“Dear Steve,
Three years ago we had no debt except a house payment. We chose to move closer to family and took a 2/3s pay cut to do it. My husband works in sales and we expected that the money we come, so although we are smart people we continued to spend like we had the money. Now we are 125K in credit card debt, 110K in Motorhome debt, 25K in car debt and 417k in home debt. My husband makes a base salary of 107k.
We have been using our credit cards to stay afloat, bad idea. Now we have maxed them out and well our monthly needs exceed our monthly guaranteed income by 4k. I don’t even know where to start, we don’t qualify for refinance because our house value has dropped and no one is buying motorhomes. Where do I start? I am not behind on any payments yet, but if we don’t do something soon we will be.
Rachel”
Dear Rachel,
I always say, “There is no sense wasting a perfectly good mistake”, so in the future, take what you learned from this situation and apply it. If you are not living within your income then it is a ticking time-bomb that will explode at some point. It always does.
So here is the heart of the problem to digging yourself out. It looks like you have been living way beyond your means for a few years. In order to recover you are going to have to live that far below your means and then some. Getting back to a break even point each month does not repay the debt, stops stops you from adding to it.
To be brutally honest, I think the solution is probably already been cast in stone for you.
Unless you decide to move back towards your old jobs, and even if they were available, it would mean turning your life back. If you are prepared to do that, go back, increase the income and pay your way out of this mess.
If that isn’t a possibility and you think that staying where you are now is best, then the most logical way out is going to be bankruptcy. You’ll have to give up the motorhome but you’ll probably be able to stay in your house.
Before you leap at any conclusion I would go and talk to a local bankruptcy attorney and get the facts. After you do that, come back and share what you are going to do.
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.
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