Looking for saving/digging myself out of a hole advice

[goingtoatown]

Hello,

I am a 22 year old recent college graduate who is currently working as a teacher. I curently make about $47,000 a year (before taxes), but somehow with my expenses this is barely enough.

My credit score is currently a 598, and I have debt as follows:
$1,600 in credit card debt (in collections)
$30,000 in student loans (currently in deferral due to national community service program)
Approximately $1,000 in debt from other things (medical bills, traffic tickets, etc.)

Rent: 1,098/month
Car Payment: 466/month (I desperately bought a car upon moving across the country, and got a bad deal, and because of bad credit, got seriously screwed on my car loan).
Insurance: 150/month for car insurance
125/month for health insurance
Union Dues: 125/month
Phone: 98/month
Gas: 150/month

I'm moving to a much cheaper apartment shortly which will help, but I was wondering if anyone had some general advice on getting myself on track financially. I want to improve my credit and put money away, as I'm unable to save any money currently. Thanks.

[sblatner]

Welcome to the forum. You will get lots of great advice here.

You are missing a few categories in your spending. Do you know numbers for groceries, clothing, entertainment, eating out, etc. Also, what is your net pay per month?

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Also, what is your car worth and how much do you still owe on it?

Does your teaching job have any sort of school loan forgiveness program?

What amount do you have in your checking account? Savings?

Any pension/403b offered through work?

[YLTL_Dan]

I was in a very similar situation as you when I graduated from college. I also bought a car I couldn't afford. First thing.. get rid of the car. It might sound drastic now, but you can buy another much cheaper. You may even need to take out a small loan at a credit union if you're upside down.

Besides that, you need to track every dollar of your spending. When I paid off $50k of debt in two years, this is the plan I used:

1. Complete a current assessment
2. Track your spending
3. Create a spending plan
4. Monitor plan and adjust as necessary
5. Save some money
6. Attack your debt

You can find the full details here (Nurture Your Money Tree)

[maat55]

First thing I would do is move and find a way to get rid of the car. You need a 1k or less car and liability insurance.

You need to prioritize the traffic ticket, ignor the CC's and medical for now. If you can sell the car for what you owe, do so. Also, I would reduce my phone costs.

I would be looking for extra work and selling everything I do not need. As you increase earnings and reduce expenses you can start saving to pay cash for a car, then save to settle your other debts.

The key thing is to lower your expenses, increase your earnings, payoff debts(student loan can be done over time) and build emergency savings. After accomplishing these, you can establish a car and house fund.

It will take time to repair your credit. But your score is the least of your worries today. After you have become debtfree and have emergency funds, you will likely be capable of maintaining a credit card for specific purchases like gas and regular bugetted spending, do not use them for future consumption and always pay-in-full. CC's are not emergency funds, once you accept this principle you will become a better saver.

[snafu]

It's good that you realize you have a serious problem which will take a lot of effort to resolve. Rather than looking at Gross income, you need to work from your Net income, the amount that goes in the bank each month. A less expensive rental helps but subtracts 'needs' like utilities [power, phone, internet, food, auto operations, insurance and maintenance from your take-home pay before 'wants' like cable, clothes fun/entertainment etc. Sadly, mistakes from the past have impacted your credit score and your car loan is what it is.

When will you need to start re-paying student loans? Is there anything you can do to increase income? Is it feasible to add a part time job or tutoring?