Case Study - pay off debt or save for retirement?

[Barton20]

This was already posted in general discussion until a poster kindly directed me here.

Life situation: Married filing jointly. No kids, no other dependents

Gross salary: 185K for me and 30K for wife

Pre-tax deduction: $300/month for health/vision/dental for both of us

Other income: None

Total income after taxes: Just started this job with huge salary bump, so guessing 115 - 120K, given first two paychecks of just under 10K/month

Monthly expenses:
Rent: $3200/month (high cost of living area)
Utilities (includes cell phones $75 each, internet and cable $154.00, water and sewer $100, electric $75): $500/month
Groceries: $800/month (seems to be average for my area, per my research)
Gas: $40/month
Health expenses: Good insurance through work so 10/month for script for wife and 10/month for me
Credit cards: $2430.84 minimum payments
Car insurance: $60/month (no car loan; paid off)
Commuter train: $200/month
Student loan: $500/month
Life and disability insurance: $300/month

Assets: Cars about $7K each. Savings of about $12K

Liabilities:
Discover credit card -- $20,388.65    $400/month   Interest: 16.49%

Chase credit -- $6395.53    $152/month   Interest 16.49%

American Express -- $13,780.94   $362.98/month     Interest 24.24%

Citibank -- $9311.72   $246.16/month   Interest 19.49%

Chase -- $2379.56   $52/month    Interest 13.99%

Chase -- $6179.10    $146/month   Interest 17.99%

Discover -- $6639.07   $133/month  Interest 19.24%

Discover -- $10,536    $210/month  Interest 13.24%

Citibank -- $23,357.05   $606/month  Interest 19.74%

Student loans -- $30,560   $545/month   Interest 6%

This is our combined debt. Some of the CC payments are what we pay most months versus minimum due, but I did calculate the minimum due above which is about $2400/month.

Plan for future:
Not planning to have kids. Wife on birth control
Want to buy a house at some point, but in no hurry
I hope to retire at age 70 due to late start

My question:
I'm 42 yo. Wife is 43 yo. We have around 50K in retirement. I want to pay off the debt like there's no tomorrow because of all that interest while my wife wants to pay off the debt while also putting something away for retirement. I think retirement should wait until we're debt-free. But I'm also concerned that the debt will take a long time to pay off and we're already in our 40s.

Any suggestions?

I've edited the post to account for questions asked. In terms of rent, we're not happy with where we live. For the cost, we get some stuff, but not worth the cost I think. We have a fitness center (so no gym membership), pool, theater, 2-bedroom apt that's 1100 sq ft., 24 hr concierge, free dry cleaning. We moved in about 2 months ago (14 mth lease) so stuck here for the next yr. The train to work is only 20 min but cost is $200/mth.

[BECABECA]

Welcome to the forum!

Does your company offer any 401k match? If so, you want to contribute enough to get the match, even before paying off those high rate credit cards.
(here’s the link to the investment order thread for more info on why):
https://forum.mrmoneymustache.com/investor-alley/investment-order/

Next, you’ll want to order those credit cards by the highest interest rate and apply all your extra funds to the highest one until it’s paid off, then the next highest, etc. until the last one is nuked.

What interest rate is your student loan? I assume it’s lower than your best credit card interest rate.

Once your credit cards are all paid off, then you’ll likely want to up your 401k contribution to the maximum.

You can likely find some more money in your budget by shopping around for lower cost cell phone plans, maybe consider cutting cable in favor of a streaming service. How much do you pay for your cell phone plan?

And, once you’ve got your questions answered in this case study, stay motivated by joining the race to positive net worth thread:
https://forum.mrmoneymustache.com/throw-down-the-gauntlet/race-to-positive-net-worth/

[Dee18]

Congratulations on your income increase!  Whether you pay off all debt first or split it with saving for retirement, you can improve your situation a lot by cutting expenses.  It doesn’t matter what “average” is for where you live.  You are essentially borrowing money at 26% to watch cable and to spend about double what an MMM couple in a high cost city would on groceries.  And I’m guessing the cell phone charges are high to reach $500/month for utilities.

[hawksnest]

You might note that this is my very first post, but here goes random internet advice #1.

You need to do both. Save for retirement and pay down the debt. At the same time. Even gigantic credit card debt is temporary debt (well, as temporary as you let it be), but your retirement account needs to be a slow-and-steady, long-term endeavor. So start now; contribute the max per month to your 401(k). It's about $1600/month. All other available funds go to the credit cards. Do this until the credit card debt is gone.

At your income level, you should be able to do this without too much strain. It might take a while, but you can do it! Once the credit card debt is gone, you can increase your wife's 401(k) contributions to the max, even if that's a huge percentage of her income. Then you'll be socking away almost $40,000 a year.

[Gremlin]

Barton20, I'm going to first ask about what ISN'T there...

Have you accounted for car expenses (gas, maintenance) in Utilities or is it in addition to what's here?
Any out of pocket medical expenses?  Is the cost of birth control already included here?
Any "play money" for you and your spouse? Personal care, gym memberships, booze etc?
Donations, charities, tithing?

Is it possible to split out your Utilities into the component parts?  That's a lot in total and there's probably a good amount of fat that can be cut.  It's difficult to know where without more granular detail.

Also, $3,200 seems like a lot at first glance for rent for a couple (even in a HCOL location), especially when your commuting costs imply you're not right near work.  What do you get for your money in this location?

On the upside, none of this seems like an insurmountable problem if you are willing to control your finances instead of letting your finances control you...

[Fru-Gal]

How much life insurance do you get for $300 a month? That seems like a whole lot. You should get term insurance (if any at all -- you don't have kids). At your salary, I'd assume your benefits include life insurance for you and your spouse. You don't have a mortgage either, so again, what is the life insurance for?

If it were me I'd eliminate the life insurance stat. The point of it is not (IMHO) what you see in the movies and on Dateline, to make someone a future millionaire when you die or they push you off a cliff. It's for covering the cost of something you were paying for in life, such as raising your kids or paying your mortgage. I don't think anything else should be covered with life insurance. Same for disability.

[Barton20]

Thanks for all the feedback guys. I've edited my original post to answer some of the things I had left out.

To answer the question by @Fru-Gal, that much gets me 1.5 million. I have a chronic health problem that combined with my age puts me in a higher risk bracket. I searched everywhere for cheaper, but couldn't find any with my health issue. It is a 30 year term policy I opened last year. I get an additional 500K through work to make it an even 2 million.

As to why I need life insurance is for two reasons: (1) because my wife makes so little money. If I die before our debt is paid off, she'd be stuck paying all that down while making 30K a year before taxes. Same with the apartment. She couldn't afford it and would need to move out almost immediately once she goes through our savings since we don't have that much saved up. Same if we bought a house which we would like to do eventually. Once we have some personal wealth, I will stop worrying about her, but for now, I have to plan for her. (2) I have a brother who is disabled. My parents support him now, but he needs lifelong care since he can't work and given my parents don't make much, I don't think they've been able to save up a lot for him. Again once I have some personal wealth, I'll stop worrying about him but if I die tomorrow, I want to know there's some money for him.

[Aegishjalmur]

Assuming $115K net income=$9583 per month in income.
Total monthly expenses listed=$7991 per month.
=$1592 per month in the black per month.


I suggest a four step plan:

1. First things first, where can you trim.
a. Cut cable. You can watch online for free for most things.
b. Switch your phones to a cheaper cost plan like Ting(they are a sprint reseller and both DW and I used for years and they are great).


2. Then, if you have a 401K matching, raise your contribution to that level. 401K match is free money and well you think it might reduce your income, the amount it save you on taxes will actually offset a good portion, so your paycheck net will remain at a similiar amount.

3. Attack the debts. With that many CC's at that interest rate, the minimum payments are beating you up and stealing your lunch money.
a. Take the $1592 per month extra I noted above, plus any extra you can get by cutting expenses and throw at the CC's with the highest interest rates. Take out the Amex. At that balance, it will take 9 months. Then, take the $1954(what you were paying on the Amex plus the $1592) and throw that at the next highest interest rate cc(that citibank- which will take 12 months at the $1954), but once gone gives you $2500!!! to throw at the next card. Lather, rinse, repeat. Each card you pay off gives you a bigger shovel to work with to pay off the rest. It sounds daunting but even if you don't reduce expenses at all, get no bonuses/ot/raises in two years you have cut your debts by $968 per month. That's a HUGE amount to take off your shoulders.
a.2. Once  cc is paid off, lock it  up in a safe, freeze it in an iceblock in the freezer-JUST DO NOT USE IT.
b. You get a bonus at work? Throw all that extra at the next cc. You get a raise? Increase the amount you are tossing at the cc's
c. Given those high interest rates, can you get a personal bank loan to pay off a couple and consolidate the debts into fewer payments? I don't like suggesting new debt but your interest rates are ugly.

4. Once the debts are paid off, or just paid down to a more manageable level, start racheting up your 401K contributions. It will reduce your taxes paid out.


What is nice is without that debt, you could really afford to take a lower paying job in a lower cost of living area. you don't have to but it gives you the freedom to do that. Or, if you want to stay put, you can throw the extra money above and beyond the 401 K into taxable accounts. Given you are worried about taking care of your wife if something happens to you(which I applaud), I could understand doing that first.

What's nice about throwing all your 'Extra' income(raises/bonus/ot) at the debt is you don't get used to spending/living at that higher level. Google 'Hedonistic Adaptation', people get used to a certain level of income, so have a hard time adjusting to lower levels if they have to change jobs.

You are in the position where with some focus, you can be debt free and able to buy a house.

I would also suggest reading some of the other case studies on here so you can see what others are dealing with and hear multiple suggestions from other posters on how to address it.

[Gremlin]

Okay, here comes the first face punch.

A couple of hours ago in your first post you listed your expenses as $5k a month ($4,500 on rent, utilities, groceries plus $300 on life insurance plus $200 commuting costs).  On a $10k+ take home pay, that sounds like everything is smooth sailing.  After a little unpacking (and a few readjustments when posters are prompting you about specifics) your case study now shows your spending at over $8k a month, including almost $1,700 a month in interest.  This may yet blow out further once everything is taken into account. Holidays? Gifts? Pets? Eating out? Entertainment?

First thing first, you need to be completely honest about what you are spending every month.  Not just "it's about $800 on groceries", but exactly what you spend on groceries to the cent.  Start tracking if you don't already.  TODAY.  It can be truly eye opening to see exactly where the money goes when you do this.

Second, how on board is your spouse with addressing your financial issues?  Do you both agree that action is needed or is one of you pushing for action and the other pushing to maintain the status quo?

Third, you need to prioritise what you want.  You and your wife are currently misaligned about whether to invest for retirement ahead of paying down debt, but are you aligned on a need to adjust your spending to accommodate either?  What are you prepared to give up to change this scenario?  $3,200 is a lot of rent, even in a HCOL area - can you move somewhere cheaper?  $800 is a lot for groceries for two people who are trying to cut costs, even if it's the "norm" where you live.  $75 a month each is a lot for phones - you can get plans much, much cheaper.  Cable is a luxury and everything that you put towards luxuries instead of paying that amex bill off is effectively compounding at a further 24% annually.

Fourth, what do you have to show for your $100k in credit card debt?  Do you have a garage full of big boys toys gathering dust that can be sold down to reduce your debt?  Do you need two cars as DINKs when you are commuting by public transport?

Finally, whilst it is admirable that you want to look after your brother as he ages, you also need to make sure you are looking after yourself.  Unless you rein in spending, pay down debt and save, save, save you won't have enough to look after yourselves in the long run, let alone anyone else.

[Fru-Gal]

Oh, another thing you might try is to renegotiate some of the CC debts, either in amount due or interest rate. You might also try consolidating if you can get a lower rate on a Prosper loan or something like it.

[AnnaGrowsAMustache]

OK, I am not an expert, but this is what I would do:

Can you move some of the cc balances to an interest free for 6 months type of thing? If so, do that and hammer that to death in 6 months. I would do it with the American Express first and get rid of the bastard. Even if you can't move it, get rid of that debt in 6 months. Then close that account. You won't need it.

At the same time, get your 401 match, as suggested above. I don't know exactly how this system works for the USA but from what I have gleaned, you're basically doubling your money so it's a must do.

Also, commit to cutting 100 off that grocery bill - stick this directly in debt repayment. See if you can find cheaper insurance and utilities, and ditch things like cable. You're spending the next 6 months at defcon 1 to get that Amex debt GONE.

At the end of the six months, and this should be a tough 6 months, reassess.

Wait, you have savings??? Um, you can get rid of two credit cards completely like now??? If you're worried about emergencies, you can use the unused credit as your emergency fund until you have actual cash. I'm talking actual emergency and not just running out of wine or something....

[Barton20]

Okay, here comes the first face punch.

A couple of hours ago in your first post you listed your expenses as $5k a month ($4,500 on rent, utilities, groceries plus $300 on life insurance plus $200 commuting costs).  On a $10k+ take home pay, that sounds like everything is smooth sailing.  After a little unpacking (and a few readjustments when posters are prompting you about specifics) your case study now shows your spending at over $8k a month, including almost $1,700 a month in interest.  This may yet blow out further once everything is taken into account. Holidays? Gifts? Pets? Eating out? Entertainment?

First thing first, you need to be completely honest about what you are spending every month.  Not just "it's about $800 on groceries", but exactly what you spend on groceries to the cent.  Start tracking if you don't already.  TODAY.  It can be truly eye opening to see exactly where the money goes when you do this.

Second, how on board is your spouse with addressing your financial issues?  Do you both agree that action is needed or is one of you pushing for action and the other pushing to maintain the status quo?

Third, you need to prioritise what you want.  You and your wife are currently misaligned about whether to invest for retirement ahead of paying down debt, but are you aligned on a need to adjust your spending to accommodate either?  What are you prepared to give up to change this scenario?  $3,200 is a lot of rent, even in a HCOL area - can you move somewhere cheaper?  $800 is a lot for groceries for two people who are trying to cut costs, even if it's the "norm" where you live.  $75 a month each is a lot for phones - you can get plans much, much cheaper.  Cable is a luxury and everything that you put towards luxuries instead of paying that amex bill off is effectively compounding at a further 24% annually.

Fourth, what do you have to show for your $100k in credit card debt?  Do you have a garage full of big boys toys gathering dust that can be sold down to reduce your debt?  Do you need two cars as DINKs when you are commuting by public transport?

Finally, whilst it is admirable that you want to look after your brother as he ages, you also need to make sure you are looking after yourself.  Unless you rein in spending, pay down debt and save, save, save you won't have enough to look after yourselves in the long run, let alone anyone else.

In my initial post, I didn't include the minimum payments on the CCs because that's the debt I was talking about when I said we're 100K in debt. I should have specified we're 100K in debt and paying $2400/month on payments. As for moving, we signed a 14 month lease and still have 12 months left so moving some place else isn't an option right now. Re: the cars -- while I commute to work with the train, that's the only thing I use the train for. We still need both cars because my wife does shift work so when I'm at home and she's working, I'd like to have a car for errands, groceries, etc. Both cars are paid off and I pay very little in gas since I take the train to work.

Re: other spending. I paid all cash for Christmas gifts and we kept it to $300 for the whole family. We go out to eat once a month, if that, as of 6 months ago when we realized how much we were spending (prior to that, we used to go out to eat once a week at least or get take-out). No pets. I'll itemize our groceries this month to see what we can cut.

Yes, we're on the same page regarding the debt, but she just thinks we should also put money toward retirement. She's very anxious about retirement while I'm anxious about the here and now. Looking for cheaper phone plans as we speak. I'm hesitant to drop cable since that's our only form of entertainment these days. We're new to the area, have no friends, and no money to use on entertainment until we pay down our debt, so we enjoy cuddling up together and watching our shows on cable. That has to stay though we're willing to make cuts everywhere else.

One more point of clarification:  My job is brand new (as in less than 2 months). Before that, my income was $50K/yr and my wife's was $25K. The high CC debt is from job interviews/traveling for interviews/moving cross-country and all that eating out and we used to do and general irresponsibility. So no big toys or anything like that.

[Gremlin]

Re your other spending.  The money you spent on Christmas, it's good that you didn't go completely overboard but that's money that's not accounted for in your budget.  If you plan on spending similar next year, then you need to account for it at $25 a month.  What about birthdays?  Similarly, if your once a month eating out is not included in your $800 groceries (or somewhere else) then that's something else that needs to be accounted for.

I'm not trying to pick holes in what you are doing - the first thing is to be 100% honest (to yourself) about what you are spending in a year.  If you don't have a handle on this, you'll continue to leak money like a sieve, regardless of what else you put in place.

Good that you are looking at cheaper cell plans. 

But here comes the next face punch.

[Cable]... has to stay though we're willing to make cuts everywhere else.

It appears that you are not willing (at this stage) to make cuts everywhere else.  You are living in an expensive rental - whilst you have 12 months left, it may be possible to negotiate an out with your landlord but you've simply dismissed the prospect of moving in the next 12 months.  You have the luxury of two cars for two of you despite a chunk of travel being your commute.  Again, dismissed the prospect of selling a car to pay down some debt (what about selling your $7k car, buying a $2k beater to run errands and plonking the difference on the amex? What about using public transport or a bike for errands?).  A poster earlier on talked about reducing or eliminating your life insurance, even until your debt emergency is under control.  Again, dismissed it.

These are all big ticket items that could make a meaningful difference to your ability to save for retirement (your wife's big stress) and/or your ability to pay down your existing debt (your big stress).  And it comes to priorities.  At the moment you are effectively saying that the convenience of a second car and the fanciness of your rental is more important to you than saving for retirement or paying down debt.  And that you prioritise cable today over controlling your anxieties around debt and retirement.
 That's cool.  That's your choice.  But it's important to acknowledge that it is a choice YOU are making, and continue to make, every day.

You have enough income and enough time to turn this around.  But you also need to prioritise differently if you want to achieve it. 

[Barton20]

Re your other spending.  The money you spent on Christmas, it's good that you didn't go completely overboard but that's money that's not accounted for in your budget.  If you plan on spending similar next year, then you need to account for it at $25 a month.  What about birthdays?  Similarly, if your once a month eating out is not included in your $800 groceries (or somewhere else) then that's something else that needs to be accounted for.

I'm not trying to pick holes in what you are doing - the first thing is to be 100% honest (to yourself) about what you are spending in a year.  If you don't have a handle on this, you'll continue to leak money like a sieve, regardless of what else you put in place.

Good that you are looking at cheaper cell plans. 

But here comes the next face punch.

[Cable]... has to stay though we're willing to make cuts everywhere else.

It appears that you are not willing (at this stage) to make cuts everywhere else.  You are living in an expensive rental - whilst you have 12 months left, it may be possible to negotiate an out with your landlord but you've simply dismissed the prospect of moving in the next 12 months.  You have the luxury of two cars for two of you despite a chunk of travel being your commute.  Again, dismissed the prospect of selling a car to pay down some debt (what about selling your $7k car, buying a $2k beater to run errands and plonking the difference on the amex? What about using public transport or a bike for errands?).  A poster earlier on talked about reducing or eliminating your life insurance, even until your debt emergency is under control.  Again, dismissed it.

These are all big ticket items that could make a meaningful difference to your ability to save for retirement (your wife's big stress) and/or your ability to pay down your existing debt (your big stress).  And it comes to priorities.  At the moment you are effectively saying that the convenience of a second car and the fanciness of your rental is more important to you than saving for retirement or paying down debt.  And that you prioritise cable today over controlling your anxieties around debt and retirement.
 That's cool.  That's your choice.  But it's important to acknowledge that it is a choice YOU are making, and continue to make, every day.

You have enough income and enough time to turn this around.  But you also need to prioritise differently if you want to achieve it.

While I appreciate your input, I simply disagree in some areas. Life is short and I think that different things make people happy. For me and my wife, that's cable especially when we don't go out and don't have any friends in a new place. Yes we're in debt but I think my salary is high enough that we can pay it down without getting rid of cable.

As for life insurance, again appreciate the input, but again disagree and I said why. If I die tomorrow, what is my wife supposed to do? With this much debt, she needs my income/life insurance. Getting rid of life insurance is just not a practical solution. My wife, on the other hand, is not insured because I don't need her income.

I'm not going to bike around town to run errands. It's just not practical for me and not going to happen. Buying a beater is a maybe, but need to think about that.

I guess I need to just say at this point that I'm 42 years old, working a good job for the first time in my life with a multiyear contract and I plan to enjoy my life while I pay down my debt. No more CCs. We buy everything in cash or debit card. The debt is being paid down just as my student loans were paid down to this last 30K. It'll take time. In the meantime, life is too short to cut down to bare bones unless absolutely necessary, is my philosophy. My only debate was in saving for retirement versus spending all excess money on debt.

@AnnaGrowsAMustache will use your suggestion of using up the savings to pay off the cards and letting a card act as emergency fund. We don't drink so no running out of wine. Haha.

[BECABECA]

For cell phone, if you don’t use very many minutes (less than 1000/month for both of you) or much data (less than 1GB/month for both of you), Ting is a good pay for what you use option. If you need unlimited minutes and data then look into redpocket mobile or mint mobile. I think all these options you can use your same phone (but you’d need to make sure it’s carrier unlocked). And even the unlimited everything options are like $50/month combined, so switching is likely to save you ~$100 a month compared to what you’re currently paying.

As for cable, nobody is saying you have to go without any entertainment, we’re just saying you should assess what shows you’re actually watching with your cable and see if you could watch the same shows cheaper via streaming. For example, I subscribe to Netflix, my sister has HBO Now, and my friend has Hulu Plus, and we share the logins with each other so we can each watch all 3. But even if you bought all 3 yourself, it’s like $35/month. Cable finally has some competition, but they might still be the better option for you if you have your internet bundled with it and you don’t have any competition on internet providers to your area.

And since your student loan is only 6% interest, I would bump up your retirement contributions to the max before I pay anything more than the minimum on the student loan.

[Barton20]

For cell phone, if you don’t use very many minutes (less than 1000/month for both of you) or much data (less than 1GB/month for both of you), Ting is a good pay for what you use option. If you need unlimited minutes and data then look into redpocket mobile or mint mobile. I think all these options you can use your same phone (but you’d need to make sure it’s carrier unlocked). And even the unlimited everything options are like $50/month combined, so switching is likely to save you ~$100 a month compared to what you’re currently paying.

As for cable, nobody is saying you have to go without any entertainment, we’re just saying you should assess what shows you’re actually watching with your cable and see if you could watch the same shows cheaper via streaming. For example, I subscribe to Netflix, my sister has HBO Now, and my friend has Hulu Plus, and we share the logins with each other so we can each watch all 3. But even if you bought all 3 yourself, it’s like $35/month. Cable finally has some competition, but they might still be the better option for you if you have your internet bundled with it and you don’t have any competition on internet providers to your area.

And since your student loan is only 6% interest, I would bump up your retirement contributions to the max before I pay anything more than the minimum on the student loan.

We tried streaming briefly last year but it just didn't work for us. We have too many varied tastes and like to just chill out in front of the TV channel surfing and finding movies or shows to watch. My wife watches a lot of Lifetime and TLC and Hallmark Channel. I watch a lot of cable news and History Channel stuff. We both agreed we wanted cable back after a few weeks without it.

But I'm looking into the phone plans. We don't spend much time on our phones so Ting should work.

[BECABECA]

We tried streaming briefly last year but it just didn't work for us. We have too many varied tastes and like to just chill out in front of the TV channel surfing and finding movies or shows to watch. My wife watches a lot of Lifetime and TLC and Hallmark Channel. I watch a lot of cable news and History Channel stuff. We both agreed we wanted cable back after a few weeks without it.

But I'm looking into the phone plans. We don't spend much time on our phones so Ting should work.

Here’s the latest phone thread I was looking for:
https://forum.mrmoneymustache.com/welcome-to-the-forum/ting-still-good-as-a-low-cost-carrier/

[Barton20]

Thanks @BECABECA

[AnnaGrowsAMustache]

Look, you know your life and circumstances better than anyone else. However, given your responses on this thread, I'm not sure that you appreciate just how much trouble you're actually in. You're in deep, deep waters. If you're not prepared to take serious action for six months or a year (like getting rid of cable), perhaps you need to have a hard think about precisely how you would like this retirement to look. Your income does mean you can take your time sorting this out. Except that you don't really have time. Every day you take is another day of interest that you're paying. Work it out over the next say five years and see how much that really is. Meanwhile, you haven't got any real assets, and you're also getting older by the day. You need to make some serious, uncomfortable changes as soon as possible. Life is to be enjoyed? Sure. And you've clearly been enjoying it. I guess you'd also like to enjoy it in retirement? THEN DO SOMETHING ABOUT IT.

[CoffeeR]

Personal finance is, well, personal. We all have different priorities, values and life circumstances. As you know by now, the MMM crowd is a tough one when it comes to money.

I think you know that mathematically paying off your high interest rate debt will give you the best guaranteed return for your money.... but, the math of debt will not get you out of debt, your behavior will. How important is this to you? How long do you want to be at this? What are you willing to sacrifice? I cannot answer these questions, only you and your wife can answer this. If your wife wants and/or needs some retirement contribution then even if its mathematically not optimal, you should consider saving something for retirement while paying off your debt. You and your wife being on the same page is worth a lot and will increase the likelihood of success.

None of this matters though if your expenses exceed your income. If you want to change your life, your future, then you must get your expenses below your income (you know this). The more you can increase the delta between income and expenses, the more you can save for retirement and the more you can allocate to paying off your debt. So, in other words, you must either 1) increase your income, 2) decrease your expenses, or 3) do a combination of the two.

How do want to do this?

You have done #1 (increased income, congrats by the way) so a big change in #1 seems unlikely. Though do read the MMM forums on how many of poster has found some ways to make money on the side.

That leaves #2 (decrease expenses). Based on years of experience and observation in order to cut expenses effectively, you need to track expenses. Seriously, track them carefully. Where does your money go? Where can you cut? What are you willing to cut? The more radically you get the shorter the journey to being debt free and then on to FI.

So how radical are you willing to get? If getting radical causes you to fail or give up, then maybe don't get that radical. Still, you can cut expenses until it hurts, but there comes a point where to cut expenses further you must make structural changes (e.g changes of habitat/living arrangement, changes in transportation, geo-arbitrage, etc.) I am not suggesting you can or are willing to do this at this time, but keep it in mind, but the MMM crowd loves to jump to this step right of the bat and they will "face-punch" you if you do not follow.

So, my suggestion, track expenses and get on the same page you and your wife. Then take a knife to your expenses and be as radical as you can be. This can take some time. While you figure this out, read the MMM forums about people who are on the same journey as you. It's much easier when you realize you are not alone.

[Barton20]

Look, you know your life and circumstances better than anyone else. However, given your responses on this thread, I'm not sure that you appreciate just how much trouble you're actually in. You're in deep, deep waters. If you're not prepared to take serious action for six months or a year (like getting rid of cable), perhaps you need to have a hard think about precisely how you would like this retirement to look. Your income does mean you can take your time sorting this out. Except that you don't really have time. Every day you take is another day of interest that you're paying. Work it out over the next say five years and see how much that really is. Meanwhile, you haven't got any real assets, and you're also getting older by the day. You need to make some serious, uncomfortable changes as soon as possible. Life is to be enjoyed? Sure. And you've clearly been enjoying it. I guess you'd also like to enjoy it in retirement? THEN DO SOMETHING ABOUT IT.

I think that's an unfair assessment. I'm considering new phone plans (and researching it as we speak), considering the option of selling my car, already moved savings to our credit card payoff account, and itemizing groceries in order to cut down. All of that from this thread.  So to suggest I don't appreciate the trouble I'm in simply because of cable when I've considered every other piece of advice (except life insurance) given is pretty harsh. We don't want to give up cable. That's just how it is. We'll make do while still having cable. And I think it's a BAD BAD idea to get rid of life insurance when my death will ruin my wife financially until this debt is paid off. Those two things are just not something I think will work for us, but I've given consideration to everything else.

[BECABECA]

Look, you know your life and circumstances better than anyone else. However, given your responses on this thread, I'm not sure that you appreciate just how much trouble you're actually in. You're in deep, deep waters. If you're not prepared to take serious action for six months or a year (like getting rid of cable), perhaps you need to have a hard think about precisely how you would like this retirement to look. Your income does mean you can take your time sorting this out. Except that you don't really have time. Every day you take is another day of interest that you're paying. Work it out over the next say five years and see how much that really is. Meanwhile, you haven't got any real assets, and you're also getting older by the day. You need to make some serious, uncomfortable changes as soon as possible. Life is to be enjoyed? Sure. And you've clearly been enjoying it. I guess you'd also like to enjoy it in retirement? THEN DO SOMETHING ABOUT IT.

I think that's an unfair assessment. I'm considering new phone plans (and researching it as we speak), considering the option of selling my car, already moved savings to our credit card payoff account, and itemizing groceries in order to cut down. All of that from this thread.  So to suggest I don't appreciate the trouble I'm in simply because of cable when I've considered every other piece of advice (except life insurance) given is pretty harsh. We don't want to give up cable. That's just how it is. We'll make do while still having cable. And I think it's a BAD BAD idea to get rid of life insurance when my death will ruin my wife financially until this debt is paid off. Those two things are just not something I think will work for us, but I've given consideration to everything else.

Yeah, that’s a bit harsh. Cable adds real enjoyment for you, and you’ve assessed cheaper options and determined that they didn’t provide the same level of enjoyment. That’s good enough for me.

I agree with you on life insurance. When you’re out of debt and have saved up a nice retirement nest egg, you can drop it then. Although... since you plan to be out of debt and nest egged sooner than 30 years, can you reduce the term to a shorter one, like 15 years? And if you did that, would it be significantly cheaper?

Thats awesome that you’re considering downsizing the car to a cheaper one, and that you’re looking for fat to trim from the grocery budget and looking for a cheaper cell plan! 

So while some of our comments can feel a little over the top, we just want to make sure you’re considering all your options for how to accelerate your progress! We get antsy around credit card debt 😜

[AnnaGrowsAMustache]

Look, you know your life and circumstances better than anyone else. However, given your responses on this thread, I'm not sure that you appreciate just how much trouble you're actually in. You're in deep, deep waters. If you're not prepared to take serious action for six months or a year (like getting rid of cable), perhaps you need to have a hard think about precisely how you would like this retirement to look. Your income does mean you can take your time sorting this out. Except that you don't really have time. Every day you take is another day of interest that you're paying. Work it out over the next say five years and see how much that really is. Meanwhile, you haven't got any real assets, and you're also getting older by the day. You need to make some serious, uncomfortable changes as soon as possible. Life is to be enjoyed? Sure. And you've clearly been enjoying it. I guess you'd also like to enjoy it in retirement? THEN DO SOMETHING ABOUT IT.

I think that's an unfair assessment. I'm considering new phone plans (and researching it as we speak), considering the option of selling my car, already moved savings to our credit card payoff account, and itemizing groceries in order to cut down. All of that from this thread.  So to suggest I don't appreciate the trouble I'm in simply because of cable when I've considered every other piece of advice (except life insurance) given is pretty harsh. We don't want to give up cable. That's just how it is. We'll make do while still having cable. And I think it's a BAD BAD idea to get rid of life insurance when my death will ruin my wife financially until this debt is paid off. Those two things are just not something I think will work for us, but I've given consideration to everything else.

I think you have life insurance for good reasons, actually. I wouldn't suggest you give that up. Cable is just an example. The point is, if you want to actually make some serious changes and get established before the standard retirement age (ie not just get out of debt) you are going to have to get uncomfortable. I think you're under the impression that you can save your situation with a few small strategic changes and basically live the same way you have been. That's not the case. You're going to have to get really uncomfortable for a good few years. Cable is what? I read $35 a month? That's $400 and change a year. That's $400 towards a debt. You're drowning in debt. You have no assets. You're rocketing towards retirement. Right now, I don't think you can afford cable.

[Simpli-Fi]

luckily you stumbled onto the right forum for help.

I didn't see the answer to the "what does 100k in debt get you?"  I'd start selling everything (except the TV in your case, unless you can get a cheaper/smaller one)

without BOLD moves...things will stay the same

[jeroly]

There are certainly things in your spending pattern that can be cut with little to no pain...

You can save $$$ on your food budget - should be relatively easy to get it down by $200/month.
You could look at say YouTube TV combined with cheap internet for about $80/ month.  This should still get you most if not absolutely all of the channels you like to watch.
You can get a cheaper phone plan from say Mint Mobile for around $60/ month for two phones instead of $150

(Those three things alone would cut your budget by $360/month or about $4k/year)

However, there are three options that would make more gigantic differences in paying down your debt.
1.  You are paying about 16% interest overall on that $110k debt or about $17k/year in interest.  If you can consolidate it at a lower rate and/or put chunks of it on zero interest cards you should be able to get that down to perhaps an average of 9%.  That would free up $8k/year at the start for additional loan pay down.

2.  I know that it’s nice to live in a nice place but with your DEBT EMERGENCY you simply cannot afford it.  I understand that you live in a HCOL area but you can certainly find nice 1br apartments in the suburbs that rent for around $1,500/month.  That would free up another $20,000/year. I understand that you have a lease but a lease can be broken, usually for the cost of a month’s rent which you would recoup in under two months.

3.  In an HCOL area, a $30,000 salary is basically minimum wage.  In today’s good economy your wife needs to put in the work to find a higher paying job.  If she were earning $50k/year that would provide another $12,000 or so to pay down debt.

Those three things combined, along with your free cash flow, will allow you to completely pay off your debt in less than two years.

[LetItGrow]

Just wanted to add some positive encouragement. Kill those debts one by one, you can do it.

Please keep reading here, and check in!

[mistymoney]

Re your other spending.  The money you spent on Christmas, it's good that you didn't go completely overboard but that's money that's not accounted for in your budget.  If you plan on spending similar next year, then you need to account for it at $25 a month.  What about birthdays?  Similarly, if your once a month eating out is not included in your $800 groceries (or somewhere else) then that's something else that needs to be accounted for.

I'm not trying to pick holes in what you are doing - the first thing is to be 100% honest (to yourself) about what you are spending in a year.  If you don't have a handle on this, you'll continue to leak money like a sieve, regardless of what else you put in place.

Good that you are looking at cheaper cell plans. 

But here comes the next face punch.

[Cable]... has to stay though we're willing to make cuts everywhere else.

It appears that you are not willing (at this stage) to make cuts everywhere else.  You are living in an expensive rental - whilst you have 12 months left, it may be possible to negotiate an out with your landlord but you've simply dismissed the prospect of moving in the next 12 months.  You have the luxury of two cars for two of you despite a chunk of travel being your commute.  Again, dismissed the prospect of selling a car to pay down some debt (what about selling your $7k car, buying a $2k beater to run errands and plonking the difference on the amex? What about using public transport or a bike for errands?).  A poster earlier on talked about reducing or eliminating your life insurance, even until your debt emergency is under control.  Again, dismissed it.

These are all big ticket items that could make a meaningful difference to your ability to save for retirement (your wife's big stress) and/or your ability to pay down your existing debt (your big stress).  And it comes to priorities.  At the moment you are effectively saying that the convenience of a second car and the fanciness of your rental is more important to you than saving for retirement or paying down debt.  And that you prioritise cable today over controlling your anxieties around debt and retirement.
 That's cool.  That's your choice.  But it's important to acknowledge that it is a choice YOU are making, and continue to make, every day.

You have enough income and enough time to turn this around.  But you also need to prioritise differently if you want to achieve it.

While I appreciate your input, I simply disagree in some areas. Life is short and I think that different things make people happy. For me and my wife, that's cable especially when we don't go out and don't have any friends in a new place. Yes we're in debt but I think my salary is high enough that we can pay it down without getting rid of cable.

As for life insurance, again appreciate the input, but again disagree and I said why. If I die tomorrow, what is my wife supposed to do? With this much debt, she needs my income/life insurance. Getting rid of life insurance is just not a practical solution. My wife, on the other hand, is not insured because I don't need her income.

I'm not going to bike around town to run errands. It's just not practical for me and not going to happen. Buying a beater is a maybe, but need to think about that.

I guess I need to just say at this point that I'm 42 years old, working a good job for the first time in my life with a multiyear contract and I plan to enjoy my life while I pay down my debt. No more CCs. We buy everything in cash or debit card. The debt is being paid down just as my student loans were paid down to this last 30K. It'll take time. In the meantime, life is too short to cut down to bare bones unless absolutely necessary, is my philosophy. My only debate was in saving for retirement versus spending all excess money on debt.

@AnnaGrowsAMustache will use your suggestion of using up the savings to pay off the cards and letting a card act as emergency fund. We don't drink so no running out of wine. Haha.

Hey Barton - Welcome!

A few thoughts for you:

I agree with everyone on whittling down the monthly outgo as much as possible. For the cable - can you try to get the monthly payment down somehow? Renegotiate price? Drop a bell and two whistles? There is a middle ground between what you are paying and pulling the plug altogether.

Also - agree with trying to kill off the highest rate card/s with your savings, you'll be in a better position immediately. Renting - at least you won't need to pay for a roof or furnace unexpectedly - so there's that!

Can you transfer to any 0% offers?

While I agree with the life insurance for security for your wife - think also about disability or unemployment. There are good reasons to get a solid chunk into retirement savings ASAP because of the protected nature of the money for applying for benefits or in bankruptcy.

What vehicles and matches are offered by your employers? 401k, 403b, etc. Minimally, you should both be contributing to get the match. With your higher salary - you may be surprised at the effect on taxes. As an example, putting in 1k only lowers your take home by 600 dollars. 

I don't think there is a "right" answer on your questions - If you are paying 25% taxes - then the tax saving return on investing is about equal to the 24% you have on your highest rate card. Of course, in the market the compounding will be a lower rate over time.

Would your wife be content if you both contribute to get the match? Is that enough? If required is 6% with 3% match - for both of you/on average - that is about 19k/year into retirements. with your and employer pieces. If not - how much more would that take for wife to feel enough was being put aside?

But you definitely need to address the debt as a priority, but I think you have the means to balance that with some retirement savings.

[Barton20]

Thanks guys.

A couple of things.

I've never broken a lease before but would be willing to do it. The thing is, I looked up our lease this morning and what we signed is that if we move before the end of the lease, we "may" be responsible for paying out the entire lease. That means 12 months of rent for not living here. But I don't understand the "may." Is that if they don't get someone else to take the apartment? I'll ask my leasing office of course but they're closed today.

Regarding cable -- how would I negotiate a lower price? It's all package based and our package is the lowest. Is there a way to go lower that I'm not seeing?

Regarding retirement -- my work matches up to 3% so I could just save 3% per month to get the match. My wife would be satisfied with that. Her employer doesn't match unfortunately.

I looked and found an old CC I already have (and don't use) that will allow balance transfers with 0% interest for 12 months, but with a 3% fee. It has a 14K limit. So I could transfer the AmEx card there. Is there something wrong with this plan I'm not seeing (3% fee?)? I have to pay it for sure in 12 months (which shouldn't be a problem) or else the interest is 25%.

Again thank you all for your help. I may not take every single piece of advice but I am listening and am thinking hard about everything you all have said.

[mistymoney]

Regarding retirement -- my work matches up to 3% so I could just save 3% per month to get the match. My wife would be satisfied with that. Her employer doesn't match unfortunately.

That's fantastic then - so I don't see any issues with putting 3% there and she will be content. Sign up for 3% with maybe a planned upping of 1% every 6 months as your situation improves. Maybe - up it 1% each time a cc balance is paid off?

Motivators!!

[mistymoney]

cable may not be very negotiable if you just signed on 2 months ago with the new place.

But every time I call to cancel something with internet or cable providers - they come up with a new promotional offer that they can transfer me to instead....

[Barton20]

Regarding retirement -- my work matches up to 3% so I could just save 3% per month to get the match. My wife would be satisfied with that. Her employer doesn't match unfortunately.

That's fantastic then - so I don't see any issues with putting 3% there and she will be content. Sign up for 3% with maybe a planned upping of 1% every 6 months as your situation improves. Maybe - up it 1% each time a cc balance is paid off?

Motivators!!

That's a good. Thanks!

[jeroly]

Thanks guys.

A couple of things.

I've never broken a lease before but would be willing to do it. The thing is, I looked up our lease this morning and what we signed is that if we move before the end of the lease, we "may" be responsible for paying out the entire lease. That means 12 months of rent for not living here. But I don't understand the "may." Is that if they don't get someone else to take the apartment? I'll ask my leasing office of course but they're closed today.

Regarding cable -- how would I negotiate a lower price? It's all package based and our package is the lowest. Is there a way to go lower that I'm not seeing?

Regarding retirement -- my work matches up to 3% so I could just save 3% per month to get the match. My wife would be satisfied with that. Her employer doesn't match unfortunately.

I looked and found an old CC I already have (and don't use) that will allow balance transfers with 0% interest for 12 months, but with a 3% fee. It has a 14K limit. So I could transfer the AmEx card there. Is there something wrong with this plan I'm not seeing (3% fee?)? I have to pay it for sure in 12 months (which shouldn't be a problem) or else the interest is 25%.

Again thank you all for your help. I may not take every single piece of advice but I am listening and am thinking hard about everything you all have said.

You should be able to find a 0% offer with free balance transfers.
However, a 3% fee with a 0% interest rate for a year is far better than 24%!

[Barton20]

Thanks guys.

A couple of things.

I've never broken a lease before but would be willing to do it. The thing is, I looked up our lease this morning and what we signed is that if we move before the end of the lease, we "may" be responsible for paying out the entire lease. That means 12 months of rent for not living here. But I don't understand the "may." Is that if they don't get someone else to take the apartment? I'll ask my leasing office of course but they're closed today.

Regarding cable -- how would I negotiate a lower price? It's all package based and our package is the lowest. Is there a way to go lower that I'm not seeing?

Regarding retirement -- my work matches up to 3% so I could just save 3% per month to get the match. My wife would be satisfied with that. Her employer doesn't match unfortunately.

I looked and found an old CC I already have (and don't use) that will allow balance transfers with 0% interest for 12 months, but with a 3% fee. It has a 14K limit. So I could transfer the AmEx card there. Is there something wrong with this plan I'm not seeing (3% fee?)? I have to pay it for sure in 12 months (which shouldn't be a problem) or else the interest is 25%.

Again thank you all for your help. I may not take every single piece of advice but I am listening and am thinking hard about everything you all have said.

You should be able to find a 0% offer with free balance transfers.
However, a 3% fee with a 0% interest rate for a year is far better than 24%!

I looked and it looks like they all have fees. Do you have any recommendations that don't by any chance? Not asking you to do the research, just if you know of any you've used or something.

[freya]

With all due respect...

You are in a hair on fire emergency!!!!!!!!  You cannot even think about saving for retirement or a home downpayment, not with your ~$100K in credit card debt!  Plus $30K in student loans!

The good news is that at your current level of spending, IF you really are able to put $5000/month towards debt payments, you could wipe this out in 2 years.  Then at that point, you can think about savings goals.  I only hope your job is secure for at least that long.  I personally would not be sleeping well at night with this situation, because if you lost your job and had to settle for something on the order of half your current pay, you guys would be in bankruptcy in a heartbeat.

I think you have to cut your spending.  Cancel cable and sign up for Netflix instead, find cheaper phone plans, and cut that grocery spending in half using the many tips on this board.  And, a $3200 rental is a luxury you cannot yet afford.   Also, I suggest tracking your spending prospectively using a program like YNAB.  Given the sheer amount of credit card debt, I am highly suspicious that you're not able to save as much of your income as you say.  There's nothing in your list that hints at the shopping sprees, vacations etc that your debt speaks to.  Could you tell us where all this came from?

Judging from the rates on your credit cards you have decent credit.  You absolutely should play the 0% balance game for all it's worth.  Yes there are fees, but 3% interest at, say, 21 months is way better than 15+%/year.  I would also consider a Lending Club or Prosper loan, if you can get into one of their top categories for < 10% interest rates.  Then yes, the obvious thing is to start paying down debts starting with the highest interest rates.

As far as retirement savings, I would contribute to the 401K up to your employer match - but not a penny more until the credit card debts are paid off.  I would however try to find out if your employer has a high deductible insurance policy that would let you pay less premiums and contribute to an HSA.   Probably you can't do anything about this until next open enrollment though.

Finally - you definitely have a problem with credit cards.  Don't cancel any paid off accounts as this will ding your credit rating, but you need to reduce the number of credit cards you use on a regular basis AND prospectively track spending, or you'll simply ratchet up more and more debt.

Hope you don't mind the face punching, but the previous posters were really much too gentle for this situation.

[Barton20]

With all due respect...

You are in a hair on fire emergency!!!!!!!!  You cannot even think about saving for retirement or a home downpayment, not with your ~$100K in credit card debt!  Plus $30K in student loans!

The good news is that at your current level of spending, IF you really are able to put $5000/month towards debt payments, you could wipe this out in 2 years.  Then at that point, you can think about savings goals.  I only hope your job is secure for at least that long.  I personally would not be sleeping well at night with this situation, because if you lost your job and had to settle for something on the order of half your current pay, you guys would be in bankruptcy in a heartbeat.

I think you have to cut your spending.  Cancel cable and sign up for Netflix instead, find cheaper phone plans, and cut that grocery spending in half using the many tips on this board.  And, a $3200 rental is a luxury you cannot yet afford.   Also, I suggest tracking your spending prospectively using a program like YNAB.  Given the sheer amount of credit card debt, I am highly suspicious that you're not able to save as much of your income as you say.  There's nothing in your list that hints at the shopping sprees, vacations etc that your debt speaks to.  Could you tell us where all this came from?

Judging from the rates on your credit cards you have decent credit.  You absolutely should play the 0% balance game for all it's worth.  Yes there are fees, but 3% interest at, say, 21 months is way better than 15+%/year.  I would also consider a Lending Club or Prosper loan, if you can get into one of their top categories for < 10% interest rates.  Then yes, the obvious thing is to start paying down debts starting with the highest interest rates.

As far as retirement savings, I would contribute to the 401K up to your employer match - but not a penny more until the credit card debts are paid off.  I would however try to find out if your employer has a high deductible insurance policy that would let you pay less premiums and contribute to an HSA.   Probably you can't do anything about this until next open enrollment though.

Finally - you definitely have a problem with credit cards.  Don't cancel any paid off accounts as this will ding your credit rating, but you need to reduce the number of credit cards you use on a regular basis AND prospectively track spending, or you'll simply ratchet up more and more debt.

Hope you don't mind the face punching, but the previous posters were really much too gentle for this situation.

All of your questions were answered in this thread. As to your question about my job, it's secure. And if I did lose it, I'd get another one for the same or better salary. My salary is actually low given what I do but this was the job that allowed me to do what I love (dream job) and my wife a big career opportunity. Her field is limited geographically but mine is not.

[ysette9]

Posting to follow. You have a breathtakingly scary amount of debt but you have the tools needed to conquer it. I wish you the best. You may consider a journal here where you track your monthly spending and debt pay down. We can be your cheerleaders and accountability partners and provide tips as appropriate.

[BECABECA]

Thanks guys.

A couple of things.

I've never broken a lease before but would be willing to do it. The thing is, I looked up our lease this morning and what we signed is that if we move before the end of the lease, we "may" be responsible for paying out the entire lease. That means 12 months of rent for not living here. But I don't understand the "may." Is that if they don't get someone else to take the apartment? I'll ask my leasing office of course but they're closed today.

Regarding cable -- how would I negotiate a lower price? It's all package based and our package is the lowest. Is there a way to go lower that I'm not seeing?

Regarding retirement -- my work matches up to 3% so I could just save 3% per month to get the match. My wife would be satisfied with that. Her employer doesn't match unfortunately.

I looked and found an old CC I already have (and don't use) that will allow balance transfers with 0% interest for 12 months, but with a 3% fee. It has a 14K limit. So I could transfer the AmEx card there. Is there something wrong with this plan I'm not seeing (3% fee?)? I have to pay it for sure in 12 months (which shouldn't be a problem) or else the interest is 25%.

Again thank you all for your help. I may not take every single piece of advice but I am listening and am thinking hard about everything you all have said.

You should be able to find a 0% offer with free balance transfers.
However, a 3% fee with a 0% interest rate for a year is far better than 24%!

I looked and it looks like they all have fees. Do you have any recommendations that don't by any chance? Not asking you to do the research, just if you know of any you've used or something.

From everything I’ve seen over the years, 3% balance transfer fee looks to be average. Out of curiosity I googled around and found this list of a few that have 0% balance transfer interest with no transfer fee:
https://wallethub.com/credit-cards/no-balance-transfer-fee/

The issue will be if you can get approved for them (usually when you need this type of card the most is when it’s the hardest to get approved for it). Although with your new job and high income that should be a lot easier than it would have been before.

[wellactually]

I promise I've read everything, but I still don't see a full answer to how the credit card debt accumulated. You said travel for job interviews, a big move to this new city, and eating out. What else went on the cards and how long have you been accumulating this debt? This level of consumer debt is always going to bring out facepunches. You are willing to make some changes, but I think what I'm feeling and maybe what's coming out from others' responses, is that it doesn't feel like you've had a "come to jesus" moment about this debt. Maybe you're just not sharing that here, but until you really grasp the situation your in and your actions that led you to it, it won't matter how much money you make.

Seriously, if you're off work today, pull up the old credit card statements and really look at what you spent this money on.

Some of us have been in large-debt situations. When we seem exasperated about cable, it's because we actually know the sacrifices necessary to get out of these situations. We have lived them.

I keep coming back to your responses that $800 is the average amount spent on groceries in your area, your cable package is the regular basic one they offer, your rent amount is pretty on-par for the new HCOL area, etc. But you cannot allow yourselves to be normal right now. And that attitude (which may just be how I'm reading it!) is going to really limit your progress here.

How do you get lower cable rate without cancelling? Call and tell them you just realized you really cannot afford the service any more. Ask what it would cost you to cancel. Keep pushing back that it's just too expensive. Eventually they will either transfer you to a person or get there themselves with options for a better deal.

How do you lower your grocery bill? First, check around and see which stores you should be shopping at. Some grocery stores don't look fancy but are much more expensive than others. Next, stop buying all convenience foods. Don't buy pre-portioned snacks or freezer meals that aren't on sale. Put in the time to prep some food. Eat more eggs, beans, and rice. Buy vegetables/fruit only in season. Stop buying any fancy drinks. Save any alcohol/beer/wine for a small reward when you hit a payoff milestone.

Everything needs to be on the table right now. Because you're not super young and you don't have any money saved. You have a very deep red networth for your age. If it was 15 years ago and you decided to deal with this mess, you could fuss about small luxuries. But you absolutely can do this.

The mentality of "this isn't a big deal because it's only $50/month" is likely part of why you're in this situation. Have you fully come to that realization yet?

[BECABECA]

It’d probably be helpful to link to the OP’s first post in the beginning of this thread so everyone can be on the same page.
https://forum.mrmoneymustache.com/welcome-to-the-forum/screwed-things-up/

That’s where I came from, so I’m more comfortable with the OP keeping some luxuries. Getting out of debt can’t be so miserable that you want to just give up. There’s lots of easy fat that can be trimmed first, and OP is making a great start at that.

[wellactually]

Thanks @BECABECA!

OP, congrats on completing school and making such a positive professional change. That's huge and can be especially scary the further you get from traditional college-age. Well done.

I truly do believe you've got everything you need to attack this debt and save for retirement.

My husband and I took the Dave Ramsey class when we went into our big debt payoff (was 72% of our gross income) and it was very helpful for some of our financial literacy. While I don't endorse the whole Ramsey financial plan, the debt part was really motivating.

If you're ready to do this, big things that helped me were physical representations of our progress and milestone goals. Every $10k was a celebration for us. Usually that was $.89 ice cream cones from McDonalds, but it helped! We also had pebbles that we moved from one jar (debt) to another (paid) for each $1,000. We also set out an aggressive time goal for total payoff and then challenged ourselves to beat it.

And as much as it sucks to feel behind, what you learn on that kind of aggressive payoff is SO helpful when it comes to then saving for retirement and a house or whatever else. We learned what we really needed and what we didn't and we let go of a lot of pride. If we hadn't learned that discipline through paying off debt, we would not be the crazy good savers we are now.

You can do this.

(also, I'm with you on the life insurance)

[mistymoney]

It’d probably be helpful to link to the OP’s first post in the beginning of this thread so everyone can be on the same page.
https://forum.mrmoneymustache.com/welcome-to-the-forum/screwed-things-up/

That’s where I came from, so I’m more comfortable with the OP keeping some luxuries. Getting out of debt can’t be so miserable that you want to just give up. There’s lots of easy fat that can be trimmed first, and OP is making a great start at that.

Wow - that thread was very different from this!! First - it warm encouragement rather than face punching!

Most recommended maxing retirement accounts....not here!

Interested on the rationale for that difference?

[Barton20]

I promise I've read everything, but I still don't see a full answer to how the credit card debt accumulated. You said travel for job interviews, a big move to this new city, and eating out. What else went on the cards and how long have you been accumulating this debt? This level of consumer debt is always going to bring out facepunches. You are willing to make some changes, but I think what I'm feeling and maybe what's coming out from others' responses, is that it doesn't feel like you've had a "come to jesus" moment about this debt. Maybe you're just not sharing that here, but until you really grasp the situation your in and your actions that led you to it, it won't matter how much money you make.

Seriously, if you're off work today, pull up the old credit card statements and really look at what you spent this money on.

Some of us have been in large-debt situations. When we seem exasperated about cable, it's because we actually know the sacrifices necessary to get out of these situations. We have lived them.

I keep coming back to your responses that $800 is the average amount spent on groceries in your area, your cable package is the regular basic one they offer, your rent amount is pretty on-par for the new HCOL area, etc. But you cannot allow yourselves to be normal right now. And that attitude (which may just be how I'm reading it!) is going to really limit your progress here.

How do you get lower cable rate without cancelling? Call and tell them you just realized you really cannot afford the service any more. Ask what it would cost you to cancel. Keep pushing back that it's just too expensive. Eventually they will either transfer you to a person or get there themselves with options for a better deal.

How do you lower your grocery bill? First, check around and see which stores you should be shopping at. Some grocery stores don't look fancy but are much more expensive than others. Next, stop buying all convenience foods. Don't buy pre-portioned snacks or freezer meals that aren't on sale. Put in the time to prep some food. Eat more eggs, beans, and rice. Buy vegetables/fruit only in season. Stop buying any fancy drinks. Save any alcohol/beer/wine for a small reward when you hit a payoff milestone.

Everything needs to be on the table right now. Because you're not super young and you don't have any money saved. You have a very deep red networth for your age. If it was 15 years ago and you decided to deal with this mess, you could fuss about small luxuries. But you absolutely can do this.

The mentality of "this isn't a big deal because it's only $50/month" is likely part of why you're in this situation. Have you fully come to that realization yet?

As I said the credit card debt is due to: "Before that, my income was $50K/yr and my wife's was $25K. The high CC debt is from job interviews/traveling for interviews/moving cross-country and all that eating out and we used to do and general irresponsibility.

I've had these CCs for 7 years now.

[Barton20]

Thanks @BECABECA!

OP, congrats on completing school and making such a positive professional change. That's huge and can be especially scary the further you get from traditional college-age. Well done.

I truly do believe you've got everything you need to attack this debt and save for retirement.

My husband and I took the Dave Ramsey class when we went into our big debt payoff (was 72% of our gross income) and it was very helpful for some of our financial literacy. While I don't endorse the whole Ramsey financial plan, the debt part was really motivating.

If you're ready to do this, big things that helped me were physical representations of our progress and milestone goals. Every $10k was a celebration for us. Usually that was $.89 ice cream cones from McDonalds, but it helped! We also had pebbles that we moved from one jar (debt) to another (paid) for each $1,000. We also set out an aggressive time goal for total payoff and then challenged ourselves to beat it.

And as much as it sucks to feel behind, what you learn on that kind of aggressive payoff is SO helpful when it comes to then saving for retirement and a house or whatever else. We learned what we really needed and what we didn't and we let go of a lot of pride. If we hadn't learned that discipline through paying off debt, we would not be the crazy good savers we are now.

You can do this.

(also, I'm with you on the life insurance)

Thank you. I appreciate that. I really have had the Come to Jesus moment, hence not using any cards in 6 mths. I am considering everything people have suggested.

[engineerjourney]

All of your questions were answered in this thread. As to your question about my job, it's secure. And if I did lose it, I'd get another one for the same or better salary. My salary is actually low given what I do but this was the job that allowed me to do what I love (dream job) and my wife a big career opportunity. Her field is limited geographically but mine is not.

Maybe too extreme for right now but since her extremely low paying job is the reason you are in a high cost of living area, have you looked at moving somewhere cheaper that would allow you to have a similar dream job with good pay but also not an astronomical rent?  I am not sure what constitutes a big career opportunity for her so maybe if her salary is expected to increase a lot then its not worth exploring.  Usually the higher paying job is the reason to live in HCOL location so your statement was kinda surprising to me. 

[Barton20]

All of your questions were answered in this thread. As to your question about my job, it's secure. And if I did lose it, I'd get another one for the same or better salary. My salary is actually low given what I do but this was the job that allowed me to do what I love (dream job) and my wife a big career opportunity. Her field is limited geographically but mine is not.

Maybe too extreme for right now but since her extremely low paying job is the reason you are in a high cost of living area, have you looked at moving somewhere cheaper that would allow you to have a similar dream job with good pay but also not an astronomical rent?  I am not sure what constitutes a big career opportunity for her so maybe if her salary is expected to increase a lot then its not worth exploring.  Usually the higher paying job is the reason to live in HCOL location so your statement was kinda surprising to me.

I don't want to give too much information to protect identity, but basically my wife is working in an industry in which she got her "big break" so to speak. Imagine a film producer in Los Angeles (except not exactly) or a news producer at the network in NYC (except not exactly). If she does well, we hope she will move up the ladder. If not, we'll move to a lower cost of living area and I will likely be paid more for jobs there.

The way her job came about is we were planning to move for MY job and she just began applying randomly to places on this side of the country and it just so happened that the right person saw her resume at the right time and kicked it up to people he knew and she got the call. After that, my job search focused on one particular region because the opportunity was too good to pass up even if it only came about due to my job search and even if her salary sucks.

[freya]

Thank you. I appreciate that. I really have had the Come to Jesus moment, hence not using any cards in 6 mths. I am considering everything people have suggested.

Well, that's good.  I also was not convinced that "job interviews and moving" could possibly account for $100K in credit card debt, but the answer "irresponsible spending" is good enough.  It's not about pointing fingers but just to know that you now see this debt as you should.

I still think you aren't fully appreciating your position.  Your combined income must feel pretty fantastic right now, but you'll find out that it's still a finite amount of $$ in the face of your debt and savings needs.   I had actually a situation almost as bad as you, after I pulled a career change AND suffered a very unfortunate financial loss that taught me the value of passive investing :-).   When I got my first post-career change job, I also was about your age, earning $120K, and I was $140K in the red with almost no savings.  It took me a little over 2 years to get to a positive net worth, and about 5 years to save enough for a downpayment on a coop apartment.  Now, about 15 years later I'm within 2 years of FI and my only debt is the mortgage.  However, I went the frugal route from the start and not sure I'd have accomplished this if I spent like the "average" person I know.

In your situation, let's assume you change nothing, pay off your debt in 2 years, save for a downpayment on a home by 5 years from now, and that your expenses and income stay about the same after adjusting for inflation. Then, as per networthify, at a 50% savings rate you'll be ready to retire in another 17 years.  That's 22 years total, or age 64.  It is good news that you will likely be safe to retire at the standard age, but you'll just barely make it - and knock wood that the chronic health condition doesn't interfere with this plan.

Good suggestions so far on shaving down the cost of that debt while you pay it off.  You've kinda made it clear you aren't into the suggestions about cutting spending, but would you at least be willing to prospectively track it?  That way you can calculate your savings rate and project your retirement based on hard, complete data, and then decide if there's something about it you want to change.

[Barton20]

Thank you. I appreciate that. I really have had the Come to Jesus moment, hence not using any cards in 6 mths. I am considering everything people have suggested.

Well, that's good.  I also was not convinced that "job interviews and moving" could possibly account for $100K in credit card debt, but the answer "irresponsible spending" is good enough.  It's not about pointing fingers but just to know that you now see this debt as you should.

I mean, I said the irresponsible spending bit many, many posts ago in the same exact sentence where I talked about interviewing. I think some just aren't reading everything and jumping to conclusions to be perfectly honest with you. Otherwise, everyone who read "job interviews and moving" would have also read "irresponsible spending" as they were in the same sentence.

I also don't get where you get this: "You've kinda made it clear you aren't into the suggestions about cutting spending, but would you at least be willing to prospectively track it?"

I have said repeatedly that I am taking the suggestions about cutting spending. I have said it over and over and over again. I'm not sure what more I can do to convince you that yes, I am "into the suggestions about cutting spending." Just because I'm not getting rid of cable? That negates every single other thing I've said about selling the car, cutting groceries, getting a CC to transfer the balance, looking into cutting cable costs, asking for advice on breaking my lease, etc, etc, etc?

Again, I think some are jumping to conclusions.

[Villanelle]

You keep responding as though cable is the only suggestion you've rejected.  It's not.

Also, I think it might be interesting and helpful for you to run some compounding number.  See for yourself how much less you end up paying on the debt if you add, an additional $100, $300 and $500 per month.  or if you plop down $2000 or more up front (from something like the sale of a car.)

I think it's crucial that you realize that the steps that feel more drastic to you don't need to be permanent.  What if you canceled cable for 1 year?  or 6 months?  What if you went down to one car (run errands when your wife isn't working, drop her at work once every other week and run errands that day, actually try the bike thing, and remember than an occasional uber ride is cheaper than insuring a second car, never mind the money you save on interest by selling the car and using that toward debt) for one year, or better yet until you hit a goal of paying down $X debt, at which point you buy a small beater.  Again, go back to the compounding math.  You suck this up for a relatively short time.  You suck up not having cable for a relatively short time. 

While many of the change you make should be lifetime goals, not all of them have to be. Is not going without cable for one year really worth spending an extra six months of your life working? (No idea on the exact numbers, with the compounding and various interest rates.)  Is spending one year with only one car not worth months of working?  These things aren't permanent commitments.  That might help make them seem more palatable. 

[ReadyOrNot]

Wow, good luck.  Read my case study... my So and I make similar money as you, and have for a long time.  Even with that, and zero debt except for mortgage, with no cable TV, cheap prepaid cellphone plans, etc., we still are far away from fire.  And I have never paid a penny in credit card interest, ever.

You have a long ways to go and you've got great advice so far.  Keep it up and hope to see some real progress soon.

[wellactually]

I definitely read "irresponsible spending." That's why I was looking for a clarification! If your trouble spending in the past was shopping for clothes and eating out constantly, that's where to be on guard. But if it was on vacations or fancy gyms or something, that's good to know. All you said is it wasn't fancy toys.

I mean, maybe 5k each for interview travelling and the move? that still leaves 90k. If you don't want to get into it, that's cool. It seems like you've made the turn and have 6 months of no credit spending behind you. But it's always good to know your weaknesses, especially when you're trying to white knuckle a big habit change.