Please don’t judge. Since I lost my job a year ago, it has been a SEVERE struggle. I racked up a lot of debt to survive, took out payday loans, all my credit cards closed, and my car has been on the verge of being repossessed. I have grown absolutely depressed and spend a good amount my day balling my eyes out. Out of all of this, I am $50,000 in debt. This includes student loans as well.
I finally told my boyfriend a little about what was going on, and he took me in (have been dating for 2 years anyways and were talking about moving in together anyways). He does well at his job and could honestly pay off all my debt and make it back within a month with is salary.
I am not like that. I wouldn’t allow it. I am stubborn and want to get myself out of my own mess. He ended up giving me 10k. I am very grateful but feel weird about this. Again, please don’t judge. I got a job working at a cafe and start next week and really feel ashamed of myself. It has been a good few years living in stress. Living in an absolute financial nightmare. My younger self would be so disappointed in myself.
Since I have 10k, how do I know what to pay down without losing it all. I want to learn how to budget properly. What is the smartest way to use this money? Thanks 🙏
Best Way to Use $10K to Tackle $50K Debt After Job Loss, Payday Loans & Financial Struggle? Please don’t judge me.
byu/Confident_Delay1953 inpersonalfinance
Posted by Confident_Delay1953
17 Comments
Hate to say it, but talk to AI. Give it as much info as you can.
Generally, start with the debt with the highest interest rate.
Make sure you have emergency funds, too.
Pay the car that’s is on the verge of repossession
What is the interest rate on your loans like?
If you have zero savings you might be best putting it in a high yield savings account and using it to pay your bills until you’re stable.
Follow this: https://www.reddit.com/r/personalfinance/wiki/commontopics
Keep your expenses as low as you can. If you can use the $10k to get the car current so you can turn around and sell it, all the better, one problem solved and an expense reduced.
You just need to file chapter 7 bankruptcy and keep the car payments if you truly need the car. Everything else is trash – if you’re concerned about credit you’ll rebuild that very quickly with the car loan.
If you still have payday loans, those are the most predatory with outrageous interest – start there. I like the idea of catching up on the car and selling it, if that’s feasible for you. Otherwise some people believe in paying off accounts with the highest interest first, and some people believe in paying off lowest balance first to get that momentum. You can also look into consolidating your highest interest debts into a lower interest personal loan.
If I were you I would consider bankruptcy.
$50k in debt on server wagers is untenable. You need to consider bankruptcy. It’s situations like yours that it was invented for.
Have you considered asking your boyfriend to lend you the rest of the money? Not give, lend, with paperwork and a very low interest rate. You’d save so much compared to your current rates. You could also save yourself some stress. Pay him back on a set schedule once you have a job. It’s basically a debt consolidation loan with a lender willing to offer you very favorable terms.
Also, please be kind to yourself. You lost your job. You did what you could and what you had to in order to stay afloat. That doesn’t make you a bad person. Things are tough right now for everyone.
INFO: balance and interest rate/monthly payment of payday loans, car, credit cards, student loan ? Degree?
I don’t know the numbers. OP should keep $1k for spending/needs until cafe money comes in. And do use the remaining $9k to get rid of the payday loans asap, as those are often predatory.
No credit cards unless you can paying off in full.
Cafe is better than nothing, but it won’t work out long term. OP should continue applying to full time roles, since OP has a college degree. Be very proactive and send like 100 applications a week minimum.
Build an Emergency Fund 1st before paying down debt.
$10,000 in an stock options wheel strategy can generate $300+ a week.
A cash secured put on ASTS with an $82 strike and 6 days until expiry pays $310.
A covered call on ASTS with a $91 strike and 6 days until expiry pays $311.
$300/week of extra income would probably get your debt under control pretty quick unless it’s all high interest stuff. And if it’s all high interest stuff, try and get it consolidated.
stop the payday loans completely if any are still active. set aside $1-2k as a cushion and put the rest toward whichever debt has the highest interest rate first. the cafe job plus not having to pay rent is a window to make a dent. you’re not starting from zero.
What are the different debts and interest rates?
What is your degree in? Can you make more than a waitress salary with it?
How much do you owe in student loans (because that isn’t going away)? Can you break down the debt for us (including payment amounts)? If you are $35k in student loan debt, bankruptcy is going to barely help.
Bankruptcy may be the best way out here, as others have noted. But depending on the student loans, it may be poor advice that won’t be much help in the big picture.
Do you have any collections? Typically speaking, they will settle for much less. They buy the debt for pennies on the dollar from creditors.
What will you make? What monthly bills do you have not including the debt?
I would declare bankruptcy. Think about it:
The biggest con of bankruptcy is you wont get loans for awhile – you are already there. No one is giving you a loan for a long, long time. Give the 10k back to your Boyfriend and declare bankruptcy. Its by far the smartest choice – its not even close.