29M, married 7 years, toddler + baby due in one month. I feel like I can’t catch a break no matter how hard I try.
I’ve tried to maintain strict budgets, but extenuating circumstances keep draining my savings and pushing me back into credit card debt. Every time I try getting back to normal, something hits me out of nowhere. It’s gotten to a point where I feel like everything I do is pointless, and honestly it has me in a pretty dark place mentally. I genuinely want to get this under control, but it feels impossible.
The timeline:
June 2023 — Our only car, a Kia Optima, was totaled. My wife was driving in the right lane at 45mph when another car pulled out into traffic without looking and hit her passenger door head-on, sending her through a fence and nearly into an apartment building. She was okay thankfully but extremely shaken up, especially since she was newly pregnant with our first child. We replaced the ($250/month used Kia with a leased Mazda CX-50 ($450/mo). It’s our only vehicle, and after what she went through, she felt safe in the Mazda so it wasn’t a battle I chose to pick.
Fall 2023 — Both of our dogs contracted a serious strain of kennel cough that developed into severe pneumonia. They were fully vaccinated, and still one was hospitalized and passed away at only 2 years old. He was a good boy and we miss him dearly. Between vet visits, medications, X-rays, and hospitalization across both dogs over several months, I was out somewhere between $10–15k. No pet insurance. Lesson learned the hard way, get pet insurance now if you’re reading this.
March 2024 — My wife gave birth to our first daughter, but suffered serious complications during delivery requiring emergency surgery, followed by additional follow-up surgeries and extensive medical and PT visits. She’s all good now, she’s a super hero, and the doctors cleared her to have more kids if and when she wanted (foreshadowing).
Also, two weeks into paternity leave I was laid off in widespread department cuts. I found a new job two weeks later, but the insurance policy switch was mishandled by both carriers. We weren’t notified until near the end of 2024 that nearly all of our post-delivery claims had been rejected. We’ve spent the past year fighting to get it resolved, and I think it’s finally starting to sort itself out, but it’s drained our HSA and the pressure to pay during that time sent more debt onto the card.
2026 — Baby #2 is due in one month, and we just found out my wife will likely need a scheduled C-section. We’ll hit our deductible this year, and until the HSA can reimburse us on the back end, everything is out of pocket. In spite of all of this chaos, we opted to go for a second child because it was important to us that our daughter has a friend and sibling to grow up with. We didn’t want to let any issues today stop our family plans long-term, though we both feel two is our max. Oh, and food and gas costs have made none of this easier, but that is something I think applies to all of us.
Financial picture:
– Salary: $98k/year
– 401k: $140k
– HSA: $1k
– Discover: $10k balance
Monthly heavy hitters:
– Rent: $1,700
– Student loans: $500
– Car lease: $450
– Groceries: $600 at least
Where my head is at:
My mind constantly bounces between
“you’ll never pay this card off”
and
“you’ll pay it off but then get wrecked by something else.”
Neither headspace is good and it’s really impacting my ability to manage our finances properly. This is my real problem. I feel hopeless and stuck in a state of zero control.
I know it’s generally considered a last resort, but I’ve honestly been thinking about taking the early withdrawal penalty on my 401k and pulling a small amount just to clear the Discover balance before this baby comes, then pumping up my 401k contribution rate. Part of me thinks it would be such a mental relief to clear that card, especially before the baby comes, that it would be worth it, though I know most would highly advise against the move.
I can’t get back to zero. Where do I start?
byu/-toastyghosty- inpersonalfinance
Posted by -toastyghosty-
11 Comments
You’re doing great on your 401k, and your salary is great. $10k on Discover is the issue.
Honestly, you’d really benefit by consolidating the debt into a standard loan from a bank, closing the Discover card, and swapping to debit till this is paid off.
You are probably bringing home something like $5k a month, but you list only about $3300 of expenses. Where’s the other $1700 going? Put that $1700 a month to your discover bill and you’ll have it paid off this year.
What’s the plan for the Mazda when the lease is up (maybe this year if it was a 3 year lease)?
Have you written out a budget? And then forced yourself to stick to that budget?
Make sure you add a line item for an emergency fund once you’re done paying off the credit card.
spending on a credit card while carrying a running balance will increase your monthly interest fees. Once you carry a balance, you lose the “grace period” on new purchases, meaning interest accrues daily on the existing debt and immediately on new purchases, causing your interest charges to compound.
Stop spending on the card you are attempting to pay off. Use debit or paper cash.
Depending how much you are contributing to the 401k, pausing that for a few months might open enough cash flow to pay down the credit card and build up some emergency fund for the next surprise.
Of course if you can cut back anything else/find extra hours/side gig, do that too. But one way to think about it is you shouldn’t be using a credit card to pay for your 401k.
$10k is not insurmountable. You can see if you’re able to take a personal loan for a lower rate, but the possible issue with that is that sometimes, people do that, and then run up the balances on the cards again, putting them in an even worse spot.
The surefire way to handle this is by increasing income and cutting out any unnecessary expenses. You may consider seeking out a part time job to help chip away at the debt.
And on a side note: Don’t lease again when the term on the Mazda runs out. Leasing is generally the most expensive way to have use of a car. They’re counting on you getting into a cycle of making car payments in perpetuity.
The vet bills are big. Hard to do anything about it now but just backing up for others that pet insurance is huge unless one plans on not treating their pet’s future serious conditions.
Apply for a balance transfer card, that’ll buy you another year +, to pay off the credit debt without interest. Chase Freedom card is my rec. Probably worth looking into some weekend job, or data entry or something, at least until the 10k is gone.
Second bad choice is the car lease. Leasing is awesome, if you’re the dealer. You won’t be able to fix this one til the lease is up, but don’t make the same mistake twice.
You could try a month of really cheap staple eating. Rice/pastas, discounted meats by shopping near closing time, etc. The idea is more palatable if you limit it to a month, but hey…300 bucks in your pocket.
Does your wife work? That’s not something that can immediately change with the baby due soon, but may be a long term consideration. Daycare expenses for 2 probably outweigh that in the short term, but medium term and beyond that can provide a substantial boost to income. Even a salary much lower than yours would be a huge boost to your finances.
First things first: Be Kind To Yourself. This seems like a daunting, impossible task, but can be tackled by some careful planning and disicipline.
Second things second: Congratulations on the new baby coming! May everything go smoothly and safely for your wife, the child, and your family.
In regards to your debt (primarily the Discover Card), instead of withdrawing from the 401k, check to see if you’re eligible to take a loan out against it. I’ve worked in a few places where you can take a loan out up to a certain percentage of the total vested balance, and then you’re 401k contributions go to paying that back. I don’t think these loans count as withdrawing early, so no penalties for that. Definitely talk to your HR and/or 401k plan manager to see what options you have.
As for the rest of your budget, without knowing what your take-home is, I’m not sure what to suggest to help balance it all out.
What I can recommend is
* Crack open a spreadsheet and list everything you have as a monthly expense (Debts, Rent, Utilities, necessities, etc). Put them all in one column and total up your monthly money out. Make sure to list their due dates with that as well.
* On the same sheet, list your money in from your salary. Make sure to list when it’s deposited. Total it up
* Look at the two numbers and see if you are positive, neutral, or negative each month.
* If positive, see where you can afford to build a emergency fund (which you don’t list as having), as well as saving for medical expense you know are coming (both with the arrival of your second child and afterwards). Also, make some room to have a small treat each month (like maybe a meal out/take-out; sweet treat; a book that you or your wife is interested), as both a reward for keeping up the good work and to motivate you to keep going
* If neutral, see if there are some areas you can maybe scale back the money out to build a emergency fund and set aside for medical expenses you know are coming.
* If negative, then you need to have a hard look at your spending. Look for things that are wants and not needs (like stopping at a gas station to grab something to drink on the way to and/or from work. Instead buy those from a grocery store. The price per container will be cheaper). Also, see if you can negotiate your payments to more favorable pay cycle (maybe you can setup the Discover every two weeks instead once of month).
* Additionally, you may need to see if you can pick up some side work for a little bit to get things back to neutral (which will be challenging with two kids)
Hope this gives you some guidance. And remember, Be Kind to Yourself.
Sensitive topic, but is there going to be a third child if you continue to be so worried about money every day?
You need to be budgeting everything, not just the “heavy hitters.” The little things obviously *become* heavy hitters, as you’ve seen. Groceries and gas shouldn’t be unexpected expenses as you have framed them in a comment here. Consider secondhand clothing for your kids, (not just stores, but swap/buy nothing groups, etc.) What kind of clothing did your toddler suddenly *need* that was $50? They outgrow everything so fast, there’s no reason to be putting them in really nice stuff as long as they are comfortable.
I do not have kids, so I won’t comment on the grocery bill, as maybe it includes diapers and baby stuff I don’t know about. But for example, my partner and I spend $250 on groceries a month in a very HCOL area and feel like we’re splurging, we just don’t eat a lot of meat, or drink a lot of alcohol, or buy a lot of packaged stuff. So if this is a mostly *food* based grocery bill, you should be able to lower it at least a bit.
Sorry that you’ve gone through all of this.
Look into Dollar For of you still have medical expenses, they review the policies for medical Forgiveness and see if you qualify – for free!
Listen, at 29 you are ahead of the game with your retirement savings. Just know that 10k is about 15k with taxes (20% federal, 10% penalty, and state taxes if applicable). With the amount you’re paying on your card – I would take about 8k from retirement account – that should give you about 5600 put that towards your cc.
What is your variable spending that you’re charging every month on average? Let’s say $500, drop your payments on discover to 1000. With the money from the 401k, in 4 months you’ll have or paid off. With the 1k freed up, take a few months and build out an emergency fund or put 500 to emergency fund, bump up 401k and hsa.
To keep spending in check, get a secured credit card, you can only spend what you’re backing the card with. Use that for the variable.