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

[tiffany123]

I've read most of the posts on this thread but haven't seen this mentioned---what type of home mortgage does OP have? If it's not a fixed rate, she's heading for another unpleasant surprise as her mortgage payments are going to increase in addition to the previously mentioned credit card minimums. I wrote earlier that her spending habits might be partly caused by some other underlying factors and after reading more, I think she seriously needs to see not only a financial counselor but also a "family counselor". Talking about buying land they can't begin to pay for and also talking about buying DVC soon are both signs that she isn't ready to accept the great advice being given on this board and perhaps needs more help that any of us can offer.

 

[maggiew]

We were pre-approved for the loan up to 59K for the land. That is where it was coming from. The problem that I had was where were we going to get the money for the payment each month.

I was with you up to this point. I can't believe you went to the auction and actually bid knowing you had no way to pay for it!!

As far as the trips, the best friends one is the one that is paid for with the exception of souvies which, yes, I can restrict my self to a certain budget. I plan to take no cc's with me. The trip in May is a large family trip and we are renting points for a DVC stay with others in our family. They are aware of our situation and are helping with our part of the rental. I have an AP, so we just need tickets for DH in May and food/souvies. I will be getting my annual bonus in April which will cover this. (i know i should use it towrds cc's, but I am obligated with my family) We have no other trips scheduled and will net schedule any until the debt is GONE!

I believed you earlier when you said the trip was paid for and nonrefundable. But really, you did not pay for this. Your mother did. You are still within the time frame to cancel and not lose money if you cancel quickly. Your best friend should not want to send you over the edge with your finances. Cancel this trip. Ask your mom if she would be willing to put the money she was giving you for the trip towards your debt.

I also think the other trip is cancellable too. Nothing is paid for on this trip yet except your AP. Your family was already going to "help you out" with your share of the DVC rental, so they won't really be "stuck" if you back out now. Think of how much closer you will be to being debt free if you use your bonus money towards your debt instead of this trip.

I really don't understand how you "deserve" this trip because you do nothing for yourself - you have spent over $1000 per month on "stuff" in order to make you happy. It seems to me that should be plenty.


I also think you should cancel the cable and your cell phones. Those aren't necessities.

I am not saying these thinks to be mean. But like others are trying to make you see the real picture.

I suggest you go to http://www.mycoupons.com I have learned a lot there. I am not sure if your area grocery stores double coupons, but people post on the TOT board what food items you are able to get FREE and or really cheap with double coupons. They also list things you can get Free or cheap at places like Walgreens/CVS with combination sale and coupon. I really think you need to do everything you can to minimize your spending.

I am a little uncertain though, considering your past spending behavior. I was also shocked to learn about your refinancing and getting rid of your CC debt a few years ago. Once you get this debt under control, you REALLY need to avoid getting into this situation again.

Maggie

 

[dvcgirl]

I don't know the area in which the OP lives, but in my town there is not one house available for under $200K. The cheapest house in our community is a modular ranch...not much larger than a double-wide... and it is on the market for $229K. Sickening, but true.

The OP lives in southern rural Ohio. A 5 second search on realtor.com shows why they can't sell their house. There are a plethora of homes that are the same age, one I saw was actually newer and a tad bit larger and it was $20,000 less. I think the problem there is that they had a custom builder who built them a relatively small home. Most people who build 1,500 sq ft houses don't have custom builders construct them. Most people looking for houses like that buy starter homes with a few custom options or they buy an older home. Plus, they are priced about 5 thousand dollars above what they owe on their mortgage. And so they can't go any lower.

I know that the OP is reading along, when she gets the chance. I want to say that I think it takes guts to post the information that she has, and not get offended or just run away. We've seen that here before.

For everyone else following along who has some CC debt, look every closely at post #109. That is where the OP posted her budget. And that is exactly what a budget looks like when you are getting close to bankruptcy. Keep in mind that the OP's budget does not reflect the true minimum payment balance as she said that not all of her CC minimums had increased yet. I also believe that there's a good amount of denial in that budget as there are lots of expenditures that aren't included in the budget, like clothing for example.

While I think that the OP is probably quite upset by what she has read here, I really do think that a big wake-up call was in order for her and her DH. But I also hear a sense of entitlement in her posts, and that's something that she's going to have to work on. We all have to make choices in our lives. Sometimes people choose a new house and take less vacations. Sometimes people choose to rent so that they can travel more. Some people can have it all....big house, fancy cars and lots of vacations. But most of us have choices to make. None of us are entitled to do things that we can't pay for. If we really want those things, we can either cut back on our spending or find a way to make more money so that we can afford them.

Some of us even find out that "things" and "stuff" and "vacations" are not going to truly make you happy. I don't know how a person could even enjoy a trip to Walt Disney World when they are so incredbily deep in debt. I know that I would not be able to enjoy myself. I mean, it's one thing if a person has a plan, but there's clearly no plan here. No real budget in place, not a clue how they got where they are. Each souvenir purchase, every meal only compounds the problem. I guess I'm not a "one last fling" type of person. I'd lay awake at night thinking about my credit card payments and what if I can't pay everyone next month.

 

[Kay1]

I have a question for DVCgirl or anyone else who considers her or himself a fiscal conservative. What do you think of the bank who approved a $59,000 loan for someone in OP's position? At what point will or should these bankers quit serving all that punch?

 

[tar heel]

I think the first thing the OP needs to do is increase take home pay, because that is something she CAN do. Immediately, she and her DH should lower the 401K payments to no higher than the amount the company matches. It's highly unlikely that the company is matching 10%, plus they're young and need the $ more than the retirement savings right now. Dave Ramsey would say they need to stop contributing totally, so that's another thought. Then, seriously look at tax withholding. I could be wrong, but I bet they typically get a big tax refund. Without knowing anything other than what she's posted, I can see almost $4,000 in tax CREDITS -- $1,000 per child and 20% of the child care. Ohio probably has a child care credit, too, and may have a child credit. These are not deductions but actual $ off the tax bill. With a mortgage that size plus the credits, they aren't paying much income tax and they need every cent of it each month instead of in April.

I think she knows the budget is not realistic. There's nothing there for a car repair, a broken washing machine or clothes. Those kind of things ALWAYS come up. I spent $226 on a car yesterday -- didn't know until the weekend that there was even a problem.

 

[dvcgirl]

I have a question for DVCgirl or anyone else who considers her or himself a fiscal conservative. What do you think of the bank who approved a $59,000 loan for someone in OP's position? At what point will or should these bankers quit serving all that punch?

I think it's abysmal. But go to any mortgage lender website, punch in your income levels and just take a look-see at how much money that they're willing to lend you. It's incredible! Apparently I should be living in a mansion! I don't know how I get by with 3,000 sq ft!

However, there's two sides to this story. Perhaps the OP and her DH weren't accurate with respect to their monthly budget and the payments that they make. They may have over-reported their income. One day the OP thought they were making 102K, they sat down and talked and realized that they only make 93K. That's a big paycut. In the end though. Banks are in the business of loaning money. Whether in the form of a mortgage or a credit card. Consumers need to be intelligent enough to know their own financial limits. Unfortunately, as we can clearly see in the this thread, some consumers *don't* know their limits.

Greenspan has been warning about these risky lending practices for months. Mostly he's referring to these insane "no-interest" mortgage loans. Oh man, when those loans start to adjust....look out below!

 

[lts862]

I agree with others, eating out several times a day, theme park tickets and souvies are not even close to a "little" something just for me because I work hard and I deserve it. It's hard to believe that your family could know about your financial situation and still think you should accompany them. Why would they want to put you further into financial insecurity?


A similar situation...my brother was supposed to accompany us on our Nov trip to Disney and my kids were thrilled about that. About 6 weeks ago, he told me that he had to back out because he just didn't have the money (and he was staying in our DVC unit only needing money for food, souvies and tickets). He racked up some serious CC debt a few years ago and is almost debt free. He had some unexpected car repairs come up and he just doesn't have the extra money to go on vacation. Although we are disappointed that he won't be joining us, I am glad to know that he has learned a valuable lesson and is working to get himself on a better path. We certainly understand his situation.

I can't imagine that your family or friend will be angry, upset or otherwise if they truly knew your financial predicament, and you explained why you just couldn't afford to join them on these trips. Money for food, clothing, shelter (and God forbid) medicine seems much more necessary than going on a trip that you really can not afford.

Think about what you NEED not what you WANT!!!!! I believe you have a very strong sense of entitlement, because your DH is a college graduate and making a decent living...but there are limits to everything. You need to change your way of thinking! My DH has an MBA and I have a bachelors degree. At this time, I am a SAHM and do without a lot so that I can afford to stay home. My children's education and needs come first. I have wanted to jet off to Aruba and Europe and Vegas in the past year or so and I can easily put those trips on a CC and go. That would mean that I have to get a job or put my kids in daycare and that is not something that I want to do, so that I could pay for the extra expenses.

You have to decide what is most important and I don't think you have done that yet. You will never be in the position that you want to be in until you decide a) what that is, and b) what you have to sacrifice to do it!

 

[hmgolden]

I think it's abysmal. But go to any mortgage lender website, punch in your income levels and just take a look-see at how much money that they're willing to lend you. It's incredible! Apparently I should be living in a mansion! I don't know how I get by with 3,000 sq ft!

I agree. When DH and I bought our condo we sat down before even going to the bank to figure out what we could spend a month on a mortgage and still be adding to our savings (even if it would only be a meager amount for awhile). When we figured it would be possible to swing, we went to the bank to get pre-approved. The bank approved us for a mortgage for over $100,000 MORE than we figured we could comfortably afford. Infact, the bank told us we were approved for a mortgage payment (including an escrow payment for taxes) that exceeded what DH and I pay every month for all our expenses combined! We are still scratching our heads over that one.

 

[d-man's mom]

I have a question for DVCgirl or anyone else who considers her or himself a fiscal conservative. What do you think of the bank who approved a $59,000 loan for someone in OP's position? At what point will or should these bankers quit serving all that punch?

I'm guessing she was probably only pre-approved for the loan and not fully appoved for it.

Banks are in the business of making money and they make money off of the sale of the loan to another party. Granted, the bank doesn't want to have the property turned over to them in foreclosure and they are taking a chance with any loan really.

However if they are selling the loan shortly after closing, I'm sure they probably could care less whether or not she's in over her head. The bank's job is to sell the customer the loan, they aren't in the business of watching her personal finances. They assume (and rightfully so) that if she signs the note, then she has the ability to pay for the loan.

Also, I'm betting they didn't have a full picture of her ability to pay the loan when they approved her for the mortgage since OP didn't have a full picture either. Many RE deals have fallen through because the customer was unable to obtain financing.... this probably would have been one also.

 

[tlbwriter]

I agree. When DH and I bought our condo we sat down before even going to the bank to figure out what we could spend a month on a mortgage and still be adding to our savings (even if it would only be a meager amount for awhile). When we figured it would be possible to swing, we went to the bank to get pre-approved. The bank approved us for a mortgage for over $100,000 MORE than we figured we could comfortably afford. Infact, the bank told us we were approved for a mortgage payment (including an escrow payment for taxes) that exceeded what DH and I pay every month for all our expenses combined! We are still scratching our heads over that one.

We had the same experience - we knew what we wanted to pay, and were surprised when we were approved for about three times that. And we thought our own self-imposed limit was a bit of a stretch! We'd be bankrupt today if we'd let the bank tell us how much we could afford to borrow.

 

[MAGICX2]

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

I did state that some of the cc debt was due to school funding. About 9500 of it. In the past four years we have had 2 children. I have had my appendics and tonsils out. I had spinal fusion surgery done on my neck. My son has had tubes put in his ears three times and his tonsils out. And my daughter has had tubes in her ears and another set this Fri. This equals out to alot of time off of work, only some of it on short term disability and alot of medical bills that I stupidly paid with my cc's.

 

[d-man's mom]

This thread has been a really great motivator for me to re-inspect my budget. I've been pretty comfortable for the past year or two, but I know that I can do much better with my savings than I have been! Time to crack down again and read my Tightwad Gazette from cover to cover. It always puts me in the right mindset when it comes to money.

OP if you are still reading this, please bookmark the link so that you can look back to it from time to time to chart your progress. Again, thanks for being so honest and good luck!

 

[d-man's mom]

I did state that some of the cc debt was due to school funding. About 9500 of it. In the past four years we have had 2 children. I have had my appendics and tonsils out. I had spinal fusion surgery done on my neck. My son has had tubes put in his ears three times and his tonsils out. And my daughter has had tubes in her ears and another set this Fri. This equals out to alot of time off of work, only some of it on short term disability and alot of medical bills that I stupidly paid with my cc's.

Have you been able to deduct any of these medical bills on your taxes?

 

[tlbwriter]

Have you been able to deduct any of these medical bills on your taxes?

You have to have a pretty high percentage of your income taken up by medical expenses before you can deduct them. I've never made it, even the year I met my out-of-pocket limit under my health insurance. Since the OP does have health insurance, and the expenses didn't seem to occur in the same year, it's unlikely she'd be able to deduct them. And she may have covered them with her FSA instead.

 

[MAGICX2]

There is no "magic help line" and I think that statement illustrates your problem. You seem to want someone here to give you some magic formula to get you out of debt and on firm financial ground quickly and that's not how it works. You have to buckle down, cut expenses, and pay your way out of debt just like you spent your way into debt. No it won't be fun or easy but if you don't do it you will soon be bankrupt.
Best of luck to you.

This came off wrong. I was trying to be sarcastic. Everyone was saying"get help, get help!" But no one was offering the where, who and how. That is what I wanted to know. I do not think there is some magic formula to get out of debt quick. I just wanted to know what and where was the help everyone was suggesting. I didn't know where to start to get help.

 

[Kay1]

Thanks to those who answered my question. Sometimes I just wonder how all this borrowing will turn out for the borrowers, lenders, and taxpayers.

I love the Tightwad Gazette and Amy's black belt tightwaderey. My own situation is good except the fact that I have a son who has autism and will always need care, and a m-i-l who is a spendthrift who feels entitled to her children's money. Sigh. . .

 

[dvcgirl]

I did state that some of the cc debt was due to school funding. About 9500 of it. In the past four years we have had 2 children. I have had my appendics and tonsils out. I had spinal fusion surgery done on my neck. My son has had tubes put in his ears three times and his tonsils out. And my daughter has had tubes in her ears and another set this Fri. This equals out to alot of time off of work, only some of it on short term disability and alot of medical bills that I stupidly paid with my cc's.

Why are the medical bills going on a CC? I thought that you had benefits, or where these procedures or a portion of them not covered? Or was there a big co-pay?

So it sounds like lots of regular living expenses ended up on the CC too...to pay for things while you were out of work. I'm sorry...that's not easy. And it also highlights why a savings account and emergency funds are important parts of a sound financial foundation.

But it would still seem that around 50% of your CC debt just went on "stuff". And so now, you're literally at your financial limits. No equity in the home (possibly negative). And quite possibly in the red every month from a budgetary standpoint. This is why poster after poster is saying that you can't afford to go to WDW. It sounds as though you've had some major medical stuff going on, and man, what if *that* continues. What will you do? You can't afford to put one more item on your credit cards or you risk not being able to make the minimum payments.

I agree with a recent poster. Stop or severely cut back on your 401k. Adjust your withholding so that you aren't getting a tax refund. You need to get rid of this debt before it buries you. Ask family if they can help out even more with daycare. While paying down the debt, start getting an emergency fund together. You are rapidly approaching the point of no return.

 

[tlbwriter]

This came off wrong. I was trying to be sarcastic. Everyone was saying"get help, get help!" But no one was offering the where, who and how. That is what I wanted to know. I do not think there is some magic formula to get out of debt quick. I just wanted to know what and where was the help everyone was suggesting. I didn't know where to start to get help.

Good sources of help - read Dave Ramsey. Read Suze Orman.

 

[DisFlan]

This came off wrong. I was trying to be sarcastic. Everyone was saying"get help, get help!" But no one was offering the where, who and how. That is what I wanted to know. I do not think there is some magic formula to get out of debt quick. I just wanted to know what and where was the help everyone was suggesting. I didn't know where to start to get help.

Go to www.nfcc.org for the name of a credit counselor in your area. The site also has a number of tools for budgets and debt analysis.

You have a lot of work to do. Your creditors don't care about excuses. They just want you to pay them the money you owe them. A credit counselor can help you deal with this.

DisFlan

 

[MAGICX2]

I've read most of the posts on this thread but haven't seen this mentioned---what type of home mortgage does OP have? If it's not a fixed rate, she's heading for another unpleasant surprise as her mortgage payments are going to increase in addition to the previously mentioned credit card minimums. Talking about buying land they can't begin to pay for and also talking about buying DVC soon are both signs that she isn't ready to accept the great advice being given on this board and perhaps needs more help that any of us can offer.

We have a 30 yr. fixed rate mortgage.
Let me clear up the DVC comment. I did mean that I was goign to go out and purchase DVC as soon as a saw light at the end of the tunnel. OF COURSE we will do our monthly contributions to our retirement and we will MOST ASSUREDLY set up money for our children's college education. My kids come first-always. DVC is a long term goal, not something soon as this poster stated.. Once everything is settled, debt free, saving and everything is on track, then we will look into it, and ONLY if we can pay for it out right. I want to be debt free more than anything. I want to help or pay for my kids college if at all possible. DVC is just a perk. But, what is the problem with using it as a goal to work towards?