So? You don't need to spend that much per kid. And you don't need to buy gifts for everyone. I'm sure they would understand, and if they don't, too bad.
I realize that I am being penny wise and pound foolish, but this is a decision that MH and I made together. Worst case scenerio, if we get in to financial trouble, that money can be used to pay bills.
I don't mean to be flip about it, but the fact is, you are already in financial trouble. I understand not wanting to cut everything, but you are basically saying you don't want to cut anything. That's the problem a lot of people in serious debt run into. It's one thing to say that you aren't cutting Christmas. Fine. But you also won't cut vacation, timeshare, or your car. You have a lot of debt, have virtually no savings or other assets, are barely saving for retirement (and assuming probably not saving for kids college either). Continuing to delay here isn't doing any favors. Even cutting your kids Christmas to $100/kid would really help you and still give them a nice holiday. Sorry, but your priorities are messed up if you are spending on Christmas almost double what you have in savings.
You have $50 going to maintenance for 2 cars, one of which needs a hefty repair. If that repair needs doing sooner than later, where are you going to get the money for it? You probably need to double that for 2 cars, at the very least. $50/mo maintenance for a new car is probably sufficient. However, one of your cars is 7 years old. I know the last year, I have probably put at least $800 in my car and it's also a 2007. I needed tires, belts and 4 oil changes, everything needed was wear and tear items. If I had a $50/mo budget for car maintenance, no way would that have been sufficient.
I think the thing with all of this is: we all have different tolerances of debt. Many people on this board hate paying interest and would cut lifestyle in order to get out from debt faster. There is nothing wrong with that, but it's not the ONLY way to live your life. Personally, I think as long as you are actually putting money each month toward debt payoff and actually saving the amounts you list, and if you're ok with doing so for the X number of years it takes to pay off the debt... that's fine. You'll pay interest, but you'll be comfortable with what you're doing and living your life the way you choose. I think that's fine.
I have around 65k in debt, no kids, and I'm single, so I can't really judge your debt lol. (most of mine is student loan debt, but seeing as how I'm currently making $20 an hour at a temp job... I'm not convinced my SL debt is any more "worth it" lol).
I would not buy a house if I were you. With your current savings and that many kids to care for, I do think you need a bigger cushion. I feel like you're just asking to add to your debt if you become responsible for all house repairs (not to mention, moving expenses, stuff you'll inevitably need/want to buy to set up the house the way you want it, etc).
Other than that, KOKO. I would pay off the higher interest rate balances first, especially if the timeshare isn't something you COULD sell in a pinch. If you think it's sellable in crisis, I'd focus on the CCs first since they are unsecured debt/you can't sell them. I do know my parents have been trying to sell a timeshare for like 2 years and are willing to sell it at a loss, and haven't been able to...so I think that's relatively unsecured debt as well. 18% is a lot of interest so I'd absolutely prioritize that and the other high interest CC. Don't worry about the SL debt until everything else is in order, if ever.
$1800 for Christmas? Are you buying gifts for everyone on your block?
I have 5 kids. We spend $225-$250 per kid. And then $25 per niece/nephew and there are 7 of them. Add in parents, a few polyannas, it adds up quick.
Are all the nieces and nephews on your side? Most people I know with a lot of kids in their extended family do a secret santa draw. Then each adult buys a present for ONE kid. I'm kind of guessing that maybe your siblings/in-laws might also appreciate not having to buy things for all of your kids every year, as well. The grandparents can be left out if they want to buy for everyone, but with parents who want to buy things for all of their kids as well it might be something nice to suggest for next year.
Post by pinkdutchtulips on Dec 8, 2014 12:38:54 GMT -5
Superduper ... Christmas for my dd this year will be 2 presents, 1 present for my niece and everyone is getting cards from the dollar store. out 'tree' will be lights strung up against the wall in the shape of a Christmas tree w/ some ornaments scattered about.
why the thin Christmas ? bc literally that is ALL I can afford in the face of a debtload similar to yours. there is no reason to go ALL OUT for Christmas. you really do not need to spend $250/kid PLUS $25/niece-nephew ....especially since these kids are getting gifts from other family members as well. cut those #s in half at least if not more. I don't mean to sound like a Grinch but w/ $85k in debt, you simply CANNOT be spending that kind of money when it could be spent paying down debt.
You are flying 7 people per year to a time share? There *has* to be a cheaper way to have a vacation nearby. I guarantee it can't cost more than than what you are currently spending - $273 (18% interest???) plus $150 a month just to get there (that's $5000). You have repeatedly said that you and your H made this decision and that's that. You can't revisit this? because this plan seems ready to drown you financially
I don't mean to be flip about it, but the fact is, you are already in financial trouble. I understand not wanting to cut everything, but you are basically saying you don't want to cut anything. That's the problem a lot of people in serious debt run into. It's one thing to say that you aren't cutting Christmas. Fine. But you also won't cut vacation, timeshare, or your car. You have a lot of debt, have virtually no savings or other assets, are barely saving for retirement (and assuming probably not saving for kids college either). Continuing to delay here isn't doing any favors. Even cutting your kids Christmas to $100/kid would really help you and still give them a nice holiday. Sorry, but your priorities are messed up if you are spending on Christmas almost double what you have in savings.
While not ideal, I do feel like we are at least a little ahead in the game that we have the ability to save some money all year long in order to pay cash for Christmas and Vacation and not put those things on credit. The only things that we charge is weekly gas and groceries, but then I pay that off every week. We use the card to earn rewards. I recently cut our cell phone bill by over $60 per month, we are looking at ways to cut our cable as well. We've stopped frivolous spending and track every penny that we do spend. We have made small changes, but the biggest was getting on a budget and actually having a plan to pay off debt. At the end of the day, we decided that enjoying our lives a little now vs paying off debt 6 mths sooner was a sacrifice that we were willing to make.
per the budget you posted ... $430/month in spending money is ALOT and can lead to lots of frivolous purchases .....
Post by asoctoberfalls on Dec 8, 2014 12:47:16 GMT -5
You mentioned Dave Ramsey. I listen to his show, but I don't follow his plan. However, from what I've gleaned, his plan only works if you follow ALL of it, which means cutting back on EVERYTHING. Since you aren't willing to do that, then I would just ignore his plan altogether. He's all about focused intensity, and since you guys are not at all intense, his advice makes no sense for you.
That's not a judgment. It didn't work for us either since we couldn't get on the same page.
The problem is, you won't ever make headway the way things are. As soon as you pay off a car, you will need another. An emergency will come up, and you will charge it because you have no savings. So unless you're willing to make some sacrifices, you will just be broke forever. And at your income, you shouldn't be broke!
Your retirement situation scares me. What are you doing to change that?
You're off to a great start. I'm not picking on you - I'm a Dave Ramsey failure myself. I'm just not getting a sense of urgency, and I think you need one.
Minimal retirement savings? No life insurance? No college savings?
A lot of us have been there with high debt loads. At least you do have a decently high income, so it could be worse. But it could also be a lot better, and you aren't doing yourself many favors to pretend otherwise, you know?
Reading the rest of your replies, if the person who made the family loan to you didn't even care about repayment, I would be inclined to pay less to that loan each month right now until you get some of the other debt knocked off. Would they be willing to accept less than $500? If you cut that in half for a few months, and add the $600 extra you have to go towards debt, I would be very tempted to pay the one car off early (my math might be wrong, but it seems like with this plan, you could pay it off in February). Even though it has the lower interest rate, you would free up the most cash by paying it off early.
You are flying 7 people per year to a time share? There *has* to be a cheaper way to have a vacation nearby. I guarantee it can't cost more than than what you are currently spending - $273 (18% interest???) plus $150 a month just to get there (that's $5000). You have repeatedly said that you and your H made this decision and that's that. You can't revisit this? because this plan seems ready to drown you financially
No. We live within a few hour drive of a resort town and that is where we take kids for vacation. FIL pays for the lodging, we just pay for food and spending money. The week we will use the Time Share is just H and I
I think having all that consumer debt and taking two vacations a year is CRAZY.
I think you need to seriously check yourself here. You live WAY WAY beyond your means.
Post by iheartbanjos on Dec 8, 2014 14:05:24 GMT -5
I'm finding it hard to come up with a good reply because I view money so very differently from you. Your questions are far from lame.
I'm going to pretend that you only have $600/month (soon to be $960) and have cut everything out of your lifestyle that you can possibly cut.
I would follow the actual Dave Ramsey baby steps exactly. Dave's program is designed for people who do not have much common sense when it comes to money or much self control. I think you fit this category perfectly. Dave's program is designed for people who require immediate gratification, which I think also fits you.
That being said, I would list all debts smallest to largest and pay them off in that order. It's hard to ignore interest rates, but you've been paying these interest rates for this long already, so really, what's the difference. You'll wipe out so many of these bills just in a few months. Hopefully seeing the amount of debt drop will inspire you to focus on doing what's best for your family and getting out of debt so that you can have a good retirement and help your kids to go college.
If you haven't, read the Total Money Makeover book. I did it as a book on tape when I was already debt free. We're on baby step 6 right now (paying down our mortgage.) We only had student loan debt, but by following Dave's plan, we are debt free, have a solid emergency fund, are saving 15% toward retirement, and are saving for our kids college. Within the next 5 years, our mortgage will be gone. Are we able to keep up with the Joneses? At this point, probably, but that this point, that's the furthest thing from our minds.
What does your $430/month spending money consist of? That's more than DH and I give ourselves and we make more and have no debt. I don't even spend most of mine. So I'm just wondering what's so important to you to spend that much.
I'm also going to say that I think you've taken some great first steps (I've been following your posts for a while). You've got a budget, you are attacking your debt, that's great. But, I also agree with some other posters here that you're still trying to have it all, and I'm worried that everything could just come crashing down with just a couple of things going wrong. Your situation just seems precarious, and you definitely shouldn't buy a house for a few more years - your rent seems fine to me and you just have too much debt (esp. high interest CC debt) for it to make sense.
Do NOT buy a house! Lol, that is my only advice, but really, don't do it.
Ditto this. When we were hanging Christmas lights this year we realized that beneath the paint that the previous owners had put up just before selling, our siding and fascia board are all rotted away. Add to this the rotted wood windows that were also painted over and....yeah.
We're looking at around $60-70K in repairs.
You can NOT afford a house because you never know what is going to happen.
$430 personal spending? For what? This needs to be cut 1/2 at a minimum ! I see a lifetime of living deeply in debt if you do not change your thinking. The attitude is very much one of entitlement. 2 vacations? Really? I don't take that much time to vacation and I can easily afford it - paid off mortgage, a years' worth of expenses in savings, well funded retirement --- and we do not take home 8K a month. You have to look at your priorities. Living for today is fine - but tomorrow does come. You do need to pay this off, stop using credit cards, have a good 6 months of expenses in an emergency fund, fully fund your retirement accounts. THEN look at buying a home AFTER you have saved: 20% down payment, closing costs, start up deposits, repair & renovations, decorating/additional furniture/appliances, yard items, tools, ladders, snow removal items etc. You need to also add higher utility costs for a house, an ongoing maintenance/repair line item - furnace/water heater dies, appliances outlive their lifespan.
Your children will grow - eat more, be in more activities - generally cost more on a regular basis. Then there is college.
What happens if one of you becomes ill and can no longer work? You get laid off?
What financial lessons are your children going to learn from you by example?
You might want to volunteer for a time at a homeless shelter, food pantry or other community service for those in need. It may help you see what is important - and it is not stuff.
I'm finding it hard to come up with a good reply because I view money so very differently from you. Your questions are far from lame.
I'm going to pretend that you only have $600/month (soon to be $960) and have cut everything out of your lifestyle that you can possibly cut.
I would follow the actual Dave Ramsey baby steps exactly. Dave's program is designed for people who do not have much common sense when it comes to money or much self control. I think you fit this category perfectly. Dave's program is designed for people who require immediate gratification, which I think also fits you.
That being said, I would list all debts smallest to largest and pay them off in that order. It's hard to ignore interest rates, but you've been paying these interest rates for this long already, so really, what's the difference. You'll wipe out so many of these bills just in a few months. Hopefully seeing the amount of debt drop will inspire you to focus on doing what's best for your family and getting out of debt so that you can have a good retirement and help your kids to go college.
If you haven't, read the Total Money Makeover book. I did it as a book on tape when I was already debt free. We're on baby step 6 right now (paying down our mortgage.) We only had student loan debt, but by following Dave's plan, we are debt free, have a solid emergency fund, are saving 15% toward retirement, and are saving for our kids college. Within the next 5 years, our mortgage will be gone. Are we able to keep up with the Joneses? At this point, probably, but that this point, that's the furthest thing from our minds.
I'mma sit next to iheartbanjos (partly because I agree and partly because I'm jealous!). I guess you could say I'm a Dave Ramsey follower. I am not as hardcore as some, but most of what he says makes a lot of sense to me. DH and I are doing the baby steps mentioned in his Total Money Makeover book, currently on step 2. Here's the thing about debt: you don't get into huge amounts of debt overnight, and you certainly don't get out of it overnight. Getting out of debt takes time, but it also takes COMMITMENT, and it is going to be HARD WORK. From your posts in this thread I see a lot of resistance and reasons why this, that and the other can't be cut or an even bigger issue, you won't cut it. I don't believe you can really get out of debt with that attitude. I tried being nonchalant about it at first thinking it would get paid off eventually, but instead of making progress we just wound up with more debt. My palms are sweating just thinking of having $85K in debt and no real savings. We have only a fraction of that and it still keeps me up at night! Seeing your debt start to drop is a real high and it is wonderfully liberating. If you aren't willing to make sacrifices, you aren't going to get out of debt any time soon. I'm not even talking about a bare bones lifestyle. Just cut back and postpone vacations, expensive gifts, etc. It also sounds like you like to carry "blow money", and that's fine. But scale it back to $50 or so. You need to get some of that debt paid way down and have a cushion before you take on a home ownership. It may look cheaper than rent when you compare dollars to dollars rent vs. mortgage on paper, but there are lots of other expenses that go along with home ownership that aren't being accounted for. Dave has a saying: "live like nobody else today, so you can live like nobody else tomorrow." In other words, pay off debts and save today so you can enjoy your life in your later years and into retirement.
Sometimes you need an "aha" moment regarding debt. An "OMG I'm so sick of this and I'm going to fix it." That's when you do what you have to do to make it go away. I'm sorry if I sound harsh, I don't mean to be at all. Good luck!!
Hmm. I was going to say "$430 in spending money goes really quickly, it's not that crazy!" but then I noticed you had money separately budgeted for clothing, auto repairs, entertainment, and eating out. That's the kind of stuff that I'd normally spend my "spending money" on, so I am curious what you spend yours on. I do think something there can be cut. As I mentioned up thread, I am a fan of balance and working toward the future while not totally depriving yourself. But, I do think there are lots of small things you can change without even really feeling a pinch. I do think you could scale back your Christmas gifts. No child needs $250 worth of stuff, especially if aunts/uncles/grandparents reciprocate the gifts you are giving their kids. What do you do for birthdays, by the way? Similar spending? If so where does that money come from?
Everyone needs a little slush fund to feel like they have breathing room, but maybe you could cut back the spending money a LOT or trim entertainment/eating out and make that money come out of the "spending money" category. I'd also see about cutting cable or scaling back. $165 is a lot of money when you can watch a ton of stuff for free online (trust me, I actually don't have cable!!! It's not bad! I don't even miss it).
I would attack CC2 followed by the timeshare in 2015. If you could find a few extra dollars in your budget, you could pay off both of those by Dec. 2015. That's in addition to paying off car 1, dr 2 and your IRS bills, which is amazing.
I, too, would encourage you to be really smart about buying home--if the difference is only a few hundred dollars, I can guarantee you won't be saving money. With maintenance inside and out, repairs, etc., it will always be something. You are in a unique position to get out from under debt and set yourself up for success financially. I'd hate to see you squander that opportunity just to buy a house. Good luck to you. Please update on your progress!
Has your H actually read Dave Ramsey or other money saving books?
Seriously sit him down on a Saturday night and watch Suze Orman on CNBC! One hour of watching her and he might see the sense of urgency in your situation.
You guys need to be in on this together.
You seem to have the budgeting down, but you just need to have a sense of urgency to get rid of this debt ASAP and make real sacrifices to do it.
With a $1000 in savings and five kids, honestly that's really playing with fire.
While this situation seems tenable now, I agree with the poster who said you need to speed this up because you will otherwise never get ahead. You will buy a new car right as you pay off an old one and get right back into the pit. Then you will need to pay for five kids' college. And will you be helping them get cars? Car insurance for five teenagers will be astronomical.
I am worried that you will never catch up on retirement because there are always so many current priorities.
Now I am not one to talk as we have $75K in debt too (mostly student loans, but a car and a CC too) and we have not cut back on all spending. But we are simultaneously contributing 10% to retirement to make sure our current lifestyle doesn't totally derail our future.
Could you convince him to go to Financial Peace University? I found it very motivating even if we didn't implement every single step.
All of our debt is MH. The exception is the Student Loan which is mine and the Time Share which we have jointly and my car. The personal loan was for his Divorce. He had to buy out his ex-wife and a family member loaned him the money.
But missing out on your full 100% match is huge. You are throwing away 100% to pay off at most 18%. I do wish you the best of luck and appreciate that you rolled with the punches here and continued to respond.
I want to sing this from the rooftops. FREE MONEY IS FREE MONEY
Yes, I believe there is a balance between fun and debt payoff. That balance does not include a time share.
And I get keeping up with the Joneses to a certain degree. But you want to be keeping up with the smart ones, not the ones rolling in debt. Find a new circle of friends if that's what it takes.
You absolutely need to be putting more into retirement. How will you keep up with your friends if you are 70 and can't afford to retire?
And ditto LoveTrains that an 80/20 loan was the worst idea ever for us. Do.not.do.it.
I'm not going to repeat what others said. But we have a similar monthly income and no kids. I just can't imagine feeling comfortable taking on a mortgage in your situation (although our mortgage is a little more than your rent, we do not have two car loans, unsecured debt, etc).
We definitely had similar thoughts as you are having, "Oh, we can pay about the same in rent or even less on a mortgage!" And while that has proven to be true, within a year of owning our property tax tripled... we needed a new roof... and now our basement is having moisture problems. I don't even know what that's going to end up costing. But luckily we have savings to fall back on and we had a lot of wiggle room in our monthly budget so it hasn't caused a ton of financial stress.
A fun Christmas and vacations are all great, but feeling secure and not being anxious about bills are really more valuable in the long run. And once you get there, you can start building towards the vacations and gifts again, but by fitting it in your budget. I tend to appreciate my "stuff" more because I don't get it as often so it's exciting infrequent versus eh, I'll just throw it on this card or whatever and it sort of loses it's appeal because I become desensitized to new things/experiences, if that makes sense.
Post by roseflower on Dec 10, 2014 11:59:35 GMT -5
I get that you don't want to give everything up but $225 per kid is an insane amount of money imo. $100 each kid for the next 2-3 years can really help you get ahead. We are paying off debt and while we are not forgoing Christmas altogether the amount is a lot smaller. Even if we had no debt I wouldn't up our budget to a few hundred per kid but that's a personal choice. Right now you don't have the money for that. You are in massive debt. Pay it off and then you can have all that freedom you want.