How do I admit to being in debt?

[soapgal04]

I am really struggling with this. I work very hard, I completed advanced degree (BA and MA), but have heavy student debt, a house that is belly up, and a lot of CC debt. Husband lost his job, I've tried to cover us, and debt just continues to grow. We have not been married that long, so house and my credit cards, student loans are separate. As you can imagine, it's taken a toll on what started out as a promising marriage. Good news is, I have a good job, good credit score, but a few cards are just about maxed out - so I'm not sure if credit score matters any more, actually! It is a struggle and I am broke. This is why:
Salary: Net: $3500
House: Owe $285K - value:$145K (I don't qualify for loan mod - because, on paper - I can make my payments!)
Car: Owe $30K
CC Debt: $45K
S Loans: $80K

Total Expenses per month: Mort: $1272; CC: $900: Car:$400; Ins: $80; Food: $240; Gas: $200; Utilities: $300; Cell; $65

Husband tries, but doesn't make much. Keeps looking for a better job - not much luck; All bills are current, but I haven't got much left over! So friends, family can't understand when I can't go out for dinner, lunch, visiting them when they live far away. Colleagues bragging about expensive trips and asking when you are going? Keeping up appearances got me in this situation, but they think I'm joking when I say "I can't afford it"! They think I'm successful! I want to laugh! House needs repairs; new appliances, etc.. I just feel ashamed and embarrassed that I let myself get in this situation. I think I've been an idiot with money and I know it's my fault, poor choices. But what do you say to convince people - hey I just can't afford it when they insist you do something and just don't get it?

Feedback, anyone?

[disneysteve]

How much is the car worth?

[Petunia 100]

Feedback, anyone?

You don't owe detailed explanations to others, so a polite "I'm afraid that isn't in my budget right now" is good enough.

However, as I read your post I wondered if your husband knows your true financial picture? It may just be my perception, but it seemed to me you were hinting he does not know. He is one person who absolutely should know.

Stop worrying about appearing to keep up with your peers; that mindset is leading you to economic collapse.

My advice:

1. Get on the same page with husband. The two of you are a team.
2. Get rid of that car, you can't afford it.
3. Look into deferring or reducing student loan payments. I have never had any student loans, so am not familiar with all the rules. Perhaps there is nothing to be done, but find out.
4. Look into balance transfers offers to see if you can reduce the interest you are paying on your credit card debt.
5. What rate are you paying on your mortgage? If it is high, look into a Harp 2 refi. Do you qualify?
6. You need a budget. Make a realistic one, and track every dollar of spending. You may need to tweak your budget a bit; don't be discouraged, that is part of the process. Can you identify places where spending can be trimmed?
7. Stop using your credit cards. Today. Take them out of your wallet and store them someplace safe but not immediately accessible, like your freezer or your safe deposit box.
8. Stick around. There is a great deal of good advice and support right here on Saving Advice.

[autoxer]

Husband tries, but doesn't make much. Keeps looking for a better job - not much luck; All bills are current, but I haven't got much left over! So friends, family can't understand when I can't go out for dinner, lunch, visiting them when they live far away. Colleagues bragging about expensive trips and asking when you are going? Keeping up appearances got me in this situation, but they think I'm joking when I say "I can't afford it"! They think I'm successful! I want to laugh! House needs repairs; new appliances, etc.. I just feel ashamed and embarrassed that I let myself get in this situation. I think I've been an idiot with money and I know it's my fault, poor choices. But what do you say to convince people - hey I just can't afford it when they insist you do something and just don't get it?

Feedback, anyone?

You have to convince yourself that you can't afford it, not the people you have been trying to keep up with.

[bjl584]

Probably the "easiest" and first step should be to look into selling the car. What are the details on the car? Model, year, amount owed, amount financed?

Next, you need to cut your expenses way back. Cancel cable, internet, eating out, cell phones, trips, etc.

What are the details on the CC debt? Interest rates?

[bigdaddybus]

Seriously, is bankruptcy ever a good option? (this is for the forum regulars)

looking at the OP's first post it looks to me that the mortage payment "might" not include annual property taxes so where is that money supposed to coming from in the budget?

I know you said that your husband is trying to find a better job, are you? Do you have the option to make extra money by working overtime, side work,etc?

I realize this is going to be very, very stressful, but like Petunia 100 said, you need to make sure you and your husband are on the same page. Money and friends come and go, but a marriage should be a lifetime partnership.

And like others have said, that car should be sold and gone asap and replaced with a car most think is suitable for a 16yr old high school kid. Something you can buy for cash and put minimum insurance on.

[tripods68]

House: Owe $285K - value:$145K (I don't qualify for loan mod - because, on paper - I can make my payments!)
Car: Owe $30K
CC Debt: $45K
S Loans: $80K

Total Expenses per month: Mort: $1272; CC: $900: Car:$400; Ins: $80; Food: $240; Gas: $200; Utilities: $300; Cell; $65

I don't know if you have thought about filing BK, but you should it as your last option.

First thing I would consider is REFI. If you are denied, simply give them back the keys. 2) get rid of the car and downside to much smaller car, thus smaller car payment, less insurance cost, etc.

As others have said, you should re-evaluate your lifestyle, family budget, etc. Try to save in all fronts including biking to work. Car maintenance is a huge expense. Sometimes admitting that you have been living a lifestyle based on a "big lie" is a good steps towards moving a better tomorrow.

If any of the above doesn't suits you, consider getting a second job to earn extra money to pay down debt.

[disneysteve]

Seriously, is bankruptcy ever a good option? (this is for the forum regulars)

Yes, there are times when there is simply no way possible that the person or couple will ever be able to repay the debts they've accumulated. The majority of the time that involves medical bills. No normal person earning a standard salary (I'm not talking about movie stars or pro athletes or hedge fund managers) can ever repay medical bills that exceed 10 times their income. If the creditors aren't willing to settle for a fraction of the bill amount, what other option is there?

Even Dave Ramsey and Suze Orman sometimes tell callers to file bankruptcy because their situations simply can't be solved any other way.

ETA: I don't think that's the case here. This can be fixed by the husband getting a job (or 2 or 3), selling the car, and getting on a survival budget to clean up some of the other debt.

[maat55]

I personally, would consider walking away from the house while you have decent credit. I would sell everything possible. I would move into an efficiency apartment. I would sell the car. I would put the student loans on deferment if possible while you attack the high interest debt. I would not care what anyone thinks about my finances or lifestyle while tackling this mountain.

Aggressively eliminating this debt will mold your financial skills in a way that will have lasting results.

IMO, things will start looking up for you when you start making headway on a radical get out of debt plan. Good luck.

[snafu]

It's so sad to see people like yourself with BA & MA frightfully unaware of the damage $ 80,000. of student loans cause and how much it will affect every decision you make for a very long time.

It's telling that you didn't note the interest rates for Mortg., SL, CCs or Car while I suspect those rates are driving the balances upward in spite of your payments. I hope you understand that there is no easy way out of your accumulated debt. Nothing, not even bankruptcy will exempt you from student loans. CC & car total $ 75K consumer debt, $ 285K mortgage combine to burden you with an alarming $ 440.K owing.

You and DH need to work as a team to solve problems, it's pointless to met out blame or fault at the point where you most need to support each other. What actions are you and DH willing to take? What household repair work can you learn and undertake together? Are you will to learn about fixing your appliances yourself if in-operable? What are you willing to give up...car, house, cell, cable? what will reduce utility costs? How can you reduce transportation costs? What can you sell? What part time work will you each accept to increase earnings?

[LivingAlmostLarge]

A parttime job to get digging out started. Once the debt is going away it's easier to live on your normal income.

[soapgal04]

Thanks for your response. Currently, the car is worth half what I owe, with too many miles on it. Part time jobs are a viable option...

It's true - while I was getting in to this hole, I was spending and charging out of control - shopping needlessly, living a life that I obviously could not afford - the good credit, buying a home, etc. and now reality has set in and I realize I have to clean this up. I've learned a lot - interest rates on Credit Cards 18%, Retail Cards are at 22%; My mortgage is conventional and so I don't qualify for the loan mods; the home mortgage interest rate is low and well, we do need a place to live - everything is current, so we may as well stay for now.

I do wish my husband would get on board. When I suggest turning off a/c or lights, canceling cable to lower utilities - he gets defensive!!! This in turn causes me to get defensive and we are off on a cycle where I feel I could clean this up better all on my own. I have thought of Chapter 7; but feel there just might be a better way.. I was able to get my student loans deferred for now but my fear is what happens when that runs out. I now take my lunch to work, brew my own coffee, make basic meals - no more fancy organic this or that...! Figured out store brands are just fine...

Enter in family and friends and their pressure for visits and why can't you do this or that or "surely you can afford it". I explain my situation and that's when I feel pressured to charge. It just creates isolation because when you can't do things and all of your weekends and free time are spent at the library or browsing, it tempts me. But, if there is a way of somehow pulling myself out of this hole for a few years and sacrificing, I am willing to try. My problem is getting family to back off because honestly - it's as if they really do not believe me!

[My English Castle]

How about something pretty straightforward like, "Until my husband can get a job, we're cutting back on all optional expenses." That's the end of the conversation. If they say more, repeat that phrase again. But Petunia's right. You both have to work together on this!

[shaggy]

Hey SoapGal, I wanted to offer up some support.

If you're up for a book recommendation, try "All Your Worth." It changed my thinking about budgets and might help you and your DH reach a compromise.

good luck -- I'm rooting for you.

[LivingAlmostLarge]

We are living on one income and have no money.