I’ve Never Missed a Payment But I Have No Savings and Not Really Getting Out of Debt. – Brian

“Dear Andy,

I am 31 years old and I own my own house. I have never missed a payment, yet can’t get refinanced due to my lowered house value. (Currently I owe about 149,000 and I just had it appraised at 140,000). My mortgage rate is 6.2%.

That is part of the story…the other part is: I have about 18,000 in student loans from obtaining my master degree and 2 credit cards that total about 30,000 in debt. (One at 6% and the other at 19%.) I also have a Home Equity Loan for 18,000 and a home improvement loan which is about 8,000.

I have a full time job and can make all my minimum payments, but can’t make any more than that. if anything “big” happens, I end up putting it on my credit card becuase I don’t have much savings. Up until 2 weeks ago I had a part time job and was finally starting to pay some of the things down/build a savings, but the restaurant I was working at just closed.

How can I get out of debt? I realize that my home loan will “always”be there, but how can I get rid of the rest sooner rather than later? I was contacted by a “Debt Reduction Company” and it sounded really good on the phone, but was a little leery…

Do you have any suggestions for someone who is in over their head/able to make monthly payments but not go anywhere by making them? Thank you!


Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

Dear Brian,

The easy answer to your question is to increase your income. Before you to try to reach through your computer screen and poke me in the eye for stating the obvious, hear me out. You mentioned that you have the ability to cover all of your monthly payments now but you have nothing to build a reserve with in case of emergencies. If you were able to take on a second job or a roommate, or both, that would allow you to start building those reserves or paying down your accounts faster. As you pay down the accounts, the minimums will decrease and you’ll be in a much more manageable position. It wouldn’t last forever and this would help you to maintain a solid credit rating as you chip away at the debt.

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If increasing your income is impossible than maybe you could look into some of the debt relief options available to you. Based on your situation I would probably start by looking into a consolidation loan (Lending Club is a good place to start for this), then look at the credit counseling approach and see what they have to say. If by “debt reduction” you mean debt settlement, be careful. Those programs will require that you stop making payments to your creditors and based on what you said I don’t believe that will help you at this point. To find reputable help in the debt relief area I would suggest you look into one of the members of the AACC, they are a small group of debt relief companies that have all pledged to put the consumer first and all have a great track record of doing so.

If you have further questions or would like to keep us posted on your progress please use the comment section below. I am subscribed to this post and will always try to respond promptly. Good Luck!

Best Regards,

Andy is a licensed real estate broker in Massachusetts and is the founder of Northeast Properties in Norton, Massachusetts. His brokerage is designed to help homeowners in today’s difficult real estate market, specializing in short sales. Andy speaks with Massachusetts homeowners every day, helping them to address their questions or issues with short sale or loan modification. He enjoys helping consumers arrive at the correct solution to their problem, and believes that the only way to correctly do that is by presenting them with all of their options in an un-biased manner.

If you have a mortgage, short sale, real estate, or loan modification question you’d like to ask just use the online form. I’m happy to help you totally for free.

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Broker/Owner of Northeast Properties – real estate brokerage
President/Owner of Northeast Settlement Group – performance based debt relief