drowning in debt

[kathleenroy]

I need advice b/c income is less than bills, namely 4 maxxed out c.c. and 2 maxxed out medical c.c.s, a title loan, a 2nd mtg and big condo fee. Trying to decide what to stop paying on. Have been using savings but it is almost tapped out and I'm getting scared.

[creditcardfree]

Food, electricity, rent/mortgage payment all come first. Prioritize from there. You many need to stop paying on a credit card if things are tapped out.

The very next step...find more income. Often that can be found by spending less, working a part time job, selling things you no longer need (maybe all the stuff bought on credit). Consider looking for different employment.

Above all, stop using the credit cards. Cut them up or freeze them in ice today!

Tell us more about your specific situation, income and expenses and we can give you better detailed advice.

[BlackDiamond]

Can you give us a list/breakdown of what you owe and what you bring in?

Shelter, water, food, heat and electric are your priority.

After that, secured loans -- home & car.

After that, high interest cc & med bills.

Do not use the cc again. Cut it up.

Sell your stuff. If it's not a need, it goes.

[mommyof4]

Take a look at Dave Ramsey's website, and it gives a brief overview of his baby steps to get out of debt. Trust me, they really do work.

FYI, I would focus on getting that title loan out of the way- you don't want to get that overdue, because those places will repossess your car even if it is a day late. I'm assuming you need your car for commuting to work, etc., and that needs to be a priority up there with food and shelter.

Maybe you can negotiate your medical bills down? Some places will work with you on this, others won't.

Credit cards- simply put, stop using them.

Good luck, and if you give more details, maybe we can help you come up with a workable budget, too.

[jIM_Ohio]

List all expenses
List all income
List all debt

those are 3 lists, one has little to do with other

when listing debt, list in order of highest interest rate first. Include debt amount, minimum payment, interest payment, when debt was acquired, and when it will be paid off (for example knowing when house or car loans are paid in full help).

Most people have a spending problem, not an income problem. Listing each seperate helps isolate problems which can be solved.

[maat55]

Be prepared to radically change your lifestyle. Think of getting out of debt as an business, don't worry about what friends or family think.

[kathleenroy]

drowning in debt

Thank you for replies. I will list income, household expenses, medical expense/debt and title loan/credit debt., monthly.

1. income; 4293. (me and spouse and rental)

2. household expenses:
Mtg #1: 583. (rented b/c couldn't sell. rent is 750. included in income, owe 73,000)
Mtg #2: 763. (we live here, owe 95,000)
condo fee: 131.
2nd mtg: 370. HFC (on house #1, owe 30,000.)

(also own a condo at Clemson univ. where my daughter lived when at college, but haven't been able to pay on it since 6/09, but no foreclosure yet. Property manager takes a lot of fees from rent. Wasn't able to get student renters after daughter graduated but it is fully rented now.)

elect: 150.
water: 60.
phone: 120.
auto ins: 241.
food: 400.
gas: 400.
pets: 50.

3. medical:
Rx: 50.
Care credit: 177. (owe 5000.)
Wells Fargo: 110. (owe 2000.)

4. Credit:
student loan: 166. (owe 11,000. will be paid off 2020)
American General title loan: 170. (owe 4200. will be paid off 2012)
Firestone: 75. (owe 800.)
Sears: 20. (owe 900. bought xmas 09 and dishwasher)
Visa: 150. (owe 3720. bought carpet and got cash advance to pay for intallation at house #1 b/c
1st renters destroyed it. We have excellent tenants now. Also put dental expenses on it.)
Visa: 50. (owe 2086. put vet bill for sick cat and dental on it.)

Whatever you can advise will be great! Just got rid of cable tv. Don't eat out much, don't go anywhere now, and already work all the time. I teach at a small college which involves many nights and weekends. Spouse commutes long distance and works long hours also. Only joy is the pets, so not going to get rid of them! Thanks!

[am_vanquish]

I'm a bit confused about the Clemson condo. You say it has been paid since 06/09 but then say it's fully rented right now. Are you receiving income from this condo? If yes, is that income included in the total income of $4293 you provided?

[ceejay74]

Maybe I'm missing something, but the income and expenses you listed match up, with about $50 left over. If your variable expenses are accurate as listed, you should at least be breaking even each month.

Have you tracked your purchases to make sure you're sticking to the $400 groceries, $400 gas and $50 pets? Are there other expenses you haven't listed or is this really it.

Granted, breaking even is not good when you want to start saving and paying down debt more aggressively. But at least it would mean you're treading water, for now, which gives you time to consider your options. I would say your main options are to cut the food budget and to try to sell nonessential items.

[maat55]

What are the values of the homes?

How much are the cars worth? Can you lower to liability?

Your housing is costing you 43% of your income. This is way too high.

Can one or both get second/part-time jobs? Any extra earnings should be used to pay down your smallest debts first.

Have a garage sale.

In general, you need to raise your income and lower your spending. You need to stop using your credit cards, period. You will likely need to sell one of the homes and live in the other. I would live in the least expensive to operate.

Can you live with family?

If you are going to default do it on the credit cards.

You are in no position to manage rental property, get rid of one of the properties. You are not able to cashflow the upkeep.

[kathleenroy]

Thanks to all of you. Yes, I am treading water. I have kept up with all my payments, but have had to tap into savings every month since Dec. I had a part time teaching job that ended in Dec. but it didn't renew b/c enrollment was down. Then since Jan. I have had to have more dental work done so had to add it to the medical c.c.s. I was afraid to use up savings for the dental work, plus it was more than my savings anyway. (about $6000. in savings)

Yes, there is a small income from the rental condo, of about $200. month. I did not include it in income on my list. It has been going to vet bills lately, when one dog had to have surgery. Also, I admit I do spend money on my hair and nails out of this. That is about 60./month. Since I am in front of people everyday, I feel it is important to look my best. I teach public speaking, and image is part of the package. But I buy most of my clothes at thrift stores.

I also didn't mention that my husband smokes and I can't get him to stop. This costs us about 300./month. Believe me when I say I have tried everything to get him to quit.

I will get a tax refund soon of about 1500. Should I pay off one item or spread it out? Should I save it and just let all the c.c debt go? I just got really mad at Band of America. They lowered my available credit on a card that I have been paying double payments on. They did this just 2 days ago. They did not tell me and my online statement said I had 679. in available credit. I had another emergency root canal today and tried to put part of the payment on it. It was declined which was so embarassing! The BOA credit rep said they just did it on 3/31. The next payment isn't due until 4/22. He said it's b/c I carry a lot of debt. I had heard about this on the news, and sure enough...so watch out. They don't have to tell you. Now I want to change banks and stop paying on the 2 BOA c.c.s. I also want to take my Mom's $ out of BOA b/c of this. That was just wrong. She has a good bit from the sale of her house and my brother and I are POA so we can do so.
Thanks for reading!:

[jIM_Ohio]

Thank you for replies. I will list income, household expenses, medical expense/debt and title loan/credit debt., monthly.

1. income; 4293. (me and spouse and rental)

2. household expenses:
Mtg #1: 583. (rented b/c couldn't sell. rent is 750. included in income, owe 73,000)
Mtg #2: 763. (we live here, owe 95,000)
condo fee: 131.
2nd mtg: 370. HFC (on house #1, owe 30,000.)

(also own a condo at Clemson univ. where my daughter lived when at college, but haven't been able to pay on it since 6/09, but no foreclosure yet. Property manager takes a lot of fees from rent. Wasn't able to get student renters after daughter graduated but it is fully rented now.)

elect: 150.
water: 60.
phone: 120.
auto ins: 241.
food: 400.
gas: 400.
pets: 50.

3. medical:
Rx: 50.
Care credit: 177. (owe 5000.)
Wells Fargo: 110. (owe 2000.)

4. Credit:
student loan: 166. (owe 11,000. will be paid off 2020)
American General title loan: 170. (owe 4200. will be paid off 2012)
Firestone: 75. (owe 800.)
Sears: 20. (owe 900. bought xmas 09 and dishwasher)
Visa: 150. (owe 3720. bought carpet and got cash advance to pay for intallation at house #1 b/c
1st renters destroyed it. We have excellent tenants now. Also put dental expenses on it.)
Visa: 50. (owe 2086. put vet bill for sick cat and dental on it.)

Whatever you can advise will be great! Just got rid of cable tv. Don't eat out much, don't go anywhere now, and already work all the time. I teach at a small college which involves many nights and weekends. Spouse commutes long distance and works long hours also. Only joy is the pets, so not going to get rid of them! Thanks!

You did OK for a first pass on these

can you add each group up?
looks like $4200 income (is this gross or net?)

expenses appear to be about $4100/mo as you listed them (including minimum payments on all debt)


Step 1- stop using the credit cards.
Step 2- when things get tough, refer to #1- if you cannot pay cash for it, wait.

Step 3- organize the finances

you listed some debt with medical and some with credit and some with mortgage... its all debt. You need to organize the debt (list all debt with minimum payments, amount owed, interest rates and when it will be paid off).

Step 4 try to consolidate some of the debt (firestone, wells fargo, sears are good candidates to combine)

Step 5
shrink this portion of budget

elect: 150.
water: 60.
phone: 120.
auto ins: 241.
food: 400.
gas: 400.
pets: 50.

$400/mo for food is high- try knocking $100 or more off of this
If car insurance is $3k per year, ask yourself why its that high and see if you can knock $1200 off of that per year.

I did not see cable listed- if you have cable- remove it now
I did not see trash listed, make sure the budget is accurate

Step 6, try to reduce the number of items in this list

student loan: 166. (owe 11,000. will be paid off 2020)
American General title loan: 170. (owe 4200. will be paid off 2012)
Firestone: 75. (owe 800.)
Sears: 20. (owe 900. bought xmas 09 and dishwasher)
Visa: 150. (owe 3720. bought carpet and got cash advance to pay for intallation at house #1 b/c
1st renters destroyed it. We have excellent tenants now. Also put dental expenses on it.)
Visa: 50. (owe 2086. put vet bill for sick cat and dental on it.)

I mentioned consolidation above, here is some more controversial advice.

The total combined payment above is $620/month
if you took 1 month and paid off the sears in full, you made the combined payment $600.
If you did the same to firestone, you would lower minimum down to $525.

If you skipped paying the other bills for 2 months, how much higher could rates get? It might make problem worse, it might make the creditors deal with you differently. Tough call.


If you start thinking in these terms for 1-2 months, its possible you can make this manageable fast. Can you sell $1700 worth of items and remove those 2 bills from the list?

What is your tax return like?