debt is more than income please help

[bunnyandabby]

I've been reading some messages and Im new here but dont know who to talk to about my situation without it being someone with an agenda. I need direction. Theres a long history as to how I got in this situation but I rather deal with it than dwell on the past. I have a mortgage/consolidation loan and 4 credit cards among other various small bills and utilities. But being not in control of our money and bills we are now about 600 a month short of covering the minimums. My time and money at this rate is running out fast. Should I try to lower minimums on cards with phone calls? Consolidate on new low card. Or go more extreme with one of these debt reduction companies. Is there someone I can trust professionally I can go to in order to look at my options.

[Seeker]

Originally Posted by bunnyandabby

I've been reading some messages and Im new here but dont know who to talk to about my situation without it being someone with an agenda. I need direction. Theres a long history as to how I got in this situation but I rather deal with it than dwell on the past. I have a mortgage/consolidation loan and 4 credit cards among other various small bills and utilities. But being not in control of our money and bills we are now about 600 a month short of covering the minimums. My time and money at this rate is running out fast. Should I try to lower minimums on cards with phone calls? Consolidate on new low card. Or go more extreme with one of these debt reduction companies. Is there someone I can trust professionally I can go to in order to look at my options.

Who is "in control" of your money and bills? Never trust anyone with your dollars.

You and your SO, need to sit down and come up with a budget. Do you know where each and every dollar is spent? Unless you have a budget going forward, you will always be dependant on others. No other person will have your best interests at heart.

List income and expenses and interest rates and where everything is that creates this $600/month loss for further help here.

[bunnyandabby]

My wife was. I didnt want to bad mouth her but she got the 4 cards without me knowing. And now finally told me the trouble we are in. I know I'll need to budget but the gap is so lopsided that that isnt going to fix the big problem with the cards and thats my first task at hand. I'll try and get more specific numbers tomorrow but I was looking for direction and feedback on which direction to go .

[disneysteve]

We really need to know the details but $600/month short of the minimums is a serious problem. Unless you can find a way to cut spending and /or boost income by that much, that could be insurmountable. Post your budget and we'll see if we can help.

[nanamom]

I went with a debt reduction company once a couple of decades ago. It was not a positive experience. i agree you need to post the budget and perhaps some of us can help.

[creditcardfree]

It doesn't fix things, but you are not the first to have a spouse forget to tell about their credit cards. And it has been discussed on these forums, too. You are not alone and plenty of us are here to help.

[bunnyandabby]

Ok I got some numbers. I have basically a mortgage loan of 160,000 at 7% with a minimum of 1260. 4 credit cards all current : 8454 at 27% min. 261, 4897 at 26% min. 159, 1370 at 25% min. 45, and the last 11383 which is split 9985 at 9% and 1754 at 4% min for both together 192.88. Jewelry loan 1286 for 23% min 140. Student loan 7428 for 4.8 % min 94. And 700 for utilites, insurance, phone, cable, and internet. That makes 2851 for minimums and bills. Income fluctuates but right now at about 2600 take home. Now add 350 in groceries and 200 in gas a month. I know I need to start crunching every penny especially on extras and food but I need to try to do something about the debt. Which way should I go about fixing this before I cant make payments anymore which will be soon at this rate?

[Lindahfx]

Originally Posted by bunnyandabby

Ok I got some numbers. I have basically a mortgage loan of 160,000 at 7% with a minimum of 1260. 4 credit cards all current : 8454 at 27% min. 261, 4897 at 26% min. 159, 1370 at 25% min. 45, and the last 11383 which is split 9985 at 9% and 1754 at 4% min for both together 192.88. Jewelry loan 1286 for 23% min 140. Student loan 7428 for 4.8 % min 94. And 700 for utilites, insurance, phone, cable, and internet. That makes 2851 for minimums and bills. Income fluctuates but right now at about 2600 take home. Now add 350 in groceries and 200 in gas a month. I know I need to start crunching every penny especially on extras and food but I need to try to do something about the debt. Which way should I go about fixing this before I cant make payments anymore which will be soon at this rate?

I find it easier to list these out in a column format:

Income: 2600

Mortgage (7%): 1260
CC 1 - 8454@27% : 261
CC 2 - 4897@26%: 159
CC 3 - 1370@25%: 45
CC 4 - 11383 = 9985@9% and 1754@4%: 192.88
Jewelry loan - 1286@23%: 140
Student loan - 7428@4.8 %: 94
utilites, insurance, phone, cable, and internet - 700
groceries - 350
gas - 200

3402 total expenses

Does your wife work? Is there any way to increase your income? I think you will have to consider a consolidation loan. What about your mortgage? Is there anyway to refinance? Can you sell the jewelry and other items purchased on these cc's?

[swanson719]

First and foremost, you have to understand what caused the problem in the first place and fix it, permanently. Otherwise, you'll get out of this debt and only get new 5 years from now. Cut up all the credit cards, and never get one again. Ever. It's plastic surgery for your financial future.

Realize the difference between a consolidation loan and a consolidation company. If you can't get a personal loan at a bank or a home equity loan, then you need to stick with the situation you have now.

Your interest rates are awfully high on everything, especially your house. I would try to do a cash out refinance if you can, and use that to pay off the highest interest rate cards first. If you can just do a regular refinance to about 5%, you should be able to lower your mortgage by about $200 at least. That would help out a lot in itself.

Surely there is something to show for $27,390 of consumer debt. You could list this stuff on Ebay, take it to a consignment auction, etc, and then have a yard-sale for whatever doesn't get sold there.

Start looking into a second job. Pizza delivery boys make $10 an hour plus tips here. Try working fast food, at a gym, anything. My neighbor is laid off and his wife is working 3 jobs to pick up the slack. You can make up the $600 a month with an extra 20 a week at $8 an hour. If your wife gets a second job too, that's an extra $1,000 a month easily, ought to be closer to $1,500. At that rate, you should be able to pay at least $500 a month more on the principle.

It will take you a while to get out of debt, but you also need to be an active partner in your financial fitness. You and your wife need to do the budget together each month and make sure it's balanced.

[wincrasher]

Cutting up your cards and never using them again is not good advice. It will hurt your credit and prevent you from getting favorable rates in the future. There is no magic - you have to pay down your debt.

You might be able to get an abayance on your student loan so you can catch your breath. Call them and see what is available to you.

Your income is just too low. You've got to focus on getting a better job, or a second, and the wife needs to work. Maybe that will reduce her shopping habit.

Your discretionaries are too high. Cut coupons, shop sales, cook at home, cut back on the cable and internet. Do an energy audit at your house - turn off and unplug. Every little bit will help. $200 per month in gas is alot. Consolidate your trips and slow down your driving - try to max out your MPG.

You are both grown-ups. You need to sit down and decide to control yourselves and your spending. What are your goals? You want to have babies? Well that takes alot of planning and a house that is in order.

You have a mortage that is almost 1/2 your income which is amazing to me. You probably can't refi that right now, but call your bank and see if there is a program for you.

Good luck.

[Granite]

Focus on increasing income, have a garage sale, start a dog walking or babysitting business or get a part time job

make a spreadsheet of all debt and update it regularly so you can see your repayment process

take the cards away from wife ! she needs to stop spending now !

take in a roommate if you have an extra bedroom

start reading everything you can on frugal living

you don't need a debt consolidation company, you can do this yourself but it will require some lifestyle changes

[bunnyandabby]

Ok, so if I manage to increase income and cut spending to practically nothing, besides the morgage, what should I do in order to tackle the rest of the debt. Should I call the credit card companies to try and get the minimums reduced or will that hurt me more than help? Which debt to tackle first? Or get a lower rate card in my name and transfer?

[fruitbowlk]

phone, cable, and internet -needs to be turned off. Yes call the cc companies and see if you can get a lower interest rates. or transfer if needed.

[bunnyandabby]

Im not getting many responces. Perhaps many are on vacation. But it seems like I've gotten more lectures than advice. I didnt know about the cards or the situation we were in. Still I take full blame for not being involved in my finances. It won't happen again I assure u. But I came here hoping to get alot of information to help decide what I can do. I have gotten some good advice and I'm much appreciated for someone to take the time to help. But I need to know what would be the best method of handling these cards since at the moment I dont have extra to pay down on them. Thanks for the help and advice.

[LivingAlmostLarge]

The house is too expensive. You are paying $1200 on $2600 income. The problem lies in the house.

Even without any debt it'd be tight to manage. I would suggest selling the house.

[disneysteve]

Originally Posted by Lindahfx

Income: 2600

Mortgage (7%): 1260
CC 1 - 8454@27% : 261
CC 2 - 4897@26%: 159
CC 3 - 1370@25%: 45
CC 4 - 11383 = 9985@9% and 1754@4%: 192.88
Jewelry loan - 1286@23%: 140
Student loan - 7428@4.8 %: 94

Originally Posted by bunnyandabby

Ok, so if I manage to increase income and cut spending to practically nothing, besides the morgage, what should I do in order to tackle the rest of the debt.

Originally Posted by bunnyandabby

I need to know what would be the best method of handling these cards since at the moment I dont have extra to pay down on them.

Originally Posted by LivingAlmostLarge

The house is too expensive. You are paying $1200 on $2600 income. The problem lies in the house.

Even without any debt it'd be tight to manage. I would suggest selling the house.

OP, I'm afraid you may be focusing on the symptoms instead of the disease. Taking Tylenol because you have a fever won't be of much help if you don't get antibiotics to treat the infection causing the fever (forgive the medical analogies - I'm a doctor ).

LAL is right on the mark. Rule of thumb is that your housing costs should be no more than 1/3 of your income and that is principal, interest, taxes and insurance. Your mortgage alone is just over 48% of income. Even without the other debts, there'd be a problem here. You seriously need to consider selling the house and moving to something cheaper.

As for what to do right now, it certainly can't hurt to call each creditor and ask for a lower rate. The worst that can happen is they say no. Even if just one or two say yes, it will ease your strain a bit.

If you still have good credit, try applying for a 0% or low fixed-rate CC and transfer some of the high interest debt to the new account.

In the meantime, I would repeat what swanson719 said. Surely some of this debt paid for material goods that are still in your possession. You need to return or sell everything you possibly can. You owe $27,390 between the CCs and the jewelry. If you could recover just 10-20% of that, it would give you some breathing room.

As for payment order, pay the minimum on everything except the debt with the highest interest rate. Put every spare dollar to that one. Once that is gone, move on to the next highest rate and so on down the list.

I'm curious about one thing. You list expenses that are $800/month more than your income. How have you been keeping up with the payments so far?

[Seeker]

And these three lines are a second $1250 outgo:

utilites, insurance, phone, cable, and internet - 700
groceries - 350
gas - 200

Can you further break out util, ins, phone, cable & internet charges? You can probably lessen and/or eliminate some of these monthly reoccuring.

In either case, the mortgage of 1260 takes too high a chunk of your income.

---

Regarding credit card consolidation companies, nobody here would advise you to take advantage of them. Most of these companies just try to get whatever money they can from you (service fees) and they do not perform any action that you could not take care of yourself. This goes back to my original post, nobody cares more about your situation than you. You need to call the credit card companies and see if they will lower their rates; be aware that they probably will not.

You need to get more income, sell whatever you can.

[disneysteve]

Originally Posted by Seeker

Regarding credit card consolidation companies, nobody here would advise you to take advantage of them. Most of these companies just try to get whatever money they can from you (service fees) and they do not perform any action that you could not take care of yourself.

I totally agree.

[Seeker]

If you did not co-sign on any of those cc's, then your wife is technically solely responsible for that which she incurred debt wise.

The banks should be trying to collect from her and i'm not sure if you should try to intervene with them as you may then make yourself 50% responsible.

That of course depend on you, but you may want to check with a lawyer familiar with these issues and the practices in your state.

[bunnyandabby]

Apparently she got these cards just for their deals and points. And then when she saw that the interests were consuming the money and couldnt pay the bills she started to pay with credit cards only causing a deeper debt. Then we got a rather big tax return which has delayed it till now. The mortgage loan is a consolidation as well because she had previous debt that we rolled in with the house. Thats y that payment is so big. Its not that I have a big house. Thanks for the replies everyone. Im doing my best to try to raise income. I'll call on the cards and try to c what could be available with my bank.