Our New Expenses Leave Us Unable to Pay Our Credit Cards. – Erika

“Dear Steve,

I’m a 39 year old married woman with a 11 month old infant.

My husband is a stay at home dad. We only have 1 income.

We recently are in the process of building a new home. We currently live in a Condo that will be rented to ensure that the mortgage and condo fee are covered.

I found that building a new home took all my cash reserves and when I start making my mortgage payments on the new home I will not be able to pay my credit card debt.

I will only be able to pay mortgage, home expenses and personal expenses. I have 2 credit cards one with a balance of 9,630.00 and the second one at 22505.00.

How can i make sure that my credits cards are paid on time and not hurt my credit score. My credit score is above 700.

Erika”

Dear Erika,

Unless I read your question wrong it appears when you start making the new mortgage payment you will have no money leftover to pay your credit card payments.

I’m almost afraid to ask if that also means you are not saving for retirement and rebuilding your cash reserves. What’s the plan in cash of a financial emergency?

I hate to even ask this but, can you even afford to keep the new house? It seems as if it leaves you in a horrible financial position.

Money problems are really just math wrapped in emotion. You’ve said that moving forward your family equation looks like income -new home+expenses=0.

We are going to need some voodoo for this situation.
We are going to need some voodoo for this situation.
I’m good at what I do but turning nothing into something requires some sort of medieval sorcery I’m not familiar with.

Money troubles are resolved with increasing income, reducing expenses, a combination of both, or some sort of intervention.

Let’s say we looked at intervention and you filed a chapter 7 bankruptcy to discharge your credit card debt. That still leaves you with a break even each month according to your estimates. So that’s not really a great solution.

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So what are our logical options then. Your husband can go to work and you can put your child in daycare, you can increase your income, or you can sell the new house, stay in the condo use your extra money each month to rebuild your savings, start saving for retirement, try to pay off the debt, or file bankruptcy and discharge the debt.

I’m very worried the credit card debt is the result of actually being negative each month in your budget and making up the difference by increasing your debt. Unaffordable items land on the credit cards.

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

Sincerly,


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.
Damon Day - Pro Debt Coach

Steve Rhode

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