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California State Employee is Suffering From Pay Cut Disease. – Martha

“Dear Steve,

Married couple, I am a CA State Employee who had a reduction of pay of approx. $700.00 a month. We have two car payments and a mortguage, in addition we have credit cards debt of approx. $25,000. THe payments of the credit debt is approx 1,4000 a month and seems that we are living paycheck to paycheck and we hate it.

We would like to reduce our credit debt but because of paycut we are only paying minimum payments. I did contact B of A on one of the credit cards and they reduced the finance rate on one card to 7% and they told me that the account will reflect closed by customer. How can we reduce our interest rate and get out of financial debt without any affects on our credit? I hate the situation we are currently in. We need help,


Dear Martha,

If you can afford at least your regular monthly credit card payments but want an interest reduction then a debt management plan is the best bet. However, while your credit report won’t reflect you are in a debt management plan, the cards included will be closed by the creditor and that could impact your credit score.

But while the credit report and credit score are important, that’s not the real problem is it? The real problem is that the reduction in pay has left you at the breaking point each month and all it will take is one unexpected expense to throw you under the bus and all your credit will come tumbling down.

You should explore the debt management solution but after looking into it, if the payment seems to high to sustain for a long period of time, come back, let’s talk about other more drastic options.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

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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