Financial dilemma question.

[LDB]

Best course of action is don't do anything. Go to the library and check out "The Total Money Makeover" by Dave Ramsey. Spend the weekend reading cover to cover. Next week make a plan based on what you've read. Then call in on Dave's program and discuss it with him, the problem and your plan. He will give you the best advice. If you follow his plan you'll win.

If you just throw money at it you'll temporarily improve things but time will work against you and do it's best to drag you right back where you started from. A total overhaul is your best bet. Good luck.

[Renegade]

1) Get control of your spending that has resulted in the high credit card. It makes no sense to pay the card down only to run it up a year later.

2) Try to get the interest rate reduced by any means possible. Negotiate with CC company, do a balance xfer, or get a loan, or second mortgage. It is the interest that kills most people on credit cards. If you can get a low rate, then make payment plan to pay it off over that fixed time of the loan.

3) I would not lump sum the paying off the card. It is risky to take that much out. Do it in 4-5 installments, hence if something unforeseen happens, you still have some money.

[militarymoron]

Your credit card debt IS your emergency. Pay it off with your emergency fund. If you have a REAL life threatening emergency (other than your credit card debt), you can use the credit card.
Stop using the credit card. Period. That's what Dave Ramsey is going to say. Check out his blog. https://www.daveramsey.com/blog/the-...edit-card-debt
Buy only what you really need. Nothing new for the house. No booze or non-essentials/luxuries. Swallow that pride until you're out of the credit card debt situation.

[Coal Dragger]

As noted, get control of your spending.

Pay off the card(s) as quickly as possible in larger installments from income and savings so you do have some cushion left over.

Now for the brass tacks....

You need to seriously consider finding a new job. If your union negotiating team did such a poor job with your current contract that you went backwards, it’s most likely time to ditch that job. If your employer cares so little about all of you and doesn’t value your time, then you should let them know what you think of them and find something better.

This may involve relocating. Probably will in fact. So I’d put your house on the market and sell it. It’s not a house for you right now, it’s a prison keeping you chained to a geographical location.

[kwelz]

I can say I have been there. In fact I posted about my troubles a few years back right here on the forum.

And first let me say that this too shall pass. Keep your head up and fight through it! As hard as these situations are we can always get out of them.


As to your specific question, I will repeat what others have said. Pay down the Credit Cards above all else. If you don't they will quickly spiral out of control and you will be throwing money away in interest.

After that cut back on everything you can. Slower internet, worse phone plan, get rid of Cable

Look at every single bill and expense you have. It is amazing how quickly the small things add up. $5 or $10 here and there quickly turns into $100 or $200 or more per month.

[Circle_10]

Luckily the credit card debt was primarily racked up buying non-neccessity items and I cover my day to day living expenses (gas, food, phone) via my checking account, so while tightening my belt is a given, I'm not going to be forced into a situation where I'm going to have to live like a pauper. I just need to exercise some real restraint.
Essentially what happened is I pay most of my essential expenses outright but was using the credit card to replace the formerly disposable part of my income that I lost following the pay cut and after ten years of living fairly high on the hog and basically being able to buy whatever I wanted, whenever I wanted, it was hard to suddenly start living like someone with a reduced income and a mortgage (especially because both these things happened within a month of each other).
I'm not really in a position where I'm going to lose my house, or where I have to start selling guns to pay the bills, I just need to stop buying so much "stuff", which is admittedly easier said than done.
This whole problem stems not from being unable to cover my cost of living but trying to live beyond my means, which, in a way, makes me feel better. Because once I address the debt and force myself to cut back on the luxury items, I'll probably be okay

Regarding the ineptitude of my union actually managing to negotiate lower wages for us, yes it was a complete atrocity. Our negotiators completely rolled over. We also get paid straight time for working holidays now too. I already loathed my job back when I was getting paid more, so you can imagine how I feel about it now. But the fact is, I'm probably going to hate any job I have, and even post pay cut, this job is probably the best paying one I'm likely to get with my pretty limited work and educational background. And honestly I really like my house and living where I do so selling the house and going elsewhere is really an utter last resort.

[HMM]

And after getting one of the Dave Ramsey books, start listening to his pod casts as well. That'll help you keep on track until you get ahead. You can dig yourself out of the hole, it'll just take a while. We are cash only with some use of a debit card (mainly fuel purchases). Only CC I have is my company card for business travel.

I also have a separate account that pays all the monthly bills, I put just a little more than the average of all my reoccurring bills. Everything is auto deducted so I never have to right a check. Plus it's liberating not having to worry if there is money in the account or wondering if i need to wait to buy something before I pay a bill. Our walking around account covers gas and anything else we decide to buy, mostly amazon prime junk...lol

[RetroRevolver77]

I was a securities licensed financial adviser and asset manager for over a decade. What I'm going to say is pretty much common sense and doesn't require a degree in Finance. Now granted I can't give you specific advice nor can it be misconstrued as replacement for hiring an financial adviser. Most advisers won't talk to you unless you are investing but a fee based planner will take your case. I wouldn't talk to anyone that isn't running some type of planning software to help you visualize your goals, be it Profiles Professional or something along those lines.

I would look at refinancing the mortgage to reduce your monthly overhead, consolidating debt balances to lower interest rate cards, then using the difference to focus paying off as much debt as possible per month. If you cannot re-finance the house then perhaps look at selling it and moving into one that fits your income level. You cannot however go below at least four to six months of savings, ever- otherwise you risk foreclosure should anything happen. Finally, put together a budget and cut all the luxuries out of your monthly expenditures. If that means eating cheap food for a year and no longer going out then so be it but your biggest concern isn't so much the credit card debt as it is neglecting your retirement. Counting on a pension isn't retirement planning as most pensions aren't doing well these days anyway and might not be there in the long run. Not to mention most pension plans COLA's aren't even keeping pace with inflation as most are factored at simple interest rather than compounding interest.

[Circle_10]

I was a securities licensed financial adviser and asset manager for over a decade. What I'm going to say is pretty much common sense and doesn't require a degree in Finance. Now granted I can't give you specific advice nor can it be misconstrued as replacement for hiring an financial adviser. Most advisers won't talk to you unless you are investing but a fee based planner will take your case. I wouldn't talk to anyone that isn't running some type of planning software to help you visualize your goals, be it Profiles Professional or something along those lines.

I suppose it couldn't hurt to talk to someone who specializes in this, maybe not necessarily for this specific CC debt issue per se, as I think in the short term I'm going to end up paying down at least a chunk of that debt via a lump sum, but my retirement planning and overall money saving could probably use some help. My job is fairly secure, I have enough seniority that I'm pretty much immune to a department layoff. The biggest risk might be in 2020 if the company tries to replace us all with contractors, but for various reasons it's not likely they will do that, although it is possible they'll try and gut us again like they did in 2016.
For someone who hates his job to the degree I do, the notion of being unable to retire for financial reasons and stuck working until well into old age like some of my co-workers is kind of a nightmare scenario.

I guess this goes beyond a simple credit card debt issue for me.

[Bubba FAL]

Yeah I've heard negotiating debt forgiveness can harm your credit score as well, last I knew I still had good credit as I haven't been delinquent on any payments. They are just getting harder to make. I'd like to get out of this with my credit score mostly intact.

Yeah, it depends on where you start from. In our case, it didn't drop as much as expected. we went from pristine to the high side of good. 7-8 years later, we're not that far off from where we were.

We tried negotiating with the cc companies, but as long as we were making payments, they pretty much blew us off. Missed one minimum payment, the APR skyrocketed. They dragged negotiations out while interest accrued at a staggering rate. Basically, the amount that was forgiven was the interest that accrued during negotiations. Would have been better had we simply taken the 401k money and paid them off to start with. Yeah, these shylocks are not your friends.