I was laid off one year ago and still don't have a job. My spouse brings in $55,000 a year, but we struggle with a $1,700 mortgage and $7,100 in credit card debt — what can we do?

The state of unemployment in America

Bill is far from alone in struggling to find employment. The unemployment rate sat at 4.2% (7.1 million Americans) as of November 2024, according to the Bureau of Labor Statistics. This is higher than the same period a year ago, when the unemployment rate was 3.7% (6.3 million people). Of these, almost one in four (23.2%), or 1.7 million people, had been without a job for 27 weeks or more.

According to Aerotek’s Fall 2024 Job Seeker Survey, 63% of respondents believe there is currently a hiring slowdown and nearly 18% expect to complete 100 or more applications before being hired.

“While the labor market continues to be strong, a significant number of workers are finding that their job searches are taking more time and demand greater effort,” the staffing agency said in a news release.

At the same time, Americans continue to rack up credit card debt, with a balance of $1.17 trillion in the third quarter of 2024, according to the Federal Reserve Bank of New York. A LendingTree analysis of its users found the average card debt of those with unpaid balances was $7,236 in the same quarter.

So, Bill’s credit card debt of $7,100 is in line with many other Americans. But it’s not an ideal situation, as the LendingTree analysis predicts credit card balances will continue to climb.

Kiss your credit card debt goodbye

Millions of Americans are struggling to crawl out of debt in the face of record-high interest rates. A personal loan offers lower interest rates and fixed payments, making it a smart choice to consolidate high-interest credit card debt. It helps save money, simplifies payments, and accelerates debt payoff. Credible is a free online service that shows you the best lending options to pay off your credit card debt fast — and save a ton in interest.

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How to get through tough times

Bill and his wife aren’t in dire straits just yet, but they’re trying to figure out how they can cover Bill’s job loss without depleting what savings they have left — and without racking up even more debt. They may want to start by cutting back on expenses wherever they can and stick to a budget.

Bill may also want to consider taking on gig work to bring in some extra income. This can help the couple stay afloat, with extra cash going toward paying off credit card debt and rebuilding their emergency savings. Being a delivery driver or dog walker may not be a dream job, but it can help with productive hours in between searching for the next opportunity.

While this couple may be feeling anxious about their inability to save for retirement as Bill looks to get his career back on track, eliminating high-interest debt should be a priority. Minimizing the amount of accumulated interest can help in the long run.

Finally, it may also be possible for the couple to access funds from a 401(k) via a hardship distribution. This is allowable by the IRS if you meet certain criteria and are in immediate and heavy financial need. But withdrawals may still be subject to the early withdrawal penalty of 10% if taken before the age of 59.5, so it’s really a last-ditch measure.