something I think I have learned....

**disneysteve** · 07-03-2009, 06:09 PM

It looks to me like you are earning about $600/month more than your bills. If that's the case, where's the problem? Unless there are a bunch of expenses you've omitted from the list, you should be able to build an EF and pay more than the minimum on your CC each month. I'd put maybe $200/month toward the EF until you have at least $1,000 and put the rest toward the CC. What is the balance on the CC?

**maat55** · 07-03-2009, 08:37 PM

Write down your expenses in order of most to least important. Cut everything that does not sustain life( cells, eating out, junk foods etc.).

Save up 1000 for ef, then payoff CC's as stated above. Cutting to the bone will get easy when you see quick results. Find extra work, sell stuff. Everything helps.

**swanson719** · 07-04-2009, 07:41 AM

Steve and I have different views on most things on here, but I think both have merit for different reasons. Paying down the CC's fastest saves you the most amount of money because you avoid interest payments. Taking 5 months to put $1,000 in savings can be beneficial to that end, unless you get caught needing that $1,000 during those 5 months and then end up putting the difference on your CC's.

I'm in the Dave Ramsey school of thought. If you give murphy a place to live, he'll move in. Put the $1,000 aside as fast as you can, which is about 45 days, then pay off the credit cards and cut them up, never to be used again. Play with snakes, you're going to get bit. Some people use CC's as a tool for the rewards, etc. but that doesn't work when you run out of money and have to carry a payment.

It's a wash to do this financially as opposed to 5 months for the EF on Steve's idea. Meaning, you have an extra $200 for 3 1/2 months towards your CC's, which will erase whatever extra interest you might be paying for the first 45 days that you build your EF. I think the piece of mind is worth it.

Baby Steps

That's the baby steps. In February 2007 we had $25,000 of consumer debt, were making about $30,000 combined net, and had no savings. Now, we have no debt aside from the house we bought last September and furnished in cash, have an emergency fund, 2 roth IRA's, and make more. When your smart with money, its funny how you end up finding more and making more. I say all that to emphasize that it can be done, and works out well if you keep on track.

Make a list of your debts, smallest to largest. Pay off the smallest first, and then work your way up to the largest. People say the interest doesn't make sense this way, but there is something to be said for the psychological boost of getting debt paid off and having your money be your money again.

Another thing I would look into is consolidating your insurance. If you have homeowners and auto with the same company, you usually will get a bundling discount, plus a multi car discount, then every 5 yrs a loyalty discount. This could save you money right away if you don't already do this. Shop around for the cheapest for what you want - we had one company charge me $1,600 for six months for one car, and then we shopped around and ended up getting both cars for $1150 for 6 months for full coverage. Doing insurance on a six month note saves you a considerable amount on the premiums usually, for us about $20 a month. It would probably be worth waiting to put extra on your debt in order to do this, because it would free up that extra $20 a month. Then for the next 6 months, you just pay your savings account the car insurance each month. You earn interest and save money.

Something else, stop using debit/credit cards and start carrying cash in envelopes labeled with what it's for. We do this with the exception of gas, we pay at the pump on debit. At the grocery store, make your list by priority of how much you need something, then put the price next to it when you put it in the cart. If you budget $120 for groceries, figure in 8% sales tax in our state, you can get up to $111 to still be in budget. So if you get to the snack food on the list and you're at $108, then that bag of chips stays on the shelf. When you write down how much each thing is and keep track of it as you go, it's not a surprise at the counter anymore and you don't spend as much.

Really, the biggest thing I think you need to do is find a way to make some more income. $30,000 a year for 5 people is really tough and doesn't leave much wiggle room at all. I give you credit for making it work. I don't know how the work schedule is in your house, but we have neighbors who both work, but different shifts so that they don't pay child care. It's no way to live in a marriage very long, but if you guys get intense about paying off the debt and getting your EF built up, you could probably get it done in 18 months or less with some extra income. Maybe one of you could pick up a pizza delivery route, that pays tips too. Or get some extra hours. Right now you have $510 a month in debt payments aside from your mortgage, which is more than your mortgage. If you get rid of that, you would have less than $1,000 a month in revolving expenses, which lets you put $1,400 in savings, college funds, and retirement accounts. You guys are in good shape for having 3 kids, and with a good plan and some time, you will be in really great shape.

**disneysteve** · 07-04-2009, 12:28 PM

Originally posted by swanson719 View Post

Steve and I have different views on most things on here, but I think both have merit for different reasons. Paying down the CC's fastest saves you the most amount of money because you avoid interest payments. Taking 5 months to put $1,000 in savings can be beneficial to that end, unless you get caught needing that $1,000 during those 5 months and then end up putting the difference on your CC's.

I'm in the Dave Ramsey school of thought. If you give murphy a place to live, he'll move in. Put the $1,000 aside as fast as you can, which is about 45 days, then pay off the credit cards and cut them up, never to be used again. Play with snakes, you're going to get bit. Some people use CC's as a tool for the rewards, etc. but that doesn't work when you run out of money and have to carry a payment.

I can't argue against this advice. It is certainly a valid way to attack the same problem from a different angle.

I am a fan of credit cards but only for those folks who can use them responsibly. If you are the type who can't use one without overspending, then you shouldn't have one at all. If you can't pay your bill in full each and every month on time, then you shouldn't use one at all.

And everyone should have at least a small savings cushion for those unexpected expenses. However, as I've said many times, most things that people call "emergencies" really aren't. They are just things that you forgot to include in your budget. A car repair, for example, should not come as a surprise. Cars break. House items need repairs. People get sick. We may not know when those things will happen but we can be certain that they will happen and we need to be prepared for them. There should be a car maintenance line on your budget. If you set aside $100/month for car maintenance, when that $500 repair bill pops up, you'll be ready. If you have a home repair account and put in a couple hundred each month, you'll be all set when the washing machine starts leaking. If you designate money every month for medical expenses, you won't have to resort to a credit card when that emergency room visit happens.

**snafu** · 07-04-2009, 01:51 PM

I've noticed lately that it's important to watch the check-out numbers being run through the scanner at the grocery. Since all major chains are on my route, I tend to shop at the store with the best loss leaders. Since March I've noticed special or sale prices are not shown on the scanner, I've had to ask the clerk to re-check the price, sticker coupon, two/for$ etc.

Meal plannng, buying less processed food, and buying non-food products at the Dollar store or Discount can substantively lower your grocery bill. Make it a challenge! Add up how much you've spent on food, household products at the food store, and restaurant in the 1st 3 months, & 2nd 3 months. Can you reduce the median amount by 15% or 20%? Put that amount in your EF.

**irmanator** · 07-05-2009, 05:03 AM

Originally posted by disneysteve View Post

It looks to me like you are earning about $600/month more than your bills. If that's the case, where's the problem? Unless there are a bunch of expenses you've omitted from the list, you should be able to build an EF and pay more than the minimum on your CC each month. I'd put maybe $200/month toward the EF until you have at least $1,000 and put the rest toward the CC. What is the balance on the CC?

ok I looked it over and found that i didn't include
40 a week my husband takes for pocket money. So that is a 160 mo. I don't see where you find 600 though. If you trusted my math about the 1453 then I realize I didn't include the 70 mon pmt on root canal or gas n groc in that total.

I think my worry comes in that there are occaisonal bills looming that i can't figure where I am gonna pull it from. I have to pay the final bill on the orthodontist (the rest was pulled from the fsa- but will still owe 160 when that is used up.)

My car is gonna need exaust and front end alignment maybe a new tire before inspection. (november) No idea on costs.

**irmanator** · 07-05-2009, 05:34 AM

to disney steves' 2nd post : I got cc because mom said you should have one for emergency. Way back when i thought she knew what she was talking about. lol working on getting rid of them now that i know better.
As far as emergency room visits I go to urgent care and its covered and only 25 co pay kids under 19 no charge. if I went to er it would be 100 no matter the age. knock on wood i don't need it too often.

to Swansen: we don't have childcare, the baby is 14.
I can't consolodate ins. (i think) because property in in escrow with the bank
as far as cash in envelopes, I pay all my bills for the week as soon as direct deposit is in at 5 am with electronic billpay. Then take out the rest for groceries/gas/husband allowance. He gets 40 wk.
if I need something that would be home repair/imp. i take it from groceries. I do my own work on that so would only need supplies. I have food stocked up cause i buy on sale- not crazy amounts but enough that if i have to fix something i don't worry about kids cause their is food.

As far as finding more income, doesnt work so well in this economy. I benifit better by having time to fix my own things and grow my own veggies. I have to run ma around sometimes. Husband is on call at his job for overtime and emergencies. We are thankful that we have seniority at our jobs and flexible vacation time to do dr appts and such. we have better benifits than most places in the area. was shocked when my friend told me what they pay for health ins.

to snafu: I don't buy processed food, we have a breadmaker i bought at a yardsale. and I bake from scratch except cake mix as often as i use them which is 3x a year it cheaper to just get as a loss leader sale. (only for kids bdays)
I always watch the scanner because of your reason and I am not sure I trust my math sometimes. So I load the conveyer belt according to importance so as the total rises I can stop her if it gets too close to what i want to spend that week.

QUOTE=maat55;226633]Write down your expenses in order of most to least important. Cut everything that does not sustain life( cells, eating out, junk foods etc.).

Save up 1000 for ef, then payoff CC's as stated above. Cutting to the bone will get easy when you see quick results. Find extra work, sell stuff. Everything helps.[/QUOTE]

can't get rid of cell because too many ppl in my family are older and sick and I can't sit at my home phone waiting for someone to tell me that we need to be at hospital for someones last minutes. I don't eat junk food unless at someone elses house. Don't eat out.

Sorry about long post I just wanted honest opinions and kept thinking of something else to add or saw someone else to respond to.

fyi only owe about 5000 total on cc, 6000 on student loans, 4200 on car, 9000 on home imp. Not much compared to some but it stresses me out. I am not behind but could easily be.

I may worry too much according to my husband, but I want the debt gone so I can put more into my 401k.

**maat55** · 07-05-2009, 06:10 AM

The reality is that in order to prosper you have take in more than you payout. If you think your expenses are as low as you can get them, then you have to find more income. There is no magic pill that will change this.

Your daughter is fourteen, you and your husband may have to look at PT jobs. It is not out of the question to have your daughter contribute in some way if necessary(maybe working for her own luxuries).

You need an positive mentality that will give you the desire to do the things it takes to prosper, saying I can't, needs to be replaced with I can and will.

Look around at what you have, what can you sell? What can you really eliminate? Where can I find extra work? If you are determined, you will find a way to prosper. Good luck.

**disneysteve** · 07-05-2009, 06:54 AM

Originally posted by irmanator View Post

I don't see where you find 600 though. If you trusted my math about the 1453 then I realize I didn't include the 70 mon pmt on root canal or gas n groc in that total.

First you said your bills are $1,453.
Then you listed the bills and your list actually totals $1,723.
You said income is $2,304.
$2,304-1,723=$581. I rounded that off to $600. So that's how I came up with that.

If your husband is spending another $160/month (what is that spent on by the way), that lowers the surplus to $581-160=$421. That still isn't bad as it represents over 18% of your income so you are far from being paycheck to paycheck.

So I'm still not sure where the problem is. A family that is able to save over 18% of income (in addition to 401k and FSA contributions) should be doing just fine. If you're not then there may still be spending that you haven't accounted for in the numbers you've posted so far. Paying a $160 orthodontist bill when you have a monthly surplus of over $400 should be simple. Buying a new tire or having an alignment done also shouldn't stress the budget with that kind of monthly surplus.

I'd suggest that both you and your husband keep a detailed spending log for the next month or two. There is probably money leaking out that you aren't aware of. If so, you need to plug those leaks and reclaim that $421/month surplus.

**snafu** · 07-05-2009, 11:16 AM

As DS points out, money leakage, just small incidental amounts surprisingly add quickly. How does DH use his $160.? If it buys lunch with his colleagues, lunch from home is healthier and cheaper.

I suggest you check on-line or with a broker to determine how much would be saved 'bundling' insurance. Armed with the figures, you could discuss the changes you wish to make with the bank/mortgage holder and gain approval to make changes.

What skill sets can you offer to bring small amounts of cash which in aggregate would cover the cost of car maintenance, appliance replacement targetted fund? Would it be possible to offer child care in your home while school is out for the summer? Has your 14 y/o taken the Red Cross babysitter course, thereby able to earn sums to pay their cell and summer entertainment?

Would neighbors or friends be interested in buying your home made bread twice a week; cheap to make, expensive to buy in stores?

We all use different methods to push income further, I hope some of these ideas are useful.

**irmanator** · 07-08-2009, 05:27 PM

All idea's are good. I am not trying to be neg. but some ideas wont work.
My 19 yo. goes to college and pays her own tuition. She works doing odd jobs for sr. citizens at the high rise.

My 16 yo daughter babysits occaisionally, as needed.

My 14 yo boy, I won't let him babysit unless i know the people well. And only for little boys i don't want him alone w/ little girls just to be safe. He does odd jobs here and there. He is trying to get a paper route. He does clean up after the county fair but thats only 1 week a year.

Husbands 160 he just buys his snacks etc. Maybe it could be cut but i doubt that would go over well as he gives me his whole paycheck and thats all he gets cashwise. He does take less if there is a big bill to cover but not everyweek.

Don't mean to sound neg. but the bread maker takes 5 hr. to make one loaf as it does everything inc raising and kneading. So I can't imaging selling bread would work. though it saves me from buying.

I don't know why this stresses me, I will keep receipts till i see where the extra goes. Even though my comments may not seem like it I do appreciate the critizms.

**disneysteve** · 07-08-2009, 06:37 PM

Originally posted by irmanator View Post

Husbands 160 he just buys his snacks etc.

$160/month on snacks? Must be more to it than that.

Don't mean to sound neg. but the bread maker takes 5 hr. to make one loaf as it does everything inc raising and kneading. So I can't imaging selling bread would work. though it saves me from buying.

Understood, as I have a breadmaker, too. Though it only takes a few minutes to measure the ingredients and start the machine, the whole process takes hours. That said, if you actually think there could be market in your area for fresh-baked bread, it could be worth looking into buying another machine. They have gotten quite cheap, well under $100. I could see having 2 or 3 loaves going at once being a profitable little side business if you have customers lined up willing to buy the product.

**maat55** · 07-08-2009, 07:10 PM

I'm going to have to check this bread thing out. I only eat wheat bread, but would love to make my own if possible. I bet the house will smell real homey while it bakes.

**Joan.of.the.Arch** · 07-08-2009, 09:19 PM

Breadmakers have become very common items at estate sales. Sometimes new in the box. $5-10 is the going rate here.

something I think I have learned....