HELP!I'm pouring my heart out here, need advice!*Updated 6/12/07*

[MAGICX2]

Update on Page 41
This is the scenario: My husband and I are almost 30. We have DS4 and DD1.5. We also have a mortgage of 168,000($1401 mo.), 17k in student loans, a signature loan with a $7800 balance and 22.5k in cc debt. We make approx. $102,000 a year. We just seem to make ends meet!
I know you see in my sig. that I have two trips to WDW in the next 8 months planned. I have already paid cash (one trip is non-refundable) for these trips so we have chosen not to cancel. I have read the TMM and Financial Peace and while I was reading them I was so psyched! I just knew my DH and I could do this and he was on board too. I haven't done it yet. I got as far as the budget on paper and it looked so hopeless. Instead of cutting up my cc's I keep saying "but what if we need them to get by, like for groceries?" My husband is so frustrated with me. I use shopping to make me feel better. Some people eat when they are depressed/stressed, I shop!(I am opening up to flames here I know.)
The biggest thing is we have out grown our house and would like to build a new one. Our plan was to sell the one we are in, move into an apartment for a while (rent is cheap in our area), pay off our debt and then build. Sounds like a plan right? Well our house has been on the market for a year with at least four showing's a month but not one single offer, not one! So we are stuck here. And to top it off the property where we would LOVE to build our new home is going up for auction THIS Sat.! We have been eyeing this acreage for about 5 yrs now and the owner would never sell. We have been pre-approved for a loan for the property but we would have to take out another sig. loan for the down payment! I think I am going crazy. PLEASE help me sort this out. We realize we have done this to ourselves, but we really want to fix it. (I have my flame suit on.)

SEE PAGE 8, POST 109 for budget listing.
AUCTION NEWS ON PG14, POST #210
UPDATE ON PG39 POST#585
UPDATE ON PG40 post#595

 

[smfritz03]

LONG!
This is the scenario: My husband and I are almost 30. We have DS4 and DD1.5. We also have a mortgage of 168,000($1401 mo.), 17k in student loans, a signature loan with a $7800 balance and 22.5k in cc debt. We make approx. $102,000 a year. We just seem to make ends meet!
I know you see in my sig. that I have two trips to WDW in the next 8 months planned. I have already paid cash (one trip is non-refundable) for these trips so we have chosen not to cancel. I have read the TMM and Financial Peace and while I was reading them I was so psyched! I just knew my DH and I could do this and he was on board too. I haven't done it yet. I got as far as the budget on paper and it looked so hopeless. Instead of cutting up my cc's I keep saying "but what if we need them to get by, like for groceries?" My husband is so frustrated with me. I use shopping to make me feel better. Some people eat when they are depressed/stressed, I shop!(I am opening up to flames here I know.)
The biggest thing is we have out grown our house and would like to build a new one. Our plan was to sell the one we are in, move into an apartment for a while (rent is cheap in our area), pay off our debt and then build. Sounds like a plan right? Well our house has been on the market for a year with at least four showing's a month but not one single offer, not one! So we are stuck here. And to top it off the property where we would LOVE to build our new home is going up for auction THIS Sat.! We have been eyeing this acreage for about 5 yrs now and the owner would never sell. We have been pre-approved for a loan for the property but we would have to take out another sig. loan for the down payment! I think I am going crazy. PLEASE help me sort this out. We realize we have done this to ourselves, but we really want to fix it. (I have my flame suit on.)

Ok---#1--your house isnt selling, so forgot about this other property you have been eyeing. You will just have to wait and something better will come along. Otherwise you are going to run into the risk of having 2 mortages at one time.

#2---tear up all but 1 or 2 CC---and give them to your dh to hide. They should not be in your possession at all.

#3--I have been in your shoes w/ the shopping bit---try to gear your mind into seeing how much $$ you can save instead. I made it a game--I started another savings--and anytime I wanted to shop--I would put $40 in (this is my normal spending when I get out and just shop). Everytime I find an item on clearance--I put the rest in savings. Once I got this extra amt over $1500---I have really become frugal in my shopping because this is truly a challenge and seeing this amt grow and grow has really kept me at it.

You are just setting yourself up for a lifetime of debt--either get it under control now or just accept that you will be paying for everything you bought now--25 yrs from now because you used your credit card.

 

[ziggystardust]

You probably don't want to hear this, but don't buy that property. Don't go on that 2nd vacation. Don't go shopping, and cut up those CCs.

You make good money- you need to budget and stick to it. There is no way you or your kids will starve making $102,000 a year. You might want to sell a car or 2 if you have the extras. Use that money to pay off your debt. Don't move into a bigger house when you can't make ends meat on a smaller one.

I love to shop, I crave shopping, I also love to go on vacation and I would love to own a home but I can't right now. I'm just starting the TMM but it seems like you didn't "get" the book. You might want to read it again.

You are answering your own questions, you know what you should be doing but you are choosing not to do them.

 

[Tinkerbelle32]

I'm sorry you are in such a sad situation. Have you ever thought of debt consolidation? My friend (years ago) decided to take this route and it really helped her to get her credit card debt paid off. If I can ask a question here(not trying to be harsh), why do you have two trips to Disney if you are so in debt? I know you said that you paid cash for one. Why not have put that cash on some of your credit card balance? Once again, I'm not judging you just trying to help you see from a different perspective. Another thing, I know you don't want to here this, but you really need to get rid of your credit cards! I would keep one for an emergency and cut the rest up! You said yourself that you have an addiction to shopping, so get rid of the temptation. Take baby steps. Try cutting back on your budget. Can you get rid of extra things: starbuck for coffee, steaks for dinner weekly, extra cable stations, etc. Just make the decision that you are going to get your financial state back in order and do it. Gosh, I hope this helps! I'll be sending some pixie dust your way!

 

[OceanAnnie]

You've gotten some great advice, here's a few things I'd do:

Keep a spending journal. Just use a spiral notebook, keep your receipts for the day and record date, what you spent, and where. Very effective. You can see trends in your spending and start thinking what to cut out and what to trim.

You only need one cc. Really. Get one that has a rewards program. I like upromise. It helps you save for your children's education. It's won't be huge, but it's free money.

If you are a spendaholic, you probably have too much stuff. Start selling the stuff you don't need to recoup some money (yard sale, ebay, classified).

Focus more on selling your house. Why do you think it's not selling? It may need revamping of some sort. There's a good book out for just decorating ideas, "More Splash than Cash". Might be some ideas to help jazz it up abit.

 

[PlaneJoy1]

I totally understand where you are coming from and will tell you what has helped me. I have an excel spreadsheet that a friend made up that shows most categories that you spend money in and your income. I took that and modified it for our expenses and the fact that we are paid 2x/month.

Once I got all the numbers to work (budgeted) and was comfortable where they were, I decided what had to be paid by check/online (mortgage, phone, cell phone, electric, cc payments, etc.) and what could be paid for in cash (groceries, saving for vacation, gas, hair cuts, clothing, spending, etc.). I then had one of those coupon organizers and made pockets for those cash items and a misc. pocket. I withdrew the cash from the bank account and placed the amount budgeted per paycheck into those pockets (you can do this with individual envelopes as well). When the pocket is empty, you are either done spending in that category or you have to borrow from another category that is less important.

This is often referred to as the "envelope" system. You can only spend what's in the envelope, NO MORE. No credit cards, debit cards (unless you've alloted for the expense that way). You learn to live by a budget and stick to it. It's a visual reminder that you have to choose where to spend your money.

We have only been doing this for a short time, but I can tell you IT WORKS for us! If you can't control the urge to use a credit card and go shopping, take it out of your purse, put it in a plastic bag with water, and put it in the freezer. When you have the urge to spend, you'll have to wait for it to unthaw.

Good luck! You are not the only one in your position.

Here's a few more things from your post (just my opinion):

I would cancel the trip that is refundable. We had to do that for our trip that was scheduled for this month.

Forget buying the land. You'll find somewhere else later.

Only sell and move into an apartment if you can truely stick with a budget and save the extra money.

 

[imsayin]

We make approx. $102,000 a year. We just seem to make ends meet!

Sorry, with income like yours, their is no excuse for you to be in that much debt or to not be able to make ends meet! Make a budget & stick to it. Do not go to Disney twice a year until you can pay for it up front. Seriously, get a hold of your situation now - pay off your debt then start saving. Quit shopping!

 

[kjh]

If you can't control the urge to use a credit card and go shopping, take it out of your purse, put it in a plastic bag with water, and put it in the freezer. When you have the urge to spend, you'll have to wait for it to unthaw.

I love this idea. Good thing DH doesn't troll around in here! but knowing me I would try to bake it or run it under boiling water (did I mention I am VERY impatient) hehehe.

 

[BkrsLoveDis!]

Your situation sounds so similar to mine that I had to chime in. First of all - I've lived on credit cards all of my adult life - it actually scared me to think of going out of the house without one because what if I had some sort of emergency?

Well - my DH and I put all of our credit cards in a zip loc bag and put them in the back of the cabinet and guess what - we've not used them in 3 months - we've been on trips and gone shopping - since 3 more months will be new year's eve - we'll probably celebrate by cutting the d*#@ things up. You CAN do this.

Second - I am an emotional shopper also - during my maternity leave with both of my children, I shopped like a crazy lady - guess what? Post Partum depression - my defense mechanism was shopping and boy did I shop! Getting rid of the credit cards helped us in two ways - first, when I shop, I know I have to have the money - definitely curbs the enthusiasm. Second, when I really need to shop uncontrollably, it's time to talk - my DH and I sit and try to talk through whatevers bothering me - has helped our relationship alot.

Everyone here has had some great ideas - I'd agree with waiting on the house - we are living like sardines too but are on a 5 year game plan and know that the best house will be the one that we can afford without credit card debt!!.

Good luck - I know, I promise, how hard this is - but every tiny step towards doing the "right" thing will make you feel so much better and stronger and the long term rewards are telling anyone who'll ask that you're debt free!!!

Cynthia

 

[MAGICX2]

I must have been rambling on in my OP, I left alot of stuff out.
First, our income has jumped from 58k to 102k in just two years. My DH graduated college and found a great job. Great for us, but I think we thought we were hot stuff, if you know what I mean.
Alot of the CC debt is school related, starting a house related, and then just plain stupid related.
We only have one car, with a balance of about 12k on the loan. It's mine. My DH is provided by company (along with ins. and gas).
The more I type, the more I realize just how stupid we have been and continue to be. Your right there is no way with our income we have to be like this.
We live in a rural area, so no Starbucks, no eating out (alot any way, maybe once a week), and this is why our house is still for sale. There are more houses on the market then there are buyers. Two major factories in our area have been sold in the last two years causing a whirlwind in the real estate. Our house was built in 2002, we can't spruce it up a whole lot. I think the problem is the amount of our mortgage compared to asking prices right now.
Lastly, we pay $880 a month in daycare. I know this is cheap for some places, but it is killing us! Can't afford to work, can't afford to quit either.
I thank everyone for their responses. I do need a swift kick in the pants. I am going to take the cc's out of my purse so I am not tempted. I am going to redo the budget and get it set in my mind. I will think of the money I am saving by not shopping as money for the future, the future I have already bought with my cc's. Please keep the posts coming.
PS-One trip is non refundable. The other trip is a three day trip for my birthday that someone else (not in my household) is paying for and won't let me cancel.

 

[PlaneJoy1]

I love this idea. Good thing DH doesn't troll around in here! but knowing me I would try to bake it or run it under boiling water (did I mention I am VERY impatient) hehehe.

Well, you would atleast give yourself a few minutes to think about that "impulsive" purchase.
(meant very tougue in cheek)

 

[DMRick]

Ouch. That is one heck of a load of debt, even for that income. Unless everything is included in that first vacation, and you absolutely can not get any of the money back, I'd cancel it.
I'd cancel the second vacation.
I'd get debt counseling immediately.

I don't see how you even got preapproved for a loan for that new property. I don't know what a signature loan is, but you sure don't need to take on another loan.

You are paying more than 10% of your total income on daycare (10,560). What percent of your paycheck after taxes is that? You might be better off getting a different job oposite your husbands hours and not pay childcare..even if it's a lower paying job.

Have a different realtor give you an asking price for your house. Even if you think it's worth more, put the lower price on it, and get out of that debt.

OMG, my stomach is in turmoil, just reading your posts...I can't imagine how yours is. Oh, and get rid of the cc and don't carry cash. You can't shop if you don't have any money or cc on you. Have your husband take over the checkbook. And go to debt counseling asap..bears repeating. Ouch..hope you work this out.

 

[mudnuri]

Sorry, with income like yours, their is no excuse for you to be in that much debt or to not be able to make ends meet! Make a budget & stick to it. Do not go to Disney twice a year until you can pay for it up front. Seriously, get a hold of your situation now - pay off your debt then start saving. Quit shopping!

Yes, your 100% right, because after all we certainly know what her cost of living is, and what her mortgage is, after all, we're the Dis board, the place where people come for advice, and we give them a "theres no excuse for you"...blah blah blah

to the OP- here's a tip- FREEZE your credit cards, LITERALLY put them in a tupperware container, fill it with water, and freeze it...you'll have them if you NEED them, but you wont be able to access them very well.

Brandy

 

[MAGICX2]

You are paying more than 10% of your total income on daycare (10,560). What percent of your paycheck after taxes is that? You might be better off getting a different job oposite your husbands hours and not pay childcare..even if it's a lower paying job.

My DH travels all over the country and is gone for weeks at a time. I have no one else to watch the children so the daycare is my only option. I have to work full time because of the debt load. Once that is down I may be able to go part-time.

 

[Cindy B]

$880 a month in daycare is actually cheap. Around here it would be almost $1000 per month for ONE CHILD! I know some places do discounts, but daycare cost more than my mortgage!

Can a shift work to alleviate daycare costs be helpful to you? My DH now works nights, so he can help get the kids off to school, while I work an earlier shift. If he didn't I would be paying before/after care for my kids.

For a long time (and I still technically don't) work full time because it would cost more in daycare/camp for my kids than it would cost.

It was better off for me to not work full time and get a job that is around my childrens schedules. I substitute teach in my childrens district, and while the benefits are low, the pay is GREAT! I also don't have a full time summer job, so I'm not paying camp prices.

Get rid of the CC's now! I hate hate hate hate cc's! I absoleutely hate shoppoing as well, so that helps. Cut them up now!

I did the snowball debt thing many years ago, and now I am practically debt free. Soon I will be finishing up college, so that will change, but no debt is great.

Wtih the income bracket, you should not be in that pattern. We got by just fine many years ago, on a 35K income, with two kids, one car, and a rental home in an affuleuent neighborhood. It was rough but we didn't starve, and my kids were fine.

WE still don't have a HUGE income, but we do fine. We are still able to do things but we only pay for things in cash.

 

[lovemygoofy]

I'm no means a debt counselor but a few questions for you?

How long is the mortgage for? 15 or 30 years? If it is less than 30 years than I would think about changing to 30 until you get all your debt under control.

Are the student loans consilidated? If you consilidate the loans, you should be able to get a lower interest rate.

Do you work? Honestly now (and you don't have to report this) but how much do you make and how long is the commute to work? Is it worth the $880/month for the daycare? Unless you are making a considerable amount after commuting costs and daycare honestly think about taking sometime off. You can apply those costs to your bills.

What kind of extras do you have? Big cable program? DSl instead of dial-up? cell phone plans? TIVO? Get rid or downgrade what you can. It will save you money.

Talk to your electric company about budget electric. The will average your past bills (I don't remember how many months) and give you an average that you pay every month. You always know how much it is.

How many credit cards do you have? That includes all dept store and gas cards? You only need one two at max.

Start writing down every single thing you spend money on and that does include a piece of gum. Give yourself and your family an allowance, even if it's $20 that can be spent on whatever. After it's gone; it's gone.

Set up a budget that is realistic for your family. Make it a family event with change jars and dollar jars.

Last but certainly not least, go see a debt counselor. They are the professionals that you need. Good luck

 

[kidzmom3]

my advice is to try to live a simpler life. When we were having financial difficulties (making only 30,000 with 3 kids and a house in MA a very expensive area to live) we got rid of everything extra:

no cable- hey those pbs shows are better for the kids anyway.

no dvd rentals-try the local librabry

no fast food-no take out-no resteraunts-its healthier and cheaper

no gifts for adults-none zero, you do not need to spend money on your husband or wife if you are both working to get out of debt- the gift will be a future without this hanging over your head. I really mean this, birthday christmas everything

scale down on holidays and partys-your kids are very young-they will not notice a difference in the amount of birthday and christmas gifts-they do not need huge birthday parties with bouncy houses and pony rides

don't take a vacation -for one full year

utilize every free activity you can find

don't go the the mall - don't go to shop, don't go for lunch, don't go to get the kids out of the house in bad weather-just don't go.

Good luck

 

[poohj80]

We were in a similar boat a few years ago, but mostly due to the amount of student loans we had between us (and we don't have day care). We stayed renters longer than we would have liked to help pay off some debts, but bought a home several years ago. We are still in debt but climbing out slowly but surely. We don't use credit cards much, prefer debit cards since the money comes right out of your account. If you don't have the money, then you don't buy. That said, we still visit WDW as well as we it is the one big splurge we allow ourselves.

Are the student loans consilidated? If you consilidate the loans, you should be able to get a lower interest rate.

Not necessarily. Most student loan consolidations determine the new interest rate on a weighted average. A lot of the deals you see advertised are only for certain types of loans that aren't more than a few years old. Even when we both consolidated student loans, we have never qualified for the great low rates that were being advertised.

What really helped us in the beginning was getting Quicken. We could see where all our money was going and were shocked to see how much was going certain places. This helped us manage our money a bit better. Also, Quicken's debt planner helps keep us on track.

 

[crisi]

I'd have to do a lot more analysis, but my gut is different.

Buy the land. You've had your eye on it for years. Don't build on it now, but it isn't likely to depreciate. You'll regret not buying it.

Even if you are breaking even on daycare/commute costs, carefully consider any financial incentive to stay at home. If you want to, move heaven and earth to do it (and it may mean all sorts of sacrifices), but on a mere financial footing - don't forget about works long term financial benefits. I just finished shelling out $20,000+ a year for two kids in daycare (yes, you read that right, and yes, we could afford it). But the six years of daycare expenses meant that my employment skills are still up to date, I've been promoted three times, my 401k has grown, I got stock options I'd have never gotten, we got my employers cheaper health care, etc. Reentering the workforce is a real pain in the back end - expect to start over if you do it - career wise, skill wise, salary wise.

However, get your back end into the doctor/your employee referral program or whatever and start seeing a therapist. If you shop because you are bored or depressed or whatever, you need help on a level that's different than "cut up your credit cards" and/or "we can't make ends meet." You need to fix the root.

Cancel your Disney trips.

Sell your crap. EBay, garage sale, even donate it to charity for the tax write offs. But get rid of it.

If your house isn't selling, you are above the market. You'll need to take it off the market for a while, fix it up and relist it - likely at a LOWER PRICE. This may mean you eat a loss. If you can afford that, build your dream home. If you can't, you need to live where you live, at least until you can afford it.

But I'd still try to do what you can to buy the land. It may not be possible.

 

[solgent]

The phrase that struck me in your message is "We have outgrown our house." I would guess that you have not really outgrown your house. In 1950 the average new house was 963 square feet. People in New York City live in very small apartments. You can do it! Besides, a smaller dwelling is easier to clean, cheaper to heat.

I think you should not move or do anything else to increase your debt until you get your financial house in order.