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

[MAGICX2]

Hello All! And thanks for sticking with me throughout this thread. Now that I have a minute I wanted to update everyone on some budget things we have done. Now, you all are aware of my concious effort to do a spending freeze, and I think I am doing pretty well. Here are the things we have tried to do to cut our budget:
Canceled trash pick-up. MIL lives 5 min. down the road. I am going to take our trash down there and we will split the bill.
Had DH and mine student loans put into forbearance for 12 months.
Contacted one of our cc's and we are actually eligable for a grant towards our balance because of the hospitalizations I and children have had over last 24 months.
Contacted two DR's offices and they agreed to forgive (write-off) our outstanding balances to them.
Working on the phone/internet bill. We have to have a land line and internet for DH job. I saw a commercial for Vonage phone service, unlimited calls anywhere in the US for 24.99 a month. We currently pay about 40.00 a month for our local phone company. Not sure about this one.
Enrolled in the budget program with our electric company. We would pay about $80 in the summer but then sometimes up to $400 in the winter. We have an all electric home. With the budget it will be $139 every month.
I work at a hospital, first shift M-F, and there other hospitals within a half hour of my home. I have already lined up some casual work at these other hospitals for evenings and weekends at my descretion.
It's not much, but it's a start. If any one has any more suggestions feel free!

 

[disneysteve]

Canceled trash pick-up. MIL lives 5 min. down the road. I am going to take our trash down there and we will split the bill.

Congratulations. It sounds like you are taking some great steps toward getting things under control.

I'm a little concerned about this one, though. Are you sure this is permissible under the rules of the trash collecting company? Think about if for a second. What if everyone on the block decided to dump all their trash at one house and just split the bill 10 ways.

Since it is just you and MIL, you may never get caught. But there's always the risk that a neighbor might see you dumping your trash over there and report it to the company. I'd double check if this is okay with the company.

 

[WonderWomanDC]

Wow!! I am so pleased to hear about the steps you have taken, all in the right direction from what I can see! Congratulations to you. I hope you're able to pick up some extra work to increase the income coming in. How wonderful that the doctor's offices were willing to forgive your outstanding bills. If you keep following this new tough road you will find yourself making progress quickly!! Keep up the good work.

 

[dvcgirl]

Sounds like you're off to a great start Magic....good for you! I have another book to recommend to you. It's "All Your Worth....The Ultimate Lifetime Money Plan" by Elizabeth Warren and Amelia Warren Tyagi. They are a mother daughter team who wrote The Two Income Trap...another great read that really pertains to your situation.

I heard about All Your Worth from Clark Howard, a radio financial guy, and took at peek at Barnes and Noble. I liked it so much that I ordered it to come to my home and after reading it I'm going to send it along to a relative who is in a situation similar to yours.

I'm just starting it now, but it's very good and had a great (and simple) plan to follow forever. The basics are this...just like everything in life, managing your finances comes down to one simple word....balance. They place all of your spending into three categories. "Must Haves" "Wants" and "Savings". Once you get your "Must Haves" and "Wants" in line, then "Savings" will automatcially follow.

The "Must Haves" are the bills that you absolutely must pay. Mortgage/Rent, insurance, car payment, utilities, basic phone, basic groceries(not eating out...that's a want)....and there are lots and lots of specifics for people in serious CC debt and where to put that payment. The "Must Haves" should equal no more than 50% of your take-home pay.

Then come the wants. I think that you'll like their philosophy because they totally subscribe to the idea that life is also about having fun. And so they say that one can spend 30% on "Wants". Now keep in mind, that the "Wants" category also includes most clothing (because they correctly assume that we all already have a closet full of clothes), cable TV (not a necessity), cell phones...(not a necessity). And so, for all of us, our "Wants" needs to be kept in check.

What has happened in our country is that so many consider things like Cable and Cell phones and name brand clothes a "Must Have", and that's how they get thrown out of whack. And so, if you love to vacation at WDW...great! You can use a portion of your 30% to do just that! But depending on your income, you may have to give up another "Want" to get there. They are adamant that under no circumstances should you go over that 30% for Wants or 50% for Must Haves. So, if your mortgage, insurance, utilities and car payment are 60%...you need to get that into balance. If your Wants are 50%...that needs to come down...and so on.

I like their philosphy.... And also, it gives good examples of where to put that CC debt (much of it will have to come out of your "wants and savings" for awhile, but once you pay that off, you'll have a great guide to follow. And so I think it would be a great read for you.

They base these numbers on 20 years of research and also look back generations to see what worked for our parents and their parents...and so on. They also talk a great deal about how so many Americans (like you) are getting into financial trouble. Their theory, and I believe it's true to a great degree...is that our parents didn't get into trouble because banks wouldn't *allow* them to get into trouble. It was very difficult to get loans and credit back in their day. There was none of this million credit card offers a day in the mailbox, zero interest CC, interest only mortgages.....on and on. And also, many had pension plans and so they didn't have to worry about saving 20%...their employers did that for them.

In our times, we need to be our own "contractor" so to speak. We need to build our own solid financial foundation so that our "financial house" won't fall down on us like a house of cards.

 

[Nicolepa]

Working on the phone/internet bill. We have to have a land line and internet for DH job. I saw a commercial for Vonage phone service, unlimited calls anywhere in the US for 24.99 a month. We currently pay about 40.00 a month for our local phone company. Not sure about this one.

The one thing to keep in mind about Vonage. If you are talking on the phone you cannot be on the internet, it will make you call cut in and out. We (I should say dh) used Vonage for a bit, but I got frustrated that I couldn't surf the web, or download my email etc because it would interfere with his call.

 

[hmgolden]

The one thing to keep in mind about Vonage. If you are talking on the phone you cannot be on the internet, it will make you call cut in and out. We (I should say dh) used Vonage for a bit, but I got frustrated that I couldn't surf the web, or download my email etc because it would interfere with his call.

This may depend on the strength of your high speed connection - we have had vonage (always with a cable modem, not DSL) for 3.5 years now in 3 different homes, and haven't had any problems. DH and I often talk on the phone while one or both of us is using the internet with no problems.

Magic - I just want to commend you on the changes you have made. It took a lot of guts to put everything out there for everyone to read. Congrats on steps you have taken. I'm looking forward to hearing more of your successes!

 

[disneysteve]

Sounds like you're off to a great start Magic....good for you! I have another book to recommend to you. .... We need to build our own solid financial foundation so that our "financial house" won't fall down on us like a house of cards.

This was a great post! Thanks for sharing that new book.

 

[LauraR]

Hello All! And thanks for sticking with me throughout this thread. Now that I have a minute I wanted to update everyone on some budget things we have done. Now, you all are aware of my concious effort to do a spending freeze, and I think I am doing pretty well. Here are the things we have tried to do to cut our budget:
Canceled trash pick-up. MIL lives 5 min. down the road. I am going to take our trash down there and we will split the bill.
Had DH and mine student loans put into forbearance for 12 months.
Contacted one of our cc's and we are actually eligable for a grant towards our balance because of the hospitalizations I and children have had over last 24 months.
Contacted two DR's offices and they agreed to forgive (write-off) our outstanding balances to them.
Working on the phone/internet bill. We have to have a land line and internet for DH job. I saw a commercial for Vonage phone service, unlimited calls anywhere in the US for 24.99 a month. We currently pay about 40.00 a month for our local phone company. Not sure about this one.
Enrolled in the budget program with our electric company. We would pay about $80 in the summer but then sometimes up to $400 in the winter. We have an all electric home. With the budget it will be $139 every month.
I work at a hospital, first shift M-F, and there other hospitals within a half hour of my home. I have already lined up some casual work at these other hospitals for evenings and weekends at my descretion.
It's not much, but it's a start. If any one has any more suggestions feel free!

Wow, I'm impressed! Good work for such a short period of time. With this level of energy and focus I think you really will be able to turn around your finances. Keep it up, you're doing great!

 

[OceanAnnie]

Congratulations. It sounds like you are taking some great steps toward getting things under control.

I'm a little concerned about this one, though. Are you sure this is permissible under the rules of the trash collecting company? Think about if for a second. What if everyone on the block decided to dump all their trash at one house and just split the bill 10 ways.

Since it is just you and MIL, you may never get caught. But there's always the risk that a neighbor might see you dumping your trash over there and report it to the company. I'd double check if this is okay with the company.

Great strides you are making! I'm glad for you.


I agree with DisneySteve. It might be risky to take your trash to your MIL's. The trash company might notice the increase in trash or someone might report it. I don't know what sort of consequence there might be if you are caught. Be careful.

There must not be a dump nearby. That would be ideal.

 

[Lyn5]

Canceled trash pick-up. MIL lives 5 min. down the road. I am going to .

I do this also. My in-laws live really close to us and sometimes DH will put our trash with theirs and sometimes we just take our own trash to the waste area, if we have a lot of stuff. Where I live, each account can have so many bags for pickup and my in-laws have only a little household trash as do we, so we add ours to theirs and noone complains.

I am so happy for you, OP, that you have been making postive progress.

 

[dvcgirl]

This was a great post! Thanks for sharing that new book.

I think you'd enjoy this book Steve. Not only is a good read for folks like our OP who are in some financial trouble, but it's good for people like me and you who are big savers. Sometimes my DH and I can get too out of balance with our savings and not have as much fun as we probably should. I ran our numbers and our "Wants" and "Must Haves" are far below the percentages in the formula presented here...and our "Savings" is through the roof. It's not that we didn't know this, and we can't force ourselves to change who we are, but it brings into focus for us that we can and probably should enjoy a splurge item every now and again.

I like the focus on dollars and not pennies. There's so much talk everywhere, and on these boards about coupons and saving a nickle on this brand over that brand. People will go to 5 different stores trying to save $1.50. I'm as guilty as anyone in this regard. And in the meantime most people shop for mortgages, insurance, apartment rentals once...and that's where many can be saving the big bucks. I love that 50% number for Must Haves. I thought, my God, how many people are *way* over that number with the mortgages that banks are willing to lend these days. And then they give you the skinny...you bought too much house for your money, or you should sell that car. Because until you get that number under 50% you won't satisfy your "wants" and your "savings" will suffer. Perfect logic.

I'm halfway through it, and I've already thought of a few people in my life who could greatly benefit from this book. It brings back the tried and tested way of living that Americans had exhibited for generations and is timely advice for a nation that has since taken a hard left off the road to financial freedom.

 

[MrsPete]

Since it is just you and MIL, you may never get caught. But there's always the risk that a neighbor might see you dumping your trash over there and report it to the company. I'd double check if this is okay with the company.

Yeah, this one is called "Theft of services" and if the company finds out, they can charge you for back-service AND fine you -- it's along the same lines as stealing cable TV. I had a family member who got caught doing this (turned in by a neighbor who was angry about something completely unrelated). While the chances of being caught are probably slim, this isn't worth the risk.

Everything else sounds great! It sounds like you're really making progress; keep up the good work.

 

[MrsPete]

I like the focus on dollars and not pennies.

I understand what you're saying, and there's a good bit of truth to it; however, I think you have to watch the pennies too. Toss a few "oh, it's only a dollar" items into your cart at the grocery store and suddenly you're no longer looking at pennies -- they've become dollars. Buy a .50 soda every day this week at work and suddenly you're spent dollars instead of pennies.

Still, your point is valid. We should be very careful with the big purchases, not just the weekly grocery bill.

I love that 50% number for Must Haves. I thought, my God, how many people are *way* over that number with the mortgages that banks are willing to lend these days. And then they give you the skinny...you bought too much house for your money, or you should sell that car. Because until you get that number under 50% you won't satisfy your "wants" and your "savings" will suffer. Perfect logic.

I also like this theory. I think it could be particularly useful to a young person just out of school. I know that when I was just starting out financially, I had a hard time gauging how much I "could afford". I think I'll have to read this book.

 

[nowellsl]

Sounds like you're off to a great start Magic....good for you! I have another book to recommend to you. It's "All Your Worth....The Ultimate Lifetime Money Plan" by Elizabeth Warren and Amelia Warren Tyagi. They are a mother daughter team who wrote The Two Income Trap...another great read that really pertains to your situation.

I've read this book and it does have some good information. Dr. Warren is often on Dr. Phil and gives good financial advice! I disagree about saving the pennies - I think you should do both, save pennies and dollars!! Every little bit helps!

 

[disneysteve]

I disagree about saving the pennies - I think you should do both, save pennies and dollars!! Every little bit helps!

I dont think dvcgirl meant to ignore the pennies. I think she just meant that lots of folks focus on the pennies and forget about the dollars. You can save a whole lot more money by refinancing your mortgage or upping the deductible on your auto insurance than you can save by changing brands of breakfast cereal.

Certainly, you should do both.

 

[dvcgirl]

I've read this book and it does have some good information. Dr. Warren is often on Dr. Phil and gives good financial advice! I disagree about saving the pennies - I think you should do both, save pennies and dollars!! Every little bit helps!

I agree, there's merit in watching your pennies. I think that the author is saying that very often we focus on the pennies and miss the big items that we're definitely overspending on. Like a mortgage, car payment, unnecessary insurance....that kind of thing.

They talk lots about the hard choices that sometimes need to be made. For example if you are way above your "Must Haves" but your "Wants" and "Savings" are in line...you can look to saving on utilities, insurance...big ticket items. But you also need to look at bigger things. Is one adult a Stay at Home Mom..or Dad? You may have made that decision back when you could afford it, but your financial picture has changed. We see that lots around here....lots of families with a SAHMs who struggle financially. We see other families who struggle with two incomes and yet the mom wants to stay at home (when it isn't really feasible.). Another big realization that I'm sure will be hitting many homeowners soon...."we bought much more house than we can afford". And so sometimes the only way to get yourself back on the financial road to freedom is to move into a new house that you can afford.

 

[Teresa Pitman]

My son and his wife got the Vonage phone thing (they have cable internet) but found it very frustrating. While it worked okay with their internet, it kept cutting in and out randomly and often you'd hear other people's conversations (which made them wonder who was hearing theirs!). They finally got fed up last month and went back to their original system.

Teresa

 

[nowellsl]

I dont think dvcgirl meant to ignore the pennies. I think she just meant that lots of folks focus on the pennies and forget about the dollars. You can save a whole lot more money by refinancing your mortgage or upping the deductible on your auto insurance than you can save by changing brands of breakfast cereal.

Certainly, you should do both.

I was referring to the author of the book - not dvcgirl! I do agree the big ticket items save more money.

 

[MAGICX2]

When I got home yesterday there was a letter to DH from SallieMae. It turns out it was an offer for a preapproved non-student loan consolidation loan. We were approved for 25K and could take out the loan for any where from 36 months to 72 months. The 36 month term our payment would be $816 dollars a month. That is just about what we are paying now. The 60month term was $586. The APR was fixed at 6.99% for the term of the loan and would only increase if we were late or missed a payment. (Which I will NOT do!) This would cover all the cc debt and only leave us with the signature loan which is an automatic deduction from our bank account each month. I thought this would be a terrific opportunity. I know some of you have said that we shouldn't consolidate because we will just get ourselves back into the same hole. Well, let me be the first to say NO WAY! As soon as the cc's were paid they would be canceled, save one. And that one's limit would be lowered to like $500 so there is no way it could get out of hand. Please let me know what you think. We have to respond to the SallieMae offer within 14 days.

 

[tlbwriter]

That's an interesting proposition. If the interest rate is less than you're currently paying, it's worth looking into. One downside would be that you'd end up stretching out *all* over your payments over the life of that loan. Didn't you say you were very close to paying off 2 or 3 of the CCs?