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    Originally posted by funwithdebt View Post
    We can turn this from a discussion from Chap 13 or not, into a discussion about Snowballin vs a DMP.

    My wife and I have looked at our budget, and have reduced it quite a bit. (I just canceled cable, yeah!) I talked a DMP today (BOA recomended) and they stated that my payments to them would be $4900, which is what I had in the Snowball. So I'm recomending to my wife that we live by this, as in a DMP we'd have to live with it anyway.
    quick note... the difference between snowball vs. DMP are two IMO: a) You control it, which means you can adjust it as necessary... Moving it forward when possible, or backing off slightly (for a defined period) if truly necessary. b) DMP and snowball may have the same monthly cost, but DMP will almost assuredly take longer--they work their fees into your payments, so you'll end up paying more than if you do a snowball on your own. Do it with the 'snowball' method--you'll thank yourself in the end.

    Congrats on everything thus-far. You can definitely get this under control, it's just a matter of patience and discipline.
    "Praestantia per minutus" ... "Acta non verba"


      I wanted to mention something that I haven't seen (or maybe I missed it)...when my mom went to Consumer Credit Counseling Service to utilize their DMP, her credit took a hit because some of her accounts were tagged as "managed by a debt management co". You can do this yourself and there's another good reason to do so.

      It sounds like you are making a lot of progress you are ready and willing to tackle the task ahead of you. I think you will eventually get the same excitement from debt re-payment as you did when shopping. It's very empowering to know that you are regaining control over your financial life.

      Without looking back at your debt balances, I recall that Nordstrom was on the small side. I would pay that off first and maybe the next smallest next. I think that the mental benefits of seeing a zero balance statement would help boost your momentum. Many will say that you should tackle the highest int rate first, and from a purely financial standpoint that's correct. However, being new to this type of mindset I think it would do you a lot of good to see yourself pay off a card or two quickly and that is easily done with the smaller accounts.

      I wish you and your wife the best of luck. If you can learn this lesson now, then your financial future will be bright. My parents didn't see the light until they were in their 60's and now their retirement is bleak.


        Thanks so much for your post and for sharing. I have been an on-and-off viewer of this forum, and have not really posted much.

        Your post and the responses were very inspirational because my wife and I are in a very similar situation to yours (actually, we might be worse off), and I was also considering BK before reading your post.

        Our monthly income is around 13k/month; we have about $70k in CC debt, $25k car debt; 2 rental properties (one of which is vacant), wife's student loans $100k; my student loans which will kick in next year, $100k.

        Was feeling very overwhelmed, but I think I too can dig out of this somehow. Thanks for your post, and thanks to everyone who gave such positive feedback.


          Originally posted by funwithdebt View Post
          Here is the breakdown:

          Total inflow after taxes, etc ...
          Husband: $6,630 per mo
          Wife: $2,928 per mo

          (everything is per mo)

          Car 1: $372
          Car 2: $250
          Fuel: $200
          Insurance: $210
          Service: $50
          I am checking in after not being on boards for a few weeks, if this is said in replies, I have not seen them. You MIGHT be able to lower insurance by raising deductable or looking for a better plan. How much time is LEFT on the car payments and what are the interest rates?

          make a goal to save $50 here on something...
          Internet/Cable/Cell: $210
          Electricity: $120
          Gas: $70
          Sprint Cell (wife's cell): $80
          Water: $70
          The cable/cell bill looks high considering wife's cell is not on the plan ($300/month for phones and internet??? cut something out, save $50 or so.

          Mortgage 1: $1300
          Mortgage 2: $300
          List the interest rates and how much time is left on each loan please. What is the total amount owed and what is house worth?

          Flexible Spending
          Dining: $150
          Groceries: $500
          Clothing: $200
          Pet Care: $50
          Personal Care: $100
          Household/Yard: $200
          Misc.: $200
          Is this two people?
          Dining and groceries at $650/month can be cut down to $200. REALLY. Save you $450 right there.

          Are you walking around naked? cut clothes out until you are out of debt. Saves another $200.

          Yard $200/mo YIKES. why so high? Cut this out completely or down to $50 max per MONTH.

          That might be $800-$850 per month in savings.

          Credit Card Debt
          Nordstrom $1,457.96 $73.00 21%
          Best Buy $2,300.00 $50.00 0%
          Chase - disney $3,600.00 $200.00 11%
          BOA $5,944.59 $132.00 16%
          BOA $8,099.93 $132.00 8%
          Discover $10,325.64 $200.00 16%
          BOA $11,351.20 $366.00 28%
          Discover $11,716.00 $220.00 16%
          BOA $11,759.68 $248.00 14%
          Citi AA $13,478.04 $200.00 7%
          Chase $13,691.74 $273.00 11%
          BOA $14,229.69 $364.00 19%
          BOA Gold $14,836.65 $357.00 17%
          AMEX- blue $15,987.40 $357.00 11%
          Citi $19,256.54 $288.00 17%
          AMEX Starwood $22,064.00 $425.00 14%
          Citi - $25,574.58 $352.00 15%

          Total per month in credit card debt: $4,237

          The flexible budget is something we just revised to help with this situation.

          If we stick to the budget (which that is the #1 problem), our end of the month would look like this:

          Inflow $9,558
          Outflow $8,732

          Net $826

          Our biggest problem is sticking to a budget.

          Any advice would be appreciated!

          Thank you!
          Bottom line is you need a budget and need a way to stick to it. Up to this point I have seen no one instruct you how...

          Normally I suggest set aside 20% of momnthly gross ($12,500=$2500) for debt, but you even blow this away with too much extra stuff (debt) so save that thought for later.

          You do not have an income problem
          You do not have a debt problem
          You have a spending problem. if you cut cut cut spending your problem will be solved quite quickly.

          If you cut the $950 I listed above the nordstrom account above is paid in full.

          Your debt minimum payment drops from $4237 to $4170
          Apply that $70 plus $950 to another debt the next month. Within 3-4 months I think you will free up considerable cash flow.

          The most important thing is you need to reinvest the cash flow to paying off debt (not spend it).


            Now that I have read the whole thread, I want to reiterate you have a $4200/mo debt payment, and a plan to send $4900/mo to debt snow ball. Bump that $4900 up to no less than $5200/mo. I see lots of extra which can be cut.

            The fact you have tried before and failed suggests to me that comments like

            Well, I think not going out at all every is unrealistic honestly. Its just not going to work for us. Now, when 150 is spent, we won't be going out, and we don't have spend 150, but I'm not going to set a budget that I can't live by.
            Tells me you are probably not going to succeed. You need to change the way you think AND act before a plan like this works.

            Check your ego at the door. If you do not control your money, your money will control you. If you take a step back you will realize your money is already controlling you.


              I think you guys need to stop being adicted to buying stuff. You need to SIMPLIFY and learn from this.


                Well, I think I have checked my ego at the door, My wife and I have worked out an agressive budget, that allows to pay down our debt and save a tiny amount to cover emergencies. In June we will have one card paid off, and a second by october, I'm quite pleased with that. The differnece between 4900 and 5200 right now is about 3 months on our snowball. So it doesn't make much diff at the moment, and I'd rather having savings for an emergency, so that I don't have to use credit to cover it. We aren't buying stuff anymore, we haven't gone to the mall in months.

                I understand our money is controlling us, and that is why over the course of my last few posts I have expressed what we are doing to get out of this situation. We are changing the way we think and act. Since Tuesday of this week we are monitoring our check register daily, and checking the budget.

                I can say to myself that clearly I have bought too much stuff, taken too many trips, and now I have to pay for it. No problem. It will be dealt with, and honestly I may not pay it all off in five years, I may pay most of it off, then slow down my repayment so that I can get on with my life. I feel that I make enought that I'll be able to do that.

                I will succeed, and I will have 4 cards paid off 1 year from now. 4 more in year 2, and 4 more in year 3.


                  I am still researching what is best for me to do in my circumstances. While reading thru the Get Rich Slowly forums and monthly newsletters I found mention of a financial book. I found it at the library--How To Get Out of Debt, Stay Out of Debt and Live Prosperously by Jerrold Mundis---and currently on Chapter 5, taking notes as I go along.

                  If you can get ahold of this book it will help to understand why your family arrived at the circumstances that your family is in and how to battle it. I highly recommend the book.
                  - Amy


                    I was just wondering....are some of these expense numbers estimates or did you really keep track of your spending for a month to see how much you were spending? I just thought of that because how some say the cost of groceries seem high (and we are all thinking it is just two of you) yet you eat out a lot (I assume again, not McD's either). I just thought maybe you estimated on the high side on a few things.

                    I know on several of my expenses I estimated because I wasn't 100% sure. I am trying this month to keep really close track. I think I will have a few categories that are going to surprise me, both ways I am sure.

                    My comment about the "no more eating out" is more about the mindset. And really getting down to the separating and realizing the difference between wants and needs. You need to eat, but you WANT to eat out. There is a difference. Sounds like you have figured out a plan and I hope you keep in touch to let us all know how it goes.


                      Good for you in recognizing that you have a spending problem. You've not mentioned what your wife is willing to relinquish to slay this financial dragon. Both of you would likely be less stressed by going for a walk ea. morning before work and evening after dinner. Exercise and fresh air is good for you both and has potential for being romantic time together.

                      Since you work at home, I wonder if you could manage with one car. Why do you need $150. of entertainment ea. month? If you have a finished basement or extra bedroom,why not rent it out to bring in more income.

                      I suggest you track every dime of spending for a month. You'll likely be surprised by the leakage. Have you worked out how much you've added to your debt because of interest? That is a worthwhile endeavour. Have you called all the creditors to ask for a reduced interest rate since their interest is so high when rates are so low. Have you created a large chart showing your progress? It's a huge motivator to see items paid off and paid down. You need a meal plan, with healthy meals you like to eat. there are tons of sites on-line like - Recipe Search and More

                      One method I've seen used successfully is jars. Each jar is filled each pay for the sum allowed for discretionary spending. Receipts are put in the appropriate jar. For example... FOOD $ 75. per week presuming you already have a full cupboard/freezer. [Your wife can work out a list of meals that can be prepared from basics already on site] needing only fresh fruit, veggies & dairy and perhaps a couple of items.
                      TRANSPORTATION $ XX. based on operating one car the past two months. PERSONAL $ XX hair cut, personal supplies, misc.
                      DOG $ XX. pet food, licence [divided by 12], no dog walker, dapper salon
                      CLOTHING $ 40. to include dry cleaning. The jars are refilled ea. pay. the point is to run out of month before you run out of money.

                      I'm certain you and wife can follow a plan and get yourselves out of this mess. The most important thing is to have a positive attitude.


                        Congrats on the progress you've made so far. It's going a little extreme, but I have a couple of suggestions that haven't been mentioned too much. You say both cars are 2007 models. Unless you'd be really upside down, I'd look into selling these and getting some old beater for a couple years. You're paying 900 over minimums each month - if you save that for 3 months, you can get a decent beater for at least one of the cars, since you work from home anyway. That gets rid of 250 to 300 a month in bills, and lowers your insurance. Puts you up to 1200 a month instead of 900.

                        You also mentioned that you have about 20K in equity in your house, and your mortgage payments are $1600 a month. Surely you could rent for far less than this. If you have the nordstroms card paid off in June, then put the profit from the sale of the house towards the next 4 smallest CC's, you would end up having an extra $500 a month to spend on debt. Then figure you rent a place for $1100 a month, as opposed to the 1600 a month mortgage, you've got an extra $1000 a month. And if you sold the car too, you're at $2200 a month extra instead of $900. That goes a long way towards the debt snowball. It's what I would do in your shoes.

                        It's just a suggestion, but you've done great getting where you are now from a couple of weeks ago. The cash budget is a great idea - it helps us out tremendously. We spend so much more with debit cards, so we take out cash and leave enough in checking for the bills, then put the rest into our EF.

                        Another thing you might think about, you have 6 BOA cards, 3 CITI cards, 2 Chase, 2 Discover, and 2 AMEX. It would seem that rather than paying interest on 6 cards to BOA, CITI, etc, you could negotiate with each individual lender to consolidate all of your accounts with each into one account. It would probably lower your interest considerably. Instead of sending 15 bills each month, you'd be sending 5. Worth a shot at least.

                        Congrats so far, and good luck.


                          You really need to negotiate with your creditors. I assume that your payments are current - your interest rates look better than I would expect, but it's still eating you up.

                          Suze Orman is suggesting that people stop paying altogether if the credit card companies won't negotiate. After a few months they may. But the damage to your credit would probably be severe.

                          A reputable DMP may be able to help you consolidate or negotiate down your rates. But they should show they can save you plenty if they charge a fee. But no upfront fees!


                            Well, some of the CC companies are very reasonable. Citi has been wonderful. BOA won't budge a bit. Amex was being severe, but the they offered up a sweetheart deal. Both cards, 6 months at 0%, then 6months at 9.99. After a year it will stay at 9.99. We modified the snowball to take advantage of that. So for the first six months, everything extra goes to our bal Amex. Then in Oct we start the normal snowball, hitting the high intrest cards first.

                            We discussed a DMP, and the one BOA recomended seem pretty reputable. But, as others have pointed, under a DMP you don't have flexibility. If there is an emergency, I'd rather route the Snowball amt to that, than have to scrounge for it. (like medical emergency, my insurance sucks)

                            Right now, starting in October, I'm looking at about a 4 year payoff. Like I said, we'll prob get most of the way there, then revaulate to get our life on back on track.

                            So far things are going well. Two weeks into and we are tracking on budget. We look at the accounts everyday. Not going out to eat is helping.


                              Those BOA interest payments are very damaging @ 16%, 8%, 28%, 19%, 17%. With interest rates so low just now, I wonder if you could get a home equity loan from your bank to pay off BOA approx $52,210. that may be balaced with your current BOA payment totalling aprox, $1230.

                              As many have stated, most DMPs are very expensive and doing what you have done for yourself. Does your state have a government operated Orderely Payment of Debt program? Would they negotiate just the BOA interest rates for you with the continued payments [$1,236.].

                              Hang in there...once you get into the snowball you will be surprised at how fast you can melt debt. We're cheering for your success~


                                Whew, quite a thread! I just found it and read through most of the posts, so I hope I'm not being repetitive...

                                I think you have a great plan and great attitude. One thing that has been invaluable in keeping myself on track is starting and keeping a blog on this site. I know if I messed up I'd have to blog about it, and that's one thing that keeps me behaving.

                                Since early 2007, I have reduced my credit card debt from just over $70K to just under $30K. And that's with a layoff in my home and with stopping extra debt payments to build up an emergency fund. Blogging works! Nerd out about your finances with others who won't think you're weird!