Ask The Get Out of Debt Experts Budgeting & Budgets

We Can’t Seem to Make Ends Meet and Save. Is Bankruptcy Right For Us? – Matt & Patti

“Dear Steve,

My wife and I gross $93K. We owe $38K in credit cards, $1290 mortgage and two kids in private HS @$15K/year. Take home is approx. $3200/mo. We are upsdie down on our house by at least $20K. Our current credit scores are – me 690’s, wife low 700’s. We make all our payments on time but emergencies like car repairs, root canals, etc put us on more CC debt. Have been working on a budget all year, but unknowns kill us. Thanks for the ear and advice!!!

We seem to be getting nowhere with the CC debt and wondered if we are good candidates for bankruptcy or what?

Matt & Patti”

Dear Matt & Patti,

On the surface the first area others are going to target in on is the private school. It’s a situation I’ve seen over and over again. My experience has been that parents in similar situations have felt the need for the private school education was more important than almost anything else.

If that sounds like your situation then we’d need to look at intervening on the debt to allow you to continue to pay the tuition.

If you feel the kids can come out of the private school then the reduction in tuition would probably get you back to a point where you could easily pay down your debt faster.

Your score might allow you to get a fixed rate debt consolidation loan through LendingClub.com and that might be the breathing room you are looking for to reduce your card payments.

But a bigger underlying issue is brewing. Your current budget might need more breathing room than a debt consolidation loan can give you. When people tell me that they have no savings account or emergency fund to pay for those life surprises that get us all, I worry.

You should have several thousand dollars at least in such an account and if you can’t manage to save on your current income and expenses then bankruptcy might be the smart play here. A bankruptcy would allow you to trim expenses and put you back in a position to save to better protect yourself financially.

READ  I'm a Marine and Worried About Battling My Debt When I Get Out. - Crystal

I’m going to give you some homework. Check out what the payment would be with a LendingClub.com debt consolidation loan and also click here to talk to a local bankruptcy attorney.

After hearing from both then I want you to come back and post an update in the comments below so we can figure out what the next logical step is. Sound reasonable?

By the way, the reason the budget is not working out for you is because you are probably doing it backwards. Before you can build your budget you need to first track your expenses for several months to find out where your money is really going. Otherwise the budget you will draw up will be just a page of lies and not based on fact.

Follow the budgeting process in my free book you can download, “Eliminate Your Debt Like a Pro.”

Sincerly,
Steve

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.

4 Comments

  • Matt,

    How have you been tracking your expenses? Are you tracking where all your money goes, even your cash?

    If your budget does not allow you to meet your expenses and put at least $500 a month in your emergency fund, then go talk to a bankruptcy attorney. Talking to the attorney does not mean you are filing, it means you are wisely researching your options.

    How much are you saving currently each month?

  • FYI – Lending Club turned me down as I could only apply with my income and not our household income. I have contacted a lawyer and am waiting to hear back. My budget has been tracked for the last 6 mos. so I am positive of where our money is being spent. Private school is our only option as the public schools here are just that – public schools and the district is very sub par and both of our kids are bright. I do appreciate the quick reply as we have been mulling and researching our options for a few months now and cannot seem to come up with anything that will say/indicate that such and such is the best way to go.

    Matt & Patti

  • FYI – Lending Club turned me down as I could only apply with my income and not our household income. I have contacted a lawyer and am waiting to hear back. My budget has been tracked for the last 6 mos. so I am positive of where our money is being spent. Private school is our only option as the public schools here are just that – public schools and the district is very sub par and both of our kids are bright. I do appreciate the quick reply as we have been mulling and researching our options for a few months now and cannot seem to come up with anything that will say/indicate that such and such is the best way to go.

    Matt & Patti

    • Matt,

      How have you been tracking your expenses? Are you tracking where all your money goes, even your cash?

      If your budget does not allow you to meet your expenses and put at least $500 a month in your emergency fund, then go talk to a bankruptcy attorney. Talking to the attorney does not mean you are filing, it means you are wisely researching your options.

      How much are you saving currently each month?

Leave a Comment

Scroll to Top