we are sinking fast!

iVillage Member
Registered: 07-20-2003
we are sinking fast!
19
Sat, 09-18-2004 - 2:11pm
I've been lurking on this board for a while, I don't know why I never posted before. Anyhow we are drowning and are losing my income at the end of next month and I have no idea how we will survive. We had our first baby this summer after IF treatments so we have major expenses adding a new member to the family. Let me tell you how much debt we have:

$17,000 MC

$5,000 Visa

$36,000 home equity loan (we did a 80,10,10 loan to avoid PMI)

$1,000 med bills

$800 Home Depot (no interest until April 2005)

$300 on a same as cash card that will be paid off in November or December when it expires

$5,000 on new windows we put in last year

plus a huge mortgage

I am so embarrassed to even write down how much we owe. Good Lord - that's $65,000 dollars not including our mortgage!!!!!!! We just found out today that our mortgage payment is increasing $120 per month b/c our escrow account was short last year. My car lease is over in March and I will need a new car but I have no idea how we'll come up with the downpayment.

I am sick about this. I worry constantly. We have a good income when we are both working. Before all these med bills and daycare costs, we could afford our lifestyle and knew we had debt but could make payments and make a dent in it. Now daycare eats up $1200 a month that we used to pay towards debt and we have med bills from my delivery.

Any advice on how to survive? I don't want to file bankruptcy b/c we put ourselves in this situation and I need to get us out. I should get a bonus/severance package next month b/c my job is being eliminated and this was incentive for me to return to work after the baby was born. I am going to put that towards these medical bills and hopefully a credit card or two. I also want to save a bit for an emergency.

Thanks for listening. It was a huge step for me to admit to anyone other than DH that we have a huge, enormous, massive problems on our hands. I just can't believe we got ourselves this far in the hole.

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iVillage Member
Registered: 09-20-2004
Mon, 09-20-2004 - 3:42pm
Hi! I'm new to this board but I feel for you in your situation. I am a SAHM of 3 and it is a sacrifice for us but it works out OK. I wouldn't have it any other way. And I remember getting that mortgage statement when they tell you your escrow is going up! I though I'd throw up. But there is another option- like NOT having an escrow at all. I don't know too much about the mortgage industry but I do know that if you have enough equity in your home you can opt out of the escrow account. We did. Of course you do have to save the money yourself. we were paying 320+ each month to our escrow and it seemed to go up regularly. When I did the math - looked at my property tax info and home ins costs, I realized that we could put aside only $225/month and this would give us $2700 to pay our taxes of $1900 and insurance of $600 with a few hundred to spare and keep in our savings account as a safety net. I do know that the prop rates where we live (MD) are going up but I figure if I add only $25/month to that amount that should give us another $300 for the taxes and ins. Is this making sense? I am guessing that the mortgage company is giving themselves a safety net as well when they estimate the $ for escrow and THEY are benefitting from it. If you put the money aside yourself you will also earn interest on it. Our savings acct gains a piddly 1.5% but still, it's MY 1.5% not the mort company. Also, use the bulk of your money to pay of your cc debt NOT the med bills. Call the dr/hospital or whomever and set up a $25-50/month payment plan. As long as you make the payments they should be OK. There is no interest on your doctor bills! Put the money toward your credit cards and other debt where the interest is killing you! Here's what I did to pay off our home equity line. It would work for credit card too. I had been paying $300/month toward the balance but then I started paying $75/week (I made an online payment every Friday) What this does is increases the total payment you make: At $300/month you pay out $3600 for the year. At $75/week, you pay out $3900 for the year ($75 x 52 weeks) This is good in itself but my next step was even better. After 12 weeks of the $75/week I upped my weekly payment by $5 to $80/week, then I increased to $85 after another 12 weeks. By doing this I added over $600 in payment that year to my debt and paid off the equity line in 18 months. I know that was a lot of math and the interest rates you are carrying affect the debt as well. All I know is that adding $5/week was pretty painless- one less trip to McDonalds, one less Blockbuster rental, etc. You can do it! It will be hard but you can. Well, I think I've gone on long enough. good luck.
iVillage Member
Registered: 07-20-2003
Mon, 09-20-2004 - 7:59pm
Thank you for your response. We really do need 2 cars. 1 is not an option for us. We do not pay for DH's car and he works irratic hours so I can't rely on ever using his car. My current car payment is $365 a month for a lease that is up in March. I really really love my car and would like to buy it after the lease, but we'll see if that's affordable.
iVillage Member
Registered: 07-20-2003
Mon, 09-20-2004 - 8:05pm
Thank you for responding. I don't think we probably have enough equity to get rid of the escrow account at this time. There was an option to pay $915 by 10/31 and then our payment would only go up $50/month. We have to see if that is an option by how big DH's bonus is.

I have called the hospital and dr's office. The 2 dr's office I owe were so nice, 1 said I could pay $25 month till the balance was paid off and 1 said I could pay 10% until the balance is paid off. The woman at the hospital was horrible. She was so rude and treated me like garbage. I got her to agree to me paying $70 for the next 8 months to get that paid off.

iVillage Member
Registered: 07-20-2003
Mon, 09-20-2004 - 8:10pm
Thank you for responding. I do visit the frugal boards. I really NEED to become frugal, but I'm not right now - obviously you can tell that by the amount of debt we owe. We have some extras we need to cut out of the budget - cable, etc.

It's great to see people who are actually working themselves out of debt and it is nice to know it is possible.

iVillage Member
Registered: 07-20-2003
Mon, 09-20-2004 - 8:17pm
Thanks for your response. I make a pretty decent salary that we will be losing and it will be hard to make up for it.

I have been really good about trying to buy clothes only when they are on sale. To be honest, I can't see myself ever wearing clothes bought at Goodwill or a garage sale. I would rather go to Kohl's when they are having a big sale.

I am planning joining a mom's group to have interaction with adults and other children. It is only $25 per year and I we should be able to swing that.

Thanks for the tips. I will check into that book at the library. I really need to learn to be more frugal. I grew up in and still live in a very affluent area where there is alot of excess. Unfortuately, DH & I fell into the trap and now we need to get ourselves out. It's been really hard for me to accept the depth of our problems but I've enjoyed reading all of the responses and getting ideas on how to save money and our sanity.

iVillage Member
Registered: 09-20-2004
Mon, 09-20-2004 - 9:45pm
Hi! I'm glad you have a payment plan for your dr bills. I, too, incurred much $ when I had my 2nd and 3rd and we had crappy ins with my husbands job. I was panicked about paying it off fast until a friend alerted me to the no interest on those. Even though it stinks to have the bills coming every month at least you know you have time to get them paid interest free. Sorry the woman at the hospital was nasty. That must have made you feel awful. I remember the tears just rolling down my face when our insurance co told me a $600 charge was not covered. But we got through it and paid it all off. Fortunately, my husband got a new job about 2 years ago and that insurance is wonderful.

Have you thought about refinancing your house? Could you add that 60K+ to your current mortgage? It will probably add $400-500/month and would take 30 years but at least it would be taken care of. Just a thought.

I forgot to mention congratulations on your new baby this summer! I'm sure looking in that sweet face makes you forget about this debt problem- for a minute anyway. Have you considered watching 1 or 2 other children in your home? You could be home and make some money too. Also, I know the cost of diapers and other stuff adds a lot to your required expenses. Try this: Use store brand diapers during the day when you're changing them frequently and buy a brand name for nighttime when you only need one! (I liked Huggies and they were the cheapest name brand at WalMart) The store brand is probably OK at night but if (when) your baby sleeps 10+ hours at night, that diaper will be pretty full in the AM and better safe than sorry. Store brand wipes are OK as well. I also made baby food in the blender and froze it in ice cube trays. It was easy and saved some $. I must admit I only did that with my first child - when the 2nd and 3rd came along, I didn't have the time to whip up homemade baby food so I had my mom, mother in law and 2 sisters cutting baby food coupons for me. That helped. Ask your pediatrician for formula samples or at least coupons. They have formula reps coming to the office and should have some. When my friend had twins (after my kids were done with formula) , I saw a formula rep loading stuff in her car in the parking lot of the pediatricians office and I just went up to her and told her about my friend and she gave my 4 big cans of the Similac allergy formula! My friend was so happy and so was I! Well, that is all- I am just blabbing away! Take care!

iVillage Member
Registered: 07-20-2003
Tue, 09-21-2004 - 8:48pm
Thanks for responding. We just re-financed this time last year and I'm certain we don't have 60k equity in the house plus 20% left over. I've thought about that though. We have a pretty low rate. We bought some white cloud diapers and you're right, they are OK during the day but at night she leaked all over the place. I do plan on making my own baby food. And my SIL gave me a ton of jars that she had left over from her DS. And I have a friend who gave me about 6 boxes of cereal left over from her DD. I just have to be sure to check expiration dates before I check them. Also, we've signed up for tons of websites and a few friends have signed up for us too. I know, bad bad. But every $1 off coupon helps.

I couldn't believe how rude the woman at the hospital was. She made feel like a complete loser b/c I couldn't pay the $800 bill all at once. The lowest I could get her down to was $70/month and she said if I wanted to go lower I would have to produce W2's and tax returns. DH has decent insurance but we had to pay 10% of everything. I had an induction, epidural, pushed for hours and then a c-section. Then was on IV antibiotics for 2 days, etc. The total bill was around 14k, luckily we just had to pay 10% of that.

Thank you for baby congrats. DD is truly a dream come true and we just love her so much! I think she is what makes me want to get out of debt so we can give her a good life.

iVillage Member
Registered: 09-22-2004
Wed, 09-22-2004 - 1:16am
Just wanted to let you know that you are not alone! My DH and I are in massive debt also... And like you, we were also just blessed with a baby girl in February after 5 years of IF treatments and of course the debt that goes along with that.

For me: Staying at home, no matter the amount of debt I have is the best thing I can do right now for her and myself. The way I look at it is...that I spent a ton to get her, so now mellow out and enjoy it.

I know what you mean, the debt is on my mind ALOT and despite that, I too cannot wear goodwill stuff and give her clothes that have been worn. So I figure I will just plug along and be happy that I FINALLY have her. And someday all this will be payed off (I hope)That is if I can just quit buying her things!

P.S. That hospital lady sounded typical! Here you are trying to work soemthing out and what do you get? HMMM, figures..

Anyway, if you can and want to make the change and continue to stay home I think you will be happy in the long run despite the debt! I know I am NOW! :)

iVillage Member
Registered: 07-20-2003
Wed, 09-22-2004 - 5:43pm
Thank you so much for your response. I'm really glad someone feels the same way I do. I have been feeling guilty these last few days that I don't want to wear second hand clothes or have DD do that. We got soooooo many outfits for her from our shower and her birth that I have enough clothes to last me through most of the winter. I've gotten a few hand me downs for her but haven't put her in them yet.

I am going to try saving money in many ways. I'll figure out some other ways besides clothes. I really don't want to offend anyone who does this, it's just not for me. Also, I don't mind being poor if I get to spend all of my time with her.

Alot of our debt was spent on trying to have her. Most of the m/c debt actually.

Congratulations on your new daughter too. Isn't modern medicine wonderful?

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