Spent Through 401k Money But Can’t Afford Bills. Husband Unemployed. – Jan

“Dear Steve,

My husband lost his job about 4 years ago.

We were in debt then and had started to make extra payments to try to get out of debt. With the loss of his income, I went back to just making minimum payments on everything. I took money out of my 401k just to help us pay bills on a monthly basis.

I am about out of that money now, and my bills are more than $1000 more than my income every month. Most of it is credit card debt. I have $36k in credit card debt, $3k in student loans and $6200 in car loans.

That doesn’t include house payment, insurance, gas, utilities, groceries, etc. We hardly ever eat out, I have always taken my lunch to work. I am doing some of the right things, just not enough of them and I am scared to death right now.

We are trying to refinance the house and get that payment lowered, but that is only going to make about $200 difference. So I’m still short $900 a month.

What can I do? I have made all of my payments up to this point, so I’m not behind on anything, but I am not going to be able to pay all of my bills anymore. Please help me. I am desparate and scared right now. I have never been in this bad of a situation before.



Dear Jan,

I understand and can remember the fear I went through as well when I was living through my troubles.

Right now you are racing towards a cliff in a speeding car and wearing a blindfold. You know the edge is coming but just not when.

It’s time to get real here. The borrowing from the 401k didn’t solve anything, it just postponed things and left you broke. You were probably hopefully he’d find a new job and so in the beginning raiding the retirement money probably seemed like a temporary event.

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In my experience, it is usually not. Instead what happens is people spend through their money dedicated for retirement and the problem doesn’t get solved. Now they are retirement broke and still facing the real issue.

From what you’ve shared it seems like the real underlying issue here is the loss of income and the inability for you to live within your current income.

Bad debt problems are typically math problems wrapped in emotion. Or in this case, with a little or a lot of fear and panic tossed in as well.

Before you are totally tapped out, foreclosed on, and homeless, what do you say we face this beast head on and really deal with the situation?

I need for you to go from waiting to be hit by the bus to driving the bus and taking charge so changes occur on your timeline.

Change is difficult for many people. They hate change. They want things to remain as they are. But wishing and reality are not the same thing.

Rather than living in regret because of change, what if we embraced change and just saw this as a new chapter?

So here is the action plan I see that you need to roll out.

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

In the most loving way possible you need to kick your husband in the ass to go out and get any job to bring in more income so you can make ends meet. I’d give him 30 days to do that.

If he can’t then we need to go to Plan B which is you will most likely need to sell the house and file bankruptcy to clear away the other debt. You’ll have to find a place to rent that you can afford on your income and you can then start living within your income. This is going to be a big a difficult change.

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However, if that is what happens, what you will find afterwards is your life will become significantly less stressful and you’ll actually have some room in your budget where you can hopefully start saving again and you’ll enjoy life more.

Until you take action this financial situation will erode your relationship, impact your work, and lead you to stress and depression.

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The choice is yours. You can stay the course or embrace change and take action.

Please post your responses and follow-up messages to me on this in the comments section below.

Damon Day - Pro Debt Coach

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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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