Need debt help/advice

[joshzd1]

I am married and in school, working part-time. I earn about $30k, and my wife when healthy has earned about $60k, but that's the problem, she's got a chronic illness that's kept her out of work the last 2 years, and our income has hovered around $50k in that time. She had already accumulated $100k in school debt, and continues to go to school. I have $50k in schoopl debt, and $60k in credit card debt. We're currently paying back on a 401k loan so no chance to get money there, and her healthcare bills are now around $50k as well.

My question is 1) how do I get us out of this hole, and 2) does debt consolidation negatively affect our credit rating? My credit rating is in the 640 range, and before all the debt was in the 740's, her's is a lost cause.

Any legit advice is welcome, thanks.

[disneysteve]

Originally Posted by joshzd1

my wife when healthy has earned about $60k, but that's the problem, she's got a chronic illness that's kept her out of work the last 2 years

She had already accumulated $100k in school debt, and continues to go to school.

So your wife is too ill to work but not too ill to continue to go to school and rack up additional student loan debt. Perhaps I'm missing something here but that doesn't sound right to me.

If there are medical and/or financial issues, I think you need to consider delaying the schooling (both of you) to work more and boost your income to get the debt knocked down and stop adding to it.

The first rule when you find yourself in a hole is to stop digging.

[disneysteve]

Adding up the numbers, you've listed 260K in debt plus the 401k loan however much that is. Your current income is 50K. As I said, you need to stop taking on new debt. No school loans. No credit card debt. Medical bills, of course, may be unavoidable. Both of you need to work as much as you possibly can because it sounds like you both have the skills to generate good incomes. You just need to put that to use, slash your living expenses to the bone and throw every penny you can at the debt.

Don't bother with debt consolidation. That accomplishes nothing. And don't worry about your credit score. That's only important if you want to borrow more money which is the last thing you need right now.

[bjl584]

I agree with Steve. Why is your wife still in school? If she is unable to work now due to illness, then what good is her having a degree going to do? All she will be when she is done is too sick to work with a degree and a whole bunch of student loan debt. You need to stop taking on new debt and start making a plan to pay back what you owe. You should post your budget for us to have a look at. You will most likely need to cut back wherever possible, pick up extra work, and generally go into survival mode.

[Redraidernurse]

I'm wondering what everyone else is - why is your wife racking up more school debt if she is too ill to work?

[snafu]

Nearly all Debt Consolidation programs are for profit business who target debtors for fees to do what you can do for yourself. If you are able to qualify for a consolidation loan the interest rate will be exorbitant.

[spendherenotthere.net]

My wife and I were in debt for over $140k about five years ago. We are now debt free and investing with a lot of money set aside. My wife also has an illness and it has greatly affected our income. The only answer is to alter your budget to save as much money as possible and pay off the debt. Anyway that you can increase your income is helpful. I took on extra work wherever I could get it. Use coupons, stop going out to eat, cancel your cable, and cancel everything except what you need to survive. I know it feels helpless but the other side of this is far worth it.

As for the medical bills, call them and tell them of your financial problems and set up a payment plan without interest. Make as small as payments on these as possible right now so long as no interest is accruing. As for the 401k, see what the smallest amount you can put on these. Then put as much as you can on the credit cards. These will likely have the largest interest. rates and are just plain nasty. Dont forget to deduct your payments on student loan interest on your taxes as an above the line deduction (I am not advocating for student loans but at least you can deduct their interest which you cannot for credit cards). Once you pay off the credit cards, then student loans, then go to the 401k, and then finish the medical bills.

As others have stated, do not take out another dime in loans. This will be tough at the beginning but oh so rewarding in the end. Love each other along the way and celebrate each and every loan you pay off.

As someone who has somewhat been where you are, take a breath, make a plan, then attack the debt. It will change your life. Good luck!

As with the

[naomibatac]

Many says consolidation does not truly help. However, there are instances that it worked. I guess, the way to make it work is for you to do your part. No debt repair can take place if you will not minimize your expenditures. You have to be frugal and concentrate on paying your debts. Make a budget as what many people advice because it will really help. But, you have to stick to whatever budget you come up with. It will not be overnight, but if you are consistently paying your debts and being frugal, you will be able to get out of debt eventually.

[Eric80]

One of things i did was go to the citizens advice bureau where they advised me to go and see a debt advisor - i did this and they were fantastic! they were really kind, genuine and honest which i think is important when in a situation like this. I have ended up doing an IVA where i am now able to manage my payments - they are the best people to speak to for honesty.

[joshzd1]

She has been going to school online while laid up in bed. She is working on a teaching degree.

I think a better question would have been how to tackle mt credit card debt. The school debt will unfortunately have to increase until we are both finished with school. For each of us it'd mean a minimum $20k/year increase in the end. I do appreciate the advice about the medical bills, I think that if I set up a payment plan, that'd be the best way to go. I will also look into the citizens advice bureau (thanks Eric).

[disneysteve]

Originally Posted by joshzd1

She has been going to school online while laid up in bed. She is working on a teaching degree.

Is her medical condition such that she is sure she will be able to resume full-time employment once she gets her degree? If so, how much does she anticipate earning at that point? You said she already has 100K in student loans and is still taking on more debt. All of the teachers I know don't earn anywhere near enough to support more than 100K in student loan debt.

Earlier you asked: "My question is 1) how do I get us out of this hole". The answer is to stop digging. Stop taking on more debt. Stop borrowing money. You can't afford the debt you've already got. When the ship is sinking, you don't punch another hole in the floor to let in more water.

Remember, student loans are not bankruptable so that isn't going to save you here.

[maat55]

Originally Posted by joshzd1

She has been going to school online while laid up in bed. She is working on a teaching degree.

I think a better question would have been how to tackle mt credit card debt. The school debt will unfortunately have to increase until we are both finished with school. For each of us it'd mean a minimum $20k/year increase in the end. I do appreciate the advice about the medical bills, I think that if I set up a payment plan, that'd be the best way to go. I will also look into the citizens advice bureau (thanks Eric).

There are no magic tricks. You two have turned your wifes education into an highly upside down asset. If she were able to make 60k before this added schooling, becoming a teacher is not going to increase her income potential above her current potential. The only thing you are accomplishing is further debt and bad habits.

I agree with Steve, stop digging and start earning more now.