Help Needed

[maxfleischer]

Re: Help Needed

Asrai - Duh! I should've noted your location before I replied. Sorry about that!

Txjman: In re: defining the edge, for myself, I'd define it as being so much in debt that it begins to have a really awful emotional impact on you -- the point at which it is impossible to live your life without feeling hopelessly depressed about your life, with debt so bad there is no way you could ever see yourself paying it back. That's just my own take -- I think the "edge" is defined differently for everyone. Also, some people are more comfortable doing different "tightwaddy" things; some parents, for example, would never consider dressing their kids in rummage sale clothes -- that's nearly all my kids wear. What types of budget cuts people are willing to make, I think personally, depends largely on how close a person feels to the financial abyss and how much they are willing to change their lifestyle and adopt different habits. Everyone has to work within their own framework.

[jhd815]

Re: Help Needed

Just my opinion,

Bankruptcy should only be used as a last resort. There are serious consequences to filing for bankruptcy; among them that a bankruptcy remains on your credit report for a period of 10 years and when you fill out loan and credit applications, they will ask if you have ever filed for bankruptcy (in other words, not just in the last 10 years). Also, bankruptcy will exempt some of your loans but not all of them (depending upon where you live).

From what you've listed I think you should look first at cutting back as many of your expenses as you can. Use the savings to pay down your credit card debts (and of course stop using your credit cards and incurring further debt). Even an extra $10/month toward a credit card bill can cut your payback time and interest payments substantially.

Good luck, please keep us posted as to what you decide to do.

[Tree0164]

Re: Help Needed

Cut up your charge card and not do use it! You don't want to be adding any more debt.

I just paid off $20k... it took us just under 4 years but we were mostly a 1 income family during that time. Every extra penny went towards that debt.

Also see if you can get your rate lowered. Even if for a promotional time. I played the cc game bounced back between 2-3 cards.

A few things in your budget stick out... is the clothing budget. That is an extra $150 that you can put towards your cc debt. That would an extra $1800 a year that you can put towards your cc debt.

I also second the Dave Ramsey suggestion as well.

Good luck!

[txjman]

Re: Help Needed

maxfleischer, thanks for your input, that was a well thought out reply!

I don't find myself in that situation currently thank goodness. I can certainly see how a person could feel that way. My situation is similar to several people that have posted on the site. Although I hate to see someone struggle it nice to know that you are not alone in your problem.

One question (for anyone) is it smart to pay your credit card daily or weekly (whatever is possible) since interest is accumulated daily? I was thinking about trying. I use homebanking which allows an unlimited amount of transactions. For example if my minimum payment is $60 I would pay $2 everyday of the month. Will this reduce my interest charges?

Re: Help Needed

You may want to consider consolidating your debt. If you have a lot of equity in your home, you could get a home equity loan. Do this ONLY if the interest rate is less than what you are paying on your credit cards.

Or you could use a debt management program )

I agree with the other replys about the clothing amount. Also, when you're grocery shopping be sure to have a list, use coupons, buy generic items. You could cut your spending by about $100 or more.

[lieweheksie]

Re: Help Needed

Another item that sticks out to me is is cable- have you thought about cutting it down or even better cancelling it - you may find it easier to agree to do this for a short time and make sure the whole $80 goes to yor credit card. In our house we don't pay for TV
Internet costs do seem high- we have to have internet( leased line) due to Dh's job as a sysadmin- so I try and use the internet to save me money- send off for freebies, enter competitons, and of course check out all the amazing money saving sites out there
Have you got a plan for paying back the credit card debt- check out Jeffrey's guerilla plan- basically you pay minimum on all cards except one- pay everything into one card- card A, when that is cleared you add the minimum from card a to card b and so on
Can you cut back the clothing - only replacing socks and underwear- most of us have too much clothing anyway. Try not buying any clothes for 6 months and when you do buy again- only on sale
Good luck into getting that debt down

[maxfleischer]

Re: Help Needed

If you do decide top try consolidating with a home loan, PLEASE be sure you have the control NOT to use your cards again -- otherwise you'll end up owing on your home loan AND your credit cards,m and be in worse shape than you are now.

[liveandchi]

Re: Help Needed

And what is your net income for the month? That way we can see how close you are to the edge, so to speak ...Can you tell me what the "other" category includes? And why is gasoline so high? Is public transporation available for work? How many more payments do you have on your car? And how much are your toal credit card balances and the interest rates for each?

Net income is $3000 a month and we usually get an end of the year bonus ove a couple of thousand dollars.

Other is everything that kind of comes up. A night out with friends, renting a movie, gifts for a party, etc.

Gas includes for 2 cars. DH has a pretty long commute and that is why it is a bit high. Public transportation won't work due to the distance.

There are still a couple of years on the car payments.

Credit card balances are high...over 10,000 and interest rates are nor very good. All are in the 15% to 20% area. We have a few dings on our credit with late payments, but everything has been paid. Nothing is in default yet.

[liveandchi]

Re: Help Needed

So what is the edge, and is bankruptcy the only option at that point?

We have considered bankruptcy, but don't want to if we can avoid it. I'm not sure if it is unavoidable yet or not.

[terry1156]

Re: Help Needed

<b>One question (for anyone) is it smart to pay your credit card daily or weekly (whatever is possible) since interest is accumulated daily? I was thinking about trying. I use homebanking which allows an unlimited amount of transactions. For example if my minimum payment is $60 I would pay $2 everyday of the month. Will this reduce my interest charges?</b>

It would have very little effect. BUT paying an extra $5 (or $65 in this case) would have a big effect. I can see the frequent payments having a positive effect if they would otherwise be wasted in other areas if they weren't placed toward the credit cards on a regular basis. What I'm trying to say is that if you make the daily or weekely payments and this will increase the chance that you can pay more than the minimum payment toward your credit cards, then you should do it.

[terry1156]

Re: Help Needed

liveandchi: It seems like you need to make some reductions, but it doesn't look to be out of the question. I would focus on trying to make it so you are at least breaking even each month. If you can do that, then your holiday bonus can go toward paying down debt.

I would also consider starting a home business as <A HREF="http://www.savingadvice.com/forums/showthread.php?t=2096&page=2">I explained in another thread</A>. This will give you a nice tax refund which can also go toward paying down debt.

[asrai]

Re: Help Needed

Is the car your DH driving the best on gas possible? If you have an expensive car that is getting many many miles the value of the car is going to be destroyed.

Call the CC companies and see if you can get the rates reduced or get them switched over to another card that gives the low rate for changed balanaces. You can tell the CC company that you are going ot change cards if they don't lower your rate.

If you can't get expenses down you need to get your income up with a second job or something.

[maxfleischer]

Re: Help Needed

Well, I'm assuming you have already refin'd your mortgage, or are unable to refi to a lwoer rate. So let's look at fixed expenses:

mortgage, car payment, garbage/sewer, electric, gasoline (since you explained the long commute), RE taxes and insurance. That's $2240 without even paying the credit cards/student loan payments.

First thing I'd do with those is to call your credit card agencies and student loan underwriter to see if you can get lower rates. Check out low-interest credit card rate offers at bankrate.com and see if you can transfer a high-rate balance to one of those. Just be sure you're not late or your rate can skyrocket to nearly 30% (I think 27-28% is the highest allowed now). If that fails, you mnight want to try and transfer the balances from your two highest-interest cards to the lowest interest card. to at least save a few dollars per month on the payment. You must, of course, stop using your credit cards now.

The easiest and most obvious cuts that I see (and I say easiest because you CAN live without them or with a lesser version of what you've got) are cable (cancel it for now if at ALL possible -- preferable to bankruptcy and ruining your credit for 7 years, isn't it? or at least reduce it to minimum); internet -- if youa ren't using this as your primary business connection, reduce it to dialup for $10 a month at netzero or one of the other inexpensive providers; phone -- with dial-up, you need a land line, but remember how we all got along with out cells just a few years ago? Cancel your cells. Don't get a long-distance carrier - buy a calling card from BJ's or Costco, etc. Groceries -- for two of you, you can easily cut $100 from this bill per month, adn more if youa re willing to eat at home and brown bag every day. Get a crockpot and cook while you're at work. Use leftovers for the enxt day's lunch. CLothing expenses have got to stop. Inventory what you have and how the items can be combined in different ways. Try rummage sales -- the ones held by churches in affluent neighborhoods have particularly nice (and cheap) items. Electric -- not much you can do there, except regular conservation stuff, like turning off lights, TV, etc. when not in room, adn converting one-by-one to fluorescent bulbs. Other has also got to stop. Look online (google) for inexpensive gift ideas, use the internet for coupons and deals (fatwallet.com is a good site to try), or make gift mixes in a jar, or another homemade item, like truffles or bread -- anybody can stop off at a store, but who cares enough to take the time and effort to actually MAKE something as a gift? Rent movies from the library. Have potluck IN with friends -- not as glamorous, but way less expensive, and if you tell your friends you're cutting back, you may find they are happy -- and even relieved -- not to have to spend a lot themselves for an evening out. Also check your local paper for free events at local colleges, etc.

So: reduce your groceries to $200/month; cut out cable; drop all but one land-line phone and get a long-distance calling card; recduce the internet to dialup; cut out clothing -- at least for now; and cut other to $75/month ... again, for now. That's a savings of $605 that can be used to put toward your debt payments, which total $610/month. Assuming you can cut groceries another $5/month, you will just break even. When youg et those year-end bonuses, put them toward your highest-rate credit card RIGHT AWAY, without even cashing the checks -- just deposit them and immediately write out checks to that card for the same amount as your bonus (OK, maybe keep out $50 for each of you for a treat for being so good). Another option is to put that money into an emergency account to cover you in case something goes wrong, but I have a feeling you might find lots of "emergencies," as we all do ... better to pay the cards right away.

This is a great site, and there are lots of others on the internet -- for others in debt, check out ivillage.com's money boards ... they have a debt board there where people commiserate and share tips, experiences, etc. They also have a budget board and a bankruptcy board.

Just out of curiosity, what do you use for heat? I didn't notice oil or natural gas listed, and if you're heating with electric, $100 seems awfully low, unless you are in the southern states ...

Coupla other questions: have you tried lowering your credit card rates or moving the higher rate balances to your lowest-rate card? Did you try reworking your student loans? Sometimes lenders will extend your loan period to make payments easier. Do either of your employers have any holiday overtime you might work? Have you considered raising the deductibles on your insurance for the time being? Are your honme and cars insured with the same compnay (usually you get a discount if they insure both)? Are you making sure you are credited with all the items you have (like ABS, anti-lock brakes, theft deterrent systems (home and car), etc.)? Did you get a tax refund last year? If so, you can adjust your withholding on your W-4 at work to increase your take-home pay. Are you paying PMI with your mortgage? Do you have at least 80% equity in your home -- if so, most lenders drop PMI.

[Tree0164]

Re: Help Needed

For the social/entertaining stuff.
You do not need to keep up with the Jones. If you do, you are ruining your credit.
Go to the library and get movies from there. Invite your friends over for the night and play a board game instead. You can make up some cheap spaghetti and sauce for under $5, if they want wine they can bring it themselves.

Take the bonus that you are getting at the end of the year and sock it right towards the debt.

It is a one day at a time thing.

Good luck!

[liveandchi]

Re: Help Needed

Everyone pray. I cancelled the cable TV and I'm just waiting to hear the storm when my husband comes home and finds out. I know that it is a must do (and I know I can convince him of it too eventually), but I also know he will not be happy when he finds out. I'm not sure whether to tell him before hand or just let him figure it our for himself.

Thank you for all the other hints. I will try to do as many as I can. I just want to get this first one under our belt before trying any of the others.