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

[disneysteve]

I'll make this short. You are living beyond your means and you need to stop NOW!

You earn a comfortable income and your debt load really isn't that bad. When we got married and bought our house, our debt was actually a little higher than yours and our income was lower. But all of our debt was "good" debt - mortgage and student loans. We did have the remnants of a car loan but that was minimal.

But somehow we managed to pay all our bills on time and in full, invest a percentage of our income for the future, and make substantial extra principal payments on my student loans to pay them off nearly 13 years ahead of schedule. During that time, we furnished a home, raised a child and took regular vacations including 16 trips to WDW as well as numerous other places.

How did we accomplish that? We lived below our means. What exactly does that mean? It means we bought store brand groceries, cooked most meals at home from scratch, didn't have cable tv or any add-on telephone services. It means we accepted that we couldn't live in our dream home. When we traveled, we drove, stayed in budget motels and ate PB+J sandwiches for lunch. We shopped at yard sales, flea markets and thrift shops.

We've now been married for over 13 years. We still live in our first home. I've been a licensed driver for 25 years and am currently driving my 3rd car. We currently invest 16% of my gross pay and 75% of DW's gross pay. By the way, DW just went back to work this year after being a SAHM for nearly 10 years.

It is all doable if you change your mind-set. Good luck.

 

[dvcgirl]

I'll make this short. You are living beyond your means and you need to stop NOW!

You earn a comfortable income and your debt load really isn't that bad. When we got married and bought our house, our debt was actually a little higher than yours and our income was lower. But all of our debt was "good" debt - mortgage and student loans. We did have the remnants of a car loan but that was minimal.

But somehow we managed to pay all our bills on time and in full, invest a percentage of our income for the future, and make substantial extra principal payments on my student loans to pay them off nearly 13 years ahead of schedule. During that time, we furnished a home, raised a child and took regular vacations including 16 trips to WDW as well as numerous other places.

How did we accomplish that? We lived below our means. What exactly does that mean? It means we bought store brand groceries, cooked most meals at home from scratch, didn't have cable tv or any add-on telephone services. It means we accepted that we couldn't live in our dream home. When we traveled, we drove, stayed in budget motels and ate PB+J sandwiches for lunch. We shopped at yard sales, flea markets and thrift shops.

We've now been married for over 13 years. We still live in our first home. I've been a licensed driver for 25 years and am currently driving my 3rd car. We currently invest 16% of my gross pay and 75% of DW's gross pay. By the way, DW just went back to work this year after being a SAHM for nearly 10 years.

It is all doable if you change your mind-set. Good luck.

I totally agree....the OP can totally get out of debt. Like Crisi said, they live in a part of the country where the cost of living is low. The problem is the spending.....and there has to be a lot of it going on because I would think that even paying a little extra on the CC that there should be some money left around at the end of the month. I also agree that the mortgage isn't bad at all, and neither is the student loan. The CC debt and the other loan are big though, and a big symptom of the problem.

 

[PrincessKitty]

A small change but do-able--stop going to any stores except the grocery store. If you are tempted to shop recreationally, go to yard sales and set yourself a $10 (or whatever) limit per week.

DH and I used to shop recreationally EVERY weekend--we would easily drop $100 per week at Target buying cute things we didn't need. We completely broke this habit by limiting ourselves to yard sales.

You absolutely have not outgrown your house. Really. Try to get out of this "bigger is better," "newer is better" mentality. Stop buying "shelter" magazines (you know--House Beautiful, House & Garden, etc.) if those are what's making you want to "move up." Try to analyze why you think you have outgrown your house--as others have mentioned, if your house is too cluttered, get rid of the clutter through Ebay, yard sales, or just by giving stuff away to Good Will or the Salvation Army.

Any honest real estate agent will tell you, with your home on the market for so long, your home is way over-priced. If you can live more cheaply renting a place, then lower your price, sell the house, and move into an apartment. Don't think about building another house until you have paid off your consumer debt.

 

[cnaumann]

I will throw in my 2 cents. This reminds me a bit of the stories of the people that win a couple of million dollars in the lottery and end up filing for bankrupty a few years later. They suddenly had more money than they could ever imagine, however, it turned out to be far less money then they thought.

What do you want to hear? Your smart, you know exactly what the problem is and you know exactly how to fix it. What is stopping you?

Want a free analysis? I will give you that. I really don't see much of an issue with your mortgage payment or your student loans. There are what they are, they probably have very reasonable terms and you have something to show for them. They are ceratinly not unreasonable for your income bracket. You only have a single car payment. I think you bought quite a bit of car for were you were when you bought it I hope you are plannig on keeping it another 10 year.

You chose to start your family a little earlier that was financially wise, but family is good. $10,000 a year is child care is major hit, but there may be very little you can do about it at this point. It would have been nice to have gotten your student loans paid down, your first car paid off and your mortgage under control and then started a family. On the other hand, I know of people who put off starting a family until it was too late. Trust me, they have a lot more regret they would have if they had started too soon.

It might be a good time to buy the land. Unfortunately, if it is a good time to buy the land, it also means that it is a lousy time to try to sell your house. (Realestate works that way.) If you know what you are doing, land can be a pretty low-risk investment. The nice thing about land is that it does not wear out like a car, and unlike a Disney vacation, it will always be there.

However, if you are currently having trouble making ends meet, can you really afford to take on the extra payments for the land? At this point, you need to assume that you will not be able to sell the house for a while, and may take a loss on it. Where is the extra money going to come from?

You have no proven track record for staying on a budget. My big concern is the $30K in discretionary debt that you have. Has this gone up or down in the last 6 months? You are no longer 'starting a home' (which to me means living on beans and rice on recycled paper plates) and are not longer having 'student expenses'. I would forget about the land until you get get your discretionary debt under control (paid off). This is going to take several years. Now is the time to get started.

Get rid of the credit cards. If there is an emergency, you should be able to get a signature loan if it is a big emergency (you will have time). Keep a little cash on hand for smaller emergencies. Do all of your spending in cash. No debit cards, and only use checks to pay bills (keep the check books at home). Come up with realistic budgets, and stick to them.

Don't think of any expenses in terms of cost per day, or cost per week or even cost per month. Think in terms of cost per year. That fancy phone plan with call waiting, caller ID and the 3 way calling that you never use might 'only' costs $7.50 a month, but that is $90 a year. Is it really worth $90? Likewise for TiVo, premium cable, high speed internet, satellite TV, two cell phone plans, and any other monthly expense. These don't seem like much, but they add up.

Eating out 'once a week' is eating out a quite a bit. How much does that one meal out cost? What is that costing you a year? Do eat out, but cut down to once a month. Are you and DH brown bagging your lunches? Spending just $4 a day (each) on lunch adds up fast. Don't take fancy frozen food for lunch either. Try a sandwich. Being on travel is no excuse for not brown bagging either. Most companies let you to pocket excess per diem.

Live right! Give up smoking. Give up drinking. Cheap food is good for you! Beans, rice, corn bread, and greens are healthy and two people can eat a full meal for about $1.

 

[jlbower79]

delete

 

[WatchinCaptKangaroo]

a mortgage of 168,000($1401 mo.)

This is a fixed expense. I don't know where you live but where I live you can't get a 2bd apt for this. Keep your house and forget about the other property. Everything happens for a reason and you'll find a better property if this one sells.

The biggest thing is we have out grown our house and would like to build a new one.

For now you'll have to shrink back down into your home. If you don't put the money from the sale into your home into a new property you'll be hit with taxes.

17k in student loans

If you haven't consollidated already call your lender. You'll have one payment with a fixed rate (it just went up but it's still under 6%).

a signature loan with a $7800 balance and 22.5k in cc debt.

See if you can consolidate the loans. You have about $30k in debt there. If you pay $600 a month it will be paid off in 72 months. That is with no fees, no purchases and a 12.9% rate.

We make approx. $102,000 a year.

Look at your take-home pay. You may be making that amount but after taxes how much are you making? How much of a refund are you getting back in April or will you have to pay?

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.

How much will you get back if you choose to cancel the one that is not paid for? It makes sense to not cancel the non-refundable trip but the other one may knock several thousand off your credit card (did you pay for the trip on your credit card?)

Instead of cutting up my cc's I keep saying "but what if we need them to get by, like for groceries?"

First see how much food you have in the pantry and in the freezer. How long could you last off that food. Not cooking things you love, but cooking and eating. That should help you feel better about that.

Now, cut all but one up (don't cancel them until you see about lower rates and/or consolidation) and stick that one in the freezer or give it to your husband for safe keeping. This card is for emergencies only. An emergency is having no food in the house. Not nothing you want to eat, but no food. It's also the car broke down and you don't have enough money to fix it. Not I want a new car, but the car broke down. When you have no clothing to wear or the kids have no clothing to wear. Not I want a new outfit, I have no clothes.

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.)

Learn to window shop. Next time you get the urge to shop leave all your money at home.

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.

Thats OK! Read the books again. You are getting great budget advice, it will be your choice wether or not you want to take it. Some people who post for advice are really ready to get out of debt, others aren't. Only you know what one you are. And at the end of the day all we are are people on a message board.

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.)

Everyone here is willing to help you. Are you willing to help yourself?

 

[crisi]

I'm not sure consolidating the loans is a good idea. It depends on the types of loans, the current rate, etc. Student loans can be one of those debts its best to let sit rather than fuss around with as they sometimes have nice bonuses you lose when you aren't a student (i.e. some loans have deferral clauses if you are unemployed, low interest rates, etc. I'm not up on current student loans, so I don't want to say too much and be completely wrong.)

 

[Cindi0511]

OP, we really want to know if you can do any of the suggestions given. We're in your corner, and REALLY are pulling for you. Some of the posts may sound harsh, but I think every poster is trying their hardest to "make" you do what you need to do to get on track to a freer, happier life. Please let us know how you're doing. We really do care !

 

[tlbwriter]

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.

Does that mean your husband is able to resist using the CCs? If so, give yours to him. I think it's important to have a credit card - not only for emergencies, but for things that are difficult to do without one (renting a car, etc.) If your husband has no problem letting them sit in his wallet without using them, let him be the keeper of the cards. You'll feel safer knowing they are available if needed, but you won't be able to use them for daily shopping.

The biggest thing is we have out grown our house and would like to build a new one.

You would like to, but you simply can't afford it right now. I agree with Crisi that if you could swing it, you should buy the land you love. But it doesn't look like you *can* swing it. Especially since you would have to borrow money just for the down payment. There were a few houses I absolutely fell in love with while we were house-hunting - houses we didn't get. And I learned that no matter how much I loved one house, there was always another one that I loved just as much, or even more. You'll find another place to build your dream home.

 

[minnie1928]

OP, we really want to know if you can do any of the suggestions given. We're in your corner, and REALLY are pulling for you. Some of the posts may sound harsh, but I think every poster is trying their hardest to "make" you do what you need to do to get on track to a freer, happier life. Please let us know how you're doing. We really do care !

So many people start these threads, and then for one reason or another, we never find out what advice worked or what didn't. More importantly, we want you to know that we are here to cheer you on. So please tell us your plan, your mistakes, whatever! I know I'd be happy to offer some words of encouragement whenever you need them .

 

[canwegosoon]

I know earning that amount of money is hard...and sometimes with higher income comes added expenses (e.g. clothing, drycleaning, better car, hairdressing,and country clubs). Many people will probably think that it doesn't, but it does in some cases(and sometimes they are unstated requirements of a job).
You have to start cutting back. I know you can do it. Do the grocery game, or www.cutouthunger.org Don't buy things but borrow. Get a friend and arrange things like babysitting (you take her kids 1/3rd sat and she takes yours 2/4th) even if you and your husband just have a night home alone it is great. Use every free resource you can think of ...the library is great...use the internet to help you reserve books and dvd's.
Honestly I think your debt load/in relation to your salary is not horrible, but agree with every one...you must start fixing it. Cancel the 1 trip, and try to go 5 days without spending money. Stop eating out...I know it is hard to have a lot of money and then still feel like you have to live on a budget, but we all do. My parents lost 7 million dollars to poor financial decisions, and they are still broke because they are still making the same mistakes, some lessons are hard to learn. My DH and myself are doing the best with what we have, but we live way below our means...like Steve says. I wish you the best. How much is this land? ANd can you make a budget? If not see the tool/tip section of Ing's website...very helpful. http://home.ingdirect.com/privacy/images/spending_record.pdf

 

[cnaumann]

anyways we have already tried getting the interest lowered but they said it could'nt go any lower.
$96 * 12 / $30,000 = 3.84% No, you are not going to find an interest rate lower than that.

Back to the loan, i wish I could get him to file bankrupty (sp?) on the loan but I know you can't on student loans...

If you ever want a loan for a car, a credit card with reasonable interest or to get a loan for a house, DO NOT EVEN THINK about bankruptcy.

Make those student loans a priority. If you start messing up and missing payment, they will change the terms of the loans and it will make you VERY unhappy.

because i just can't send them more money because it upsets me to think i'm sending 96 dollars worth of wasted working money to the government student loan morons

I think your anger is misplaced here.

If this is your only debt, you need to come up with with at least another $100/month to throw at it.

 

[catherinesmom]

If you don't put the money from the sale into your home into a new property you'll be hit with taxes.



This is no longer true. The Federal Govt changed the tax laws. As long as you have lived in your home for two of the last five years, you can make $250,000 (single) or $500,000 (married) tax-free profit. You can take advantage of this provision every two years.

 

[poohj80]

My husband has a 30,000 student loan debt... anyways we have already tried getting the interest lowered but they said it could'nt go any lower. He has it set up so the monthy note is based on his income... WELL he only owes 64 dollars a month... but the interest every month is 96 dollars... ALL I CAN AFFORD ... I send them $100 dollars a month.. so that means his loan goes down 4 dollars a month.... FOUR DOLLARS A MONTH

The only way you'll get this loan paid off is to pay more! I have a much smaller student loan amount and the interest monthly is higher that $96 so you already have a pretty good interest rate.

 

[punkin]

I see nothing wrong with your student loans or the mortgage. However, your credit card debt is astronomical. In addition to cutting up the credit cards and stopping your recreational shopping, all of which were addressed, here's how I would pay down the cards.

If your credit is good (it looks like it is based on the fact that ou can get signature loans at will) you are probably gatting credit card offers in the mail for a 0% introductory rate (I know I am). Transfer your $22,000 to one of these cards and pay only the minimum payment due. Put all the rest of your money towards paying off your $7000 loan. After you pay that off, put all that money toward the rest of your card debt. You can transfer to another 0% card if you run out of time.

I want to stress that this is only a temporary fix to avoid paying interest while you are paying off your debt. This is not a olution. The only solution is to stop spending more than you bring in.

The land you want to buy is a case in point. You do not NEED a bigger house. No one does. When I was growing up, 4 of us lived in a NY Junior4 (1.5 bedrooms) with a TINY kitchen in which my grandmother produced the best food on the face of this (or any other) planet.

Stop going out; learn to cook; cancel your second Disney trip; eat sanwiches on your first (non-cancellable trip); learn the difference between want and need and with your income, you should be fine in a year or two.

I know this is hard. My husband is a spender and we are also in debt due to home construction. However, we have not gone out to eat in a month. I have pared my grocery budget to $450 per month. I have not bought myself any new clothes in over a year. My debt load scares the heck out of me but every litle bit counts. I can see a diference just in the one month since I laid down the LAW to my husband. Once your attitude changes, the rest will come. Hang in there.

 

[tlbwriter]

If your credit is good (it looks like it is based on the fact that ou can get signature loans at will) you are probably gatting credit card offers in the mail for a 0% introductory rate (I know I am). Transfer your $22,000 to one of these cards and pay only the minimum payment due. Put all the rest of your money towards paying off your $7000 loan. After you pay that off, put all that money toward the rest of your card debt. You can transfer to another 0% card if you run out of time.

This is a great idea. But if you do it, you must cut up your other credit cards. I wouldn't cancel them, just make sure you cannot use them.

 

[disneysteve]

sometimes with higher income comes added expenses (e.g. clothing, drycleaning, better car, hairdressing,and country clubs). Many people will probably think that it doesn't, but it does in some cases(and sometimes they are unstated requirements of a job)

This is a very common way of thinking but it gets lots of people in trouble financially. People think because they have a certain job or work in a certain area, they need to live a certain way, whether they can afford it or not. There is sometimes a certain degree of truth to this in the business world, but not nearly as much as people think.

I'm a physician, something generally considered to be an upscale prestigious occupation. Most of my professional peers live far more upscale lives than me. They drive Mercedes, BMW, Lexus and get new ones every 2-3 years. I drive a Toyota that I bought used 7 years ago and plan to keep for 4 more years or so. They live on the other end of town in stately gated communities where their neighbors are other doctors, lawyers, executives. I bought on the side of town in a 40 year old neighborhood where my neighbors work for the electric company, car dealers, airlines, small businesses. They send their kids to private school. Our DD goes to public school. Their wives go to the salon weekly to have their hair and nails done. My DW cuts her own hair and doesn't get manicures. They go to WDW and stay at the Grand Floridian. We go and stay at a rental condo through SkyAuction. I could go on and on.

The point is this. I am just as successful in my profession as they are. I just have made a conscious decision that we don't need to keep up with the Joneses just because I'm a doctor. Now who do you think will have the bigger retirement account in 20 years when I'm ready to call it quits and enjoy life and they are still putting in 60 hour weeks? I'll stick with living below my means. If it means I'll never get elected as president of the medical society, well so be it.

 

[DMRick]

If your credit is good (it looks like it is based on the fact that ou can get signature loans at will) you are probably gatting credit card offers in the mail for a 0% introductory rate (I know I am). Transfer your $22,000 to one of these cards and pay only the minimum payment due. Put all the rest of your money towards paying off your $7000 loan. After you pay that off, put all that money toward the rest of your card debt. You can transfer to another 0% card if you run out of time.

The only problem I see with this plan is, if you don't pay close attention and the 0% time is up and you don't remember to transfer it, or if there is no 0% transfer avaialable (there is no way to know positive there will be) the % is very high on these cards. My daughter did this quite successfully with a car loan, however, if at any time the deck of cards folded and she couldn't get the 0%, or a low percent, she had the money to pay off the credit card. That's a large sum of money to have on a credit card that may have high interest...and the OP freely admits she likes to shop, so unless that problem is addressed, the cc's will continue to be used..and the debt will only go higher.

 

[tiffany123]

I've read all the posts and one thing I haven't seen mentioned is perhaps the OP needs to assess why she's a recreational shopper. She writes the DH travels alot, sometimes for weeks at a time. Could it be that she's using shopping as an "escape" from her life as "single" Mom? True, she is married but since DH travels so often she is basically raising their two kids by herself and perhaps a strain on their marriage is part of the reason for their debt. DH makes very good money especially for living in the rural Midwest but if she's unhappy and maybe even subconsciously resentful that he is gone all the time, it's going to be difficult for her to adjust her "spending mentality".

 

[punkin]

"the OP freely admits she likes to shop, so unless that problem is addressed, the cc's will continue to be used..and the debt will only go higher."
DMRick, I agree. The 0% option is only temporary and is not going to solve anything if the underlying problem is not addressed. However, it will buy her some time if she is ready to cut out her spending.