Reply to Earning Well but Drowning in Debt...how to dig out?

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[quote=Anonymous]I would use the savings to eliminate a good chunk of the credit card debt, as PPs have suggested. Then cut all the extra activities, eating out, vacations (even driving ones) for the next year to pay off the rest of the cc debt. Cut up the credit cards and just use cash for necessities (or your debit card for the gas station). Cover the summer with YMCA camp, grandparents, and parents taking all accrued PTO separately. It's one year, OP--you can do it for one year.

Konmari your house, to make room. Do not move.

That gets us to 2017, no credit card debt (probably adding $1500/month back to cash flow that was going to minimum payments on the cc debt), middle child in aftercare (so a reduction of daycare costs), and car 1 almost paid off. I would add $500/month back to your entertainment budget, but I would continue to take it in cash. If you register online for an activity or something, pay with a debit card, and put that amount of cash back into your account. If you don't spend the whole $500, put it away for vacation. The rest of the additional money ($1000 from credit cards, and extra from daycare savings), I would use to replenish savings. When car 1 is paid off, I would put that money towards savings, earmarked for maintenance/savings for a new car (because even Hondas need to be replaced eventually, and hopefully by then you'll have enough to pay in cash). Same for car 2.

So in 2018, you'll have rebuilt your emergency savings, have zero credit card debt, have two paid-off cars that should be reliable for at least another five years. You'll still have SL and mortgage debt, but a lot of us do at your income, and hopefully they are at low interest rates. Your kids will all be in ES, and they will want to pay little league, or join the band or something, and you'll be able to pay cash for those things. I would focus on paying off SL debt, and when that's gone, redirect the money into college savings for the kids.

I would plan to stay in the house for the long term though. You really don't need a bigger house.

You can do this OP. It's going to involve a little short term pain, and a lot of discipline going forward, but just keep your eye on the yearly goals, and in a few years, you'll be in a much better place.
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