Get Out of Debt Guy

I'm Depressed and Don't Know How to Deal With My Debt

Posted May 23, 2013

WRAL Reader Question

Dear Steve,

I have credit card debt totaling about $15,000 (Eg. Discover, Mastercard, etc). I don't use them but have decided to get into 2 different consolidation companies.

I do own a home and car that I'm currently paying on. My credit card is the problem for most part. If I can pay that down, that will save me about $600 a month.

Trying to pay off my debt has caused me to get behind on my car payment (they have called a few times this month) I've been overdrawn, with my bank account several times, so when I get paid I don't have enough to make that one payment in full, etc because of this.

I drive an hour (one way to work) each day. I'm thankful to have a job but the gas is killing my pocket also.

I've been trying to find something closer.

Sometimes I feel depressed, and just don't know what to do except accept that I'm late and the credit card companies will get their money when I am able to pay them, the past due balance and more.

My credit score was excellent but now it has dropped significantly and I can't get one credit card and do a credit transfer to combine all those payments into on. I have dug myself into a hole, and can't get out.

What is the best way to tackle my situation?


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Dear Kim,

Money troubles are handled in just a few basic ways. You can increase income, reduce expenses, a combination of the both or intervene in the debt with a legal solution, bankruptcy.

I'm not sure if you've entered into a credit counseling relationship for the debt or what type of "debt consolidation" companies you are working with.

It seems clear whatever the strategy is, it's not working for you.

I'd much rather see you stay current on your car and mortgage payments than the credit card debt. You need the car to get to work and that makes it a priority debt.

You also mentioned a critical fact that concerns me. As you observed it is easy to become depressed and blue when sinking financially.

In a study I previously conducted we found nearly 4 out of 10 people with debt were clinically depressed. Depression can be a life killer. It also leads to being unable to make decisions, a long-term plan, carry out the plan, or find motivation to continue down what emotionally feels like an impossible path.

In my experience there are three ways to deal with the depression problem. We can either alter the life situation or you can seek talk therapy or medication to minimize the depression. You should talk to your medical provider about how you are feeling.

If we tackle that issue at the same time as we deal with the debt, it will give you the fastest path to the other side of this mess.

I once had a client who was a deputy sheriff. He was feeling blue and depressed about his impossible debt situation. I had suggested many of the same things to him and he wanted to think about it. But he had his moment of truth when he made a traffic stop and later realized because of his depression and constant worry about his debt he let his guard down and did not take the necessary actions to protect himself. The driver had a loaded gun on the front seat and the deputy told me he just felt lucky nothing bad happened. The lesson is that debt impacts your life on many levels.

There are all sorts of things you can do to adjust your income and expenses to free up more money to pay towards your bills. In fact the good people that read my articles here on WRAL often have some great suggestions.

Some things to lower expenses are easy and can be implemented to free up some money each month. There are easy things like cutting out cable and watching television online via internet. Dropping your cell phone from a smartphone to a flip phone to save money is another big savings people can do. You can also focus on your driving habits to reduce your fuel consumption. Things like making sure your tires are properly inflated, you don't mash the gas pedal and you drive at the speed limit can help reduce the gas cost as well.

But from experience, and based on what you are saying, I'm wondering if all those things will be enough to alter the path you are on.

What I would do is prioritize you debt and make sure you are paying all your basic expenses first. We need to pay the mortgage, car, food, utilities, insurance, etc. The credit card payments come at the end of the list and if there isn't enough money to pay them, it is what it is.

When you can't pay the minimum contractual payment you will go into collections. You will get collection calls, it will hurt your credit report, and you could be sued.

The only way to quickly alter the situation to get our life back on track fast is to consider a financial reboot, fresh start and legal second chance.

If you qualify for a chapter 7 bankruptcy, as most people do, your debt would be discharged in 90 days or less, it would prevent you from being sued over the debt and you could take the lessons you've learned from this experience and do better moving forward.

The bigger tragedy I see are people who get in a bad spot and worry more about fixing the past than fixing the future. Logically and mathematically we need to make things better moving forward and get you back as quickly as possible to a position where you can build an emergency fund and save for retirement. Of all the bits and pieces here the only one that we don't have any control over and can't replenish is time.

The more time that passes with you stuck in this pit, the less opportunity you have to either prepare for retirement or save money for emergencies. And it sure does not sound like you are saving now.

You can find a local bankruptcy attorney here. At the very least you should meet with one and learn more about what bankruptcy would mean for you.

Then, armed with your addressing the depression, looking at increasing income or reducing expenses sufficiently, or bankruptcy, you can then make the best decision for you based on facts rather than assumptions.

What do you say, is that a logical plan of action for you?

Post your comments below to reach me.

Steve Rhode
WRAL Get Out of Debt Guy

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About this Blog:

Steve Rhode has had careers in opthalmology, real estate and as the head of a nonprofit debt counseling firm. On his blog, he offers hard-won, free advice about getting out of debt, consolidation and making the right choices as you manage your money.