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I Can Make My Payments But Looking For The Fastest Way Out of Debt. – Tanya

“Dear Steve,

I am a 30-year old female. My credit score is in the 720’s. I make payments on time (though usually just the minimums). I owe approximately $16,000 in credit card debt, $7500 in a personal loan, have school loans and a car loan. I am at the point where my whole income goes to making payments most months and there is nothing left to save.

At this point, since I am making the minimum payments, is a debt counseling plan my best way to go or should I pursue more drastic methods? I don’t want something that will destroy my credit rating for years to come but I also don’t want to feel suffocated by my debt forever. Help?


Dear Tanya,

I hear you and understand. You’re getting by but not getting ahead. That’s almost the toughest spot to be in since you don’t want to hurt your credit but you want to get out of debt.

If hurting your credit is off the table then bankruptcy and debt settlement are out.

A credit counseling program can make sense but it can have a small impact on your credit simply because the accounts included will be closed. The tremendous advantage of a credit counseling program (you can click here for credit counseling information) is your interest rates may be significantly reduced if they are high now. While the minimum payment will remain about the same, the amount of time to get out of debt on the minimums will go from 50 years to five years.

Since you are just struggling to get by now on the minimums, in order to make this work you could probably free up about 20% of your discretionary spending by tracking your cash and making educated decisions about things you may want to cut back or cut out. One tool that works well to track your spending is Mvelopes. If you prefer something less automated, use pen and paper. It’s not that the product you use to track the cash is the key to saving, it’s the awareness you develop by tracking that helps your conscious mind to spend with more awareness.

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The best method of freeing up extra cash without hurting your credit might just be a debt consolidation loan from LendingClub is a peer-to-peer lending network, and they are growing really fast. Essentially it’s people that lend to other people at lower rates than you’d get from a bank. In fact I happen to lend people money for debt consolidation loans through LendingClub.

The debt consolidation loans are not secured and for three or five years. It would be worth checking out first and see what you think. You could then get one loan to pay off all your debt, make one payment and save the rest to build up your emergency fund.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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