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scarglitter · 07-30-2006, 08:30 AM

Hi NoSoup,
Thanks for offering your advice.

Would you mind assessing my current situation, and offering any advice regarding getting out of debt?

I am 22 years old, my annual income is roughly $30,000. I have almost no savings, and am contributing a matched 5% of pretax income to my company's 401K plan.

1) Student loans: 18,000 in consolidated student loans at 4.75% fixed interest.

2) Auto loan: $19,500 at 5% interest over 60 months (about 54 months remaining @ $367.30/mnth)

3) Health financing: Due to poor dental health, I am financing braces ($6300 at 10% interest over 60 months). I also need to finance extractions/other dental care, probably charging up to $1000 on my one major credit card (special 4.5% offer for the life of the debt).

4) Credit cards: I have one major credit card ($2300 limit, $700 used, 15% interest), 3 retail store credit cards ($3000 total, no balance on any). I just requested an increase on the major credit card so that my debt ratio will not be too high with the extraction/dental maintenance debt.

5) Miscellaneous expenses: Gym membership ($35), cell phone ($55). Car insurance ($330 every 3 months). No rent, utilities, etc.

I have mostly stopped eating out and buying lattes (or going out for fun for that matter), and have been living off peanut butter and jelly sandwiches, eggs and tortillas, and some other cheap stuff (lots of fruits and veggies). I do not spend much money, just on the necessities (and the occasional indulgence - like a book, sushi or shoes). While the gym membership is probably something that can be cut out, I would prefer not. It has become an important part of my daily regime, and is my opportunity to go out, release tension, and be healthy. When I can, I pay my bills twice a month.

Over the past couple of years, some bad decisions were made. For example, my old car started to fall apart, and I panicked and purchased a new car (I went with the '06 Honda Civic, which is very reasonable and reliable, but now it is clear I should have looked for a used car instead

). I was able to pay down most of my credit debt, but it is still there and about to become greater due to the braces. I guess where I am right now (income wise) I feel okay paying off this debt as soon as possible, but I worry about what might happen (what if I lose my job, etc...). I would like to pay everything off as soon as possible so these fears will not be so invasive. Because of this way of thinking, there is nothing in my savings account.

Looking at this situation, what are your initial impressions?

Sometimes I feel like if anything else comes along (i.e., unexpected costly events

), I will drown. Other times I feel like everything will be okay as long as I continue pay these items down as fast as possible. Please let me know what you think.

Thanks for your time!!

07-30-2006, 08:30 AM	#323 (permalink)
scarglitter Upright	Hi NoSoup, Thanks for offering your advice. Would you mind assessing my current situation, and offering any advice regarding getting out of debt? I am 22 years old, my annual income is roughly $30,000. I have almost no savings, and am contributing a matched 5% of pretax income to my company's 401K plan. 1) Student loans: 18,000 in consolidated student loans at 4.75% fixed interest. 2) Auto loan: $19,500 at 5% interest over 60 months (about 54 months remaining @ $367.30/mnth) 3) Health financing: Due to poor dental health, I am financing braces ($6300 at 10% interest over 60 months). I also need to finance extractions/other dental care, probably charging up to $1000 on my one major credit card (special 4.5% offer for the life of the debt). 4) Credit cards: I have one major credit card ($2300 limit, $700 used, 15% interest), 3 retail store credit cards ($3000 total, no balance on any). I just requested an increase on the major credit card so that my debt ratio will not be too high with the extraction/dental maintenance debt. 5) Miscellaneous expenses: Gym membership ($35), cell phone ($55). Car insurance ($330 every 3 months). No rent, utilities, etc. I have mostly stopped eating out and buying lattes (or going out for fun for that matter), and have been living off peanut butter and jelly sandwiches, eggs and tortillas, and some other cheap stuff (lots of fruits and veggies). I do not spend much money, just on the necessities (and the occasional indulgence - like a book, sushi or shoes). While the gym membership is probably something that can be cut out, I would prefer not. It has become an important part of my daily regime, and is my opportunity to go out, release tension, and be healthy. When I can, I pay my bills twice a month. Over the past couple of years, some bad decisions were made. For example, my old car started to fall apart, and I panicked and purchased a new car (I went with the '06 Honda Civic, which is very reasonable and reliable, but now it is clear I should have looked for a used car instead ). I was able to pay down most of my credit debt, but it is still there and about to become greater due to the braces. I guess where I am right now (income wise) I feel okay paying off this debt as soon as possible, but I worry about what might happen (what if I lose my job, etc...). I would like to pay everything off as soon as possible so these fears will not be so invasive. Because of this way of thinking, there is nothing in my savings account. Looking at this situation, what are your initial impressions? Sometimes I feel like if anything else comes along (i.e., unexpected costly events ), I will drown. Other times I feel like everything will be okay as long as I continue pay these items down as fast as possible. Please let me know what you think. Thanks for your time!!