Need help is getting rid of debt

[americangolden]

I am going to be 24 years old in a month and my fiance is 22. We own a home and think we are doing good in life for our age but we are getting a little over our head in debt.

We are getting married August 7th of this year and I am hoping to get help from people here at this forum to get our debt under control before then. I wrote down all of our loans & bills for each month. I don't know where to begin right now we are just making minimum payments to everything and it's not getting us anywhere.

Any help would be greatly appreciated in helping us work on our way to becoming debt free.

Our monthly income is as followed
Me - $1350
Fiance - $650
-----------------
Total - $2000

Here is a list of loans that I want to eliminate

Best Buy Loan
Balance - $1,345.20
0% Interest if payed off by 9/3/2010
If not payed off by that day 24.24% interest rate
Monthly Payments - $16 (which is the minimum payment)

Car Loan
Balance - $3,977.10
6.5% Interest
Maturity date - 6/1/2013
Monthly Payments - $114

Visa Credit Card
Balance - $2,720.54
Credit Limit - $9,000
18.99% Interest
Monthly Payments - $63

Loan from Father
Balance - $1,350
0% interest
Monthly Payments - $50

WHEDA Home Loan
Balance - $88,842.35
Maturity Date - 10/1/2038
6.5% Interest
Monthly Payments - $810

WHEDA Home Loan #2
Balance - $3,789.02
Maturity Date - 10/1/2013
8% Interest
Monthly Payments - $40

Old Navy
Balance - $344.91
22.99% Interest
Monthly Payments - $18

Here is a list of monthly bills I have

$810 - Mortgage Loan
$40 - Mortgage #2 Loan
$16 - Best Buy Loan
$50 - Dad Loan
$114 - Car Loan
$63 - Credit Card
$65 - Anytime Fitness
$18 - Old Navy
$104 - American Family Insurance
$95 - US Cellular Cell Phone Bill
$74 - Water Utility (Every 3 Month Bill)
$85 - Natural Gas Utility
$53 - Electric Utilities
$240 - Food
$150 - Gas For Cars
$50 - Dog Food
$95 - Cable/Internet
$30 - Cigarettes
$150 - Going out

[woodie96]

Hey americangolden,
Congrats on the upcoming marriage.
Doing a quick run of the numbers I see a couple of things that would help.

No.1 - Additional employment,,,either you or finacee..or both....at the current rate, just paying minimums, it will take you over 10 years to pay off the debt. If you snowball the debt, and can land an extra job bringing in an additional 200 a month to pay towards these bills, you could have them all paid off in about 3 years.

No.2 - House is killing you. Your home expenses including utilities make up about 48 percent of your income. If possible, sell home and rent for a while until you guys can get these down to something more manageable. I think the experts say that housing should be no more than 30 percent.

No.3 - The smoking, going out, and cable/phone bills need to be cut to a minimum. Those alone are costing you an additional 200 a month.

I know, some of these seem drastic, but if you decide to put your mind and energy to it and develop a plan, you can do it.

I would look on the internet for a snowball calculator for MS excel, and put the numbers in and play with them and then you can see just how much of a difference it can make, you may be surprised.

Hope this helps. I'm sure some of the guys/gals here will offer much more detailed advice.

[americangolden]

Yeah we were making $2,700 combined a month when we got the house and before all the loans etc we got here then my fiance lost her job when the economy went bad and now she just has a parttime which is hurting us but i'm glad she atleast has something.

What is snowballing? More information would be appreciated on what it all is about? Also I do have microsoft excel 2003 and all the other ms office 2003 programs.

Thanks for the reply!

[woodie96]

Snowballing in a nutshell, is maxing out your payments on one bill at a time, when it is gone, then max out the next one....
right now, your minimums are around 250.....if you paid your minimums on everything except one .....say Old Navy for example....
If you could come up with an extra 200 through additional employment, etc....pay the additional 200 on top of the $16 minimum, and within two or three months that one is paid off. Once that one is gone, use the extra 200 from before ...along with the 16 from old navy, and pay on best buy....8 months from now that one would be gone...
keep doing this and according to my calculations....within about 30 months you should have all of them paid off...
PM me if you would like and I'll send you a copy of the snowball calculator I used....Really user friendly...
John

[woodie96]

"Snowball" by Dan (schizeckinosy@yahoo.com)

If you cut and paste this into your search engine...it should come up with the link that I downloaded my basic snowball calculator from...
I love it....
I tried to attach a copy of it here, but I guess I can't do that...

[woodie96]

PS...on the flatbow link,.....then look for the download for the basic calculator that does 5 bills/credit cards...

[disneysteve]

What was the Best Buy charge for? Was it for some appliance like a fridge or a luxury purchase like a TV or stereo or computer? If the second is true, sell the item and use the money to help repay the debt. I'd also look to sell anything you possibly can to raise funds. And I certainly agree with doing whatever can be done to boost income.

What is American Family Insurance? What type of insurance?

Turn off cable tv and internet. Ditch the cell phones if you can get out of the contract. Stop smoking and stop going out.

[americangolden]

Best buy was for a fridge and stove for when we moved into this house. I set aside a bunch of stuff to sell like a nintendo wii+games+fitness board lots of old baseball, football & basketball cards and some other useless stuff I dont need anymore.

We were also thinking of using all of the money we get from our wedding to put twords debt but not sure if it would be better to put this into savings?

American family insurance is for 2 cars full coverage.

Getting rid of all that sounds so easy but so hard at the same time.

[americangolden]

That snowballing idea sounds like a great plan too. I am going to do some more research on it tonight when I get home. Thanks for the info.

[bjl584]

Do you have any savings or investments of any kind? I can't know specifically what you purchased to run up all of those charge cards, but I am willing to bet that most of it was for things that you didn't need. I think that you need to dust off the "for sale" signs that are sitting in the garage and relieve some of the pressure that all of your debt is causing you. I think that you also need to change the way that you think about finances (not to steal any of Jim's thunder), but i'm sure that as soon as he weighs in on your post he is going to tell you the same thing. I think that it's time to start living within your budget. Cut out unnecessary expenses and luxuries, pick up additional jobs to boost income, and start selling some of the stuff that you have accumulated, cut up your credit cards and get them paid off, and create an all cash budget for yourself.

[americangolden]

It's just hard not knowing where to start. I am good with all the numbers I get them all in front of me but just overwhelming to start.

[EconoMutt]

The debt that you are carrying doesn't look that bad to me.
I think you need to figure out how to bring in more money.
Could one or both of you pick up a part time job?

[americangolden]

Yeah she is trying to find another full time or part time job and I am going to start looking myself for something part time to do besides my fulltime job.

Any suggestions on using the money we get from our wedding to pay off debt or put in savings?

[creditcardfree]

Stop charging on your credit cards.

Cut expenses. Cigarettes and cable, caller id, ect. Turn down the heat. Stop going out. Invite friends over for a $1 Red Box movie rental, play cards or games. Have them bring their own beverages.

Can you get out of the Anytime Fitness contract? For a short period of time...workout at home.

Sell those things you mentioned and more. List them on craigslist or ebay. Use the money to pay off debt. I would most likely focus on the credit cards first. One at a time, while making the minimum payments on everything else.

You need about $269 total per month for 5 months to pay Best Buy off before the 0% expires. Then knock out Old Navy and then the Visa.

More income would help, too. Good luck in your search.

[Joan.of.the.Arch]

Are we also seeing the debts which are only in your beloved's name, or are those a separate story?

[disneysteve]

Originally Posted by americangolden

Any suggestions on using the money we get from our wedding to pay off debt or put in savings?

Do you have any savings at this point? If not, I'd set aside a small emergency fund. $1,000 is the typical recommendation for a first step. Everything else I'd use to attack debt.

There isn't really a delicate way to do this but I'd tell as many people as possible that what you really want for gifts is cash. The last thing you need is a bunch of junk like picture frames, vases, panini presses and other assorted stuff that people often give as gifts. Don't create a bridal registry anywhere. When people ask what you want, you can tell them that you are really trying to get your financial house in order rather than your physical house. Cash or gift cards to general retailers like Target or Wal-Mart would be greatly appreciated. Supermarket or gas gift cards would be great, too, as it is stuff you have to buy anyway and would allow you to free up some income for debt payments. Make sure your parents know this so that when people ask them what to buy you, they can be told the same thing.

[minnie1928]

Originally Posted by disneysteve

Do you have any savings at this point? If not, I'd set aside a small emergency fund. $1,000 is the typical recommendation for a first step. Everything else I'd use to attack debt.

I totally agree with everything that DisneySteve said.

Is it safe to assume that family is paying for the wedding or are you going to incur more debt for the wedding expenses?

[disneysteve]

Originally Posted by minnie1928

Is it safe to assume that family is paying for the wedding or are you going to incur more debt for the wedding expenses?

Great question. I didn't even think of that. If you are paying for the wedding yourself, FORGET IT. You can't afford it unless you are simply paying someone to officiate and legally marry you and that's it - no reception, no honeymoon.

If family is paying, I would still cut back to the bare minimum. If they want to spend money on you, let them give you a cash gift that you can use to pay off debt rather than blow thousands on a party.

[elessar78]

BTW, if you're getting married, consider registering at Bed, Bath, and Beyond because you can return gifts purchased from your registry for cash!

[am_vanquish]

Originally Posted by creditcardfree

You need about $269 total per month for 5 months to pay Best Buy off before the 0% expires.

I agree with what everyone else has said, but I'd emphasize this point about the Best Buy card. Keep in mind that because the 0% offer is "expiring" doesn't necessarily mean you haven't been accruing interest. For most offers like this, they've been accumulating the interest since you bought the item. If you pay it off before the 0% expires, they eat the cost. If it's not paid in full when the 0% expires, you get hit with all the interest that's been accrued since the purchase.

I'd check to see if this is what they're doing. If so, be sure to get that paid off before they tack on another couple hundred dollars in interest.