Can I be your pet project? loooong

[idontknowmargo]

Lurker here. I'm kind of nervous and have sweaty palms and feel sick to my stomach typing all this. But I have lurked long enough (too long) to know that you have great advice, not afraid to offer a kick in the ass when needed and some have come from behind to get back on track.

So, I am 35, DH is 34 and we have a 1 year old. We are both STUPID when it comes to money and you would think we would learn, but nada. We own our home, want another kid, and really just want to be unsaddled with the debt we have carried for almost the entire time we've been together (12 years)

We both work full time. He is salaried and I am considered an independent contractor, have 1 full time employee and pay self employment taxes.

Right now, we have $400 in savings and $23,000 in cc debt. And between the both of us, maybe $10k in retirement. That's it. Kind of makes me want to hurl

Last night we talked and have decided that we are going to use CCCS to help us with our debt. Here's the thing. My income is so cyclical that I have 6 really good months in a row, a really shit month, an okay month, etc.

Last year, my income went down $25,000, we had a kid (planned) and and shit just got out of hand. I think we have just put our heads in the sand thinking if we can just get to the good months, we would be okay.

But in reality, the good months, we need to save to get us through the shit months instead of relying on credit.

Mold me and hold me, MM? We are most likely doing the CCCS. We have good credit. We haven't been late or past due on anything, but right now, our minimum cc payments are almost $600/month. MINIMUMS! I have called and asked to reduce our interest rates to no luck. About $10k of our cc debt is from taxes. We thought we were ahead in our estimates, but alas, we weren't and got hit. Hard.

we had much more in savings, but of course, the shit months this past year have pretty much drained it.

So, I will answer any question you want. I will be pretty open. I feel so embarrassed and ashamed and stupid and humiliated. It sucks to face this head on, but I am determined to get out of this. If for anything, to be able to teach our little one how to manage money and get them on a good financial path.

And please, no flames. I know we are stupid. I get it and have beat ourselves up over this for quite a while. But admitting it is the first step, yes?

[ijack]

you know what we need - post your budget!!

[Deleted]

Can you post a budget for us? Can you sell your house to pay off the credit cards and put some in savings? And then start over with Saving for retirement first, then a downpayment on a new house way down the line?

[HoneySpider]

Do you have a budget? If yes, post it. If no, you need to make one! It's impossible to tell you what you need to do without knowing your bigger financial picture.

I'm glad you recognize your problem and want to make a change!

[simpsongal]

Admitting is very important. Making a plan of action and sticking to it is key.

Can you list out your expenses and minimum income for the month?

When you say you own your home, do you have a mortgage or actually own it outright? There may be areas you can cut, you two may just be bad at tracking and controlling your spending, or you may need more income -- we need to see monthly spending & expenses to know how to help.

First thing is first, you need to put more money in savings. You need at lease $1000 in an efund, especially with a 1-year old.

[mellymel]

Yes, we need to see some sort of a budget. Or maybe post a good month vs. a bad month so we can help you more accurately.

[Deleted]

Jan 11, 2013 16:33:18 GMT -5 idontknowmargo said:

Mold me and hold me, MM

Definitely need a budget. Also, I love this line. It made me giggle.

[idontknowmargo]

We have a mortgage and just refinanced this year. We live in a very LCOL and it would be dumb to sell. The rental market here blows and we would pay pretty much the same for rent than for owning our home. Selling is out of the question, honestly.

And forcuatro, I'm glad I made you laugh

I am off to get my "budget"

[limey]

Since your annual income is about the same as your debt, you may have to take a FT job to bring in more money.

ETA - And by "your", I just mean the OP, not the combined, obviously.

[idontknowmargo]

Jan 11, 2013 17:00:18 GMT -5 limey said:

Since your annual income is about the same as your debt, you may have to take a FT job to bring in more money.

ETA - And by "your", I just mean the OP, not the combined, obviously.

I do work full time. I meant that my income decreased by $25,000. My 1099 will be around $80,000 this year.

[kadams767]

What is your mortgage payment?

[idontknowmargo]

Jan 11, 2013 17:07:05 GMT -5 kadams767 said:

What is your mortgage payment?

It is under House - $695

[idontknowmargo]

Jan 11, 2013 17:09:51 GMT -5 carrotsmakemefat said:

What is a CCCS?

Consumer Credit Counseling Services - the one suze Orman recommends

[Deleted]

What is the personal loan for? When is that paid off?

I honestly don't see a whole lot else. I think you guys have an income problem because none of your expenses are ridiculous. I mean gas is high, but you said your income includes mileage payments so I assume that's partly a wash.

I guess your life insurance is a little high. Could you get a smaller policy for now and bump it up higher again when you have more money to work with?

Obviously your phone is also high but you said it was getting lower. Though still kind of high, really.

[kershnic]

I think you need to lay the debt out for us better so we can tell you how to snowball it. Both total owed on each account and interest rate.

[Roc A Bee]

Where does the leftover money go?

You need to cut up the credit cards. Do not use them.

When is the personal loan paid off or the car?

You should be cutting your phones down more. Do you have cable? Internet?

I think one or both of you need to get a second job. You just don't have that much extra to throw at your debt.

[idontknowmargo]

Jan 11, 2013 17:14:04 GMT -5 carrotsmakemefat said:

Right away I don't see cable. Do you have cable?

Can you cut back on eating out? I think you can likely get by on $300 or less on groceries a month.

What about clothes/baby stuff - when you get haircuts and all that? Where does that money come from?

What about property tax?

I still think that $130 for cells is ridiculous. Is that for smart phones? Why would you need a smart phone?


ETA: I see you have $307 left over after you pay bills. Where does that money go?

We are in a transition right now. We ditched Directv and are getting wireless. DH got a Roku for Christmas so we will use that for TV and for internet. Having wireless at home will allow us to bring our cell phone bill down too.

We are working on decreasing our budget for food right now. This month, we only have $250 to get us by for food.

Haircuts came from checking with extra money.

Luckily, we have tons of hand me downs for our little one, so we don't really buy much in that department.

Our mortgage includes PMI, taxes and insurance.

[idontknowmargo]

Jan 11, 2013 17:22:07 GMT -5 @buckybells said:

What is the personal loan for? When is that paid off?

I honestly don't see a whole lot else. I think you guys have an income problem because none of your expenses are ridiculous. I mean gas is high, but you said your income includes mileage payments so I assume that's partly a wash.

I guess your life insurance is a little high. Could you get a smaller policy for now and bump it up higher again when you have more money to work with?

Obviously your phone is also high but you said it was getting lower. Though still kind of high, really.

The personal loan will be paid off in 2 years.

The mileage helps offset the fuel cost.

We have thought about dropping one of our life policies or reducing it.

I know the phone is high and we are trying to come up with options to cut it, but we both need it for work - texting, internet and phones. We are able to write off 50% of our phone bill off taxes

[Muddled]

Any way to decrease your business expenses to bring home more? Rent, specifically.

Call your student loans issuers to see what options you have for decreasing your payments.

[idontknowmargo]

Jan 11, 2013 17:34:51 GMT -5 Muddled said:

Any way to decrease your business expenses to bring home more? Rent, specifically.

Call your student loans issuers to see what options you have for decreasing your payments.

I am working on decreasing business expenses. Payroll is the one area that I need to cut. Shes at $1551/month, so I pay that, plus $416/month in taxes plus $50 towards her retirement. She's setting up nicely compared to me, huh?

This actually may change soon. I may be splitting her 1/2 with someone else, so that would help soooooo much! I am waiting to hear if it is a go. I inherited her, so I took over what she was getting as it wasn't fair to her to change her pay.

Rent is cheap - $260/month. The rest of it is misc business expense, which is both needed and can be reduced.

I should also say that my monthly average will increase this year as I will be making more commission wise. So the $5180 average is conservative.

[idontknowmargo]

Jan 11, 2013 17:26:51 GMT -5 kershnic said:

I think you need to lay the debt out for us better so we can tell you how to snowball it. Both total owed on each account and interest rate.

I will bring that either this weekend or Monday. I have it all at home and don't want to pull it up at work.

Here's a quick breakdown from memory:

1 - 6200
2 - 7000 this one is 0%
3 - 5500
4 - 1400
5 - 1700
6 - 800
7 - 950
8 - 770

The average interest on all these, I know, is around 16%

Our goal of going to CCCS is just to help get the interest rates down and get this paid off sooner. If they can lower the amount we pay monthly, that would be awesome too!

Also, we will be going to a cash only budget. We do have one cc we put gas on, but ironically, it is the only one that gets paid off each month. It has a pretty low limit on it.

[hlke]

If you are not in default on any of your debt, I am not sure if CCCS will help you much. Certainly talk to them, but be sure to do your homework on this before you sign anything. If you are not delinquent, I'm not sure how they are going to get you lower rates or payments.

If you really do have an extra $300 a month in your budget, I think you can get out of debt in a couple of years. That's a total of $900 going towards your debt each month, which will add up fast once you pay off a few things.

Do you think you withheld enough and paid enough in quarterly payments that you'll get a tax refund this year?

[idontknowmargo]

LOL! We never get a refund! I wish.

No, a refund is unlikely. Cccs will do a debt management program that will help us reduce interest rates. We talked to them this morning and have an initial meeting Monday morning. We will see what they say/think and go from there.

The thing of it is- we HAVE to build savings. We will need this to get through the shit months. In fact, I had to pull $800 from savings this month to help with bills since it is a bad month. So the good months need to go to savings so we can break this cycle.

I am off and have plans, so I will respond when I get back If there are more questions. I verymuch appreciate everything already!

[kershnic]

Jan 11, 2013 18:28:08 GMT -5 idontknowmargo said:

The thing of it is- we HAVE to build savings. We will need this to get through the shit months. In fact, I had to pull $800 from savings this month to help with bills since it is a bad month. So the good months need to go to savings so we can break this cycle.

You can save what you earn beyond 2k a month for the lower months, but included in the 2k every month you need to have more going towards debt than just the minimum. The $300 or so extra in this budget plus savings from cutting back the areas people have suggested should be that money.

[simpsongal]

Ditto the above, there's just not that many places to cut. Be sure to take a good look at your spending patterns on the cards - there may be areas you're missing.

I hate to be a killjoy but I honestly don't think you can afford another child. Imagine doubling your daycare costs, upping your food bill, and all those other things that come with kids.

You DH's salary is a bit low - is there any growth opportunity? Overtime possibilities? Retirement is important but at those rates it's more important to pay off the CCs.

[shopgirl07]

Someone else who knows what they're talking about can chime in about CCCS. But, if you're enrolled in a program like this, won't you take a hit to your credit score? I could be wrong but, if so, I don't think it's the way to go since you have good credit.

[mokes]

A couple of thoughts:
You say you're saving $500/month for taxes ... that doesn't seem like nearly enough? Is it?

Do you withhold more in the months you earn more? You said you net an average of $2k/month, but if you should really be withholding more, you're really making less and not getting a true idea of your take-home pay -- are you sure this job is worth it? Would you make more at the end of the day at a salaried position?

You mentioned you're contributing to retirement, too? How much?

I think I would cut spending cash at least by half and use that and the $ leftover in the budget to start saving and paying debt 50/50. I would transfer into savings as soon as you get the first paycheck of the month -- pay yourself first and don't touch the money. If you make extra money in a month, put that excess in a separate account and use that to cash flow the tighter months. Don't commingle it with your savings.

[kwynn]

I'm dying to know what kind of business this is....I am a small business owner myself and our amounts are similar---

But I do not have rent, an employee, etc.

If you are bringing home 2k, you need to be withholding like $900 or so just to be sure. Self-employment taxes are a B, but I know you already know that

[hulley]

Jan 11, 2013 19:29:23 GMT -5 shopgirl07 said:

Someone else who knows what they're talking about can chime in about CCCS. But, if you're enrolled in a program like this, won't you take a hit to your credit score? I could be wrong but, if so, I don't think it's the way to go since you have good credit.

I considered working with them a long time ago. If I recall correctly, the cards have to be closed before they will work with you. This would likely cause your credit to take a hit. I didn't end up doing the program but that is what I remember from my limited experience.

[cookies]

Definitely price out new life insurance rates. My husband and I are your age and we JUST switched carriers. We're paying about $55 for the two of us. I'm not sure what coverage you need, but we're at 500k for 20 years.