New here. Debt + budget + somewhat-of-a-plan. Suggestions?

[Chris73]

I am a 41yo single Mom of 3 (oldest has moved out, but may move back sometime?) My ex had gotten us into an incredible amount of debt when we were married. He is now in prison and will remain there until my youngest is 21, so I will never get child support from him. When we split up, I had just a high school education and there was no way I could take care of my kids with only that. So I went back to school for an associate's degree (total of 3 years).

While attending school full-time, I worked 2 part-time minimum wage jobs. At the time, I was so afraid of not having enough to provide for my kids that I also took out the maximum allowable for student loans. (The financial aid office told me that there was no scholarship info they could give me. But I bet I could have applied for some. Too late now.)

My credit card balance now is from having to come up with nearly $5000 when I sold my old house at a loss (was on the market for 1.5 years and drained me), as well as some Christmas presents and a few things for my current home. (Instead of taking out a cash advance on the CC's at 25% interest, I paid bills and bought groceries with them while saving up the $5000).

I have paid off around 35% of my auto loan so far, so much of the interest has been paid. A few months ago a young girl almost ran me off the road, and I have a huge scratch all the way down the right side from a tree branch. So I imagine that with the decreased value I am upside-down on this loan. Also I have put brand new snow tires on this vehicle. It is 4-wheel drive, and I must be able to go to work even in adverse weather conditions. I have considered refinancing at 1.99% but have not researched this thoroughly yet.

Here are my debt totals:
Discover $2500 approx (17.9% APR) - I have worked a lot of overtime, and I plan to pay this off 1/16/15 with some other money I have saved in addition
Visa $2000 (9.9% APR)
Auto loan (2.9% APR) - $14,500 approx ($335/mo minimum - have been paying $500/mo)
Nelnet (student loan @ 6.25% APR) - $22,200 ($175/mo minimum - have been paying $200/mo)
Mortgage (3.9% APR) - $56,000 approx - ($360/mo minimum - have been paying $500/mo)

Here is my current budget:
Income w/o overtime:
$2400 after taxes + after health insurance
*Each full 12-hr shift of overtime = $300 after taxes - I work as many as I can

Expenses: (in addition to debt listed above)
Utilities: $200 avg
Groceries: $200-300 avg
Car insurance: $120 - thinking about checking around
Fuel: $100 avg
Misc: $50
Cell (for my older son and me): $105 (son's is for appreciation of all the help he is around the house and watching his younger brother; mine is so my kids can reach me when they need to)
Cable/internet/home phone: $135 (I asked about canceling cable, but was told that since it is a bundled package, then just internet and phone would cost even more)

In addition, I am saving $150 per check toward a new metal roof (current one quite damaged by moss), and $30 per check toward Christmas (may not spend $750 for Christmas, but don't want to run up credit cards when the time comes). I'm also planning to save $55 per check toward my starter EF of $1000 (should have by August 2015 or sooner if I can work additional overtime).

It's probably weird that I am paying extra on my auto, student loan, and mortgage at the same time. I think I may be a little OCD with these. For some reason, when I first acquired these debts, the monthly totals I have been paying seemed to be a comfortable payment for each of them, and I feel a little anxious with the thought of lowering them any. Maybe if I could, it would be more of a snowball toward whatever debt I am attacking at the time.

Altogether I am just about breaking even if I don't include overtime. When I finish saving for a roof (hopefully by August 2015), I can add more to paying off debt.

So...what do you all think?

[Chris73]

I forgot to mention that I am saving 3% with company match in my 401K. I have around $28,000 total. I really want to increase my retirement savings in the next few years!

[autoxer]

I think you should stop paying extra on the mortgage, auto loan and student loan, and put all of the extra towards the credit cards.

You also may want to consider using something like mint.com to track your actual spending. Your quick list of expenses looks like it is missing some things.

[Chris73]

I think you should stop paying extra on the mortgage, auto loan and student loan, and put all of the extra towards the credit cards.

You also may want to consider using something like mint.com to track your actual spending. Your quick list of expenses looks like it is missing some things.

Mint.com seems like it would be a helpful resource. I probably am spending here and there some and don't realize where it is all going.

I just calculated the extra I have been paying each month on auto, student loan, and mortgage...$330. This will make a great snowball to start with.

[sblatner]

I just want to say that you are doing a tremendous job! $2400 per month is not a lot to work with and you seem to know where most of it is going. I do suggest Mint or Quicken as you might be surprised at some of the lost money.

Great job!

[cardtrick]

Snowballing is the way to go. Pay off whatever has the highest interest rate. I would go as far as saving up the $1000 EF (pool all of your savings categories into this) and then putting everything new that comes in towards the debt with the highest interest rate. If you really need something later on, you can always either use the EF or find a 0% APR offer or put it on the credit card then. Why save a couple hundred each month in a savings account that pays under 1% interest while you're paying a lot more on the debt?

[Chris73]

Sblatner,
Thanks for the encouragement! I have been trying to do well with what I've got coming in. I will have to check out both Mint and Quicken. It would really help to have a better idea of where I may be losing money.

cardtrick,
Do you recommend saving the $1000 EF before paying off Discover? I considered that, but I have been so tempted to get rid of my Discover bill since I am so close to it. An EF would be useful though. Thanks!

[autoxer]

Mint works well linked to a credit card and checking account, because it automatically categorizes transactions, so you only have to make small tweaks here and there. It's not so good if you use a lot of cash.

If you are using cash, you may want to carry a small note pad and just jot down each transaction, so you can total everything up at the end of the month.

[Chris73]

autoxer,
Great idea about carrying a small notepad to record everything! I used to use my debit card at the grocery store etc, but I found that I kept blowing my budget. I try to leave a $500 cushion in my checking account in case something comes up, and I think I kept feeling comfortable to dip into it. Lately I have been taking out my grocery money in cash, and this has made me more mindful of it.

Thankfully I am not a big shopper. One thing I try to do is something I read about long ago called "unshopping". This means before I go to checkout, I look through my cart and put back things I don't really need or picked up on impulse. Sometimes those unneeded things still get purchased, but I have been better with it lately.

[cardtrick]

Sblatner,
Thanks for the encouragement! I have been trying to do well with what I've got coming in. I will have to check out both Mint and Quicken. It would really help to have a better idea of where I may be losing money.

cardtrick,
Do you recommend saving the $1000 EF before paying off Discover? I considered that, but I have been so tempted to get rid of my Discover bill since I am so close to it. An EF would be useful though. Thanks!

Most people consider a $1000 EF as very necessary before attacking debt. I don't belong to that camp, however. If you have good credit, there are plenty of 0% for 12 months or more offers that you can find (Chase Slate does a 0% on balance transfers with no fees. You can just do a balance transfer to Discover and then ask Discover for a check for the negative balance and use this as your EF). It is kind of counterintuitive to borrow more but that money will just sit in your account. I'd rather borrow at 0% and let it sit in my account than keep my own money in reserve AND pay ridiculous interest rates on my debt. That's my opinion.

[Weird Tolkienish Figure]

Most people consider a $1000 EF as very necessary before attacking debt. I don't belong to that camp, however. If you have good credit, there are plenty of 0% for 12 months or more offers that you can find (Chase Slate does a 0% on balance transfers with no fees. You can just do a balance transfer to Discover and then ask Discover for a check for the negative balance and use this as your EF). It is kind of counterintuitive to borrow more but that money will just sit in your account. I'd rather borrow at 0% and let it sit in my account than keep my own money in reserve AND pay ridiculous interest rates on my debt. That's my opinion.

I've done it with and without the EF, I find the former is way easier. Psychologically it's important not to go backward in debt IMO, without the EF what are you going to do when the car needs repairs?

[Bal.Leona]

It looks like you're definitely on the right track knowing where everything goes and having the right mindset on how to tackle things. You said you'd be able to pay off the Discover card shortly - can you pay 1500 on it and keep 1000 for your EF? If you paid only the minimums on everything else you could still finish it off in a few months.

I know a lot of the time in these threads people ask if you could sell the car and buy a used one in the 3-5k range (with cash from the sale of the current car) and use the rest of the money to pay down debt. It may or may not make sense depending on how much you think you'd be able to sell it for, but I figured it was worth mentioning. It would probably also be worth shopping around on your car insurance, as you mentioned. Also maybe look at your cell phone plan - I've heard a lot of people mention Ting as a low cost provider, but I don't know that much about it. Maybe it would be something that you could look into and see if it works for you? Just a thought.

Overall, sounds like you're doing a great job - keep it up!

[Chris73]

Thanks for the suggestions Bal.Leona and Weird Tolkienish Figure!

I noticed that I was charged interest of almost $35 on my Discover statement. Since it is such a high interest rate at 17.9%, I couldn't help going ahead and paying it off.

I have $50 left over, and I'm going to start my EF with that and build it up to $1000. It will be helpful to be able to cover unexpected expenses without having to use CCs. I had been paying them off every month, but it seems that when I started using them to save up that $5000 to close on my old house (Nov 2014), then it became easier to start putting nickel-and-dime amounts and eventually more on them.