High Debt and Having Trouble finding Solutions

[superkick36]

Hello, I want to start off by saying I looked through other threads for similar situations and wasn't able to find any that were close to mine. I have been scouring the internet for the past few months since graduation, trying to get myself sorted out here. While in school, I made some seriously poor financial decisions with the attitude of "I'll be able to pay it off later" which, obviously, was an awful mindset. I spent nearly seven years in school, between community college and a private university. That amount of time was enough to set me back. Between student loans and some of the credit card debt I put together, I dug myself a hole. My car loan is a whole different story as well. I purchased a car thinking it cost me less monthly than the one I was trading in, but I miscalculated my gas and had a bad misquote by my insurance. Now, I'm stuck with the car since I owe more than it's worth. I looked into a serious down-grade, but the issue there is the maintenance costs.

The good news is that my credit score & history are pretty good, at least until recently. I also have a couple of people who can cosign on any refinancing or consolidations to help me get a good interest rate.

To give you an idea of what I'm looking at right now, here are my current debt summaries:

1. Student Loans: $90,000 total ($35,000 federal, $55,000 private)
2. Credit Cards/store charge: $5,000
3. Car loan payment: $450 per month (includes gap coverage & extended warranty plan)

Here are some other details as well:

1. Annual income: Roughly $36,000 (~$24,000 after deductions, bonus & possible tax return not included)
2. Monthly rent/utilities: $1000 (includes gas,water, electric, trash, etc)
3. Typical fuel cost per month: ~$150
4. 6 month car insurance cost: $790

Obviously, there's food and other costs as well. So, I have crunched the numbers. Right now, there is absolutely NO WAY I can afford to live the way I am. Here is what I have done so far to try and get on the right track:

1. Start finding more affordable housing (my lease isn't up until March though)
2. Applied for Federal loan consolidation & repayment plan (repayments scheduled to start end of Dec)
3. Researching options for Private loans (repayment started in October, CANNOT AFFORD)
4. Applied & looked into various consolidation loans
5. Applied for better paying jobs

There is a lot more that goes into this. I've put together a budget analysis and I'm just stuck. I looked into consolidation of loans, but have yet to hear back from hardly any (legitimate) loan companies. So, where do I go from here? I am going to be calling both my federal and private lenders to see if I can push off my repayment for a little while, especially until I can find a new place to live (and/or a roommate).

Absolutely any advice would be greatly appreciated!!!

Thank you so much!

[disneysteve]

Welcome.

I think you've taken some good steps so far. Clearly, the biggest issue is you aren't earning nearly enough. In addition to applying for higher paying jobs, you should also be looking for a second job for right now to boost your income. Work nights. Work weekends. Do whatever you can do to make more money.

As for the loans, do any of them offer income-based repayment? I think the federal ones should.

Private loans are bad news all around because the interest rate can go up to whatever they want it to so you should definitely focus any and all extra payments on those first.

I addition to lower housing costs, really tighten the belt on every aspect of spending. Cancel cable TV. Don't eat out. No vacations. No unneccesary spending until you at least put a good dent in your debt load.

One last warning. Forget about having someone cosign for any new loans. Don't put anyone in the position of being 100% responsible for your debt. You miss one payment or make one late payment and it messes up that persons' credit score. Fail to pay the debt and that person will be on the hook for the loan. Don't even consider doing that to someone else.

[Petunia 100]

Is having a car a necessity? Would it perhaps be possible to move close to work, or on a bus route?

How upside down are you on your car? If you can sell the car for a few thousand less than you owe, you could borrow a bit on a credit card to make up the shortfall. That gets you out from under the car payment, the gas, the insurance, and the maintenance. That is a big chunk of money every month which you could then use towards eliminating debt.

What sort of interest rate are you paying on that 5k of credit card debt? Chase Slate currently is offering 0% for 15 months, with no balance transfer fees.

[Weird Tolkienish Figure]

Hello, I want to start off by saying I looked through other threads for similar situations and wasn't able to find any that were close to mine. I have been scouring the internet for the past few months since graduation, trying to get myself sorted out here. While in school, I made some seriously poor financial decisions with the attitude of "I'll be able to pay it off later" which, obviously, was an awful mindset. I spent nearly seven years in school, between community college and a private university. That amount of time was enough to set me back. Between student loans and some of the credit card debt I put together, I dug myself a hole. My car loan is a whole different story as well. I purchased a car thinking it cost me less monthly than the one I was trading in, but I miscalculated my gas and had a bad misquote by my insurance. Now, I'm stuck with the car since I owe more than it's worth. I looked into a serious down-grade, but the issue there is the maintenance costs.

The good news is that my credit score & history are pretty good, at least until recently. I also have a couple of people who can cosign on any refinancing or consolidations to help me get a good interest rate.

To give you an idea of what I'm looking at right now, here are my current debt summaries:

1. Student Loans: $90,000 total ($35,000 federal, $55,000 private)
2. Credit Cards/store charge: $5,000
3. Car loan payment: $450 per month (includes gap coverage & extended warranty plan)

Here are some other details as well:

1. Annual income: Roughly $36,000 (~$24,000 after deductions, bonus & possible tax return not included)
2. Monthly rent/utilities: $1000 (includes gas,water, electric, trash, etc)
3. Typical fuel cost per month: ~$150
4. 6 month car insurance cost: $790

Obviously, there's food and other costs as well. So, I have crunched the numbers. Right now, there is absolutely NO WAY I can afford to live the way I am. Here is what I have done so far to try and get on the right track:

1. Start finding more affordable housing (my lease isn't up until March though)
2. Applied for Federal loan consolidation & repayment plan (repayments scheduled to start end of Dec)
3. Researching options for Private loans (repayment started in October, CANNOT AFFORD)
4. Applied & looked into various consolidation loans
5. Applied for better paying jobs

There is a lot more that goes into this. I've put together a budget analysis and I'm just stuck. I looked into consolidation of loans, but have yet to hear back from hardly any (legitimate) loan companies. So, where do I go from here? I am going to be calling both my federal and private lenders to see if I can push off my repayment for a little while, especially until I can find a new place to live (and/or a roommate).

Absolutely any advice would be greatly appreciated!!!

Thank you so much!

What are the interest rates for all your debts?

Some ideas:

See if you can qualify for a no-APR credit card and transfer CC debt to there and pay it down first.

Roll federal loans into an IBR/PAYE plan (sounds like you might be doing this already).

Sell car, buy a beater with cash, and find a really good mechanic and get AAA with long distance towing. Do your own vehicle maintenance (you will like this after some initial skittishness, trust me).

Private loans are tricky, see if they will work with you on these? They should be illegal for anyone to take out to be honest.

Can you move back in with the 'rents? Get a roommate?

Higher paying job.


To me, step 1 is listing the interest rates for all your debt. My guess is that paying down the CC first will help you the most financially, usually CC is double digit interest rates.

[TheKayla]

I think the biggest thing you can go right now to stay afloat is to find more income -- a second job, donate plasma/blood, sell belonging you don't use or need, odd jobs, temp jobs, etc. Then, be as frugal as possible like DisneySteve mentioned -- use coupons, cut cable, turn off the lights, drive less, fix things before buying new, don't buy things you don't need at this point. In the meantime, keep looking for a higher paying professional job. If you can keep a second job after finding a higher paying main job, all the better.

Now, regardless of the type of debt, list every single account out and its amount and interest rate. Try your best to pay more on debts that have the highest amount and interest rate. If you're struggling to do this, try to focus on the smallest debts first and paying a few individual debts off to build yourself some breathing room in your budget. (Look up Dave Ramsey's Debt Snowball, it's mathematically backwards in the long run, but can stop you from putting off paying on your debts or not being able to at all in the beginning.)

I would strongly suggest trying not to defer your loans any longer -- the problem only grows with interest, then you have a bigger problem to deal with. (Still don't fall into the trap 'I'll have more money later') Do it as an absolute last resort -- after you've become as frugal as possible and increased your income as much as possible and if you still can't make ends meet.