I am 50 years old and a lot of debt I make good money but I feel like there's no way to get out of this dead anytime soon without declaring bankruptcy. But I really don't want to declare bankruptcy.

I am 50 years old and a lot of debt I make good money but I feel like there's no way to get out of this dead anytime soon without declaring bankruptcy. But I really don't want to declare bankruptcy.
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I don’t own a home and I have no other real assets except for my 401(k).


I am sorry to hear about your financial struggle.  If you have not already, I would suggest you seek the advice of a nonprofit NFCC-accredited credit counselor who can take a look at your entire financial picture and make some recommendations to you.  I certainly understand not wanting to declare bankruptcy, and while you should certainly explore all other options first, please understand that it is in place for a reason as a method of protection for consumers who become overwhelmed.  There is certainly “life after bankruptcy”.  In addition to discussing the benefits and drawbacks of bankruptcy, a counselor can determine if there are other options such as a Debt Management Program (DMP) that might be able to help you reduce the interest rates and payments.  It is very unlikely that you should employ your 401k to assist in your situation as it is a protected asset that you will need in retirement.  Good Luck!



Based on your situation it sounds like it would be a could idea to speak with an NFCC certified credit counselor. They can review your entire situation with you to determine which specific options best meet your needs. They can also often help to directly address your debts.



The most important thing you can do is keep filling up your 401k. Make that your highest priority regardless of what that does to your debt payments.

Have you set a goal? If not - you need to think about that. You have 20 years until you retire - because your social security is at the maximum amount at 70. You would like get more than $40,000 a year. (Don't know your income or how long you have worked). But assume it is.

Take 80% of your current income - subtract the social security amount. Then double it and multiply by 20. ($100,000 * 80% less $40,000) times 2 times 20 = $1.60mil. That is how much you need in your 401k to keep that standard of living. If you have $100,000 in your 401k today - it will grow to $400,000 at 7%. So you need to contribute $1100 a month and grow it by inflation to reach that goal.

Then - once you do that - you can concentrate on the debt. Make a list - pay the minimum on each one - and then put as much as you can on the smallest one. When that is paid off, take the next one and do the same thing by taking the amount you paid and adding it to the minimum you were paying. When that one is paid off - take the amount you paid on the first two and add it to the minimum you are paying on debt three. Just keep working up the ladder. You will surprised how fast you can wipe out that burden.

Hope this helps.


Without the numbers, it is hard for me to see whether or not you are indeed in too deep to get out. But I have coached clients out of some pretty high levels of debt without declaring bankruptcy. This ALWAYS starts with a real commitment to do whatever it takes. Once you make that commitment, you need to take a long hard look at your budget and make the sometimes difficult or painful decisions about the way you allocate your monthly paycheck. The budget has to come first. If you are not willing or able to change the money habits that put you in debt in the first place, it will be impossible to work your way out of debt!
Avoid the temptation to use “quick fix” solutions like debt consolidation loans. It is my experience that if the budget, lifestyle, and spending habits aren’t changed, such “solutions” simply leave the individual even deeper in debt and with fewer options available, almost ensuring bankruptcy.
Unlike what others say, it may be prudent to attack the debt while taking a holiday from 401k contributions - but only if you have a serious plan to attack the debt with ferocity. It may also be possible to gain some concessions from creditors. It may be possible to do this on your own if you are persistent, without paying a third party. Now, with budgeting discipline in place, you can start attacking the debts. Pay minimums if you can on all debts, but pour as much money each month into paying down your smallest non-mortgage debt, until it is gone. Once it is gone, there is more money available to do the same thing toward your next debt. This is the “Debt Snowball” technique popularized by radio host Dave Ramsey.
Good luck!


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