debt is more than income please help

[LivingAlmostLarge]

I don't think you have enough income honestly to get out of debt. You'll need more. Or need to cut the house likely. One major home repair, car replacement/repair and you'd be in too deep.

Nasty stuff that you rolled more debt into the home. Can you sell it for the mortgage?

[Granite]

well... we are actually trying to help you. You are probably upset because your wife is behaving like a spoiled child and she is not doing you any favors by charging the cards without your knowledge or consent. Grow a backbone and deal with it. This is your life and no one here should have to sugar coat things for you if you are an adult.

The bottom line is that some drastic measures will need to be implemented in order to resolve this situation. First of all there will be no more charging ANYTHING, or buying on credit. EVER. This discussion will need to take place in your home.

Secondly you may be able to transfer some debt to 0 % cards, or call each company and ask them to assist you by either putting you on a hardship plan or lowering your interest rate.

thirdly you should learn to cook from scratch, use coupons, barter and sell whatever you can. You will both need to take on additional jobs or start some side businesses (think elder care, babysitting, mowing lawns, bartending)

fourth you DO NOT NEED A DEBT CONSOLIDATION COMPANY. there are plenty of bloggers and websites on the net with the information you need. It boils down to spending less than you make.

fifth you should look into renting out a room in your house to a student. If you have kids this could be babysitting in lieu of rent so that your wife can work and make $ to pay off her debt

I totally understand your situation as I am in a heap of debt myself but I am PRO ACTIVE about it and I take control - meaning I work 2 jobs, pack my lunch daily, cook from scratch and cut coupons !! I even make my own laundry detergent. Pick yourself up from your boot straps and take control !! It is not that hard, it just takes commitment on both of your parts and a willingness to change

[bunnyandabby]

I thought that if I was married to her that they would eventually come for me. Im not sure I would want her cards being delinquent and then us getting all those phone calls and threats you hear about. I would rather try to help her than do that. And Granite, I work 70 to 80 hrs a week. I get up at 330 and pack my own lunch everyday and we rarely go out since we have to very young children. I don't sit down until night time just to be on here and do what I can to fix this problem with the debt. Don't get the impression that I dont do much. As for the soap, your on your own there. But once again thanks for the time and advice you guys. I really do appreciate it.

[LivingAlmostLarge]

if you work so much, why do you make so little? What do you do? Is there any opportunities to get promoted or make more money?

[disneysteve]

Originally Posted by bunnyandabby

I work 70 to 80 hrs a week.

Originally Posted by LivingAlmostLarge

if you work so much, why do you make so little?

That only works out to as little as $7.50/hour. I don't know what you do but I'd seriously be looking for better work. I know times are tough and I don't know where you live, but that's ridiculous. You could make more money delivering pizzas or newspapers.

[Granite]

what about your wife? can she babysit some other children while she is taking care of your small kids? this would bring additional income into the household. At night when you are home, she can perhaps cocktail or wait tables somewhere?

[bunnyandabby]

My last pay check was 1750 which is 3500 a month but with taxes, life insurance , health insurance, and a medical fsa planned withdrawel it ends up at 1300. I had 401 withdrawel too but I just got that stopped for now. It doesnt help that its my slowest time of the year which basically means this is when I make the least. My wife wasn't working because of the new baby now she has agreed to work part time in evenings after I get off. I've set an appointment with my bank to see what they had available. I haven't had the time during the business hours to call her cc companies. I'll need her there too because they are hers. I'm also going to look into the student loan. Somebody said something about applying for hardship or something like that so I'll see what I can get done with them. But yes, the economy really has made a difference. I was making 4800 a month just 4 yrs ago. We just didn't adjust our lifestyle with our paychecks. Course I didn't know I was that bad and trusted she would tell me.... all my fault. Stressful time for me now but I won't let it beat me. I will find a way to get it fixed. Thanks for the concerns from you guys.

[minnie1928]

You mentioned that you got a large tax refund this year... you should adjust your withholding so that you come closer to breaking even in 2009. You need that money now, not 9 months from now.

[LivingAlmostLarge]

What's your real take home pay, adding back the taxes? Making $3500/month you should be paying like $0 federal taxes with a kid.

What's the budget really look like?

[rusty2832]

[SIZE="5"] Per the Jewelry, is it something that can be sold on ebay or at a pawn shop? Consider breaking down the $700 into actual amounts so we can see how much is for electric,gas,etc and maybe figure a way to cut back yet still keep your internet, even if you might need to go to a cheaper one like arczip.com or earthlink or a cheaper internet service, a dialup type. I would think that somewhere in that $700 you could cut back some to compensate for the shortage. Also post what you buy categoywise in the way of groceries and maybe you can cut down on part of that. Where do you shop at? Gasoline--how far do you drive to work? Are there other forms of transporttaion like buses or maybe a bicycle that will eliminate gasoline cost. Basically agree with most of the postings on this stuff. I am glad I am not married. My dog and 3 cats can't run a credit card bill thank goodness. - Amy , Stay

[asmom]

If you can get a 0% credit card and transfer those balances then yes!!! by all means do that. I would do that before I call the CC companies to ask them to lower the minimums which they are unlikely to do anyway. It would lower your payments significantly and allow you to catch up over the course of a year while working on reducing your other spending.

[bunnyandabby]

They take out 600 in taxes per 3500 gross. My Taxable status is single and exemption is 1. Im going to look into claiming more to get less taken out per month . I just don't want to take to where I owe at the end. But your right I need the money now more than later. Thats for sure. As for the credit cards, should I transfer to a fixed card with low rate or one with 0% intro period and then try to transfer again before it goes up? Im also assuming to do the one with the highest rate first.

[asmom]

Originally Posted by bunnyandabby

As for the credit cards, should I transfer to a fixed card with low rate or one with 0% intro period and then try to transfer again before it goes up? Im also assuming to do the one with the highest rate first.

0% for a year if you can get it, otherwise the transfer fees would decrease the value of doing the BT in the first place. And keep transferring until you get them paid off. And yes, do the ones with the highest rate first.


You should definitely switch your withholding to married. You need the money now.

[bunnyandabby]

How can I find the best credit card offers to do a BT to them? I got one in the mail with a 0 interest for one year but then goes through the roof after that. I'm also thinking of getting two just to get all the cc dept in a lower interest.

[PetMom]

I have heard of bankrate.com listing info on that.

Remember to stay on top of the credit card payment and pay on time as they use that as an excuse to raise the interest rate in some cases and you sure don't want late fees.

If you mentioned a student loan that has some potential for trouble down the line - the payments are far higher than 'promised'; people have been taken advantage of with these. Research this carefully and know what you are signing before deciding on that option.

Paychecks are now chopped into more and more before we get them. Many workers at my husbands ex place of employment dropped their 401ks as they could not afford it. Hopefully that is a temporary measure for most that can be caught up on later.

Keep searching for more and more budget tips. This forum is great and your wife might find interesting the Tightwad Gazette (a book) as that has some info regarding children/babies and some strict cutting back.

every little bit and effort helps!

[Runaway Finances]

I don't have a ton of experience of dealing with credit card companies, but recently worked with a couple and I recommended they contact the CC companies. The companies all said they would not negotiate with them as long as they were current on their payments. They said they would have to get 3 months behind before the would negotiate. In this case, the couple had no choice but to stop paying on them as they simply did not have enough money to pay even the minimums. They had to cut off the bleeding.

What I did was take their last 12 bank statements (this is what you need to do). Create a spreadsheet. Down the first column (Column A) list all your fixed expenses (ie. house payment, car payment, auto insurance, life insurance, health insurance, cable, Phone, electric, etc.) Don't put the credit card payments in there yet.

In Col B, C, D, etc. list the month of the bank statement. It is important to have all 12 statements. So, if your last statement was in April, then Col B would be May 2008, then C would be June 2008, etc. until you get to April 2009, then the last column should be "BUDGET".

Now, one bank statement at a time, enter in the fixed expenses. Don't worry about the discretionary expenses because we already know you can't afford to spend as much as you were. But if you want an eye opening experience add up all the checks/debits/withdrawals on those 12 statements and subtract your fixed expenses (after you do my exercise) to see how much you spent on discretionary expenses. Prepare to be sick!

Once you enter the fixed expenses for the 12 months, then the next step is the most critical. In the BUDGET column I want you to go one expense at a time. Pick an amount that would have been enough to pay that expense 10 out of 12 months. This is important. Do NOT add up the 12 months and divide by 12 to get an average. You will surely fail. Do this for each of the different expense categories.

Now total the BUDGET column. Subtract that total from your Monthly Income. Assuming you don't write a check for taxes each year and you either pay in the right amount in withholding or you get a refund each year, then take your NET paycheck after all deductions as your income for this purpose. Hopefully, you have more net income than the total BUDGET column. If not, you really need to seek professional help.

Assuming there is some left after subtracting your Fixed expenses from your net income, divide that remainder by 52. This is how much you can afford to spend on discretionary expenses (ie. haircuts, groceries, gas for cars, clothes, etc.). Discretionary expenses are generally anything paid away from the house.

Here comes the big question...out of that weekly amount, how much can you afford to use toward debt reduction? Whatever you determine you can afford, see if you even have enough to pay the minimums on your credit cards. If the answer is "NO" then you have to call the companies and negotiate. You can't do that until you stop paying on your credit cards.

Not paying on credit cards will hurt your credit, but I'm one that believes that is not always a bad thing because then you won't be able to get any more debt. You don't need any more debt. If you can't pay your debts, you will have to do something and all the solutions (ie. bankruptcy, etc.) will most likely negatively affect your credit scores too.

Assuming you have enough to pay your minimums and then sum, then you do as others have said and each month pay the minimums on all cards except the highest interest rate card. Take your debt reduction budget minus the minimums on the other cards and the result is what you send to the highest interest rate card. Do this until that card is paid off. Then, using the same budget amount, repeat the procedure with the next highest interest rate card.

Do some projections and if it is going to take you more than 4 years to pay off the debt, then you have a very serious problem. Increasing income and reducing all unnecessary expenses will help. Get rid of cell phones, cable, satellite, and anything else. We think of cell phones as a must have, but they aren't if you are broke.

The key to this plan is also to provide yourself with a weekly cash amount that pays for all discretionary spending. When you are out of cash, you are out of money ....for that week. Don't cheat. This is going to be a drastic change in your life, but you have no choice.

Hope this helps.

[bunnyandabby]

I just wanted to take the time and thank everyone that has helped me here. It is very appreciated. I managed to get slightly more income from work and changed my tax status which will give me more per paycheck. I also stopped my 401 k for now. My wife is working more hours after I get off so we spend less time together but that extra income really helps. The ratio is really close now which is good compared to the major deficit I had. I tried to apply for a new card to transfer the highest interest over but apparently I was made a user of some of the cards so they are on my credit now. So I was declined because of the balances being too high. Which kills me that my wife with little to no income could go out and get 4 credit cards with $25000 credit. And yet I can't get one just to do a transfer. Everyone I talk to tells me that I couldn't get a refi which would be the best thing I could get. I'm not sure whether I should waste my time trying for that or not. Hopefully I won't have to let the credit card payments go until I can negoiate. The hassel with phone calls and the bad credit for my future worries me a bit. I'm going to try to make that my last resort. I feel that I will have to come up with a way to lower my payments and interest in order for me to ever have enough extra money to pay off any of this debt. In the mean time I hope I don't need extra cash for a breakdown, repairs, or anything like that cause I'm done then.

[albertknowles09]

hey,
i will suggest that go for less debt as income is low. save as much as you can.

[payoutless]

I was in the same situation about two years ago. We were not at a point to increase our income, so we decreased our spending. We turned off the cable, we had Verizon Fios and were spending about $200 / month. We also decreased our budgeted amount for groceries from $300 to $150. My wife is awesome at finding deals and loves to shop. If your wife is the same way you might give her a challenge. Hand her $150 (cash) and see if she can buy groceries for the month on that.

I would also recommend making the credit cards wait. I know it sounds crazy but make sure the house is paid for, you have food to eat, heat to enjoy, and electric to survive.

I personally would cut up the credit cards. I did that and it has not hurt my credit at all, and here is why. I still pay on the credit cards and I pay the mortgage every month. My wife and I were too tempted with the credit cards so we got rid of them. Now we buy everything out of our checking account. Google "dave ramsey" you might be able to find some great information from his site.

[maat55]

Your mortgage is too high. For you to prosper you will need to downsize your mortgage.

You need to sell everything you do not need. This could mean jewelry as well. It is better own things and not have them own you. I would sell everything to become debtfree then build it back without debt.

Find extra income where ever possible.

Stop using your CC's. Do not ever use them again until they are paid off and you can pay in full each month.

Selling your house and unnecessary things will lift a massive burden off your shoulders. It will allow you to rapair quickly and build real wealth much sooner. Good luck.

If you are stubborn enough to keep your excessive mortgage you should look into a refi to lower the payment.