topic Re: Desperately need help in Personal Finance

Desperately need help

Anonymous — Sat, 31 Aug 2019 03:35:21 GMT

So I'm 33 and work as a teacher at a private school. I only make 40k a year, and I've been in debt for a while and at this point I just see the writing on the wall that I just can't really make this work anymore. I have 19.5k of credit card debt, basically across 3 credit cards. The first card is the biggest one with about 12k, the 2nd card has about 6.5K on it and I have it at 0% APR for the next 12 months. The third card has about 1200 on it and also has 0% APR for the next 12 months. I recently took advantage of some balance transfer offers which is why you see the 0% on those 2 credit cards. I also have one student loan (federal) for about 20k which is at about 4.5% interest which is locked in.

FYI as for a background on why the credit got so high. In 2012 I did the stupid thing of walking away from another teaching job I had because I was upset I was only getting paid 28K and I was told they couldn't give me a raise. It hurt and I couldn't land a teaching job for like 3-4 years and in that time I wracked up around 13-14k of that credit debt. The rest of the debt came from furniture and some collectibles, that I probably shouldn't have bought that pushed it up to the 19K number. Even so the damage was done after leaving that job and I never really recovered.

Right along I've always looked into getting a loan to consolidate everything (this was before the balance transfers I did recently), but I've decided this is a dead end. With a credit score currently of 683 and a credit card utilization of around 63%, I can't get any loans with good interest rates. Most interest rates come in around 15-18% with one or two maybe being around 12-13%.

I only make about 2k a month after both paychecks. My monthly expenses look something like this ...

rent - $700
(geico) car insurance - $100
national grid (electric) - $75
national grid (heat) - $100
comcast - $50
verizon (phone) - $67
Bank of america cc (1) - $240
Bank of america cc (2) - $25
Citi CC - $100
Medical payments - $75
student loans just kicked in as well after I used up all my deferment time, this bill will be another $188.

And this is not including gas and food.

I've looked into debt relief programs, but to be honest a lot of them sound shady and when you do a few quick number crunches, they aren't even really doing much to negotiate with the banks on the money you owe. All that risk to work with them and in the end most offers I've seen I would still have to account for like 15K of that credit debt.

I'm not sure If I'm missing anything here, but if anyone else has any ideas, I would appreciate it. In terms of career wise, I'm in a tough place. I've kind of had it with teaching. It's just such a lose lose type of job. You work in a private school with good kids and parents, and the job is reasonable and not too stressful but it comes with the burden of low pay. You go over to public school districts and there is high pay but a lot of the students/administrations are beyond stressful. I know too because I've worked in a number of them throughout my ten years of being in education. All of my worst years were in urban public school districts.

This whole thing continues to do a number on me. I have high anxiety and get medicated for it as well as meet with a therapist. At this point I'm really starting to wonder if filing bankruptcy would be the best move. I tried like a bastard to get a better teaching job this summer, but nothing worked out. At this point I'm going to have to try to get some part time job that pays at least semi well. It's not a good feeling to get a part time job that pays $10, not when your already spent from all the hours you have to put in teaching and correcting papers. I feel with bankruptcy it might give me some breathing room from getting the credit off my back so I can at least live normally and start saving a little bit or just start focusing on the my student loans more. I mean even if I work two jobs and somehow pay off all this credit debit within 3 years, it will leave me with no savings. That's why I feel that maybe filing bankruptcy, I can build back up my credit in that time and also possibly have some kind of savings to at least start considering buying a house.

The only real thing I have right now is my 401k which only has 9K in it at the moment. And I can't access that money unless I am separated from my employers, and it's a shame, because even though it would be taxed and penalized 30%, I feel that money could help put a dent and eliminate some of my credit cards.

So there it is. I'm pretty broken and defeated by most of this. It pretty much gives me panic attacks every time I think of it. I just thought I should start reaching out to communities to see if anyone had any good advice or things I could do that would help.

Re: DESPERATELY NEED HELP

Anonymous — Sat, 31 Aug 2019 01:36:01 GMT

First its calm down. $40K is not a bad income infact where I live considered high end. yes I live in the middle of no where and you live inthe midatlantic area with a high cost of living. Several thoughts come to mind 1) is your apartment big enough to get a room mate. I know this not a fun thought but it does cut costs alot 2) I would look for a night, weekend, Chrismas Holiday and summer job. I would hope inthe field of your major but I would look at all the big box stores and fast food, one of members delivered pizza every night and on weekend and I believe he made as much as his day job. It got him out of debt. 15 years ago when dw and I started our current biz I worked from 6 PM to 11 PM and most weekends for a big box store while we were starting our biz so I went straight from day job to big box. 3) During the 2008/2009 crisis our food budget for 6 months was $1 tv dinners every single night It was not fun but it was cheap and left money for other more important thngs like electricity. 4) I would start look for a higher paying school even if it is a public school Yes The kids are worse. I went to a Church School (private school) . One of the highest rated in our state. The headmaster was aware of the rankings and as a result many people fought to get their kids in but also adults fought to teach there . As a result they paid terrible. All the single teachers moonlighted to survive. Best of luck

Re: DESPERATELY NEED HELP

Trudy — Sat, 31 Aug 2019 03:43:54 GMT

Welcome to the forum. Unfortunately I'm not the person to give information regarding your specific situation but I want to commend you as an educator, as hard as it is. You deserve higher pay and much more respect.

Hang in there and if this post doesn't get enough hits, keep trying because there's a lot of knowledgeable people here and confident that someone can help with a game plan. Maybe try some other forums (although it may be moved to a different) but don't give up. Sometimes there are better times and date with more traffic and it will be more visible.

I wish you the best. The only thing that rings for me to add is that high cost of living areas with certain circumstances are difficult to improve your financial situation without more resources, although possible and may be slower recovery. At this stage in your life you may want to think about relocating which sometimes take you away from your comfort zone. But if the situation is dire enough it could be a life saver if you find the right place to live.

I relocated to a state where I knew no one and although a very different situation and I relocated to a MUCH higher cost of living area, it provide more income based on location and my field and ultimately a happier life. Living here now I've made friends who had to leave due to the cost of living and they have landed somewhere with a much lower cost of living and found their happiness. Some have rebounded enough to move back here where they have family and be okay financially after getting out of dire debt.

Good luck to you.

Re: DESPERATELY NEED HELP

Anonymous — Sat, 31 Aug 2019 13:01:02 GMT

I mean in the end, I agree I need to pick up 2nd and maybe even a 3rd job. I did spent most my summer looking for other teaching jobs even public ones, but it didn't go well. So now I'll just have to be looking at part time stuff. If my apartment was big enough I would definitely consider a roommate but there is no room for a 2nd bedrom. Hell even if I moved in with a roommate somewhere else, I feel like it won't make that much difference with how expensive apt rents are.

Re: DESPERATELY NEED HELP

Anonymous — Sat, 31 Aug 2019 13:04:14 GMT

Yea that's one thing I didn't do was really look for jobs outside of MA. I prob should have, I guess I just wanted to stay in the comfort zone a little. It's something I'm going to have to strongly consider. It's unfortunate though because if I just landed a job making 10k more and then had access to my 401k I feel I could turn this around. But I'm on the fence right now with my checking account approaching $0.

Re: Desperately need help

SouthJamaica — Sat, 31 Aug 2019 17:42:35 GMT

IMHO bankruptcy is not necessary

My advice
1 get 2nd job
2 no more borrowing
3 join credit union
4 use snowball method to reduce revolving balances
5 forget about zero interest rate deals, those are traps which have ensnared you

Re: Desperately need help

Jnbmom — Sat, 31 Aug 2019 17:48:16 GMT

I agree with other posters, you can find a way out but it will be a challenge , but doable.

Honestly I wouldn't suggest BK on that amount, yes any debt seems high when you are struggling, but most dont declare for that amount.

Good luck and keep us posted.

Re: Desperately need help

Anonymous — Sat, 31 Aug 2019 19:40:15 GMT

I agee BK is not the best solution. It won't help student loans. Regarding roommates yes the rent for entire unit might be $1,000 but 1/2 is $500 this saves $200 month ie $2400 a year and imo that is significant. Rents are not cheap anywhere. Where i live $700 to $800 will usually get you an older 2 or 3 bedroom house that is very basic not that well cared for but it does allow for roommates.

Re: Desperately need help

Kidcat — Sun, 01 Sep 2019 00:41:20 GMT

Hi OP

You mentioned that you purchased some collectibles. Is there anything that you could sell to get some immediate relief. I've personally sold some things on ebay at different times, and if I put my mind to it and really needed the money I could generate another $500 per month, just from stuff I already have.

If you have previously spent money on nice things, they may be things that someone else would pay for right now. Also it sounds like you are single without kids (just an assumption based on your post). So you "should" be able to fit in a part time 2nd job without infringement on family time.

These things will provide immediately relief which may give you the breathing room to get going on a debt snowball plan.

Good luck

Re: Desperately need help

credit_is_crack — Sun, 01 Sep 2019 03:53:01 GMT

Hi @Hanzo18 -- sorry you're feeling like you're in the pits, it can be a sinking feeling.

With that said, I think we just need to change perspective a bit. Here are the things that stood out to me

You have $19k in debt, 3 cards ($12k, $6.5k and $1k -- 2 @ 0%)
You're paying $365 for credit card payments
You like the comfort of the lower stress private teaching job
You recognize urban schools pay more, but come with stress
Renting space is not an option
You do have the option of a loan between 12% - 18%

My questions regarding tackling debt (which snowballs into everything else you mentioned)

Which of those two cards are the ones sitting at 0% and how much time is left?
For the card with a non 0% APR, is the APR higher than the 18% max offer for your personal loan?
When you applied for the loan did it cover all 3 cards or just the non 0% cards?
If you did move forward with the loan would the overall interest be less than what you're paying on the cards (mainly that 3rd card)?
If you did get the loan, is the payment amount less than what you're paying now ($365/mo)
Are you maxed out on these cards? What's your UTI carrying that $19k?

Your offered interest on the loan weighs heavily on your score, which is being dinged by the higher utilization. Yes, transferring the debt to a loan still leaves the same debt, but it will compound much slower than credit cards would. The impact of the lower card UTI would outweigh the impact of the new loan showing up.

You make payments on the loan and cards, and 6 months down the line (with the higher credit score), you do a little shopping for an even lower loan, slowly chipping away at interest and getting you to your preferred 'good rate'.

I think you're looking for a solution that's going to fix everything now, but you didn't get into this spot all at once. You went thru stages to get into this, and you'll want to take stages to get out of it.

Good luck to you!

Re: Desperately need help

Jnbmom — Sun, 01 Sep 2019 03:26:50 GMT

@credit_is_crack

Very good insight, very detailed . Kudos for taking the time to post this👍👍

Re: Desperately need help

Anonymous — Sun, 01 Sep 2019 11:58:36 GMT

Yea I could sell some of the stuff I bought over the years. If it did sell, maybe 5k. I was thinking of this as a last resort though (which I'm getting closer to every day). But on the flip side, it's kind of ridiculous I haven't had a 2nd job yet in my situation. I ultimately do think that's my main problem. I've been just trying to cruise by so far with just getting by. I should have been more aggressive.

Re: Desperately need help

Anonymous — Sun, 01 Sep 2019 12:09:44 GMT

The card with 6.5k is at 0%APR until next July, and the card with $1200 is 0% until Nov of 2021. And yes, since I opened both of those two cards recently the rates on them are pretty high. Both sitting around 22%-24%. My main card with 12k is at about 14%APR. I have another card that is at 14% APR as well, but that is the card that I took all the balance transferrs from which is why it is empty now.

The original loan I was looking at I believe was for $20K. Mainly looking at places like Lending Club, Marcus, New Egg, Sallie Mae, etc. Those generally come in around that 18% APR. I did have a smaller loan from my main bank TD Bank for 10K at 12% I think it was, but didn't pursue it, as it didn't cover all the costs and at the time I was still hoping for better interest rates. But yea, If I did take one of these loans from the others the interest actually is higher in a lot of cases than that 3rd card I have or when I had most of the debt on 2 cards before I did the balance transfers. Payment amount was very similar. I remember it being somewhere mid three hundreds to four houndred as a high.

Credit card UTI is about 63%. I do have more credit across all of my cards. I've just been pretty strict on not using it anymore. I like your idea on taking out a loan and freeing up the UTI rate if that's what your saying, for the purpose of making my profile better to then get another loan later down the line to replace the first one. To be honest though, I wasn't sure a bank would give a 2nd loan to someone like me if I had one already along with my college debt. If it's possible I do like the idea though, I just thought they would always look at it as high risk.

Re: Desperately need help

Anonymous — Sun, 01 Sep 2019 15:22:12 GMT

A few questions:
1. Are your loans federal? Total balance and loan type?
2. What plan are you on? Have you looked at PSLF?
3. Which type of deferment did you use up?

Re: Desperately need help

credit_is_crack — Sun, 01 Sep 2019 17:45:54 GMT

You already know the things you need to do

"..If it did sell, maybe 5k. I was thinking of this as a last resort though (which I'm getting closer to every day).." - BK is your last resort (and I still don't agree that $19k is worth pulling that lever for). Flag this a 2nd to last resort if you're going to hunt for another job. If it doesn't prove successful, then this is your next step. $5k will buy you some breathing space.

"..I've been just trying to cruise by so far with just getting by. I should have been more aggressive." - you recognized it and let it bleed. Nobody is here to judge what you already did, but keep looking forward. YOU own your destiny.

"..and I did have a smaller loan from my main bank TD Bank for 10K at 12% I think it was, but didn't pursue it, as it didn't cover all the costs" -- it's always preferred to truly consolidate all debt, but if it's not an option, paying two payments (that equal less) than the one you're paying now still makes sense. It's just a nuisance, but you're not chasing convenience. The goal is to reduce your monthly payments and get out of debt.

"..I do have more credit across all of my cards. I've just been pretty strict on not using it anymore." -- keep this up!

"..and freeing up the UTI rate if that's what your saying, for the purpose of making my profile better to then get another loan later down the line to replace the first one.." -- yes, that's exactly what I'm saying

"..loan to someone like me if I had one already along with my college debt" -- the core thing a bank will look at is DTI (how much is coming in vs how much needs to go out), but the math used there is not like a mortgage where they factor in daily expenses like food, gas and the other things you originally listed. They will look at how much all your debts require each month minus your income. In your case CC1, CC2, CC3, CC4 (sounds like theres a 4th ghost card), Student Loans and prospective Personal Loan minus $2,000 (I'm also assuming this is your post tax amount, but they'll use your pre-tax amount). If after all the math is done you still have 30% or more left over, you're generally in a good spot. If your profile shows limited debt on credit cards (which banks fully know compound very quickly and can accelerate a problem), then you're adding points to your application. The overall credit score looks healthier and it lends itself to more of an approval. Keep in mind this is all YMMV - we're only talking about you, let alone the state of the market and how generous/reserved banks are at the time you execute all this. However, if you aim for this setup though then you're on the right path.

We're just discussing manipulating your finances to get you some breathing space. A 2nd job and/or selling some of those collectibles is your immediate fix. If you can't get the 2nd loan, then sell at least half of those collectibles - yes you'll have a few less, but you'll be sane enough to appreciate them.

A little from column A, a little from column B and you'll be a little more stress free.

Go get it!

Re: Desperately need help

Anonymous — Sun, 01 Sep 2019 18:05:12 GMT

Things like getting a second job, selling collectibles, moving in with a roomate and/or potetially moving to aother state are understandably uncomfortable. I'm currently working three jobs and live in an RV to save on rent. It's not easy or pretty. But, it's the avenue that gave me hope for a financially independant future.

So I'm trading in comfort for hope.

I wonder if that perspective might be helpful to you? Sounds like you're in desperate need of hope. It is within your reach, it'll just take time. Hang in there, you got this!

Re: Desperately need help

credit_is_crack — Sun, 01 Sep 2019 18:14:42 GMT

@Batsy — “..trading in comfort for hope..” beautifully worded!

Re: DESPERATELY NEED HELP

CreditInspired — Sun, 01 Sep 2019 18:54:49 GMT

@Anonymous wrote:
I mean in the end, I agree I need to pick up 2nd and maybe even a 3rd job. I did spent most my summer looking for other teaching jobs even public ones, but it didn't go well. So now I'll just have to be looking at part time stuff. If my apartment was big enough I would definitely consider a roommate but there is no room for a 2nd bedrom. Hell even if I moved in with a roommate somewhere else, I feel like it won't make that much difference with how expensive apt rents are.

Hi and welcome to MyFICO

You have gotten good and very supportive advice from everyone here who posted.

So here are my thoughts. I want you to rethink the BR situation. You don’t have to have space for another bedroom. I’m willing to bet there’s another teacher struggling to make ends meet too. A roommate can sleep on a pullout couch in the LR, or the DR can be turned into a BR. If no separate DR, the open area where a table is right now can be used to setup a cot, or a cot can be placed right out in the LR. I want you to think outside of the box. Believe me, your problem has a solution.

So if your school has a bulletin board, put up an ad that you’re looking for a roommate who is also a teacher so you can help each other out. Put an ad on roommates.com. Find that roommate yesterday. This is going to be the biggest influx of income.

Second. Maybe a second job as a security guard would work. The work is nonstressful and will give you the time needed when school is back in session to grade papers, prepare for the next day, etc.

So you’re ok and you’re going to be ok. Stop being hard on yourself and start thinking positively. I hope, ”I’m going to get out of this mess” will be your mantra.

GL2U

Re: Desperately need help

Anonymous — Sun, 01 Sep 2019 22:09:44 GMT

The loans are federal and is a Direct Loan. I actually had 3 months of hardship forbearance left and just put it through because I can't afford to pay them right now or my checking account would be close to $0. This gives me like 3 months to hopefully get a 2nd job and start making more money. I've looked at some of there forgiveness and cancellation problems a little, but I honestly don't think I qualify. The one you said is the public service one, but if right, I think you need to make at least 120 qualifying payments to be considered, which I'm nowhere near that. It also is tough because there are loan forgivess options there for teachers, but unless you basically teach in a low income public school district, then it's not going to be appliable. Another huge dissapointment about teaching... I don't think there are a lot of options for private school forgiveness, at least not from what I read.

And thanks for all the replies everyone, it helps. I agree and I think I know where I stand. I just have to get moving right now if I'm going to get in front of this. Tough thing is one of my options was that I wanted to ask for a raise from my current employer, but seeing as how that ended up in 2012 with my last teaching job I just couldn't risk it. Even with great testing scores and a special honorable mention in the private school organization my school is a part of, I just think I wouldn't have got the raise. I know my private school I work at isn't too lucrative of a school, and I doubt they would be eager to do anything like that. Still, I wish to god I could just find a way to clear out my 401K right now, I swear it would help put a dent and help turn the tables around. I'm even thinking of talking to my principal about it, but I'm wary because I don't want them to know how bad my financial situation is.

Re: Desperately need help

Anonymous — Mon, 02 Sep 2019 18:57:14 GMT

Actually that's not true at all. The loans are direct loans, so no need to consolidate. You've been working in schools; even private schools count. I believe there is a minimum number of hours needed for each month's qualifying payment (30 hours/ week worked?). And if you've made any payments after you graduated they were likely qualifying payments. The count of 120 doesn't need to be all at one time.
As long as you don't consolidate this count will be preserved. Additionally the rules are that the majority of the payments need to be made on an IDR plan but the others can be on a standard repayment plan. What majority is hasn't been defined as far as I've read.
What's confusing is that many people see apply for PSLF and it's not what it actually is. You're applying with a servicer (which will become FedLoan Servicing) to have them keep track of your progress. When you have the requirements, it seem to, they send the actual application and supporting documentation to the government to have it approved. The servicer has no say in the process, ultimately it's up to the gov. (Lack of processing and iversighty are some of the main reasons the Dept of Education is being sued.)
Each year you'll turn in an employment certification form. Have one signed for your servicer's records and keep one original for yourself because servicers loose stuff. The best part is PSLF can be retroactive, so you should apply and get updated with your employment certification forms from past years. Keep copies of everything and make sure to ask your servicer to send you your qualifying payment count at minimum annually.
I know this doesn't help you now, and since you used the hardship deferment these (non-) payments won't count. But it's something imo.
If you have any questions, ask away. 🙂