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Agree with PWC1, cut out unnecessary expenses and maybe pretend you are living during college for a hot second.
I wanted (not needed) to pay off student loans (amounted to 20k) and I paid this off during a year. Granted my rent at the time was 1300 but I also did not eat out, did not buy clothes, literally did not buy anything additional than I required.
It might not be fun but it’s either compromise Now OR compromise later in life
Not to say you need to eat Ramon and live like you aren’t making 120k, but just be very conscious and ask “do I really need this to live”
Curious but what did you use your credit card for lol
Were you not paying your CC bill at all or is 15K the amount you couldn’t pay?
FWIW I saved ~$40K on a similar salary by being very frugal during COVID lockdowns. $1700 in rent, ~$750 other expenses
Chief
$2K a month towards it
If interest is higher than 10% pause 401K
Take a look at your leisure expenses, cut out some of the more unnecessary expenses, and start putting it towards the debt. Also any bonus should go straight there
Chief
That’s honestly impressive
You need to start with visibility into what you're spending. Start by signing up for Mint or Personal Capital. Then you will have a much better idea of where your money is going and where to cut back.
As a guess, food can easily be a major expense, so cut back on delivery. If you'rea single person in a big city, it is easy to spend $15 for a fast causal lunch and another $40 for delivery everyday, and then on the weekends spend $100 on dinner and drinks with friends, plus $30 in round-trip uber. These expenses feel and are insignificant on their own, and are not obvious when you glance around your apartment to see what you've been buying, but in a month, that's easily around 1500 in food, delivery, dining and drinking.
I'm not saying you need to eat rice and beans all the time or become a chef overnight, but keeping the fast casual lunch and swapping the $40 delivery at home for $5-10 worth frozen meals from the grocery store can save hundreds of dollars per month by itself while still giving you access to a variety of quickly readied food.
120k minus 20k for 401k means a gross monthly pay of 8.3k. Assuming maybe 30% in total deductions (tax, insurance, etc) means ~5,800 takehome pay. 1,700 for rent and even just 500 a month for food leaves 3,600 to repay your credit card debt in around 4 months.
Is the 15k cc debt on a high interest cc? If so, maybe you can consider not contributing to 401k for now or doing a balance transfer so you can save a bit on finance charges?
Balance transfer for 12 or 15 months. Pay off aggressively
Chief
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Look closely at what you were spending on that put you in such debt. Eating out? Travel? Clothing or luxury items? All of that is easy to cut and that money should go right to debt payments. At 120k, you should have room to be throwing 1k+ at this anyway. Bonus should definitely go directly to credit card. If things are really bad, consider pulling back 401k set asides for a couple months. 30+% interest is more than you’ll be earning in the immediate term.
Your immediate action has to be cutting off the head of the snake and getting your spending right.
Thank you everyone for the guidance, any opinion on refinancing credit card loans with one of those companies? Or don’t suggest?
Chief
No purpose in refinancing if you want to pay it off in less than a year
Snowball method.
Chief
Pay the debt asap since their interest rates must be high. Of course also leave out a few months of savings to cover emergencies, then the rest to pay off
You need to budget every single expense with every paycheck like bills and other necessities then the rest of it to your credit card debt
The trick is you always have to pay off your statement balance on time. I always have about $7-8k floating out there in credit card but never late in payments.
Download the Every Dollar app (or a similar budgeting app) to track your cash in and cash out. Using an app to track spending has been a lifesaver for me!
Chief
1. Use a single card for virtually every purchase. I use citi double cash for 2% cash back in everything. The only thing I don't use my card for is rent which comes straight from the bank.
2. Never go above 30% of your available credit
3. Pay off your card every paycheck
Result = nearly perfect credit. I have like 780 score or so and never have money issues and I spend a lot lol
120k that means after taxes at least 6k per month. Save 50% of your salary. Target for that. Trust me it’s doable if you don’t have any responsibilities. And pay it off.
1. Stop using the credit card.
2. Make a rough and realistic budget and figure out how much you can afford to pay off per month.
3. Set up an automatic transaction to make the repayments the day after you get paid.
4. Once you’ve paid the credit card off, consider diverting the funds you were paying off into an investment account instead.
At 120k you should be able to live comfortably within your means. If you get any pay rises etc, try to avoid lifestyle creep for a while and get yourself in a better position financially.
Good luck!