Need Advice - Not a Novice

[FrugalPixie]

I feel as if I am already doing most all of the things posed in the challenges. I already use cloth napkins, shop at Aldi or Save-a-Lot, make food from scratch, etc. We wear yard sale or thrift store clothing 99% of the time. I'm already paying an extra $50 to principle on our house payment each month. In fact, the way we've set up payments, we make an extra payment each year.

The income in my household is roughly $35,000 per year after taxes, child support, medical insurance, and life insurance. I would like to find ways to pay off our credit card debt (around $5,500) and save more money for emergencies.

I've been a thrifty person most of my life. I don't really know of any other places where I can cut my spending. Suggestions would be most welcome.

Namaste,
Kali

[scfr]

Instead of paying the extra $50 towards your home's principal each month, you could put that money towards paying off your credit card debt and building an emergency fund. I'm all in favor of paying off a mortgage early, but I'd wait to do that until the cc's were paid off and you had an adequate emergency fund.

Also - Are you paying cash for everything now, rather than adding to the cc balances?

[FrugalPixie]

Originally Posted by scfr

Instead of paying the extra $50 towards your home's principal each month, you could put that money towards paying off your credit card debt and building an emergency fund. I'm all in favor of paying off a mortgage early, but I'd wait to do that until the cc's were paid off and you had an adequate emergency fund.

I was told that the additional money paid to the mortgage went further than it would toward credit card debt. If I pay $50 to my principle for 4 months, I've cut out one month's payment. This is essentially equal to $700. Personally I am not sure what is better. We recently set up a new budget where we will be paying $375 towards the credit cards each month. At this rate, my card will be paid off in less than a year and Hubby's card within 6 months after that (his has the higher balance).

Originally Posted by scfr

Also - Are you paying cash for everything now, rather than adding to the cc balances?

The credit card balances are old. We only use them now if we HAVE to (for a purchase that needs a credit card) and then we add that amount to the payments we make each month.

Thanks for your input!
Kali

[oldbones929]

[quote=FrugalPixie;113791]I was told that the additional money paid to the mortgage went further than it would toward credit card debt.

I would definitely put the extra $50 and any other "extra" money toward the credit card. I'm sure the interest rate on the card is considerably higher than your mortgage. The faster you pay your credit cards off means that you can add those monthly payments to your mortgage to get it down even faster than $50 a month extra. For example, if you pay $200/mo on your cards, once they're paid off you could add that $200 plus the $50 and make extra payments of $250/mo toward your mortgage which would be $3000 extra per year, compared to only $600 extra a year with the $50 payment.

Jennifer

[oldbones929]

I forgot to mention that if you have more than one credit card, pay off the lowest balance first with any extra money in addition to the regular payment while paying just the minimum on the other cards. Then use that payment as extra in addition to the regular payment on the next card, etc. Each time you pay off a card, add that and any payments from the previously paid cards to increase your payment. You don't want to spread your money to thin by paying extra on more than one bill at a time.

Jennifer

[FrugalPixie]

Thanks for the advice, Jennifer. I have started paying the majority of our alloted $350 to my credit card (balance = $1900) and paying only the $119 minimum payment on Hubby's card.

[oldbones929]

Once you knock out those credit cards you'll really be able to put quite a bit of extra toward your mortgage principal and get it paid off really early.

Jennifer

[LivingAlmostLarge]

Pay off the credit card and get cash in the bank so you don't use the CC for emergenies that crop up. That will make you way more financially secure than paying off a mortgage. Sometimes people focus too much on stuff like a mortgage.

[jodi]

Sounds like you're doing great! But because you asked...have you:
1. Comparison shopped for your insurance (i.e. car) to make sure you are getting the best deal?
2. Cut down on electric/heating expenses (i.e. line drying, programmable thermostat, turning off lights and appliances)?
3. Do you eat out at all? Have a large entertainment budget you can cut temporarily? Do you have money unaccounted for in your budget that seems to slip away?
4. Have you thought of trying to make a little more money instead of spend less, such as selling things on E-bay, doing surveys, picking up some odd jobs?

Maybe none of these are appropriate for you or maybe you have already done them all...just throwing them out there. Good luck

[Daylily]

Do you live near any of the major drugstore chains? Can you start doing any of the 'deals' that they have in order to get free toiletries/HBA ?

[FrugalPixie]

Jodi,
I already do much of what you suggested. I will be shopping around again on my car insurance in October when my policy expires. I believe I can combine it with Homeowner's insurance and save. The other options you gave are already in play and have been for years. Thanks for the suggestions though.

[FrugalPixie]

Originally Posted by Daylily

Do you live near any of the major drugstore chains? Can you start doing any of the 'deals' that they have in order to get free toiletries/HBA ?

I don't have CVS local. I hear they have the best deals. Walgreens is here but I've never done their rebate program. I think this is because I've never really seen it done. Does it really work for you?

[My English Castle]

I do the walgreen's rebates almost every month.
The trick is to make sure you get the darn thing in the mail in time.
I actually write it on my calendar a couple of days ahead of time.
I estimate that I get about $20 worth of stuff every month--some of which
ends up in the food pantry donation.

[My English Castle]

Sometimes trying to save more is almost impossible.
Is there anything you can do to increase income a little?
Can you babysit neighbors' kids--even for a few hours a week?

Or hire yourself out as a dogwalker or do some cleaning or something
related to one of your skills? Often making a little bit more helps...

[FrugalPixie]

Thanks for your comments, My English Castle!

I have FMS and it makes working a second job even a sporatic one rough. Thankfully I have an amazingly wonderful husband who does side jobs (HVAC, plumbing, etc) quite a bit. It is mainly in the spring and summer months though. This year I plan to put that money to work for us paying down the credit cards and making some repairs of our own!

[Ima saver]

I turn off the hot water heater practically all day long. My electric bill is much lower by doing that.

[leggzz66]

hey ima, does it matter if u just turn off breaker? or is putting in a switch different, better?

[Coleroo]

I would suggest getting a visa backed debit card (most major banks offer those) - I know of no purchase nowadays that HAS to have a credit card. Its way too easy to make higher priced purchases when you have a comfort zone of a credit card. Only pay cash - period. In the 6 months since we stopped using credit cards, hubby & I have found many many purchases we could cut back on because we thought twice about spending the cold hard cash (we found out those purchases weren't truly "necessary" at all).

I would also suggest paying the $50 towards your credit cards instead of mortgage - especially if you have a high interest rate (have you checked on having the rates reduced??). Unsecured debt should be gotten rid of first and foremost.

Do you have ceiling fans? Ceiling fans make a place cooler with less electricity. Do you have an automatic / programable thermostat? The 39$ one we got at lowes last summer was the best purchase we've made for our house by far (for winter and summer savings).

Have you examined any unecessary fees? Bank fees, ATM fees, miscellaneous fees, late fees, maintenance fees, over the limit fees, overdraft fees, unneeded cell phone service add ons (i.e. unlimited text messaging), electronic phone voice mail for land line fees.... all of this stuff is uneeded and can save you a bundle!

[Aleta]

I would really need to see what your balances, interest rates, and minimum monthly payments are before knowing which payment to pay off first.

I have a sister that tried paying a little on a few debts and she never felt like she was getting anywhere. Something would always creep up. I agree with the other posters that to forgo paying on the mortgage now would probably be best. Find one debt and concentrate on it solely. Meanwhile, your other debt balances will be lower each month just because of the minimum payments.

I would suggest that you look at your credit cards and see what items keep reappearing on your cards For instance, it might be car repairs. In that case, later on after you are out of debt, you might want to allocate money to a car repair fund so you won't have to use a credit card.

I like the book ALL YOUR WORTH by Elizabeth Warren. You can pick it up at your library. Good luck!

[Ima saver]

legg, we used to turn the hot water heater off at the breaker. Now, my husband puts a switch in the kitchen in all the houses he builds. So, you just flip the switch!!