New here and need help

[annmarie93]

I decided that my husband and I need to get on the right track with our finances because somewhere over the last couple of years things have gone astray. We used to spend like crazy and have plenty left over, but that isn't the case anymore. Now we are living paycheck to paycheck - literally. I just finished bills and we have $61 to last for two weeks.

Here are our numbers:

Monthly take home income: $4300
Mortgage: $950/month
Car #1: paid
Car # 2: $315/month
Private school: $565/month (for two kids)
Emergency fund: $80/month
Utilities: approx $450/month
Gasoline: $350/month (car #1 is a 2003 Toyota Camry - good gas mileage; car #2 is a gas eater - 2004 Toyota Sequoia)
Kids activities: $80/month
Necessary prescription meds: $100/month
Groceries: $400/month
Credit card: just transferred to a low-rate card; don't know the monthly payment but I have $8100 on the card


Ok, I think I got everything. We should have money leftover so what should I do to get on the right track. We want that CC debt gone. We just started carrying a balance over the last three years (due to job changes on the part of hubby)

Both cars were bought used. Our house isn't big or fancy at all. Private school is a must - please don't tell me to cut it. (ok, you can say to cut it but I really would rather do without someplace else) We choose to live in a smaller house, drive used cars, not get our dream boat, etc. so that our kids can go to this school. I'm a private school teacher and I could work in public school and make $10 to $12k more a year but when my kids get to my high school I will get a 70% tuition break on an almost $8000 annual tuition/ per child. Also, I really like my job and I rarely have the problems that public school teachers have.

We are both putting into retirement. I don't know what we have though - dh does that.

I also just started selling Southern Living at Home, which is a homebased sales business just to bring in extra money. I'm not going to count on it as a guaranteed income.

I just finished reading Dave Ramsey's Financial peace and I love his ideas, but I'm overwhelmed at to where to start. I like the idea of the envelope system.

I know what two things we need to do right now: pay of CC and put more in the emergency fund.

Ok, sorry for the rambling post and thanks for anything you have to say to me.

[maat55]

I decided that my husband and I need to get on the right track with our finances because somewhere over the last couple of years things have gone astray. We used to spend like crazy and have plenty left over, but that isn't the case anymore. Now we are living paycheck to paycheck - literally. I just finished bills and we have $61 to last for two weeks.

Here are our numbers:

Monthly take home income: $4300
Mortgage: $950/month
Car #1: paid
Car # 2: $315/month
Private school: $565/month (for two kids)
Emergency fund: $80/month
Utilities: approx $450/month
Gasoline: $350/month (car #1 is a 2003 Toyota Camry - good gas mileage; car #2 is a gas eater - 2004 Toyota Sequoia)
Kids activities: $80/month
Necessary prescription meds: $100/month
Groceries: $400/month
Credit card: just transferred to a low-rate card; don't know the monthly payment but I have $8100 on the card


Ok, I think I got everything. We should have money leftover so what should I do to get on the right track. We want that CC debt gone. We just started carrying a balance over the last three years (due to job changes on the part of hubby)

Both cars were bought used. Our house isn't big or fancy at all. Private school is a must - please don't tell me to cut it. (ok, you can say to cut it but I really would rather do without someplace else) We choose to live in a smaller house, drive used cars, not get our dream boat, etc. so that our kids can go to this school. I'm a private school teacher and I could work in public school and make $10 to $12k more a year but when my kids get to my high school I will get a 70% tuition break on an almost $8000 annual tuition/ per child. Also, I really like my job and I rarely have the problems that public school teachers have.

We are both putting into retirement. I don't know what we have though - dh does that.

I also just started selling Southern Living at Home, which is a homebased sales business just to bring in extra money. I'm not going to count on it as a guaranteed income.

I just finished reading Dave Ramsey's Financial peace and I love his ideas, but I'm overwhelmed at to where to start. I like the idea of the envelope system.

I know what two things we need to do right now: pay of CC and put more in the emergency fund.

Ok, sorry for the rambling post and thanks for anything you have to say to me.

If your looking to get out of debt, DR has the plan. First you get current on all your bills.
Second, you save up an emergency fund of 1000.
Third, list all your debts smallest to largest and pay every extra penny you can get toward the lowest debt and pay it off then move to the next.

Make a budget that lists your expenses by highest priority first like, House payment, electric, etc. Once your whole list is made, look for drastic cuts that can be made.

The whole purpose to Dave Ramsey's plan is to get out of debt quickly. Get side jobs and sell everything you don't use. DR's plan is a bold plan, but if done his way, will be very quick to do. I must say that your private school costs are a big load to carry, with your income. If you were debtfree, investing in private schools would be easier. Whatever you do, cut up your credit cards.

[Tree0164]

I was going to suggest reading Dave Ramsey which you have already done. The private school is what is really hurting you-keep it if either you or your spouse can get a job to help cover that until you get out of debt and then save up a year's worth of tutition.

Groceries you may be able to cut down by $50-$100 check out the frugal eating fourms here. also are you eating out at all?

Prescriptions do you have the cheapest options? Can you ask your doctor for any samples?

Tax withholding Are you with holding too much can you adjust so you are not giving the government a tax free loan.

[AmbitiousSaver]

Nice to see you here too, AM

The people here definitely are helpful

[annmarie93]

I have no idea if we are with holding too much or not. How do we know what is enough to get some extra income but not too much to have to pay at the end of the year? It is just my husband and I and we have two kids. Is there a normal amount for a family of four?


Also, as for the private school, we have it cheaper now. My daughter has been in daycare - which was $100 a week = either $400 or $500 a month depending on the number of Mondays in a month. My son's tuition was $318 last year for private school. Now they will both go to the private school and it is less money so we got a raise, so to speak.

Also, it is a good idea to not invest as much in retirement for a period of time in order to pay off the debt, and then increase that amount again?

[annmarie93]

Nice to see you here too, AM

The people here definitely are helpful

Thanks, S. I'm glad you told me about this place.

[humandraydel]

The bills you list are only $3300 and your income is $4300. Where is the other $1k?

[annmarie93]

Groceries you may be able to cut down by $50-$100 check out the frugal eating fourms here. also are you eating out at all?

Prescriptions do you have the cheapest options? Can you ask your doctor for any samples?

I will check out those forums. We do eat out too much and I hope the envelope system will help us there.


We do mail order Rx when we can. I also get free samples quite often. I checked the Wal-Mart list of $4 drugs and none of mine are on there. I need to see about dh's meds.

[annmarie93]

The bills you list are only $3300 and your income is $4300. Where is the other $1k?

That is what I can't figure out. I can't believe that we blow that much each month in "incidentals."

[AmbitiousSaver]

AM, what helped me figure out what we spend money on is I use Quicken so I went back in April and May and wrote down every transaction. This really alerted me to irresponsible spending... I put $1809 on my CC earlier this month (I paid it off this month too)... but that $1809 is money I could have used paying DOWN my credit card instead... while we had the cash in my checking account I just kept looking at it like "Oh, we have money to spare" but now I see that it would have put our CC balance under $8K this month instead of at the $9600 it is at right now.

[humandraydel]

That is what I can't figure out. I can't believe that we blow that much each month in "incidentals."

Then you need to start tracking every dollar for at LEAST a month, if not 2-3. Then, you can take a hard look at your budget and cut where you feel you can. You don't list insurance expenses - car insurance? is the house insurance incuded in your $950 "mortgage" payment? What about property taxes? Remember to plan for EVERYTHING in your budget! Only then can you see if you are spending more than you make. Most people forget to include things like car maintenance, property taxes, gifts, etc. in their budget and therefore think they have more fun money than they actually do!

[annmarie93]

Then you need to start tracking every dollar for at LEAST a month, if not 2-3. Then, you can take a hard look at your budget and cut where you feel you can. You don't list insurance expenses - car insurance? is the house insurance incuded in your $950 "mortgage" payment? What about property taxes? Remember to plan for EVERYTHING in your budget! Only then can you see if you are spending more than you make. Most people forget to include things like car maintenance, property taxes, gifts, etc. in their budget and therefore think they have more fun money than they actually do!

I guess writing everything down is a good place to start.

I included car insurance in with utilities. Our taxes and home insurance are part of our mortgage.

[AmbitiousSaver]

Also, it is a good idea to not invest as much in retirement for a period of time in order to pay off the debt, and then increase that amount again?

I wonder this too... I've heard both arguments and really... am not sure.

Does the economy come into play with what one should do like this?

Whats the APR on the credit card? I've heard arguments that say if its lower than you can expect to get on a savings account or your expected rate of return... keep investing... if its more, pay off your debt first.

But what does worry me about the current economy is I've heard 760 is the new... 620... so a score above 700 today isn't as good as it used to be so the APR might adjust up.

[disneysteve]

That is what I can't figure out. I can't believe that we blow that much each month in "incidentals."

Then you need to start tracking every dollar for at LEAST a month, if not 2-3. Then, you can take a hard look at your budget and cut where you feel you can.

I agree. That's your problem right there - there is $12,000/year that is unaccounted for in your budget. That's a lot of money.

You and your spouse need to each write down every penny that you spend for at least 1 month. Then make a list placing each expenditure in one of two columns - Wants and Needs. You need to be really specific when you do this. For example, having a phone is a need. Having call waiting, caller ID and voice messaging is a want. So you may need to split a bill partly into the Wants column and partly into the Needs column. Add to that chart any recurring expenses that aren't paid monthly, like 1/12 of home insurance, auto insurance, auto registration fee, magazine subscriptions, etc.

Once you have that list, your numbers should balance pretty closely regarding income and expenses. If you still have unaccounted for spending, you need to find it.

Then look at the list and start cutting back on the Wants. That might mean switiching from premium to basic cable, or cutting out extras on the phone bill or eating out less or trimming the grocery spending or whatever.

Don't ignore the Needs list either. Just because something is a need doesn't necessarily mean you can't trim the cost. Get new insurance quotes (auto, life, home) and make sure you have the best rates. Once you have a good EF, consider raising deductibles to lower premiums. With groceries, pay attention to the weekly sales. Use coupons. Try less costly brands.

[jIM_Ohio]

I would think you are on right track. I did not add up the numbers, but if you have 1k per month unaccounted for, that is 25% of your budget and where most gains will come from.

My advice would be to look at kids activities and cut these out or defray the costs. If they play soccer or another sport, volunteer for the organization to cut the fees. I coach soccer and know the organizations cut deals like this all the time.

I would also stop doing emergency fund savings and get that CC debt down. $8100 is a lot, but if you can find that $1000/month you are missing, in 8 months the debt is gone and in 12 months you have a HUGE emergency fund.

Pay yourself first.
Watch spending (most people have a spending problem, not an income problem)
Set money aside in taxable and retirement accounts each month.