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I read Dave Ramsey's book The Total Money Makeover back in June 2015 and decided it was time for me to get my life together and pay my debt off. I had roughly $52,000 in credit cards, a car loan, a school loan and a line of credit and was making around $40,000 a year. After 4 years and 6 months of busting my ass off working 2 jobs I had finally reached the light at the end of the tunnel and had paid off all my debt in December 2019. I began beefing up my emergency fund (had around $2,500), began investing (had around $1,500 invested), had a credit score above 800, and most importantly I was debt free! Needless to say, it was all short lived because I'm an idiot and got myself back into debt yet again. If there's one word I can use to describe my dumb decisions, that word would be Greed.
Shortly after the stock market crashing in 2020 due to covid we began going on an epic bull run. I was investing/swing trading with my own money and at one point made roughly $7,000 in 2020 within months. I was shocked and surprised at how easy it was to make money in the markets and decided to stupidly take out some loans, as well as do some cash advances on my credit cards and try to get rich overnight. Well of course that didn't happen. Over the next 2 years (2021/2022) the market slaughtered me as I tried to swing and day trade myself into wealth and now, here I am in January 2023 typing this out with an astonishing total debt of $134,593 and a credit score ranging from the high 500s to the low 600s. Here is the breakdown of my stupid tax:
5) Line of Credit = $12,000 ($738 @ 17.24% and $11,262 @ 15.49%)
6) Credit Card 5 = $15,501 @ 0% until 4/24 and then 29.99%
7) Credit Card 6 = $5,359 @ 21.99%
8) Credit Card 7 = $5,239 @ 19.24%
9) Loan 1 = $19,998 @ 9.9%
10) Loan 2 = $17,606 @ 15.99%
11) 401k loan =14,528 @ 1.5%
12) 401k loan 2 =8,068 @ 3.1250%
Total Debt = $134,593
Monthly payments = $2,525 (not including 401k payment)
Monthly interest = $1,324 (not including 401k interest)
I know, I know, I messed up. Messed up bad. I got greedy and it expectedly backfired. It's up there high on the list of the dumbest things I've ever done and I have no one to blame for it but myself. I'm not looking for pity and I whole heartedly welcome the incoming negative comments and insults from everyone. The one thing I'm absolutely NOT doing is declaring bankruptcy. I intend on paying every single penny I owe (plus more with interest) until I'm finally debt free again. My total income is roughly $65,000 with OT. I'm not sure how long it will take me to pay off but I plan on documenting it here with updates every few months or so on how I'm doing. Some of the APRs are ridiculously high on the credit cards so I haven't really decided yet if I'm going to attack the smallest debt first and let the debt snowball get bigger or attack the card with the highest interest rates first. Once I pay some of my debt down, I plan on moving things around with balance transfers to reduce interest rates and hopefully pay my debt off sooner than later.
I welcome all comments, criticisms, as well as support and advice. Here goes nothing. Month 1. Wish me luck!
Well, you've beaten yourself up enough in your initial post I think, so I hope others can spare you the grief. You've looked in the mirror and admitted there's a problem, which puts you in a better position that many who just ignore the problem while continuing the spiral, and I can respect that, as well as your determination not to declare bankruptcy.
You've done it before, you know what the tools are, so get to it! Rice and beans, no restaurants unless you're working there, sell everything you can, so much that the kids think they're next! With your income and a determined effort, you should be able to clear the slate again within 3 years, possibly sooner if you're able to get the income up through your job or a second job.
The lesson here - stay out of debt! No more borrowing, ESPECIALLY investing on borrowed money.
Best of luck, and keep us posted on your progress as you go along!!
But seriously, sorry that happened to you. As the other poster said, it sounds like you beat yourself up enough already so no bother in explaining what you did wrong.
Moving forward, I would pay down the highest interest rate debts first, use the snowball method. You sound highly motivated and prepared to face this challenge head on so let the numbers dictate your paydown decisions. Stay vigilant my friend!
Consider the stock market for long term investments and give up the idea of a quick profit You probably already know that.
I would try a credit union to see if you could get a loan at a better interest rate. Your only real option is to try and reduce the interest rate on your debt.
I would contact the credit card co's and tell them you are over your head in debt and to avoid bankruptcy you would like to get their rate down to 6% and you think you will be able to KEEP ALL YOUR MONTHLY PAYMENTS ON TIME AND pay off the debt.
I would have suggested your 401k for a loan but unfortunately you have already done that. Now for the new problem. If you leave your current job I think you will be required to repay the 401k loan in total or to realize a income taxable distribution.
Let me throw a suggestion out there for when you do settle up and get back on the sane side of the street.
consider taking away your ability to do it again by cancelling some of those cards. You've now done it TWICE. I wish you all the best on cleaning it up again.. But.. Log some time thinking about what you need to do to prevent it happening a THIRD time.
Don't cancel them until you've cleaned everything up, because.. While you're handling all this, you'll be in danger of the 'big emergency' happening. So.. Keep them as a safety valve, just in case. Though, I wouldn't carry them with me.
I wish you the best. I mean, you recognize it.. you're working a plan to take care of it.. Without asking the questions "How can I just not pay this".. But.. Also.. It's probably a fine idea to put some thought into whether you trust yourself enough to have all that credit.
Way back in Ye Olden Days when I was a college student.. around 1991.. I thought things were bad when I got in about $1500 of CC debt.. Got it paid off and I wouldn't carry a card for another 10 years.. When I got to the point where it was really critical to have one for hotels/rental cars/etc. And, to this day.. I won't put something on that card that I wouldn't be willing to pay in cash.. And I pay that sucker off immediately. Half the time, I'm trying to pay it off before it's posted.
I know you said you weren’t going to do it, but you really should consider bankruptcy
An income of $65k is going to leave you with a take home of roughly $4000/month. Maybe a bit more, maybe a bit less depending on deductions.
If I read it correctly, your payments are $2500/month, plus some more to keep up with 401k interest.
Can you live on 1500/month? And take the better part of a decade to pay this off? Then have to start saving again when you have lost close to 20 years of your career savings?
Don’t be so honorable that you sabotage the rest of your life and live in poverty until you die. Reconsider bankruptcy.
I applaud your desire but how can someone making $65k pay $2500 a month in payments. You’re looking at $3k a month just to make a dent in the interest.
Personally I make a very similar income to you and after taxes, health, and 401k contributions I make $3500 a month take home.
BK seems like only option unless you rent a room and eat rice for 10 years.
Before suggesting bankruptcy, shouldn't people first ask if the OP has a career, or may get a job, that requires top secret clearance?
Also, wondering if any of the $134,000 of debt was spent on women and alcohol?
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