I am M[30] a recovering shopping addict. I don’t know why but it was always tied to relationships and depression which I have for the most part cleared up entirely. I have about $10K in cc debt. $16,500 loan that was $25k. I have a 2015 Honda Accord with 71k miles on it but it literally sits due to the fact that I live in the city and I’m remote. I owe $16,100 on that car.
I owe taxes due to some poor situation with my birth mother that I’m paying. It’s probably $2500 total. Then student loans are at $13k. I pay about $150 a month.
I get bonuses every quarter that are about 3k or so after taxes. Make $6k a month after tax. Rent is about $1400 a month. All other bills are maybe $2000.
I’ve been toying with the fact to sell my car. I can maybe get $15k for it and then use my bonus to pay the rest of the negative equity.
On the credit cards I wanted to just get another loan and pay them off that way since I keep paying the minimums but in reality I don’t feel like that’s a logical idea. I pay $745 for my current loan a month and have about 3 years left. I want to refinance it but I’m nervous about hard inquiries—all of them fell off this month I’ve had in the past.
If I get rid of my car I’d have about $550-$600 to repurpose into the personal loan’s principal.
I think I’m just getting suggestions on the best moves first or in general suggestions overall. Any help is greatly appreciated. I don’t feel smothered by my debt but it’s not what I’d hope for myself at this age.
Have debt but want OUT
byu/Tazmanian-Romantic inpersonalfinance
Posted by Tazmanian-Romantic
2 Comments
Sounds like a plan. You should have about 2k or more per month to pay off loans. 26K should be gone in 14 months or so. If you don’t have that much, track your spending to find out where it is going. Put up a detailed budget if that doesn’t work. Pay down the highest debt first.
Congrats on the mental health recovery.
Let’s look at your situation.
**Debt**
* Credit Cards $10k
* Personal Loan $16.5k
* Car $16.1k
* Student Loans $13k
* Taxes 2.5k
* **Total $48.1k**
**Income**
* $6,000 Month
* $3,000 quarterly bonus
**Spend**
* Rent $1,400
* “All other Bills” $2,000
* Car Payment $600?
* Personal Loan Payment $745
* Student Loan Payment $150
* Total listed $4,904
* Other spending $6000-$4904 = $1,096 (food, gas, utilities, etc)
**Assets**
* Car–owe $16,100 value maybe $15,000, so ~($1000) equity
**Action**
1) Credit card debt–you can look at consolidation loan, but you have to stop using the cards (as you know). Otherwise you end up with a consolidation loan payment *and* a bunch of new charges on your cards. This and the tax debt should be your highest priority. This because interest on CC debt is severe; taxes, because the gov’t always gets its share.
2) Selling the car — If you don’t use the car, selling it, even with covering negative equity, makes sense from not having to pay taxes, insurance, fuel, maintenance, and debt service.
3) Mathematically, attacking your higher interest debt is most fiscally efficient.
4) Worry less about your credit score, and more about the hundreds of dollars a month you are paying in interest.
5) Good luck–the usual “maximize income, minimize spending, pay off debt, yada, yada, yada” apply.