@Anonymous wrote:
Thanks for the input. One card (13k limit) just increased my limit by 2.2k last week without me asking for it. I don't want to increase my limits though, for fear I will use the limit. It seems counter productive to what I'm trying to accomplish.
One credit card is through my Credit Union. The other is through Elan Financial Services with Busey Bank, a small Illinois-based bank.
Getting out of debt is like losing weight: it takes a lot of hard work to do, and a change in lifestyle and mindset to keep it off.
To get out, you're going to have to make some sacrifices. Those two credit card balances are killing you. If it were me, I would do the following:
1. Find out how much (if at all) you am underwater on the car you paid entirely too much for given my income (you and I have a similar car payment and I make 3-4x what you do - what does that tell you?). If you are NOT underwater on it, great. Trade it in for something that's reasonably reliable and in good condition that costs about $6000 (or around 10% of your gross income), preferably less. It's not your forever car, it's not your 'I'm a baller' car, it's your 'I'm serious about fixing this without going the BK route' car. If you ARE underwater, deduct that from the $6000 and see what you can find for the amount left. If you're more than $3000 or so underwater, you're pretty much stuck with it for now.
2. For your location, the rent seems reasonable, but the phone bill does not. The national average is $71/month for phone, so you can do better. If you have more than the minimum required insurance and you have a clean record, take it down a notch for a while to save a little extra. If you've had some fender benders, maybe keep it.
3. If you go to the gym more than 8 times a month, keep the membership. Otherwise, ditch it.
4. Work with your student loans to get a deferral. They're more apt to do so, though they will likely capitalize interest during that time. It's better than BK, trust me (I've been there).
5. That 8% for retirement? Don't touch it. It's far more valuable than you know. Before you cut back on any withholdings (which you said you can't anyway), cut back on EVERYTHING else before you ever consider cutting back on this.
6. Prepare to tighten the belt of discipline. Set yourself a budget of $800 a month for gas/food/entertainment and stay under it for 3 months. Then drop it to $700/month and make it for 3 months. You'll get used to $700 then you drop it to $650 and so on until you're at the point you simply cannot reduce more and maintain comfortable living. It sounds brutal, but it's not as bad as you think. Most people spend WAY more per month on stuff than they need to and try to live beyond their means.
All the money you've freed up should be turned full throttle towards wiping out the CC balances. Start with the highest interest card and go nuts. This is where you start to see results of your hard work and "dieting" as you watch the pounds melt away. At your debt levels, it may take a couple years. If unexpected surprises like medical bills come at you, pull it out of here.
Once you've cleared the CC balances, bring the student loans back in, if the deferrment didn't already end. Tackle them in a similar but slightly less agressive manner. Why less aggressive? Take $100/month you're throwing at the student loans and throw it into an emergency fund. You've already gone this long without needing that $100/month, so keep on not needing it. Once you have an emergency fund going, take that $100/month and increase your retirement. After that, put it into a rainy day fund - and with that, you have a source to pull from when you do want to take a vacation or buy a nicer car.
Congrats once you lose the weight, but how to keep it off? There's a reason I included your quote above. Before you can ever fix the problem long-term and prevent it from happening again, you MUST change this mindset. All the financial aid in the world won't help you if you're too tempted to go spend again. Learn to keep the weight off.
