25 and Drowning in Debt

[Unregistered]

My boyfriend and I are both 25 and have been living on our own for about 3 years. We barely make it paycheck to paycheck. Our life sucks! Here's a summary of our debt & monthly bills:

Rent: $545/month (1 br/ 1 ba - 645 sq. ft)
Water: Approx. $28/month
Electric: $90 - $180/month (varies if heat or a/c used)
Auto Insurance: $170/month (2 cars)
Auto Loan: $385/month (2 cars) ($11,000)
Student Loan: $173/month (About $18,000 total)
Student Loan: $100/month (About $10,000 total)
Credit Card: $300/month minimum payment ($12,500 total)
Cell Phone: $49/month (includes long distance)
Internet: $31/month
Groceries and Personal Items: $50 - $100 month
Parking: $40/month
Gas: $150/month

Not included: 5 misc. high-interest credit cards (approx. $8,000) we stopped paying because we couldn't afford the minimum payments, $10,000 of medical bills incurred while without health insurance, $6,000 fine from some stupid mistake made when my boyfriend was 18.

No house phone. Only basic cable because it's included in our rent. No entertainment. No new clothes. No fun stuff. No eating out. No movies. No drinking. No friends or family to count on.

My boyfriend lost his job in April '01. He couldn't find another one that paid more than minimum wage, so he went back to school full-time and works part time for minimum wage. Last year he only made $10,000. I made $35,000 working 60-hour weeks and all my money went towards paying our bills. All the money on the credit cards is for things like car repairs, doctor bills, food, gas, work clothing and other necessities that we couldn't afford.

This is not how I imagined my life would be when I was 25. I worked so hard in school, graduated top of my class. Got a great job in my field. But I'm so stressed from work. Sick of paying all the bills. I want to start a family soon and get a house (cheaper and more stable than renting) but my boyfriend is going to declare bankrupcty and has 3 more months of school. Then, he'll start out entry-level salary. It will take us forever to pay down our debt. How do we get out of this rut? This is not how I want to live my life!

[crazy-girl]

Trust me, I know how much that sucks. I'm paying very similar debts to you. It seems sometimes like I'll never be able to buy a house or a new car. If the debts are very bad---is there any way you can shuffle things around?

For example, can you defer your student loans? I don't know if you can do that once you start paying them but maybe you could get them consolidated with the credit card debt.

The only other option was the car situation. $170 is HIGH for car insurance so you must have new cars. That and the mighty expensive auto loan tipped me off to that. Perhaps you could sell your new cars (or car) and buy some used ones and not have as big of payments. A used Honda would be pretty cheap and it woul run. You're paying about $200 a month on each car and I know that's a pretty good deal but a new car isn't a must. You can get a shitty car for a few more years. My car is a 1994 hunk of junk from Enterprise Rent-a-car but it's all paid off and I only pay $100 in insurance a month (I'm a bad driver). I'd love to get a new car but with my credit card bills and my student loans hanging over my head----it's a luxery I can't afford and it sounds like you might not be able to afford it.

Suzie (or is it susie?) Ormond (I think that's her name) has been on Oprah before and she's very cool with the financial advice. She has some books she wrote on it. The thing that has helped me is seperating needs and wants. Only buy your needs.

[TosaGirl]

Hello there, Hunny, let me tell you, I think that is very "usual" of us in this age bracket. I am 26, I make about $27,000 a year but have over $45,000 just in student loans to pay back!!! One thing i found works for me, is deferring the payment. I think they give you a year on it. And I think I was told you can derfer if your economic hardship lots, and can forbear 2 times during payment. So I would look into that!!

As for the other bills, I know its hard to do, but just think what you "need" and dont need....sounds like you use your cellphone as your home phone, well do you make sure not to ever go over your minutes??? Get a smaller plan so you pay less, I know thats cutting off friends/family even more, but do you want to sink or start to swim??

You said your boyfriend is going to file bankrupt, I would HIGHLY suggest he avoid that. My cousin did that, then got married. It is also on HIS record, even though he did not do it, and its on your credit history for 10 years!!! That makes it way hard to do much of anything!! So before he does it, I would look over the pros/cons of it!

All I can say is I hear you!!! I was just "whinning" to my mom about all of my bills and stuff, all I can say is someday down the like (okay when we are all 90), you'll just think this built character! If you want to talk more about how I am dealing with it, and doing it alone, please email me at brazil_lover@Juno.com
:)

[malaynab]

Our stories sound exactly the same. I'm trying to decide whether or not to use a credit counseling service. If I jimmy everything around enough each month, I can make arrangements to pay phone and electric late, etc., but am still barely making minimum payments on everything. Add to the problem $1000 in medical bills for myself and $900 for my boyfriend and I've really got trouble. My student loans are already in deferment, and will be coming due again in December. I make too much now to do another economic hardship deferment, so it will have to go into forebearance. I've talked to several people who have used credit counseling, and they think it's great. I know that it does show up on your credit report though, and that's what turns me off. I'm not sure what to do either. Let me know if you find any other possibilities!

Good luck!

Malayna

[lonelypghgrrl]

Finally! Someone who understands! I never thought that with me making 20$ an hour that I'd be so broke. My bf and I live together. He makes 13$ an hour...and with that..we still live paycheck to paycheck. I thought that Pgh had a lower cost of living than most large cities. We rent an old house with 2 br and no air conditioning and no kitchen appliances. We had to provide them all ourselves. Its 650$/month. I have a car payment and Credit Counseling fees...Its a lot less a month but its still a lot and all at once instead of $50 here and 25$ there. So be sure u can make a large payment at once. Plus I still get harassed by the credit card companies. My credit is ruined from my mother taking out a $10,000 credit card in my name and maxing it out and not paying it on time. Plus over 50K in school loans. I just want to run away and get a new identity. Start over. Life sucks like this. Im so miserable i could cry.
:eek: :( :confused:

[malaynab]

Please don't cry, it's contagious! I too am without cable (not even basic), have huge credit card debt, student loans, medical bills . . . Like your bf, my fiance lost his job in December 2001, and just now started working again. He's only working 3 days a week, for a total of 15 hours. The job market here sucks! There have been so many lay-offs around here that even a McDonald's job is hard to come by.

We've been planning on getting married for 3 years now, and don't have the funds. (courthouse doesn't appeal to me, trying for Vegas) We'd like to buy a house, but with my credit rating, that'll never happen. We'd like to have kids too, but we can't afford ourselves, much less take care of someone else! I'm with you . . . this is not how I pictured my life at 25.

Now that I've vented, let's decide what we can do about it. Any ideas?:)

Malayna

[stephr721]

Here is a tip on the student loans - consolidate them with Direct Loans. I had a Perkins and a Stafford that was running me $210 a month - I consolidated them and now my payment is $148 a month. It's not much, but the difference pays the cable bill. I'm going to be paying them for the rest of my life anyway.

Here's the link: http://www.loanconsolidation.ed.gov/borrower/borrower.shtml

We also got married in Vegas to save the $$$. It was totally worth it.

[TX20s]

Brand new to the site, saw this post and thought I would offer my .02

My new husband and I were in the same boat with debt - but it was totally our fault; we got ourselves into it by living above our means. We tried a credit counseling service and got ripped off!! It was called Ameridebt, and basically, the counselor told me I would be getting such and such a rate, and had me sign on the dotted line. Afterwards, half our creditors would not agreee to the terms, and I had already sent Ameridebt three large payments. I finally cancelled the service. I do not recommend them. My credit was GOOD until then. It was just too high for us to handle, but I had no late payments until that point in time.

I know bankruptcy scares alot of people, but if you are considering it, talk to a lawyer. Most (good ones) will offer a free consultation, give you the pros and cons, and let you make a personal decision on if this is the route you want to take. It should be a last option, but in the long run, you may end up in a better situation that you're in now. While it's true the "scar" of bankruptcy can stay on your credit report for 10 years, most people find they can start rebuilding their credit 2-3 years from the date they file. And, of course, some states have more lenient bankruptcy laws than others. Texas happens to be very lenient!

Good luck to everyone with money/debt issues!

[lcc27]

I feel you....im 27 and im drowning in debt!! seems like all paychecks go to bills with nothing left to safe. its awful!! got 30k+ in loans although in deferment. on one of them i still have to pay the interest on it.

i havent found full time work yet which doesnt make my situation any easier. doin temp jobs doesnt even put a dent in my debt??

[MissKitty]

Debt sucks.
I have about $35K in student loans in deferment until July, I'm hoping that my full-time student husband can find some decent part-time work by then and I can start paying them down.
The hardest part for me is trying to keep up with everything on my measly salary. After the rent and bills are paid and some groceries are bought, I'm lucky if I have $100 left, and I only get paid once a month! We get by OK, but we barely make it from month to month and we have no emergency fund set up. It sucks, but we all have to start somewhere and most of the people I know are in a similar situation.

Start by getting rid of all those extras. Cable, long distance, brand name/gourmet foods (start getting those dollar store alternatives!), yup...even the computer and internet access is an extra if it's not being used to bring in more money for you. Consider it a temporary set back. Hell, our home computer has been sitting in a pile in the corner of the studio collecting dust since October! If you only use your computer for e-mail or messages, consider using the library. It's free.
Stop using the credit cards! You are only digging yourself furthur and furthur into debt every time you use it. Cut them up if you have to and start fresh. Try to live without them and you will see that you have been living way above your means.

Can you take public transportation to work? The cost is so worth it if you live in the right places. I only pay $48 a month for transportation to and from work, and I can read a book instead of stressing over the traffic. What about car polling? Could you walk or bike to work? Kill two birds with one stone by exercising and getting where you need to go.
I would also suggest getting rid of the new car and settling for a used one, or just work around having one car. Take a look at your budget! You are paying way, way too much for transportation, not to mention that you are charging car repairs. Look into alternatives.
Are there cheaper places to rent in your area? Could you find somewhere closer to your work, and that offers utilities included? You may need to temporarily down grade until things pick up.

Bankruptcy should be the absolute last resort and definately get a lawyer. It won't cover student loans though, you will still have to pay those. A friend of mine declaired bankruptcy and she had to pay over $500 to do so! Realize that it's not an easy solution.

Cut back on everything. Use less water and electricity. Its easy and you can think of it as doing something good for the environment. Use candles and oil lamps, give up the ac and heat - use alternatives, conserve water by showering or bathing together, don't flush the toilet every time you use it, unplug things that are not in use...there are hundreds of ways to save on electric and water!
Could you be doing anything else to bring in money? Work a part-time job, sell stuff, make crafts to sell, odd jobs, type papers...anything? I've been making X-mas stockings to sell at craft shows and around the holidays. I experimented with this last year and a weekend's worth of work brought in about $300! I am so sick of making X-mas stockings, but you gotta do what you gotta do to get by.

Consider it all a temporary situation, start living below your means. It sucks at first and it's a downer at times but try to find the joy in simplicity, and keep telling yourself that it's all temporary and the struggle will pay off.
~MissKitty