I am a 29 y/o living in Los Angeles and have a huge $23k credit card emergency. Basically, I was living on a non-existent champagne budget and obviously, lived well above my means and made major financial mistakes. I want to live the life I envisioned for myself growing up and pursue a few goals (MBA, travel, spoil my immigrant mother, save for home, etc) while I am still single with no SO or kids. Sidebar: I feel like nobody would want to seriously date a loser with so much CC debt anyways
However, none of this can happen due to the overwhelming amount of credit card debt and high interest rates.
- Location: LA (live and work)
- Age: turning 29 in a few weeks
- Gross salary: ~$60k; about $1,450 net every 2 weeks
- Part-time job: about $150-300 net every month depending on how many hours I pick up (varies based on full-time job schedule)
- Employee-sponsored 401k = $23k (fully vested; I contribute up to company match)
- Roth IRA = $8k (stopped contributing since 2015 since this was a retirement account from a previous employer); 1-year rate of return = 17%
Total Student Loans: $10k (interest rates varying from 3-6%)
Monthly Budget (Budget / % of net income)
*Note: I split utilities with my two roommates. The numbers listed below are my individual share.
- Rent - $1,050 / 36% (considered a great deal for West LA)
- Sprint - $100 / 3% (Includes installment payment for iphone 7. I upgraded this year from an iphone 4 with a broken home button, so noooo I am not upgrading to new devices unnecessarily)
- Car Insurance - $100 / 3% ($500 payment every 6 months due in January and July)
- Internet (cord-cutter) - $25 / 1%
- Utilities (gas and electricity) - $20 / 1%
- Braces - $112 (I have $600 left to pay off) / 4%
- “Savings” - $200 / 17% (I end up dipping into it to avoid using the credit cards...so sadly, I do not have a savings.)
- Student Loans - $260 / 9%
- Gas - $150 / 5%
- Groceries - 200 / 7%
- Netflix - $5
- Spotify - $15
- ClassPass - $50
It used to be out of control about 5 years ago, but I have since learned how to spend less. I don't go shopping or travel. After essentials, most of my spending is on dining and booze since I like to go out with friends. In October I spent $200 on alcohol (drinks are about $15 at bars) because I went out more but In the past year, I've spent $20-50 a month on happy hour and bar hopping. I started cooking most of my meals to save money on eating out and realized it's also a passion of mine. I shop between Costco, Trader Joes and Ralphs depending on what I need.
I always pay all my bills on time and pay at least the monthly payment. I allocate about $500 a month from my main paycheck to credit card payments. I picked up an easy part-time job to help with the credit card payments and anything I make from the part-time job gets fully allocated to the credit card. I've had this job for about 5 months but in the last three months I had to use the funds to pay for some car maintenance.
I picked up the part-time job to help, but have also been actively searching for a new full-time job that pays more. I've been in contention for higher-paying jobs but have been told that they picked the other candidate because of their finance skills (I'm not going for finance jobs btw), hence why I feel like I am in a never ending cycle. Can't get a better job until I get my MBA, but can't get my MBA until I pay off my credit card debt and perhaps get a better job that will help me get into a better school. I can't live with family either since they are not from here and they are not in a position to help me financially.
TLDR: $23k credit card debt; Cut spending and picked up part-time job to help pay it down, but still too overwhelmed and feel like I cannot accomplish my personal goals due to the debt.
As a last resort, should I use my retirement funds to pay off some debt? I was thinking of paying off the Bofa and AMEX card with retirement funds and then transferring the rest of the debt over when Bofa / AMEX offer 0% on balance transfers (I'm pretty sure Bofa will offer it). I am confident in my budgeting habits now (I've been using an app that I really like) and monitor my spending a lot. The problem is that the debt is so high I seem to be going nowhere with what I'm doing now. Thoughts? Thank you for your time.