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

[dvcgirl]

I am not and will not defend my vacation expenditures. However, are you suggesting that I not have ANYTHING outside of the necesseties to live? And I am not saying that a trip to Disney is a necesseity to live. I have been given the entire amount of my trip by my mother because she knows just how very little I get to do for myself. The only thing I will be responsible for is souvies, which I don't ever buy a lot of any way. BUT, if anyone, not just me, were to be told to put every last living cent they have available (which I am just about doing now that I have started this) into paying off their debt, without any type of leeway(not just a Disney trip), I can almost garauntee that they will fail big time. I will tell you right now that one of the major things that has gotten me so head strong about this is that I have two upcoming trips that I know I have paid for without using cc's. I know that money could be used to pay some of this debt, but I am putting everything I have into this now. The other major factor is my and my children's future and what I am doing right now will determine that future. I have up until this point taken everyone's comments in stride. I know that with the situation I am in I should not be taking these trips. It is my concious decision to go ahead with it anyway. It does not mean that I am not serious about getting debt free, it does not mean that I am picking and choosing what advice to follow, it simply means I have made a decision and I have to live with it. If it means it will take 6 months longer than it would have to pay off the debt then so be it. I do not think that these trips are detremental to my getting debt free. Could the money be used else where, definitely. Will the money spent keep me from getting debt free, no way. It may slow it down for a month or two but it will not stop me.
My best friend is aware of the situation and when we were going to cancel that is when my mom stepped in. My mom never does things like this, but she also knows how much of my life I give up so that my DH can pursue his career. I do not hold this against DH, but my mother also thinks I deserve a break.
For all of you whom have suggested we seek "professional help", just exactly what type of help do you recommend? I have looked into debt consolidation services such as InCharge Debt Solutions, but it seemed I was only going to be paying about $50 less a month than I am already and I have heard this type of service hurts your credit. So, what type of "help" should we get. Does anyone know what "debt negotiation" is?

Again Magic...you really are exhibiting a total disconnect here. Your statement, "However, are you suggesting that I not have ANYTHING outside of the necesseties to live? ". Yes. That's exactly what I'm suggesting, for at least a few years because you can't *afford* anything other than the essentials. You are spending money that isn't yours, and now it's time to pay that money back. You can't continue to do what you are doing because pretty soon you won't be able to make the minimum payments on your credit cards and you'll have some very difficult choices to make. You haven't been able to afford these "extras" for some time. But you've just been running up thousands of dollars on your credit cards. I can appreciate that this is incredibly hard to hear and realize, but you have children and you need to do what is right for them and get this thing under control. Because out of control is where you have been... I think it's probably time for you both to tell your family members what your financial picture is. Perhaps they can chip in and help out even more with daycare. But they certainly should understand that you guys are in no way, shape or form able to go to Walt Disney World to spend more money. And they should also know that you're not in any position to be buying them christmas gifts.


Try calling someone at the National Foundations for Credit Counseling. This is the group that Clark Howard (fiscal conservative/consumer watchdog/radio guy) recommends. www.nfcc.org.

You want to avoid Debt Settlement companies because that will negatively affect your credit for many, many years.

 

[crisi]

Personally, I'd start with your family doctor. You indicated some tendancies towards compulsive emotional spending. That might be related to stress or boredom or depression or OCD or......basically a whole lot of things. I am not a medical professional and if I were I'd never dream to diagnose someone on the internet. Have your doctor (or if you have an employee assistance program, try there) set you up with a therapist. An EAP or a therapist may also be able to give you recommendations for financial counseling as well, but I'd start more basic at taking a good look at you instead of taking a good look at your money.

But there is no "magical help line" to get this cleared up (unless you have a wealthy elderly relative about to leave you money or a winning lottery ticket, and even then if you don't fix the root, its only a temporary solution). Help in this case means help, not do. It means someone will sit down and help you figure out a budget and be accountable for it.

Your library can be a lot of help - a lot of people like Dave Ramsey. Personally, I'm fond of Eric Tyson's Personal Finance for Dummies.

 

[dizcrazy]

First, I want to say thank you for continuing to post and update us on her situation. You are being extremely honest and brave!

You have clearly stated that you do not intend on canceling your two upcoming trips. So I won't comment on them.

I am so glad that you had that "light bulb" moment and realized you couldn't afford the land. Continue with the light bulb moments . . .

Here is some advice I just read in Money magazine. . .
Make a spreadsheet of your finances. Keep a small, pocketsize version in your purse or wallet, and pull it out whenever you feel the need to spend . Seeing your dire situation on paper might quench that thirst to spend!

I think you have made progress (baby steps) by freezing the cc's, making alternative daycare arrangements to save $$$, discussing the bills with your DH, asking for help here, etc. Your journey isn't over but we are pulling for you!

 

[pearlieq]

However, are you suggesting that I not have ANYTHING outside of the necesseties to live?

Yes, that is generally how it works. When you have a lot of debt and no money consider yourself lucky to have the basic necessities. You are not entitled to extras just because you want them. You have to manage your money responsibly to get them.

If you reread what you posted and really think about what it sounds like, I think you'll see why folks may be giving up on you. Your problem is pretty clear. Your solution is pretty clear. The fact that you don't want to do what it takes to get to the solution is something no one here can help with. I'm starting to agree with other posters. I'm not sure you've hit bottom yet. Being here is starting to feel like banging your head against a brick wall.

I really do wish you the best of luck and I hope you're sucessful at turning things around. I just don't think there's any more to say at this point.

 

[Kay1]

This thread makes me wonder. . .how many families in this country are living this way? Not just the credit cards but counting their chickens (house value) before they've hatched.

 

[rjthkids]

And they should also know that you're not in any position to be buying them christmas gifts.

I would second this. I know sometimes it seems horribly selfish to not buy gifts. But when you don't have the money to spend in the first place, who are doing any favors by spending money that isn't yours?

Credit cards are a loan. They are deceptively easy to fall into the trap of "I have money" because they let you live beyond your means. But ask yourself, would your family really want you to fall deeper in debt in order to buy them something they don't really need in the first place? I make it known on no uncertain terms that I do *not* want material presents from people in my family that simply cannot afford them.

There are great ways to make personalized gifts for people that inexpensive. Write your mother a letter for Christmas telling her all your favorite holiday memories from your youth. Make a calendar on your computer that utilizes family pictures for each month, and note everyone's special dates on it. Write a little blurb about each member of the extended family on the back cover and what you enjoy most about each of them. Pull together a recipe book of favorite family treats. All of these things are truly meaningful, and you don't have to spend money to do them, you spend time.

I commend you for wanting to get out of debt, for the sake of your family. I would highly second the suggestion of switching to a cash only system. Freeze all your credit cards. It seems too great of a temptation to use your credit cards as cash loans for stuff that is not essential. When all the grocery money is gone for the month, it sinks in that order to literally be able to feed your family, you need to give up the souvenirs at Disney World in order for the family to be able to eat. When you are not able to live off money that isn't yours, it is much easier to grasp the enormity and seriousness of debt and living beyond your means. Go cash only for at least six months so you can really see, first hand, how much money you have each month and how far it goes. Do not put one cent, not one cent on another credit card. Since you cannot pay them off right now anyway, each time you put money on a credit card you are borrowing it. If you want to start living within your means, the CCs need to go for the time being.

Hugs to you, I imagine this has to be extremely difficult and stressful for you. I know I would be greatly distressed. It is wonderful that you want to start climbing out of this situation. Good luck.

 

[tlbwriter]

I am not and will not defend my vacation expenditures.

Not to be nitpicky, but most of the rest of that post is defending your vacation expenditures.

When you first posted, I thought you were in decent shape. You had a lot of debt but you had a good income, you surely had some equity in your house, and you realized you had a spending problem (which is half the battle). Now we find that you probably owe more on your mortgage than your house is worth, you make 10% less than you thought you did, and you've already cleaned out your home equity twice to pay off credit cards. And you came this close to spending another $42K without thinking about where that money was going to come from just because you really wanted to. You're taking two trips to WDW just because you really want to. Your situation looks more precarious now. I would have told the person in your first post that she should go ahead and take one of her "paid for" trips. But not now. You've already acknowleged that the money you're spending on these "paid for but not quite paid for" trips could go toward your debt instead. I can't imagine the unpaid parts of your May trip (food, souvenirs, and DH's ticket) will cost less than $1000. That's a lot of money. I don't think you've realized that you're at the point where you can't spend so much money just because you really want to.

 

[d-man's mom]

BUT, if anyone, not just me, were to be told to put every last living cent they have available (which I am just about doing now that I have started this) into paying off their debt, without any type of leeway(not just a Disney trip), I can almost garauntee that they will fail big time.

Actually, it can be done. I did it. You just have to put your mind to it and decide that you are going to buckle down no matter what. Every paycheck you take part of it and put it in savings- that's your leeway (even if it's $25 that would have gone to a credit card- you need an emergency fund). No luxuries. I know for me after I paid down my debt and got my credit back on track, I was thrilled to have DIAL UP for my internet at home. It was a treat!

As for help, call your local United Way to see if they have a credit counseling service. They will crunch the numbers with you and help you with an action plan. However, you still have to do all of the work once you get the numbers figured out.

Debt consolidation can actually harm your credit, so be wary of anyone that wants to negotiate the terms on cc's for you.

Go to the library and check out any books on personal finance as well as the Complete Tightwad Gazette. Read the Tightwad Gazette from cover to cover. And don't forget to return the books on time- you can't afford the late fees.

Carry notecards daily and write down your expenses to the penny. Get rid of cable, internet, long distance, cell phone extras, shop around for lower car insurance rates, etc. I'm sure someone here has already stated this all to you before- but you need to do it asap. And be upfront with your family now (and extended family) that this will be a lean Christmas because holiday spending can blow your debt repayment out of the water. Try and make some gifts for people instead.

 

[CarolA]

This thread makes me wonder. . .how many families in this country are living this way? Not just the credit cards but counting their chickens (house value) before they've hatched.

A lot

I confess that I got way over my head on credit cards when I was young. I was working for just a little over minimum wage and living off of the credit card.


I was actually lucky that 20 something years ago credit cards were not as readily available as they are now!!! Or I probably would have borrowed from Paul to pay Peter!!!

And yes, I gave up EVERYTHING extra for a while to recover.

I am now in a much better job, with a much better finanical status but this thread reminds me of how I felt. (Although I must confess I had never even thought of Disney then LOL My vacations were going home to visit my mom!)

That said my real estate agent says she is seeing lots of foreclosures already. Folks with large loans on adjustable rate mortgages are REALLY feeling a pinch.

 

[dvcgirl]

This thread makes me wonder. . .how many families in this country are living this way? Not just the credit cards but counting their chickens (house value) before they've hatched.

I'm guessing a fair amount. People are flocking to file for bankruptcy before the new stricter laws kick in later this month. Cardweb.com said that filings were up 24% over the same period last year. That number will probably go higher by the time the law goes in effect. And we'll most likely see lots and lots of home equity loans flying out of banks when the numbers come out from last month. People trying to ditch the CC debt because the minimum payments have gone up and they can't handle them. If you are a person in serious CC debt or use a CC to cover the extras each month...this is a bad time.

 

[tlbwriter]

Actually, you don't have to put every living cent into it. You can (and possibly should) allow yourself small splurges. But a trip to WDW, even if someone else is paying for the room and tickets, is not a small splurge by anyone's definition. And two trips? Even less so.

 

[elan]

Another thing the OP has to look at is her mortgage. If it's adjustable her payment will probably be going up the next time it's adjusted.

 

[DisFlan]

Kay1 - probably more than we can imagine! And it's going to get worse with the price of gas (and everything else linked to oil) and all the over-priced homes sold in the last few years. (I can see a real bubble bursting in that area.) All those "cheap" credit cards and too-easy-to-get Home Equity Loans are going to be hitting a lot of families where it really hurts.

I'm just thankful we're heading toward the final stretch of this race rather than starting out right now. Our house is only a few payments shy of payoff (bought back when housing was reasonable), we've always maxxed our 401k and our son is finishing college this year. Whew. Like the commercial says - it wasn't a walk in the park. We sacrificed and planned. Lots of tuna noodle casserole, hamburger and Spam, no new clothes, cable, trips or trinkets for a number of those early years. Because of all that, we've lived well in the years since. We can now afford things like owning DVC (with cash, not debt). On to a nice retirement!

DisFlan

 

[crisi]

I've been there, too. When my first husband left, I was 22 years old with a mortgage (no kids, thank God) and all the debt a 23 year old irresponsible husband can rack up, the heat in the house was set to 55 degrees in a Minnesota winter and I slept with a pillowcase over my head for warmth. That winter I didn't own a winter coat in Minnesota, I had a wool fall weight army jacket I wore with two layers of sweaters underneath. I took the bus in this getup to work everyday. Going out for pizza with friends was a huge treat - and usually someone else paid. I was down to giving away my cat because I couldn't afford food and litter when my sister moved in and saved the cat, that got me heat, and a friend gave me an old coat. I grew my hair out because I couldn't afford to get it cut. My parents paid my dentist. I took a second job for a bit telemarketing - and when I had vacation time at work I'd set up a week long temp assignment so I could get paid twice.

That went on for almost three years - the first three months were the worst, then my sister moved in, I started to get some spousal maintenance - but only $100 a month - and I got a raise at work - paid down the bills so I had a little extra money. It was tough. But I managed to keep my house and not move back in with my parents.

We aren't talking missing trips to Disney during this time, we are talking finding change to go to the dollar theatre.

 

[dvcgirl]

Well Crisi, you've come a long, long way.

The thing that troubles me the most about the OP is that total lack of understanding of the situation that they are in. She says that she paid cash for her Disney trip, but when you are spending about 20% more than you are making each year, then there is no such thing as cash in your vocabulary. I hope that she continues to read here because there are some here who have been in dire financial situations and have pulled themselves out of it...and eventually flourished.

Well, first she needs to understand just how dire the situation is. Not using credit cards for a few months should illustrate the seriousness of the problem. I just don't understand how you get into this kind of credit card debt just buying "stuff". There's been no mention of job loss, or pay cuts, or even medical bills. There has been lots of talk of Disney trips and furniture and "stuff" though.

And like so many people who I know who have gotten into similar situations, when you show them the numbers, they're just shocked. They've been running their house for years with no plan, no budget, no clue as to how much they are spending.

 

[DisFlan]

My new moto is "I am going to be debt free and in the DVC! (this is my goal)

NO! NONONO! You're still not getting it. Your mindset should be "I am going to be debt free and funding my kids' college, my retirement, life insurance and a SAVINGS account"!!

DVC is an expensive luxury. It comes at the END of the line, it's not the next in line. It should come ONLY after everything else is covered with a comfortable margin. Or you'll be right back in the same boat.

A DVC trip still costs money. Airfare, park tickets or AP, food. Plus the yearly fees. Even owning DVC and going just once a year (including fees), a DVC trip can cost $2000-4000. It'll be a while before you're financially ready for that. And if at some point (down the road), you do join DVC, PLEASE save up and pay cash.

DisFlan

 

[Lyn5]

I think a lot of people have been there, at varing degrees. What makes the difference is one's attitude and actions. Sometimes you have to admit to your mistakes, pick yourself up and move on from there.

 

[dvcgirl]

I think a lot of people have been there, at varing degrees. What makes the difference is one's attitude and actions. Sometimes you have to admit to your mistakes, pick yourself up and move on from there.

Yes, but in some cases people just *never* seem to get it. I'm not saying the OP is that person, but clearly there was a spending problem revealed a few years back, $18,000 of CC debt rolled in with the mortgage. And now 24 short months later they're back up to 30K. This is why I rarely recommend to people to go the HEL or Cash Out Refi route when trying to get out of CC debt. It gives them this sense of "Hey...we did it....we got out of debt!!" When all they really did was extend the length of the loan out to 30 years. Rarely does the consumer examine their budget and spending tendencies and realize that they are simply living above their means. Unless you can curb your spending ways, it's a terrible plan. And I think it's a bad idea anyway....paying for those things that you can't even remember buying thirty years down the road is no deal.

 

[Lyn5]

Yes, but in some cases people just *never* seem to get it. I'm not saying the OP is that person, but clearly there was a spending problem revealed a few years back, $18,000 of CC debt rolled in with the mortgage. And now 24 short months later they're back up to 30K. This is why I rarely recommend to people to go the HEL or Cash Out Refi route when trying to get out of CC debt. It gives them this sense of "Hey...we did it....we got out of debt!!" When all they really did was extend the length of the loan out to 30 years. Rarely does the consumer examine their budget and spending tendencies and realize that they are simply living above their means. Unless you can curb your spending ways, it's a terrible plan. And I think it's a bad idea anyway....paying for those things that you can't even remember buying thirty years down the road is no deal.

I agree about the dangers of placing consumer spending on your home. Unfortunately, I also agree that some people never get it...which is sad. Hopefully the OP will realize what she needs to do and then do it.

 

[RADOPT]

I know a lot of people who retired only to take part time jobs to continue to be able to pay their mortgages.

And for food.

A couple of years ago they had some number out on this and althought I can't remember the exact percent, it was very high.

scarry!