I don't know how much backstory is needed here but DH and I want to get rid of our debt, like tomorrow.
I am willing to do most anything except sell the house or the car.
I work from home, so things like phone/cable/internet and cell phone are written off at the end of the year, at least for a partial amount.
I have a preschooler that is in daycare full time and a newborn who I am going to keep at home with me to save money on daycare.
We have $500 in savings and no retirment funds whatsoever.
Income - $4100
House Payment - $1250 PITI and PMI (we just re-fied @ 3% for 30 years. we have been here 4 years in march. it appraised for 10k over what we paid in 09) CC1 - $50.00 ($500 @10%) CC2 - $42.00 ($1,300 @ 0%) CC3 - $142.00 ($4,000 @ 22%) CC4 - $110.00 ($5,000 @ 14%) CC5 - $190.00 ($11,000 @ 8%) SL1 - $115.38 ($9,000 @ 4%) SL2 - $138.24 ($15,500 @ 3%) Car - $276.55 ($8,600 @ 6%)
Electricty - $150 Gas - $45 Trash - $14 Phone/Cable/Internet - $135 (cheapest package) Gas for car - $150 Insurance for car - $25 Cell Phone - $120 (I might be able to cut the minutes on this to save $30-$50) Fast Food - $10 Dining Out - $20 Groceries - $300 Doctor Visits - $30 Pharmacy - $30 Medical1 - $50.00 ($1,035.14 @ 0%) Medical2 - $106.00 ($1,058.27 @ 0%) Daycare - $560 Kids clothes - $10
This leaves us with $25, which would go towards dog food or an extra doctor visit a month.
Anything I don't spend I was planning on putting towards debt. We are starting the debt snowball to pay off all the loans, once we get 1k saved.
DH does pick up overtime when he can but I am not couting on that. I think I have all the expenses covered.
As long as I get my work done when needed, they are ok with me keeping the baby at home. I am also free to earn other income while at home I just don't know what or how.
This doesn't seem workable to me. It's good in theory, but it accounts for no random household expenses, car repairs, or medical bills....all of which are inevitable. Those are the types of things that make it so hard to pay down debt.
I will also say that I really disagree with Dave Ramsey's idea that a family of 4 should only have $1000 in savings. $1000 would be wiped out by a simple car repair and a small home repair.
Will you be getting a decent tax refund this year, perhaps?
We got back $600 last year, so I am not expecting much more than that, really.
our house is a new construction, and so far we have only needed two things fixed. i was hoping to ride out this next year without anything.
my car is under warrenty for the next two years. DH owns a car outright and he can fix anything on that with the help of his uncle who owns a repair shop.
You guys have $30K of consumer debt. Even with some serious budget heroics, you'll need to get a second job to pay this off. Cut out cable and cell phones. Why won't you consider selling your car? You should really sell the car and buy a cheap, reliable, fuel efficient car. Why won't you consider selling your house? You are living a lifestyle you can't afford. You need to make drastic changes.
All of this and the "we want this debt gone tomorrow" shows that your delayed gratification skills could use a bit of fine tuning.
I don't think little tweaks are going to help. You need major lifestyle changes.
I think putting the extra toward debt is a great idea, but what's the extra? It sounds like you're spending down to the penny. I'm also curious where you can get $10 of fast food per month and spend $20 on eating out. You may as well cut those both since I don't think they are realistic numbers. Ditto to the $10 on kids clothing. DH and I can't even get 2 fast food meals for less than around $14 these days. I guess you eat off the dollar menu?
Post by mrssavy42112 on Jan 3, 2013 11:50:19 GMT -5
If all of those credit cards are at the minimum payments, then I don’t see how you could do the snowball method here. At least, not without bringing in more income. Can DH take on overtime at his job? Does he have any skills that he can get random side jobs for?
For you, what additional work can you take on? I’ve personally found success in the past with online writing, tutoring and direct sales. Do you have items at home you can sell on eBay/Craigslist? Honestly, you can’t make a dent in the debt without bringing in more. If those aren’t the minimums, then drop them to the minimums and Google ‘snowball debt reduction method.’
we have had a come to jesus talk about buying things. the CCs got that high b/c DH was laid off for almost a year while we were building the house. And then we had two kids. this is the first time ever we have had a budget and we want to stick to it to get out of debt.
i know this all comes off as excuses, but we are really serious about this. i never ruled out a second or third job. it if is an income problem - which it appears to be from pps - then i will work on bringing more money in
I think putting the extra toward debt is a great idea, but what's the extra? It sounds like you're spending down to the penny. I'm also curious where you can get $10 of fast food per month and spend $20 on eating out. You may as well cut those both since I don't think they are realistic numbers. Ditto to the $10 on kids clothing. DH and I can't even get 2 fast food meals for less than around $14 these days. I guess you eat off the dollar menu?
yeah, $10 is two trips to McDs and $20 is one night of ordering pizza
eta: the kids get most of their clothes either handmedowns or as gifts. they have enough winter/spring clothes from christmas to last until their birthdays in the summer. $10/month is for socks and undies in the odd month they need them.
We got back $600 last year, so I am not expecting much more than that, really.
our house is a new construction, and so far we have only needed two things fixed. i was hoping to ride out this next year without anything.
my car is under warrenty for the next two years. DH owns a car outright and he can fix anything on that with the help of his uncle who owns a repair shop.
Does your warranty cover normal wear and tear? Does your DH also get free car parts? Do your kids never get sick?
You have absolutely no room in your budget for anything to go wrong, and with four people and 12 months, something will always go wrong. This is often the mindset that gets people into creidt card debt and keeps them there. It's a cycle, and I don't see this budget resolving your debt.
Also, if the amounts you listed for the credit cards are just the minimum payments then a good chunk of your that payment is going to interest.
As tight as the budget is, there really isn't going to be any "extra" to throw towards debt.
I'm also concerned that you continued building a house while your husband was laid off. You were obviously unable to afford the home if you had to take on $20k worth of cc debt in the process. I think it's important that you both realize what got you in this mess.
Post by makingithappen on Jan 3, 2013 11:58:55 GMT -5
It is an income nd spending problem. If you only have an extra $25/month, that is not much to be putting towards your debts. When does the 0% card expire? Will interest start at that point or will they back charge it; is it a store card? Can you defer the student loans and put that money towards the CCs? Also, don't budget for kids clothes and hand down the kid 1's clothes for the baby and sell the baby clothes to buy used clothes for kid 1. Can you get a lower interest rate on the car? A lot are in the 3% range and cars can be refinanced.
It's a full warrenty, so whatever that normally covers. I did have to have my key replaced but it was only $40. And DH does get free parts from his uncle. My LO has been seen by the doc once a year for being sick since she was born. So $30 a year. LO2 hasn't been sick yet.
We continued with the house b/c we were told at the time we would be sued if we didn't buy it since we had signed the contract already. Since we were in a one bedroom apartment at the time and I was just pregnant, we just went ahead and bought it. We also didn't know anything about buying a house, so looking back I can see how we got in too deep.
As for extra - for this month, the electic bill is only $130 and the gas is $20, so that extra $50 could go somewhere else.
It's a full warrenty, so whatever that normally covers. I did have to have my key replaced but it was only $40. And DH does get free parts from his uncle. My LO has been seen by the doc once a year for being sick since she was born. So $30 a year. LO2 hasn't been sick yet.
We continued with the house b/c we were told at the time we would be sued if we didn't buy it since we had signed the contract already. Since we were in a one bedroom apartment at the time and I was just pregnant, we just went ahead and bought it. We also didn't know anything about buying a house, so looking back I can see how we got in too deep.
As for extra - for this month, the electic bill is only $130 and the gas is $20, so that extra $50 could go somewhere else.
But it’s delusional thinking to think that the pattern will continue. Kids get sick, accidents happen, appliances break, cars get hit. This stuff happens to everyone and there is no reason to think it won’t happen to you too.
Believe me, I used to think the same way. When DH and I got married, we had a lot of extra room in our budget. But that was b/c I didn’t have a clear vision of the trust costs of living on your own & how often unexpected costs come up. My 4 year old cat got sick, $500 gone. Never sick once in her life. DH presented with odd symptoms & needed to see several doctors. $600 gone. Never saw a Dr. in 8 years. My car dropped dead & I needed a new one. It was running strong for 10+ years. STUFF HAPPENS. And when you have a home, there is more opportunity for things to go wrong.
I think you already know the answer. You both need to take responsibility and increase your income. When you do, ALL of it should go towards your debt. You can do it, you just need to stay disciplined.
How are you ever going to save that $500 in order to get to $1000 efund when you don't have a savings line? You need more income. There isn't a lot to cut and honestly, and you have line items missing (maintenance, doctor bills, etc.)
Can you get your phone,cable,internet reimbursed through work since you work from home? Can anyone in your family watch your kid for free? And not to be typical MM, but you have to cut down your cell phone. Pay as you go phones!
Post by HoneySpider on Jan 3, 2013 12:13:03 GMT -5
Obviously you have made some mistakes and gotten into a less than desirable situation, but I applaud you for stepping up and wanting to make changes.
Are new, higher paying jobs an option for either you or your H? Are there any alternative day care options, like family who may be able to help out? I don't see anywhere to really cut and you do need more income in some way. A second job for one of you might be the only solution at least for right now.
The only other thing I could think of is to call the medical bills and tell them you can only afford $20 a month. They should work with you. That would give you a little bit more.
It's really just an income problem. Look for any odd jobs- babysitting, pet sitting for friends going out of town. Can your husband work at his uncle's shop on Saturdays?
You're an excellent candidate for Dave Ramsey. I borrow a copy of totally money makeover from the library and read it tonight.
The only other thing I could think of is to call the medical bills and tell them you can only afford $20 a month. They should work with you. That would give you a little bit more.
Definitely an income problem. With no extra money it's going to be impossible to snowball. Bring in more money. Cut out cable and cut back to phone to prepaid plans (or whatever your work will cover 100%). You can't afford to spend more in those areas.
It's not insurmountable but you're going to have to find more money somehow. Can you have a yard sale? Babysit? Anything and everything until you're over the hump.
Since you work from home, do you have to work traditional hours? Or, can you work evenings? Then, your DH can care for the toddler while you are working, and you can take her out of preschool this year. You and DH won't see each other, but at this point, you won't see each other with the extra jobs, either.
As someone who works from home I think you need a better long term plan than I'll work around the baby. It might work for a few months but eventually you're going to have to plan for more care for your kid.
Since your medical debt is at 0% interest I'd see if you can make smaller payments (say $50 each) and use some of that to get the CC paid down faster. If you can I'd move some of the high interest to a lower interet card.
Can you call your provider and get a reduced payment for now. Maybe IBR, or a graduated re-payment plan?
Electricty - $150 Gas - $45 Trash - $14
What do you do in the months that the bills aren't this amount? Do you end up spending it elsewhere or put it in savings?
Phone/Cable/Internet - $135 (cheapest package)
While this is the cheapest package, I really think you are in no position to have cable. You can get an even cheaper package with just phone/internet. I know in my HCOL area, I can get those two for $50/month-ish. It doesn't matter if you get to write it off at the end of the year, you are still paying it every month.
Cell Phone - $120 (I might be able to cut the minutes on this to save $30-$50)
With a price like that, I imagine you have 2 smartphones (at least I hope so). Check out pre-paid plans. I know that there is the initial cost up front to get new phones, but Virgin Mobile is a good option. $35/line for a data plan. If you don't need that data (since you are home all day) get a normal talk only phone to save even more
Fast Food - $10 - Sure, it's cheap, but it needs to be cut
Doctor Visits - $30 - Is this sed every month? What happens to it when it doesn't get used Pharmacy - $30 - ditto
This leaves us with $25, which would go towards dog food or an extra doctor visit a month.
What about the dog for the rest of the year? Vet visits? grooming?
ive been selling everything i can but no one wants a rage agaist the machine cd or a wedding dress from 2005.
Donate and take the tax write off.
I've also found that the more I get rid of, the less I want in my house at all. It's a roundabout way to curb some of the impulse spending. Simplify your whole life and your finances follow suite.
Since you work from home, do you have to work traditional hours? Or, can you work evenings? Then, your DH can care for the toddler while you are working, and you can take her out of preschool this year. You and DH won't see each other, but at this point, you won't see each other with the extra jobs, either.