Long story short... my income has decreased over 60% the last 2 years and I am struggling with my debt. I am actually paying much more than I am earning each month and have no savings. I spoke with an ACCC counselor (non-profit credit agency) who came up with a budget and plan that would reduce my current credit card debt from $900+ payments to $465 through reduced interest rates. I would still pay all credit cards in full and on time but they would be closed which will affect my credit score (which I dont really care at this point). Even with this plan I am going to be in the hole each month and still without savings.
Income:
$5600 net after taxes (this could be as low as $4800 if my bonus changes)
Expenses:
Mortgage: 1625
Cars: 850 Lending Club: 1100
Avant: 350
Credit Cards Pre-ACCC: 925 (465 if I do the plan)(Total Balance: 20,000) IRS Debt: 125
Student Loans: 200 Car Insurance: 235 (was only 65 before my kid turned 16 a few months ago)
Utilities (phone, cable, internet): 280
Electric: 400
Total before groceries etc: $6090
With 4 kids our grocery bill runs $400+ per month.
So even with the credit card plan reducing my payment to $465, I am still in a hole that I can't get out of (at least $500+ short every single month). I have cut out our wireless plan with ATT to get on a no contract plan and changed cable/internet to drop my bills lower (actually reduced those from $500 to $275). We have cut out all spending on eating out, etc.
So I am considering stopping payments on the personal loans (Lending Club and Avant) in order to pay off the other debts faster and accumulate some savings because as of right now, if our car needed a major repair or some other financial disaster were to strike, we have nothing to use. I have less than $1000 in the bank currently. I don't care what happens to my credit score over the next 5 years, this isn't just an inconvenience at this point, it is a financial emergency to get on track. Sure I will be taking on collections and calls etc from Lending Club and Avant but they cant get money when I dont have money. My goal would be to pay off the credit card debt much more quickly than the plan would call for (since I would have an extra $1400 per month from not paying the personal loans) and save some money for emergencies... then settle for less on the personal loan debts down the road. Paying an extra $400 per month to my credit card debt would take my 48 month payment plan to just 22 months.
Is this a dumb route to take? Please give your insight!
Submitted July 16, 2017 at 11:10AM by PM_Me_Funds http://ift.tt/2tXRpnV
