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I’ll try to make this straight to the point- -I have one credit card, two store cards, two small loans and I can barely make ends meet. I don’t know whether to try to consolidate with one or credit card. i’m drowning in information overload from online research. Basically, due to my rent increase on my new lease, since it’s been the same for the last two or three years, with my new lease now they tacked on the percentage increases of the last two or so years and my rent has gone up $215/month. I live in a decent apartment and honestly considering the county I live in, although I elected one of the unfurnished apartments which just really means the cabinets, it was 1471 when I moved in now is 1676.

-I have one credit card with a $3000 limit, one Best Buy card, and one Target card.

-thank God I paid off my card note last year, around the same time my student loans were forgiven so those are two less payments per month I had to make.

-my salary is decent but once I get hit with taxes and deductions, my take-home is less than my rent. I get paid every two weeks.

-I don’t spend money crazy and I’m very frugal and don’t have to keep up with the Joneses. My adult child is living on her own and I’m single.

-my monthly expenses primarily include: -loan payments (taken out for car repairs and helping my daughter to move across country, don’t ask, but that needed to be done done…) -car gas -car and renters insurance -Life insurance -Target card repayment -Best Buy card repayment -Food -Utilities(which are very low as I rarely have lights on all day as I get home in the evenings, really run the dishwasher once maybe twice a week, wash laundry once a week or every two weeks) -cell phone bill -Internet (dropped cable almost 20 years ago and mostly stream but pay a monthly fee for Hulu and Netflix which is way way way cheaper than having cable which is not missed at all)

I just wanted to paint a picture for any finance professional who can give me some type of advice. I just got finished paying bills and maybe I’m in panic mode because my rent just went up, I just got paid and paid my rent, leaving off the annual new $350 amenities fee which is ridiculous to me, and I currently have $600 left to my name and don’t get paid again for another two weeks. This is a really bad and sickening feeling and I think it’s making me very anxious where I’m just looking online how I can get money quickly dropped into my account to start paying off my debt in one payment so I’m not juggling so much, but also have that little cushion and knowing that the money is in my account won’t have me feeling so anxious. I have no one I can borrow money from $600 stretch for the next two weeks . I don’t want to borrow from my 401k due to facing penalties etc. because I’m under 59 1/2 and I don’t qualify for a hardship with them anyway.

Should I just sign up for lender tree or Credit Karma and consolidate my loans and all my debt? From what I’ve read so far it looks like I should line everything up and write down what my balances are for each and what the interest are? But I’m so tired of reading I don’t know what I’m supposed to do after that Because I don’t want to click and accept the very first offer because I feel like anything that’s too good to be true, usually is. I understand that there in the end would be a much higher amount paid back due to the interest. But if I came into money and wanted to pay everything off early , my next question would be would it just be the remaining balance of the whole consolidation or the whole balance plus whatever interest I was informed will be attached to it in other words pay it off in five years you would have an interest of X dollars.

I hope this makes sense because it’s even confusing to me. Please advise because I feel like I need to go back online and apply for something within the next day or two. I know how I spend money and I know that literally I should be fine before my next paycheck but just seeing what’s left on my account right now is stressing me out… sorry for grammatical errors I’m using voice text on my cell phone. Thanks in advance for any suggestions or recommendations.

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    When you write "my take-home is less than my rent. I get paid every two weeks" are you saying that monthly your rent is more than your single 2-week take-home earnings, or are you saying that the rent is more than you bring home in an entire month (2 x 2-week earnings periods)?
    – brhans
    Commented Jul 8 at 17:40
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    You need to actually create a budget, line-by-line. Statements like "my salary is decent" does not give you the decision power of saying something like "my salary is $5,000 per month before tax and deductions, and $3,000 per month after tax and deductions". Many people are uncomfortable talking about money. You are not alone in that. It also probably causes you stress to even put the numbers down together, but it is really the first step here. What are your actual, by the dollar, income and expenses, per month? This is a tough process, but it is very worthwhile to go through it. Good luck! Commented Jul 9 at 14:54

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-my salary is decent but once I get hit with taxes and deductions, my take-home is less than my rent. I get paid every two weeks.

This is the culprit. If your take-home earnings (assuming your withholding is correct) are less than your minimum mandatory expense you cannot balance your budget and will spiral into debt.

You have to either have your salary go up, or your rent go down, to the point where the salary covers the mandatory expenses (housing, food, necessary medicine, commute to work). It may mean downsizing, moving to a less desirable location, or relocating to a different area where you can find a job with lower cost of living.

You cannot have your budget balanced if you already know that your income won't cover the minimum necessary expense. Taking loans from 401k is dangerous since if you don't repay them you get a significant tax hit. Carrying balance on credit cards (Best Buy, Target) is even more expensive since the interest rates on those are huge. Don't do this. Instead, consider pausing your 401k contributions to help you balance your budget until the situation improves.

Loan consolidation is potentially an option to reduce the interest charges. You'll need to check carefully what fees are tucked in, how much interest the new loan would charge, and whether it amounts to more or less than your current interest rates on the credit cards. Once you do consolidate - close the credit cards, don't use them at all. Even if you don't consolidate - stop using credit cards. Otherwise you'll just get back to where you were with more debt.

Helping others is commendable, but if you can't afford that - don't do it. I understand that family situations may be difficult. But if you give someone else money you don't have - you still need to repay that money.

Dropping things you don't need (like cable) is a good solution. If every penny counts - drop Netflix and Hulu as well. There's enough free entertainment on Youtube, Tubi, Ticktock, etc. Over the air TV stations are still there if you want to watch the news or prime time shows.

Bottom line - cut expenses aggressively and try to raise your income, while not falling for "get quick bucks working remotely" and other scams.

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  • A 401K loan is also dangerous in that it makes more of your money accessible to creditors. If you're in an especially bad state, a 401K adds additional long-term consequences to your debt (i.e., if bankruptcy is inevitable, a 401K loan might make things worse).
    – Brian
    Commented Jul 10 at 13:20
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As usual littleadv is right on. Until your income can pay for basic expenses (food, clothing, shelter) you are playing a losing game. One option is to get a roommate and share expenses. Another is to get another job or three.

Once that is complete I'd advise a simple plan:

  • Live the most basic lifestyle you can, minimizing all expenses.
  • Anything you can do to get your income up helps dramatically.
  • List your bills smallest to largest (in balances) and pay them off in that order. Throw all extra income at that loan, and pay the minimums on everything else. Once the smallest is paid off, move onto the next smallest doing the same.
  • Don't borrow anymore money.
  • You can probably get rid of your life insurance as you have no dependents. Life insurance is about taking care of people that are depending upon your income. If this is a whole/universal life insurance policy you have been ripped off. Get rid of it now.
  • Don't borrow from your 401K.
  • Don't consolidate your loans. This rarely works out well.

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