My debt situation/ introduction

[disneysteve]

Steve I think the 'decreasing over time' is that the $100K policy in 10 years won't be worth the $100K it is now.

That's not what he said, though. He said "a policy that decreases it's payout over time". If he's talking about the effect of inflation, sure, that's true of any insurance policy unless it has some sort of inflation adjustment each year (which typically comes with a premium adjustment as well).

[Gailete]

That was the only thing I could figure out about why a term life policy would 'decrease.'

[Sammydabullz]

Like I said I need to do more research on term life. Just a simple Google would reveal that there is a term life policy that will decrease it's payout over time....called decreasing term life. There must be more than one type of term life.

[Jluke]

http://term4sale.com/

You can try that one to get some idea of cost.

20-year term might be a good choice.

[disneysteve]

decreasing term life.

My apologies. I didn't know that was a thing.

It makes sense, though. Ideally, your need for insurance should decrease over time, so actually having a policy that factors that in could work.

Let's say you buy a house. You want insurance to cover the mortgage in case you die. With each passing year, the amount owed is smaller so the coverage you would need would be smaller.

I've never had decreasing term coverage but I have reduced the amount of coverage I carry a couple of times. As our debts decreased and our savings increased, the amount of insurance I needed to carry lessened. By the time my current policy term ends, I shouldn't need insurance at all.

[disneysteve]

http://term4sale.com/

You can try that one to get some idea of cost.

Selectquote, Intelliquote, and Accuquote are other good sites. I'm pretty sure I used Accuquote last time around.

[disneysteve]

I am keeping a 12k EF and I'm not going backwards and end up having to save up an EF again.

Let me take one more shot at this.

Your EF is BORROWED money. You are carrying 13K in CC debt in order to maintain your 12K EF. And you are spending close to $3,000/year in interest charges in order to have that EF.

It would be far better - and cheaper - to use your EF to wipe out the credit cards. Then start rebuilding the savings with actual income instead of borrowed money. If an emergency hits before it's built back up, you always have the option of using the credit card again temporarily. But if no emergency happens, you will have saved yourself thousands of dollars.

On another note, I don't think anyone has mentioned the spending side of things. If you want to get serious about the debt, you need to cut out as much unnecessary spending as possible.Unless you are correcting safety hazards or code violations, remodeling is a want, not a need. Even if you are doing it all yourself, you are likely still spending hundreds or thousands in the process. That's all money that could be going to debt reduction.

As suggested, if you post your budget, you'll get a lot of helpful tips on how to clean up the debt mess.

[Gailete]

Any thoughts and lectures you have for me bring it on.

Just wanted to remind you of what you said in your first post as you seem to be rather unhappy with the suggestions you have gotten. The problem with your credit cards and your EF is basically one of numbers. How much are those monthly payments on your two credit cards each month? If you paid off all but $2K of the credit cards, you would still have $1000 in your EF, it would free up a large amount of cash that you could speedily pay off the other bills, and at the same time fill up that EF again.

I don't know if you have read many of my posts, but at one point I found myself in over $40k in credit card debt, a $100K mortgage where the yearly payment was going up every year due to taxes, and a $400+ car payment. I was bringing in $1800/month, my ex-husband while he would tell people he made $800/week (yeah that happened maybe twice a year) in reality was generally bringing in about $300/week. Sometimes less and sometimes more. He was a trucker and so his pay depended on his loads. He was also a spendoholic of the worst kind. I had to divorce him to get out from under it all. At that point in time, my minimum monthly payments on the credit cards were $1100/month not including the house and car payment! At yet he kept spending 'money' - charging more as he was the kind that if the store would take his card he was happy. I got creditors calling me for years following us breaking up. Rather extreme, but it took radical things to get back to solvency (although I doubt that he is solvent yet in the 17+ years he has been out of my life.

During that very awful time I read a book by Carol Keeffe Called Get What you want in Life with Money you Already Have (http://amzn.to/2ruclmb). I followed her ideas. I also started rounding up if possible, bill payments to the next dollar. I studied Dave Ramsey. I just opened my old day planner and saw his 'Baby Steps" list. If you are following him, unless he has changed his Baby Steps, the first thing to do is save $1000 in emergency savings. Then kill the debt, THEN increase emergency savings to $10000, then work on fully funded retirement accounts, pay off your mortgage and then save & give. If you are a Dave Ramsey fan, then you have that EF saved. You should now be in the Killing off debt phase. I is funny, not ha-ha funny weird maybe, that the better I have been doing with credit card pay down, the better our finances seem to be and the less stressed I am. Last year was horrible for us as my husband had eye surgery than pretty much made him blind – no driving, no working (he is self-employed so no money coming in if he isn’t working) I’m on disability so financially we were in a pickle. But as I have stayed constant in paying off the debt, the better we are doing this year. As I am already in my 60’s I knew it was imperative to not only pay off the debt but get some retirement savings. In the last 15 years, even with chronic physical problems for both of us, we have managed to save (and with savings growth) I added it up the other day and we have $37K! Of course, since most of it is in stocks, that could fluctuate over time and yet still grow.

Just giving some examples of someone that is under the same weight as you and is working their way out of it. The initial debt that I talked about was paid off completely with my share of the house proceeds. This debt is because of the physical problems we have, but I know there will be a huge improvement when we get our mortgage paid off as well as some rental property that should be paid off within the year.

You must set a goal, write it down and then figure out how you will accomplish those goals. Get out your calculator so you know that you aren’t trying to get rid of a bill with a 4% interest rate while you are barely touching one with a 20% rate as that is just poor math. Unless you EF is making a big fat interest rate it is better to pay down those heavy bills with it as you will be saving and saving a lot in the meantime. If you published your budget we could help you perhaps plug other leaks as well. For the most part you have only mentioned your debt and without corresponding income and regular outgo, so we have only been able to focus in on only one specific thing. Hope this is of some help and encouragement. Many others here have also gone through what you are and they only want to help.

[disneysteve]

Dave Ramsey. I just opened my old day planner and saw his 'Baby Steps" list. If you are following him, unless he has changed his Baby Steps, the first thing to do is save $1000 in emergency savings. Then kill the debt, THEN increase emergency savings to $10000

I just want to clarify part of this.
Baby Step 3 is to save a 3-6 month emergency fund. That amount will vary from person to person based on your expenses. It isn't a set $10,000.

[Gailete]

Thanks Steve for the update. I had written that in the back of my day planner years ago. Apparently he did make some changes.

[disneysteve]

Thanks Steve for the update. I had written that in the back of my day planner years ago. Apparently he did make some changes.

Since OP's monthly take home is $3,500, 3 months of expenses can't possibly be more than $10,500 and likely less than that when you cut out the fat.

(ETA: I suppose monthly expenses could exceed $3,500 if they are spending more than they are earning. I hadn't thought of that.)

[msomnipotent]

Personally, I would consider owing all that credit card debt an emergency. I do completely understand why you want to hang on to the EF because I have been down that road, too. Only I owed a LOT more money. But having so much money tied up in the EF is costing you a lot of money. As someone has already posted, if things go south again, you can utilize your cards again if need be. In the mean time, you are saving thousands on interest and you are saving your sanity. Owing a lot tends to do a lot to one's mental health. I felt physically lighter each time I paid off a bill. At least consider paying off the highest interest rate card, then adding half of what would be that payment to the other card and half back to the EF if you feel the need, although I would snowball that money to the other debt in full if it were me. You might also be lowering your credit score and making your debt more expensive while carrying these balances, depending on your utilization ratio. Have you checked your credit score lately?

Another thought is why $12,000? Is it an arbitrary number or did you crunch the numbers and decided that $12,000 is what it will take to get you through something?

How is your credit score? Are you able to open a new card and use low interest balance transfers? Can you join a credit union and take out an unsecured personal loan to consolidate your debt?

Do you have a written budget? It really helps to keep you on track. You might also consider moving if there are no accounting jobs available near you. We moved around quite a bit when we were first married due to my husband's skill set. He wound up with better benefits and more money each time.

[disneysteve]

Personally, I would consider owing all that credit card debt an emergency.

[Gailete]

. In the mean time, you are saving thousands on interest and you are saving your sanity. Owing a lot tends to do a lot to one's mental health. I felt physically lighter each time I paid off a bill.

You said a mouthful there! As I am knocking down bills lately I too have felt lighter and much less stressed.

[disneysteve]

You said a mouthful there! As I am knocking down bills lately I too have felt lighter and much less stressed.

Agreed, however in fairness to the OP, having no savings is stressful, too. That 12K EF might be what helps him feel less stressed. I can understand that view.