I earned $ 100,000 a year, but I accumulated $ 85,000 in credit card debt. I now buy in Aldi and drive a 2007 car, but I still try. How to get rid of debts faster

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question: I’ve accumulated $ 85,000 in credit card debt over the last few years. I worked in two jobs and earned $ 100,000 a year, but when COVID was hit, I lost my second job and couldn’t find another that would be paid almost as much as before. I joined American Consumer Credit Counseling, a nonprofit consulting agency, and my card companies have asked me to lower my interest rates, but I pay $ 1,837 a month while earning only $ 58,000 in salary. I work randomly, I’ve sold almost everything I have, I buy groceries at Aldi and drive a 2007 vehicle, but I don’t think I’ll be able to afford it, given how much I pay per month in credit card debt. Before the outbreak of COVID, I lived in distress and at the current price of gas and food, I can barely make a living. My credit score is around 640 – I’ve never paid a late payment and I always pay more than the minimum, but my debt-to-income ratio is horrible right now. I have no idea what to do. Help!

Do you have a question about getting out of debt or another money fight? Email chill@marketwatch.com.

answer: You should be proud of yourself first because you’ve come this far in your repayment plan, says Matt Schulz, chief credit analyst at LendingTree, who also notes that you’ve probably already paid off part of your debt. You also live very modestly and have taken a useful step in lowering interest rates, which should also be done by readers with large credit card debts.

So what’s next? For some people, they might struggle with credit card debt with a personal loan, such as issuers offer interest rates starting at around 5%. “Personal loans work best for large, one-time expenses such as home improvement projects and debt consolidation. The best personal loans help you achieve a financial goal, such as getting rid of credit card debt, but compare them to other financing options to find the right example, ”says Annie Millerbernd, a personal loan specialist at NerdWallet. But with your credit score, interest rates on personal loans may be higher than what you are paying now.

That’s why Schulz advises you to call your credit counselor and let them know you’re making less money now. “They need to find a way to extend that payout period and reduce their monthly payments,” Schulz says. The same is said by Marguerita Cheng, CFP committee ambassador, who notes that existing clients enrolled in debt management programs can contact customer service and explain their situation to try to get more manageable payments. “ACC can provide documentation of your income,” Cheng says. Because you want to repay your debt, but the proposed payment plan is not sustainable, Cheng says it’s worth mentioning to the ACC that a $ 1,837 monthly payment represents 38% of your gross monthly income. “You can ask them to change your payment, which can extend your debt repayment plan,” Cheng says.

One more thing to keep in mind: if you normally receive a tax refund, you may want to consider a tax deduction. “Instead of receiving an unexpected tax refund, by reducing the amount of taxes you deduct from your salary, you can ensure more cash flow throughout the year,” Cheng says.

And it might be worth considering options other than a debt management plan if the advisors aren’t willing to work with you. “You can try to get a credit card to transfer interest-free balance and move your debt to it. But with your credit rating, there is no guarantee that you will be granted a card, and if you are, the credit limit may not cover the amount you owe, ”says Schulz.

Finally, debt settlement negotiations in which the creditor allows the borrower to repay less than the total amount owed could be a viable option. “It simply came to our notice then. However, it usually destroys your credit. In addition, the amount that is forgiven to him usually becomes taxable income, so they can later get stuck in a large tax account, ”says Schulz.

Therefore, the best option suggested by Schulz is to redesign your debt management plan to better reflect the reality of their current financial situation.

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