Totally lost!!

[sunshine5637]

Hi! This seems like a great forum, I am glad I found it.

Let me start by saying I've made some incredibly stupid mistakes and lived way too high above my means. I have traded two vehicles and am on my third, which I absolutely HATE and my payments are higher than what I can really afford but I have to keep the stupid car because I have $6000 negative equity in it. I had a serious credit card problem back in the day and I have two debt consolidation loans out there, also. It seems as though the credit card/loan process is like a revolving door. You make the payments and then go in the hole and have to charge a little more because you are paying on what you ran up before.

Finally, I have done some learning and am really trying to be smart. I make pretty good money for my location and occasionally get a bonus which I've been using to keep me up to date on my paying my credit card off from time to time.

I guess my question is: do I try to refinance my car to get a lower note? WHERE do I start to try to eventually be debt free??

Thanks ya'll!

[disneysteve]

Welcome!

The best thing you can do as far as this forum is concerned is to list your debts including outstanding balance, interest rate and monthly payment and list your income and expenses. Then we can dig through your numbers and give you specific advice on how to proceed.

[mommyof4]

Hi! This seems like a great forum, I am glad I found it.

Let me start by saying I've made some incredibly stupid mistakes and lived way too high above my means. I have traded two vehicles and am on my third, which I absolutely HATE and my payments are higher than what I can really afford but I have to keep the stupid car because I have $6000 negative equity in it. I had a serious credit card problem back in the day and I have two debt consolidation loans out there, also. It seems as though the credit card/loan process is like a revolving door. You make the payments and then go in the hole and have to charge a little more because you are paying on what you ran up before.

Finally, I have done some learning and am really trying to be smart. I make pretty good money for my location and occasionally get a bonus which I've been using to keep me up to date on my paying my credit card off from time to time.

I guess my question is: do I try to refinance my car to get a lower note? WHERE do I start to try to eventually be debt free??

Thanks ya'll!

Get Dave Ramsey's book, Total Money Makeover, and he will give you some good advice.

Mom

[sunshine5637]

Welcome!

The best thing you can do as far as this forum is concerned is to list your debts including outstanding balance, interest rate and monthly payment and list your income and expenses. Then we can dig through your numbers and give you specific advice on how to proceed.

Here it is....

$18,500; 8.75% interest; Toyota
$9,000; 10.24% line of credit
$10,500; 12.5% loan
$2,200; credit card, I can't remember the exact interest rate but it's less than 10%

At the end of the month I'm always in the red but I have NO idea where all my money goes? I have like $500 left for the whole month but I'm clueless how to budget (as you can tell from the numbers up there....)

[KGeary]

Here it is....

$18,500; 8.75% interest; Toyota
$9,000; 10.24% line of credit
$10,500; 12.5% loan
$2,200; credit card, I can't remember the exact interest rate but it's less than 10%

At the end of the month I'm always in the red but I have NO idea where all my money goes? I have like $500 left for the whole month but I'm clueless how to budget (as you can tell from the numbers up there....)

Can you borrow more on the line of credit? If you can, you can sell your car and buy a beater which would get rid of that car payment.

[maat55]

You should look at your budget from a business point of view. Write down every expense from most important to least. Such as:

Housing
Food
Utilities

See how much you could apply to debt if you got rid of things like: cable, cells, eating out etc. Pack a sandwich for lunch.

I would set down with your loan officer at the bank and see if you can borrow the difference plus 3k to sell your existing car and get a beater. You should be able to knock that 18k down to 9k.

Have a garage sale, get part-time work temporarly. Spend some time reading personal finance books, you can check them out at the library or buy them cheap at goodwill.

The important thing is to want more than anything to get out of debt. If you want to bad enough, you will do it quickly and painlessly. Stop using your CC. List your debts from largest to smallest or highest interest to lowest, after paying the minimums, attack the first debt and move to the next. (Debt Snowball)

If you get motivated, you will get out of debt. Good luck.

[disneysteve]

I have NO idea where all my money goes

I think this is PROBLEM NUMBER ONE! You will never get this straightened out until you are controlling your money instead of your money controlling you.

Start today with a written log of every penny you spend on absolutely anything. Write down spending at the time you do it. Don't try to sit down at night and remember what you spent.

Do that for one month. At the end of the month, sit down with the spending log and review it item by item. Divide the spending into two columns: WANTS and NEEDS. And be specific and honest. Some expenses might be part want and part need. For example, you need to eat, but you don't need to go out for lunch every day. You need to have a telephone but you don't need call waiting, caller ID and voice messaging. You need some form of entertainment, but you don't need the premium hi-def on-demand cable service.

After you divide everything up, take a good hard look at the WANTS column and start chipping away at those items as much as possible and apply any savings you realize toward your debt, starting with the highest interest, the 12.5% loan in your case.

Otherwise, I agree with getting rid of the car and replacing it with something much, much cheaper. Borrow the difference between the pay-off amount and the sale proceeds. That should reduce your total debt considerably, which will reduce your monthly payments and free up some cash flow that can go toward quicker debt reduction.

[arthurb999]

Since you have no idea where your money goes... the first step is to get microsoft money or quicken software and learn how to use it. To make it a little easier, get a credit card that you put monthly expenses on and pay off at the end of each month. That way you can download the statement and most of the work is done for you. Once you have a months worth of data, run the monthly revenue and expense report and there is your answer... it's pretty eye openeing.

[disneysteve]

arthurb999, I think your suggestion has one flaw. Using a CC to pay expenses and then reviewing that statement doesn't break down spending in enough detail. Seeing a charge for "Joe's Grocery Store" doesn't tell you if you bought necessity items like chicken and vegetables and milk or if you bought Hershey bars and Doritos. A charge from "Target" doesn't say if it was for socks, underwear and toothpaste or if it was for a new video game and a couple of CDs. I think someone who really doesn't know where the money is going needs to break down spending item by item to see where the problems are.

[arthurb999]

Good point… my current systems lumps stuff at the grocery store as groceries… target/walmart as household items, etc. I guess I assumed when you are trying to get out of debt, you wouldn’t be spending money foolishly on DVDs, video games, candy bars, etc.

You could just save receipts and itemize further from there once the main bills are downloaded.

[disneysteve]

I guess I assumed when you are trying to get out of debt, you wouldn’t be spending money foolishly on DVDs, video games, candy bars, etc.

You could just save receipts and itemize further from there once the main bills are downloaded.

Unfortunately, many people are in debt precisely because they are spending money foolishly and that's what they need to see in black and white so that they can start correcting that.

Definitely save receipts. That is an important point to the log system I spelled out above. When you get home from the market, you need to be able to record not just how much you spent but what you spent it on.

[jIM_Ohio]

List your utilities line by line, same with house payment, car payment, insurance payments and any other expense you have every month. List other yearly expenses too.

List all income seperately.

compare the two on both an annual and monthly basis. If you get paid every other week, this will be important to compare.

[sunshine5637]

Thank you all for your advice!

I am currently looking for something like transcription work which I can do at home when I get in from work. I won't make a fortune, but, I think it'd at least help. I get a raise beginning January-course by the time I pay Uncle Sam I MAY see $150 extra per month-but that helps

Thanks again!!

[sunshine5637]

One more thing: it was suggested that I borrow to pay the remainder of my car so I can sell it. I can't borrow any money because my debt is too high for my income. I previously had a Bank of America line of credit that I closed a few months ago and I called today to see if they could reopen it, but they said they could not. So, I'm stuck there.

And someone else asked if I could borrow against my $9000 credit line. The answer is no, I'm maxed out there, too.

[disneysteve]

$18,500; 8.75% interest; Toyota
$2,200; credit card, less than 10%

it was suggested that I borrow to pay the remainder of my car so I can sell it. I can't borrow any money because my debt is too high for my income.

What is the credit limit on your credit card?
How much could you sell the car for?

Let's say the car is worth $15,000, leaving you $3,500 in the hole if you sell. Could you then buy a used car for $5,000, get a car loan (which you should then qualify for since most of the $18,500 debt would be gone) and use a credit card check to cover any shortage? That would reduce your overall debt by $10,000.