Managing the debt now that we are current.

[familyof4]

we won't be selling the house. We will reduce debt and make our way out of the payments. Our income seems to increase twice a year with mine and my wife's raise, so by this time next year our housing will be 25%.

Since I posted here, we were able to get everything on track and paying on time. Paid off the furniture which eliminated the accrued interest. And I think with our next paycheck we should have enough to totally pay off credit card 1.

[ActYourWage]

Please save the lectures about the amount of debt, the position we are in… so on. I read it all in my first thread and I do agree with all of it. Lets try to stay focussed on the solution to the problem, not the fact that there is a problem.

Looking at your expenses, I see a need to rethink the way you think about debt. It looks like you get a loan anytime you think you need something. A different mindset regarding debt would be a good starting solution to this issue. I would get in debt eliminating mode and get this debt knocked out. You only have around $32,932.17 worth of debt not including the mortgage. My wife and I eliminated approx. $30,300 within 10 months to become debt-free this past year. It can be accomplished.

[sounderella]

Wow Act, how'd you manage that?

[familyof4]

Looking at your expenses, I see a need to rethink the way you think about debt. It looks like you get a loan anytime you think you need something. A different mindset regarding debt would be a good starting solution to this issue. I would get in debt eliminating mode and get this debt knocked out. You only have around $32,932.17 worth of debt not including the mortgage. My wife and I eliminated approx. $30,300 within 10 months to become debt-free this past year. It can be accomplished.

I can see us being able to become debt free. We have about 15k in assets we can sell, we can take all of our savings and pile on the debt each month. But the things we do have and own outright, we need to discuss if we want to give those up. We are in the beginning stages of this plan and still are trying to become organized.

My mindset is not that I want loans for things, We have just never been taught and have been learning for many years. After awhile we got sick of the debt and are here to make a change. I know the habbits are bad and acknowledge all of it.

If my mindset had not changed, I would not have ever posted.

[creditcardfree]

Yes, I would start putting the $104 on CC1. Then when it is paid off move to the second card.

I like that you are trying to save the $430, but I would look at whether or not you have an emergency fund. You need at least $1000. So take 2.5 months to accumulate this if necessary.

If you have the EF, maybe you are looking for what I call a slush fund. Things happen that may be able to be forecasted, but that we don't always expect. We have anywhere from $500 to $2000 just put aside to do fun things, buy new tires, ect. So, maybe start with $500 in your slush fund and add to it from time to time.

Once you've established those...put the $104 and the $430 towards credit cards as best you can.

Look for other ways to bring in small amounts of money. Sell things, have a garage sale, get a paper route, collect your change, collect and turn in aluminum cans. Check your insurance and cell phones for better rates.

Think about whether your kids need savings accounts right now. Sure college is important, but getting some of this high interest debt off your back is important, too.

I didn't see your other thread yet, so sorry if some of my advice is off base. Good luck.

[maat55]

I can see us being able to become debt free. We have about 15k in assets we can sell, we can take all of our savings and pile on the debt each month. But the things we do have and own outright, we need to discuss if we want to give those up. We are in the beginning stages of this plan and still are trying to become organized.

My mindset is not that I want loans for things, We have just never been taught and have been learning for many years. After awhile we got sick of the debt and are here to make a change. I know the habbits are bad and acknowledge all of it.

If my mindset had not changed, I would not have ever posted.

Don't take it personally how some of us have responded. Your debt load is extreme and we wish for you to fully understand this. You've learned to manage your money much like most people and unfortunatly it's not wise.

It's hard for some to believe that they can learn to only borrow money to purchase secured assets that go up in value and not for every consumer product they want. The statement you made above is very incouraging and I hope you use that emotion, as you change your outlook.

I strongly suggest that you read a few personal finance books. I highly recommend these:

The Total Money Makeover by Dave Ramsey
The Millionaire Next Door

[ActYourWage]

Wow Act, how'd you manage that?

About this time last year, I started to budget. I made sure that all my money that I was going to bring it for that month had a designated place to go. $$ for mortgage, $$ for food, $$ for gas, $$ for debt, etc. until all my money was spent before the month began. I got married in October and my wife and I joined our money into one account. We did the same as I mentioned above. I did use some savings (around $9,000), a tax refund (around $2,600) and lived straight by the budget. Once the ball got going, the faster we wanted to be deft-free. At first it did seem overwhelming to think we would have paid off over $30,000 in around 10 months but it is good to have our money working for us now.

[ActYourWage]

I can see us being able to become debt free. We have about 15k in assets we can sell, we can take all of our savings and pile on the debt each month. But the things we do have and own outright, we need to discuss if we want to give those up. We are in the beginning stages of this plan and still are trying to become organized.

My mindset is not that I want loans for things, We have just never been taught and have been learning for many years. After awhile we got sick of the debt and are here to make a change. I know the habbits are bad and acknowledge all of it.

If my mindset had not changed, I would not have ever posted.

I am glad to see you have changed your mindset. I am just trying to pump you up about getting rid of the debt. You really don't have alot of debt, you just need to realize how you got to this place in your life before you can proceed. Hope this helps.

[ActYourWage]

If my mindset had not changed, I would not have ever posted.

There are alot of people that want to be debt free and they begin asking, searching, etc. but they do not want to do the necessary things in order to accomplish those things. It is like someone wanting to lose weight, they read books, visit forums, etc. but they do not eat properly, exercise, etc. in order for the results to show. The mindset about the situation may have changed but not the actions.

I am willing to bet your mindset and actions have changed and I wish you the best.

[familyof4]

Here is a current snap shot. We paid some things, consolidate and it leaves us better off to deal with the upcoming year. Our salaries did not change much (2352 bi weekly), but we should see a raise within 3 months. I hope to take some of the savings and further reduce the debt. The only loans we currently on are Primary mortgage, home eq, my 401k loan, lease and my student loan.

Any more advice?

Mortgage / taxes/ home insurance___________________1,462.50 OWE 159150.00 6.5% fixed
Home Eq ___________________________________ 210.00 Owe 17800.00 7.25 fixed
Vehicle 1 Lease___________________________398.00 Have 18 payments left. Are advertising it for sale now.
Son / Daughter savings acct_________________40.00
401k Loan_______________________163.86 OWE 3100.00 6.75%
Auto Insurance_______________168.00
Snowmobile Insurance______________27.00
Life Insurance______________53.05
Student loan______________47.74 OWE 9300.00 6.1%
Power_________________90.00
Satelite_________________42.98
Cell Phone________________53.00
Home phone / DSL__________________25.55
Garbage_______________17.50
Heat_______________100.00
Spending / Gas / Food______________800.00
Savings / Emergency________________1020.00

[zetta]

Savings / Emergency________________1020.00

Is 1020 the balance in Savings/Emergency, or are you sending 1020 per month to this catagory?

How much per month can you put toward debt?

I would suggest focusing on repaying the 401k loan first. It is the smallest debt, and the 2nd highest interest rate. Get that money back in your account and compounding toward your retirement. Never borrow from it again.

[jIM_Ohio]

$800 for gas food and discretionary spending seems high considering the debt you are in.

$88 for home phone, dsl and cell phones is high because you cannot use all 3 at same time. Elimate home phone line for example.

Based on your take home $(2352), you should be setting aside 20% or $470 per pay period into 401k or applying this amount to debts in addition to current payments. You need to cut spending and live on less than you earn.

Apply the 20% to debts until debt free
then use 15% of this to fund 401ks
then use the other 5% of this to increase the emergency fund.

[familyof4]

Is 1020 the balance in Savings/Emergency, or are you sending 1020 per month to this catagory?

How much per month can you put toward debt?

I would suggest focusing on repaying the 401k loan first. It is the smallest debt, and the 2nd highest interest rate. Get that money back in your account and compounding toward your retirement. Never borrow from it again.

1020 is the amount per month we can put into an account.

I was thinking of taking that amount and depositing it bi weekly (510) into a higher yeild MMA. Then after 12 months dump a large chunk of that on the home eq loan.

800 per month does not go far, that is 200 per week with both my wife and I working.. gas alone is little over 100 per week, then food is high, small spending amounts. we don't eat out, we don't shop at stores for things we don't need. We are funding 9% into my 401k currently and I think have been doing a good job at getting the monthly bills under control.

[myself]

Here is a current snap shot. We paid some things, consolidate and it leaves us better off to deal with the upcoming year. Our salaries did not change much (2352 bi weekly), but we should see a raise within 3 months. I hope to take some of the savings and further reduce the debt. The only loans we currently on are Primary mortgage, home eq, my 401k loan, lease and my student loan.

Any more advice?

Mortgage / taxes/ home insurance___________________1,462.50 OWE 159150.00 6.5% fixed
Home Eq ___________________________________ 210.00 Owe 17800.00 7.25 fixed
Vehicle 1 Lease___________________________398.00 Have 18 payments left. Are advertising it for sale now.
Son / Daughter savings acct_________________40.00
401k Loan_______________________163.86 OWE 3100.00 6.75%
Auto Insurance_______________168.00
Snowmobile Insurance______________27.00
Life Insurance______________53.05
Student loan______________47.74 OWE 9300.00 6.1%
Power_________________90.00
Satelite_________________42.98
Cell Phone________________53.00
Home phone / DSL__________________25.55
Garbage_______________17.50
Heat_______________100.00
Spending / Gas / Food______________800.00
Savings / Emergency________________1020.00

Since you have your spending pretty much under control.
A couple of suggestions:

1. $1,020/month toward savings/emergency should be directed toward your 401K loan to pay yourself back ASAP. Heck, you'd have it paid back in full in 3 months!
2. What's the balance of your savings? You should be prepared to replace the Leased vehicle when that lien is up. After paying of the 401K loan, start to build this up.
3. After saving up enought to pay cash for a replacement vehicle (or darn near it), work on paying off the other car loan ... if it's not gone already.
4. You didn't mention it here (I don't think), but I'm hoping that the kids are doing some work around the house for $40/month.
5. I honestly never heard of "snowmobile insurance". Is that to protect the rider, or from someone stealing it?

Overall, it looks like you're doing pretty well, contratulations.

[familyof4]

Since you have your spending pretty much under control.
A couple of suggestions:

1. $1,020/month toward savings/emergency should be directed toward your 401K loan to pay yourself back ASAP. Heck, you'd have it paid back in full in 3 months!
2. What's the balance of your savings? You should be prepared to replace the Leased vehicle when that lien is up. After paying of the 401K loan, start to build this up.
3. After saving up enought to pay cash for a replacement vehicle (or darn near it), work on paying off the other car loan ... if it's not gone already.
4. You didn't mention it here (I don't think), but I'm hoping that the kids are doing some work around the house for $40/month.
5. I honestly never heard of "snowmobile insurance". Is that to protect the rider, or from someone stealing it?

Overall, it looks like you're doing pretty well, contratulations.

I will pay the 401k back now.. especially since stocks prices are low and that 3k will work more for me now buying up stocks at a lower cost.

Our Savings is about 1k, we may need to pay a septic cleaning bill out of it (300.00)

There is no other car loan. we only have the lease with 18 more payments.

The kids, age 7 and 3, maintain their toy room and bedrooms.. the 7 year old does more of course. The money is more for a jump on college for books or fees.. they don't see that money nor spend it.

The snowmobile insurance is like an auto policy, theft, liability, collision and is required to ride in pretty much any state I would take them.

Thanks for the praise, we feel better about things and plan to continue to become debt free and saving more and more each month.