Help/Advice on Credit Card and Student Loan Debt (pay, rent, taxes)
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Hello, I'm new to the forum and am hoping you guys could give me some good advice. I graduated from a master's program three years ago with $60,000 debt in student loans. I also have around $6,000 credit card debt.
I've been making around $1,200 a month for the last 5 years. The problem is I have to pay my own rent and utilities on my own (my parents can't help me). I don't think I can continue to defer my loans and am confused on what to do next. Supposedly with income-based and income-sensitive repayment programs the minimum payment could be as low as $0/month. Then there's consolidation and debt settlement.
I have gotten much more aggressive about cutting costs. I have been able to avoid using my credit cards for the last few weeks and am paying a bit more than the minimum payment now. I am seriously considering looking for a second part-time job and use that money only towards paying off my debt. I figure I should do it while I'm still young (30 yrs old) and be much better off in the future. Any advice would be greatly appreciated.
You need to get your income up to a decent level before doing anything else. Not trying to be mean, but $1200 isn't really going to let you do anything with that amount of debt.
What was your masters in and are you working in your field? Getting a masters degree to only earn $1,200 a month sounds like a poor ROI.
Either way, you are where you are. You should get on the Income Based Repayment program if you can, I think that's around 15% of your discretionary income which isn't a huge burden Income-Based Plan | Federal Student Aid
Pay that for 25 years and the rest can be forgiven (again, make sure you qualify) though you'll owe taxes on the forgiven amount at that point.
I'm sure you know the other recommendations, cut everything (car/cell/cable/internet/groceries/going out) to the bare bones, get a second job or get a better paying job. Get a roommate or be someone else's roommate. People have been in bigger holes than you're in before and managed to dig themselves out so it'll take some work but you can certainly do it if you're dedicated enough.
Thanks for the replies. I do need to increase my income and am looking at taking a 2nd job, even if it's in a kitchen or book store. Not trying to undermine my situation but at least I have been getting steady work since I was still in school and my credit rating is still good. But I know need to do something soon about my problem because it's not gonna go away. I messed up and need to own up to it.
What was your masters in and are you working in your field? Getting a masters degree to only earn $1,200 a month sounds like a poor ROI.
Either way, you are where you are. You should get on the Income Based Repayment program if you can, I think that's around 15% of your discretionary income which isn't a huge burden Income-Based Plan | Federal Student Aid
Pay that for 25 years and the rest can be forgiven (again, make sure you qualify) though you'll owe taxes on the forgiven amount at that point.
I'm sure you know the other recommendations, cut everything (car/cell/cable/internet/groceries/going out) to the bare bones, get a second job or get a better paying job. Get a roommate or be someone else's roommate. People have been in bigger holes than you're in before and managed to dig themselves out so it'll take some work but you can certainly do it if you're dedicated enough.
Thank you. I have TWC for the internet (no cable tv), I cook at home, and pay only $8 for Netflix streaming. I also leave the thermostat as high as I can stand.
As others have said, $1200 a month isn't going to cut it. If this is a temporary situation and you anticipate your income going up in the near future you sould be able to get a hardship forebearance on your student loans if your deferment has expired. The difference is that with a forebearance you will be charged interest. Not an ideal situation, but better than having to choose between eating and making the loan payment. I don't think consolidation is an option until you are able to make the payments.
What field do you work in? Some student loans can be forgiven if you take a position that meets certain criteria. For instance, a neighbor who has a teaching degree is looking specifically for a job in a low income school district because her loans will be forgiven if she works in a low-income district for a certain number of years.
Settlement may be an option for the cards but you have to have something to settle with first. They aren't going to reduce the balance and let you continue to make monthly payments on it so you'll have to save up some cash first. If your credit is good and you want to keep it this way I wouldn't go this route, though.
My repayment schedule is supposed to restart this month. I'm going to see if CFI can put me on deferment/forbearance for a bit longer and tell them I am no longer looking for full-time employment but that I'm looking for a 2nd job pronto.
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