Just a little background info, I’m 20 years old with a wife and child. I’ve recently taken out a loan and a line of credit, as well as a credit card with my bank TD. I also have another credit card with Triangle (The Canadian Tire one) we currently live in a three bedroom townhouse that we split rent with my mother so we pay maybe 300 each a month as rent here is $1200.
I was wondering if I put myself in a bad spot, my monthly expenses add upto $1136 altogether (groceries, rent, and phone bill) and after adding up all of my current debts I have I owe $10,375 to TD and CT Bank. I work as a plumbers apprentice and make $40,000 a year, and with all of the side projects and weekend gigs that i get paid for in cash I make somewhere in between $48,000 and $60,000 annually. I’ve only just started getting into trying to build a credit history so I may someday buy a house, car, etc. I think i got lucky as the highest interest rate on any of these is 14% on my td line of credit.
The reason why I’ve accumulated this much debt is so that I can pay for a good chunk of the tools that you need as a plumber, aside from the $20,000 drain cleaning machines and $5,000 Propress tools I’ve got everything I need for service plumbing, rough-ins and new construction plumbing (Hand tools, most power tools needed different tasks, wirsbo expander, etc) I’ve also bought a couple of other things from Milwaukee vacuums, floodlights and stocked up on different blades and all kinds of drill bits.
My thought process was that my tools will make my money back after some time and that i’ll eventually be able to go to school for my license, I haven’t been able to go to do having the baby and things were tight while we had our own apartment ($1800 for a two bedroom)
After making some payments I’ve realized it takes a good chunk of change, but not too much for me too handle, I was wondering what would be the best route to pay this off and have an emergency fund?
I hope this is the right place to post and ask for questions, i’m not in a desperate situation currently but I have crossed into 5 digits worth of debt and I’m wondering what the best way to go about paying this off is.
Am I in too much debt
byu/Ok-Register-4918 inpersonalfinance
Posted by Ok-Register-4918
4 Comments
Your bills are extremely low and you make about $4000 a month. Throw $2000 at your debt every month and it’ll be gone in 5 months
>I think i got lucky as the highest interest rate on any of these is 14% on my td line of credit.
High-interest debt *is* an emergency. I would concentrate on paying it off and then start accumulating an emergency fund for your next emergency.
I don’t think your business strategy was great when your paying 14% interest to finance all of this, but with the side income you have, if your agressive it won’t take long to pay it off, and not much harm will be done. The big thing will be to not keep buying tools you don’t really need, and to limit yourself somewhat until your making more money to justify it.
Live on a budget, live below your means, have an emergency fund, put funding your goals into your budget once the high interest debt is paid off. Don’t forget to invest in retirement as well. Trades are good jobs but can definitly be hard on your body, over time. Take that into account as your planning for retirement, etc. Stay fit to lessen that impact on your body too.
The debt you have is tied to your work and tools, which means it’s more of an investment in your career than just spending. With your income potential between $48k to $60k and relatively low monthly expenses, this debt is manageable as long as you stay disciplined. Focus first on paying off the debt by paying more than the minimum amount, try to throw as much as you can. At the same time, put any extra income from side jobs or overtime toward building a small emergency fund so you don’t have to rely on credit if something unexpected comes up.