I have no idea how to make a budget or get out of debt!

**maat55** · 08-05-2008, 06:40 PM

You need to sell the car.

Pay in this order:

BOA 980.
SL 3500
SL 5350
AMEX 12800
SL 11000

You should not have CC's at this time. If I were you I would cut them up NOW.

You are going to have to get a second job NOW. Are you living at home? You need to sit at home and read personal finance books for a hobby for a while. I'm doing it, and I'm debtfree.

Pay your minimums and apply all extra income towards debts as listed. It will take you some time to fix this problem but you will come out of this much smarter, and then you can finish your studies. After you sell the car, you may have some negative equity you will have to finance. Selling the car is a must, cutting up the cards is a must. Getting a second job is a must. Good luck.

**DebtFreeMe2** · 08-05-2008, 07:09 PM

I agree with maat55 on the order of payoff, just be sure to pay off the $500 dollar card also, before interest starts.

As for the budget you already have one laid out, you seem to know what all your debts are and what your income is, so basically all a budget is, is a plan for the next month. Only now that you know what your current expenses are try and find places to cut in your future budget.

Just at first glance if you're single with no kids, I see allot of 10 cent Raman noodles in your future to bring down the $150 for groceries. We feed my family of 4 quite well on $175 every 2 weeks, coupons and sales are great.

To learn all about how to get out of debt and set up a budget the very first book you need to get is by Dave Ramsey called the "Total Money Makeover".

You should be able to pick up a copy FREE at the library to read. Dave Ramsey has a few other books out, but I really didn't get as much out of them as I did from TMM. Also his writing style in this book is much better then his previous ones and will really help jazz you up to get out of debt.

My wife and I used that book to help pay off $48,000 in 2 1/2 years. Not easy to do with twin new born babies (having them on the way is what scared us to get out of debt), and only making $50,000 on a single income, my wife is a great stay at home mom.

Being as young as you are the hard work of getting out of debt will be nothing but a distant memory in just a few short years and you�ll be in a much better position then most people in this country. I was 30 when we started and wish we would have started much earlier.

Good luck and get the book.

DebtFreeMe2

**claudius753** · 08-05-2008, 07:37 PM

I could really use some tips on decreasing my grocery bill. Most of that is to pack lunch for work. Lunch meats are expensive, but I don't know what else to take. Gotta find a substitute for those HotPockets too, they aren't the cheapest way to go I'm sure.

**cptacek** · 08-05-2008, 08:50 PM

What about the car? Any thoughts about selling it? It is about 25% of your take home pay.

**jIM_Ohio** · 08-06-2008, 01:23 AM

You listed income, $1474 per month

issue 1 is to spend less than you earn. I generally recomend living on 80% of what you make and setting aside 20%.

This means you need to plan to spend only $1180 per month on car, food, and bills.

This means allocate 20% towards gaining financial independance- this is $295.

I would NOT be looking to move student loans onto credit cards or transferring one debt to another.

As you listed things, think about it this way:

Your bills (student loans, phone, car, groceries) are $1009. You are well less than 80% with "fixed" expenses.

The debt (cc) is what is hurting the financial independance efforts. You have $310 of debt payments which is close to 25% of what you take home.

I would take the $500 balance and pay it off- regardless of interest rate, just get down one less bill. I might suggest consolidating all 3 cc onto one card- so you have one bill- allocate the remaining $465 per month to the 23k of debt you have accumulated.

Do you get a tax refund?
Do you pay rent?
Can you get a second job?

**lexi_kaye** · 08-06-2008, 05:56 AM

Transferring student loans to an unsecured credit card (at a lower interst rate) is not a bad idea. What you have to keep in mind is what that would make your monthly minimum payment on that credit card. You can call the company and ask how their monthly minimum payment is computed if you are not sure. Most are 2-3% of your balance. Before you would opt for this, you would need to make sure that your new payment difference would not be more than you currently were paying to the student loan. Read up on the snowballing debt theory. You can find lots of into about it on the internet. It has helped me tremendously and while I am not yet debt free, I have a plan in place and after many many years of feeling like I was just spinning my wheels, I finally now see that I am making progress and can see the end in sight.

The comments about cutting the grocery bill is right on. Perhaps shop what is on sale and stock up, use coupons, find alternatives. I could buy stuff for sandwiches for $10 that would last for lunches for a week, easily. Of course, I usually opt for cheaper options, peanutbutter and jelly or peanutbutter and marshmallow cream on whole wheat bread. For a few dollars, I have at least a week's worth of lunches. I also shop at an Amish store which sells seconds and can usually find soups and canned raviolis, etc for less than 50 cents a can, this is a quick easy lunch. Being it is just me, I also sometimes eat this type of thing for supper as well. What you have to watch is that you are still getting some veggies and fruit into your diet, but buying when in season helps.

As far as the getting rid of the car, I understand that might not be an option. I live in an area where I have no option, no public transportation, etc, and am forced to have a car. Mind you, I actually like owning a car but until recently, was driving the same car for 15 years. I drive 10 miles to work a day, and cannot carpool because of my hours and job duties. But what I can do is combine trips and stop on the way home Friday night instead of making a trip into town on the weekend. I try and use as little gas as I can.

You have a good start on the budget, knowing what you owe and how much each month your payments are is a big start!

**disneysteve** · 08-06-2008, 06:04 AM

Originally posted by claudius753 View Post

1475 - 1319 = $156 left over for the month.

You already have a budget. You just posted it. And it is a pretty good one because you are spending just under 90% of what you earn, so you are living below your means. Good for you. That's really the first hurdle - spending less than you earn.

As for the debt, I agree with maat55's order of repayment.

As for the car, I'm sure you realize now that you bought something you couldn't afford. Having 25% of your income going to the car is way too much. How much is it currently worth in private sale? Check kbb.com to answer that. Then consider selling the car and buying something affordable.

Hopefully, you are no longer using any of your credit cards. If you are, stop immediately. Cut them up and forget they exist. Definitely don't add to your CC debt by charging your student loans. That's a bad idea.

**fruitbowlk** · 08-06-2008, 06:17 AM

Originally posted by claudius753 View Post

I could really use some tips on decreasing my grocery bill. Most of that is to pack lunch for work. Lunch meats are expensive, but I don't know what else to take. Gotta find a substitute for those HotPockets too, they aren't the cheapest way to go I'm sure.

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**glock35ipsc** · 08-06-2008, 06:22 AM

I have to pretty much agree with what maat55, DebtFreeMe2 and the others have said.

About the car..... you don't need (and can't afford) a $17,800 car. Get rid of it, and find a $1000-$2000 car to drive. You don't need an image, you just need reliable transportation. I drive a $1000 220,000 mile 16 year old Subaru. I can afford a car that costs much more now that I am debt free, but I actually like this little car! It paid for itself is just a few months, and it still gets 30 mpg! I'll drive it until it dies, then I will pay cash for the early 2000 something BMW 330i I have been wanting for soooooo long.

Cheap, easy lunches: a bag of frozen chicken breasts, bag of frozen broccoli, and some sweet potatoes. A very healthy 7 days worth of lunch or dinner at an approximate cost of $3.25 per meal. I do this, and have a large George Foreman type grill, and cook all the chicken and bag the broccoli on Sundays. Then just grab one of each every morning before leaving.

**stressedmama** · 08-06-2008, 06:34 AM

Get rid of the car and get something cheaper if possible. I'm not sure about where you live, but our personal property taxes (cars, boats, etc) are coming due in the next 2 months. You must account for this in your budget too (if it applies in your state) since you have a new car and taxes would be pretty high. Plus you should get cheaper insurance if you get a used/older car.

Lunches - PB&J and an apple a day should be pretty cheap, generic brand canned soup, hot dogs, etc are a lot cheaper.

**LuxLiving** · 08-06-2008, 06:50 AM

Start taking the extra money you have and start boosting that emergency fund.

Pay off debts.

Have you adjusted your exemptions at work to bring home the most of your money as you can? Better to get a little more in each check than one giant one a year.

For good reading on budgets - try youneedabudget dot com and mvelopes dot com.

Do you have health care coverage at work? I don't see that listed. How about clothing? car repairs under warranty now?
Those are some things that you should likely be budgeting for as well.

You don't address your living arrangements? If you plan on living on your own sometime in the future are you saving for a down payment? or for 1st & last months rents? Utility deposits? Etc? I'm sure if you are still at home you'd probably like to move forward at some point. I think you'll find the room to start saving towards those kinds of goals if you follow the other's advice here and lose the car and get yourself a less expensive model.

Good luck and let us know how it goes!

**claudius753** · 08-06-2008, 02:41 PM

Ok, so I guess I should add some additional details.

I do live with my parents right now. I didn’t include the rent in my budget. My uncle who passed away a year ago left his house to my sister, my mother, and I. My mother doesn’t want the house; it is basically going to be 50/50 with my sister and I in the future. We rent this house out to some relatives right now. The rent money covers the cost of the mortgage on that house with about $50,000 remaining on the mortgage. The money left over after saving for taxes / repairs on that property goes to my sister and I technically, but I don’t get the money, it covers my rent for living with my parents. I don’t ever have to worry about it so I didn’t include it in my income or my expenses.

As for my credit cards, I divided the minimum payment on my amex by the balance, and I came out with pretty close to .02, so I assume they calculate the minimum payment at 2% of the balance. Were I to consolidate the $3,500 school loan and the BoA balance to it, I would increase the payment on that card to ~$370 ($110 increase) and remove $122 from my monthly expenses, so really only a $10 savings per month. I would, however, be saving on interest. Note that the $3,500 school loan has no tax advantages while the other two I can deduct interest on my taxes.

I did get a fairly large refund last year, about $1,400, which I used to jump-start my EF and paid on some debt. This year I will have even more deductions than last year, so it may be even higher. Perhaps I should look into changing my withholding? I just don’t want to have to owe taxes every year.

I need to cut back on my grocery spending some how as well - then I can apply that savings to either the EF or to pay extra on debt. Note that as of right now I don’t pay the minimums on my CCs or car, I always pay extra however little it may be. So is it better to pay the minimums on everything and focus on one debt at a time?

I can’t feasibly justify selling my car. Say I’m not serious about paying down debt or whatever you want, I have to have a car. I don’t live in a city, there is no public transportation. To sell my car, I would be upside down right now. So I would have to still pay on this car, plus I would need to finance more on another car. I can’t buy a $500 beater; I need reliable transportation to get to work. I did look into trading in to buy a VW Rabbit and could maybe get $15,000 for my car, but the new car is $16,500 plus taxes etc. They have 0% financing right now, so it would lower my payment by maybe $50 a month, but it doesn’t seem right to buy a new car to save money. I would end up owing more total, but less payment. I would rather keep paying on this car until it at least is worth more than I owe, even though the payments are high, then getting a lower payment but owing more, or owing $6-7k on a used car. With this car I at least have a warranty and it is reliable.

I have been looking for a new job to pay more than the $11.10 I make now, but it is hard to find any job in my area right now. There aren’t even many part time jobs to be found. I could probably get 2 or 3 more hours of overtime every other week that I work OT already. I might even be able to talk the boss into giving me an OT day every week instead of every other. So I could have 8 extra hours of OT – that would be $150 extra per check before taxes, or $325 a month. After taxes maybe $200 so I guess that would really help out.

By the way, I do have about $7,000 currently in my 401(k) plan and I contribute 6%, the max to what the company will match 25% with a yearly discretionary bonus of up to another 25%. That is around $60 taken out of my check. I’m getting 25%-50% on my money up front, there’s no loan I have that is that much interest, so it doesn’t make sense to stop funding that right now…right? I would rather not change that.

Anyway, kudos if you read all of that. I guess I just need to focus on making as much as I can and paying as much as I can on the debt I have.

**MiikeB** · 08-06-2008, 02:47 PM

I agree with everything addressed but want to bring up one thing that wasnt:

How did you get 20k in student loan debt getting an associates in general studies?

I don't want to sound mean but its pretty much the most worthless degree out there, and spending 20k getting it means either you didnt take school seriously and failed a bunch, you went to a grossly expensive private school, or you took out way more than you needed so you could have spending money.

What happened?

**claudius753** · 08-06-2008, 02:58 PM

Originally posted by MiikeB View Post

I agree with everything addressed but want to bring up one thing that wasnt:

How did you get 20k in student loan debt getting an associates in general studies?

I don't want to sound mean but its pretty much the most worthless degree out there, and spending 20k getting it means either you didnt take school seriously and failed a bunch, you went to a grossly expensive private school, or you took out way more than you needed so you could have spending money.

What happened?

I went to a private school that cost $22,000 a year for 1.5 years before I dropped out. I maintained a 3.7 GPA and I had a scholarship covering $12,000 a year, but I still ended up financing a total of around $15,000 (10,000 + 5,000 loans). I was just a dumb kid at the time, fell into depression, and decided I hated that school and everyone there. They were all rich kids with mommy and daddy paying tuition and for the gas in their new BMWs and Mercedes while I was washing dishes to have the money to pay for gas to commute to the college.

The $3,500 covered 1 year of community college to finish up the associates degree, I just finished that after starting school again. I'm looking at about maybe another $14,000 to get the bachelors that I think I want to get in Computer Science from a public school. I'm looking to try to get some aid to help cover that though, through scholarships, etc.

I don't regret dropping out of the private school, though I very much regret not simply starting at a different school right away. I would have had my bachelors for over a year by now

.

I have no idea how to make a budget or get out of debt!