AI Legalese Decoder: Your Path to Escaping Legal Troubles and Finding a Way Out of the Hole
- April 6, 2024
- Posted by: legaleseblogger
- Category: Related News
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### Overview of the Situation
So very long story short, my wife has gotten us into a shocking amount of credit card debt over the last year. I was finally able to see just how much and I’m pretty overwhelmed and looking for some advice. Additionally, our therapist convinced my wife to show me the credit card statements, revealing the extent of our financial situation.
### Background Information
We have been married for 2 years and had been dating for 3 years before that. This entire time I have been at my same job. I make about 105k and I’ve put away 13% to my 401k and have reached 1x salary early last month. My wife has had a couple jobs in that time working in education. She was making about 80k until recently when she was let go. She has found a new job but it’s a pretty big pay cut right now, only making about 40k. We bought a house in early 2022 right after we got married. I have a 2017 Civic that’s paid off and she has a 2021 Subaru that she’s still paying on ($500/month).
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### Current Financial Situation
– My income: $5,300/month after taxes and 13% 401k contributions
– Wife income: $2,500/month after taxes
**Credit Card Debt:**
– Chase: $8,000 total, $102 monthly min, 23.24%
– Wells Fargo: $10,000 total, $321 monthly min, 18%
– C1: $8,330 total, $82 monthly min, 20%
– Store Credit Card 1: $3,251 total, $175 monthly min, 30%
– SCC2: $4,296 total, $286 monthly min, 29%
– Apple Card: $1,100 total, $75 monthly min, 21.24%
**Other Expenses:**
– Mortgage: $2,700/month (principal, interest, PMI, insurance, and property tax)
– Car payment + Insurance: $670
– Utilities + Internet + cell phones: $600
– Student loans for both of us: $280
– Emergency fund: $3,500
### Plan of Action
I have already cancelled streaming services to save money and am working on addressing my wife’s spending problem through therapy and budgeting. I am considering whether to prioritize paying off the highest interest credit card debt first or using the emergency fund to eliminate one of the cards. Any advice on managing our debt and improving our financial situation would be greatly appreciated.
### Relationship Aspect
I acknowledge the importance of monitoring our finances from the beginning and am actively working on the relationship aspect of this issue separately.
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****** just grabbed a
Your emergency fund isn’t even one months worth…just leave it for now.
You make 7,800 after tax+misc. You spend 4,600 on necessities and minimums. This means you have 3,200 “extra” to pay your debts down. Your debts are ~35k keeping that budget and you should be out of debt in a little over a year. If she can’t control her spending then nothing matters though.
After the high interest debt is done build an actual emergency fund.
I’d suggest calling some of the card companies and seeing if they can give you a limited time 0% interest rate. I did that for one of mine last year and they gave me 12 months at 0% just for asking. For any that won’t and if she has any credit left available, try opening a card that’s offering balance transfers at 0% for 15 or 18 months. Then transfer the bigger percentage cards that you couldn’t talk into 0% interest to the new card. That will help with the interest not piling up. Don’t give her the security code or the physical card 😁. Figure out how much to throw at this new card to get it paid completely off before the interest starts. Good luck!
First step here will be to no longer manage finances and accounts separately. Combine everything with both having equal access. You are married, after all.
As for the game plan here I think it’s pretty straightforward.
First, you need to track all of your expenses. You can use an app/service for this. In our house we use Copilot from the iOS App Store.
Frequently review and categorize all transactions.
Second, create a budget. Start with what’s coming into the account as income and then start subtracting each bill and necessity. This may be difficult to stick to at first given her habits.
As for the emergency fund set a goal for a started emergency fund. That may be simply $1000 dollars or it may be 1 month worth of your budget expenses.
After that it’s just down to the nitty gritty of it all. Keep expenses/budget as small as possible and put all money possible towards paying off these cards and loans.
Avalanche method where you start with highest interest loan first is the fastest and cheapest way.
Snowball method where you start with smallest loan balance first is preferred by some people because it helps to keep them motivated even though it may cost you more in interest over time.
If there’s anything you can sell or downgrade like cars that wouldn’t hurt either.
As someone who is impulsive, work with her to remove shopping apps and any saved payments on her phone. It’s so easy to plop stuff in the cart and check out. It’s not so easy to log into a website, go get my card, enter everything in…etc.
Do weekly budget check ins. Physically go through the week together with your budget.
Is she big into appearances/influencers? Talk it up as a no-spend challenge. A challenge is more fun than a punishment.
Other folks have noted you should hopefully be able to pay this down in a little over a year. How I would personally handle this?
Pick one card to use for day to day purchases, make sure you’re both on it. Pick a card that currently has a zero balance and pay it back down to zero every month so you’re not accruing additional interest. Agree on the max amount that should be on that card. Check it daily.
Nothing should go on the debit card except a small amount of cash (e.g. $100) per month from the ATM (mortgage and bills are typically paid via online payment/check).
I recommend putting everything in a spreadsheet every month so you can see your progress.
Good luck OP.
Leave the emergency fund alone.
Your wife may need individual therapy to address why she is spending like this. I would be tempted to tell her to get a second job to help get out of this. If she’s working a second job, she can’t do as much shopping. I think she needs to feel some pain from the decisions she has made. If you bail her out, she may not learn as much. I understand you are a team & I’m not saying don’t help, but she needs more skin in the game. Some might see this as petty but what she has done is financial infidelity. For me that would take some work to come back from. She also is not allowed to carry a credit card or store them in apple/goggle pay. She has to pay cash for everything. Everything, including gas.
Are you sure this all of it? I would insist that you both sit down & review your credit reports together. That way you are both aware of the credit cards & other lines of credit each person has open. I would push her to close several. It will impact her credit score but unless you will be needing it for something in the short term, who cares. Do this every 4 months. You get free credit reports from each bureau once a year. No new cards or lines of credit can be opened by either of you without discussion.
Are there unnecessary recent purchases that can be returned? This won’t put a huge dent in things but would be less you have to pay back. Are things you have & don’t like, need, use? Sell them & all proceeds go to debt. Same thing, not a huge dent but some progress.
Go through everything that has been purchased on these cards & through the checking account. Create a budget based on what has been spent. She needs to see the hole she is creating as part of the big picture. Then cut it down to a realistic budget for how things will be going forward until the debt is paid off.
Try shopping around for home & auto insurance. You might be able to find some savings there. Since it’s not listed separately, could you save money by switching carriers for your phones?
As for actual pay off, once you have a budget nailed down that excludes the debt payments, what’s left. If it’s going to take more than a month or 2 to get those
28% & 30% balances paid off, I would look into a balance transfer. Those rates are really high. See if any of the already open cards have low promo rates. If not, it might be worth opening a new card with one. It might have to be in your name. If you do this, the minimum payment is whatever balance you transfer divided by the length of the promo period. You can also call & see if any of the credit card companies will lower the rate. Some will some won’t but it doesn’t hurt to ask. Any extra left after minimums are paid goes towards whatever has the highest interest rate.
This is not the worst situation in the world & you are aware of it now & can stop it from getting worse. Good luck.
This is a case where the two of you going through Dave Ramsey’s Financial Peace University would probably be very good. It would be good education for her and you’d go through it together to get on the same page. His program is also textbook created for just this situation where you have racked up a lot of debt and going through getting out of it with others in the same boat… so you don’t feel you are alone. Even just reading his book together would be helpful.
I’ll also suggest watching Ramit Sethi’s podcast on YouTube where he counsels real couples on their personal finance and money psychology. Super helpful.
[Here](https://www.npr.org/2019/02/14/694669510/7-strategies-for-digging-out-of-debt) is an article on how to pay off your debt. Here’s [another](https://www.npr.org/2024/01/18/1196978541/how-to-save-money-when-youre-broke) about saving while broke, in case you find it helpful. NPR has a [life kit on personal finance](https://www.npr.org/series/your-life-kit-to-better-personal-finance). USA Today has an article from November 2023 on [negotiating credit card debt](https://www.usatoday.com/money/blueprint/credit-cards/negotiate-credit-card-debt/).
While this asking for salary, I think bullet point #4 from Ask-a-Manager is also a good mental tactic for negotiating *down* debt [here](https://www.askamanager.org/2019/03/how-to-negotiate-salary-after-a-job-offer.html).
If you want to DIY your personal budget: The Consumer Finance Protection Bureau has [this on organizing your debts](https://www.consumerfinance.gov/about-us/blog/how-reduce-your-debt/); and [this for tracking your spending.](https://www.consumerfinance.gov/about-us/blog/track-your-spending-with-this-easy-tool/) There’s also *Personal Finance for Dummies* by Erik Tyson, which was recently published in September 2023; and, *Atomic Habits: An Easy and Proven Way to Build Good Habits and Break Bad Ones* by James Clear. I re-read this one from time to time when I want to change my behavior.
Go to your local library because they might have them and, best of all, it’s free!! If they don’t have it, you ask the library to buy it, depending on their budget.
If you think things might or have gotten tense between you two, you could bring in a intermediary with the [National Foundation for Credit Counseling](https://www.nfcc.org/) does debt *management* and budget analysis. They do charge but take a look at their [FAQs](https://www.nfcc.org/faqs/) under *What do NFCC members charge for counseling services* to see how much. It says it varies, but the page does state that the majority of cases are low cost to nothing–not guaranteed.
Do you know if the payments have been made on time so far? Sound like she has been handling that? Hopefully your credit hasnt taken a hit.
Well if you have already hit your 401k match then I would stop contributing and start paying the highest interest rate CC.
Is there any way you could get a personal loan to consolidate the debt?
I had around that much in credit card debt in 2020. I was referred to Navicore solutions and they really helped. Put me on a five year plan. They were able to work with credit card companies and lower my Apr to almost nothing and some zero. My payments were cut in half and I will be debt free in June 2025. I did have to close cards but I didn’t care. I would suggest navicore solutions to anyone who wants to get out of debt.
My wife had a similar problem and we refinanced our car to get lower interest debt.