Feeling Horrible: Just found out how much in Debt we REALLY are...

[Tink-aholic]

OP, you can follow Dave Ramsey's principles without doing the tithing part, if that isn't your personal philosophy. I don't tithe or follow DR's religion, but I like his money management style and it works for me. You can take the concept and adapt it (or Clark Howard, or Gail Vaz Oxlade, or Suze Orman -- pick your personal guru)!

 

[piperdown]

Be really careful about using the cc just to earn the rewards, I have read a lot of financial advisors who talk about this being such a bad idea if you don't really keep on top of it. Good luck.

Believe me, I know!! We now know how to live on a budget, and that hasn't changed with the new CC. I've gotten very good about tracking our expenditures.

Also, I purposely chose one through our credit union, so that I can easily make the payments via bank transfer on the banking website. Every Monday, I make a transfer for the balance of the previous week's transactions. The easier I make it for myself, the more likely I am to stick with it.

 

[Tosie]

Another vote for the Dave Ramsey method. You don't need to take the Financial Peace classes if it's not feasible - I did the plan just by using the Total Money Makeover Book.

We started in 2005 and we are debt free except for our house. I love using the cash envelopes - keeps us accountable and under control.

Good luck OP - you can do this!

 

[dd50]

I feel like I have no where to turn for support (except for my husband)! I just have this big rock in my stomach...

We did some re-financing before the bubble burst and payed off alot of credit card debt, and I thought we were making progress on what was left over. My husband pays most of the bills (I make about half of what he does) and I pay for child care and health insurance. Anyways apparently we are far outspending what we are taking in and our credit card debt has risen again, higher than it was before the re-fi. I had no idea! I've offered to help with the actual paying of the bills, but that would be a bigger hassle he says...

I just need some words of encouragement and advice - we can't tell our family and friends so I though perhaps some fellow Disney lovers would have some good insight. We're going to work out a budget tonight, cut way back on eating out and shopping (cash only, and on a strict budget), but I am just so worried! Sigh.

The best advise that I can give is to cut up your credit cards and use cash because when you run out of cash you are done until the next pay day.

 

[ICF]

The best advise that I can give is to cut up your credit cards and use cash because when you run out of cash you are done until the next pay day.

That would be silly advice...use the card, earn rewards, pay off the balance each month/week/day/hour so you arent charged interest. Enjoy your free stuff-be they disney $, hotel rewards, cash back, free airline tix or whatever else you want to ear.

CC's aren't really a problem, it's not having the self control to know HOW to use them and keep the charges on them to what you have budgeted.

 

[indimom]

That would be silly advice...use the card, earn rewards, pay off the balance each month/week/day/hour so you arent charged interest. Enjoy your free stuff-be they disney $, hotel rewards, cash back, free airline tix or whatever else you want to ear.

CC's aren't really a problem, it's not having the self control to know HOW to use them and keep the charges on them to what you have budgeted.

Yes, under normal circumstances this is true. BUT, you are forgetting that they already carry a debt on the cards. So any rewards are negated by the interest on the balance. At this point, using the credit cards is not the best idea for the op.

 

[rer1972]

OP here again...

You guys are totally right, my Hubby and I need to do this together! I meant that I trusted him in regards to him not misusing our money. He's not gambling or anything like that.

What do you all think about transferring some of the high interest rates to zero percents?

I think your are just playing with fire. If there is even a chance you could use one of those cards to add on more debt, it will likely happen. Not to mention that if you happen to miss a payment or are late, those 0% rates usually go out the window.

That would be silly advice...use the card, earn rewards, pay off the balance each month/week/day/hour so you arent charged interest. Enjoy your free stuff-be they disney $, hotel rewards, cash back, free airline tix or whatever else you want to ear.

CC's aren't really a problem, it's not having the self control to know HOW to use them and keep the charges on them to what you have budgeted.

Not everyone is able to do this, and the situation the OP is in makes this way to tempting to just continue to rack up debt.

Please look into the other recommendations for Dave Ramsey. We have done it, and it works.

Going over your budget with your husband is just the first tiny step to eating that Debt Elephant. If possible try and put at leat $1,000 in cash away in the bank for emergencies (real ones like the car breaking down, the heater a/c breaking down, etc.). It seems like Murphy loves to make things worse when you don't need them to be worse. This way your next emergency won't go onto that hill of debt.

Then start hitting the debt (smallest amount not largest interest rate) full force.

It can be done, and when you get done you will feel like you've conquered a mountain!

Best wishes

 

[bumbershoot]

That would be silly advice...use the card, earn rewards, pay off the balance each month/week/day/hour so you arent charged interest. Enjoy your free stuff-be they disney $, hotel rewards, cash back, free airline tix or whatever else you want to ear.

CC's aren't really a problem, it's not having the self control to know HOW to use them and keep the charges on them to what you have budgeted.

First they must get the balance gone. Then they must create the willpower to not overspend, to ONLY spend what they have in the bank. And only then is it safe to do the above.

 

[csharpwv]

Spending habits - and eating habits are two of the hardest habits to change.
When the two are tied closely - the problem gets bigger.

It is so easy to eat out - no shopping - no prep - no clean up - and everyone can get what they want - it is such an easy solution to something that wasn't even an issue 10-15 years ago.

The number of restaurants has soared - and that number has climbed with demand - there are places across the country with 1 hour wait times on weeknights because demand is so high.

One key fix to this is menu planning -
No one knows how to do it anymore - and kids often times don't like to eat what their parents do - so it makes food prep even harder.

When I was growing up - there was one thing to eat on any given night, and if you didn't eat it, you didn't eat.

So, that habit can be changed in about a month of so of preparing food on a daily basis.

As far as your budget - you have two options - work harder and spend less.
When I say work harder - that means a 2nd job, supplemental income from a direct market business, or find a full time job that pays better.

If you don't mind taking on a 2nd job - you can drop your debt twice as fast.
If you don't want to take on a 2nd job - you have to cut your spending.
First thing to go should be your cable or satellite bill.
Get rid of TV, it is totally unnecessary - you can easily get by on reading books (from the library... for FREE) or you can play games as a family, or you can do a hobby together as a family... cut coupons, clean house, visit neighbors, family, and friends.

If my wife would let me - our cable bill would be gone in a flash!

Next, in regard to cutting your spending - utility bills....
Watch your energy consumption, watch your water consumption, and watch your bill shrink.
While these are bill you can't get rid of - you can do your part to lower them!
Time your showers - flush the toilet only when necessary - and if you water your lawn - STOP! Dead grass doesn't look the greatest - but would you rather your grass be brown... or your bills unpaid?

A PP mentioned the cost of child care - and weighing our your options. If you are just working to pay someone else to watch your kids - cut out the middle man, watch your kids yourself - and become a stay at home professional mommy!

As far as buying things - and by things I mean material possessions - stop buying. Cut that 100% If you can LIVE without it - GO without it.

There is nothing worse than money-induced stress - it doesn't do anything for your be stress you out more - and stress is very taxing on the body.

As others have said - don't panic - there is nothing that you can do at this very second - however, with planning - you can spend less, and save more!

Chances are, if you are in debt enough to stress out about it - you aren't saving enough either! If you aren't saving for your kids college education, and your retirement - then the problem is even larger than what you realize?

So - take your time - look at where your money is going - and re-route that money!

If you are buying coffee every day - but that money into a jar. If you are buying lunch at work every day - save that money - and put it in a jar. In no time at all, you will have more than $100 saved each week - and that amounts to $5,200 each year, that you have cut out of your spending - and directed either to paying off your debts.

For every bill that you owe - put together a thermometer notebook chart page. Just like organizations do when raising funds - raise your temperature each day with the fund you SAVE - not spend.

This problem isn't going to be solved today or tomorrow - it is going to be solved in no less time than it took to create the problem - from 1 year - to 10 years. You can't pay back what you spent over a 10 year period - because if you could... you wouldn't owe it to start with!

$1.00 not spent, is $1.00 that you no longer owe.

A credit card is a form of financing - if you wouldn't sit down at Starbucks and fill out an application for credit to buy a frappe.... don't put it on your credit card! You are financing that cup of coffee!!!!! WITH A REALLY HIGH INTEREST RATE!

So, first off - relax - and don't stress out - second - make a plan.

If you plan for it - you can make it happen!

Perk up, and take a breath of fresh air - and make reminders for yourself of your goal every day - save at least $5.00 today - that's a start!

 

[rer1972]

A credit card is a form of financing - if you wouldn't sit down at Starbucks and fill out an application for credit to buy a frappe.... don't put it on your credit card! You are financing that cup of coffee!!!!! WITH A REALLY HIGH INTEREST RATE!

Very good point

Anytime I explain the no credit cards concept to people they look at me like I'm crazy, but when I ask them that sort of question "Would you ever take out a loan to pay for a Big Mac, coffee, a video game, pizza, or gasoline?" they seem to understand why I feel that way.

 

[MrsPete]

My new job helped financially, but it's still not a ton of money coming in. So I went to the local library and borrowed different books about finances and budgets - my favorites are America's Cheapest Family and Suze Orman books. We incorporated a bunch of different ideas and put them together in a plan that works for us. We put ourselves on a budget and only use cash/debit card to buy the things we need and want.

Although it's a bit outdated now, I also recommend The Tightwad Gazette by Amy Daczyn (spelling?). She wrote her series of three books in the 80s, so her numbers are no longer realistic, but her process (i.e., calculating how many hours you'd have to work to buy this or that, comparing the per-serving cost of potato flakes vs. baked potatoes vs. French fries) is still valid.

I guess I should have qualified that as "people who are in trouble with consumer debt".

Yes, if you are a very disciplined spender, working the points options is an excellent strategy, but for someone in the OP's position, using a CC for groceries is unwise, because it will pile on more interest, AND they are likely to overspend at the supermarket that way, because, after all, "groceries are a necessity!"

As I said, the supermarket is a danger zone for folks who are on austerity budgets, because it is a place where they will tend to give themselves permission to splurge because they have given up eating out. Those little supermarket splurges can add up to a lot of money over time.

Restricting yourself to cash-only at the supermarket (gift cards are good if you don't want to carry cash; buy them at the beginning of the month), forces you to watch the impulse buying if you don't want to be eating nothing but rice, pasta, and freezer leftovers for the last few days of the month.

I was going to comment on just this very thing: For those of us who are skilled in the ways of using credit cards (rather than letting them use us), putting necessities on the credit card can earn literally free money (or, free restaurant gift cards, which we enjoy immensely!).

I'll throw in one more comment on the grocery thing: It's also easy to over-spend at the grocery store because so many of the splurges there are inexpensive. $3 for a box of cookies, $6 for a gourmet cheese, which then means you must have the $5 box of imported crackers. It adds up. The real answer, however, is A LIST.

OP, you can follow Dave Ramsey's principles without doing the tithing part, if that isn't your personal philosophy. I don't tithe or follow DR's religion, but I like his money management style and it works for me. You can take the concept and adapt it (or Clark Howard, or Gail Vaz Oxlade, or Suze Orman -- pick your personal guru)!

It's fine to read multiple "experts", then pick and choose what works for you from each one's plans (you'll find a great deal of overlap anyway). Just be sure you're being honest with yourself and aren't ignoring the tough parts of the various plans!

One key fix to this is menu planning -
No one knows how to do it anymore - and kids often times don't like to eat what their parents do - so it makes food prep even harder.

A couple tricks to help with cooking savings:

- If you simply can't face cooking and are tempted to just go eat out, consider something from the grocery store deli instead. It's more expensive than cooking for yourself, but it's less expensive than eating out (where sodas are $2 each and you have to leave a tip). Or consider a deli chicken and make sides yourself.

 

[Tink-aholic]

It's fine to read multiple "experts", then pick and choose what works for you from each one's plans (you'll find a great deal of overlap anyway). Just be sure you're being honest with yourself and aren't ignoring the tough parts of the various plans!

Good point. I was just trying to say that one doesn't have to follow Dave Ramsey's religion to follow his snowball method. Unfortunately, I'm afraid there are some people who would otherwise do well on his plan but get turned off by how much he has tied religion into his money management. That's why I don't listen to his radio show, but I read his book. That way, I can step over the religion to get to the financial advice. This has worked for me, anyway.

 

[ah1126]

One thing we have done is look at your other bills too. We changed our car insurance providers and save $40 a month. We were paying $5 a month for Netflix, but we weren't watching the movies so we canceled it. We also saved money by combining our cable, home phone, and internet.

Can you cut back on your cell phone bill? Less minutes or features? Maybe cut your cable? Does your internet company offer different speed packages? Maybe you could cut money there.

Good luck to you! It is a hard and long road, but you will be amazed what you can do!

You can do it!!!!!!

 

[kimkoz]

but on the other hand you need a little slap too.. In a good way. Big hugs coming your way but post like this make me sad. You need to demand (in a nice way) that you be involved 100%. I know we all think of happy times but you need to be prepared for the bad times too. Life can always throw us for a loop, death and accidents. I wish it upon no one but heaven forbid something happened to your DH and you were the one 100% in control not knowing anything from your families past finanical duties. You would be lost and thats not right. I understand he wants to keep the stress on his shoulder, its a pride thing (I'm the same way) but you have children to look out for. Hang in there, things will work out. You will find a way. Little things add up.. We've been in debt, worked our way out and now its great.

I had to push DH to learn how to run the family finances, his answer was I trust you.. Well thats not what I wanted to hear, I love he trust me but I need to have faith in him that if anything happened to me, my family would still be on thier feet growing and striving..

Hang in there, things will work out and people have given you great advice. Just please educate yourself, its stressful but you need to know this.

 

[Natalie's Mommy]

Actually, there is nothing about Disney trips in my signature... the only one on the horizon is not being paid by us...

sorry my bad, that's what i get for being on DIS when im dead tired

No, another poster who stated she has over $50,000. in credit card debt has 2 trips in her signature. Not the OP.

i cant even imgine how to get that much CC debt! my two brand new cars combined wern't that much (both hondas)

 

[NBCGal]

There's a lot of good advice offered up in response to your post. I wish you luck in ridding yourselves of the debt monster. It can really cause a lot of pain in a family. You can do it! Don't give up (or in). Keep track of your expenses and learn what necessities really are (I have a hard time with this myself).

 

[Nugget]

I agree with the other posters that cutting the cable bill is a great way to cut down expenses. My husband and I got rid of the cable and the house phone. That was a big chunk.
Another big chunk is my impulse spending. I locked up my debit and credit cards in a safe so I can't carry them around anymore. I just carry an emergency $20 for gas.
Hang in there!

 

[mafibisha]

If the OP pays for the health insurance it is likely that her job provides the health insurance, in which case quitting is likely to cost quite a bit more than staying home.

OP, insist on seeing those CC statements! Not because your DH is hiding something, but because looking at them regularly tells you WHERE your money is actually going. If it is going to things that are impulse buys, then you know that discipline is the problem. If it is going to non-necessity things that are too expensive for you to otherwise afford, then your tastes need to change to match your present realities. If late fees are a problem, then it is time to go to auto-pay.

One of the things that I always advise folks is NEVER to use a CC to pay for groceries. Food is one of the biggest impulse buys that exist, and it is so easy to just toss that extra item (or 2, or 3, or 10) into the cart for a treat, especially if you have cut out restaurants. Budget your groceries in cash and resort to the pantry and freezer when you run out of money before payday; the discipline will swiftly follow.

One thing that is completely painless that will help a little bit with your mortgage is to start splitting the payment and sending in half every two weeks rather than paying the installment monthly. Over time, doing this will make a surprisingly nice dent in the interest.

Im just now reading this thread, and apologize if this has been asked / answered, but can you or someone explain this part a little more? I'm not sure I understand but it sounds intriguing!!

 

[DISNEYNV]

Set up your credit cards online. Check them everyday. You will know exactly where your money goes. I would never let my husband pay the bills without being involved - you both are liable for the bills, you should know where every penny that you both spend goes to.

Totally agree!!!!!! I worked part time for years while my kids were infants and my husband always said we were fine! I believed him and just never checked our CC statements! Stupid move! I later found out we were in debt because he was using the cards for groceries and not paying it off rack month as he said he was! That racked up really quickly after three years! Do yourself a favor and get involved with your families finances right away. You are responsible for the debt as well as he. If he refuses to tell you or show you then there is a problem. I found that out the hard way. Good luck to you!

 

[DawnM]

Basically, it is like paying an extra payment per year.

If you pay monthly in 12 installments, you don't pay every 4 weeks, you pay every 30-31 days.

However, if you pay every 2 weeks (not twice a month, but every 2 weeks) you will pay 26 times half payments making 13 payments over a year instead of the usual 12.

You can have the almost the same results by taking your regular payment, dividing by 12 and just paying that amount extra per payment.

For example:

Monthly payment: $1,000
Divide by 12: $83.33
New payment: $1,083.33 per month

If you have a 30 year mortgage this can shave off about 6 years or so if you start from the beginning. If you have a 15 year mortgage it may only shave off 2 years.


Dawn

Im just now reading this thread, and apologize if this has been asked / answered, but can you or someone explain this part a little more? I'm not sure I understand but it sounds intriguing!!