My Payoff plan - tips?

[uRabbit]

-Budget-
Income: $1,300/mo
Expenses: $889/mo
Difference: $411
Total in Savings: $1,340

-Debts on Credit-
Auto Loan - $3,293 - $126/mo - 14%
Student Loan - $1,667 - $40/mo - 6.6%
Student Loan - $385 - $9/mo - 6.6%
Credit Card - $973 - $30/mo - 24.24%
Personal Loan - $966 - $100/mo - 9%

-Debts not on Credit-
Auto Loan - $11,500 - $200/mo - 0.0%
Student Loan - $12,000 - $150/mo - 6.9%

I am not 100% sure on all of these figures. Percentages may be lower. The debts not on credit: first one is result of my mother paying off a car for my college grad gift, lowering my monthly payment. The second is a student loan in my father's name that he wants me to pay. It has been in disbursement since 2009.

Some history about me: 23 year old husband and father, only provider. We live with my parents right now, unfortunately, as we obviously cannot afford rent of any kind. Working on debt payoff in order to be completely debt-free. Also working toward using my college education in Massage Therapy to begin working in that field. Unfortunately, I have not been able to, and graduated in 2007. I've made plenty of financial mistakes, and am paying for them now.

I would like some suggestions on what to do. I have just paid-off a Best Buy cc and am working on the other one. Minimum payment for that is $30/mo, but am paying $66/mo (projected payoff December, 2012). Now, here's my issue: see all that money that's supposedly left over after bills? It hasn't been leftover for a few paycheck now. We have needed toiletries, baby stuff, etc. I have gone thru again and again, and see nothing that we could have skimped on. Also part of that money is $50/mo to Starbucks. It is our only non-bill expense. We even canceled our Netflix recently. So I believe the Starbucks is okay. So that leaves a bit more than $350, which - like I said - is not always there.

My question, mainly, is this: what should I do with any left over cash? Currently, I am paying it to my savings account (which is only 0.04%). Should I continue to do so until a certain point? Or add it to my monthly payment on the cc? Also, I practice the art of 'rounding'. I round every purchase up to the nearest dollar. Last month, that equaled $15.86 that I moved to savings. Should I use that towards the cc as well? And, with expenses like car maintenance, should I take that from the leftover cash - like I have been doing - in order to avoid dipping into the savings as if it were an emergency?

[Hector]

to me $50/month on coffee is too much. try to reduce it if you can. try to buy cheap things that you need and try not to spend money on your wants. I hope you are buying used baby stuffs.

In your situation, I would try to look for ways to improve my income. That includes looking for a higher paying job and/or getting a part time job.

Once I have $1000 into savings account for my EF, I would start attacking that CC with 24.24%.

Hows your credit history? If its decent, I would apply for a new credit card with 0% balance transfer to save some money on interest that I am paying right now.

[uRabbit]

Originally Posted by Hector

to me $50/month on coffee is too much. try to reduce it if you can. try to buy cheap things that you need and try not to spend money on your wants. I hope you are buying used baby stuffs.

In your situation, I would try to look for ways to improve my income. That includes looking for a higher paying job and/or getting a part time job.

Once I have $1000 into savings account for my EF, I would start attacking that CC with 24.24%.

Hows your credit history? If its decent, I would apply for a new credit card with 0% balance transfer to save some money on interest that I am paying right now.

We have cut down our Starbucks expense. We now get it twice a week, get the smallest size, and the cheaper drinks (like iced full-leaf teas). It used to be anything grande. Ha. And I figured since it is our only entertainment activity, it was excusable.

I have looked for part-time jobs to work around my current 9-5 M-F schedule, but unfortunately it is pretty difficult to find such a job. A job in massage would most likely work (but I need to put on $125 for my license), and I could pick up shifts at work, but they would be overnight shifts.

Credit history is good. I use creditsesame.com to monitor it right now, which uses Experian. Score is 695, using 16% of my available credit, and - though creditsesame does not show individual reports - I have a late payment from last year.

[riverwed070707]

First things first, have you stopped using credit cards? If not, cut them up ASAP. You can't fix the problem until you stop contributing to it.

Secondly, are both you and your wife working? If not, you both need to have jobs. Living off your parents in your mid-twenties and still not making progress on your finances is unacceptable. They are very generous to let you stay so you need to take advantage of the opportunity to get things paid off now while you can afford to.

Next, what are your cars worth? If they have more value than what you owe, I'd be selling one or both of them, buying outright and freeing up that money you're putting toward car payments. Your car payments are 25% of your monthly income...that's what a house payment is supposed to be, not a car payment. Can you consolidate down to one car? Is public transportation an option in your area?

As far as how to pay your debts, check out the snowball calculator on whatsthecost.com. You put in what you owe, min payments, interest, etc and it will tell you the best way to pay off your debts. You definitely need to start with that 24% interest card.

[riverwed070707]

Also, am I reading right that you only have $234 in expenses that are not debt related? That includes groceries? gas? lunches? baby supplies? I think it would also be beneficial for you to post the breakdown of your budget so you can get some feedback on that as well.

[uRabbit]

Originally Posted by riverwed070707

First things first, have you stopped using credit cards? If not, cut them up ASAP. You can't fix the problem until you stop contributing to it.

Last cc use was in January, 2010.

Secondly, are both you and your wife working? If not, you both need to have jobs. Living off your parents in your mid-twenties and still not making progress on your finances is unacceptable. They are very generous to let you stay so you need to take advantage of the opportunity to get things paid off now while you can afford to.

My wife is not working. Our four-month old wouldn't do well without her. Haha. And there is no one able to provide low-cost or free child care. I can pick up coverage at work, I suppose, tho the time away from the family is killer and probably not worth it.

Next, what are your cars worth? If they have more value than what you owe, I'd be selling one or both of them, buying outright and freeing up that money you're putting toward car payments. Your car payments are 25% of your monthly income...that's what a house payment is supposed to be, not a car payment. Can you consolidate down to one car? Is public transportation an option in your area?

This was one of my idiotic financial decisions, which took place three years ago. Anyways, I no longer have the car my mother paid off for me. We now have one car, which we purchased for $5,525 (retail at $9,500), with $1,800 down. It is supposedly worth about $8,000, but has a reconstructed title. And it has super low mileage and we're in this car for the long-haul. Not going to go out and purchase something for $2,000 that will end up costing my $5,000.

As far as how to pay your debts, check out the snowball calculator on whatsthecost.com. You put in what you owe, min payments, interest, etc and it will tell you the best way to pay off your debts. You definitely need to start with that 24% interest card.

Yep. Have been snow-balling. I'll check out that site.

Also, am I reading right that you only have $234 in expenses that are not debt related? That includes groceries? gas? lunches? baby supplies? I think it would also be beneficial for you to post the breakdown of your budget so you can get some feedback on that as well.

The budget: go to spreadsheets DOT google DOT com/spreadsheet/lv?key=0AoMxlCeYZJVRdDJmQXlyX3o5SVRDSjQ3b0FvbE1JYV E&hl=en_US
(Cannot post links yet.)

We are - unfortunately - on food stamps and WIC. That takes care of 90% of out groceries.

I have not included baby items in the budget (wipes, disposable diapers, etc.) because I am still not sure how much we spend on her a month. According go my records, it's about $25 last month, $0 the month before that. We use cloth diapers except when we leave the house. Most of her clothes have come from family. Last time we bought her clothes, it was $180 worth, which was free money... We took in clothes she'd never worn and some she wore and outgrew already, and got $200 in-store credit at a place called Other Mothers.

I'll be contacting my credit union to look into their cards. None of their cards have an annual fee (only reason I've stuck with this one) or fees on balance transfers.

Edit: I would LOVE to not have to drive to work. However, I work with developmentally disabled and have to drive them places sometimes. It's required for the job. "/ But, I am practicing hypermiling tactics, and as a result, am getting 34 mpg, while the car is rated at 27.

[riverwed070707]

Originally Posted by uRabbit

Last cc use was in January, 2010.



My wife is not working. Our four-month old wouldn't do well without her. Haha. And there is no one able to provide low-cost or free child care. I can pick up coverage at work, I suppose, tho the time away from the family is killer and probably not worth it. I disagree on both accounts. Staying home is a luxury you cannot afford. I would love to be at home with my little girl, but the fact is that her financial future is more important. Your wife needs a job. You don't have to have free childcare to make it worth her time -- if she puts in 40 hours a week making $10 an hour you'll still be bringing in plenty more than what you're paying in day care, especially if you two can work opposite shifts for a while. I also think you picking up extra shifts would "be worth it"; however, since she's not working at all, I'd put more pressure on her to pick up some slack than for you to pull double time -- you need time with LO too!



This was one of my idiotic financial decisions, which took place three years ago. Anyways, I no longer have the car my mother paid off for me. We now have one car, which we purchased for $5,525 (retail at $9,500), with $1,800 down. It is supposedly worth about $8,000, but has a reconstructed title. And it has super low mileage and we're in this car for the long-haul. Not going to go out and purchase something for $2,000 that will end up costing my $5,000.Tough pill to swallow paying on a car you don't have, but good move in removing the expense of a second car.



Yep. Have been snow-balling. I'll check out that site.



The budget: go to spreadsheets DOT google DOT com/spreadsheet/lv?key=0AoMxlCeYZJVRdDJmQXlyX3o5SVRDSjQ3b0FvbE1JYV E&hl=en_US
(Cannot post links yet.)

We are - unfortunately - on food stamps and WIC. That takes care of 90% of out groceries.

I have not included baby items in the budget (wipes, disposable diapers, etc.) because I am still not sure how much we spend on her a month. According go my records, it's about $25 last month, $0 the month before that. We use cloth diapers except when we leave the house. Most of her clothes have come from family. Last time we bought her clothes, it was $180 worth, which was free money... We took in clothes she'd never worn and some she wore and outgrew already, and got $200 in-store credit at a place called Other Mothers.

Budget thoughts: Phones have to go. Get a prepaid. You cannot afford whatever you have that is costing you $117/month.

Have you shopped for car insurance lately? For just one car, that seems pretty high...we pay less for full coverage on 2 cars.

If WIC covers 90% of your groceries, where is the other 10%? That needs to be in your budget.

Regarding baby expenses, they can be cheap if you keep wants and needs separated. I think $25/mo is reasonable for a 4 month old. Just keep that in check even as you work to increase your income.

Bottom line -- you have a lot of debt for what you make. You need to increase your income if you're going to get out of it and get out on your own. I imagine it won't take long before you and your wife tire of living with your parents and want a place of your own. Time away from baby is certainly a huge sacrifice, but it will be so, so, so worth it to get ahead now.

[uRabbit]

$10/hr and working full time? Woo-boy, I wish that was possible! I work full time 40 hours a week and only make $7.75/hr. Minimum wage here is $7.25. Oh, did I mention I have five years experience in the field? Ha.

We will do the best with what we have, I suppose. Been doing okay so far.

[creditcardfree]

Do you have an emergency fund? A minmum of $500, but $1000 would be better. Start there. Minimums on debts until you get there.

If you have the emergency fund, or once you get one, all extra should go to the debt you are paying off. That credit card at 24% looks like an excellent one to be focused on.

You definitely have an income problem. You really need to get that license. And it probably should be first on your list before paying off debt, simply because of your income problem. You can mow lawns, your wife could babysit (at their locations since you don't have your own home), sell things you own (cds, books, electronics, outgrown baby clothes).

[uRabbit]

We've gotten rid of our TV and XBOX. Only electronics we have is a beard trimmer, hair straightened/curler, coffee machine, and computer. Haha.

Income problem - I agree! I will get to work on that license.

My savings account with the $1,300+ in it is the EF.

Edit: wifey and I have decided to cut our Starbucks in half. So, ~$96/mo (haven't done the budget yet) towards cc. Payoff would be this time next year. But $96 will be the MINIMUM. Everything I save, including from rounding, will go towards that. Shouldn't be too hard; it's under $1,000.

[creditcardfree]

Since you do have that EF, I would definitely put ALL extra funds toward your license and then to debt. Looks like you could have your license in 1.5 months without dipping into your EF.

[uRabbit]

riverwed, I don't mean to totally disregard your advice. I am not doing so at all.

But my wife working is just not an option. Yes, finances are VERY important. And the whole reason for all of this is FOR my family. But I believe that leaving our child to learn from other people is just out of the question. We are set on how we want to raise her, and we're not going to let someone raise her for us from their trailer. And we would be miserable. It's just like my hypermiling practices. Lots of people go pretty far with it; new ECU's for their car, modifying basic fundamental elements on the vehicle, etc. Too extreme for me. Just like extreme couponing. Ha.

I have applied to a few places that I believe would work with my schedule, or even replace my current job (Apple store, car sales, etc.), but to no avail. And there aren't any higher paying jobs in this field that I am qualified for.

New Budget: spreadsheets DOT google DOT com/spreadsheet/ccc?key=0AoMxlCeYZJVRdDJmQXlyX3o5SVRDSjQ3b0FvbE1JY VE&hl=en_US#gid=0

[skydivingchic]

You are in some serious trouble. Right now your minimum debt payments are 50% of your pay! That is quite simply unsustainable. A general rule of thumb when obtaining a mortgage is that total debt payments should be no more than 36% of your pay. I realize you aren't trying to obtain a mortgage, but I point that out as some kind of rule of thumb. Many here, including myself, believe even that is too high, and you guys are well above that.

A few thoughts on things you need to do.
- First, get a handle on where your money goes. Right now you show a total of $290 extra each month, but say that it always disappears. That is a lot of money disappearing. You need to figure out where it is going. Put together an actual budget that reflects your true situation.
- Second, I know its been mentioned, but you guys really, really need to get more income coming in. You say you don't want your daughter being raised by someone else, but what about the idea of having your wife get a job on a night shift? You work during the day, she takes care of your daughter and vice versa at night. No, it wouldn't be fun, but I'm not suggesting you do this forever - just until you can get your debt paid off and some cushion in savings. Also look into other ways of raising income - a second job for you, side hustle jobs like mowing lawns or babysitting, etc.
- Take $340 out of savings and put it toward the 24% CC. Pay minimums on everything and focus all extra money on getting this card paid off. Then move to the 14% auto loan. As each debt is paid off, move to the next highest interest rate debt.

[zim]

First off, I know how much daycare costs, for my wife and i it is $450 a month. That is by far the cheapest we could find. So I don't disagree with the fact that your wife stays home. However i disagree with your statements about missing time with family, etc...If you want to do better for your family monetarily, you would pick up 2 or 3 extra shifts a week. I have a college degree, I mow lawns, landscape, sell on ebay, whatever I can to make it better for my family. And I think somewhere you said you didn't want to jeopardize the time you have with your four month old, I understand that too, trust me I understand, my wife and son live 15 hours away. But its a sacrifice for the short term for a long term gain. If you continue to make excuses for why you can't work more or why your wife can't work, you will wallow in this mess forever. Like I said, I know how expensive daycare is these days, but she can work at night while you are at home.

[Frugal]

I agree that Starbuck's is the first habit I had to cut (well, cups of coffee at coffee houses in general) when I was flat broke in college due to paying tuition and trying to find work that was scarce. I saved about $50-70 a month on this. Maybe more. It is actually just as non-essential as Netflix (I know it is hard, because people love their caffeine fix!) . However, you can easily buy some inexpensive coffee syrups at Walmart or the grocery store, and make your own lattes at home. you don't need a fancy espresso maker to make every drink. You can also easily make Frappucino-type drinks in your blender for a fraction of the cost of Starbuck's.

Hey, that extra $50 towards Starbuck's could go towards paying off your debt.

I am cutting every extra dollar I can (and I do mean even if I only save $5 or $10) to put towards my pesky student loans that never seem to go away.

[uRabbit]

I will talk with my wife about what she can do to help. I'm not sure where she would work or how to even find it, but I suppose it's out there somewhere. The bummer part about if I were to pick up extra shifts is that they are 5pm to 9am, and my shift is 9am to 5pm, so I would be gone 24 hours. We will work something out.

[riverwed070707]

Originally Posted by uRabbit

I will talk with my wife about what she can do to help. I'm not sure where she would work or how to even find it, but I suppose it's out there somewhere. The bummer part about if I were to pick up extra shifts is that they are 5pm to 9am, and my shift is 9am to 5pm, so I would be gone 24 hours. We will work something out.

But as others have said you don't have to pick up at your current job. Between the two of you, you can mow lawns, babysit, or other odds and ends for neighbors. Serving would be a perfect job for her -- the hours are flexible and she can work as many or few shifts a week as she wants. How many days a week do you work? Is there a reason she can't be working on the weekends if you work the week or vice versa? In my experience people who work 12 hour shifts usually only work 4 days a week -- what is she doing those 3 other days?? You have a whole lot of excuses as to why it can't work and all that's going to do is keep you exactly where you are. If there's a will, there's a way.

ETA and I've never had a serving job where I haven't made way over min wage -- usually averaged $12-15/hour. Granted you don't necessarily put in 40 hours, but you certainly can bring in $400+ a week if you're willing to work the busy shifts and pull a double once or twice a week.

[uRabbit]

I work 9-5 M-F, but the other shifts are 5-9 any day of the week.

She says that since she is breast-feeding, the extra stress and what-not could put a damper on her milk supply. Daughter is a few months from being off the boobie too. Hmm... I could pick up more hours till then.

As to what my wife is doing. Well, she has a full-time job as well - she's a mother and a house wife. Unfortunately, it's not paid in currency.

Well, thank you all! The wife and I have a lot of planning to do. And thanks all for helping me figure some things out.

[riverwed070707]

I'm not discounting the value of or hardwork done by SAHMs but you could use her help and it's not fair for her to put this all on you. FWIW, my going back to work when DD was 8 weeks and working 40+ hours a week didn't hinder me from breastfeeding my daughter until she was 23 months. It can be done. Yes it's stressful, yes it's hard but so is being in debt and living off your in-laws. If you're happy with your situation then by all means continue on, but you came here asking for help -- most would interpret that mean you want to change your situation.

Also, rereading, I'm confused about the work shifts. I quickly read it to mean there were 2 12 hour shifts avaiable but you only work an 8 hour shift...why if you pick up do you have to pick up a 16 hour shift making your work day 24 hours long? That doesn't make any sense.

[uRabbit]

Riverwed, you are absolutely right. I just don't like hearing it, apparently. I have found out today that I can practice massage in a neighbouring city (10-20 miles away, depending on the city). So I am going to work on my resume and cover letter tonight. I will also speak with my wife more - see if there's something she can do. I know she would like to create some things to sell on etsy, but I also know that it takes a small investment to do that.

My work schedule is 9-5 M-F. I work in a facility that provides 24-hour care to DD adults. The other shifts, therefore, are 4 on 3 off, 5pm to 9am.

Good news! Called my credit union and applied for a credit card with no-charge balance transfers. It seems I may not get it, but who knows. I have been emailing the store manager and he is working on it. He did have great news - they can take over the auto loan and lower if by $26/mo to $100/mo! That's $26 more towards the cc!