How do I start saving?

[darkxeno]

I will admit I suck at personal Finance. I just don't know how to start saving for the future. a little about myself is I'm 32 years old I make right at 51k a year my wife is 31 and make about 28k a year. We have a 30 year mortgage that started at 131k. Its paid down to about 127k now. I have 3 credit cards 1 is fully paid off and and one is half way maxed out and the other is fully maxed out. I also have a car loan that is 30k that is 600 a month. and A title loan that is 6k at 300 a month.

Ive been reading about the snow ball effect to get out of debt. but I just dont know where to go after i get out of debt to start a portfolio or to even grow my net worth. can someone help steer me in the right direction?

[bjl584]

First, you need to make a plan to pay off your debt.
Then, you can worry about investing.

The snowball method is fairly simple.
There are a couple different theories about how to structure it, but it works like this.

Let's say you have 3 debts. To make things simple, let's say the balance of each debt is $1000 and the payment on each is $100 a month.

So,

1) $1000 payment = $100
2) $1000 payment = $100
3) $1000 payment = $100

All you do is take the payment from the first loan and snowball it into the second loan once the first loan is paid off.
So, when 1 is paid off, you take the $100 you were paying and use it to pay off loan 2. So now you are paying $200 on loan 2 and $100 on loan 3. Once loan 2 is paid off you move onto loan 3 and pay $300 a month on it until all debt is paid off.

Now onto your particular situation:
You are drowning. First and foremost, you own way too much car. That needs to be downgraded if possible.

For the rest, can you post more details about all of your expenses and income? Include interest rates, balances, and monthly payments.

Be as detailed as possible.

[darkxeno]

First, you need to make a plan to pay off your debt.
Then, you can worry about investing.

The snowball method is fairly simple.
There are a couple different theories about how to structure it, but it works like this.

Let's say you have 3 debts. To make things simple, let's say the balance of each debt is $1000 and the payment on each is $100 a month.

So,

1) $1000 payment = $100
2) $1000 payment = $100
3) $1000 payment = $100

All you do is take the payment from the first loan and snowball it into the second loan once the first loan is paid off.
So, when 1 is paid off, you take the $100 you were paying and use it to pay off loan 2. So now you are paying $200 on loan 2 and $100 on loan 3. Once loan 2 is paid off you move onto loan 3 and pay $300 a month on it until all debt is paid off.

Now onto your particular situation:
You are drowning. First and foremost, you own way too much car. That needs to be downgraded if possible.

For the rest, can you post more details about all of your expenses and income? Include interest rates, balances, and monthly payments.

Be as detailed as possible.

my monthly pay after taxes is $2392. my wife's monthly is $1700. so a total of $4092
house payment is $836 a month at 3.4% interest.
card 1 $0 balance at 19% interest
card 2 $900 balance at 23% interest
card 3 $400 balance at 19% interest
car loan is $600 a month at 12%
title loan is $300 a month at 35%
student loan is $82 a month at 4%

[Jluke]

your interest rates are killing you...

when you said you had maxed out cards, I wasn't expecting balances of $400 and $900.


payoff the $400 credit card today. If you can't do that, then there are issues.

do you have any money leftover after the basic expenses - food, utilities, cell phone, etc?

more info.

[disneysteve]

do you have any money leftover after the basic expenses - food, utilities, cell phone, etc?

Yes, to help you, we really need to see the numbers.
What are your monthly expenses? Where is every dollar going currently?

You earn $79,000/year. You should not be struggling to pay a $400 credit card bill and you certainly shouldn't need to be taking out a $6,000 title loan.

Tell us more about what caused you to get into that debt?

[darkxeno]

your interest rates are killing you...

when you said you had maxed out cards, I wasn't expecting balances of $400 and $900.


payoff the $400 credit card today. If you can't do that, then there are issues.

do you have any money leftover after the basic expenses - food, utilities, cell phone, etc?

more info.

after food and paying our utility bills and food and gas we may have about $100 left.

[bjl584]

after food and paying our utility bills and food and gas we may have about $100 left.

I think you need to start itemizing and tracking where every dollar goes in a month. There seems to be a lot of money that is getting spent that is not on your radar.

Quick dirty math says you have around $2000 left after paying the bills that you listed. You need to find out where that $2000 is going.

[darkxeno]

160.00 Insurance
865.00 House
600.00 Car
45.00 water
46.00 Wells Fargo Home
300.00 Truck
104.00 Pet Food
82.00 Student Loan
9.99 netflix
9.99 WWE
220.00 Electricity
112.00 Dish
35.00 Amazon
160.00 Cell Phone
0.00 Safe Card
35.00 Security
80.00 Time warner
0.00 Boa
200.00 Gas
300.00 Groceries

here is what i have in my budget file

[disneysteve]

160.00 Insurance
865.00 House
600.00 Car
45.00 water
46.00 Wells Fargo Home
300.00 Truck
104.00 Pet Food
82.00 Student Loan
9.99 netflix
9.99 WWE
220.00 Electricity
112.00 Dish
35.00 Amazon
160.00 Cell Phone
0.00 Safe Card
35.00 Security
80.00 Time warner
0.00 Boa
200.00 Gas
300.00 Groceries

here is what i have in my budget file

You are in a burning building sitting on the sofa watching cable, Netflix, and WWE! You need to slash this budget today!
Cancel Dish.
Cancel Netflix.
I'm guessing Time Warner is internet access. If so, you've got all the entertainment you need right there so keep that.
Is WWE a wrestling thing? If so, cancel that.
What is the $35 Amazon charge?
What type of insurance is the $160 figure?

[disneysteve]

Also, make sure your budget reflects ACTUAL costs. The numbers you list aren't actual. For example, yes Netlfix is $9.99 but what's the real total with tax? Same for the cell phone, Dish, etc. Each of those bills are probably at least a couple of dollars more than what you listed.

You need to account for every dollar.

[darkxeno]

You are in a burning building sitting on the sofa watching cable, Netflix, and WWE! You need to slash this budget today!
Cancel Dish.
Cancel Netflix.
I'm guessing Time Warner is internet access. If so, you've got all the entertainment you need right there so keep that.
Is WWE a wrestling thing? If so, cancel that.
What is the $35 Amazon charge?
What type of insurance is the $160 figure?

the amazon charge is my amazon credit card and the insurance is full coverage on both my wifes car and my truck and our golf cart.
I'm still in a contract for dish i have 10 months left on it.

[disneysteve]

our golf cart.
I'm still in a contract for dish i have 10 months left on it.

Why do you have or need a golf cart? What's it worth if you sell it?

What is the early termination fee on your Dish contract?

How much is your car worth today?

[disneysteve]

Your take home pay is $4,092.
You listed expenses of $3,364.

I think your expense number is understated as I said above because you are listing "sale" prices not totals with taxes and fees so let's round up to $3,500.

That leaves you about $500 extra/month. Where is that money going, assuming it actually exists?

Normally, I would advise paying off the highest interest rate debt first but I'm going to give different advice here. With $500/month, you can have both credit cards paid off in under 3 months. Then take the $500/month plus the $100/month roughly that was going to credit card payments and throw it all (plus any extra you can free up from your budget) at the title loan because that is killing you. In no more than 10 months, that will be gone (faster if you slash the spending). So in just over a year, you'll be down to just your mortgage and car loan and you'll have a monthly surplus of at least $900.

[Thrif-t]

Wait are your credit card BALANCES really $400 and $900 or is that your monthly payment towards your cards?

[Jluke]

Wait are your credit card BALANCES really $400 and $900 or is that your monthly payment towards your cards?

I was wondering the same thing about balance or payment but didn’t come out and ask that directly. He didn’t correct me, but info hasn’t been very exact thus far.