9 replies to this topic

[Fishy]

I've been around this site before, but it's been several years. My husband and I are in quite the pickle and I need some advice or maybe just some reassurance.

My husband and I bought a restaurant in 2004. Long story short, it started out doing really well and then crashed with the economy. We sold it in 2010 but lost A LOT of money. My husband ended up with significant credit card debt ($40k) as a result and it took him 9 months to find a new job. I just graduated from nursing school (RN) in 2010 and was unable to get enough student loans throughout school to completely pay our living expenses (which aren't extravagant by any means) so I ended up with 20k credit card debt.

So, here's where we stand:

Combined income: About $77,000/year
Total credit card/line of credit debt: About $60,000 (me: $20k (8.9% interest), him: $40k (varying interest rates, mostly around 10%)
Total student loan debt: About $60,000 (all mine, from two B.S. degrees and one AAS degree), husband has no student loan debt
Car Loan: $2,500
Mortgage: I think we owe around $124,000 on a condo that is now worth about $100,000
Savings: 0
Retirement: (we're 33 and 36) I think 10k combined

Our original plan when we sold the restaurant was to suck it up and pay the debt. We've NEVER been late on a payment and we both are currently able to pay extra toward the debt. We're not living paycheck to paycheck, but obviously don't have a ton of money left over each month either. My husband's latest FICO score is 719, the last time I checked mine, I think it was around 725.

With no savings and virtually no retirement, are we fighting a losing battle here? I've created debt snowballs for us both, and if all goes as planned, we should have the debt paid off in 5-7 years (ETA: I'm talking about the credit card debt, I'm not really focusing on the student loans right now). BUT, it also scares me that we have no savings and virtually no retirement.....sure we're still young, but we're not getting any younger!

I just don't know what to do. I really don't want to file bankruptcy, but the option would free up a lot more money to save. Even still, given our income vs debt (I know student loan debt isn't able to be discharged), I'm not sure we'd even qualify and we're fully capable of paying the debt right now. We've already done what we can as far as negotiating lower interest rates and consolidating debt.

Sorry for the rambling post. I just feel so lost and depressed sometimes about our situation. I don't know if I just need reassurance that we CAN do this and it's not the end of the world, or if there's more I can do that I need advice on.

Anyone?

Edited by Fishy, 25 February 2012 - 10:34 PM.

[Frank13]

Just a quick question before I offer a reply ... how much is the monthly car loan payment?

[Fishy]

Just a quick question before I offer a reply ... how much is the monthly car loan payment?

$242/month at 5.49%. It will be paid off sometime around the end of this year. It was at $3000, but I had some extra money and put $500 more down on it yesterday.

Edited by Fishy, 25 February 2012 - 10:31 PM.

[tiggerlgh]

I am sure others will disagree with me here but it took you a while to get into this debt and it will take a while to get out of it. I would do the snowball method and try to pay off the debt. If you are not living to pay check to pay check with the debt its doubtful you will qualify for Chapter 7 anyway. Good luck!

Edited by tiggerlgh, 26 February 2012 - 03:02 PM.

[Fishy]

I am sure others will disagree with me here but it took you a while to get into this debt and it will take a while to get out of it. I would do the snowball method and try to pay off the debt. If you are not living to pay check to pay check with the debt its doubtful you will qualify for Chapter 7 anyway. Good luck!

Thank you tiggerlgh. I know it seems silly, but sometimes I think I need to be reminded of the obvious, that this debt will not go away overnight. I tend to be an overly anxious person and always jump to the worst conclusions. I had a feeling that we probably wouldn't qualify for bankruptcy anyway, but to hear that be confirmed is also helpful. Since I've never been in this situation before, it's hard for me to know if we're just postponing the inevitable or if we're on an okay track in attempting to pay off the debt.

[Fishy]

Just a quick question before I offer a reply ... how much is the monthly car loan payment?

$242/month at 5.49%. It will be paid off sometime around the end of this year. It was at $3000, but I had some extra money and put $500 more down on it yesterday.

I will also add that although this car loan is nearly paid off, there is the possibility that we will end up needing to replace our other car. Both my husband and I commute, I have a fuel efficient newer car and he has one that gets about 15mpg (1995 Jeep Grand Cherokee with 120k miles). Right now, I think we may just drive it until it's dead because I think the savings in not having a car payment will be more than the savings we'd make in gas, but I need to do some more calculations. However, if/when we do replace it, I'd like to just buy a reliable cheaper used car with a lighter payment.

[nosup4u]

I would definetly hold onto the car. I sell a lot of Jeeps and they are reliable if kept up. I guess you have to see how much you spend in gas every week are you filling up 2 a week? Lets say you spend 150 a week thats 600 a month. then insurance. 90 a month lets say for a total of 690 a month for driving would it be better for you to buy lets just say a Prius insurance would be higher but gas would be lower but cost of car is going to be at least 35 to 40k I think so with your scores you should be albe to get 1 to 3% finacing. But my main point to this response is to keep some kind of cash on hand even if you and your husband only put 20 a week each in an envelope cash is king and you will find that 160 a month will come in handy when your in a pinch cause something needs to get fixed.

[Baddies4Breakfast]

You can do it. No bankruptcy necessary. $77k income is a lot actually for that debt load. Be aggressive and extreme. I made in the $30's last year (new job) and paid more than $30k towards my credit card debt. I understand the emotions and the anxiety and depression, but you can and will do it! As your debts go down and your credit improves, you can take advantage of 0% balance transfer deals, which will take a lot of pressure away.

* Regarding Savings: You need an emergency fund! Shoot for $500 first, then $1000 as the next goal. Can you set up your paycheck to have like $100 (or whatever) direct deposited to savings every paycheck?
* Do either you or hubby have a 401k at work or something similar with a match? Contribute the bare minimum at least to get the match. It's like a guaranteed bonus.
* Keep coming back to CreditBoards for motivation.

Edited by Baddies4Breakfast, 26 February 2012 - 05:06 PM.

[Frank13]

Well, I always encourage people who don't see the light at the end of the tunnel to see a BK attorney for a consultation.

BK may be an option but more likely is it not in your situation. You already know that a large chunk of your debt is not able to be discharged. Really what would make a case for BK (in my opinion) was if you wanted to get out of the condo that you are under water in. If you wanted to get out from under it, BK may be the right choice.

So a consult with an attorney would not be unwise.

HOWEVER ...

I doubt that BK the course of action you will end up taking --

From your estimate of 5-7 years to pay off the credit card debt I am guessing that you are paying down the CC debt with extra payments of $750-$1000 per month. I think what is bothering you the most is the lack of savings or retirement funds. What I am going to recommend is not the absolute best financial move but it may be a good move psychologically.

Take the extra money that you are paying towards CC's over the next 3-5 months and pay off the car loan. That will free up $250/month in cash that you could direct towards an IRA for retirement or savings. Ok, so $3k a year is not that much towards savings/retirement in the short run but it will help alleviate that scared feeling of having no savings and virtually no retirement.

It sounds to me like you have things pretty much under control and I encourage you to hang in there and stay the course. Since you are not living paycheck to paycheck there is light at the end of the tunnel and you are moving towards the light. If you had no money left over or could not make the payments comfortably I would encourage drastic action but unless things change for the worse (job loss, etc.) I think that you are good.

ETA: This post was originally written yesterday but just posted today due to CB's technical difficulties.

Edited by Frank13, 26 February 2012 - 05:18 PM.

[Fishy]

Well, I always encourage people who don't see the light at the end of the tunnel to see a BK attorney for a consultation.

BK may be an option but more likely is it not in your situation. You already know that a large chunk of your debt is not able to be discharged. Really what would make a case for BK (in my opinion) was if you wanted to get out of the condo that you are under water in. If you wanted to get out from under it, BK may be the right choice.

So a consult with an attorney would not be unwise.

HOWEVER ...

I doubt that BK the course of action you will end up taking --

From your estimate of 5-7 years to pay off the credit card debt I am guessing that you are paying down the CC debt with extra payments of $750-$1000 per month. I think what is bothering you the most is the lack of savings or retirement funds. What I am going to recommend is not the absolute best financial move but it may be a good move psychologically.

Take the extra money that you are paying towards CC's over the next 3-5 months and pay off the car loan. That will free up $250/month in cash that you could direct towards an IRA for retirement or savings. Ok, so $3k a year is not that much towards savings/retirement in the short run but it will help alleviate that scared feeling of having no savings and virtually no retirement.

It sounds to me like you have things pretty much under control and I encourage you to hang in there and stay the course. Since you are not living paycheck to paycheck there is light at the end of the tunnel and you are moving towards the light. If you had no money left over or could not make the payments comfortably I would encourage drastic action but unless things change for the worse (job loss, etc.) I think that you are good.

ETA: This post was originally written yesterday but just posted today due to CB's technical difficulties.

Thank you Frank. Your idea of taking the extra payments and putting it toward the car is actually not a bad idea, and something I might consider. I'd just love to get rid of that extra $250 a month and have it freed up for other things.

Also, thank you again to everyone else for your words of encouragement and advice. I might stick around here for awhile ;o)