Mail question: I'm a financial mess, where do I start?

Pete "the Planner" Dunn,

My husband hasn't worked for almost two years. I work full time plus a side job on the weekends to pay all the bills. I just need to know what to do. I have to do something before I lose my mind. Here are my expenses and income, can you give me any advice?

Thank you for your time,

Anonymous

Thanks for your email. There's a ton going on here, and I don't have all the facts I'd want, although I do know a little bit more than is shown in your question. I know that you are over 59 1/2, and that matters a lot. I've chosen to answer this question with a series of bullet points. Why? I don't know. It just feels like I should.

• We're on a hunt to recover $1,267 per month. This is the amount of money you are currently paying toward consumer, personal, car, and medical debt. Debt, in itself, is not evil. The monthly obligations to pay back our debts, are what make debt bad. That, and the behavior or lack of preparedness that led to the debt. The sooner we recapture this $1,267, the better.

• You have three major groups of debt that demand separate attention. You have your car payment, in which $13,205 is holding $325/month hostage. You have a personal loan, in which a $20,395 debt is holding $493/month hostage. And you have consumer and medical debt of $18,538, which is holding $449/month hostage.

• You should consider using your small annuity to payoff some of your debt to free-up some monthly debt obligations. You need to understand there will be tax ramifications to this, possible annuity surrender fees, and possible investment losses. You should discuss this with your financial advisor and/or the insurance company that issued the annuity.

• There's no possible way the annuity is earning you more in interest than the debt is charging you, unless it's a variable annuity.

• I would consider using the annuity to either wipe out the car loan and $6k of the consumer and medical debt, or simply using the annuity to wipe out ALL of the credit card and medical debt.

• You must immediately use the money you freed-up by paying off a group of debt, and start paying toward another group of debt. For example, if you were to pay off your consumer and medical debt, then the $441 that was going toward those bills should now go to pay down the car debt aggressively. Instead of making $325/month car payments, you will now make $776/month car payments. This will payoff your car loan in just over one year. After you do that, you will then make $1,269 payments to the personal loan. That payback will take less than 10 months.

• You will be out of all debt, except for your mortgage, in less than two years. It will be hard. It will suck at times. But you can do this. Don't liquidate any other assets than your small annuity.

• You need to then turn your focus to saving $1,267 per month.

• You've got this.