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We Can Just Make Our Minimum Payments and Have Good Credit But Need Help. – Becky

“Dear Steve,

My husband and I are in our late 30’s with 2 sons. We have $22k in debt, $10k personal loan and $12k credit cards. We make the minimum payments each month as that is all we can do and our credit scores are above 750.

I look at all of the snowball theories and paying highest interest first theories but, we don’t have huge amounts that we can add to the minimum payments. I just want to pay this debt off and I’m trying to find the best way. It seems almost impossible to ever get it paid down.

We were given an approval from Prosper for 18% but all of our debt ranges from 6% to 12% so does going to one loan for 18% makes since?

Do I try and transfer balances to cards with 0% for periods of time to try and knock it out that way? I’ve even thought about making a withdrawal from retirement IRA and just being done with it. This is so confusing, please let me know your recommendations. I’m open to any ideas.


couple working

Dear Becky,

What are the combined monthly payments for your current personal loan and credit cards? What is the projected monthly payment for the Prosper loan? Let’s look at the math.

One thing is clear, unless we alter the equation here by increasing income, reducing expense or intervening with the debt, not much is going to change.

If you have not already done so you might want to start tracking your expenses for the next month or so and create a spending plan. See my free book Eliminate Your Debt Like a Pro for instructions on how to do this.

What I’m very concerned about is if you are saving for retirement now or have put that on hold because you are limping along. If you can not afford to save now then we might need to take some action more than budgeting.

My fear is that if you are just paying your way out of the debt and not savings, you may be throwing away millions in retirement.

Debt Repayment Calculator

What Will Debt Repayment Cost You in Retirement?

What Will Debt Repayment Cost You in Retirement?

This calculator demonstrates the future retirement financial loss you may experience when electing to repay your debt with an extended repayment program offered by creditors, credit counseling or debt settlement, rather than intervene on your debt with solutions like bankruptcy which terminate the debt quickly and allow you to resume saving again for retirement.

The calculator solves two problems.

Cost of Payment Plan in Retirement Dollars: This is the value of the retirement funds that you could have invested rather than repay your debt through an extended repayment program.

Future Lost Retirement Value: This is the amount you will lose in retirement from entering into a repayment plan to deal with your debt.

If you want to just see the amount lost from the payment plan, leave the “Monthly Payment After Payment Plan” box at 0.

Here is an example:

Current Age: 25
Monthly Payment: 300
Monthly Payment After Payment Plan: 0
Length of Payment Plan: 5
Rate of Return: 10
Estimated Retirement Age: 70

Cost of Payment Plan in Retirement Dollars = $23,231.12
Retirement Cost of Payment Plan = $1,247,526.55

What This All Means

If you elected to pursue some other solution, like bankruptcy, to discharge your debt quickly, you would not make monthly payments into an extended repayment plan. Those funds could instead be used to save towards retirement.

In this example, if our 25 year old debtor decided to enter into a credit counseling or debt settlement program they would repay their debt but that plan would cost them $23,231.12 in retirement funds that would be worth $1,247,526.55 when they eventually retired.

The purpose of this calculator is to not talk you out of credit counseling or debt settlement but to assist you to make a more informed decision about the future costs to you.

Debt Repayment Impact on Retirement Calculator
Current Age:Length of Payment Plan (Years):
Monthly Payment:$Rate of Return (%):
Monthly Payment After Payment Plan:$Estimated Retirement Age:

Current Age: Enter your current age.

Monthly Payment: Enter monthly payment of debt plan.

Monthly Payment After Payment Plan: Enter any payment you expect to make on a monthly basis into your retirement plan after you get out of debt. Leave this as 0 if you just want to see the future cost of lost retirement from a repayment plan.

Length of Payment Plan: Enter the number of years the repayment plan will take.

Rate of Return: Enter the rate of return you anticipate your retirement plan to have. Keep in mind that a good stock index mutual fund can return 10% or more.

Estimated Retirement Age Age: The age you anticipate retiring at.

And if you don’t think worrying about saving for retirement is important, please read The Saddest Avoidable Mistake People Make When Getting Out of Debt.

Why This is Important

Government data shows 41 percent of Americans aged 55-64 have no retirement savings account.

For those in this age group who do have a retirement account, the median account balance is only $103,200. In addition, an increasing number of Americans are retiring without pensions.

The Employee Benefit Research Institute (EBRI) finds that 44 percent of baby boomers will fall short of adequate retirement income for basic expenses and uninsured health care costs.

Women, in particular, have an increased likelihood of outliving assets due to, among other things, lower savings and lower private pension coverage. – Source

You don’t want to wind up broke in retirement.

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

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About Steve Rhode

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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