In June, I lost my job and had to survive on less than 2 months worth of severance. I have: $51,000 in credit card debt; $165,000 in student loans; and $6,200 owed to friends/family. I owe myself almost $4,000 from my retirement fund.

Prior to getting laid off, I was already falling behind on rent and was taken to court by my former landlord so I moved to a cheaper apartment. Unemployment benefits were hardly enough to cover my rent, never mind my other living expenses (e.g. food, transportation) and debt payments. While laid off, I incurred a $500 medical bill which I'm still paying off. 

Thankfully, I landed a new job that started in mid-September. Just as I was ready to start fresh and build up an emergency fund, one of my pets got sick. Vet bills and medications quickly added up to over $3,000. My own health insurance options rose by four times the previous amount.

It feels like every time I take one step forward, I fall 10 steps back. How do I begin to save when I continue to live paycheck to paycheck? The anxiety keeps me up at night which, ironically, affects my job performance.

Original Post

I am sorry you are going through this and glad that you have a new job lined up. I would say to focus on what you can control and not worry about the rest. Speak to your friends and family and make every effort to pay them back, even if it's small amounts of money. If your new job isn't contingent on you having good credit, you might want to consider bankruptcy for the $51k if there is no way you can pay it all back. Bankruptcy lawyers are not that expensive, but you need a deposit of a few hundred dollars. Don't worry about the student loan debt as long as you are making payments. Making yourself sick over this won't help. See if you can get a second gig as seasonal help or babysitting or whatever. Just remind yourself that the second gig is only temporary to get a few dollars. As long as you look at what you can do rather than losing sleep over what you can't do, it will give you a clearer path.

It can be difficult to see the end to a resolution when one feels buried in debt.  I'm sure you have tried almost everything and it feels like you said, taking more steps backward, than forward most of the time.  

I agree with Detkar to look into bankruptcy if possible. Sometimes that's the only way to feel like you are getting your finances under control; the courts make that possible for those who are overwhelmed so use it as a remedial too. Taking the worry off your shoulders may be just what you need to focus on the positive......like your new job!!

Try to also think out of the box:  is getting a room mate possible to share rent expenses, even if just for a year or so? 

Can someone in your family or a good friend care for your pet temporarily? 

Would any of your family and friends consider you doing sweat equity to work off money owed them?  (The bonus of volunteering somewhere or using sweat equity in lieu of cash is that it often puts you in contact with other people and allows you to network your way to better opportunities, be it a better job, a second job, assistance, etc) I am a firm believer in networking because it has worked well for me in the past. 

I'm real sorry to hear about your situation. Best bet is bankruptcy and try living way under your means. If your 165K into school debt than the last thing you need is a dog. Life is hard but it's the sacrifices you need to make to recover and be on top. 

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