I'm 32 with $66,000 of debt. How can I get out of it?

Q. I'm a 32 year old with serious credit card debt. I don't own a home, earn $75,000 a year, have recently been forced to buy a used car, and plan to get married within a year.

I have about $40,000 in credit card debt, owe $26,000 on the car, and am trying to apply all extra money to the credit cards so nothing is going into my 401(k). I know there is no simple way out, but I am getting concerned about not saving in the 401(k).

Is there anything I can do, aside from just keep paying off as much as I can, that might help? I don't want to declare bankruptcy, but I'm starting to feel that I'm running out of options. S.A., by email from Dallas

A. Sorry, there is no magical exit. This is a good example of how our financial institutions are willing to provide excess credit to anyone with a pulse. The first lesson every young person needs to learn is that lenders are not your friends. They will extend way more credit than you should use. Then they will increase your interest rate because you have borrowed too much. Remember: It's not the lenders problem when you have to choose between a monthly payment and your Starbucks habit.

So I suggest a complete reboot on how you think about your spending, your debt, and your income. First, the money that goes to credit cards isn't "extra" money. There is no such thing as "extra" money. Never has been, never will be.

The question is what do you intend to do with your substantial earning power?

Here's how you might accelerate getting out of debt. Assuming you were "forced" to buy a used car because you were upside down on a previous vehicle, owing more than it was worth, you could focus on paying down the used car note first. You'll do this because you are still upside down. When you are no longer upside down, sell the used car. Replace it with a much less expensive car.

Suppose, for instance, that your car is really worth only $20,000. If you pay the $26,000 loan down first, you could replace the $20,000 used car with a $6,000 used car. As a consequence, paying down $6,000 of car debt would open the door to eliminating another $14,000 of debt when you buy the less valuable used car.

This would make a dramatic change in your car payment. If you were fortunate enough to get a 48 month $26,000 used car loan at 8 percent, your payment would be $634.74 a month. Concentrate on paying it down to break-even on sale and your replacement car loan of $6,000 would cost $188 a month for 48 months or $146 a month for 36 months.

This would free up at least $446 a month that could be applied to your credit cards or to your company 401(k) account. If you applied $375 a month to the 401(k) plan you would enjoy these results: • You would still have $71 a month to apply to the credit cards, • You would be saving 6 percent of your income which would probably capture your employer's match. If it is the typical 50 percent match, you'd gain $187.50 a month in additional retirement savings. • Your income tax bill will go down by about $93.75 a month because of your 401(k) commitment. Combined with the extra $71 above, this would allow you to pay an extra $160 a month on the credit cards. The extra payment, alone, would pay off your credit cards 12 months faster.

Your credit card debt, assuming an average 18 percent interest rate, can be paid off by making monthly payments of $1,015 a month for 60 months. As a practical matter, once you've made the car change and 401(k) commitment, you'll be able to pay more and reduce the pay-down period to 48 months.

Better still, you'll also be in a position to start looking for lower-cost credit cards. A $1,175 a month payment, for instance, would have the credit cards paid off in 39 months--- if you could borrow at 9 percent interest.

So here's the plan in a nutshell. First, pay as much extra as you can on the car loan while making credit card payments of at least $1,015 a month. That's a total commitment of at least $1,650 a month---$2,000 would be better.

Do whatever it takes to make this happen. If you whine about having to live on only $50,000, consider that millions of people would be happy to put you out of your misery by beating you to death.

Second, do the car switch and take the auto payment down. Third, join the 401(k) plan and become a young saver with a lower tax bill. Fourth, use your new financial strength to get low interest rate credit cards. Fifth, celebrate by paying cash for a romantic dinner with your fiancé.