topic Re: In a bind & really bummed out in Credit Cards

In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 00:16:28 GMT

So I never thought this would happen to me; I always thought I was too smart to get myself in credit card debt...but here I am. I feel so depressed and downtrodden that it is hard for me to even get out of bed in the morning. The thing is, I have a good career and have always done a decent job with my personal finances but now I feel like I am trapped and can't get out. Basically what happened is that my girlfriend had a bunch of major medical expenses and she has no insurance, so I helped her out. This went on over the period of about a year, and there shouldn't be any more major expenses going forward, but over that 1-year period I went from $0 in credit card debt to $36K. And when I first took these credit cards out, they all had 0% introductory rates, but now the interest has kicked in, and it is killing me. I am trying to make a budget to pay off all this debt, but with all the interest I am paying, there is hardly any money left over to pay down the balance. I have a $400 per month car lease that I entered into several years ago before all these expenses came up, but I can't get out of that until next April when the lease expires. Plus it is a truck that uses a lot of gas, and I've got a 60 mile round trip commute to work every day. The only place I really have left to cut back is food so I am trying my best to do that. By the way, what do you guys think a family of 2 adults can realistically get their monthly food bill down to? In the past, I put pretty much all my savings into my 401K and was very stupid in not keeping some kind of emergency fund. So I have like $500K in my 401K but I can't access it. And I did something else very stupid. When I saw that I was starting to get into some credit card debt about 10 months ago, I took out a $12K loan against my 401K. I basically repay it to myself through my paycheck, so that is another additional monthly expense I have. I could theoretically borrow up to $250K under my 401K, which I would use to pay off the credit card debt. But the thing is that you can only have one loan outstanding at a time, so I would have to pay off the remaining $9K on my existing loan (which I don't have) before I could take out any additional money. I am only 30 years old so I can't take a regular withdrawal from the 401k. Sorry this post is so long, but can anyone give me some advice? I feel so hopeless and sad right now.

Re: In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 00:29:31 GMT

@Anonymous wrote:
So I never thought this would happen to me; I always thought I was too smart to get myself in credit card debt...but here I am. I feel so depressed and downtrodden that it is hard for me to even get out of bed in the morning. The thing is, I have a good career and have always done a decent job with my personal finances but now I feel like I am trapped and can't get out. Basically what happened is that my girlfriend had a bunch of major medical expenses and she has no insurance, so I helped her out. This went on over the period of about a year, and there shouldn't be any more major expenses going forward, but over that 1-year period I went from $0 in credit card debt to $36K. And when I first took these credit cards out, they all had 0% introductory rates, but now the interest has kicked in, and it is killing me. I am trying to make a budget to pay off all this debt, but with all the interest I am paying, there is hardly any money left over to pay down the balance. I have a $400 per month car lease that I entered into several years ago before all these expenses came up, but I can't get out of that until next April when the lease expires. Plus it is a truck that uses a lot of gas, and I've got a 60 mile round trip commute to work every day. The only place I really have left to cut back is food so I am trying my best to do that. By the way, what do you guys think a family of 2 adults can realistically get their monthly food bill down to? In the past, I put pretty much all my savings into my 401K and was very stupid in not keeping some kind of emergency fund. So I have like $500K in my 401K but I can't access it. And I did something else very stupid. When I saw that I was starting to get into some credit card debt about 10 months ago, I took out a $12K loan against my 401K. I basically repay it to myself through my paycheck, so that is another additional monthly expense I have. I could theoretically borrow up to $250K under my 401K, which I would use to pay off the credit card debt. But the thing is that you can only have one loan outstanding at a time, so I would have to pay off the remaining $9K on my existing loan (which I don't have) before I could take out any additional money. I am only 30 years old so I can't take a regular withdrawal from the 401k. Sorry this post is so long, but can anyone give me some advice? I feel so hopeless and sad right now.

@Anonymous,

Sorry to hear and welcome to MYFICO... if you have that much in 401k have little debt, surely your financial advisor should be able to give you some advice. How does your credit profile look like? Does your G/F have a job?

Lastly, if you have that much 500k in 401k, you shouldn't feel hopeless. There is always a way out...

Re: In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 00:36:31 GMT

Also, these credit cards you speak off can you list them with their starting limits and what is owed? Remember, to get the best answers here you have to be as open as possible...

Re: In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 00:36:52 GMT

Thanks for the reply. I don't have a financial advisor and doubt I could afford one at this point. I used to have hardly any expenses, so I would put like 25% of my paycheck into my 401k. Plus I put all the money into stocks and started building up the balance when the market was at its low point, so I kind of lucked out on that. The only way I could take money out of it at my age is if I qualify for a hardship withdrawal, which I don't. Medical expenses are covered under the hardship withdrawal provision, but only if the expenses were for your medical care of your spouse's. Since this was for my girlfriend, this doesn't qualify.

Re: In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 00:38:49 GMT

My girlfriend doesn't have a job right now due to her medical issues....she is trying to get Medicaid though but hasn't received a response yet. My credit score dropped from like 760 to 680 over the past year as well.

Re: In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 00:45:24 GMT

@Anonymous wrote:
Thanks for the reply. I don't have a financial advisor and doubt I could afford one at this point. I used to have hardly any expenses, so I would put like 25% of my paycheck into my 401k. Plus I put all the money into stocks and started building up the balance when the market was at its low point, so I kind of lucked out on that. The only way I could take money out of it at my age is if I qualify for a hardship withdrawal, which I don't. Medical expenses are covered under the hardship withdrawal provision, but only if the expenses were for your medical care of your spouse's. Since this was for my girlfriend, this doesn't qualify.

What company is your 401k with? Also, your employer should have someone inhouse whom you can contact and talk to regarding your 401k at no extra cost. Also, can you asnwer the other questions if you don't mind? Just trying to figure out a solution..

"A hardship withdrawal is a distribution from a 401(k) plan to be “made on account of an immediate and heavy financial need of the employee, and the amount must be necessary to satisfy the financial need,” according to the IRS.

Now this statement -Medical expenses are covered under the hardship withdrawal provision, but only if the expenses were for your medical care of your spouse's. Since this was for my girlfriend, this doesn't qualify. Aren't the credit card bills in your name? If it is then it is your debt.

Re: In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 00:44:35 GMT

Sorry to hear about the financial woes. Glad that your girlfriend seems to be past her medical issues.

A question, how are your credit scores and what is your utilization ratio? Do you have access to any credit beyond the $36K? How about your girlfriend's financial situation and credit availability?

What are your card balances and what interest rate do you have on each?

Some thoughts:

It sounds like you must have good income with that sizable balance in your 401K, so I'd start with your budget first and see what sort of cash flow you can free up. This can be simple stuff (cutting cable TV, groceries as you noted, etc) or more extreme measures which you shouldn't rule out (move closer to work, SwapALease.com to get out of your lease, etc).
If you can get that $9K loan paid off, an excellent option would be a 401K loan. Of course saving and paying off the 9K is ideal, but even if you had to borrow funds from somewhere and take out a newer, larger loan, it beats paying the CC interest.
Look into balance transfers and see if you can find a lower APR. Or, call your credit card company and let them know you're having trouble paying the interest and want to look into debt repayment options.

In terms of the grocery bill, it's definitely possible to eat cheaply. My fiancee and I personally spend about $400/month for two of us and we could definitely get cheaper if we cut out some of the luxury items we enjoy from time to time. Check out one of my favorite financial bloggers and what he has to say about grocery bills:

http://www.mrmoneymustache.com/2012/03/29/killing-your-1000-grocery-bill/

Re: In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 00:48:00 GMT

@Anonymous wrote:
@Anonymous wrote:
Thanks for the reply. I don't have a financial advisor and doubt I could afford one at this point. I used to have hardly any expenses, so I would put like 25% of my paycheck into my 401k. Plus I put all the money into stocks and started building up the balance when the market was at its low point, so I kind of lucked out on that. The only way I could take money out of it at my age is if I qualify for a hardship withdrawal, which I don't. Medical expenses are covered under the hardship withdrawal provision, but only if the expenses were for your medical care of your spouse's. Since this was for my girlfriend, this doesn't qualify.
What company is your 401k with? Also, your employer should have someone inhouse whom you can contact and talk to regarding your 401k at no extra cost. Also, can you asnwer the other questions if you don't mind? Just trying to figure out a solution..

"A hardship withdrawal is a distribution from a 401(k) plan to be “made on account of an immediate and heavy financial need of the employee, and the amount must be necessary to satisfy the financial need,” according to the IRS.

Now this statement -Medical expenses are covered under the hardship withdrawal provision, but only if the expenses were for your medical care of your spouse's. Since this was for my girlfriend, this doesn't qualify. Aren't the credit card bills in your name? If it is then it is your debt.

Not necessarily. The care has to be for him or his spouse, not paid for by him or his spouse.

Sorry to hear about the financial woes. A question, how are your credit scores and what is your utilization ratio? Do you have access to any credit beyond the $36K?

What are your card balances and what interest rate do you have on each?

Some thoughts:

It sounds like you must have good income with that sizable balance in your 401K, so I'd start with your budget first and see what sort of cash flow you can free up. This can be simple stuff (cutting cable TV, groceries as you noted, etc) or more extreme measures which you shouldn't rule out (move closer to work, SwapALease.com to get out of your lease, etc).
If you can get that $9K loan paid off, an excellent option would be a 401K loan. Of course saving and paying off the 9K is ideal, but even if you had to borrow funds from somewhere and take out a newer, larger loan, it beats paying the CC interest.
Look into balance transfers and see if you can find a lower APR. Or, call your credit card company and let them know you're having trouble paying the interest and want to look into debt repayment options.

http://www.mrmoneymustache.com/2012/03/29/killing-your-1000-grocery-bill/

Re: In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 00:51:08 GMT

Here are my cards:

Chase Freedom Visa: Owe $9,100 against $10K limit

AmEx Costco Executive Card: Owe $7,000 against $9,500 limit

Capital One Platinum Visa: Owe $9,000 against $10K limit

Visa 1-2-3 Kroger Rewards Card: Owe $6K against $6K limit

Fifth Third Bank Platinum Mastercard: Owe $5K against $6K limit.

Re: In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 01:37:21 GMT

@Anonymous wrote:
Here are my cards:

Chase Freedom Visa: Owe $9,100 against $10K limit
AmEx Costco Executive Card: Owe $7,000 against $9,500 limit
Capital One Platinum Visa: Owe $9,000 against $10K limit
Visa 1-2-3 Kroger Rewards Card: Owe $6K against $6K limit
Fifth Third Bank Platinum Mastercard: Owe $5K against $6K limit.

What is your income if you don't have any expenses? 25% of that is going into 401k you said...

Re: In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 00:56:57 GMT

@Anonymous wrote:
Here are my cards:

Chase Freedom Visa: Owe $9,100 against $10K limit
AmEx Costco Executive Card: Owe $7,000 against $9,500 limit
Capital One Platinum Visa: Owe $9,000 against $10K limit
Visa 1-2-3 Kroger Rewards Card: Owe $6K against $6K limit
Fifth Third Bank Platinum Mastercard: Owe $5K against $6K limit.

I know this might not be the ideal response, but maybe you can get another part time job? If it were me in your position, I would look into ways of making some extra cash.

Re: In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 00:57:25 GMT

I think the rules for hardship withdrawal vary by plan. I would rather not say the name of my company bc it is relatively small, and I am kind of embarassed that someone might find out who I am. I already spoke to the 401K representative....I would have to provide documentation of unpaid medical bills in my or my spouse's name in order to qualify. Also, they said even if these bills were for me, I still wouldn't qualify because I have paid them by credit card....therefore, they technically aren't unpaid. And credit card debt is not a qualifying event for a hardship withdrawal.

Re: In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 00:59:15 GMT

@Anonymous wrote:
I think the rules for hardship withdrawal vary by plan. I would rather not say the name of my company bc it is relatively small, and I am kind of embarassed that someone might find out who I am. I already spoke to the 401K representative....I would have to provide documentation of unpaid medical bills in my or my spouse's name in order to qualify. Also, they said even if these bills were for me, I still wouldn't qualify because I have paid them by credit card....therefore, they technically aren't unpaid. And credit card debt is not a qualifying event for a hardship withdrawal.

Don't say the name of your company... We don't need that. What is your income?

Re: In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 01:00:29 GMT

My income is $89K, or maybe a little more depending on my year-end bonus. I was putting 25% into my 401k at one point...now I am putting in 0% because I need every extra cent to pay on this debt.

How do I include someone's question at the top of my reply? Can't figure it out.

Re: In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 01:02:35 GMT

@Anonymous wrote:
My income is $89K, or maybe a little more depending on my year-end bonus. I was putting 25% into my 401k at one point...now I am putting in 0% because I need every extra cent to pay on this debt.

How do I include someone's question at the top of my reply? Can't figure it out.

You said you didn't have any expenses but food.. How much do spend on groceries a month? On average, how much are your bonuses? It is performance based and individual based so is it 5%, 10% or higher? What bonus percentage have you received in the last say 2 years?

Re: In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 01:05:48 GMT

Food definitely isn't my only expense....it is just the only expense left that I have any room left to reduce it. I have rent expense, car insurance, lease payments on my car, cable, utilities, parking at my work, gas, etc. I spend about $600 on food per month for my girlfriend and I.

Re: In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 01:09:11 GMT

Also, my gf has $400 per month in doctor and medication expenses that I pay out of pocket. We plan to get married before the end of the year, so she will be on my insurance starting next year, which will definitely help.

Re: In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 01:12:06 GMT

@Anonymous wrote:
Food definitely isn't my only expense....it is just the only expense left that I have any room left to reduce it. I have rent expense, car insurance, lease payments on my car, cable, utilities, parking at my work, gas, etc. I spend about $600 on food per month for my girlfriend and I.

Ok.. So your monthly gross is roughly $6,846.15 since you are no longer putting 25% towards 401k. My math may be slightly off but just trying to figure out how to help. Have you made the budget?

If the 25% is no longer going towards 401k, put that in a seperate account and aggressively put it towards the debt...

Re: In a bind & really bummed out

JSS3 — Sat, 06 Jun 2015 01:14:25 GMT

You are a VERY good man!

Re: In a bind & really bummed out

Anonymous — Sat, 06 Jun 2015 01:21:18 GMT

@JSS3 wrote:
You are a VERY good man!

Certainly true love..You don't get guys like OP these days..