A 29-Year-Old Asks For Help With Managing A $120,000 Debt, And That Doesn't Even Include The Mortgage

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A 29-year-old and his wife have more than $120,000 in debt, and that doesn't include their mortgage. The couple mostly got into this situation because of credit card debt, and they are taking out personal loans for big expenses.

The 29-year-old isn't sure how to tackle their debt and turned to Reddit for advice. They also have four kids, which is a great accomplishment, but they have to manage various costs while establishing a path out of debt.

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Prioritize Credit Card Debt

The couple has $30,000 in credit card debt, which comes to approximately $500 per month in interest. They have four credit cards, and most commenters suggested focusing on that debt over the others.

"Focus extra payments on the highest interest debt first, while making the minimums on the rest, and work your way down," one commenter said.

Getting rid of credit card debt as quickly as possible will make it easier to tackle the remaining financial obligations. We also know that the couple has a debt consolidation loan at $768 per month at a 9% interest rate, but it only has a $7,400 balance, so it should be paid off soon. There is also a $5,300 personal loan that has $150 monthly payments. We do not know the length of the loan terms.

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Swap Out The SUV

One of the biggest expenses the family has right now is a $55,000 SUV with $1,044 monthly loan payments. The couple has another car that is fully paid off.

While they need a big car to accommodate four children, some Redditors suggested selling the vehicle and getting a suitable replacement.

"A brand new Hyundai Santa Fe, which seats seven, is like $36,000," one commenter said. "A Honda Pilot is $41,000, and minivans have been in production for decades for under $50,000. It was clearly a luxury choice, and one they thought they could afford but can’t."

Selling the SUV and getting a more affordable car will free up a lot of space in their budget. That also translates into lower insurance and car maintenance fees. The couple can save even more money by purchasing a used car that is still in good condition.

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Make More Money And Invest Less

The couple nets $8,000 per month, which is good, but it's not enough to make meaningful progress on debt. The financial obligations the 29-year-old listed come to $2,562 per month. The couple also has $20,000 in student loan debt that is currently $0 per month in payments due to an income-driven repayment plan, but the 29-year-old said it's about to "probably pick back up."

These expenses do not include the essentials, such as the mortgage and groceries. It also doesn't include child expenses, emergencies, and taxes. For instance, one of the expenses is a $100 per month loan payment for the oldest child's braces. The three younger children will eventually need braces, too.

The 29-year-old currently invests $80 per month into an index fund and an additional $80 per month into a high-yield savings account. That comes to $160 per month, which can go toward debt. The interest the 29-year-old is accumulating on credit cards and loans is higher than what they will earn by keeping it in the bank.

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This article A 29-Year-Old Asks For Help With Managing A $120,000 Debt, And That Doesn't Even Include The Mortgage originally appeared on Benzinga.com

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