I am currently 4,000 in credit card debt (not including student loans). I have $1500 in my account. I make 2800 a month. My rent is 1300. My bills are 500 a month. This started when I was relocated for a job, and I was not put into work when I was expected, leading me to put a lot of my spending on the credit card. I am currently looking to find a second income as what I make a month does not support me and my bills rent and interest from adding up, groceries, gas, occasional fun money. What advice would you give a 25 year old who feels like it is the end of the world because I don’t have my shit together.
Quarter life crisis. Help.
byu/kiwilemonswirl inpersonalfinance
Posted by kiwilemonswirl
11 Comments
You’re not in a terrible place!
From my understanding, your spending is 1800 / month. If you left the 1500 in your account and strictly put 1000 to your credit card debt, you’d be done with it in 4-5 months. Not too bad.
Any more variables here? I’d even trim the savings to 1000 just to focus on killing the debt
Start here: https://www.reddit.com/r/personalfinance/wiki/commontopics.
Budgeting: https://www.reddit.com/r/personalfinance/wiki/budgeting
You have $1000 a month to fix your issues.
Why doesn’t $2800 support $1300 + $500? Where is the other $1k per month going?
I don’t know what “not put into work when I was expecting” means? Are you saying there was a period where you were without income? If so, how long?
Take a breath, this is not that bad. Read The Total Money Makeover by Dave Ramsey to learn the baby steps and follow them and you can win
Step 1: Make a full budget. You listed rent and bills, but list our absolutely everything. Food, subscriptions, insurance, car payments, etc.
Step 2: Actively track your spending every day to ensure you stay in that budget. A budget does you no good if you don’t follow it.
Once you gather info from those two steps, that can help point you as what really needs to happen, like getting a second job like you mentioned. Raising your income in some way is obviously important. Right now, your rent is almost half of your income, and that’s too much.
Also, never use the credit cards again. If you’re using credit cards to cover expenses that you can’t afford, it’s better you don’t have the credit cards at all, because with their interest rate, they will destroy you financially for years. You’re at a deciding moment in life that will determine your financial stability for years. In your scenario, I would do everything I possibly could to ensure I never had to use those credit cards until I became more financially stable.
Find a new place to live under 1,000 a month if you are able.
Try to make extra income by selling items around your house and put all your earnings towards paying off that debt.
You got this!
Stop having fun money. You are in an emergency situation and need to stop with ‘fun’ until that CC debt is paid off. Eat ramen until it’s paid off. No spending on anything other than rent, gas, and ramen. Get a second job immediately.
I had a similar problem at 25 and it was because I made too little to have my own place. You didn’t mention roommates, are you in an apartment on your own? I’d consider trying to split a house or larger apartment with a friend to reduce your rent.
Your rent to income is 46% which is on the high end to me.
I’m envious of you for finding this resource at your age. It wasn’t until I was 36 years old that I finally started taking personal finance seriously. I cleaned up a few things on my own and then sat down with my wife and said we need to get our crap together. We tallied everything up for the first time, and even after the debt I’d cleared up, we still had $55,000 in credit card debt, costing us over $10,000/year in interest.
You have access to all the tools you need on this sub to make a plan to knock out your debt in a matter of months, and be well on your way to financial independence. Use that feeling you have (and if it helps, the idea of ending up where I was) as motivation to make a serious change. You can do this!
You’ve gotten financial advice here, so I’ll just say this. I didn’t have my shit together financially until I was in my 40s. I’m 48 now and doing fine, so don’t panic. You’ve recognized your deficiencies way earlier than I did and time is on your side.
ok, try to eliminate the credit card debt by living frugally, zero fun money. the interesting is killing you fast.
remove unnecessary subscriptions, like amazon and Spotify, even the gym.