Make $200k, credit card debt, no savings

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here. I’ll look at my expense breakdown when I get home today. $12k in credit card debt, 90k in student loans, $2000 401k loan, 12k federal taxes. I currently pay $300 a month to the IRS. Rent is $2500.

I think I just don’t know what to tackle first. My thoughts-

1. Get a handle on spending - obviously- eat out less, stop shopping
2. Save maybe 2k for emergencies
3. Debt- how to pay this off? What do I pay more on?

Not eat out less. Don't eat out AT ALL until you understand how much money you are truly spending a month. What is the credit card debt for? You owe 12K in taxes? Adjust your w2.

What do you make monthly after taxes?

[Anonymous]

Anonymous wrote:OP here. I’ll look at my expense breakdown when I get home today. $12k in credit card debt, 90k in student loans, $2000 401k loan, 12k federal taxes. I currently pay $300 a month to the IRS. Rent is $2500.

You have a list of problems here that you should not have at this income--credit card debt, a 401k loan (and one this small, assuming that it wasn't larger and paid down to this, which suggests cash flow problems--you should NEVER be dipping into a 401k for $2k), and tax debt.

I bet $100 that either you or your spouse are highly avoidant of money as a topic and I predict that you are going to be unsure of what you are spending the $1500/week on unless you have recently embarked on an expense tracking campaign.

Am I right?

[Anonymous]

Anonymous wrote:OP: You should be able to pay off $12,000 in credit card debt in 6 to 10 months in your situation.

What is the interest rate on your credit cards ?

$200,000 divided by 12 months = $16,666 per month.

Assume that your take home pay is half (50%) of the $16,666. This equals $8,333 a month in take home pay. Rent/mortgage, utilities, food, and other expenses might leave you with $2,333 a month to pay on your credit card debt. The $12,000 of cc debt should be gone in less than 6 months.

[Anonymous]

Get a side hustle. It will give you more money to direct to your debts and less time to spend (waste) money.

[Anonymous]

Anonymous wrote:Cut out restaurants first

+1

[Anonymous]

OP here-

- credit score is low
- we’ve overspent for decades- sometimes because we made so little
- husband won’t even look at the checkbook or talk about money
- fed taxes are from when our income went up significantly a couple of years ago. I have enough withheld now.
- take home is 11k per month
- zero savings

[Anonymous]

Anonymous wrote:OP here-

- credit score is low
- we’ve overspent for decades- sometimes because we made so little
- husband won’t even look at the checkbook or talk about money
- fed taxes are from when our income went up significantly a couple of years ago. I have enough withheld now.
- take home is 11k per month
- zero savings

If your take home is $11K / month on that salary that means you aren't maxing your retirement contributions either which you absolutely should lbe. This is like a red siren emergency.

[Anonymous]

Anonymous wrote:OP here-

- credit score is low
- we’ve overspent for decades- sometimes because we made so little
- husband won’t even look at the checkbook or talk about money
- fed taxes are from when our income went up significantly a couple of years ago. I have enough withheld now.
- take home is 11k per month
- zero savings

What's his stated explanation for this? I ask because it may influence how you have to go about un-effing this situation.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here-

- credit score is low
- we’ve overspent for decades- sometimes because we made so little
- husband won’t even look at the checkbook or talk about money
- fed taxes are from when our income went up significantly a couple of years ago. I have enough withheld now.
- take home is 11k per month
- zero savings

If your take home is $11K / month on that salary that means you aren't maxing your retirement contributions either which you absolutely should lbe. This is like a red siren emergency.

I miscalculated. It’s more like 9k. I do 6 percent 401 k for my job since my company matches that. Can’t get my husband to do a 401k at his job.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here-

- credit score is low
- we’ve overspent for decades- sometimes because we made so little
- husband won’t even look at the checkbook or talk about money
- fed taxes are from when our income went up significantly a couple of years ago. I have enough withheld now.
- take home is 11k per month
- zero savings

What's his stated explanation for this? I ask because it may influence how you have to go about un-effing this situation.

Just like every issue- silence and grumpiness

[Anonymous]

Divorce while neither of you have any money, it will be simpler and then you can figure out your own finances.

Or, if he's willing to turn all the finances over to you then you can figure this out.

But unwillingness to discuss it or let you handle it means you will never resolve it. It would also make me wonder if he has more debts that you don't know about.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here-

- credit score is low
- we’ve overspent for decades- sometimes because we made so little
- husband won’t even look at the checkbook or talk about money
- fed taxes are from when our income went up significantly a couple of years ago. I have enough withheld now.
- take home is 11k per month
- zero savings

If your take home is $11K / month on that salary that means you aren't maxing your retirement contributions either which you absolutely should lbe. This is like a red siren emergency.

I miscalculated. It’s more like 9k. I do 6 percent 401 k for my job since my company matches that. Can’t get my husband to do a 401k at his job.

$9k is still not bad.

$1500 towards the CC debt and another $1k towards the 401k loan at least

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here-

- credit score is low
- we’ve overspent for decades- sometimes because we made so little
- husband won’t even look at the checkbook or talk about money
- fed taxes are from when our income went up significantly a couple of years ago. I have enough withheld now.
- take home is 11k per month
- zero savings

If your take home is $11K / month on that salary that means you aren't maxing your retirement contributions either which you absolutely should lbe. This is like a red siren emergency.

I miscalculated. It’s more like 9k. I do 6 percent 401 k for my job since my company matches that. Can’t get my husband to do a 401k at his job.

$9k is still not bad.

$1500 towards the CC debt and another $1k towards the 401k loan at least

OP, your debt isn't that bad with your HHI.

What are you spending frivolusly on? clothing, food, entertainment, trips, luxury items, what?

You should be able to pay back the IRS, pay off the cc debt, and the 401k loan within 2 years.
Student loan debt may take a while ... Or it may be forgiven, who knows. That would be my lowest priority, tbh.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here-

- credit score is low
- we’ve overspent for decades- sometimes because we made so little
- husband won’t even look at the checkbook or talk about money
- fed taxes are from when our income went up significantly a couple of years ago. I have enough withheld now.
- take home is 11k per month
- zero savings

If your take home is $11K / month on that salary that means you aren't maxing your retirement contributions either which you absolutely should lbe. This is like a red siren emergency.

I miscalculated. It’s more like 9k. I do 6 percent 401 k for my job since my company matches that. Can’t get my husband to do a 401k at his job.

$9k is still not bad.

$1500 towards the CC debt and another $1k towards the 401k loan at least

OP, your debt isn't that bad with your HHI.

What are you spending frivolusly on? clothing, food, entertainment, trips, luxury items, what?

You should be able to pay back the IRS, pay off the cc debt, and the 401k loan within 2 years.
Student loan debt may take a while ... Or it may be forgiven, who knows. That would be my lowest priority, tbh.

With rent at $2500, no house maintenance costs, and that salary, you should be able to pay off the IRS, the CC and the 401k loan in a year. Maybe even do the 401k loan in February to get a running start. You are not in an unworkably bad situation, but you are going to have to sacrifice to get back out of the hole.

[Anonymous]

What are the interest rates on the credit card, student loan, and 401(k) loans?

Assuming that the credit card rate is the highest, it makes sense to pay the minimum on everything, then pay the credit card down. Possible exception would be that 401(k) loans usually need to be paid off immediately if you lose your job or change jobs. Since that is a (relatively) small amount, it might make sense to pay that off immediately, especially if losing your job is a possibility, or if there is a chance of getting a better-paying job.

Pay the student loans and IRS as agreed, but, unless the interest rates are particularly high, it makes little sense to make either one a priority.

Possible exception: if bankruptcy is a possibility, then do not pay anything toward the credit card debt, as that is the one that would most likely be reduced or discharged.

How old is OP? Minimal savings at age 25 would not be terribly concerning, but minimal savings at 55 would be.