Get Out of Debt Guy - Steve Rhode

Should I Use Credit Counseling, Do It On My Own, or File Bankruptcy? – Carol


“Dear Steve,

I currently have $34,411 in credit card debt, with most cards being close to the limit. In addition, I have $23,422 in an auto loan. My gross pay per month is $5772 and my net pay per month is $3259.

My living expenses (including rent and car payment) are about $2300 a month. My monthly payments for my credit cards total a little under $800 a month. So, I’m looking at about $150 extra income a month.

My payments are on time and accounts current. I have already paired down to the bare minimum when it comes to personal finances–don’t have a home phone, just got rid of cable and internet, etc.

There is a possibility that once September arrives, I will be able to find part-time work to provide a little additional money each month ($200 or more).

Should I consider becoming part of a Debt Management Program (such as CCCS) or should I just try to dig out on my own? Should I consider Chapter 13 instead of a DMP? Thanks!


Dear Carol,

Thank you so much for asking me for help and advice.

The most critical component here is one you did not mention. How much are you able to save each month and also save for retirement?

I understand you’ve cut the budget to the bone but I’m worried you may not have left enough room for the most important obligations of an emergency fund and retirement savings.

Digging out of debt without saving for both at the same time is financial suicide. Accidents and unexpected financial surprises happen and without the emergency fund those surprises will land back on credit and erode progress you make.

Without saving for retirement now it can cost you a million dollars or more later when you need it most.

Please let me know what your current saving strategy is and while you are at it, use the calculator below to better understand the long term impact of not saving for retirement while you are getting out of debt.

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

Big Hug!
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