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

[disneysteve]

Sure, you can get a great condo off-site at Disney for $300 (this sounds low but I believe you)

OT but since you mention it, we are booked at Orbit One Vacation Villas in November. We booked through SkyAuction. 7 nite stay, $260. 2-bed, 2-bath condo with full kitchen and jacuzzi in the master bath. We stayed there last year and loved it.

 

[deadhedjen]

JMTCW but here goes....

You really do not need cable, a cell phone, or anything more than basic phone service. Dial up internet is fine too. Eating out is a luxury, not a necessity. Eat at home. Read books, play board games, rent videos from the library, go to story time at barnes and noble.

There was a time on my life where I was in a situation similar to you. Our money available for spending was next to nothing. We (thankfully) did not have the amount of debt hanging over us like you do, but I can relate to your situation now of not having any money to spend.

My situation was temporary, as is yours. Totally fixable. In my situation, I found it worked out better NOT to work. Saved on child care costs and additional expenses associated with working. Believe it or not, I found that I spent LESS by staying home MORE. I didn't need to pick up take out on the way home from work because we did meals at home. I didn't need new clothes to stay home, didn't need gas in the car to get to/from work, didn't need to pay for day care, kids didn't need new clothes for day care. I wound up less stressed because my house was always clean, I decluttered. I discovered all the clutter I had made me money on eBay. I discovered thrift stores, couponing, and internet message boards to get support from.

I knew that my situation would only last for 2 years. (DH was full-time college student and we had 3 kids with 1 on the way) We moved away from our families so DH could finish school. I knew money would be tight for those 2 years, but knowing it was only temporary made it bearable. Your situation is totally temporary as well. You can do it!!!!

Your kids are not going to remember that there was once a time when you didn't get them happy meals, buy them the latest toys and gadgets, dress them in brand name clothes, etc. As a mattet of fact, all my kids remember was how I used to take them to the park all the time, went fishing so often we never even took the poles/tackle out of the mini-van and went to the library weekly.

Listen to the advice you've been given here. The folks here seem quite knowledgeable about how to get out of debt.

Please keep us posted.

Jennifer.

 

[dvcgirl]

OT but since you mention it, we are booked at Orbit One Vacation Villas in November. We booked through SkyAuction. 7 nite stay, $260. 2-bed, 2-bath condo with full kitchen and jacuzzi in the master bath. We stayed there last year and loved it.

Great deal...where is that located?

 

[WatchinCaptKangaroo]

Good job!

It may help you feel more productive to pay down your lowest balance first by paying minimum payment on all your other balances and paying the rest on your lowest balance.

From the looks of it CC#6 is your lowest balance. So on CCs 1-5 you would pay the minimum then pay $155 (if my math is right) on CC #6. Then after you pay off #6 (which will be a lot sooner by paying $155 a month then $50) you can take that $155 and start paying $205 (again if my math is right) to CC #5. Once that is paid off you can take that $205 and pay $305 to CC#4 etc... I know a lot of people recommend paying off the hightest interest rate first but when your debt seems to never go down getting rid of the smaller stuff first can help boost your confidence.

CC #1 $165.00 (min.—usually pay 175.00)
CC #2 $210.00 (min.---usually pay 225.00)
CC #3 $145.00 (min.---usually pay 175.00)
CC #4 $ 65.00 (min.---usually pay 100.00)
CC #5 $ 35.00 (min.---usually pay 50.00)
CC #6 $ 27.00 (min.---usually pay 50.00)
Sig. Loan $230.00 (automatically taken out of checking)
Groceries $300.00 (avg.)
“Blow Money” $100.00 (for whole family for the month)

GRAND TOTAL= $4707.33

Take home pay from both of us= $4820 (avg. DH set salary, mine is hourly)

I think you should keep the difference in income/output for any higher payments you aren't expecting.

Thank you for updating!

 

[MrsPete]

In my situation, I found it worked out better NOT to work. Saved on child care costs and additional expenses associated with working. Believe it or not, I found that I spent LESS by staying home MORE.

Just to present the other side of that coin: When I had my first child I was in a starting-salary job, and I brought home very little. I "did the math" as so many people suggest, and while I was not losing money every month, I wasn't making all that much. I seriously considered all the things I could do if I stayed home: with more time on my hands, I could've done more from-scratch cooking, I would've had time to make homemade gifts and use cloth diapers, I would've definitely ditched one car (that in itself would've been a huge savings), and life would've been less stressful with one parent at home. And, of course, taxes are lower for a single-earner family. If I had been looking at JUST the paycheck, with some effort I could've at least broken even by staying home.

I decided to continue working. Why? If I'd stayed home until my second daughter started school, I'd be trying to find an entry level job now; instead, I've moved up the payscale and I now make twice what I did then. Braces and teen drivers are on the horizon for us, and I'm glad that I earn more than an entry-level salary at this point in my life. Next, I am in one of the few jobs that still has a traditional pay-til-you-die pension, and I have amassed an extra decade of working years towards that goal. My work skills are still current, my 401K has been growing for an extra decade, and I have seniority in my workplace. These are things that will benefit my children as well as me. I'll be able to support myself in retirement (don't scoff -- my parents won't be able to do that -- I don't want my children to be forced to take care of me financially). My children have nice college accounts, they live in a nice mortgage-free house, and they've enjoyed nice vacations.

Of course, all of this is highly individual. Unlike the other poster, I had no big life changes on the horizon, so the work-or-don't-work wasn't a two-year choice for me -- I was making the decision for the long haul. Also, I have a professional job that I like, ample time off, and a husband who doesn't travel or work odd hours. I was blessed with healthy children born several years apart (if they'd been twins, I'm sure I couldn't have worked!) and opportunities for good day care. If any of these factors had been different, they might have swayed my decision. Also, if I'd felt I wasn't able to keep up with the children's needs, I would've quit working; while my husband and I are sometimes left without time for ourselves, the children's needs are never shortchanged.

The point: Pay attention to more than just the paycheck when you're making this important decision. Take a look at where you'll be ten years from now if you stay home and where you'll be ten years from now if you work. Then assess your personal situation.

 

[VernRDH]

I just sat and read all 10 pages of this thread. I can truly understand the OP's feelings of helplessness. Been there, done that. A lot of great advice has been offered to you and hopefully you will get on the right path soon. I understand about the day care costs -we are finally out of "day care" and only in after school care-from $800/ month (one child) to $200/month. Credit cards down to one with balance of $2500. We do one "big" vacation per year, but plan it out a year in advance. We know how much it will cost and budget that much each week/month and put it into savings. I get to earn interest (albeit a small amount) on the money and when I actually go, my trip is paid for in CASH. We are cruising this Dec. and planning our next WDW trip for next Dec, including the Dining plan, which will greatly help us with our budgeting.

I like to shop too but I am more into ebay than Abercrombie . I love a bargain and that is how I do 90% of my shopping. I am a low maintenance gal-color my own hair ($6 for Miss Clairol or $100 at the salon-no brainer), go to SuperCuts only a few times a year (trim my own bangs). I am a dental hygienist so I wear uniforms to work which my boss provides thankfully, so I do not need a wardrobe that consists of anything but jeans, t shirts, shorts and my one "wedding/funeral/job interview" suit.

I don't recall anyone mentioning this, but a bi-weekly mortgage payment is another great way to save money in the long run. Basically, you pay half your mortgage payment (in your case about $700) every two weeks. You will make 26 "half" payments in the year. But in 12 months, you would make 24 half payments. You are therefore making an extra payment every year. It will cut a staggering amount of interest off your loan. On a 30 yr term you could cut 7-8 YEARS off. It also lets you build equity faster. We have done this since we bought our home 5 years ago. Last year when the rates were low we refi'd to 15 years and with the same plan will be done in 12 years-right when DD is in college. Something to consider.

I wish you a lot of luck. You have a tough road ahead, but it can be done. And if you think you have it bad, don't fret, cause there is someone else out there who is in even deeper than you. YOU CAN FIX THIS!!!

 

[jamzots]

O.K. I am going to give you totally DIFFERENT advice because I have been in the same situation and this worked out for me. First look into refinancing, I believe the interest rates are still somewhat low and you can pay off ALL your credit card debt plus have some money left over to put down on the new house. I know your probably thinking that your mortgage will then go up, BUT if you figure out what your monthly payments are each month for your credit cards, you will be paying a significantly lower out of pocket amount each month. Do the math. Refinance is VERY easy to do these days and it should not hurt your chances of getting your other mortgage when you go to buy your house. You won't have as much equity in your home when you go to sell because you will have to pay off the refi, but don't forget your putting down your down payment for your new home already. Second cut up ALL your credit cards. You do need to have access to cash for emergency's so just get an American Express that gets paid off each month. I have one now and I cannot tell you the difference this makes, knowing I have it there, I don't abuse it, but I don't get freaked out either if something comes up. Third, do NOT give up your Disney trips, this is your sanity. (O.K. maybe cut down to 1 per year for now) But make sure you get a good deal for your vacation, you can be creative with times of year, hotels, ect. A travel agent will work with you on this, or have fun and plan yourself!!! GOOD LUCK!! It will work out!!!

 

[Lyn5]

O.K. I am going to give you totally DIFFERENT advice because I have been in the same situation and this worked out for me. First look into refinancing, I believe the interest rates are still somewhat low and you can pay off ALL your credit card debt plus have some money left over to put down on the new house. I know your probably thinking that your mortgage will then go up, BUT if you figure out what your monthly payments are each month for your credit cards, you will be paying a significantly lower out of pocket amount each month. Do the math. Refinance is VERY easy to do these days and it should not hurt your chances of getting your other mortgage when you go to buy your house. You won't have as much equity in your home when you go to sell because you will have to pay off the refi, but don't forget your putting down your down payment for your new home already. Second cut up ALL your credit cards. You do need to have access to cash for emergency's so just get an American Express that gets paid off each month. I have one now and I cannot tell you the difference this makes, knowing I have it there, I don't abuse it, but I don't get freaked out either if something comes up. Third, do NOT give up your Disney trips, this is your sanity. (O.K. maybe cut down to 1 per year for now) But make sure you get a good deal for your vacation, you can be creative with times of year, hotels, ect. A travel agent will work with you on this, or have fun and plan yourself!!! GOOD LUCK!! It will work out!!!

I am happy things worked out for jamzots, but I would carefully think about transferring your unsecured credit debt to your home. The OP may have a nice household income now, but if something were to happend to her or her DH or one of their jobs they could lose their home. Also, I think she needs to correct core problem of their spending habits. If not, all they will do will be to reload their credit cards. Now, if they are gazelle intense and really cut out the vacations and other spending, maybe going this route would be beneficial....but it is something that should be approached with much caution.

 

[stemikger]

Originally posted by lyn5
I am happy things worked out for jamzots, but I would carefully think about transferring your unsecured credit debt to your home. The OP may have a nice household income now, but if something were to happend to her or her DH or one of their jobs they could lose their home. Also, I think she needs to correct core problem of their spending habits. If not, all they will do will be to reload their credit cards. Now, if they are gazelle intense and really cut out the vacations and other spending, maybe going this route would be beneficial....but it is something that should be approached with much caution.

The above quote is very good advice. I think it is a bad move when people put their homes on the auction block. If you lose your job you could lose your home and that should never be jepordized.

I know people that have taken out so many home equity lines of credit that if they were to sell their homes they would still owe money to the bank.

 

[JudimouseNC]

Just finished reading this thread. OP, we have been where you are and there has been alot of good advice given here. I am no financial wizard so I won't even begin to give you advice there. LOL

Hubby and I lived in NJ, right outside of NYC all of our lives. Two income household, one child, two cars (only one car payment), lots of credit cards and two or three trips to WDW per year for the last few years (always got good deals). Hubby is a computer nut (we have 5 computers for two people) and we had a tv in every room, all the latest elctronic this and that. And we were drowning....not only in debt but by working so much to apy for all that junk that we barely saw each other. Our house was filled with "stuff" that was all mostly bought on a whim and held no personal meaning for us at all. Bought the stuff just to have it.

About 2 years ago, after going to the doctor for "stress related symptoms", I decided enough was enough. We had met some friends in NC and became fascinated with the area. Long story short, we sold our house in NJ (made a NICE profit), paid off ALL of our debt, bought a house in NC for CASH and put some more into it. Hubby found a nice job here, I am pursuing my dream of starting my own business and we can sleep at night.

I know what we did was drastic and not everyone can do what we did, but my point is that in order to change your financial situation, you need to change your perspective and your attitude toward material stuff. We are a society of instant gratification and credit cards make that possible. I know it sounds corny, but we, as a society, need to stop and smell the roses more often.

We all need to de-clutter our lives occassionally. When we were packing up 20 years of a life together in NJ, we became VERY aware of how muc recreational spending we did. We would pull stuff from a closet and look at each other like where did this thing come from. Go through you "stuff", list things you really don't need on ebay, have a yard sale, donate stuff to the Salvation Army. You will be surprised how much better doing that will make you feel.

BTW, we went from a 1,000 sq ft house toa 3,000 sq ft house on 3/4 of an acre of land. Our little piece of heaven in NC. We have NO credit cards at all. We pay for everything we need with cash. We leave for WDW in 14 days and paid cash for the trip. And WOW does it feel good!!!!!

To the OP, good luck in all you are going through, but your situation will not change unless you change your attitudes towards possessions and money. You seem to be on the right track.....

 

[tar heel]

I also disagree with jamzots' advice. Until spending is really controlled they cannot risk their house. Plus to pay off $30,000, you've got to have a good bit of home equity. I don't get the impression they have any significant equity. If they did, they likely would have probably tapped that already instead of getting a signature loan. They've not been in the house long and didn't make much of a down payment (they're paying PMI). She has said that two factory closings in the area have DEPRESSED house prices.

 

[crisi]

The point: Pay attention to more than just the paycheck when you're making this important decision. Take a look at where you'll be ten years from now if you stay home and where you'll be ten years from now if you work. Then assess your personal situation.

Oh, yes! When people make this decision on short term finances, I always cringe.

Another thing we discovered with two incomes: There was a period of time where my husband was two days from being unemployed. He never did get laid off, but at that moment I knew that a two income family was the right choice for our family. As uncertain as work life is for a lot of people right now, even just breaking even can buy you some security.

It takes a little juggling, but a working parent can set up life so not to be dependant on take out, need drycleaning, or buy nylons. My work warddrobe is washable and holds up better than the weekend warddrobe (because I don't crawl on the floor or garden in it - its two biggests risks are spilled coffee and going out of style). Its worthwhile to look at your work expenses (women and men, parents and not) and see what can be trimmed and what is vital. It was touched a little earlier that some jobs require nice cars and country club memberships. And some require dry cleaned suits and lunches out. But if you can trim your warddrobe to nice washable slacks, bring lunch to work, haul coffee in a thermos, carpool or take public transportation or work from home one day a week, etc., work doesn't have to be as expensive as it often is.

Of course, that isn't to say that you shouldn't stay at home if that is what you really WANT to do and can afford to do.

 

[dvcgirl]

I am happy things worked out for jamzots, but I would carefully think about transferring your unsecured credit debt to your home. The OP may have a nice household income now, but if something were to happend to her or her DH or one of their jobs they could lose their home. Also, I think she needs to correct core problem of their spending habits. If not, all they will do will be to reload their credit cards. Now, if they are gazelle intense and really cut out the vacations and other spending, maybe going this route would be beneficial....but it is something that should be approached with much caution.

I totally agree with you Lyn5. If I was the OP, I'd want to be darn sure that I could live without adding even *more* to my credit cards. All of that debt that people lump in with their mortgage, well, think of all the things that you bought with those cards. Clothing, furnishings, vacations, even say a cup of coffee at Starbucks. You'll be paying for a tiny fraction of that coffee 30 years from now when you make that final mortgage payment. The house is still there...but the coffee, clothing, vacations and furnishings are long, long gone.

I was reading yesterday that we're about to see home equity lines of credit/loans hit an absolute high. All due to the credit card minimums doubling and the new bankruptcy laws. Homeowners who are over their heads in CC debt and can't handle the new payments may have no choice but to go this route. However, I would only go that route as an absolute last resort.

Also someone mentioned that bi-weekly mortgage payments are a way to save money. Yes, they are indeed a way to pay far less interest on your mortgage, but I don't think that the OP and her family is in a position to make one extra mortgage payment a year. Maybe down the road, but certainly not now.

 

[disneysteve]

I'd also have to disagree with paying off CC debt by taking on a bigger mortgage. Why? Because you are greatly extending your repayment period. The OP is already paying above the minimum on the CCs. That means that debt will be retired in a reasonable period of time, perhaps 3-4 years or less. If, instead, that debt gets rolled into a new mortgage, she will still be paying for those impulse purchases up to 30 years from now. Sure the monthly payments are lower, but that is because the repayment period is so much longer.

On a similar note, lots of folks are getting themselves in trouble these days by purchasing more expensive cars than they can really afford but managing it by taking out longer loans, 6 or 7 years instead of 3 or 4. The problem is they are ending up "upside down" where they owe more than the car is worth.

So just because a certain strategy will lower your monthly payments doesn't mean its a good idea.

 

[luvmy2sams]

I had not looked into the subject of borrowing from 401K much. However, isn't it true that if the OP were to leave her job before she pays off the loan, she will either have to return the whole amount or be hit with a tax? My point is that, depends on her job, it may be a high risk.

Felicia

This varies from company to company. DH's 401K can be borrowed from and repaid over a period not to exceed 48 months. If you leave during that time, you're given the option to either pay the amount due in full or continue making monthly payments.

 

[Chicago526]

I haven't read the whole thread yet, so someone else may have said this.

Lets put it this way, and by no means is this a flame to the OP, this is truely friendly advice from someone with debt of her own!

You've read Dave Ramsey? Then you KNOW what to do! If what you are looking for are tips on getting "Gazelle Intense" then you are in the right place. If you are looking for another way out, I'm affraid their isn't one! I wish there was!

Here's my advice.

1) Get your emergency fund established. Dave recomends $1000, I think you should shoot for $2,000 if you can, just my personal preferance. You know how you said "but what if we need a CC for groceries one week?" Well, if you have the emergency fund, you won't need the credit card for grocieres, now will you? $2000 will cover almost any emergency short of a total disaster. And if you do have to tap it, refill it right away (see step 4)

2) Cut up the CC's. All of them. The accounts are still open so if you HAVE to you can order a replacement. And when I say HAVE to it better be nothing short of life or death.

3) Cut out everything not nessesary, and if possible sell some of your old stuff for money (ebay or garage sale). Take a good hard look at canceling that 2nd trip. Use the "new found money" for step 4.

4) Start your debt snowball, if you got the books, I don't need to explain it. If you have an emergency, use the money in your fund. Then stop the snow ball and pay the mimimums due until your emergency fund is refilled.

5) Start now. Start today. Waiting is only costing you more interest and delaying the inevitable.

Good luck, you CAN do it!!!

 

[waspnest]

I heard this before. Very cute.

But I always wondered how this would deter internet shoppers. DH and I shop a lot through the internet and have our numbers, expiration date and even the security code memorized! Freezing would do nothing! Lol!

That being said, we always pay off any interest bearing balances in full every month.

You could call the CC company and say you lost your card. They'd issue you a new card with a different number, and when that comes, straight into the freezer it goes! (I only thought of this because I had all my info memorized, too, but we had some unauthorized charges on our account this month, and had to get new cards, so I'm back to not knowing the numbers!)

 

[DiznEeyore]

I'd also have to disagree with paying off CC debt by taking on a bigger mortgage. Why? Because you are greatly extending your repayment period. The OP is already paying above the minimum on the CCs. That means that debt will be retired in a reasonable period of time, perhaps 3-4 years or less. If, instead, that debt gets rolled into a new mortgage, she will still be paying for those impulse purchases up to 30 years from now. Sure the monthly payments are lower, but that is because the repayment period is so much longer.

So just because a certain strategy will lower your monthly payments doesn't mean its a good idea.

However, there are other things to consider in that situation. Before anyone jumps on me, I'm not looking to debate, simply present another point of view.

With the credit card companies raising minimum payments, if someone is *barely* making their current 2% minimum, they'll never be able to make 4%. It will topple their financial apple cart, and bankruptcy might be the only option. Plus, credit card interest isn't deductible.

If they were to roll their credit cards into a refi and *close* the card accounts, they'd be saving themselves from falling so deep into the hole, they'd never get out. Plus, they now have a lower total amount going out monthly and they can now deduct mortgage interest.

And most mortgages allow you to prepay without penalty, so once they're on track, there's no reason that they can't make additional payments and pay it off sooner than 30 years.

Of course it's never a good idea to add unsecured debt to your home. However, if it's the one thing that keeps you from going bankrupt, it's worth considering.

 

[tlbwriter]

It takes a little juggling, but a working parent can set up life so not to be dependant on take out, need drycleaning, or buy nylons.

You know, it annoys me to no end when those "is working really worth it" articles trot out the so-called expenses of working - lunches and dry cleaning. I bring my lunch from home most days, and even if I were at home, I'd be eating lunch! Also, the cost of daycare generaly includes meals and snacks, so if your child is at home, you'll have additional grocery expenses. I spend less than $100 on my own dry cleaning per year. And yet when they look at the benefits of working, they stop at salary. What about insurance? My employer pays for my health insurance and half of DD's. In *one month* that makes up for what I'd spend on lunches and dry cleaning for an entire year. What about retirement benefits and continuing education? And don't forget that, if you can itemize taxes or use a flexible spending account, the actual cost of daycare is lowered.

The decision to stay home is almost never a purely financial decision. Usually parents feel in their gut what they want/need to do, and they make it work. Which is exactly what we should do, IMHO. But we need to be honest about the financial aspects. I just hate the generalization that "you're probably earning less than you spend on daycare and dry cleaning." It makes it sound like all working mothers are earning minimum wage while they wear silk dresses at fancy restaurants, and ordering pizza as soon as they get home.

 

[MrsPete]

Of course it's never a good idea to add unsecured debt to your home. However, if it's the one thing that keeps you from going bankrupt, it's worth considering.

What you're saying is not without merit; however, if you refinance and fall behind on your payments, YOU CAN LOSE YOUR HOUSE! I personally don't know anyone who could afford to do that. A person who's near bankruptcy obviously already has financial problems -- this isn't something to put on the chopping block.

Off topic: Have you noticed that all these slick loan-sharks are using a new phrase for a second-mortgage: Home equity loan -- it doesn't sound so bad, does it? It ought to be called a "Miss a payment, sleep in the park" loan.

And if they pile the debt into their mortgage, the credit cards will suddenly be "empty" and available for charging again. The original poster knows that shopping is a problem, but I don't think she can say that she's licked that problem yet. Those empty accounts -- even one account -- would be a great temptation.

If the debt stays on the credit cards and some tragedy befalls the family (loss of job, sickness, unplanned triplets), the worst thing that can happen is that their credit is ruined. While that's bad, it's not nearly so bad as losing your house!

I have to side with those who say, "NEVER RISK YOUR HOUSE."