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    Trying to get out of debt

    I found this forum doing a search for ways to get out of debt. Right now dh and i are in the process of refinancing our mortgage from 8.25% fixed to 5% fixe on a 160000 loan. This will free up almost 400$ a month for us and our new mortgage will be about 1200$ w/taxes/insurance included. It is our other debt that is the major concern, right now we have about 47000 in debt in the form of cc's, student loans and car loans. We also are behind on some bills about 3000k worth and we will need to pay income taxes of around 2500K.

    Dh works on commission and the winter months are hard, so that is the main reason we are behind on some bills. I am in the process of looking for a part time job on dh's off days so he will stay home on those days w/our son so we won't incur more costs of daycare. We are cutting back on everything. We have cancelled our blockbuster account, we plan to cut out our landline in a few weeks, and with couponing i have managed to get our grocery budget down to about 150$ a month. We haven't eaten out all month, I am pretty good at running the finances and have been trying to convince dh that we needed to start a debt elimination process for about 2 years now, and appears he is now finally on board.

    I have done quite a bit of research on eliminating debt, but I honestly prefer forums for more insight and to gain knowledge from others who have been where i am or are going through similar circumstances.

    Things have started picking up for dh at work again, so we will be able to start getting current on our bills within the week, and hopefully in a few, begin working on tackling this debt.

    just looking for advice or others with similar circumstances

    thanks

    #2
    I'm amazed that you are able to get refinanced if you have delinquent bills - good for you if it works out.

    Best thing to do on debt reduction is to pay down items with the highest interest rate first.

    But really, I would work on an emergency fund first. You need to have a safety net so you don't incur more debt in the future. Save 3 to 6 months of expenses first, then start attacking your debt.

    Cutting back your expenses is excellent - hit your big ticket items first - shop your insurance for better prices and do some comparison pricing on daycare - that's probably a big hunk of your budget.

    Comment


      #3
      I would post a detailed budget for more assistance. List all expenses every month and then list all income every month.

      You should try to make your cc payments be 20% of your gross pay- meaning if you gross 100k, the debt payments should be 20k per year.

      I would also list every debt, the minimum payment, the interest rate and when it will be paid off (year).

      Comment


        #4
        I would also suggest reading Dave Ramsey's Total Money Makeover. Its a quick read and presents an overall, lifetime financial plan, including debt elimination. Dave recommends a small emergency fund ($1,000) first, then credit card debt elimination, then building the larger 3-6 month emergency fund. Since you know you have seasonal salary variations, this should be worked into your plan. Build enough savings during the good months to make it through the winter.

        You might also look at DueMinder.com for free on-line software to set up a debt reduction plan. You enter your balance and interest information, then decide how much you can commit each month. It tells you which card to pay the most on, and gives a full month-by-month schedule so you know when you are debt-free. It follows either the highest interest first method that wincrasher mentions, or the lowest balance first that Dave Ramsey suggests. Highest interest first is mathematically better, but lowest balance first gives you the psychological boost of quickly paying off an account. The software sends you email payment reminders, too.

        If I were you, and that refinance comes through, I would try to earmark the $400 per month savings towards debt reduction, if not more. You should shoot for at least 10% of your monthly take-home, but if you can get close to the 20% of gross that Jim suggests, you'll pay it off much quicker.

        Comment


          #5
          I second dave ramsey's book... excellent read. Go get it from the library for free

          Comment


            #6
            Originally posted by jIM_Ohio View Post
            I would post a detailed budget for more assistance. List all expenses every month and then list all income every month.
            I agree. We really can't give any useful or specific advice without more information.
            Steve

            * Despite the high cost of living, it remains very popular.
            * Why should I pay for my daughter's education when she already knows everything?
            * There are no shortcuts to anywhere worth going.

            Comment


              #7
              yep, Dave Ramsey it is. He's great for people trying to shovel out.

              Comment


                #8
                Originally posted by MamaBird06 View Post
                I found this forum doing a search for ways to get out of debt. Right now dh and i are in the process of refinancing our mortgage from 8.25% fixed to 5% fixe on a 160000 loan. This will free up almost 400$ a month for us and our new mortgage will be about 1200$ w/taxes/insurance included. It is our other debt that is the major concern, right now we have about 47000 in debt in the form of cc's, student loans and car loans. We also are behind on some bills about 3000k worth and we will need to pay income taxes of around 2500K.

                Dh works on commission and the winter months are hard, so that is the main reason we are behind on some bills. I am in the process of looking for a part time job on dh's off days so he will stay home on those days w/our son so we won't incur more costs of daycare. We are cutting back on everything. We have cancelled our blockbuster account, we plan to cut out our landline in a few weeks, and with couponing i have managed to get our grocery budget down to about 150$ a month. We haven't eaten out all month, I am pretty good at running the finances and have been trying to convince dh that we needed to start a debt elimination process for about 2 years now, and appears he is now finally on board.

                I have done quite a bit of research on eliminating debt, but I honestly prefer forums for more insight and to gain knowledge from others who have been where i am or are going through similar circumstances.

                Things have started picking up for dh at work again, so we will be able to start getting current on our bills within the week, and hopefully in a few, begin working on tackling this debt.

                just looking for advice or others with similar circumstances

                thanks
                thanks helps a lot....

                Comment


                  #9
                  Besides getting your expenses down you need to get current on your bills.
                  Get an emergency fund together of $1,000
                  Start paying off credit cards by paying the minimum on all except for one. This is the one you put all extra funds you can come up with to. Once one is completed, you will pay minimum payment from 1st, minimum for 2nd cc and any extra and until all credit cards are paid.

                  Can you put student loans in deferrement for a period of time? Even 6 months might help, so you can use it's payment on another bill.

                  How much are your car loans? If you have two cars, can you sell one?

                  A part time job, is a great idea if you can make it work.

                  It would be helpful to see more information about your income, expenses and debts with interest rates. What bills are you behind on and how much?
                  My other blog is Your Organized Friend.

                  Comment


                    #10
                    Originally posted by jIM_Ohio View Post
                    I would post a detailed budget for more assistance. List all expenses every month and then list all income every month.

                    You should try to make your cc payments be 20% of your gross pay- meaning if you gross 100k, the debt payments should be 20k per year.

                    I would also list every debt, the minimum payment, the interest rate and when it will be paid off (year).

                    My husband's income is 100% commission so his income varies from month to month, and i am not working. The winter months, jan and feb are bad but things are picking now, he has sold 2 cars today which is good. Last year he grossed about 65k, which for our area is decent pay.

                    here is the breakdown of our monthly budget as of today

                    Loans: 2 car loans, 2 student loans and the mortgage=2287.90
                    CC's= minimum each month=665.00
                    utilities/insurance/phone/health insurance=875.00
                    household/gifts/clothes=470.00

                    So we need about 4300$ a month at a bare minimum

                    as far as how much we are behind on in bills,
                    mortgage will be paying that by friday=1586.96
                    car payments: =600
                    cc's: 504 late
                    utilities: 557 with another 230 due on the 28th of this month

                    So about 3500$ with what is due on the 28t right now, we do have money in the bank, but we are waiting for a paycheck to have enough to pay the mortgage on friday...

                    I am the one who does the finances primarily, and my husband is now on board with debt elimination, but i am not sure how on board he is......I have decided that I will not budge, from this debt eliminating plan. I am determined to get a handle on our finances.

                    Comment


                      #11
                      yep its all about dave ramsey!

                      Comment


                        #12
                        How much do you spend on food a month?

                        On Friday, are you paying February's payment? When will you pay your March mortgage payment?

                        You need to get those utilities...electric, gas, water...paid as soon as possible, too. Once you can get above water, you can start attacking debt.

                        How's the refinance going? Is it dependent on being current on your present mortgage?

                        Your primary focus should be food, utilities and mortgage. Everything else is secondary until you are able to handle these.
                        My other blog is Your Organized Friend.

                        Comment


                          #13
                          Can you break down your mortgage from the cars? Having two car payments isn't great and I bet that is one of the main reasons you are struggling. If you can sell one and then buy an older car with no payment, you may not.

                          As far as budgeting with commissions-it can be done. My husband is commission not 100% but his monthly income can vary 2-3k a month. We budget on the lower side. Those extra $$ determines if we are funding vacations, camp, extra things for the kids plus some of our yearly expenses. It took us awhile (years) to realize that we need to plan for the lower times. He hasn't received a decent commission since last Sept so we are really watching expenses right now.

                          Comment


                            #14
                            Originally posted by MamaBird06 View Post
                            Loans: 2 car loans, 2 student loans and the mortgage=2287.90
                            CC's= minimum each month=665.00
                            utilities/insurance/phone/health insurance=875.00
                            household/gifts/clothes=470.00

                            So we need about 4300$ a month at a bare minimum
                            You need to break this down in much greater detail. List each individual loan with the balance, the interest rate and the minimum payment. Same for the credit cards.

                            You've also lumped in non-necessity items in your "bare minimum" spending needs. Gifts and clothes are wants, not needs. Take them off the list. Also, break down what "household" means.
                            Steve

                            * Despite the high cost of living, it remains very popular.
                            * Why should I pay for my daughter's education when she already knows everything?
                            * There are no shortcuts to anywhere worth going.

                            Comment


                              #15
                              Sell the cars, and buy two beaters at $3,500 or less each. Definitely get Dave Ramsey's Total Money Makeover.

                              Comment

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