My plea for help (long)

**Tree0164** · 11-28-2007, 04:55 AM

As I mentioned in my previous post, get Dave Ramsey's book. It really focuses on the snowball method of paying your debt down. Since you have no kids, I suggest getting a part time job to help pay down your debt even more.

You have just about 20k in credit card debt. Anything that you can sell? It looks like you have been openning credit cards at stores for the 0% down. It can burn you unless you had them paid off before the end of term. I would focus on getting those paid off first.

Since you husband walks to work I would sell 1 of the cars as well. You can't afford 2 at this time.

I would then focus on the wamu credit card-see if you can do a balance transfer or threaten to leave them to lower that 22% interest rate.

**Joan.of.the.Arch** · 11-28-2007, 05:29 AM

I wonder if you are charging your renters enough. Does that $450 a month cover at least half of the nondivisible expenses on the house such as mortagage + insurance* + taxes* + etc? Do you pay one garbage fee, water bill, or any of the utilities in one payment for both units, or does your renter get some of these bills directly? Are you charging enough rent to come out ahead after things like the new furnace and other repairs* and maintenance*?

*not listed in your monthly expenses. Don't forget these.

**MClinton** · 11-28-2007, 05:53 AM

Originally posted by nomorecredit View Post

So here's my deal. I'll try to give a shorter version of our situation... Let me first say that I know my "gimmie gimmie" attitude got my into this mess and I'm not making any excuses and I throw myself upon the mercy of the board to help me : ) I'm determined (so determined that we're not doing Christmas/birthday gifts, nothing). I more than admit that I made massive mistakes (I've been sorta lurking and reading stuff here, and you guys seem like you know what you're talking about and won't tear me to shreds for being in this mess). I'm 26, married, no kids, and I want to get out of this while there's still time to redeem myself. All credit cards are cut up as are my bank cards so when I go to the bank Friday I decide how much money I can have for gas and food and parking, and that's it. once it's gone, it's gone. At this point I'm so disgusted with myself I feel there is nothing we need to buy anyway. I've taken small steps lately (such as dying my hair back to its natural color so I don't have to worry about dyeing it ... hey, every little bit helps, right?)

My husband has health problems, so last month I had to put him on my health insurance at work, to the tune of a whopping $432 a month (and my company pays for half it it, thank god). The old plan was $230 a month at his job, but we had to foot 20% of the bills, and with the thought of a surgery or two in the future, there was no way that I could not put him on my plan at work which has awesome co-pays, emergency room visits, prescriptions, etc. It really wasn't a choice. Due to his health problems, he works only 2 days a week and makes about $100 a week which he usually gives me what he can for food or something.

I made roughly $52,000 last year and more this year. I work only on commission, so it's SO difficult for me to budget because it ranges from month to month. I try hard though. I usually average $4,300, minus the health insurance and taxes, of course. I've started kicking it up a notch Our house is a duplex that we live in and rent out the other half so we get $450 a month for that (yay! Best financial decision I ever made as far as getting the duplex instead of a single house) In 2008 I plan on working as much as humanly possible to pay all this down and buying nothing that I don't have to.

So here is our seemingly never-ending list of debts, what we pay monthly. I don't even know how we manage to pay all this!! It's sickening. I want to cry seeing it all written down, but I'm optimistic that we will overcome this. I can't believe I've never made a late payment.

Phones: $106/mo.
Internet: $50/mo (just cancelled cable... all the tv shows I want to watch I can see for free online anyway. I'd rather have my $50 a month and watch The Office a day later)
Car insurance: $63/mo
Health insurance: 432/mo taken directly out of my checks.
Gas: varies... we just had to put in new furnaces and it just started getting cold here in NY.
about $40 every month and a half for dog food.

This is just what we owe. I won't qualify for a consolidation loan. Of course there's gas for the car (Dh walks to his part-time job) and parking and food (we keep it as low as possible and I'm a coupon discount store freak). We never, ever eat out and are pretty much homebodies and our entertainment is walking our dog and hanging out at home... you know, free stuff : )

So that's it. What would you guys do? Please help me before my spirit gets broken....

First, great job coming on here and recognizing that you are in a situation that demands attention. Most would just keep spending until the collections agents make their life too miserable to live. You did the right thing and you know the first step -- stop spending without a plan.

I know you're looking for a concrete plan for getting out of this, so that's what I'll try to help provide.

First, make sure the necessities are taken care of. That's reasonable food, clothing, utilities, and housing. Those are the priority. We don't want you current with some credit card while not making house payments or not keeping your lights on. From your list that appears to be:

-Mortgage (includes homeowner's and taxes and all that stuff): 770/mo 6% (I'm unclear if you owe 770 in addition to what your tenant pays, or if it's $420 with your tenants rent.) Either way, your house payment isn't out of control with other reasonable planning and spending.
-Garbage user fee dealie: $55 every few months (set $20 per month aside in your budget for this expense)
-Electric approx. 50-70/mo for winter
-Water Bill (aug through oct) $166/mo
-Gas (you mentioned a new furnace) and put a value on that.

Before starting on credit card debt, please please please fund a small emergency fund (about $1,000) in a money market account or a high interest checking account. This will keep you from reverting to using credit cards if (when) something goes wrong. A much bigger emergency fund will be in place after you're out of debt.

The credit cards should be tackled (according to those here on SA) in order of interest rate. It is, after all, the best mathematical method. The other popular method, Dave Ramsey's Debt Snowball, starts with the smallest balance. Yours are here:

-WaMu: 9,000 22%
-Line of Credit (medical bills): $272/mo approx. 14,000, 10% interest
-Discover: $64/mo 3,206, 7.9% interest
-Citicard: approx 6,000, minimum payment $128 (interst RATE?)
-Circuit City: $1200, 0% interest until January 2009
-Home Depot Card 1788, no interest until June
-Linens n Things: 400, minimum payment $15, 0% until 2009
-Furniture: approx. 1200, 0% interest until like 2011, 53/mo

Get after these credit cards and start knocking them out. Work extra jobs, sell stuff, do whatever you can physically and emotionally handle to get these out of your way.

You have way too much in car loans. You have to determine if selling one of the cars and replacing it (if absolutely necessary) with a $1,000 beater is worthwhile. The car payments are hurting you. If you have some value in the cars (they're worth more than you owe), I'd seriously consider selling them and buying some cheap cars to get you by for a while. The $470.00/month you have in car loans would do some serious damage to your other debt.

I'm not sure of your precise take-home pay, and that's the number you should clarify with us. You can use Dave Ramsey's "Irregular Income Planning" form to help you budget. You should look for extra income anywhere you can find it (legally, of course) and stay on a very tight budget.

A couple years of careful planning and debt reduction will get you into a financial position that, today, you dream about. You can, in 3 years, have thousands in an emergency fund in the bank, no unsecured consumer debt, and retirement savings and investments underway. The harder you work at it, the more intense you get, the faster it will happen.

Again, great job getting on here and I hope his has helped. Keep us updated and correct me in anything I recommended above.

-MC

**LivingAlmostLarge** · 11-28-2007, 07:26 AM

At least you are here trying to change.

**mom-from-missouri** · 11-28-2007, 07:49 AM

Did you cancel the cards or just cut them up??? Read the fine print on those with 0% interest--make sure you don't loose that 0% if you actually cancel the card.
I would start a EF first.
Do your renters pay for half the trash pickup? If not, next contract renewal I would put that in there. We rent and never had paid for tennants trash or any of their utilities.
I see you have listed dog food but no people food
Water seems high to me. Are you paying for their water???
With the holiday coming up, can you take a temp part time job to focus on the bills? Many stores hire temp help around Christmas and again at inventory time.

**getforfree** · 11-28-2007, 08:22 AM

The Wamu loan at 22% is eating up a lot of your money in interest, that's more than $200 in interest alone. I would either transfer the balance somewhere with lower interest or call the company and threaten to transfer it if they don't lower it.

You need to keep at least a small emergency fund, like $1000, not only if something breaks and needs to be replaced right away, but also when your dh will need to have surgeries and other treatments, that will cost extra $$ too. When your husband will recover after surgery, he will miss some work time too. So I wouldn't really count his pay as an every-month income.

The Home depot card. See how many payments is utill june. It's about 5 payments of $358 to be paid by may.

Then I would try to pay extra on the line of credit with 10%, or if Citicard rate or Wamu negotiated rate is higher, then that one. Pay extra on that and the minimum on everything else.

Then, in about march 2008 or so, see how much you still owe on 0% cards untill january 2009 and divide the amount owed by how many payments you still going to have until beginning of december 2008 and try to pay that much to make sure that you don't pay any interest on those.

Also, try to read some awsome money-saving tips on this site and many others, so you woud save some extra $$ and pay off everything faster.

On those days when your dh is home, can he do some light housework, like dusting or taking care of the dog or even some cooking. That way you can pick up extra few hours at work or get a pt job.

Since the health insurance is from your work, maybe your dh can get a different, easier job, so maybe he could work more time if the job would be easier than the one he has now, whatever his health would allow.

See if you are charging your tennants enough. Even if it's enough, but not to much already, you still can raise it for about $15 a months, just because everything else becomes more expensive. I don't think they would bother to move for such a small increase, but it would help you towards you bills.

**disneysteve** · 11-28-2007, 08:29 AM

Congrats on tackling your situation. Sometimes just sitting down and listing everything as you've done is enough to spur you into action.

A few comments/questions:

You phone bill is high. Is that home and cells? Can you drop some of that service? You could go all cell or at least reduce your service plan.

$50 for internet may be high. Is DSL available in your area. Around here, it is about $29. Every little bit helps.

Is the mortgage amount listed the total or just the share of it that you pay and your tenant pays the rest? Speaking of the tenant, is $450/mo. a competitive rent for your area? Around here, you could barely rent a large storage garage for that price. Check the local paper or speak with a realtor to see what comparable properties are renting for.

Your water bill is outrageous. We are a family of 3 in a decent size house and our monthly bill is under $35. Even if you are including water in the rent for your tenant, $166 is still ridiculous. I'd look into that. Make sure you have no leaky faucets, toilets that don't flush properly, etc.

Your car costs are too high. If your husband can walk to work, does he need a car? Is your car worth more than you owe? If so, consider selling it and replacing it with something much cheaper.

Call WaMu and ask to have your rate lowered. And direct every spare penny to that loan. Then work your way down from highest to lowest interest rate.

**getforfree** · 11-28-2007, 08:31 AM

also, see if you are spending any money towards miscelaneous items, like soda or a snack at a vending machine, or lunch at the fast food or any other small items that don't cost much every time you buy, but might add up to $100 for the whole months. Some people don't realize they spend that much untill they start recording every single little item even if it costs only 50 cents.

**disneysteve** · 11-28-2007, 09:15 AM

Originally posted by getforfree View Post

also, see if you are spending any money towards miscelaneous items, like soda or a snack at a vending machine, or lunch at the fast food or any other small items that don't cost much every time you buy, but might add up to $100 for the whole months. Some people don't realize they spend that much untill they start recording every single little item even if it costs only 50 cents.

Very good advice. Both of you should keep a spending log for a month and see where all of your money is actually going. You'll be surprised how little leaks can sink big ships, as the saying goes.

**Scanner** · 11-28-2007, 11:32 AM

I agree the phones is way too much at $106/month.

I have a TracPhone and if your husband is home most of the time, I don't see a reason to spend $106/month.

You can 30 buy minutes/month for 12 months for about $110.00 on a Tracphone, what you pay in one month.

If you won't do a TracPhone, then okay. . .get a cheap plan.

If you have parents to call or other family, ask them to buy a card to recharge more minutes. I'm sure they will understand your financial situation and send you a card 1x/month to talk to them.

I also agree your car loans are way too much. I have said this before but $5000.00 is quite enough for a functional car. I bought my Taurus for $5000 (including tax) with 50K on it 2 years ago. I just did some repairs (new belt, new brakes, couple new tires) for $600. Whether it's just good to stick with what you have or liquidate and "downsize" on the car, I don't know.

If you even go cheaper than a $5000 car (let's say $1800), you can totally forego collision coverage on your car insurance and just self-insure. I recommend the $5000 range because it's a balance of repairs and getting a functional car.

And yes, it's okay to be a 1 car family for awhile.

I'm lecturing you on the car because this a long term habit that needs to get broken. Given your current income it will take awhile for you to rebuild your finances and once all that debt is paid off, you don't want to go out and take out another $20,000-30,000 auto loan.

Cars, in my opinion, are not a fulfilling way to spend your money. I know most Americans though, are in love with cars.

**nomorecredit** · 11-28-2007, 02:34 PM

Wow, wow, wow, thanks SO much for all the replies and help! i'm so grateful that I found this board...really, really glad. makes it easier to have people to talk to and help me

To answer some questions (i'll try to get all of them), I took a peek at our water bill and it's $100 for water and the rest is a "sewer fee".. I don't know what that is, so I'll have to look into it. Our renter doesn't pay water and garbage... in fact, I don't know anybody who rents who pays either of those, and I myself have never had to pay garbage or water at an apartment. I figure in a few months, a rent hike is going to be discussed. I plan that in a little bit our finances will be a little more stable... I'm scared if I bring it up now that he'll leave and we'll lose that much-needed rent check, so I'll wait.

Our whole mortage payment in total is the 767, not that plus the rent.

We have a contract with Sprint (too bad, because a Tracphone sounds really cheap) so I'm going to have to see exactly what we're paying for and what we can drop, as I can't afford to pay the hefty cancellation fee thingie. The 109 is just our cell phones, no landline.

In good news, my husband has a job interview tomorrow!!!! He saw someone today that he used to work with way back when who is looking for an assistent. This guy is well aware of his health problems (DH falls into the "but you don't LOOK sick" category which is difficult for people to understand. He's got celiac disease, bleeding ulcers, and the one that interferes with work is CVS... it's hard to find an employer who doesn't get frustrated...) So I have my fingers crossed as it will help HUGELY, even if it's only part time

And as far as me, I figure it's not worth it for me to get a second job, instead just work at my job as much as I can and get enough done. I told my boss today to give me as much work as possible. At least I have the luxury of being able to do a lot of work at home, on the weekends, etc. I do plan on starting to get to the office an hour early anyway, as well as do oodles of work over the weekend.

I also decided that my whole x-mas bonus check will go towards the blasted WaMu account (btw, I tried before when I first got the bill to negotiate with them, and they wouldn't budge) and I'll start taking my mileage checks from work and putting them in the savings account for emergency fund (there's only $400 in there now) and any extra I can spare to build it up.

And as far as my take-home pay, it's hard to say. This month I took home $550 a week, but if there were only 4 Fridays like usual, it would have been $687 a week. Sometimes (well, before the health insurance started getting taken out) there were months where I'd take home $950 or more, so it all depends on the work I get and the work I get done.

Thanks again for all the advice..

Oh yeah, I went to buy the David Ramsey book after work today and couldn't find it

I'll just order it online [and pay with it through my checking account, obviously, not the credit card]

Thanks again, everyone. I'll keep you updated and am going to try to write in my blog about how much money I'm NOT spending!

**Joan.of.the.Arch** · 11-28-2007, 03:51 PM

Live where there are public libraries? You should be able to get the Ramsey book free from a library. As someone said above, little things add up--books, included.

**nomorecredit** · 11-28-2007, 03:58 PM

Originally posted by Joan.of.the.Arch View Post

Live where there are public libraries? You should be able to get the Ramsey book free from a library. As someone said above, little things add up--books, included.

Wow... you're right. There's a library a block away. Good thing I'm here...

**Tree0164** · 11-29-2007, 01:16 AM

Originally posted by nomorecredit View Post

Wow... you're right. There's a library a block away. Good thing I'm here...

Yes use your library! Our library is wonderful it has a ton of movies (some of them only 1-2 years old plus tv shows) and of course the books.

They offer free movies for the kids every Saturday afternoon, the kids love bringing their blanket and lying down and watching the movie on the big projecter screen.

The little things do add up.

My plea for help (long)