Dear S.,
This cycle is common for so many people striving to improve their finances: one step forward, two steps back.
Save some money, then use it all almost immediately for necessary expenses. Contribute to a retirement account, then wonder if you would be better off just using the cash now. Cut back on expenses, then find out the cost of your essentials is going up.
Making more money to create a cushion only works for people who have the perfect combination of time, energy, skills and equipment to do so. I, too, have struggled to make ends meet with just two or three of the parts of that perfect combination. It doesn’t feel like hustling. It feels like drowning.
It’s great that you have some retirement savings, and I’m glad you didn’t suggest emptying out those accounts for cash. The penalties just aren’t worth it if you have retirement coming in the next 10 to 20 years.
So let’s look at conquering your debt bit by bit. If you have a solid credit score (at least 620), you can probably get a personal loan to consolidate some of your debts. Some of these loans are tailored specifically to move scattered student loan payments into one monthly payment.
Others let you use the funds to pay any bill — whether it’s credit, medical or some other big tab — and they’ll help you pay it off over several years. In both cases, interest rates are often lower than you’d be paying otherwise, depending on your credit.
If your credit history precludes you from consolidating your debt, consider credit counseling. To find someone near you who’s qualified, visit the online directories of the Financial Counseling Association of America or the National Foundation for Credit Counseling. A credit counselor can review your situation and tell you if there are any ways to lighten the burden.
You also may be eligible for a debt management program. These programs are similar to the consolidation option above in that they reduce your interest rate or spread your payments across a longer period.
The process of moving from a paycheck-to-paycheck feeling of desperation to a more comfortable, confident outlook will take time — likely years. But if you can maintain your determination through it all, you may find that being able to retire is a reality instead of a far-off dream.
Have a tricky money question? Write to Dear Penny and you might see your question answered in an upcoming column.
Lisa Rowan is a personal finance expert and senior writer at The Penny Hoarder, and the voice behind Dear Penny.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
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