looking into debt consolidation

**jmjj215** · 08-23-2005, 09:31 AM

Re: debt consolidation

txjman, before you do this, maybe you could disclose your current budget and all obligations? I'd like to see if we couldn't help you avoid it all together. 99% of the time it's not a good thing for the user.

**txjman** · 08-23-2005, 03:45 PM

Re: debt consolidation

I can do that.

$700 house payment
$800 on cars
$70 school loans
$425 personal loan
$500 in credit cards
$150 insurance
$27 Alarm company
$114 home improvement
$1093 in household expenses (gas,eletric, telephone, etc..)

That totals $3879
My avg monthly income is $4400

Now I need to put gas in my car and feed my family.

I am no financial genius obviously. I understand you either have to cut expense, increase your income, or a combination of the two. We have gotten rid of cell phones and television. I would like to trade in at least one car, but I don't want to be upside down on the next when these will be paid off in 16 months. I bring in a little extra money as does my wife, but I am tired of this. I am tired of building an emergency fund to see it get washed away and then put the next emergency on the credit card before we can build up the fund again. No this is not good, but I want it over with. I have been late on the credit cards recently which has raised our interest rates through the roof and has harmed our credit already. I attempted the snowball method when I paid off one school loan, but I had to put that in savings for the emergency fund when it was depleted.

Any advice would be well received.

**jmjj215** · 08-23-2005, 04:27 PM

Let's Help out a Forum Member!

Guys,
Let's take a look at txjman's situation and see if we can't help him get on track. He's thinking about consolidating. He's tried snowballing, but every time they build up an emergency fund it seems it gets washed away and they have to charge an emergency on a CC.

**34saving** · 08-23-2005, 04:41 PM

Re: Let's Help out a Forum Member!

Any additional info. on the household expenses would be useful I think. (Surface says they're quite high, but it's hard to know what all is covered there.)

**cercis** · 08-23-2005, 06:48 PM

Re: looking into debt consolidation

I thought those looked high too. I've only hit that high once and that was a month we splurged on DS's bday (mommy guilt for not planning well) and a couple of trips.

**terry1156** · 08-24-2005, 08:13 AM

Re: looking into debt consolidation

If you consolidate, are you only considering through a consolidation company? Are you considering using your home equity? Would you consider doing the consolidation yourself?

**pennywise** · 08-24-2005, 08:23 AM

Re: looking into debt consolidation

I think we need a more detailed budget. I don't see the car insurance, home owners insurance. There may be alot more places to cut if we can see the budget in the most detail form. This family is a WINNER. Do you see they cut the cells and TV. EXCELLENT. We can and will help a person who will want to help themself. Please get the budget down to more detail. How many people in the house, and ages is helpful to give hints on entertainment and groceries, school lunches, etc.

**txjman** · 08-24-2005, 09:03 AM

Re: looking into debt consolidation

Expenses:
$86 phone
$37 gas (water heater/furnace)
$102 Energy (my last 2 bills have been over $200, it's hot in Texas)
$165 auto insurance
$27 alarm
$75 life insurance
$75 water and garbage collection
$240 allowance
$100 childcare
$170 school
$1002 total

Left overs:
$100 eating out
$160 grocery
$280 gasoline (we have long commutes, and it only getting worse with the price of gas)

Sorry, the total yesterday was off the top of my head. We have done a much better job with eating out and misc expenses. I will look into using the equity in my home, but we just refinanced three years ago to do the samething. I didn't have much equity then, and I had to use it to live in because I was laid off at the same time (as were a lot of us). That is the story of my life. I am not saying that I haven't made bad financial decisions, or that we haven't been irresponsible with credit cards. I feel like we have straightened out for the last 3 years at least, but we just can seem to stay one step ahead. It is frustrating.

4 people in the house Me, wife and 2 kids 5 yrs and 1 yr.

Thanks!

**txjman** · 08-24-2005, 09:04 AM

Re: looking into debt consolidation

I forgot to mention, we don't go out much. We don't travel. We have cut the luxury items out of our life for the last 2 years at least.

**pennywise** · 08-24-2005, 11:21 AM

Re: looking into debt consolidation

Its okay to cut the luxuries. Short term sacrifices for long-term gains!!! You are on the right road. You found us so you are looking, you have also made some tough decisions and incorporated them into your life. I hope we can prevent the further loan taking. Taking equity from your house is not a good idea and does not buy you the financial freedom you are looking for. We will continue to encourage you. I started on ADC over 25 years ago - my sister said: look at what you have done with your opportunities. And I did. I don't have to work anymore if I don't want - will have to live on a low income, but I don't have to anymore. Let's get you there.

1) The phone. I need you to analyze the phone use. What do you use the phone for? Can prepaid long distance cards work and cut long distance. I know we all need unlimited local because of the computer. Check out Vartec: I have unlimited local and 30 min long distance every month for about $45 total (all those taxes and fees included). If anyone has the same cheaper who is your company? Check all competitors in your area. SBC is looking to grow right now. Okay, step 1.

2) Look at our discussion on the hot water heater and the other is "how do you save on electricity". There may be some ideas for you. Can you turn the hot water heater down a notch. Do you have the blanket on the hot water heater (if you need to buy one you have to cut from somewhere to buy - you cannot just go buy one, okay?)

3) I read my electric meter every day to see where I can cut. You need to analyze every room to see what is plugged in. You can lower here I am sure, see #2 above.

4) The auto insurance. What coverage, how old are the cars. I have two brand new and I put the minimal insurance - they were paid cash for. The insurance man said "new cars, we will fix you but not the cars" I said "I have been driving since age 16 (current 49) and have never used my insurance"!!!! Check competitor's, do not just keep paying the bills. Call your rep and discuss decreasing the coverage.

5) Cut the alarm at the first out of the contract. Keep your sign on the house and keep the thing working. Mine goes off if I forget, but really - what is the liklihood someone will break in? The sign will keep the honest man honest and the crook will come even with the alarm. Come on, do you really have millions to protect?

6) Allowance is good. I know it makes you feel good, but the kids are 5 and 1. You are lucky because at this age you can control the money, clothes, toys, etc. It is my opinion you need to cut the allowance out completely. Short term sacrifices for long term gains!

7) Eating out. Just don't do it. If you are going out pack a picnic. Besides eating out is gross, who knows how sick the teenager cook is, did the food fall on the floor, how freshly cooked is it, does he have a hair net on......?

8) The wife or SO: does she/he work? What do you do for a living. I am looking at this area to see if we can increase income. Again, short term sacrifices for long-term gains. Also, look up in the search engine "Benjamin Franklin AND saving" there is very good advice here.

9) REad the whole site here as there are good links and ideas.

10) get the wife in on the plan and get her to read the household tips us women put out.

Let's get started, we will cut your bills, increase your income, avoid further borrowing, and start the path to financial freedom: SPENDING MONEY DOES NOT GIVE YOU POWER, HAVING MONEY DOES. SPENDING MONEY DOES NOT BUY FREEDOM, HAVING MONEY DOES.

Good job, I am proud of you. Keep that TV off except for a rare treat. Don't forget to get silly with the family, since the kids are young they don't care what kind of dancer you are, just that you dance with them. So sing, be silly with your wife and kids and laugh - it is free.

**txjman** · 08-24-2005, 01:03 PM

Re: looking into debt consolidation

First let me say thanks.

1 SBC is my phone company. We have the bare minimum for long distance. I can cut call waiting. My internet is in there also. I know free works fine, but I can handle 14.95 for DSL.
2 I'll look into it.
3 same
4 My wife had two accidents within a month this year. We have insurance through a friend that has been fair to us. I had to sign up for a certain amount of coverage for work. I don't think I can lower it since I signed an agreement.
5 I don't know that my wife will like that. It gives her an added sense of security. I'll talk about though.
6 The allowance is for the grown-ups. I couldn't imagine giving a 5 yr old that much money.
7 Working on it.
8 I mow yards on the side. My wife has a full-time job and sells Arbonne. It took a little investment at first, but now she is profitable. There is a chance that this will provide even more income, but I feel safer underestimating right now.
9 ok
10 she is embrassing our drive to get rid of this stuff.

**pennywise** · 08-24-2005, 01:35 PM

Re: looking into debt consolidation

The allowance for the grown ups can be cut too. My spouse wanted $60 week and law school. I said no. I allocate only for gas. He was going out to lunch, I never did, unfair. Oh well, you can brown bag it and must. What is made for dinner is made enough to cover lunch the next day. You will have to decide if it is a WANT or NEED. now the definition of need is food, water, shelter, clothing (at a minimum - no fancy to keep up with the Joneses). That will free up that money to pay down the debt. I am not sure what the school allocation is? I do not suggest free internet. I pay 21.95 on top of the 45 for phone for MSN so I guess that ups my phone budget to $67/mo. Good to see if you can stop call forwarding or other items. The false sense of security is not warranted on a home security system. Set it off and see if they call you, they won't. You are paying for smoke and mirrors. I AM VERY PROUD THAT YOU WILL DISCUSS IT WITH YOUR WIFE. WE HAD ANOTHER GENTLEMAN WHO WAS KEEPING HIS WIFE OUT AND WAS MAJORLY IN DEBT. A MARRIAGE IS A PARTNERSHIP PER THE FEDERAL IRS!! Glad you are man enough to discuss it. I am pleased to see your wife is getting on board. The only way you can do it is have monthly family financial meetings. The CEO of a company has meetings and you can allocate as you wish: wife is the CEO and you are the CFO (chief financial officer). But, you are a business with income and expenses just like GE, Ford Motor, GM, or McDonald's. Changing the way you do things will free up alot of money. I know you feel down about it, but you are way ahead of the game from the rest of your peers. You are awake to the problem, trying to solve it, and demonstrate a STRONG desire to work on it. The rest of your peers are taking the equity loans and now charging their gasoline for the car. Great Job and Pat yourself on the back for me because I am not there. Running your home can be much cheaper than you think. Best to avoid doing things with others as they will just want you to join them in their spending. Think of this as a time to develop a strong bond with your nuclear family (nuclear family: wife and children. Extended family: grandma, sisters, etc.). You will do it. To live debt free is a dream not many realize. I am almost done, 2 years on the mortgage left, cars were paid for in cash, we are paying for law school with cash, and my master's in nursing with cash. I have always been a saver.

**BAGAGT1** · 08-24-2005, 07:43 PM

Re: looking into debt consolidation

I agree with Pennywise, I see plenty of places in your budget where you can cut back. For example, I agree with Pennywise that you should definitely get rid of the alarm system, also $240 for allowance is too much. My wife and I both brown bag our lunches, and I budget a $20 a week allowance for my wife and myself for anything extra we want during the week. I generally can keep my $20 for several weeks, so you should try to keep it to $10 - $15 a week each. $86 for phone + dsl seems a little high to me, when the DSL is $14.95.

Let's talk about that gasoline expense. Can either your wife or yourself carpool a few times a week to save on gas? What kind of cars do you drive? Are they fuel efficient? Are you close to paying off any of the cars, if so could you sell one and buy a cheaper more fuel efficient used car, and use the rest of the revenue generate from the sale to pay down some of the debt?

You didn't mention how much total CC debt you have, so I'm just making some general observation.

**Snoopy2645** · 08-24-2005, 09:04 PM

Re: looking into debt consolidation

I would also cut the car payment for about $2500 you can get a very nice used car!!

looking into debt consolidation