Paying off $30K in Debt and a Baby on the Way

Julia and John, both in their early 30s and living in Queens, are expecting their first child next spring and desperate for a financial audit to help them find ways to reduce debt and save up before embarking on parenthood.

The good news: Julia loves her job as a special education teacher, earning $70,000 a year. She is currently halfway through a certification program that will give her the credentials to advance and earn closer to $100,000. Their monthly expenses are also not crazy high. Altogether they spend about $3,000 a month on items including rent, utilities, cable and car payments. They would like to curb their eating out and entertainment expenses, currently averaging $100 per week.

The challenges: They have no savings and $30,000 in credit card debt across three cards, which they’re paying down minimally. The couple also owes $5,000 in a personal loan to a friend. After all their expenses and debt repayments, they’re left with little to nothing to save.

Regarding John’s career, he recently left his commission-only job in insurance sales because it paid very little. Now, he’s stringing together some side gigs, earning about $500 per week, until he can land a full-time job elsewhere with a steady, more robust paycheck. With only an associate’s degree, he’s also contemplating going back to school and getting the full bachelor’s degree. He’s not sure what he would want to study just yet. Plus, completing school would be a huge time and financial commitment. Is now the best time to enroll? Will it be worth it in the long run? The couple wants advice.

Check out my recommendations to help get them on track financially over on the Mint blog.

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“My husband and I have $30K in credit card debt from when he was sick and unable to work. We have about $300K in retirement and $50K in cash savings. Should we use the cash to pay off the credit card debt even though not having the cash savings gives me a bit of an anxiety attack?”

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