We Spend $1,000 More Per Month Than We Earn. – Tracey


“Dear Steve,

We have 3 credit cards with balances of 20,000 each, an equity loan 40,000, & mortgage 220,000. We make fairly decent money but I’ve been keeping track and we spend 1,000 over our checks each month. I’ve narrowed it down to shopping, cigs..grr, groceries, & dining out. I keep track weekly but by the end of the month I’m overdrawn and still have credit cards to pay. The debt seems to get deeper and I’m starting to get depressed trying to do better for my family. Where can I go or what can I do to get a hold of this? I don’t want to do bankruptcy. I considered debt relief BUT I don’t want our credit to be stained for years.

What are our options to paying our debt off with out damaging our credit for years?


Dear Tracey,

Thank you for writing me for help.

The number one off limit item you are going to have to let go of is the desire to hold on to spotless credit. The lure of that will lead you towards unrealistic promises from people that will scam you.

Unless you are paying at least the monthly minimum payment, your credit will be impacted by any debt relief solution.

Now that’s all bad news but the good side of it is that bad credit is not permanent and can be healed.

Ultimately this solution is going to be resolved by increasing income, reducing expenses or a combination of the both.

If you can work harder to make more money to pay more than the minimum on your bills, consider doing that. But if that is not realistic, then we are going to have to look at cutting other expenses.

Look Tracey, I can sit here and preach to you about cutting out every little expenses that others would label as optional and disposable but just from experience, not everyone is cut out to eliminate cigarettes, an occasional meal out, etc. People like to have something to look forward to, and in moderation, it seems okay to me.

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I’d start first by suggesting that you track your cash for a month and develop a spending plan that is based on your actual money spending patterns. You can download a free copy of my book “Eliminate Your Debt Like a Pro” and starting on page 81 are the instructions on how to track your cash.

Simply tracking the cash will reduce your discretionary spending by about 20%. When you are more aware of where you money is going you can then make informed decisions about how you want to best spend your money.

If after tracking your cash for a month and taking a detailed look at where the money is going you might come to the conclusion that no simple and easy budget cuts are going to help you pull the ends of your financial life together.

In that case you will need to think about a debt repayment plan or eliminating your debt and start over on a more responsible footing. To achieve either of those goals I would suggest the legal protections you get under bankruptcy. Talk to a local bankruptcy attorney about what bankruptcy would mean for you.

The depression over your debt situation will continue to deepen as long as you take no action to resolve the situation. Each month the hole you are digging will get deeper and deeper and your fear or lack of action will leaving you swirling in increasing stress, pain and regret.

Personally, I think that any informal debt reduction plan like credit counseling or debt settlement is going to be unsustainable for you and will result in you simply paying money for a solution that will not be resolved that way.


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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Steve Rhode

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