Am I on the right track?

[jIM_Ohio]

Originally Posted by Offshore82

Hi everyone,

My wife and I currently have $23,000 in credit card debt, which is eating us alive. Most of this was racked up during our college years as my wife had to put herself through school on her own. We are now both 27.

I started tracking expenses 2 months ago, after all the monthly bills are paid we have $600 left over- or should. The problem is the $600 gets eaten up by clothing for our daughter, toys, vet bills, all the random things that just don't get on the monthly bill list.

I contacted a national bank and requested a $23,000 personal loan to pay the credit cards off. They would only do $15,000 which would pay off the largest credit card we have. The interest rate is 9.9% and would save us $50 a month- and be paid off in 5 years vs 85!

This leaves us with $8000 in debt.

I have 3 options here:

-Apply for another personal loan at a different bank (doubt they would give me one?)

-Ask for a loan from a family member.

-Ask my parents to take a home equity loan out for the full $23,000 and let us make the payments. I do not know if they would help us like this or not, their house is paid for and has been for awhile. The payment would be low enough that defaulting should not be a concern.

I also have $70,000 +/- in a 401K but have been told I can not take a loan out against it (due to program rules?). We are very responsible with our money, but can't seem to get these cards behind us.

My goal here is to just get all the debt off the cards and into something that is a low fixed rate.

Any thoughts out there?

YES
my thought is you need to take a step or two back and add more options to your problem solving approach. Because if the red text was actually a true statement, you would be here giving advice and not asking for it- being good with money means that $600 extra ($7200/year) pays off the debt in about 3 years.

How about an option to drop spending another 5% or 10% and throw 600 plus the 5 or 10% to the debt?

23k is not much debt- really- I knocked 80k+ of student loan debt out in about 8 years on a salary of 40k, and also paid off 10k of cc debt at same time in less than 1 year.

Focus on what your goals are, and what is important to you financially, you will find a better solution than anything you presented.

[Offshore82]

Originally Posted by BlackDiamond

Yes, you are still $23,000 in debt.

.............. I gave up having children because I sat down and really thought about how much they would cost to give them a good life. I screwed up financially in my 20's really badly and now that I'm in my mid 30's and likely won't be married until I'm at least 40, I opted to obtain permanent birth control. IMO, It would be cruel to bring a child into my world with my current financial situation. I shake my head every day at people who have no money saved, tons of debt and who proceed to have multiple kids. I have to wonder what they were thinking..............

It sounds as though you have low self esteem if you feel that without money your children's lives would be "cruel". I feel badly for you.

Most of you on here are radical nuts, no need to post any more advice, really, I am all set!

[Offshore82]

Originally Posted by BlackDiamond

I could see both of you not taking second jobs, but I see no reason why one of you couldn't.

I will send my wife out to the corner, would that be ok?

[cptacek]

Originally Posted by Offshore82

I will send my wife out to the corner, would that be ok?

I suppose if that is ok with both of your value systems, it would fine.

Seriously, though, what did you expect to hear? You have debt. You refinanced some of it to lower interest rates, but the bank wouldn't give you enough to refinance all of it. You want to get a loan from family to "pay off" the rest. You are spending $600 a month on misc. stuff that some have suggested how to cut back on, but you don't want to cut back on those things. You don't want a second job. You don't want your wife to get a part time job or a full time job. If you don't change something, the end results will be exactly where you are now: in debt and drowning. So what are you willing to change?

[cici01]

Originally Posted by creditcardfree

If you are currently adding money each month to your credit cards, then you are living above your means. Only getting control of your spending will leave you with the extra money to pay off the debts. Moving the money around does not pay it off.

I'm not saying don't take out the personal loan, but just make sure you have the finances under control so that you don't end up in the same situation 2-3 years from now. Take the fixed rate on the amount that the bank will allow. Put the extra $50 towards the credit card each month.

Do not ask to borrow the money from family. It changes the relationship you have with them. From family to borrow/lender. Don't do it.

It's also never a good idea to borrow from a retirement account. It's good that your plan doesn't allow this.

Are there things you spend money on that you can eliminate to free up cash to pay off your debt? Cancel cable, gym memberships, subscriptions, caller id, cell phones. Stop a bad habit: soda, alchohol, cigarettes. Look at EVERYTHING you spend money on and evaluate whether it has a bigger priority over paying off the debt. Is there something you can sell to bring in some cash...outgrown toys, clothes, electronics, extra furniture. Look around for things to sell and start listing them on ebay or craigslist.

In my opinion, I think that you can borrow the money from family, this is a good way, it will not let you feel the pressure is too high, at this moment, your family members are most likely to help you out.

[BlackDiamond]

Originally Posted by Offshore82

It sounds as though you have low self esteem if you feel that without money your children's lives would be "cruel". I feel badly for you.

Most of you on here are radical nuts, no need to post any more advice, really, I am all set!

My self esteem is just fine, thanks.

Actually, yeah. Without money to purchase them food, clothing and a chance for a good education having children would be cruel. Not really sure why any idiot would think otherwise. If you can't afford children, don't have them. Period. Children are a want, not a need. They are a luxury, IMO and if you can't afford to pay your bills you have no business reproducing and continuing the cycle of poverty.

Money is the most important thing in this world. It is what we use to buy the things that keep us alive and there is simply no argument that can counter that. Unless you are a dirtbag who lives off other people's taxes, I suppose.

No one on this forum is a radical nut. Everyone here just has a really good sense of reality.

[BlackDiamond]

Originally Posted by Offshore82

I will send my wife out to the corner, would that be ok?

Oh please. No one is telling your wife to be a hooker. Do you think that lowly of your own spouse that you think the only way she is capable of making money is to be a prostitute?

If I was married to you, and you thought that was the only way I was capable of getting a part time job, I'd probably divorce you.

I am telling you to send her out to McDonalds or the grocery store and tell her to get off her butt and help support the family she chose to create and get rid of the debt she chose to help make. Surely, she is capable of doing basic food service or retail work?

I don't get this mentality that some women have that they can't work. Staying home, much like having kids in the first place, is a luxury and you, Offshore & Mrs. Offshore are in no position right now to have luxuries. The vast majority of mothers I know work full time and their kids are just fine.

If you want to give your kids a secure life, GET OUT OF DEBT. The only way you are going to do that is to get more work and that means you need to increase your income.

You came here for advice and yet, you have ignored everyone's advice and made several comments suggesting that WE are suggesting your wife be a prostitute to earn extra money. I really don't know what else to say to you.

[Offshore82]

I used the work on the corner thing as a radical example to match the line of thinking here.

Also, when did I say my wife didn't work?

[disneysteve]

Originally Posted by Offshore82

Am I on the dave ramsey website?

No, but maybe you need to be.

I've been at this site for a long time and I can tell you it is anything but radical. In fact, I have always been a relative non-supporter of Dave Ramsey, though my opinion has recently changed as I've started listening to the podcasts of his shows and I find the vast majority of his advice to be pretty darn sound. I still disagree with him on a couple of points but not all that much.

You have debt. You have a choice. You can keep shuffling it around or you can hunker down and do everything possible to get rid of it. That may include you and or your wife getting extra work. It may include selling belongings. It may include making other sacrifices. In your case, you make a good income and have a moderately low amount of debt, so it seems that you should be able to get rid of it without a big problem. As Jim suggested, your debt isn't that bad. I paid off over $100,000 in student loans when my income for the first few years was well under that.

Take a step back and read the advice here as folks trying to be helpful, many of whom have been in similar positions in the past and are just trying to share what worked for them.

[wincrasher]

Everyone wants a silver bullet. Get out of debt easy or just walk away from it.

Cut back on lifestyle? Work harder (or smarter) to make more money? Sell stuff? Crazy talk!

I say let's see some pics of the wife to see the income potential. Dog meat can be tender and delicious - think about the savings!

[maat55]

Half-hearted attempts to get out of debt are usually not successful. I gave up golf, cable, lunches out etc. to get out of debt and build an EF.

Today, I have much less taste for consumption and am content with growing wealth. Sacrifice is not as bad as you think it will be when you see real results.

[BlackDiamond]

Originally Posted by maat55

Half-hearted attempts to get out of debt are usually not successful. I gave up golf, cable, lunches out etc. to get out of debt and build an EF.

Today, I have much less taste for consumption and am content with growing wealth. Sacrifice is not as bad as you think it will be when you see real results.

This is such a great point. I am getting out of debt by selling my junk on Ebay and at various cd & dvd stores and I actually LOVE the feeling of de-cluttering my life. I made $41 tonight by selling stuff I took out of a plastic bin in my basement an hour beforehand that had been sitting down there for over 5 years. Last week, I made $71 selling a box of cds (32 of them) that had been forgotten for years under my bed. I literally had to dust them off to make them presentable. On average, I make $400 per month between cd/dvd secondhand shops and Ebay.

There was a time when I NEVER would have parted with these things but it feels great letting them go and watching my debt decrease and savings increase. I also have ZERO interest in replenishing the contents of those bins. I love music but I am picky about what I purchase now. I love movies but Netflix is a lot cheaper than buying every dvd I want to see.

[maat55]

Originally Posted by BlackDiamond

This is such a great point. I am getting out of debt by selling my junk on Ebay and at various cd & dvd stores and I actually LOVE the feeling of de-cluttering my life. I made $41 tonight by selling stuff I took out of a plastic bin in my basement an hour beforehand that had been sitting down there for over 5 years. Last week, I made $71 selling a box of cds (32 of them) that had been forgotten for years under my bed. I literally had to dust them off to make them presentable. On average, I make $400 per month between cd/dvd secondhand shops and Ebay.

There was a time when I NEVER would have parted with these things but it feels great letting them go and watching my debt decrease and savings increase. I also have ZERO interest in replenishing the contents of those bins. I love music but I am picky about what I purchase now. I love movies but Netflix is a lot cheaper than buying every dvd I want to see.

Good job. Getting out of debt and building wealth, IMO, is more enriching than mindless consumption. Financial peace is worth the short-term sacrifice. Keep it up.

[snafu]

Good on you for making a start to track expenses before your financial situation gets worse. Is your wife supportive of your desire to reduce debt?

I suggest you throw CC & ATM cards in the freezer and totally stop using them. Decide how much you can spend on food, transportation & variables and use cash. Once the money is gone, so is spending in that category.