Debt payoff/budget question

[pixie]

I'm trying to figure out the best financial moves. Would you pull money from savings to pay off the card with 1500? Or just try to aggressively attack it each month? My partner and I just bought a house. He currently takes care of all home related expenses (until October when I'll take on a portion of them) 

Current set up looks like this
I am 29F

Total savings: 

E-fund
$1,000.00

Misc savings
$3,000.00

Gifts (christmas, birthdays, weddings)
$1000.00

Retirement
$1353.67

Total debt:

Credit card debt
Card 1- 1577.74
Card 2- 8,912.29

Total:10,490.03

Both cards are 0% interest. 





Budget:

Income- $2900


$266.00 car payment
$125.00 gas
$137.00 car insurance
$71.00 phone
$375.00 groceries
$35.00 gym
$300 pets
(2 dogs. food and pet insurance 1 dog eats rx food they cover and the other needs a hip replacement in the future. Insurances reimburses me 90% of any and all vet bills after a 250.00 deductible)
$150.00 min. debt payments
$505.00 Therapy
$200.00 Misc fun money 

roughly $700 left over

[Deleted]

I am not nearly the expert that others are on this board, but looking at this, my thoughts would be:
1) Your savings are pretty low now that you're a homeowner and bills come up unexpectedly. I know your BF is paying until October, but stuff breaks and that small amount in savings would scare me so I would not pull from savings to pay off the debt; however, I would scrap the gifts account and use that to pay off debt. At this point, and I know this is harsh, I don't think you should be spending money on gifts if you can't afford the debt you have.
2) How long are the cards at 0% interest? I'd set up a spreadsheet and track to those expiration dates.
3) What portion of the home expenses will you be paying come October, and how does it affect that $700 you have left over at this point?
4) That phone bill seems high. We pay $100 for unlimited with tax for two of us.

[pixie]

Jun 29, 2020 11:35:06 GMT -5 @princessbubbleyum said:

I am not nearly the expert that others are on this board, but looking at this, my thoughts would be:
1) Your savings are pretty low now that you're a homeowner and bills come up unexpectedly. I know your BF is paying until October, but stuff breaks and that small amount in savings would scare me so I would not pull from savings to pay off the debt; however, I would scrap the gifts account and use that to pay off debt. At this point, and I know this is harsh, I don't think you should be spending money on gifts if you can't afford the debt you have.
2) How long are the cards at 0% interest? I'd set up a spreadsheet and track to those expiration dates.
3) What portion of the home expenses will you be paying come October, and how does it affect that $700 you have left over at this point?
4) That phone bill seems high. We pay $100 for unlimited with tax for two of us.

-0% for 18 months

-we havent decided on what i'll be covering in October yet. Because of covid and a recent job change we're not sure where I'll be financially so we're leaving it open- it will be a relatively small portion ( taking over the utilities or something like that - under $500.00)

- phone bill, i've looked into switching, I tried to switch to tmobile and had zero success in getting the account set up. I tried for weeks and all they could tell me was that they werent able to succesfully port my number. I am open to suggestions for other options if anyone has any. Some of the ones most commonly suggested here arent available in my state 

I also didnt mention that I bonus quarterly - this is a new job so im not sure what that looks like yet typically $500-2k is what i've been told. So obviously that money will be put towards debt.

[lessel]

Hmm. Is any of the therapy possibly covered by or reimbursable through health insurance? (I guess, do you have health insurance?) Any way to tighten up about the fun $? Are you using the gym membership? I'd kind of get a bit ruthless about cutting stuff out that you can for awhile.

I'd pay down the cards aggressively so you don't have a balance at the 18mo mark and really try not to use them in the meantime. I don't think I'd touch savings to reduce the cards yet.

I came out of grad school in my mid-20s with a fair bit of credit card debt and didn't pay attention to it for years... just sort of paid close to minimums... but man, it stuck with me for awhile. So I would try to get rid of that soon and then really focus on building up some e-fund and retirement savings.

[Deleted]

Jun 29, 2020 12:46:09 GMT -5 lessel said:

Hmm. Is any of the therapy possibly covered by or reimbursable through health insurance? (I guess, do you have health insurance?) Any way to tighten up about the fun $? Are you using the gym membership? I'd kind of get a bit ruthless about cutting stuff out that you can for awhile.

I'd pay down the cards aggressively so you don't have a balance at the 18mo mark and really try not to use them in the meantime. I don't think I'd touch savings to reduce the cards yet.

I came out of grad school in my mid-20s with a fair bit of credit card debt and didn't pay attention to it for years... just sort of paid close to minimums... but man, it stuck with me for awhile. So I would try to get rid of that soon and then really focus on building up some e-fund and retirement savings.

OMG yes to this. It took me much longer than I care to admit to get rid of what was not a significant amount of debt in hindsight. 

[pixie]

Jun 29, 2020 12:46:09 GMT -5 lessel said:

Hmm. Is any of the therapy possibly covered by or reimbursable through health insurance? (I guess, do you have health insurance?) Any way to tighten up about the fun $? Are you using the gym membership? I'd kind of get a bit ruthless about cutting stuff out that you can for awhile.

Currently no insurance as I just started a new job. In august I can start submitting but still likely no reimbursement until I hit my deductible. (Therapy is not something I can stop) 

Fun money can definitely be cut down. I often don't spend it all and if thats the case it goes to debt

Gym membership is used 5x a week - exercise is one of the tools we use for my anxiety disorder

I'd pay down the cards aggressively so you don't have a balance at the 18mo mark and really try not to use them in the meantime. I don't think I'd touch savings to reduce the cards yet.

Thank you! This seems to be the approach i'll take. Cards are no longer in use. This is old debt from a divorce. Would have been paid off much sooner but I was hospitalized in 2019 and my minimum medical bills used all excess money. 

I came out of grad school in my mid-20s with a fair bit of credit card debt and didn't pay attention to it for years... just sort of paid close to minimums... but man, it stuck with me for awhile. So I would try to get rid of that soon and then really focus on building up some e-fund and retirement savings.

[Cappy]

I'd not touch savings right now since you are a homeowner. Otherwise you could could dig in deeper if there's an issue with something breaking or an unexpected bill like when property taxes/escrow bump up (as they always seem to do).

I'd put the $700/month extra into those 0% cards.

I'd also see if there is any way to cut costs for your dogs. Maybe exploring insurance provider alternatives and/or earmarking those premiums toward the future care in a sub savings account. It may not make sense but definitely run the #s.

I don't know what you contribute monthly to retirement but I'd look to increase that. Time is your friend there so it is worth getting started ASAP.

[lessel]

pixie - Definitely don't cut therapy! Just try to get set up to get reimbursed as soon as you can. And don't cut gym if you use it and need it.

I feel like really you just need to focus on the card pay down and keep that as a top priority. With a new house (for me at least) there's potential to get distracted by a lot of shit that you don't *need* (Exhibit A: The $150 I spent on decorative pillows), but if you really focus on getting those cards down before the interest starts to hit, you'll be so grateful for it in the long run.

[Mushe]

Check out Mint Mobile for cell phone! I heard about it here, and it works great for me. You pay in advance, but can get referral credits or discounts. I have the 8GB/mo plan that’s $20/mo. You can get a SIM that works for a week for $5 to test your service.

[pixie]

Jun 29, 2020 13:23:22 GMT -5 Mushe said:

Check out Mint Mobile for cell phone! I heard about it here, and it works great for me. You pay in advance, but can get referral credits or discounts. I have the 8GB/mo plan that’s $20/mo. You can get a SIM that works for a week for $5 to test your service.

Thank you! Ill look into this!

[pierogigirl]

I think I'd put $500 per month on card 1 and beef up the efund by 200 per month for a while. Pay off card 1 in 3 months and then continue paying the 500 plus whatever you were paying on card 1 on card 2. When your efund is 2-3000, put the extra 200 on card 2.

[sadlebred]

Can you buy cheaper gifts for a while? It's the thought that counts, right? That would pay off 75% of one card.

At $35/month, I won't tell you to cancel your gym membership. I know it's for physical and mental health.

I'd put every bit of that $700 towards the debt for the next couple of months until you have to pay part of the house expenses.

Is $375 for you and your partner or just you? If it's just you, this could probably be cut in half.

[bugandbibs]

$10,490.03/18= $582.78/month to be paid off before interest is due. You can cover that fully with the “extra” you have left over every month. I would pay the minimum on card 2 and then put everything else towards card 1 until it is paid off. Then put everything each month towards card 2. You have a little wiggle room, but not much if anything happens to get it fully paid off. I’d err in the side of front loading the debt pay off. Put any bonuses towards the debt, but don’t count on it or factor it in to the payment schedule. Once the debt is gone, I would work towards increasing retirement and having 3-6 months of expenses in an e-fund.

I would look at temporarily cutting expenses to make it easier to budget in your upcoming extra expenses. Have you shopped around for the best deal on your dog’s prescription diet? Reduce your food budget with simpler meals. Ask your therapist for a cash discount since it’s not going through insurance. They may also have a sliding scale fee structure.

[simpsongal]

Personally, I'd go ahead and pay off the $1500 card just to get rid of the debt. I like the snowball approach to getting rid of debt and that boost may give you the jolt to commit to a pay off plan for the rest. I'd aim to chunk it off during the 18 mos of 0% interest.

[pixie]

Jun 29, 2020 21:08:13 GMT -5 sadlebred said:

Can you buy cheaper gifts for a while? It's the thought that counts, right? That would pay off 75% of one card.

At $35/month, I won't tell you to cancel your gym membership. I know it's for physical and mental health.

I'd put every bit of that $700 towards the debt for the next couple of months until you have to pay part of the house expenses.

Is $375 for you and your partner or just you? If it's just you, this could probably be cut in half.

The 375 is for both my partner and I, and it includes all food and household products (detergent, soap, paper products, cleaning supplies etc)

[wildrice]

What is your partner's financial situation? Are you both on the mortgage/title? Do they have savings that can cover repairs in an emergency, and are they willing to do that? If you are not married and your name is not on the house, I'd actually hesitate to pay for much in the way of house repairs out of your own income, anyway.

Personally, I would keep on doing what you're doing and put that $700 toward your cards until they are paid off. Depending on your partner's situation, perhaps they could either help you pay off the debt OR let you wait to contribute to house expenses until it's paid off. Your budget is actually pretty tight and hopefully having a partner helps ease some of that burden. Do you have plans to marry or combine finances at some point? I know that's not right for everyone, but in my experience, things got much easier/better for both my H and I when we stopped trying to divide things up and just combined our finances. Then it didn't matter who paid what, we just jointly started paying off debt and building up savings. We were able to do this much more quickly as a team than either of us were able to on our own.

[pixie]

Jun 30, 2020 12:19:20 GMT -5 mofongo said:

Jun 30, 2020 10:42:21 GMT -5 pixie said:

The 375 is for both my partner and I, and it includes all food and household products (detergent, soap, paper products, cleaning supplies etc)

Since you only have a few post I was trying to figure out your living situation. Earlier this month you said y’all spend over $800 due to the type of diet you’re eating. I get nutrition is important but that’s high for 2 people.

That post was from 2016- Since then I've left that relationship and state and moved cross country to a LCOL.



ETA-
House is in my partners name, he will take care of any and all repairs until we decide to get married and my name goes on the deed.
He lived in my apartment for 6 months rent free so the agreement when he purchased the home was that I would have the same amount of time. After which we'll sit down and discuss what I can afford comfortably. 

[pixie]

After reviewing everyones suggestions i've decided to do/try the following

Switch my phone service to mint
Lower my fun money
My gym membership is back on pause due to COVID closing my state back down
I have decided since I am not responsible for home repairs I pulled money from my holiday savings and regular savings to pay off the card with the 1577 balance.
I also realized I had quoted my pet category $75 more than usual, I had to purchase a new dog door this month so I had added into pets

Income- $2900

$266.00 car payment
$125.00 gas
$137.00 car insurance
$20.00 phone
$375.00 groceries
$225 pets
$100.00 min. debt payments
$505.00 Therapy
$75.00 Misc fun money
Total 1828

Leaving me 1072 left over- I am going to aggressively pay towards the card left.

[Deleted]

Jul 1, 2020 12:53:10 GMT -5 pixie said:

After reviewing everyones suggestions i've decided to do/try the following

Switch my phone service to mint
Lower my fun money
My gym membership is back on pause due to COVID closing my state back down
I have decided since I am not responsible for home repairs I pulled money from my holiday savings and regular savings to pay off the card with the 1577 balance.
I also realized I had quoted my pet category $75 more than usual, I had to purchase a new dog door this month so I had added into pets

Income- $2900

$266.00 car payment
$125.00 gas
$137.00 car insurance
$20.00 phone
$375.00 groceries
$225 pets
$100.00 min. debt payments
$505.00 Therapy
$75.00 Misc fun money
Total 1828

Leaving me 1072 left over- I am going to aggressively pay towards the card left.

I think this is a good plan. I'd suggest making a budget and sticking to it. When I was in this situation, I created a spreadsheet and I mapped out my payments every month, tracked my balance, etc. It feels so great to see that balance dropping. I also mapped out where that money would be going in a year so that I could see the long-term impact of having that money to put into savings, etc. If you are aggressive about using that left-over money to pay it down, this time next year it could all be behind you. Good luck!