Posted: 11/6/2013 10:39:06 AM EDT
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I know I am going to regret this, but here goes anyway.
Never thought I would post one of these threads. My financial situation has never been a problem. I’ve never had a late payment on anything and make decent money. But that all changed this year after 2 medical emergencies and the recent loss of child support. I will do my best to accurately paint the whole picture and provide as many facts as possible. I suppose we should start with income: Me: $550 a week after taxes and insurance for myself and the two kids. Salary. Wife: around $400 a week after taxes, insurance for herself, 401k and a $100 direct deposit into a separate account that is used to make her car payment. Hourly, so it varies some. Car payment is $350 a month, and we pay $400 a month to accelerate the payoff. Because that payment is automatically deducted from her take home pay, I won’t include it from here on out. Total take home pay: usually around $3800 a month Expenses: $1100 rent (complicated situation: the house we rent is owned by my parents. Because of this, we have a flexible payment schedule – meaning that rent can be payed any time in the first half of the month.) $100 water average (varies per season depending on sprinkler use) $100-$300 power (again, varies per season depending on furnace use) $50 Directv (I dislike it, but we are under contract for another year) $150 phone (again, under contract) $400 food (lunch is provided to me every day at work, provided I work through my lunch. Basically a menu is circulated and I select an item. Lots of leftovers get taken home. Meals at home mostly prepared from scratch an meat from freezer. Lots of elk, deer and antelope. Also chicken. Very little eating out.) $30 internet service $100 minimum credit card payments between 3 cards $110 car insurance $500 gas (mostly to and from work, errands, etc.) $800 in medical bills and co-pays (this varies substantially. $800 is about the average.) $200 in misc expenses (school supplies, clothes, birthdays, etc) Total expenses: $3740 So we pretty much cover the bills every month. Never a late payment, food on the table, gas in the cars. Nothing to complain about as I know there are many people struggling to cover the bills every month. Debt: $2500 in credit cards $20,000 in medical bills (at least, I need to do a recent tally) $20,000 on wife’s car. About 6 months old. Assets: Not much. My truck is worth about $10,000 (paid for) Our fifth wheel is worth about $3,000 (paid for) My Jeep is worth about $3,000 (paid for) Modest gun collection about $5,000 Savings: None. Depleted due to medical bills. Credit Scores: Around 650 for both wife and I Child support: $1100 a month. At least, that is what we are supposed to get. Haven’t seen any in a few months because he lost his job. He is also required to pay 50% of all medical/dental bills for the kids. He hasn’t been doing that either, so my wife and I are covering those bills because they are in my name and I don’t want them to go to collections. He moved back in with his parents and has no assets or money to go after. Additionally, when the State of Nevada finds out you are behind on child support payments, the very first thing they do is suspend your drivers license. They call it a deterrent, but it really is stupid. Can’t get a job to pay your back owed child support without a drivers license. So we haven’t bothered taking him to court as it would only screw us in the long run. What is the point of all of this? I want out of debt so I can sleep at night, put some money away and buy a house. Now I am exploring my options. Option 1: Sell my Jeep for whatever I can get. Use that money to pay off credit cards and cut them up. Paying them off will raise me credit scores into the 700’s, which puts me in house buying territory, when our situation stabilizes. That means I will be driving my truck everyday, which can be a diesel hog and expensive to maintain. It will also free up another $100 a month and save us whatever money in interest. Option 2: Second job. Damn near impossible to find in my area with our very high unemployment rate. I have looked, but not hard. Option 3: Sell part of the modest gun collection. Not really much to be gained there as I’ve been selling off unused guns for awhile and I have it down to about the necessities. Couple of AR’s, couple of shotguns, couple of bolt guns, couple of CCWs, a 10/22 for the kids. Modest ammo supply. Haven’t spent any money on “gun stuff” in quite awhile. Option 4: Keep doing what we are doing and slowly chipping away at the debt. Continue finding things to cut from the expenses. I’m not going to say they are cut to the bone, but in all honesty, there isn’t much left to cut. So what says the hive? If I have left out any important information, I will be happy to answer any questions. |
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I'm not a financial adviser but two things stand out to me:
1. You have 3 vehicles for 2 adults. Is the wife's car worth what you owe on it? I would sell the Jeep, fifth wheel, and wife's car and pay cash for something used that's less expensive than her current vehicle but reliable. That would free up the money you spend on her car payment every month. Apply that money to paying off the credit cards as quickly as possible. 2. Obviously the medical debt and monthly bills are the big problems, were you not insured when the medical emergencies happened? Any chance of negotiating the medical debt lower? |
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Quoted:
I know I am going to regret this, but here goes anyway. Never thought I would post one of these threads. My financial situation has never been a problem. I’ve never had a late payment on anything and make decent money. But that all changed this year after 2 medical emergencies and the recent loss of child support. I will do my best to accurately paint the whole picture and provide as many facts as possible. I suppose we should start with income: Me: $550 a week after taxes and insurance for myself and the two kids. Salary. Wife: around $400 a week after taxes, insurance for herself, 401k and a $100 direct deposit into a separate account that is used to make her car payment. Hourly, so it varies some. Car payment is $350 a month, and we pay $400 a month to accelerate the payoff. Because that payment is automatically deducted from her take home pay, I won’t include it from here on out. Total take home pay: usually around $3800 a month Expenses: $1100 rent (complicated situation: the house we rent is owned by my parents. Because of this, we have a flexible payment schedule – meaning that rent can be payed any time in the first half of the month.) $100 water average (varies per season depending on sprinkler use) $100-$300 power (again, varies per season depending on furnace use) $50 Directv (I dislike it, but we are under contract for another year) cancel and get out of this service $150 phone (again, under contract) cancel and get out of this service, use cheap pre paid no contract service, you don't need smart phones $400 food (lunch is provided to me every day at work, provided I work through my lunch. Basically a menu is circulated and I select an item. Lots of leftovers get taken home. Meals at home mostly prepared from scratch an meat from freezer. Lots of elk, deer and antelope. Also chicken. Very little eating out.) embrace rice and beans in bulk $30 internet service $100 minimum credit card payments between 3 cards $110 car insurance $500 gas (mostly to and from work, errands, etc.) wow! $800 in medical bills and co-pays (this varies substantially. $800 is about the average.) $200 in misc expenses (school supplies, clothes, birthdays, etc) Total expenses: $3740 So we pretty much cover the bills every month. Never a late payment, food on the table, gas in the cars. Nothing to complain about as I know there are many people struggling to cover the bills every month. Debt: $2500 in credit cards pay these off, do not close accounts, it will damage your credit score $20,000 in medical bills (at least, I need to do a recent tally) $20,000 on wife’s car. About 6 months old. dump the new car, replace with older economy car paid in full Assets: Not much. My truck is worth about $10,000 (paid for) you could buy 2 used economy cars with this sale and cut down on your fuel Our fifth wheel is worth about $3,000 (paid for) sell My Jeep is worth about $3,000 (paid for) sell Modest gun collection about $5,000 any 'collection' is an excess, keep what you need for protection Savings: None. Depleted due to medical bills. Credit Scores: Around 650 for both wife and I second tier, you need to get that above 700 Child support: $1100 a month. At least, that is what we are supposed to get. Haven’t seen any in a few months because he lost his job. He is also required to pay 50% of all medical/dental bills for the kids. He hasn’t been doing that either, so my wife and I are covering those bills because they are in my name and I don’t want them to go to collections. He moved back in with his parents and has no assets or money to go after. Additionally, when the State of Nevada finds out you are behind on child support payments, the very first thing they do is suspend your drivers license. They call it a deterrent, but it really is stupid. Can’t get a job to pay your back owed child support without a drivers license. So we haven’t bothered taking him to court as it would only screw us in the long run. What is the point of all of this? I want out of debt so I can sleep at night, put some money away and buy a house. Now I am exploring my options. Option 1: Sell my Jeep for whatever I can get. Use that money to pay off credit cards and cut them up. Paying them off will raise me credit scores into the 700’s, which puts me in house buying territory, when our situation stabilizes. That means I will be driving my truck everyday, which can be a diesel hog and expensive to maintain. It will also free up another $100 a month and save us whatever money in interest. Option 2: Second job. Damn near impossible to find in my area with our very high unemployment rate. I have looked, but not hard. Option 3: Sell part of the modest gun collection. Not really much to be gained there as I’ve been selling off unused guns for awhile and I have it down to about the necessities. Couple of AR’s, couple of shotguns, couple of bolt guns, couple of CCWs, a 10/22 for the kids. Modest ammo supply. Haven’t spent any money on “gun stuff” in quite awhile. Option 4: Keep doing what we are doing and slowly chipping away at the debt. Continue finding things to cut from the expenses. I’m not going to say they are cut to the bone, but in all honesty, there isn’t much left to cut. So what says the hive? If I have left out any important information, I will be happy to answer any questions. You have a lot to cut. When you get your credit cards paid off and you have trimmed down as recommended put your monthly expenses on your cards. Pay your cards off every month in full. It will keep your credit rolling. Living debt free means you can have nice things without burden. You just have to get there first. |
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Contact the hospital and state and federal agencies for help with your medical bills. This help can be anything from total forgiveness to a long term payment plan.
ETA: look at the other recommendations too. Cutting down bills is always a good idea. Check how much to get out from contracts--sometimes that's cheaper than continuing to pay. |
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Get rid of wife's car, high dollar phones and TV service. Get wife something to drive, and pay cash for it.
You can get out of those "contracts", you just can not afford them. Why is your elect and water so much? Are you living in a mansion? $100/mo is the max you should be spending on elect. Sell half your guns and pay off CC bill. Lock it in a safe for a REAL emergency, do not cut it up once paid off, and DO NOT USE IT except for a real emergency. Turn the deadbeat into DFACS, he will never pay otherwise. They will lock him up, then mommy and daddy will bail him out. |
| In addition to the advice already given, which is good, I'd also look at the "other side" of the ledger. I personally have always found it easier to get creative about making more money than to spend less money. You can start a business maybe? Grass cutting service? You already have a diesel truck? Maybe you have a lawnmower/weedeater/blower? Cut some grass. Guys where I live who cut grass full time make well over $50k a year. Did you ever have a trade that you could do part time? I used to do electrical work, I could get weekend work with some electricians I know. Perhaps you've done plumbing or construction? Ever consider painting houses? I just painted my son's room because I couldn't believe what it would cost me to hire someone to do it for me. Painting rooms is easy cash money, can be done at night and weekends sometimes. Go tell Home Depot you want to be one of their "handymen" that they send to go do stuff maybe? Whatever your regular dayjob is, get a raise. Sit down, write out a little chat script with good points, and get in your boss' office and start negotiating. Read a book about negotiating. Take tests and get certified in things relavent to your day job. |
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What do you use the 5th wheel for? Primarily hunting trips (done for this year, all on a very tight budget). May or may not be any trips next year depending on financial situation. 1 annual trip to a Nascar race (these are paid a year in advance. So our trip in 2014 is already paid for. Non-refundable, otherwise I would cancel it.) Few trips during the summer to a nearby lake. Inexpensive camping weekends for the kids. If it was a $30,000 fifthwheel, I would probably try to sell it and pay most everything else off with that money. But seeing as it isn't, I would really, really not like to sell it at this point. I paid cash for it, and it is kind of my fall back plan. God forbid, if we had to, we could live in it. I see it as cheap insurance. |
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Biggest things that stick out to me:
Rent: $1100, really? You could cut this in half if you really wanted to. You could get a mortgage and buy a house and spend less than that. I may be off on home prices in Nevada, but around here $1100 a month will get you a lot in terms of living conditions. 2nd: You bought your wife what I assume to be a brand new car? Not a huge issue just questionable if you're struggling to put away money. You're not too bad off considering everything. I would eliminate that $1100 in rent though. Seriously, an extra $500 a month would get you back on track. |
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Get rid of wife's car, high dollar phones and TV service. Get wife something to drive, and pay cash for it. You can get out of those "contracts", you just can not afford them. Why is your elect and water so much? Are you living in a mansion? $100/mo is the max you should be spending on elect. Sell half your guns and pay off CC bill. Lock it in a safe for a REAL emergency, do not cut it up once paid off, and DO NOT USE IT except for a real emergency. Turn the deadbeat into DFACS, he will never pay otherwise. They will lock him up, then mommy and daddy will bail him out. Pretty much this except I live in a house with shitty insulation so I know what electric bills can get up to. Quite honestly though, if it just for piece of mind and you arent behind on anything, why make yourselves suffer by getting rid of stuff you love... as long as you do use them (jeep, fifthwheel). Downgrade the wifes car that is way too expensive for your situation. Kill the cable and phones, and turn in the deadbeat just to give him a shot across the bow. He knows hes fucked as soon as he goes back to work as his wages will be garnished, so his answer is to not work. Gotta push on that one the most even if its going to be the least probable to happen quickly. Of course we all want the nice house, and car, but situation dictates tactics as they say. Be patient and make the best of what youve got in the meantime. ETA: good call on the rent issue. $1100 is a mortgage, $700 is rent. |
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Get rid of wife's car, high dollar phones and TV service. Get wife something to drive, and pay cash for it. You can get out of those "contracts", you just can not afford them. Why is your elect and water so much? Are you living in a mansion? $100/mo is the max you should be spending on elect. Sell half your guns and pay off CC bill. Lock it in a safe for a REAL emergency, do not cut it up once paid off, and DO NOT USE IT except for a real emergency. Turn the deadbeat into DFACS, he will never pay otherwise. They will lock him up, then mommy and daddy will bail him out. Water bill varies between winter and summer. This time of year, the bill can go as low as $25 a month. Power bill is another story. Power is expensive in my area (as are most things). The absolute lowest we have been able to get the power bill is about $80 a month. I should note that our power bill also includes natural gas. An outdated furnace is the main culptrit for our high power bills during the winter. It should also be noted that we don't run the furnace much. It runs for exactly 1 hour in the morning as we get ready for the day - then it runs for exactly 2 hours during the evening when we get home. New siding and new windows were installed on our house over the summer, so hopefully that will help during this coming winter. All of the lightbulbs in our house are either CFL or LED (I've been converting slowly), and we unplug most things when not in use. Locking up the deadbeat is not a great option for us. His mother provides childcare for the kids before and after school. Otherwise, we would have to pay for that as well. I don't like the situation, but can't see any other option at this point. |
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It sounds to me that unless you get the child support and his half of the medical expenses from the dad you're going to have to sell whatever you deem as nonessential. Personally I would sell the new car, the truck, the Jeep, and the camper and buy two $5k cars that get good mileage and put the rest of the proceeds into a money market account as a buffer for any future financial disasters since it seems you are one step away from bankruptcy. Otherwise you can hope nothing happens, plug along paying the minimum on your bills until your contracts are up on the nonessential services, cancel them and use that money to pay toward bill.
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Biggest things that stick out to me: Rent: $1100, really? You could cut this in half if you really wanted to. You could get a mortgage and buy a house and spend less than that. I may be off on home prices in Nevada, but around here $1100 a month will get you a lot in terms of living conditions. 2nd: You bought your wife what I assume to be a brand new car? Not a huge issue just questionable if you're struggling to put away money. You're not too bad off considering everything. I would eliminate that $1100 in rent though. Seriously, an extra $500 a month would get you back on track. We pay the going rate as far as rentals go. Yes, it is absurd what houses rent for in this area. $1100 a month is what? Around $150,000 mortgage? That puts you in very questionable neighborhoods here. The housing market is coming back with a vengence. That being said, home ownership in the next couple of years is my goal here. But I want everything paid off going in, and right now, there is no fucking way we can come up with a down payment and have the cash reserves for a mortgage until this mess is paid off. $700 a month gets you into a 2 bedroom apartment with bars on the windows. Yes, wife bought a new car. At the time, it wasn't a financial reach in the slightest. Her old car was starting to exceed it's value in annual repairs and she needs dead-nuts reliability in transportation for a few reasons. |
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Locking up the deadbeat is not a great option for us. His mother provides childcare for the kids before and after school. Otherwise, we would have to pay for that as well. I don't like the situation, but can't see any other option at this point. So, you are good with giving him about a grand a month? That is what it amounts to. Dollars to donuts granny will not give up the time with the kids. If so, deal with it. You are paying dearly today for that "free" child care, and it will only get more expensive. |
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So, you are good with giving him about a grand a month? That is what it amounts to. Dollars to donuts granny will not give up the time with the kids. If so, deal with it. You are paying dearly today for that "free" child care, and it will only get more expensive. Quoted:
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Locking up the deadbeat is not a great option for us. His mother provides childcare for the kids before and after school. Otherwise, we would have to pay for that as well. I don't like the situation, but can't see any other option at this point. So, you are good with giving him about a grand a month? That is what it amounts to. Dollars to donuts granny will not give up the time with the kids. If so, deal with it. You are paying dearly today for that "free" child care, and it will only get more expensive. This is sure something to consider. |
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Dehammer is pretty much spot on I would also suggest canceling internet and shopping around for better car insurance, especially once you get rid of the wife's car. I would also stop 401k contribtions until you are debt free.
Check out Dave Ramsey'sTotal Money Makeover and see if a Financial Peace University class is being taught near you. Most importantly get on a written budget each month! |
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Child support and his requirements never go away. Even if he cant pay now he will eventually unless he is dead. A friend of mine got behind and had to pay his ex well after the child was grown and gone. Money owed is money owed. So that being said dump the medical bills to a super low payment. Most hospitals will even accept $10 as long as it is consistent. Then pay more when he gets a job and starts earning and paying again.
Drop the cars. Sell them all and buy a cheapo. Learn to carpool and commute. Get creative. A car is your biggest loss no matter what it is or what you owe. Drop the cable. it is a small thing and it won't really hurt your credit that much to cancel. Drop the phone too..... get a cheap prepaid. Sometimes getting them off your credit is as simple as a low low payment plan. I had to do it on a Sprint plan. The payoff and fees were cheaper then keeping it. Sell everything and bank as much cash. Cut your food bills. I remember eating a lot of beans and rice when I was younger. My parents were successful later in life but not so much when I was little. Suck it up. And it has been said, but get that rent reduced asap! Look for comparable or slightly lower properties and show your parents how much less you could rent somewhere else, and offer to split the difference or put in a reasonable notice you are vacating the premises. Figure that should put you in a good spot in 6-8 months. Spend next weekend asking every lawn service truck you see if you can get some weekend work. I used to pay guys $100 per day on the weekends cash when I had my lawn business. Ask enough and you will find at least a few days a month of extra work. |
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Find a local church or other group that is hosting Dave Ramsey's Financial Peace University. Go to it and do what he says.
Or get his book, read it and follow his advice. You could be out of debt fairly quickly. You are not that far under. But you will have to change your lifestyle. It's all up to you. Good luck. |
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I would keep the new car. It's warranted, so you don't have to worry about buying a used car that might have been someone else's problem. Drop to the minimum payment on it, with so long left, it's more beneficial to use that $50 for other things right now. Drop the 401K for right now as well. Take those amounts and put it on the credit cards. You don't mention interest amounts, but pay the one off with the highest first. Once you get that one paid, you can take that now larger amount and pay the next one off, and then the third. This then frees up your $100 minimum, $50 excess car, and whatever the 401K is, you didn't mention that either that I saw. Talk to your medical providers, and work out a lower payment amount each month. As long as you make some payment, they can't send it to collections. This will free up more money possibly. Dump the cable. You will have to pay a penalty, tell them you will pay it over a few months. Depending on your contract length, do the same with the phones. You might have to give that a couple months though to avoid a lot of monthly fees/payments. Drive a little slower to increase your mileage, it will only cost you a few minutes. Every 5 MPH is 5 seconds per mile more, plan accordingly if on the freeway.
Do this, and you can keep your toys, and start chipping away pretty quickly once you get those credit cards done. Roll over anything you save per month into the next thing to pay off to do it faster, including the medical bills. There's no interest on those though, so worry about them later. Interest is just a waste of your money, so try to get rid of that first. If you must sell something, sell the jeep, a truck has many uses, as people have mentioned. A Jeep is more of a toy. That would save you insurance money, and help you pay someone off faster, to redirect that money. Also turn in the deadbeat. If he has trouble after losing his license, you lose nothing, he isn't paying you now anyway. |
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Debt: $2500 in credit cards $20,000 in medical bills (at least, I need to do a recent tally) $20,000 on wife’s car. About 6 months old. Assets: Not much. My truck is worth about $10,000 (paid for) Our fifth wheel is worth about $3,000 (paid for) My Jeep is worth about $3,000 (paid for) Modest gun collection about $5,000 Sell your truck, Jeep, 5th wheel, and wife's car (I'm going to assume if you owe $20k on it, it's worth at least $25k). That nets you $21,000 and wipes out her car payment (1 debt gone). Buy yourself a 98-2004 Toyota truck, the extended cab long beds are nice and will get 25+ mpg on the highway with the 4-banger and 5-speed. Maintenance is near-zero, oil and tires + timing belt & water pump every 90k. That will cost you $5,000. Buy your wife a used Civic for $3,000. You'll have 2 rock-solid dependable cars and $13k in cash. Pay off your credit cards and half your medical bills. Congratulations, you now only have $10,000 in debt and more income per month because you have no car or CC payments. |
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I would keep the new car. It's warranted, so you don't have to worry about buying a used car that might have been someone else's problem. Drop to the minimum payment on it, with so long left, it's more beneficial to use that $50 for other things right now. Drop the 401K for right now as well. Take those amounts and put it on the credit cards. You don't mention interest amounts, but pay the one off with the highest first. Once you get that one paid, you can take that now larger amount and pay the next one off, and then the third. This then frees up your $100 minimum, $50 excess car, and whatever the 401K is, you didn't mention that either that I saw. Talk to your medical providers, and work out a lower payment amount each month. As long as you make some payment, they can't send it to collections. This will free up more money possibly. Dump the cable. You will have to pay a penalty, tell them you will pay it over a few months. Depending on your contract length, do the same with the phones. You might have to give that a couple months though to avoid a lot of monthly fees/payments. Drive a little slower to increase your mileage, it will only cost you a few minutes. Every 5 MPH is 5 seconds per mile more, plan accordingly if on the freeway. Do this, and you can keep your toys, and start chipping away pretty quickly once you get those credit cards done. Roll over anything you save per month into the next thing to pay off to do it faster, including the medical bills. There's no interest on those though, so worry about them later. Interest is just a waste of your money, so try to get rid of that first. If you must sell something, sell the jeep, a truck has many uses, as people have mentioned. A Jeep is more of a toy. That would save you insurance money, and help you pay someone off faster, to redirect that money. Also turn in the deadbeat. If he has trouble after losing his license, you lose nothing, he isn't paying you now anyway. It has been a USED car since he got it home. It depreciates each month by about the amount of the payment, so he saves nothing by keeping it. Ask anyone that has ever been in the car business, they will tell you used cars are every bit as reliable and trouble free than "new cars with warranty" and can be bought for a fraction of what new costs. Plus, no need for collision ins on a car you paid cash for. |
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The wife and I just finished Financial Peace University. We had been doing it on our own, but this helped get us focused.
High points of it- Cut up credit cards. Save $1000 cash for emergencies. Pay everything you can on smallest debt, cut everything else to minimum payment, when smallest is paid off, pay that plus what you are currently paying on next smallest, and keep going. Cable, phones-dump them. Cars, truck, jeep, 5th wheel, all but a ccw sell. Apply all towards smallest debt which should be your CC. Any left over pay towards med bill. You are not in bad shape if you commit to getting out of debt. I would shelve buying a house until everything else is paid off. |
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So here was my wife and I's debt situation a few years ago.
$10K in credit card debt $30K in one car $15K in another ~$2-3K in varying medical and tax bills Basically $50K in the hole in consumer (i.e short term, bad) debt. My credit score was crap (500ish), my wife had a foreclosure on hers. We weren't looking good. We are now debt free. We have the titles to two cars. We are saving for a new house. Just keep plugging away and making the tough decisions in your budget. We have 6 kids, two of which are from 2 different deadbeats. Neither of the deadbeats was paying the child support. One of them we filed with the sate agency to get them to garnish his paycheck. The other, who is still $10k behind, we just pestered to send what he can each month. Eventually we started getting ~$300 a month between the two of them. The key with them was to be persistent and not let them off the hook. Nevada has a child support enforcement division that can garnish his wages (if/when he earns them). The best thing you can do with your debt is to use the snow ball method. Find the smallest debt, and start pouring every extra penny you have into paying that off. Once you pay that off it's a huge moral lift. Then take the payment you were making towards that and the extra money you were paying and combine them into the payment for the new smallest debt you have. You will be shocked at how quickly this starts to pay off. When we were paying $25 towards a credit card payment and then started adding $50 to it, we paid off our smallest debt, about $600, pretty quickly. Then we rolled that over to our next debt that we were paying $40 a month to and all the sudden we had $115 a month that we were putting towards that ($25 from paid off debt, $50 extra money, $40 monthly). This really paid huge dividends towards the end when were getting close to paying off our biggest debt, the car, and were putting like $1000+ a month into it. As to finding ways to pay off the debt quicker, I whole heart-idly agree with finding new revenue generators rather then cutting even further. Even now after being debt free we live a pretty bare bones budget. We don't have cable, we use wood to heat in the winter, I'm constantly flipping off lights to save electricity, my wife shops in bulk for groceries (25# of beans and 50# of rice at a time) so cutting expenses isn't the only answer. Find ways to bring in new money. This can be things (as suggested) like cutting lawns, offering handyman services, doing odd jobs, having garage sales instead of donating to goodwill. For myself, I am in the internet industry, so I started a part time consulting business for web development. It was the biggest pain in the ass I have ever put up with, but it was worth every second because it helped me get to where I am now. I often wondered why I was spending so much time on the side for what seemed like pennies. At (my fulltime) work my time would get billed out to clients at like $50-60 an hour. I found myself taking on projects that would take 200 hours for $2k. Thats only $10 an hour before taxes. But I would take that $2k and pay down the debt. So I encourage you to find away to generate extra cash. Everyone has some sort of skill that they can market. Even if you only earn an extra $50 bucks a week (Like from mowing 5 lawns), that's $2500 a year. That $50 combined with your other money in a snowball will kill your debt quicker then you can imagine. In addition to all this once you start to get the debt paid off, it becomes exciting. You will get frustrated at first, then you will get greedy - in a good way. You will go after every penny you can find to bring that debt down. The frustration of working for pennies will dissipate and you will see the debt melt away. So go at it. There is no magic bullet just determination and hard work. You will feel like crap at times. You will want to go spend money on stupid things. You quite often will. But you will pick yourself up and keep moving, keep chipping away at that debt, and one day soon you'll wake up and realize, "Man, this feels great. I'm making the last debt payment I will ever make." Get to it. |
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It has been a USED car since he got it home. It depreciates each month by about the amount of the payment, so he saves nothing by keeping it. Ask anyone that has ever been in the car business, they will tell you used cars are every bit as reliable and trouble free than "new cars with warranty" and can be bought for a fraction of what new costs. Plus, no need for collision ins on a car you paid cash for. Quoted:
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I would keep the new car. It's warranted, so you don't have to worry about buying a used car that might have been someone else's problem. Drop to the minimum payment on it, with so long left, it's more beneficial to use that $50 for other things right now. Drop the 401K for right now as well. Take those amounts and put it on the credit cards. You don't mention interest amounts, but pay the one off with the highest first. Once you get that one paid, you can take that now larger amount and pay the next one off, and then the third. This then frees up your $100 minimum, $50 excess car, and whatever the 401K is, you didn't mention that either that I saw. Talk to your medical providers, and work out a lower payment amount each month. As long as you make some payment, they can't send it to collections. This will free up more money possibly. Dump the cable. You will have to pay a penalty, tell them you will pay it over a few months. Depending on your contract length, do the same with the phones. You might have to give that a couple months though to avoid a lot of monthly fees/payments. Drive a little slower to increase your mileage, it will only cost you a few minutes. Every 5 MPH is 5 seconds per mile more, plan accordingly if on the freeway. Do this, and you can keep your toys, and start chipping away pretty quickly once you get those credit cards done. Roll over anything you save per month into the next thing to pay off to do it faster, including the medical bills. There's no interest on those though, so worry about them later. Interest is just a waste of your money, so try to get rid of that first. If you must sell something, sell the jeep, a truck has many uses, as people have mentioned. A Jeep is more of a toy. That would save you insurance money, and help you pay someone off faster, to redirect that money. Also turn in the deadbeat. If he has trouble after losing his license, you lose nothing, he isn't paying you now anyway. It has been a USED car since he got it home. It depreciates each month by about the amount of the payment, so he saves nothing by keeping it. Ask anyone that has ever been in the car business, they will tell you used cars are every bit as reliable and trouble free than "new cars with warranty" and can be bought for a fraction of what new costs. Plus, no need for collision ins on a car you paid cash for. I've had used, it's a crapshoot. You never know what you are getting when someone else owned it. You know for sure if it's purchased new by you, and that money is already figured into their budget. So you are correct, they won't be saving anything, but they won't be losing anything either. Once that car is paid off a few years down the road, and they keep it longer, they've gotten their money's worth. I'm not saying it will definitely require a lot of work, I am saying maybe, and once the new car is gone, it's gone, and you are stuck with your gamble. They already dealt with having one car that was breaking down all the time. I would venture a guess that's where some of that credit card debt came from. Cash for clunkers did a lot of damage to the reliable used market. |
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Debts eats at the table first. Get rid of as much debt as possible. Get rid of TV and phones. TV is a complete waste of time. Prepaid phones is the way to go.
Get rid of the toys....Jeep and 5th wheel. You will not miss them. You need to get it in your head that living beyond your means is not a luxury you are entitled to. Living within your means is an obligation you have to your spouse and children. Two years ago I lost my teaching job. I tried real estate and made nothing. To pay my obligations I sold much of my gun collection. I had bought a large number of guns after my divorce. They were my way of self-medicating. I did not drink, do drugs, date, gamble, go to movies, eat out, anything. I bought guns. The hunt thrilled me. Once I got one, I cleaned it, studied it, and then put it in a rack never to be shot so it could gather dust. At one time I had 150 long guns (mostly milsurps) and 50 handguns (also milsurps). I had a spectacular collection containing some genuinely rare pieces. But I had obligations. I was not going to live off my new wife. My bills, obligations freely accepted before we met, were entirely my responsibility. To meet them, I have sold nearly 100 long guns and 25 handguns. It was painful , but I have not missed what I sold and I put the money to very good use. Once they are gone, they fade from memory. I still have more to sell. I have freed up many thousands of dollars. I have also much more than covered the cost of purchasing them. Peace of mind is much better than toys and self-indulgence. |