‘I was once an emotionally unkempt individual’: I’m 27, was raised in poverty, and work in a grocery store. I have $8,000 in debt. Can you help?

I’m a 27-year-old grocery-store employee. I was raised in poverty and in an unstable household, and I was once an emotionally unkempt individual. But with the help of therapy and ADHD treatment, I am now a very stable person. One thing that has followed me from my previous lifestyle, however, is old debt and a horrible credit score. 

I definitely live within my means, but I don’t have tons of extra income. There is a pressure to turn my finances around because I’m in a serious relationship with a guy who makes great money and owns his own home. We’re the same age and have known each other since high school. 

He knows I have made major changes in my life, and he is very supportive, but I have never told him about the debt. I would like to take care of my debt, which totals around $8,000, before we move forward with any serious commitment. I have looked into American Consumer Credit Counseling for help, but I’m not sure if that’s the best way for me. 

I know I have options, but I can’t seem to pinpoint the best next steps. Can you help?

Ready for Change

Dear Ready,

You are running your own race. Paying off your debt on a regular basis, automating those payments, and having a medium- to long-term goal of getting back on track is doable. But putting pressure on yourself because of a relationship will only serve to punish yourself and put an obstacle in your way.

The National Foundation for Credit Counseling is a nonprofit financial-counseling organization that can help you put together a budget and a realistic plan to pay off your debt. As you note, American Consumer Credit Counseling is another such nonprofit organization that is there for people in your position.

There is no shame in your game. You should be proud of how far you’ve come, both personally and financially. You probably don’t realize the amount of courage and fortitude and stamina it took to get to where you are now. Research has shown that an emotionally unstable household can be one of the biggest challenges for childhood development, and stability later in life.

But you are already winning. You have a partner, who sounds like a best friend; a steady job; and the will and ability to pay off this debt. It may take a number of years, but if you seek help and know that you are better off not tackling this on your own, you will have a greater peace of mind. When you have a plan in place, you can tell your boyfriend.

I am willing to bet that he won’t react in the negative way that you might expect. He knows you. He knows your heart. And he knows how hard you have worked. He will likely want to give you moral support and cheer your efforts. You’re not alone: Credit-card balances hit a record $931 billion in the fourth quarter of last year, up 18.5% on an annual basis.

And while we can all compare ourselves to others and feel like we have not achieved enough or done enough, there will always be someone who is in a more indebted position than you. Take this man, who wrote to me about a $100,000 gambling debt and has yet to tell his wife. He is coming to terms with an addiction, while you are recalibrating your financial life.

Support groups

There are several approaches you can take to pay off your debt. The “debt avalanche method” starts with the debt with the highest interest rate (credit cards, for instance), while the “snowball method” starts with paying off the lowest-balance debts as quickly as possible. If you have more than one debt, I suggest starting with the highest interest rate. Read more here.

If you get money back on your income taxes, use it to pay down your debt, says Cary Carbonaro, senior vice president and director of women and wealth at Advisors Capital Management. She cautions that rising interest rates may not be conducive to debt consolidation. “I wish you all the luck, and I’m proud of you for taking ownership,” she adds.  “Congratulations on making positive changes in your life.”

There are also support groups out there, including Debtors Anonymous, where you can have a safe space to talk about your background and emotional life, take responsibility for your debts, and plan a way forward with the help of a community that’s in the same boat as you. You will also find a sponsor or mentor who can help keep you accountable and guide you along the way.

As you make progress, you can also look into building your credit score. When you have paid off a debt, you can, for example, negotiate to have a charge-off — a “bad debt” on your credit score when you don’t pay the full minimum payment on a debt for several months — removed from your credit report. To do that, you would have to contact the creditor directly.

You may also consider joining a credit union, many of which have financial-literacy programs and can provide advice on debt consolidation and management. You can read more about that here, but be wary of for-profit debt-management services, which can not only charge you fees that you can’t afford, but also saddle you with loans with a higher annual percentage rate (APR).

Once you have made headway in making a plan to clear your debt, as I have no doubt you will, you can focus on taking night classes, moving up the ladder at your current place of work, or taking on extra hours and cutting down on unnecessary expenses to clear the debt. It’s not painless, but the sense of achievement will be worth it.

You have restored the dignity to your life that you have always deserved, and this is just one reminder of the past you want to put aside. Your future is already here. Please keep in touch and tell me how you get along. You have one more person on your side, cheering you on, and I know countless readers of this column will be wishing you well too.

Yocan email The Moneyist with any financial and ethical questions at [email protected], and follow Quentin Fottrell on Twitter.

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More from Quentin Fottrell:

‘She is a grifter’: My father set up a $500,000 trust for my troubled sister, and asked me to be trustee. What are the risks involved in being a trustee?

‘We live in purgatory’: My wife has a trust fund, but my mother-in-law controls it. We earn $400,000 and spend beyond our means. What’s our next move?

I’m afraid to tell my spouse’: I maxed out my credit cards and racked up $100,000 in debt due to my gambling addiction. Can you help?

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