debt is more than income please help

[disneysteve]

Income: 2600

Mortgage (7%): 1260
CC 1 - 8454@27% : 261
CC 2 - 4897@26%: 159
CC 3 - 1370@25%: 45
CC 4 - 11383 = 9985@9% and 1754@4%: 192.88
Jewelry loan - 1286@23%: 140
Student loan - 7428@4.8 %: 94

Ok, so if I manage to increase income and cut spending to practically nothing, besides the morgage, what should I do in order to tackle the rest of the debt.

I need to know what would be the best method of handling these cards since at the moment I dont have extra to pay down on them.

The house is too expensive. You are paying $1200 on $2600 income. The problem lies in the house.

Even without any debt it'd be tight to manage. I would suggest selling the house.

OP, I'm afraid you may be focusing on the symptoms instead of the disease. Taking Tylenol because you have a fever won't be of much help if you don't get antibiotics to treat the infection causing the fever (forgive the medical analogies - I'm a doctor ).

LAL is right on the mark. Rule of thumb is that your housing costs should be no more than 1/3 of your income and that is principal, interest, taxes and insurance. Your mortgage alone is just over 48% of income. Even without the other debts, there'd be a problem here. You seriously need to consider selling the house and moving to something cheaper.

As for what to do right now, it certainly can't hurt to call each creditor and ask for a lower rate. The worst that can happen is they say no. Even if just one or two say yes, it will ease your strain a bit.

If you still have good credit, try applying for a 0% or low fixed-rate CC and transfer some of the high interest debt to the new account.

In the meantime, I would repeat what swanson719 said. Surely some of this debt paid for material goods that are still in your possession. You need to return or sell everything you possibly can. You owe $27,390 between the CCs and the jewelry. If you could recover just 10-20% of that, it would give you some breathing room.

As for payment order, pay the minimum on everything except the debt with the highest interest rate. Put every spare dollar to that one. Once that is gone, move on to the next highest rate and so on down the list.

I'm curious about one thing. You list expenses that are $800/month more than your income. How have you been keeping up with the payments so far?

[Seeker]

And these three lines are a second $1250 outgo:

utilites, insurance, phone, cable, and internet - 700
groceries - 350
gas - 200

Can you further break out util, ins, phone, cable & internet charges? You can probably lessen and/or eliminate some of these monthly reoccuring.

In either case, the mortgage of 1260 takes too high a chunk of your income.

---

Regarding credit card consolidation companies, nobody here would advise you to take advantage of them. Most of these companies just try to get whatever money they can from you (service fees) and they do not perform any action that you could not take care of yourself. This goes back to my original post, nobody cares more about your situation than you. You need to call the credit card companies and see if they will lower their rates; be aware that they probably will not.

You need to get more income, sell whatever you can.

[disneysteve]

Regarding credit card consolidation companies, nobody here would advise you to take advantage of them. Most of these companies just try to get whatever money they can from you (service fees) and they do not perform any action that you could not take care of yourself.

I totally agree.

[Seeker]

If you did not co-sign on any of those cc's, then your wife is technically solely responsible for that which she incurred debt wise.

The banks should be trying to collect from her and i'm not sure if you should try to intervene with them as you may then make yourself 50% responsible.

That of course depend on you, but you may want to check with a lawyer familiar with these issues and the practices in your state.

[bunnyandabby]

Apparently she got these cards just for their deals and points. And then when she saw that the interests were consuming the money and couldnt pay the bills she started to pay with credit cards only causing a deeper debt. Then we got a rather big tax return which has delayed it till now. The mortgage loan is a consolidation as well because she had previous debt that we rolled in with the house. Thats y that payment is so big. Its not that I have a big house. Thanks for the replies everyone. Im doing my best to try to raise income. I'll call on the cards and try to c what could be available with my bank.

[LivingAlmostLarge]

I don't think you have enough income honestly to get out of debt. You'll need more. Or need to cut the house likely. One major home repair, car replacement/repair and you'd be in too deep.

Nasty stuff that you rolled more debt into the home. Can you sell it for the mortgage?

[Granite]

well... we are actually trying to help you. You are probably upset because your wife is behaving like a spoiled child and she is not doing you any favors by charging the cards without your knowledge or consent. Grow a backbone and deal with it. This is your life and no one here should have to sugar coat things for you if you are an adult.

The bottom line is that some drastic measures will need to be implemented in order to resolve this situation. First of all there will be no more charging ANYTHING, or buying on credit. EVER. This discussion will need to take place in your home.

Secondly you may be able to transfer some debt to 0 % cards, or call each company and ask them to assist you by either putting you on a hardship plan or lowering your interest rate.

thirdly you should learn to cook from scratch, use coupons, barter and sell whatever you can. You will both need to take on additional jobs or start some side businesses (think elder care, babysitting, mowing lawns, bartending)

fourth you DO NOT NEED A DEBT CONSOLIDATION COMPANY. there are plenty of bloggers and websites on the net with the information you need. It boils down to spending less than you make.

fifth you should look into renting out a room in your house to a student. If you have kids this could be babysitting in lieu of rent so that your wife can work and make $ to pay off her debt

I totally understand your situation as I am in a heap of debt myself but I am PRO ACTIVE about it and I take control - meaning I work 2 jobs, pack my lunch daily, cook from scratch and cut coupons !! I even make my own laundry detergent. Pick yourself up from your boot straps and take control !! It is not that hard, it just takes commitment on both of your parts and a willingness to change

[bunnyandabby]

I thought that if I was married to her that they would eventually come for me. Im not sure I would want her cards being delinquent and then us getting all those phone calls and threats you hear about. I would rather try to help her than do that. And Granite, I work 70 to 80 hrs a week. I get up at 330 and pack my own lunch everyday and we rarely go out since we have to very young children. I don't sit down until night time just to be on here and do what I can to fix this problem with the debt. Don't get the impression that I dont do much. As for the soap, your on your own there. But once again thanks for the time and advice you guys. I really do appreciate it.

[LivingAlmostLarge]

if you work so much, why do you make so little? What do you do? Is there any opportunities to get promoted or make more money?

[disneysteve]

I work 70 to 80 hrs a week.

if you work so much, why do you make so little?

That only works out to as little as $7.50/hour. I don't know what you do but I'd seriously be looking for better work. I know times are tough and I don't know where you live, but that's ridiculous. You could make more money delivering pizzas or newspapers.

[Granite]

what about your wife? can she babysit some other children while she is taking care of your small kids? this would bring additional income into the household. At night when you are home, she can perhaps cocktail or wait tables somewhere?

[bunnyandabby]

My last pay check was 1750 which is 3500 a month but with taxes, life insurance , health insurance, and a medical fsa planned withdrawel it ends up at 1300. I had 401 withdrawel too but I just got that stopped for now. It doesnt help that its my slowest time of the year which basically means this is when I make the least. My wife wasn't working because of the new baby now she has agreed to work part time in evenings after I get off. I've set an appointment with my bank to see what they had available. I haven't had the time during the business hours to call her cc companies. I'll need her there too because they are hers. I'm also going to look into the student loan. Somebody said something about applying for hardship or something like that so I'll see what I can get done with them. But yes, the economy really has made a difference. I was making 4800 a month just 4 yrs ago. We just didn't adjust our lifestyle with our paychecks. Course I didn't know I was that bad and trusted she would tell me.... all my fault. Stressful time for me now but I won't let it beat me. I will find a way to get it fixed. Thanks for the concerns from you guys.

[minnie1928]

You mentioned that you got a large tax refund this year... you should adjust your withholding so that you come closer to breaking even in 2009. You need that money now, not 9 months from now.

[LivingAlmostLarge]

What's your real take home pay, adding back the taxes? Making $3500/month you should be paying like $0 federal taxes with a kid.

What's the budget really look like?

[rusty2832]

[SIZE="5"[FONT="Garamond"][/FONT]] Per the Jewelry, is it something that can be sold on ebay or at a pawn shop? Consider breaking down the $700 into actual amounts so we can see how much is for electric,gas,etc and maybe figure a way to cut back yet still keep your internet, even if you might need to go to a cheaper one like arczip.com or earthlink or a cheaper internet service, a dialup type. I would think that somewhere in that $700 you could cut back some to compensate for the shortage. Also post what you buy categoywise in the way of groceries and maybe you can cut down on part of that. Where do you shop at? Gasoline--how far do you drive to work? Are there other forms of transporttaion like buses or maybe a bicycle that will eliminate gasoline cost. Basically agree with most of the postings on this stuff. I am glad I am not married. My dog and 3 cats can't run a credit card bill thank goodness. - Amy , Stay