How long until she is out of debt?

[MBony]

I have a friend or rather someone who used to be a friend and I found out she is in debt with school for ~$40-50k and has credit card charges of ~$10k.

Assuming she is making ~$40k/year (she is a bartender and has a master's degree, go figure), how long do you think it will take her to pay this off.

Please reserve judgement as to her character or the mistakes she has made. I am just looking for a # of years you think it will take for her to pay this off.

 

[SurgicalShark]

Online calculators are available, they are your best friend.

 

[Leper Messiah]

um. what are her expenses?

 

[Genx87]

A long time depending on interest rates and what kind of lifestyle she is leading.
Honestly it could be 5+ years.

 

[SurgicalShark]

Depends her credit history, credit score to get new card for consolidation, current rates on credit cards....and so on.

 

[GeneValgene]

should live frugally, and aggressively pay off all credit card debt

the student loans she can pay back more slowly, as she can right off the interest on her taxes

 

[sixone]

Depends on how much of a priority it is for her. If she's willing to forego some 'luxuries', she could do it much faster than if she is also buying stuff for herself.

 

[Pantoot]

Without knowing how much of her salary she can commit to the debt the answer is 42.

 

[Fingolfin269]

We have to know NECESSARY expenses first.

 

[MiniDoom]

Sometimes I'm glad I didn't go to college. That?s a lot of debt.

 

[jlbenedict]

We have to see PICS first!

 

[kranky]

Nowhere near enough info. How much money can she use yearly to retire debt? What's the interest rate on the loans and CC?

 

[DaShen]

Pay off the Credit Card as quick as possible. Pay off the Loan in 10 years.

 

[radioouman]

Might be nice to have an interest rate in this equation.
If she lives with only the bare necessities, she can probably pay it off in about 15 years. You'll never pay it off in 5 years unless you put 100% of your net wages toward your debt.
Net on $40,000 per year is about $27,000.

 

[MBony]

She has a 1BR loft in the city (probably ~$700/month + utilities), a car payment (~$350), plus living expenses (food, pet food, she has a bird), she is NOT good with money and with this kind of debt she buys things like ipods and expensive cell phones for herself. So she is not frugal, she is 31.

Her interest rates are around 10% APR for the CC, not sure for the school loan.

 

[isasir]

Depends on whether she speaks to a financial consultant or not. Seems like she should try to delay school payments if possible, then try to get CC companies to forgive some interest owed perhaps to try and get that under control (or do a balance transfer or something to keep it more in check).

 

[MiniDoom]

Bankruptcy FTW.

 

[kranky]

Let's say net is $27K, which is $2250 a month. Let's assume rent, utilities, car, and other necessary expenses like food and gas are $1600/month. That leaves $650 for everything else.

She could pay off the CC in 5.5 years paying $200/month IF SHE NEVER CHARGES ANYTHING ELSE.

The school loan we will assume is 5% and we'll assume it gets paid off over 10 years. That would mean a payment of $424/month. If she takes 20 years to pay, it would be $264/month.

 

[CPA]

Originally posted by: Pantoot
Without knowing how much of her salary she can commit to the debt the answer is 42.

lol.

 

[iversonyin]

Originally posted by: rdubbz420
Bankruptcy FTW.

 

[Gibson486]

Originally posted by: rdubbz420
Sometimes I'm glad I didn't go to college. That?s a lot of debt.

tell me about it......I am approaching 60k

 

[Rudee]

Whatever number of years you end up calculating add 25% just because people are poor at sticking to budgets.

 

[rudder]

Originally posted by: SurgicalShark
Online calculators are available, they are your best friend.

forget online calulators. it depends on how quickly she wants to get out of debt. She can live like a pauper for 2 years, get a second job on the weekends, and be out of debt fairly quickly. And by live like a pauper I mena getting a paid for car, no eating out, no new charges, pay cash for everything, etc. Or she can maintain the same lifestyle, make minumum payments, and be in debt for 20 years.

 

[DBL]

Sounds like a smart first step would be to refinance those school loans over 30 years provided they qualify. Otherwise, the financial burden of those monthly payments is going to overwhelm her, if they have not already.

 

[tfinch2]

Originally posted by: Rudee
Whatever number of years you end up calculating add 25% just because people are poor at sticking to budgets.

But then you plan for that extra 25%, so you spend even more. Better just double it...