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    Need advise - in debt badly

    HI Everyone,

    Im new and need some advice or what have others done to get out of debt. I believe I inherited applying from all those "dont pay now or no interest for 3 years" deals from my Dad, or had that attitude I will it now instead of saving up for it which has now dug me a hole which in which I am having trouble digging out from.

    Heres my scenario:
    Mortgage - partner now pays full mortgage because I cant pay my part - shes awesome and I dont deserve her for doing this.

    Car loans - I have two loans but one car.
    1 x car loan - costing $260 month / balance is $3400
    1 x car loan - costing $550 month / balance is $13800

    Vehicle I have is a 2000 Jeep Grand Cherokee V8 - gas costs me $160 week

    Credit cards:
    2 x credit cards with $13,500 balances - both maxed ouit
    1 x credit card with $9000 balance - maxed out

    Credit Cards are apprximately $750 month repayments - interest is 20%

    Store Card - $5700 balance - maxed out, $160 month

    I have my Jeep for sale which is hard for me because I love it, no one wants it because Im asking $2000 more than what its worth - I have to pay the car loan company because it is security.

    I have just applied to consilidate the two cars to reduce the monthly payments (the car loans only), I earn $70,000 a year but am now the monthly repayments now compared to 3 years ago is killing me, I am in the red and short every pay.

    Whats the best move here, what has others done?
    Really appreciate any help.

    #2
    Originally posted by DebtfreeNZ View Post
    Vehicle I have is a 2000 Jeep Grand Cherokee V8 - gas costs me $160 week
    Seriously? How much do you drive???

    $160 / $4 gallon = 40 gallons ; and that's if gas costs $4/gallon

    What is your car actually worth?

    I have just applied to consilidate the two cars to reduce the monthly payments (the car loans only), I earn $70,000 a year but am now the monthly repayments now compared to 3 years ago is killing me, I am in the red and short every pay.

    Whats the best move here, what has others done?
    Really appreciate any help.
    There may be ways to help reduce the symptoms, but you also have to address the disease. If your payments are higher than 3 years ago, it means that things are getting worse.

    Disease: You are spending too much. You're living beyond your means. And you're using debt to do it.

    Symptoms: high debt balances, car loan payments, pressure on cashflow each month, you feel terrible looking at your financial picture each month, etc.

    ---------------------------------------

    Step #1: Get on a budget! (addresses the real problem)

    You make $70k/year. Are you married? How much does your partner make?

    After tax, you're likely looking at $60k or so = $5,000/month (very rough estimate, ie - I'm guessing )

    Above, you listed total expenses of $2,360. Leaving $2,640 each month for living and other expenses.
    • Where does the rest of your money go?
    • When's the last time you actually tracked your monthly spending?
    • How can you properly manage your money, if you're not tracking where it goes?


    FYI - we can help with your budget if you need it but we'll need a complete budget

    ---

    Step #2: Reduce interest rates wherever you can (symptoms only)

    I'd recommend trying to find some 0% balance transfer options for your CC debt. Find a good long offer, to reduce interest as much as possible. Do this on as much CC debt as possible.
    Last edited by jpg7n16; 03-10-2012, 03:09 PM.

    Comment


      #3
      Where do I drive?
      Lately it has now been restricted to just to and from work, within local neighborhood.
      To and from work - on congested freeway, I work 9 till 5, traffic is bumper to bumper.

      Gas cost?
      My Jeep achieves 220 miles which is what I do each week, Jeep averages 12 MPG. Gas prices here are $8 gallon.

      I used to go camping and outdoors with Jeep, due to cash resrictions this has now stopped.

      Car value
      All Jeeps of this year average about $12,000 but with 120000 miles, mine has 30000 miles which is why Im asking $14,500.
      My Car Loan ($13,800 balance one) needs to be paid when I sell the vehicle. The monthly payment is $550 per month with 33 months remaining

      I was hoping to sell it for slightly higher so I can pay a bit of the other car loan. The smaller car loan needs to be paid in full now as the Jeep I had before (now been sold as I drove of road and damaged it, insurance did not pay obviously) Did not get enough to pay first car loan.

      I do agree and acknowlegde I am spending more and using debt to do this.

      I do have a budget but I use to pay the monthly bills, items like snacks, DVD rentals, clothing are not included. I have tried to pay debt bi-weekly but I havent got on top of all bills to do this. My budget is not effective and is not effective.

      I receive after tax $2093 bi weekly. My wife earns similar to me but now has her account, wants nothing to do my financial affairs. We have 2 kids, both under 7 years.

      Outgoings bi weekly:

      Groceries $450
      House rates $108
      Insurance $60
      Gym fees $36
      Gas $330
      Wifes parking / gas $150
      School Care $65
      My parking $10 a day
      Electric bill $140
      Phone bill $60

      Total $1200 excluding my parking

      Debt:
      Car Loan (small one) $252 per month (14.99% interest) Balance $3500
      Car Loan $550 per month (12.99% interest) Balance $13800
      Credit Card 1 $300 per month (maxed, 20% interest) Balance $13500
      Credit card 2 $300 per month (maxed, 20% interest) Balance $13500
      Credit Card 3 $250 per month (maxed, 20% interest) Balance $9000
      Store Card $160 per month (0% interest for 4 years) Balance $5300
      Bank Loan $600 per month (14% interest, this was a consilidatin loan where$26000 was the original balance) Balance $3700
      Credit Card 4 $60 per month (joint credit card, 12.95% interest) Balance $3300

      If I put aside the above bi weekly - total is $1236 approximately

      I am open to any suggestions, i will drive around in a Toyota hatch when I can sell mine :-(

      Comment


        #4
        Most people on this board will disagree, but I would suggest to snowball the bank loan, the one with $600 dollars a month with a balance of $3700. Getting that paid off will free up $600a month. Then, you can tackle the debt one at a time starting with the highest interest rate.

        You said your wife has nothing to do with your financial affairs; yet, you put down your wife's parking and gas for $150. You both need to get together and pool all your extra money into the debts. According to your statement, you both bring in about $4,000 every two weeks. You both are in it together, you both need to get out of it together.

        You said you want to sell you Jeep, if you sell it, will you have to take out another loan for another car? Donít do that, buy a beater for cash. I did that, it was embarrassing, but I wiped out all my debts in about a year.

        One piece of advice, do not incur any more debt.

        Comment


          #5
          Originally posted by DebtfreeNZ View Post
          I do have a budget but I use to pay the monthly bills, items like snacks, DVD rentals, clothing are not included.

          I receive after tax $2093 bi weekly.

          Outgoings bi weekly:

          My parking $10 a day

          Total $1200 excluding my parking


          Debt:

          If I put aside the above bi weekly - total is $1236 approximately
          So you spend $600 more EVERY month than you earn? And that's not including the $10 a DAY in parking or items like DVDs, clothing, etc? Obviously you have got to cut spending a LOT. Or get another job! If I were you I would cut the gym and reduce grocery expenses by a LOT.

          Comment


            #6
            I'm guessing the NZ in your name stands for New Zealand? Is that correct? I don't know of anywhere with $8 gas


            Bi-weekly figures are comforting, but not useful. Let's adjust everything to monthly (there are 26 bi-weekly periods a year, so multiply by 26 and divide by 12 to get monthly), and list your expenses from largest to smallest. I'll also do some subtotals to help you highlight some issues:

            Monthly Income : $4,535

            Groceries : $975
            Gas : $715
            Bank Loan : $600
            Car Loan (large) : $550
            Wifes parking / gas : $325
            My parking : $325
            Electric bill : $303
            CC 1 : $300
            CC 2 : $300
            Car Loan (small) : $252
            CC 3 : $250
            House Rates : $234
            Store Card : $160
            School care : $141
            Insurance : $130
            Phone Bill : $130
            Gym fees : $78
            CC 4 : $60

            Total Expenses: ($5,828)

            Monthly Net (Loss): ($1,293)

            Subtotals:
            Debt : $2,471 (42% of all expenses)
            Jeep (debt and gas): $1,517 (26% of all expenses)


            Now where is that $1,293 coming from? Are you still increasing your debts?

            -------------------------------------

            Now whenever I evaluate a budget, I start with the largest numbers and work down the list.

            For instance, in your case: Groceries @ $975. That's ridiculous. Nearly $1,000/month on food. Wow. You should focus some effort here to reduce. If you were able to drop this amount by 1/3-1/2, that would save you between $325 to $488/month. What can you do to reduce this expense?

            Next up - Gas @ $715. VERY high! If we were able to cut this in half, that would also save $355/month. What can we do here? Well you can't just not go to work. Could you carpool? Is there a public transportation system that you could take? Reduce the price and sell the Jeep ASAP? Some other option I haven't thought of?? Selling the Jeep and switching to a cheaper car with better gas mileage is likely the best option. What can we do to make that happen?

            Another benefit of selling the jeep and moving to a cheaper car is that it reduces your loan balances, and therefore your loan payments. Switching to a car at 1/2 the price would likely save half those expenses, aka another $400

            Then continue this process all the way down your list!

            Just FYI - fixing the main 2 expenses and their causes could potentially save you $1200/month, and put you close to breaking even.

            --------------------------------------

            Regarding your debt and your wife. Your debt costs are ridiculous. When you calculate approximately how much interest you are paying per year, it works out to $10,462.62 of interest each and every year (based on current balances and interest rates).

            • What impact does that have on your family?
            • Are you stressed over your debts and how much they cost?
            • How would the stress level of the house be impacted with an extra $10,000/year in your pocket?
            • How beneficial would it be to your family to save that interest and have an extra $2,500/month?
            • What could you do with your kids if this wasn't hanging over your head?


            I get that your wife doesn't want to be a part of your financial situation - but she IS part of it. Like it or not, your financial situation impacts the whole family - not just you.

            My point is, that you NEED her help in cleaning this up. And it's in her best interest to do so.
            Last edited by jpg7n16; 03-11-2012, 08:38 AM.

            Comment


              #7
              thanks everyone for your help.

              I have just received $2500 from the tax department as a refund.

              I need to transfer this straight away to a Loan, I need to know which one:

              Car Loan 2 - balance is $3400 and costing $250 a month.

              Debt consilidation loan - balance is $3700 and costing $600 a month.

              I am think the second one because I will then only have 1 more monthly payment and it will free up $600 a month?

              Comment


                #8
                Originally posted by DebtfreeNZ View Post
                thanks everyone for your help.

                I have just received $2500 from the tax department as a refund.

                I need to transfer this straight away to a Loan, I need to know which one:

                Car Loan 2 - balance is $3400 and costing $250 a month.

                Debt consilidation loan - balance is $3700 and costing $600 a month.

                I am think the second one because I will then only have 1 more monthly payment and it will free up $600 a month?
                You should really hire a financial specialist to evaluate your situation. You have quite a hefty situation going on here. You need to commit to a lifestyle change as oppose to a quick fix.

                1. Create an actual budget
                2. Get rid of the Jeep opt for something more fuel efficient, insurance friendly, and reliable

                You make a substantial amount over the national average you should be able to get out of this rut in 2 years if you commit to it. I'd take a class or two about saving/budgeting. Good luck.

                Comment


                  #9
                  Originally posted by DebtfreeNZ View Post

                  I am think the second one because I will then only have 1 more monthly payment and it will free up $600 a month?
                  I would definitely go with the 2nd loan. Then, take the $600 per month and apply to another loan - probably the $3500 car loan.

                  Comment


                    #10
                    Originally posted by DebtfreeNZ View Post
                    thanks everyone for your help.

                    I have just received $2500 from the tax department as a refund.

                    I need to transfer this straight away to a Loan, I need to know which one:

                    Car Loan 2 - balance is $3400 and costing $250 a month.

                    Debt consilidation loan - balance is $3700 and costing $600 a month.

                    I am think the second one because I will then only have 1 more monthly payment and it will free up $600 a month?
                    If it gives you the leverage you need to downsize your car, I would use it for that purpose. Downsizing the car is the single biggest step you can take in the right direction.

                    If it's not necessary, or you'll be able to downsize the car w/o it, then I'd personally apply it to the $600/month bank loan. Cashflow is a huge issue right now, and I think it'd give you a shove in the right direction.

                    Other things to note:
                    1. You should update your tax withholdings to give you an extra $200/month. The sooner you can get the cash right now, the better.
                    2. You should apply for some 0% balance transfer offers on some/all of these 20% maxed cards. The more you can shift to 0%, the better.
                    3. It's gonna be a while before all this mess is cleaned up, so get ready to be in this for the long haul.


                    Originally posted by jadet View Post
                    You should really hire a financial specialist to evaluate your situation.
                    1. How would he pay them?
                    2. What would they be able to do that we haven't already covered?

                    Comment


                      #11
                      Get the hell rid of the jeep! Buy instead something used with good fuel efficiency. 12 mpg is flat out terrible, esp if you are driving 220 miles/week, and only for commuting. You don't need a jeep for that.

                      And how on earth are you paying over $800/month for it?? I bought a brand new vehicle last year, and my payments are only $400/month. Yours is 12 years old!! GET RID OF IT! It's an anchor around your neck, preventing you from paying down debt in multiple ways.

                      Comment


                        #12
                        The car situation is positively insane. How on earth do you own over $17k on a 12 year old Jeep?? That car is worth like $4k.

                        Comment


                          #13
                          Originally posted by DebtfreeNZ View Post
                          HI Everyone,

                          Im new and need some advice or what have others done to get out of debt. I believe I inherited applying from all those "dont pay now or no interest for 3 years" deals from my Dad, or had that attitude I will it now instead of saving up for it which has now dug me a hole which in which I am having trouble digging out from.

                          Heres my scenario:
                          Mortgage - partner now pays full mortgage because I cant pay my part - shes awesome and I dont deserve her for doing this.

                          Car loans - I have two loans but one car.
                          1 x car loan - costing $260 month / balance is $3400
                          1 x car loan - costing $550 month / balance is $13800

                          Vehicle I have is a 2000 Jeep Grand Cherokee V8 - gas costs me $160 week

                          Credit cards:
                          2 x credit cards with $13,500 balances - both maxed ouit
                          1 x credit card with $9000 balance - maxed out

                          Credit Cards are apprximately $750 month repayments - interest is 20%

                          Store Card - $5700 balance - maxed out, $160 month

                          I have my Jeep for sale which is hard for me because I love it, no one wants it because Im asking $2000 more than what its worth - I have to pay the car loan company because it is security.

                          I have just applied to consilidate the two cars to reduce the monthly payments (the car loans only), I earn $70,000 a year but am now the monthly repayments now compared to 3 years ago is killing me, I am in the red and short every pay.

                          Whats the best move here, what has others done?
                          Really appreciate any help.
                          Well, you are obviously not in good financial shape here. I'm sure you would agree with me on this. Here's what I want you do. Make a categorical list of your monthly budget expenses for the following categories:

                          - Mortgage/Rent
                          - Automobile Costs
                          - Insurance Costs
                          - Taxes
                          - Education Costs
                          - Lawn & Garden Care Costs
                          - Clothing Costs
                          - Utilities Costs
                          - Food Costs
                          - Entertainment Costs
                          - Medical and Dental Costs
                          - Household Costs
                          - Home Improvement Costs
                          - Any other pertinent categories for which you have expenses

                          This will amount to your monthly outlay.

                          I want you to may a CONCERTED effort to reduce each of these by at least 10% over the next 6 months, with the recognized savings being applied directly towards your credit card debt. In order to do this, you will need to itemize the areas of expenditures in each of the aforementioned categories. You will need to SCRUTINIZE each and make a concerted effort to reduce that expense by 10%. For example, if your Food Budget is $500/month currently, you will need to reduce it to $450, by doing things like eating out less often, foregoing cafe lattes, using store food coupons, etc.

                          You need to do this for each category, and not get overwhelmed with your situation. You will garner much satisfaction by reducing your budget, and also by paying down your CC debt.

                          Sincerely,

                          BudgetSurgeon

                          Comment


                            #14
                            My partner was $80K in debt just a year and a half ago and he's managed to get down to $35k now just by prioritizing his debts.

                            First of all, make a budget plan! You either need to cut back on your expenses to carry this debt or make more money just to survive. Pick something that works and stick with it. If you're trying to pay these off it's important to learn how to budget without racking them back up.

                            secondly, call your credit card companies and ask them to lower your interest rates. Seeing as your credit card balances are rather high, it'll be much better for you to pay $40 a year and have a 9% interest rate than pay no annual fee and have a 20% interest rate.

                            I would start by paying off the store credit of $5700 because it's not too much and the interest rate from retail stores is usually killer. Pay minimum payments on everything else and pound all your money into that store credit until it's gone. Once that's gone it'll be a bit easier and you can start focusing on the next debt you have.

                            PS. If you have any savings, now would be the time to dip in there and use some to pay off soem of this.

                            Comment

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