need input......

iVillage Member
Registered: 02-24-2006
need input......
8
Fri, 02-24-2006 - 2:51pm

Well, my husband and I have managed to get ourselves in a horrible situation. It is amazing just how quick we ran up our credit cards. He was a full time student and I was the only person working - but still - I am not making excuses. We should have lived with the money we had not beyond our means. And we didn't.

Anyhow, we at our max owed 30,000 in credit cards, plus we owe 70,000 in student loans (which are in deferment until he graduates next year)....he is now working though.

Due to a tax refund and unexpected $$ we were able to put 4000 towards that number and we are down to 26,000 in cards. (We will worry about the SL afterwards)

We do make decent $$ and if I work an extra 8 hours a week (overtime) - it comes out to an extra 1000 dollars a month which I am sending right to the cards. After our mortgage and other bills and leaving per month:

400 groceries
260 gas
400 misc ie) oil change, tolls, and other things like that
400 spending $$ b/n the two of us

We will have another approx 1000 to send to the cards.

The cards are
12,000 on a card with 10% interest
8,000 on a card with 0% til Feb 07
3,000 on a 14% card
2600 on 14% card
700 on another card not even sure about the interest

We left 1000 in our savings for emergencies and we are still saving 150 a month for an IRA and 7% of my salary for my retirement plan.

Do you think the $$ we left over is reasonable??? For us it is a huge scale back-we were spending like it was going out of style and now are trying to really cut back.

If I work 8 hours extra it is 3 12 hr days and 1 8 hr day so my plan is that if I do 4 12 hour days the extra money will be for treats for us (and to keep us motivated)

How does this sound??

iVillage Member
Registered: 03-27-2003
In reply to: sm80
Fri, 02-24-2006 - 5:15pm

My honest opinion is that you could probably cut back more and get the debt paid down faster. But, you've said that your spending was out of control so I think this is a great starting point for you-I would do it for a couple of months and then reevaluate to see if you could go even lower.

Taleyna

iVillage Member
Registered: 01-25-2006
In reply to: sm80
Fri, 02-24-2006 - 5:33pm

Good job trying to get your hands around the situation and halt the spending. I have a couple of suggestions you can take or leave.

1. If you could make that $1000 payment + any interest accrued that month, you would at least be reducing the principal by that full $1000 per month. I would pound on those 2 14% cards and the mystery rate and get them wiped out in the next 6 months.

2. The next 'degree of difficulty' (too much olympics! LOL) would be to pay that $1000 plus the min payment on all of the cards. As you pay off cards, you could decide if you wanted to keep rolling those min payments into your debt payments or I would suggest starting to pound on the student loans (only any private or nonsubsidized loans even if you aren't in repayment yet to avoid capitalized interest) or if you wanted to start adding to savings.

It looks to me like those 4 areas you outlined are pretty flush but I don't know what part of the country you live in. $300 per week on groceries, spending money and misc seems pretty high at least for my neck of the woods. If nothing else, maybe you could set out with the mindset that you are going to try to spend only 80 or 90% of that amount and if you succeeded, that would be a nice snowflake ($120-240 per month). I know it is tough to make those big changes but maybe you can just focus on one area at a time (I personally would take a long hard look at the grocery budget. I know lots of families of 4-5 that eat for a month on a lot less than $400). Start looking for baby step ways to cut your budget and I bet you can make it work!

Hope that helps! Welcome! Keep asking questions and I bet you'll figure out a way to make this all work well.

Peg

iVillage Member
Registered: 02-24-2006
In reply to: sm80
Fri, 02-24-2006 - 7:34pm

Sorry, I guess I wasnt clear. I am actually putting 2000 plus the minimum payments towards the cards. I know we probably could cut back more - but I know how we are and I think that if we cut back much more - we will end up not sticking to this. It seems to be a good balance where we have room for some fun yet still are making a good dent each month into our debt.

Like the other poster mentioned maybe after a few more months we could re-evaluate - and our grocery bill is high but at least now we are eating at home much more, taking lunches to work and not buying Starbucks everyday... in our grocery bill is also takeout once a week as a special treat...

iVillage Member
Registered: 01-06-2006
In reply to: sm80
Fri, 02-24-2006 - 9:31pm
Welcome to the board,
My preference would be to pay off and not use the $700 mystery interest rate card first. You will get immediate gratification in paying that off now. Then tackle the 2 cards with the 14% interest, then 10% then the 0% unless that goes up before they are paid off and if it has a higher balance start paying more to it at that time. I don't know anything about student loans, but the other poster said if student loans were accumulating interest or something try and pay those early, I would do that because it sounded like sound advice. You are already going the right way $30K-->$26K keep it up!
As for the budget things can be reevaluated after you try this budget for 3 months and see if it works for you. If you decide you can make your coffee at home instead of hitting the local java joint or could your husband manage to do oil changes himself, you might find other ways to trim the budget or maybe you find you didn't leave enough for gas and tolls and need to redistribute your budget, then redistribute and reevalute in another 3 months.
Everyone here has been a great support and inspiration to me and I'm sure you will find the same.
Pam

Proud sister of a Marine:

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iVillage Member
Registered: 03-27-2003
In reply to: sm80
Sat, 02-25-2006 - 1:49pm

I also wanted to recommend trying to read/listen to as much financial material as you can. Even if you don't adopt everything (and you won't because the experts can't agree on how to beat debt) you'll find yourself incorporating little changes into daily life. I read Tightwad Gazette about 9 years ago and thought this won't work for me, she only deals with family stuff, this is too radical and now I've probably adopted about half the ideas in her books. I would just look up a debt author (dave ramsey, jerrod mundis, amy dazycyn, mary hunt, jonni mccoy) and then go to the that section in the library and start doing some browsing.

Good luck!

Taleyna

iVillage Member
Registered: 01-25-2006
In reply to: sm80
Sun, 02-26-2006 - 11:38pm

Sounds like you've figured out what will work for now and you'll be making some great progress on the debt with that level of payment.

Peg

iVillage Member
Registered: 02-24-2006
In reply to: sm80
Tue, 02-28-2006 - 2:57pm

Thanks all for the input... greatly appreciated.

I know there are probably things we could cut back on ie) our grocery bill is probably high b/c it is just the two of us. However, I kind of made some cushion with that and with our spending money. We are also young (25 and 26) with no kids and so we like to go out on the weekends with slowly adds up. I know we could cut back on this - and we have alot. We are having friends over more, etc rather than going out. But we don't want to loose touch with friends by not going out on the weekends and such. Also, if we cut back too much I would be afraid of just blowing sticking to this. My whole perspective towards money and spending has drastically changed. I used to have the attitude that I deserved certain things and therefore could spend and that saving was for tomorrow type thing. And I loved to shop, shop, shop... which is where I have really cut back on... which really will be very tough for me for the next year. However, I have a huge goal in sight - paying off these stupid cards. And then we will free up $$ to save, put towards our home improvements, and also splurge here and there...

We do have a ton of SL but really it is locked into a 3.5% rate and although it stinks having to pay it - it was in my mind still worth it for DH to get his two master degrees and for me to get my bach degree. I don't think we will snowball the student loan either b/c it is at such a low rate, the money is better off elsewhere....

My plan is to pay off the 700 dollar one first, followed by the other two low balance ones... then work on the 12k one for a few months and then start plugging towards the 8k trying to get the 0% one done before its 0% timeframe is over ....

One a side note, last night I worked over at work b/c it was crazy busy and got paid critical staffing pay and made an extra 250 to put towards the cards!!! YAY... There is honestly an excitement I get off of writing checks out to the cc companies...

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iVillage Member
Registered: 11-09-2004
In reply to: sm80
Wed, 03-01-2006 - 11:30pm

Hello,

You could try taking a look at your utility bills and other monthly recurring bills. Sometimes you can sign up for a managed plan where the bills are the same every month. Do you have cable service with extra channels you're paying for? Does your home phone have caller id, voice mail, and *79?

Some of these things could be "turned off" and added to your snowball without causing you to feel "deprived". Regarding keeping in touch with friends.. you are already paying for the phone.. use it. =) Send them emails giving them an update and asking them for their "latest news".

Set up some time to chat with your friends during the week. You can still go and do things with them, but calling in between will keep you in touch without adding to the bill (unless they are long distance..).

Congratulations on coming up with a $2000 snowball! That will definitely make a dent very very quickly on your smaller balances. As some previous posters have suggested, start with the lowest balance, pay it off, then snowball to the next credit card balance, etc.. until they are all paid off. Then work on any other debt you might have.

Do you have a car loan? Do you have rent or a mortgage?

Sincerely,
Lindsey Schocke

Sincerely,
Lindsey Schocke

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