So confused...just took the quiz on debt
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So confused...just took the quiz on debt
| Wed, 05-07-2003 - 9:59pm |
Well, here I sit at the computer reading again. I took the debt quiz, and according to it I am in debt depression. I will admit, I think about my debt ALOT!!! I am so confused about our house. I know it is more than we really can afford, we built it last year and went over on the budget. ALOT. The great thing is that it is in a wonderful neighborhood, the same neighborhood that myself and my husband grew up in. Our parents are right around the corner. It would absolutely kill me to sell it. Our payments are 1375.00 per month. In our area, that is pretty high. It is a great house. Truly my dream home. I love my home. It just makes me sick to think of leaving it. But, It is also making me sick to try and figure out how the heck we are going to pay for it. We have more going out than coming in each month. What are your opinions on all of these pop up ads on consolidation and refinancing?? They seem to be everywhere. Is this all just a big racket? To have one "low" payment? Sounds too good to be true. Well, as usual I am in a hurry. Lunches to pack, homework to check, thanks for everything.
Lucy
Lucy
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Instead, start looking for ways to get your incoming greater than your outgoing. Can you lower your grocery expenses by $5 a week? That would give you $20 a month to work with. How about gasoline? Are there trips you can consolidate, carpooling you can do, that would reduce that by $10 or $15 a month? Shave a bit off here and a bit off there, and you may find your money will stretch farther than you think. Focus on getting that debt paid down a bit to give yourself some breathing room.
Consider getting a temporary part-time second job to get the debt paid down a little faster.
I don't know about consolidating your debt. Do you have any equity in your home? If not, consolidation may not even be an option. If it *is* an option, I would hesitate to use it. If you roll your cc debt into your house, and then are unable to make the higher house payments, you risk losing your house that way. Whereas now, if you can't make a cc payment it's certainly not a good situation, but at least your house isn't on the line for it.
When we were in a similar spot, we thought about selling our late-model Subaru Outback and purchasing an older, less flashy (never thought I'd think of a station wagon as flashy--that's what momhood does to you! LOL) vehicle. My dad (who is *very* financially savvy) actually talked me out of it. He suggested refinancing instead, which was fortunately an option for us as we actually did have equity in the vehicle and good enough credit (not great credit, but good enough) that we got a better interest rate and longer terms (and a much lower payment). We'll be paying for it far longer than I'd like, but his point was that we love the vehicle, we've already paid for the enormous immediate depreciation of having driven it off the lot when it was new, and we intend to drive it until the wheels fall off. So why permanently give up something we love because of a temporary financial situation? If we still owe on it when our unsecured debt is paid off, we'll go ahead and pay it off as quickly as we can as well.
Also, have you called the cc companies and asked them to lower your interest rates?
As enthusiastic as you are about your home, I would consider selling it only as a last ditch move if you can't figure anything else out. Once it's sold, you'll never be able to get it back (not that that's the end of the world, but again, it's a matter of a permanent solution to a temporary problem--rarely a good idea).
Hope that helps. I'm sorry you feel depressed, but keep coming to this board, read some of the excellent books recommended by others (my favorite right now is Mary Hunt's "Debt Proof Living"), and remember to take time to enjoy your lovely home.
Blessings,
Heather
Thanks again.
jb
Finally I had to come up with a spreadsheet that showed my husband that we weren't really any better off doing his plan. We would still have $12,000 debt & interest, and would have "wasted" a whole lot of rent money in the remaining years it would take us to pay off the debt, re-save a down payment, then buy another house. I can't recall offhand how it worked out dollarwise, but I think we'd be spending a couple thousand more dollars to keep our house for 5 years or whatever, versus his plan of selling, re-saving downpayment, buying another house in that same time period.
I guess the gist of what i'm saying is that if you love your house, I'd explore all the other options first. I decided to look at cutting other expenses first. So we are keeping our house, have adopted a frugal way of living, and will look at trying to increase our income in a couple years when the youngest goes to school.
In over a year of evaulating our life/money we have:
=cancelled satellite t.v. and gotten basic t.v., savings of $40/month
=cancelled high speed internet and gotten $9.99 unlimited dial-up, saving $40/month
=cut grocery bill by not buying boxed or premade meals, saving about $300/month family of 4
=quit take-out meals except for what we might spend in a weekly 'family fun money' allowance
=quit smoking, saving $120 month
and many more things, we really took a microscope to every penny of our spending.
The most drastic thing we did was sell our cars. They were paid for, but they were beaters and always needing repairs. With that came the savings of repairs, gas, & insurance. Another savings of at least $400/month. We're in a major city here with great public transit and everything is a $10 cab ride away anyway if we're desperate, so we took the plunge. Last July we did this, saying we'd try it for a couple months to see how we fared, and we haven't looked back. It hasn't been an inconvenience at all.
It's all a matter of what's important I guess. It's a real long process. Here it is 1.5 years later, and I'm still playing with our spending plan. for us the concept of "Freedom Funds" is working wonders. The microscope process showed us what was really a need and what was a manufactured need, and what our real bills are, so we're taking our bills and necessary expenses and setting aside 1/12th of their annual cost every month. We struggled over the winter to pay our oil heating bill as we had no freedom fund in place, and starting this month we'll be finally putting a freedom fund in place for that expense.
We're also starting to 'take care of us' too, with funds/allowances going in place for yearly vacations, family recreation monthly, stuff like that. I figure we did indeed finally wake up, we realize it's going to take a good 6 or 7 years to get out of debt, and dammit we're going to be happy while we get there! :-)
Good luck in figuring out what's best for your family, I really do recommend the Mary Hunt book "debt proof living", borrow it from the library, it really does help take a load of mental strain off and get things back in perspective.
Lorraine
Lucy
I know how you are feeling about your house. My dh and I lived in our brand new house for 1.5 years when we sold it because we had more going out than in. I wish I had not sold it!!! I still think about that house. It was perfect for us. It was in a nice neighborhood, close to shcools etc and I regret selling it! At the time I just could not see any other way out and cutting back (REALLY cutting back) just hadn't occurred to me. We did a few things like going to basic cable, giving up the cell phone but we could have done so much more and kept our house.
Right now we are living in a condo (renting) and we have 30 year old carpets (YUK!) I hate my home (but at least like the neighborhood). Now we are trying to pay debt and SAVE for another house and I would rather just be paying down debt.
I would advise you to exhaust all other options before selling your home given they way you feel about it. I still think about "my home" and I still wish I lived there. Now on the other hand I have learned so much since selling it and I don't think I would be where I am today (and except for where we live) and I like where I am today.
Sandra
Thank ou so much.
mslvp@sbcglobal.net
Cruise and Group Specialist
HAVE A GREAT DAY! (OR EVENING!)