Ashamed, Scared, What Next?

Hi Scott,

My husband earns $150k, which is a lot of money, yet with four kids aged 10-19 we are still struggling. We have lived modestly for the last three years and are better for it. We have even entered into debt consolidation to take back control of our $80k credit card debt. So here are our vital stats now: debt consolidation $65k, novated car lease balloon payment $12k, mortgage $414k (value $550k), other $30k. What should we do?

Amy

Hi Amy,

You know things are cra-cra (and not in a good way) when you have a $30k line item labelled ‘other’. I’m not a big fan of debt consolidation; it’s often sold as a magic pill (and it does reduce your interest costs), yet the real magic is your behaviour. If that doesn’t change, nothing changes.

Now, you say you’re living ‘modestly’. I’d like you to live ‘aggressively’. Because to get out of the stinking hole you’re in, you need to get angry. You need to swear off debt and say to yourselves ‘never, ever again’. Then you have to back it up with action: line up your debts from smallest to largest and knock them over, one by one.

You’ll know you’re on the right track when you take a second job at night to get debt-free quicker.

Scott