‘No money and no ideas how to pay back my debt.’ What should she do?

It’s Group Therapy time when the principle of Collective Wisdom is applied to help solve someone’s Big Life Problem. Sienna* writes

“I moved here 5 years ago from England and over that time due to various life changes I have managed to amass a debt of just over $50,000. This is now spread over 4 credit cards and 1 personal loan.  My minimum repayments now equal over 50% of my income and I am struggling to repay anymore than this.

I have got to the point in my career where I have a pretty good job and as a result I think my friends and family around me believe I am able to afford a much more comfortable life than I really can.  As a result I find myself going out for dinners/birthday celebrations/weekends away that I really can’t afford but do not know how to say no to without explaining why.

I cannot bring myself to tell my friends or family as I am just too ashamed of myself and feel I really do only have myself to blame as I barely have much at all to show for it.  I think I am scared my (relatively new, but lovely) friends will stop inviting me to things because they think I can’t afford it, which I guess is a symptom of moving to a new country as an adult and getting into the ‘never turning down any invitation’ habit.

I have now moved into a flat-share in order to reduce my rent payments but this really isn’t enough to make the dent in my debt I need.  I drive a very basic “A to B” car and don’t feel I have any major assets I could sell to help me out of my situation.

Today I called a debt management company (Fox Symes). They advised me that my best option was to enter into a Debt Agreement. This will stay on my credit file for 7 years which I am really worried about. I may have been feeling sensitive, or could be just unfortunate with the person I ended up speaking to but he made me feel 100 times worse than before I called. He essentially told me that I should enter into a debt agreement or I would spend 25 years paying off my current debt. I came away from the call feeling stupid, intimidated, belittled and downright frightened. But I am the first to admit I probably deserved it in this instance but the idea of damaging my credit rating irrevocably for 7 years really worries me.

I am a single girl who is soon turning 33 and am watching my peers and friends around me settling down buying houses and all the while I am wondering how I got myself in this situation and how to change my life to become more financially secure.  I don’t want to waste any more of my thirties having sleepless nights over this, yet know I only have myself to blame.

I actually love being single, but I also know deep down I am also almost afraid to meet a guy because I feel that at some point I would have to confess my financial situation to him.  Even more than that, without wanting to sound melodramatic, if I got run over by a bus tomorrow my family would have have deal with my debt – which is the thing I feel worst of all about.

These are the kind of thoughts which now fill my day and keep me awake at night.  I really have no idea what to do next and I just want to feel happy and normal again.

I would really love to know if anyone else has been a similar situation and has any practical advice?”

NOTE” Please remember that any advice given  here does not constitute professional financial advice. Even if it’s given by professional advisers (they need to know the intricacies of your situation before their advice can be considered relevant to you)

Also, you may want to take a look at this handy website  Understanding Money and also the Financial Planners Association of Australia

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