05/21/2013 12:02 pm ET Updated Dec 06, 2017

Maxed Out on Credit But Hemmed In With Life

Huffington Post Reader Question

Dear Steve,

I'm 24 yrs old married with two kids.

We just bought a house to save on the rip off of rent which saved me $164.00 a month on house payment.

Well we bought our house and I had not been at my new job very long so with closing, down payment, etc. we emptied our savings.

I had a credit card with a $4,000 dollar limit an we had to have furniture for our home I spent $3200.00 on furniture thinking I could pay it off with income taxes.

Well that didn't go well. I got far less for income tax than I planned. So I have a outstanding balance now help please.

I have two credit cards one is a secured card ( I got when I was younger to build credit) and a now $5500.00 credit limit card that I got from Walmart discover when I financed a tv.

I make good / decent money $20-$23 a hour and a union member. But now my wife's car is on its last leg. And we have to get one.

Getting a car when your c.c. is 65-70 percent maxed out. And showing on your credit report is not an easy task.

Is there any help or suggestion you can offer me. If I could get the payments for my credit card reduced or lowered this would make life a lot easier. Thanks a lot


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Dear Landon,

I understand where you are coming from. You've run into that old problem that credit agreements are linear but life doesn't always flow in a straight line. The credit agreement says payments must be made every month, but sometimes hours get cut or emergencies happen.

At this crossroad we can do one of two things. We can either turn around and try to spend the next five years working harder to try and repair your past financial mistakes.

To free up enough money you'd have to reduce your expenses even more and increase your income. For many, it is just as unrealistic to budget your way out of debt in tight situations as it is to not expect life speed bumps along the way.

If you want to see how deep you've had to slash to get back to being able to reduce your debt, read this article.

But the other more important consideration, in my opinion, is fixing your future so you can protect your family and not let a financial surprise ruin everything.

You've drained your savings and now you are operating without a financial safety net. That's utterly dangerous.

Recent studies say that about half of Americans could not get their hands on $2,000 in cash in 30 days. That is far too risky in my book.

While it would be awesome to have a magic wand to wave to turn back time and help you change decisions that would have altered your future, that only happens in the movies.

Considering the fact you are getting maxed out we might need to look at other options.

If you want to try to pay your way out without any impact on your credit you should make at least the contractual minimum payments you agreed to with your creditors. You should also get a copy of your credit report and look for mistakes and errors you can correct.

You can get a free copy of your credit report at

If you want more help cleaning up your credit report to help raise your credit score, click here.

By paying down your debt and cleaning up your credit report you'll get in a better position to buy a car.

If that sounds unreasonable or undoable, then we need to look at a different approach.

It may make logical and mathematical sense for you to consider a chapter 7 bankruptcy and discharge your debt in about 90 days. If you want to then repay your creditors as you can afford to, nothing would stop you from doing that.

But a chapter 7 bankruptcy would get you quickly back into a position where you meet your other expenses and start to save for retirement and build and emergency fund.

If you want to see exactly how much you will lose in potential retirement savings by trying to pay off this debt through an extended repayment program, click here. When you look at the math, it will make you sick.

It would be great is there was another way to let you get back to a safe financial position quickly without the intervention of bankruptcy, but there just one which is legally binding on your creditors and eliminates your debt so quickly.

You can click here to find a local bankruptcy attorney and talk to them for free about your specific situation. Get the facts and then you can make an informed and educated decision if bankruptcy is right for you.

Whatever you choose to do, educate yourself about all of the options for dealing with debt and then consider which is the most logical approach for you, to repair the past or fix the future.

On your journey out of debt I'd suggest you first read this article, this one, and finish here. They will give you a great overview of what we need to deal with to get you moving in the right direction.

Then use the free How to Get Out of Debt Calculator to review your options.

Once you've identified a company you want to work with, then follow my step-by-step guide on what you should look for and expect from a good debt relief company.

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