I am 35 years old, single, and live in the US. My income is 78K to 80K after taxes and insurance.

I pay $1,500 for rent+utilities, $150 for phone bill, $450 for auto loan, $300 for auto insurance (for two people; I am helping a friend who can't pay auto insurance), $750 for a personal loan and $750 to $1,000 for credit card. I also need to send $100 to $200 to my home country. Total monthly expenses are $3,950 to $4,200.

I have a $16k auto loan at 7%, $32k of credit card debt at 20-22% and a personal loan of $18k at 17%. Total debt = $64k.

After the above expenses I need money for groceries, clothes, gas and other monthly needs.

I want to be debt free or at least decrease my total debts from $64k to $10k.

I can't consolidate my debts, because I already have a personal loan and I have a poor credit score.

Please advise me how to reduce my debt.

Can I be debt free or should I file for bankruptcy (I don't know if that's possible, because I am not a US citizen).

  • 76
    $4,200 * 12 = $50,400. Your income is ~80k after taxes, so where's the $30k/year going?
    – Hart CO
    Commented Feb 28, 2019 at 22:06
  • 65
    Yup, OP has some huge money leaks they are not documenting. Commented Feb 28, 2019 at 23:48
  • 42
    He talks about sending money home. Which implies family abroad, which may explai the big phone bill. SOmeone needs to get an introduction to skype to cut that down.
    – TomTom
    Commented Mar 1, 2019 at 9:31
  • 43
    The question is here if it is really appropriate to support that friend when you have the feeling that you don't even have enough funds for yourself.
    – glglgl
    Commented Mar 1, 2019 at 14:39
  • 28
    Your accounting is confusing. You say "Total monthly expenses are $3,950 to $4,200" but then you say "After the above expenses I need money for groceries, clothes, gas and other monthly needs." So the $4200 isn't actually total? It doesn't include groceries, clothes, gas, etc.? Commented Mar 1, 2019 at 16:17

8 Answers 8


Can I be debt free or should I file bankruptcy

There's no reason to file bankruptcy with $64k in debt and a $80K net salary. You can get out of debt in 1-2 years if you're willing to sacrifice. The harder you sacrifice, the less time it will take.

Please advise me how to reduce my debt.

  • Stop creating any more debt. Cut up all credit cards
  • Put $1,000-2,000 in a cash savings account to cover "emergencies" while you are getting out of debt.
  • Get on a cash budget. List out all of your expenses in order of priority (housing, food, utilities, transportation, etc.). Put debts last.
  • Cut expenses to the bone. No restaurants, no vacations. Every discretionary dollar you spend restricts how quickly you get the debt paid off.
  • Once you have all of your expenses laid out, all remaining cash goes to your highest interest-rate debt (I normally suggest the smallest balance, but the interest rates and balances are so high here it might make more of a difference than most cases). Once the cash runs out, stop spending.
  • Pay minimum payments on all other debts. Do not skip payments unless you're already in default.

Once you determine how much per month you can pay towards debts, you can figure out how long it will take you to pay them off. Don't expect any quick solutions. Your debt has been building up over time; there's no reason to expect to get rid of it quickly.

Some things you can do to jump-start your journey:

  • Sell the car. Use the proceeds to get a cheap car that you can pay for in cash.
  • Sell other stuff. Anything you can sell online will help you get out of debt sooner.
  • Get extra work. You can probably find part-time work that pays $1-2,000 per month.
  • 24
    @TheGuest You're not alone. The first step (getting a budget and sticking to it) is the hardest by far. It will take some time and discipline but once you have that down you'll be less inclined to overspend going forward.
    – D Stanley
    Commented Feb 28, 2019 at 22:23
  • 55
    Sell the car. Use the proceeds to get a cheap car that you can pay for in cash. Whether this is good advice depends on the current value of the car. Commented Mar 1, 2019 at 7:57
  • 44
    In addition selling the car and focussing on that expenditure probably isn't a good use of time. The asker has a very large annual surplus already that they are spending on something. If they figure out how to stop doing that then they can forget about economising on the car. If they don't figure it out the few hundred per month saved by changing cars will just be spend along with the 30k or so that is disappearing from the budget each year.
    – Eric Nolan
    Commented Mar 1, 2019 at 9:40
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    @LuxClaridge I could be wrong but I'm pretty sure CC accounts are still considered "active" as long as you have a balance and are making payments (no need to buy gum every month while paying it off). Cutting up the cards doesn't mean closing the account, it just means you can't be tempted to charge more to the account while on this mission. Also, having a good credit score should be the least of OP's concerns right now - he shouldn't be looking at applying for more credit any time soon, so he doesn't need a good credit score.
    – CactusCake
    Commented Mar 1, 2019 at 14:28
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    @paul23 again, this is just my opinion, but if something catastrophic happens you stop paying down debt and use those debt payments to deal with the emergency. If you have a large medical bill you work out a payment plan. If you lose your job you stop paying debt, cut expenses even more and get back to work as soon as possible. My point is 18% is a lot of interest to pay to keep a large safety net for a low-probability event.
    – D Stanley
    Commented Mar 1, 2019 at 15:23

You need to change the way you think. First, understand compounding. Not just intellectually, but viscerally. You need to develop an aversion to spending borrowed money.

A debt with 22% APR doubles every 38 months.

Every dollar you pay down your debt, cuts the total length of time you will be paying that horrible interest. Every $1 you spend now increases your time to get out of debt, and costs you around $3.70 if it takes you 6 years to get debt free.

Take a look at graphs of compounding interest. They're designed to excite you about saving, but debt grows exponentially too. That should scare you. Set one of those graphs in front of you until it does.

Then, use your intellectual knowledge of compounding to change your real-world behavior. Learn to turn price tags into what it will actually cost you, by multiplying by 3.70. That $150 favor you do paying car insurance for a friend actually costs you $555. Every month. You are out $750 for your relatives in your home country to receive $200. The $2 cup of coffee costs you $8 (don't forget sales tax!). The $7 lunch costs you $28. Splitting a night out with your friends is costing them $150 each, but you're out $550!

But lucky for you, you've got a place to put money where you don't get back only 1/3.7 of its value -- your debts. They work in reverse. Where lunch will have you paying $28 for a meal worth $7, every extra $10 you throw at your credit card debt puts $37 into future-you's pocket.

Start seeing the things you spend money on with their true, just-for-you price tags, and you'll find saying no to waste and eating pasta at home at lot more compelling.

The best part is that if you do change your thinking like this, D Stanley's estimate that you could be out of $66k debt in under 2 years, and back to living life normally, paying for things at the same price everyone else gets, is 100% possible.

  • 13
    Wow, the part about multiplying by 3.7 is really interesting. Is this a common piece of advice? I've never heard it before
    – Jon
    Commented Mar 1, 2019 at 3:50
  • 15
    @Jon: There's nothing special about 3.7, it's just 22% APR compounded monthly for 72 months. You can substitute any APR and duration. If you have no debt except subsidized student loans, your number might be 1.3 or so. If OP had missed a payment before asking here, and therefore was hit with penalty APR, it could be 8.5 (based on 30.99% APR and 7 years).
    – Ben Voigt
    Commented Mar 1, 2019 at 3:56
  • 47
    +1 because you showed how much money a $8 coffey will cost you in 7 years. Its sometimes helpful to see things this way. May i ask you if you could improve your answer by adding the formular to get to the 3.7 factor? It could also help future readers.
    – some_coder
    Commented Mar 1, 2019 at 6:52
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    One complicating caveat: $200 in home country may have more purchasing power than $750 in host country.
    – gerrit
    Commented Mar 1, 2019 at 12:34
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    @CactusCake If you compare the two "future-you"s, the one who gets the $10 later has $37 more than the other.
    – glglgl
    Commented Mar 1, 2019 at 14:41

My income is 78K to 80K after taxes and insurance.

I pay $1,500 for rent+utilities, $150 for phone bill, $450 for auto loan, $300 for auto insurance (for two people; I am helping a friend who can't pay auto insurance), $750 for a personal loan and $750 to $1,000 for credit card. I also need to send $100 to $200 to my home country. Total monthly expenses are $3,950 to $4,200.

I have a $16k auto loan at 7%, $32k of credit card debt at 20-22% and a personal loan of $18k at 17%. Total debt = $64k.

After the above expenses I need money for groceries, clothes, gas and other monthly needs.

I want to be debt free or at least decrease my total debts from $64k to $10k.

You have dug yourself into a hole. Luckily you have a shovel, and the hole is only 3 years deep.

Time for a concrete budget and savings plan.

  1. Reduce your utility costs. Raise the AC temp by 3 degrees. Lower your heating by 3 degrees. Turn off your lights religiously. This could be $10-$25. So $1475 cost.

  2. Trim your phone bill. Unless you are buying your phone in installments (which cell companies call "get a free phone, just sign up"), you should have a < $50 phone plan. No home line. $100 saved. $50 cost.

  3. Tell your friend you are sorry, you can no longer cover their auto insurance, because you owe 10s of thousands of dollars of debt and need to pay it off. Give them 1 or 2 months warning. $100-$150 saved, $200 cost.

  4. Keep sending the home country money. I am assuming this is a lifeline for one or more people. $150 cost.

Total: $1875/month.

Debt servicing: $1000 credit card, $450 auto loan, $750 personal loan.

Total: $2200/month debt servicing.

Income after taxes: $6500/month.

Annual interest on debts: 16000*.07 + 32000 * .22 + 18000 * .17 = $11220, or just over $1000/month. Note that this is lower than your servicing.

Grocery: Get a small freezer. Buy some protien you like in bulk, freeze it in freezer-safe bags, raw. Cook batches, spice it. Freeze some. Add a cheap starch. Selection of vegtables (including freezer veg). Buy the "cheap option" (Ie, organic or not? Not.), and go to the cheaper grocery store.

Have a weekly meal plan. Always eat what you cook. Always. Eat it all, and only it. Bring lunches and snacks to work. (Eating out comes out of your $50 a week spending money, which doesn't go far.)

Note, this can easily consume 5 hours a week in food prep. Budget for that. It'll probably eat in into your existing hobbies and socialization, but cooking can be a hobby, and you can even socialize by inviting friends over to have your home-cooked food once you get half-decent at it. (Feeding people this way isn't free, but is much cheaper than going out to socialize usually)

Unless you are eating ridiculously fancy food, you can manage less than $200/week this way even in an extremely expensive city, and probably under $100.

Gas; I'll say $100/week. Work out what you are spending, make it accurate. Keep receipts for at least a month.

Spending money; give yourself an allowance, say $50/week. Any money left over at the end of the week goes into the "I win" jar. Record how high you can get your "I win" jar.

Clothing and misc budget; Start with $50/week. Yes, this means you don't get to buy new clothes for a little bit.

$300/week, or $1300/month.

1875 + 2200 + 1300 = $5375/month.

Leftover: $1125/month.

You'll note I pinched pennies. This is on purpose; $100 is only 1/65th of your income, but it is 1/10th of the money you need to pay off your debts.

Put $125 into a rainy day fund; a different bank account. The remaining $1000 goes against your debts.

After 1 year, you have a $1000 rainy day fund (example use: your car explodes), $500 capital expense (new freezer), and have paid off another $10000 of debt. You haven't added any debt.

In addition your debt servicing has reduced your debts.

  1. $1000 CC - $587 interest = $413 against principle, * 12 = $5000 paid off

  2. $450 auto - $93 interest = $350 against principle * 12 = $4200 paid off

  3. $750 loan - $330 interest = $420 against principle * 12 = $5000 paid off

And another $10,000 in CC debt paid off. So after the year you'll have

Year 1

  1. CC: $15000 (32 - 5 from principle portion of payments, -12 from debt clearing)
  2. Car: $12000 (16 - 4 from principle portion of payments)
  3. Loan: $13000 (18 - 5 from principle portion of payments)
  4. Savings: $1000

I'll assume your servicing remains the same, and you continue another year.

  1. $1000 CC - $375 interest = $725 against principle, * 12 = $8700 paid off

  2. $450 auto - $70 interest = $380 against principle * 12 = $4500 paid off

  3. $750 loan - $185 interest = $565 against principle * 12 = $6800 paid off

Year 2

  1. CC: $0 (15 - 9 from principle portion of payments, 6 from debt clearing)
  2. Car: $7500
  3. Loan: less than $1000 (13- 7 from principle portion of payments, 6 from debt clearing)
  4. Savings: $2500 (1+1.5)

You just freed up your CC payment. Your personal loan is almost gone. You are now saving $1000 (debt reduction) +$1000 (cc payment now debt reduction) +$750 (personal loan now debt reduction) = $2750/month, or $33k a year.

  1. $0 CC - $0 interest

  2. $450 auto - $44 interest = $400 against principle * 6 = $2400 paid off

  3. trivial interest on loan.

Year 2.5

  1. CC: $0

  2. Car: $0 (7.5 - 2.5 principle portion of payment - 5 debt clearing)

  3. Loan: $0 (1 - 1 debt clearing)

  4. Savings: $12000 (2.5+750 saving +10 leftover debt clearing. 1250 capital expenditure)

And that is that. You are financially stable. You have enough savings that if your car dies, you can buy one with cash. (Note: all car loans are bad deals; their interest rates are lies, buying a car with cash gives you a lower price)

Year 3

Savings: $28000 (12k + 750 saving + 16k debt clearing leftover - 750 capital)

Now you can buy a cheap car with cash and still have an emergency fund.

This is where you want to be. At this point you can consider supporting a friend with car insurance, retirement funds, saving up for a downpayment on a house, buying a fancy phone, etc.

You'll still want to budget. But your budget horizon should now be 40+ years long.


If you followed this budget you'd actually pay things off faster, because I charged you the interest you owe at the start of a year for the entire year, even though it is decreasing as you pay it off.

About 1 year into this process you might be able to renegotiate your personal loan for a lower interest rate.

Sticking to this will be hard. It will feel like you are living like a pauper. But keep your eye on the light at the end of the tunnel.

Depending on your job, you might not be able to keep your clothing budget down that low. Reassess every 6 months.

Ideally build a spreadsheet that lets you enter your current debts and tells you how long until credit card $0 is. That is the key point; once you have cleared that pile of high-interest debt, you can redirect the servicing costs to the next pile of high interest debt. And then you are home free.

Right now, your debt servicing is twice as big as the money you can "free up" to clear your debts.

As you clear your debts, your debt servicing will plummet, which means you get more money to clear your debts, which makes the debt servicing costs go down, which gives you more money, etc.

This is called a "virtuous cycle" -- if you can make serious moves towards clearing that debt you can shockingly quickly get out of it.

The bad news is that the cycle works the other way too. Right now, you can make your lifestyle modestly cheap, and have the space to quickly pull out. Increase your debts by another 50% and you will be forced to have a modest lifestyle to tread water, and it would take a decade or more at that rate to pull out. Another 50% and you'll be in an emergency situation, unable to make your bills.

Here is a spreadsheet that does month-by-month calculations of your current debt. It is set up so that you pay off debts from right to left. Negative values indicate remaining money owed against that debt. Positive values indicate money leftover (that month) after all debts are paid, and are automatically "cascaded" into the debt on the left (the same month).

Each column as a min payment, which is put towards that debt until the debt reaches 0. The "debt clearing" one has a 0 debt, so its money automatically flows to the left (into credit card column). Finally, money left over flows into savings.

By charging monthly interest it more accurately reflects the payoff schedule.

You should make a spreadsheet like this, and check if you are on-track periodically, create new versions to reflect reality, and use it to diagnose errors.

Note that in it, your last debt is actually cleared at the 24 month mark. Then over the last year, you accumulate savings. I assume this is due to the fact that the interest payments I calculate for some of your debts is higher than the result of monthly calculations. That adds up (and compounds), especially on the higher interest debts.

  • 13
    "Clothing budget; Start with 50$/week. Yes, this means you don't get to buy new clothes for a little bit." ... Eh? You can buy clothes immediately with that budget. Could easily get by on half as much, or even less.
    – CactusCake
    Commented Mar 1, 2019 at 19:57
  • 3
    If you really want to pinch pennies, Goodwill has a lot of name brand, good quality clothing that people just don't want anymore. I needed polo shirts to wear to work when the summer weather kicks in here so I went to two different Goodwills and got 5 new polo shirts for about $30.
    – Steve-o169
    Commented Mar 1, 2019 at 21:36
  • 4
    Yeah, I also hit the clothing budget and fell off the rails there...I would rather spend like half of that on better food instead of trying to live on super basic food, and just...make a suit last more than a year... Commented Mar 1, 2019 at 22:53
  • 8
    "Luckily you have a shovel" at 70k+ net income, I'd say it's more of an excavator or a bulldozer...
    – user75362
    Commented Mar 4, 2019 at 11:24
  • 5
    @TheGuest on Stack Exchange sites you can change which answer you accept as the best answer for any of your questions any time you like and for any reason - it's just a matter of clicking the check mark next to the one you like best.
    – CactusCake
    Commented Mar 4, 2019 at 21:12

One thing that I don't see addressed in the other answers is this:

I am helping a friend who can't pay auto insurance

You MUST stop this. While I understand, and applaud, the desire to help a friend, you are not in a financial position to do this. An analogy is a toddler who wants to help carry in the groceries and tries to carry in a gallon container that is made of glass. Bad things are going to happen and the toddler is going to get cut.

Follow the steps that others have suggested. Get out of debt and when you are financially strong enough, then you can help others.

  • 9
    Absolutely this. As a fellow bleeding heart, I can understand how difficult it is to tell your friend that you can't help them anymore, but you have to do it. If you can't even figure out a way out of your own financial situation, how do you expect to be able to help someone else with theirs? Also, this is going to be a defining moment in your friendship - if they are really your friend, they will completely understand, and if they throw a fit, they were never really your friend in the first place and it's best that you cut ties with them before they cost you any more.
    – Abion47
    Commented Mar 1, 2019 at 23:30
  • 6
    Do try to give them some notice though. I know you're not in a good position yourself, but if they have a payment due tomorrow don't let them know today you won't cover it. If possible, try to give at least one month's notice, to allow your friend time to sort themselves out.
    – Tas
    Commented Mar 3, 2019 at 22:29

The tropes that got you here

There's a core pattern of thinking that drove you here. It is a well known trope, and it has already made you a debt slave. Now, whilst in the middle of it, you must realize what happened and make course corrections. Otherwise this will be your life. Indeed, bankruptcy is the next step in the ever repeating cycle, so the fact that you are thinking that shows how inculcated you are into the pattern.

Trope: Spend if able

The core of the pattern is this logic: Am I able to spend money?

  • Yes -> do so ASAP -> high esteem and happiness.
  • No -> don't spend -> low self-esteem and misery.

This way of thinking is the path of the debt slave. I almost wrote "it is wrong" but that's a value decision for you.

In this way of thinking, you work for money: money is your boss and makes you do pretty much everything. Money makes you spend when you are able. It makes you carry debt. It makes you go to work. It defines your path, it even defines your happiness. Excuse me, but darn it, this is wrong!

Contrast with my life, where my living expenses are about 1/3 of salary because I go to extremes to make that so. I find fulfillment in things other than spending (like saving!) - some of my rewards are powered by my money stance. I take extended periods on sabbatical because I can. I have a tremendous amount of freedom in my life. I don't literally have to work, I choose to work and I select the most self-fulfilling jobs. I also don't fly out of the office at 5:01pm right into rush-hour traffic, and I don't get "hump day".

Trope: Throwing money at problems (when you have it)

There's a related mindset: Whatever the problem of the day is, throw money at it. This one is very evident just from the few paragraphs you wrote.

The logic is, "Well I have the money or credit limit space, so the easiest path is just spend my way out of this problem". That is different than the next phase of debt slavery, where lenders have cut you off, and now you truly don't have the money. Then, you feel smothering pressure to solve the problem in some other way that doesn't involve cubic money.

Here's the thing. Feel that pressure even when you do have money. Even if you have $24,000 of credit line available, say "NO. I simply do not have the money for the transactions you propose." And put your foot down. (even though, by your thinking, there's some unused credit limit just sitting there!)

For instance, with the hospital, "I CANNOT pay you" leads you to doing some research and finding out their "retail prices" are a racket: jacked up rates intended for rich foreign medical tourists, or suckers. You go to billing and say "Excuse me, if you had done this same work for a Medicare patient, you'd have cheerfully accepted $2145.89. [you just made that up, but they won't check.] Do I look like a rich foreign medical tourist? Given my poverty [credit limit doesn't count toward poverty], I propose $1200 to settle it." And then you haggle from there, and you try to hit a number in the 20-30% range. That's how smart people handle the hospital.

(another gotcha is using an ambulance as a taxi to the hospital. That'll cost you about $1000 in the U.S. Previously, doctor and hospital voice mails said "if this is an emergency, call 911", now they say "come to the ER or call 911".)

Or take the phone. You need to make a lot of international calls to countries where the phone service is a racket? You just grabbed the easiest option, a cell phone with the best international plan you can get at the store. Now if you didn't have the money to spend, you'd have looked much closer at things like Skype or TeamSpeak, or simply do more email communication. Heck, given the stupid cost of international long distance, you could buy them a tablet.

On the car, I choose simple older cars and I developed the skills and tool set to fix them myself. Due to my experience I can just do it; I left my car for awhile and found 2 frozen brakes, so I popped off the wheels and loosened up the brakes down on the spot. It cost me $0 and I was an hour late to my thing. You'd have towed it to a garage and lost 2 days and $1200 doing all 4 corners. That's one of the ways you lose money hand over fist. That and the stupid car and insurance payments. It gets even more explosively bad if you violate Harper's Law: Never owe money on a car that's out of warranty. Because then, BOOM you have a broke car and still owe the full boat on the loan.

Some friend won't pay his insurance? People back in the home country? You can't help them if you're in trouble: Put the oxygen mask on yourself first. Share your wealth when you have wealth. And you don't have wealth right now.

So paradoxically -- Live your money like you don't have it. And then, you'll have it.

For my money (heh), you'll have wealth when you create the patterns of thinking that create wealth. I'm not the first to say that. The people who say that are wealthy.

  • Thank you. I never know that I can negotiate with my hospital bills in US. Now I know. I want to clarify that I use skype, whatsapp to make phone calls to my home country. But cant use them to call my own parents and some other relatives, because they live countryside (and poor signal, no wifi also) and most of them don't use smart phones. But I dont call much and maximum I spend on international calls is $10 a month.
    – The Guest
    Commented Mar 1, 2019 at 19:01
  • 5
    @TheGuest If you spend max 10$ on international calls a month then for goodness sake switch to a cheaper phone plan. My phone bill was 95$ this month for THREE people, and I'm not on a terribly cheap plan! If you must continue supporting your friend, tell them they only need an emergency phone--no smart phone--and buy them a gift card for a pre-paid phone. If they want to use more than the pre-paid amount they spend it themselves. Commented Mar 1, 2019 at 23:00
  • @TheGuest You can easily get a prepaid plan for $40/mo. I just checked, and Boost has a plan for $35/mo. AT&T GoPhone has a $2/day plan where you don't get charged if you don't use the phone.
    – Rich
    Commented Mar 6, 2019 at 14:21
  • Verizon has a $25/mo plan for flip phones. That plus an iPad with cellular data (which covers your data needs). Or ONLY the iPad because $25 buys 2GB for 3 months, or unlimited for 1 month. I spend about $13/month on iPad data, worst case $25/mo, and you can Skype/Google Voice just fine with that. Who needs a phone? Commented Mar 6, 2019 at 14:56
  • You can consider using Skype out which is not free but is very inexpensive in most cases and allows you to call local mobile or land lines directly from your computer or smartphone. Commented Mar 7, 2019 at 11:49

D Stanley has some good advice. I would only say:

  • Don't sell the car unless/until you've very carefully explored all the pros and cons: net financial gain, total cost of an alternative vehicle or alternative transportation. You could end up worse off, or the gain may be too little to be meaningful.

  • No need to destroy the credit cards, but hide away all but one to be used only where advantageous to do so. I find it easiest to use a credit card to buy gas, and it may be the only practical way to cover an emergency expense.

  • Cut all discretionary spending "to the bone" - no vacation travel, no restaurants, coffee shops, hotels, theater/movies/live sports/concerts except as a very occasional treat. No online shopping. Cook your own meals instead of dining out/ordering in, entertain yourself at home or go where it's free/cheap (parks, museums).

  • Streamline your subscriptions - cancel what you don't need or rarely use.

  • Use cash to pay for groceries or ad-hoc purchases. When grocery shopping, make a list before you go and only buy what is on the list. That pretty much applies to any other shopping - only buy what you've already decided you need.

  • Make a budget for things like clothing; don't spend more than the budget; only buy what you need, not what you'd like.

  • Prioritize credit card repayment; as D Stanley says, highest interest first. Your primary focus should be to bring the credit card balances down to zero. Realize that progress may seem small at first, but any progress is better than none.

Once you've cleared your credit card balances, the job's not entirely done. You need to change your spending habits permanently otherwise you'll end up in the same place again in the future. Credit cards are great if you use them wisely. Only spend money you've already banked - in other words, don't put on your card a balance you can't fully pay off when the bill comes in.

Be aware of the impulse to purchase something you really don't need. Advertising/merchandising is designed to trigger impulse purchasing or desire the premium version of something - train yourself to resist the impulse to buy the gadget you really don't need or the premium coffee that isn't really all that special.

  • 1
    Or keeping up with the Joneses with the last phone/computer/TV model....sound advice. There is a culture of having the latest shiny model of devices, and the habit of only buying a new one when it stops being useful is quite lost. The OP is stating on another question he has 4 bank accounts. Back here, that can amount to around 200-250 euros cost per year if the 4 have CCs, and much more if one of them goes overdraft. Keeping accounts open, even empty accounts costs money. Commented Mar 2, 2019 at 16:04

I don't know where you live in the USA; but when I lived in Toronto (which is NOT one the cheapest places to live in Canada) about 5-10 years ago, I found an apartment for about $750/month (rent and central heating included). It wasn't a popular neighbourhood -- an old and relatively cheap building near the edge of town -- the nicest one I could find in that price-range.

I also spent about $120/month for a bus+subway pass (instead of, you say, $450/month for an auto loan and $300/month for insurance plus gas on top of that), and didn't have a car. I actually haven't owned a car in decades, because living in a city (in Europe or Canada) I don't need one because there's public transport, or I can rent an apartment near work and just walk.

After a while I bought a good bicycle -- even a good new bicycle at a purchase price of like $800, plus lots of extras like a rack and panniers and shoes and gloves and bike locks, costs less than a yearly bus-pass (I commuted by bike instead of public transport, 18 km each way, good times).

In summary the "poverty line" for Toronto was defined as being about $22000/year for single people (the "poverty line" is the amount where you're spending almost all your money on essentials, e.g. on rent and so on, not "discretionary" spending).

I found that my total cost of living was actually about $18000 year. At that rate and with a net income of $80K, I could have paid off a $64K debt in about one year.

Apart from rent my next biggest expense was weekly groceries. The rest was relatively insignificant, i.e. many tens of dollars per month for utilities and e.g. clothing.


Adding to the other answers...often are the small things that count and accrue costs.

Having several bank accounts+CCs, especially with them charging maintenance on top of the costs because of being empty? Close all of them. Unless you want to diversify where you store substantial savings you do not need accounts in more than two banks.

Having small vices, coffee, smoking, maybe drinking, sweets? Drinking outside of home? Even worse. Using all those home coffee or tea machines? Cut all of that. Go dry. It is inane the money I spend drinking coffee, and here coffee is ridiculously cheap.

Same goes for food. Try to cook your own food instead of already made meals/fast food. The costs are significantly lower, and the food of better quality.

About clothing, do not go for the more expensive brands. Heck, consider using 2nd hand clothing stores to diversify your wardrobe.

Then could come the less essential stuff. NetFlix, Spotify, other only services? Cable TV? Special movies and sports channel bouquets? Cancel all of that. Downgrade for a weaker Internet service, just enough to keep connected. (I spend 30Euros per month for 150 TV channels+100Mbps...we already have 2Gbps offerings). I know people spending 200-400 Euros, and they often complain they are cash strapped at the end of the month. It is easy to get lost over higher speeds, Sports/movie channels and Internet subscription services)

Buying trendy phones? The technology has evolved tremendously, nowadays a 300 hundred bucks android phone does almost the same of a 2000 phone for practical purposes.

Lastly into personal items, car. Having a flashy car? That only alone in insurance costs, specialised maintenance and brand parts can eat a significant chunk of your money. Get rid of it.

Getting into the remote family part, my wife is foreign, and I can witness the pressure the family puts (more) on her sisters, who also live near us. They(we) are all working class and they consider us rich, and feel they are entitled to get money or things, on top of their monthly remittances. All their younger relatives have smartphones better than ours. Do not fall into that trap. It will happen only if you allow it.

Advice: it is all too easy to get lost, in the tiny amount of small regular expenses (e.g. that daily twice visit to StarBucks is not that expensive). People successfully saving money do their account/math per year on type of expenses.

(Example: I can go with workmates outside our work corporate complex having all coffees in the nearby coffee shops vs having them on the automatic machine, where I also do not go alone. At the end of the year it is 600 saved USD going to the automatic machine. Or stop having coffee altogether, and I save 200-300 USD per year. And supposing I smoked, 10USD a day on cigarettes, 3.5k-5k USD a year. Also I may spend around 200USD on spirits and wine drinking at home, and that figure can be 10-20 times higher when drinking in pubs...Or into eating, around 700 year bringing food from home vs 1.5K in the canteen vs 4K-11K eating lunch on restaurants - and I am not even getting into dining out, which is usually much more expensive. It all adds up when you do your math per year. It also gets ridiculously easy to burn though large sums of money living without caring about costs when paying it only for yourself and much more when being too generous with "friends" ).

Last remark: you are at your prime physical peak, and probably career peak. Do not let it waste away being too generous with "friends" and not taking control of your expenses and your money. Get your life back. You wont be in your 30s forever, you will need savings later on.

Yet another personal remark: In my 30s, I cut loose more than one female "friend" that was only interested in getting money/"help". I also cut 1 or 2 male friendships, even though I liked the company of one in particular, because I was getting into a group of very pleasant people to have around, but a group of daily heavy drinkers. Some choices are not easy to make.

Personal story 2: To cut a story short, a greater part of why I separated from the mother of my child is that we were burning through 3K-5K net monthly barely without noticing, for a few months, while unemployed just eating out all the time, and driving around by car before our daughter was born, and did not like her reaction when I pointed out that to her. So I can relate to your plight.

Disclaimer: I am making up those monthly numbers from the top of my head, and many of them roughly based on my cost of living. Take them with a pinch of salt, they are just for illustrating a point.

Technical tip: When I was an expat abroad, in one of my holidays I installed a voip phone in my parents house. Bingo, cheap calls at any time of the day. At the time, smartphones were not that prevalent. Nevertheless, they only had to dial 2 to call me, and they could pick it up as a normal phone.

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    About the friend with the car: If your friend cannot pay auto insurance, he should not have a car. Who is going to pay the bill when the car breaks? You? The hard part of having a car is not buying it, it being able to keep it up, and I do not believe that car is being properly maintained. Apparently, you cannot afford to "have" 2 cars. Also what kind of home do you own? would you be able to downgrade it too, or better getting a couple of housemates for sharing costs? Commented Mar 2, 2019 at 16:49

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