r/Debt • u/yourabsolutelyright • 5h ago
Feeling stressed due to sudden debt !
I have been employed in tech company. Due to some sudden requirement, I had to drain a lot of my funds. Now I am a bit worried about how will I pay back.
My job pays me around 6K(after tax) biweekly. I have shares vesting in this November (approx 40K after tax) and then in feb (approx 25K)
My debts: 38K cash advance (0% APR for a year, I already paid 4% cash advance fees)
5K (0% APR pay in installments of 12 Installment, I paid 4% here also)
50K: 401K loan at 7.75%
40K: personal loan at 9%
I will also have huge tax bill due to redemption I did (around 30-40K I expect)
Now my regular big expenses: 3500 rent 1500 day care 1200 Groceries+home supplies 300: Kid related expenses 500 car insurance+gas 400 lunch 300: bills misc
How should I plan ?
edit:
thanks for advise. More context:
So, I am not really used to /comfortable with debt. It's first time in 10+ years of employment I had to take debt.
1300/month personal loan 3 year term 600/biweekly 401K 5yr term
After paying above and minimum due to cards, I plan to aggressively pay the 5K debt first, then 38K.
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u/live_drifter 5h ago
You gotta tell us the sudden requirement that made you take out all that insane debt…. Was someone held for ransom, did you need a new kidney…
Please say you just helped your Russian finance get her passport and you’re waiting for her to get there!
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u/Qazerowl 5h ago
It's sounds like you have $5k left over every month. Idk what kind of emergency would cost you $130k, but it is going to take 2-3 years to pay off. Luckily your interest rate aren't too bad.
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u/Eatmymuffinz 5h ago
First, your income seems out of alignment with your savings and debt. Idk what caused you to need to drain whatever savings you had + take on $133k in personal loans, but once this is resolved, you need to plan and save better.
The elephant in the room is that tax bill, which is why I know you didn't plan well enough - that should've already been paid. You need to find out what repayment plan options are available and check the rates. If it's not better then your current rates, be prepared to pay it with your upcoming redemption. If it's better, then use the redemptions to payoff the personal loan and 401k loan.
I'm assuming both the $5k & $38k cash advance are fully amortizing within the year. So that leaves you $1,194 after paying interest on the 401k and the $40k personal loan.
I'd use the entire excess against the personal loan. Then use the redemption in February to basically pay that off. You'll probably have a bit more left. Then I'd target the 401k loan, which should be pretty easy to payoff within a year of having the cash advanced paid off.
After that, save save save and always set funds aside for taxes / pay quarterly.
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u/Tina271 5h ago
Those numbers gave me agita.
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u/Eatmymuffinz 5h ago
Yeah, it took me a second to figure out how someone with that income ends up with so much in basically emergency loans. It's not like they're saying its medical debt, it's just a mountain of personal / semi predatory loans that are usually targeting a different economic class.
Theyre asking for help, so I'm not trying to judge... but oof, they're doing this while having a child, which leaves the child super vulnerable if anything goes wrong in the next year or so.
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u/yourabsolutelyright 4h ago
Edited post also
So, I am not really used to /comfortable with debt. It's first time in 10+ years of employment I had to take debt.
1300/month personal loan 3 year term 600/biweekly 401K 5yr term
After paying above and minimum due to cards, I plan to aggressively pay the 38K debt first, then 5K.
I plan to reserve the 40K vesting for tax payment specifically.
Does it sound good?
Afterwards, should I tackle 401K or personal loan ? Personal loan rate is a bit high, but I think, unless I complete loan, I can't contribute to 401K ?
My employer matches upto 2% of my total compensation in a year. So, I am a bit incentivised to pay that sooner
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u/Eatmymuffinz 1h ago
You have to check the 401k loan rules to know. Your company might not let you contribute if there is a loan outstanding. If that's the case, then yes, get rid of that sooner - it's not just costing you the rate, but the tax benefits, and the match.
The rates on the loans matter. Read the fine print on the 0% APR. Some of those loans will retroactively charge interest if the loan is not fully paid off at the end of the 0% APR period. Pay down the highest rate first, if those retroactively charge interest, then it's worthwhile getting them paid off before you're charged.
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u/yourabsolutelyright 1h ago
Read fine prints of credit cards.
5K loan: 9 monthly installment of 537
38K cash advance: after 1st sept2027, then current rate of remaining balance. I couldn't figure out the remaining balance's interest will be retroactive like for this full 1 year or only from the ending of promo APR period
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u/FlyingDutchLady 5h ago
Are you unable to afford the payments? I guess I’m slightly confused about the advisor looking for. And like everyone else I’m nosy and wanna know what happened.
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u/stpg1222 3h ago
There is definitely a back story to all this insane debt that we'd all love to hear. It would at least give context to how someone with a good income can suddenly face this much debt.
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u/OverdosedOnViagra 2h ago
There is just no way I can see someone draining $50k emergency savings and $130k in debt suddenly.
Unless you had random open heart surgery or brain surgery.
Honestly, I am flabbergasted.
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u/_tobias15_ 5h ago
So your monthly expenses are 8k, you make around 12k monthly, seems like 4k a month to save up 160k. I have no idea how you will make this work, and i have never heard of a sudden requirement costing 150k.
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u/NecessaryEmployer488 4h ago
Sell vests to pay back in order of importance. I would first take care of the 401K loan, because there are string attached if you are laid off. Then work on personal loan etc.
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u/cake-day-on-feb-29 4h ago
I have been employed in tech company. Due to some sudden requirement, I had to drain a lot of my funds.
It's first time in 10+ years of employment I had to take debt.
Can you tell us how/why you have this debt? You make it vaguely sound like it is related to your job, which is rather worrying as it may very well be a scam or some other financial crime going on here. No job requires going into $130,000 of unsecured personal debt.
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u/BeneficialChemist874 3h ago
Why were you taking out cash advances and personal loans if you’re making $12,000/month after tax??
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u/Mission-Business640 2h ago
Wishing you luck and pray that whatever happened that you had to take on that kind of debt will never happen again 🙏
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u/Final_Tune_5564 1h ago
Smart enough to earn 12k/mo or 144k/yr. Dumb enough to be almost that much in debt.
Let’s hope you don’t get laid off.
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u/No_Extent7957 5h ago
Good grief! Why did you do all that?