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My Debt is Affecting My Everyday Life and Relationships. – Enrico


“Dear Steve,

I have $85,000 in credit card debt and $40,000 in student loans. I have $7000 in the stock market $3000 in savings and $11000 in my 401k. I am a PhD scientist and make ~$100,000/yr.

My debt is primarily from credit cards during 6 months of unemployment between PhD and first job. Also, the credit cards were used for my wedding, which was supposed to be financed partly by my parents and in laws, but due to the economic downturn they were unable to contribute.

Currently, I am paying <5% APR on all my credit card debt. I have been paying off credit cards after promotional period with another card with a promotional rate and have been getting by so far, but I just got a credit card closed that had $25,000 line and I was planning on transferring balances to that on a promotional rate. Unfortunately, my promotional rates end in June 2009 and after that I will be in trouble.

What is the best way to approach paying off my debt? I have not used a credit card in 12 months. I contribute ~$2500/mo to my credit cards and do not think I will be able to afford the minimum payments if the interest rates skyrocket.

Is debt consolidation a possibility? How do I go about consolidating the debt and will it negatively affect my credit score? Is debt settlement an option I should consider? I feel that if I can get a low rate on all my debt I will be able to pay it off in ~5 years if the cc companies will agree to a low enough interest rate and a long enough time to pay off the debt. Please help…I am getting very nervous and it is affecting my everyday life and my relationships.


Dear Enrico,

If you want to pay off your credit cards in 12 months you just need to pay $7,083 a month. That’s not going to happen, is it?

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You didn’t get in debt overnight and you are not going to get out of debt overnight. This has been a petri dish of debt that has had a long incubation period.

The balance transfer option was simply a stalling tactic. The minimum payments during the introductory period made you feel you were doing better than you were, and that’s exactly what they are supposed to do. Low introductory rates and minimum payments are not designed to get you out of debt, they are designed to suck you in. That is unless you pay off your entire debt before the rates rocket up.

You can certainly ask for consideration and understanding from the credit card companies, and you should. Don’t get discouraged if they don’t bend. Now more than ever the credit card companies are raising interest rates way up and marching fees up as well so they can maximize income and profit.

Any sort of approach, other than paying the debt in full or making at least the agreed monthly minimum payment can negatively impact your credit report. But that should be the lesser of your concerns right now. Your biggest priority is to dig yourself out of this hole.

Debt management, credit counseling, debt settlement, bankruptcy, reducing expenses and increasing income are all possible solutions. The key here is to define the goal you would like to achieve and then create a path to achieve that goal. Do you want to get out of debt the fastest, the least harmful to your credit, what?

You’re a scientist and deal with facts, get the facts. Talk to a debt settlement company, a debt management company, and a local bankruptcy attorney. Then weigh what they all claim to offer with the goal that you would like to achieve. Only that way can you make an informed and intelligent decision.

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One thing is for certain, your current plan is not working for you and you are going to have to take some action to alter the course of this impending financial train wreck.

If you are still confused after talking to the different option providers, come back and add an update in the comments section. Let’s take it a step at a time.


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.

About the author

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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