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[wantoutfromunder]

Hello,

I've been lurking about for a week or so and thought I'd introduce myself. I have found myself in a position I really don't like, that of someone who has way too much debt. My husband (who has always managed all our bills/money) confessed to me last week that we owe $42,000 on credit cards Apparently, he's been doing the credit card shuffle to manage it, but now he just can't handle it anymore. He has had this 1950's attitude that he should provide his wife with whatever she wanted so he never spoke up and said "hey...those things shouldn't be in our budget" I would LOVE to blame him for the entire mess, but I should have been paying better attention. But, now that my head is out of the sand, it's time to attack this debt. I have put us on a strict budget and I am energized to do this in under 2 years. We are done wasting money on eating out, alcohol for our guests (it's BYOB from now on!), vacations we can't afford, etc. I have started meal planning, shopping at our local discount supermarket and I feel thrilled each time my grocery bill comes in under budget.

Just looking for some support. I feel like this is my new mission in life and so far I'm doing great. In the first month, I paid off $2600 and this was a "back to school" month with extra expenses! I wish I could say the same for my husband. He was just whining about wanting an IPad. Grrr...sorry buddy...not only can't you have that, I am thinking about selling your KindleFire!

[bjl584]

Welcome and congrats on getting off to a great start.

Can you post up some numbers? Income? Other expenses? Interest rates on the debts that you have? Any assets or retirement account? It will be easier for everyone to help if they have some numbers to work with.

[JoeP]

I'll also suggest counseling. From what you wrote, it sounds to me like there is a trust issue, and that you don't see finances in the same way. You need to come together on those before you can hope for any long-term success, regardless of the financial advice dispensed here.

[wantoutfromunder]

Monthly Income 8K

Mortgage 2200
Car 400 (second car is paid in full)
Electric 270
Life insurance 50
Cable/TV/Internet 160
Cell (for 4 of us) 200
Water/Sewer/Trash 120
Gas 160
Gas (cars) 350
Poland Springs 36
Gym 38
Savings 300
Spending money 200 (25ea for hubby and I per week)
Fidelity college fund for kids 60
Grocery 1000

Credit cards: 9 total cards
1st balance 2984 19%, $67 min payment (50)
2nd balance 3842 0% $71 min payment (75)
3rd balance 4045 0% $40 min payment (50)
4th balance 4132 19% $100 in payment ((100)
5th balance 4947 0% $49 min payment (100)
6th balance 5795 19% $115 min payment (80)
7th balance 6750 0% $135 min payment (180)
8th balance 7668 0% $115 min payment (150)
9th balance 1850 - paid in full!

( ) is the amount my husband has been sending. Amounts listed are before we sent in this month's payments so they should all be at little bit lower now.

This was my budget for this month. Some things will change. I overestimated the grocery budget. For the last month, the bill has averaged $150 a week. I am learning meal planning and I am cancelling the gym membership. Cellphone bill is high, but we're locked into a contract. Will do that as soon we can do it and go to pay as you go phones. I know some will say to cancel the Poland Springs as well, but we've had 8 cases of cancer in our neighborhood in the last 7 years and I don't want my kids drinking the water. If that delays being debt-free, so be it. Electric bill is VERY high...my mother lives in an in law apartment and can't take the heat. Her AC runs 24/7 We have excellent credit and my husband has always paid the bills on time. But living on credit is no way to live so it's time to live under our means for a couple years and then learn to continue to live under our means and save for college and retirement as we only have about 26 years of working years left. We both contribute to our 401K's and have combined about $150k right now. After this debt is gone I want to increase the amount we contribute each month.

I'd love to hear any thoughts anyone has.

[wantoutfromunder]

Joe,

I appreciate your suggestion and agree completely. I will admit that I was SHOCKED to hear that my husband was afraid to discuss money issues with me. I was more upset about his lack of trust/faith in me than the fact that I need to change my lifestyle. I am upset that I can't trust him in the same way any longer. A husband and wife should be a team and that's not how he was treating our marriage. And I feel like I can't treat him like we are a team and instead I've found myself acting more like a mommy to him "we can't afford an IPad" etc, etc.

I have a friend who went through the same thing a few years ago. She tried to buy a new house and only then did it come out that her husband had done pretty much the same thing. It took them about 2 years to pay it all off and they are now working more as a team so I hope and pray it will be the same for my husband and I. He needs to learn that a trip to Disney (or whatever we've wasted money we don't have on) is not worth giving up our trust in each other and our financial security.

Thank you.

[JoeP]

Cable TV/internet: A luxury item, see if you can get internet alone and put up an antenna. Lots of people here (myself included) have added Netflix for $9/mo and get plenty of content.

Yes, when your contract is up, drop the cell phones and go prepaid. Contracts don't make sense any more, and they don't care if you're trying to free up cash.

What's the balance and interest rate on the car that you're financing?

I hope to see a new expense listed: counseling. Please understand that I sincerely hope you and your husband can work this out together.

[bjl584]

From the numbers that you posted you are bringing in around $8000 a month and are spending around $6500 a month.

Do you know where the extra $1500 is going? An extra $1500 a month on the debts will get them paid off fairly quickly.

[wantoutfromunder]

Oops...forgot to add that I am now sending that extra $1500 to the credit cards and I am sometimes able to send more. I am a nurse and unfortunately, I am told I am not needed for one scheduled shift a week. I made our budget as if I lose those 8 hours of pay a week. When that doesn't happen, I make another $100 a week and I plan to send all of that to the credit cards as well. I guess in my mind, that money is GONE so I forgot to add it to the new budget. But it is there and that's how I was able to pay off the first credit card in the first month.

ETA: Any opinions on using the debt snowball method? Some of our cards do have finance charges so I tend to want to pay those off first, but there is something to be said for that feeling of accomplishment I got when I paid off that first card in the very first month of my new budget.

[bjl584]

Have you stopped using the cards? Are there any other cards or debts that you did not list or may not know about that your husband could still be hiding?

Rule one when trying to get out of a hole is to stop digging.

I'd throw as much as you can toward the 19% cards first. Are all of the cards that have a 0% rate an introductory rate? If so, what does the rate go to? You will want to try to pay them off before the 0% offer ends.

[wantoutfromunder]

The cards are no longer in our wallets. I may sound naive, but I don't think there are any that I don't know about. I am always home first though so I will keep a close eye on the mail for a while. All of the 0% cards will eventually start charging interest but I don't know when. I'll have to figure that out. It seems like every day we get new offers to transfer balances over with no interest for a year. Is it worth it to shuffle the balances around while paying everything off? Most offers are for one year and by then, I hope to have at least 1/2 of this debt paid off.

[bjl584]

The cards are no longer in our wallets. I may sound naive, but I don't think there are any that I don't know about. I am always home first though so I will keep a close eye on the mail for a while. All of the 0% cards will eventually start charging interest but I don't know when. I'll have to figure that out. It seems like every day we get new offers to transfer balances over with no interest for a year. Is it worth it to shuffle the balances around while paying everything off? Most offers are for one year and by then, I hope to have at least 1/2 of this debt paid off.

Careful. Most balance transfer offers charge a fee. Usually it's some percentage of the outstanding balance. You wil need to crunch the numbers and figure out if the fee is worth it or not. You may save more by paying the fee than you would by paying interest on your current cards, but you will need to figure that out.

If you are unsure about more debts pull your credit reports and take a look.

[NuggetBrain]

Does your husband have any automatic debts or payments coming into those cards? Keep a close eye on the statements when you get them.

[Petunia 100]

You're off to a great start! The good news is, you have a good income and lots of extra room in your budget to work with. Sometimes people in debt have very little extra to work with.
You've already eliminated one debt, good job.

I'm not understanding something. It seems as though some of these payments are less than the required monthly minimum payment? Will you clarify, please?

Credit cards: 9 total cards
1st balance 2984 19%, $67 min payment (50)
2nd balance 3842 0% $71 min payment (75)
3rd balance 4045 0% $40 min payment (50)
4th balance 4132 19% $100 in payment ((100)
5th balance 4947 0% $49 min payment (100)
6th balance 5795 19% $115 min payment (80)
7th balance 6750 0% $135 min payment (180)
8th balance 7668 0% $115 min payment (150)
9th balance 1850 - paid in full!

I would pay minimum on all except those currently charging 19% interest. The only exception would be, if any of those currently at 0% are furniture or applicances which were no interest for a time. Typically, those purchases actually have deferred interest, which is added to your balance if you fail to pay in full in the specified time frame. Plan to have those paid in full before the deferred interest kicks in.

[maat55]

Honestly, you can take forever and maybe fall off the wagon or you can go into sacrificial mode and eliminate this debt quickly while learning and developing a strong resistence to wastefull spending.

How much you cut from your budget will determine your sincerity to this process.

Personally, I would be figuring how I can get out of the current car debt(depending on its balance).
I would look for useful ways to lower utility bills.
I would cut cable/internet to very basic.
I would eliminate at least 2 cells.
I would eliminate gym.
I would stop saving if you have a 2-3k in savings.
I would make sure groceries never exceed 150.00 per week.

These type of shorterm sacrifices will lead to wise frugal lifestyle choices later. You need to experience living on much less and seeing great results in your financial transformation. Half heated attempts usually fail.

I have got out of debt twice. First time was through selling my house and paying off debts which did not strengthen my resolve to do better. Second time I cut my budget to the bone giving up alot of wants/unnecessary needs(things I thought I had to have), and this time it has stuck.

Good luck.

[SeanH]

http://www.cnpp.usda.gov/Publications/FoodPlans/2012/CostofFoodJun2012.pdf

Please see the above for thoughts concerning food budgeting. In short - $1000 a month would fall under the liberal plan.

Phones - I am currently using Straighttalk. I'm 1 month in and I have no complaints. Its a prepaid $45 plan (unlimited talk/text/2 gigs of data). I did have to purchase a smartphone to get this. That said - there are really cheap plans out there if you don't need data and some cheap plans if you do. Straight talk offers a 1000 minutes/unlimited text plan for $30 and I believe the phones associated with this are very affordable. T-mobile offers a 5 gigabyte/$30 a month plan (with very little talk minutes). I completely understand you are locked in, but its definitely something to keep in mind for the future. I couldn't be happier with my switch (do recognize the up front cost of the phone if you go with a data plan.

As far as giving up cable TV - antennae, Netflix, Hulu, ESPN3, Redbox, library membership/DVD borrow. If you have a laptop with an HDMI output you can stream from your laptop to your TV (if it has an HDMI input) to save yourself needing to purchase any sort of additional electronics. HDMI cables purchased online through Amazon are a steal compared to the total ripoff prices stores charge. $3 online will get you 15 feet - I bought a 3 foot cable at Target for $20.