Need Help Re: Overspending

[aka-mad4themouse]

The way I look at it, is in the scheme of my bills, $200 a month is not that big a difference.

I understand the desire to hold on to the great deal that you got for your DVC membership but if you're consilidating cc debt, this probably isn't the wisest financial decision at this point in your life. That $200 per month is a big difference if you consider this:

If you have $10,000 in outstanding cc debt with an APR of 15.99%, you would pay it off in 37 months by paying $350 towards it every month. If you upped that payment by $200 to $550, you would have the debt paid off in 21 months! You would also save yourself several hundred dollars in interest.

Imagine being debt-free a whole 16 months earlier! That's the difference that $200 a month can make. Of course, your actual debt and interest rate is probably different. You can visit Bankrate.com's Credit Card Calculator to plug in your own numbers and see how paying $200/month extra towards your debt can affect your timetable. I think that it will surprise you!

 

[ceecee]

Maybe now is not the time to start a home business. Working outside the home would allow you a paycheck and retirement plan, 401K, etc. and trust me on this once you have kids at home working outside the home will be a lot harder.
I too, agree with some of the posters. A Vacation home would have to wait. Paying off our house was #1 priority. This turned to #2 when we had fertility issues and our adoption fund became #1. DH said when we had $20,000 saved we would start the adoption (it took a year!) DH's salary went down due to a bad market at the time (he is in finance/brokerage business) but we managed it within a year. Our big night out was splitting a blizzard at DQ!!! We actually saved my entire salary for three years, once you get used to not spending it's easy to keep it up. We had some bank stock that did extremely well that helped too. Thankfully we can look back on that and smile as it all worked out, but it was tough at the time.
My girlfriend is budgeting now (wants to start her own business and is saving $ to start). If she sees something she wants, she leaves the store to "think it over" and almost never goes back to get it. Another friend who is a car salesman agrees....don't let them leave the lot. So not going shopping sounds like good advise.

 

[agotta]

Maybe now is not the time to start a home business. Working outside the home would allow you a paycheck and retirement plan, 401K, etc. and trust me on this once you have kids at home working outside the home will be a lot harder.
I too, agree with some of the posters. A Vacation home would have to wait. Paying off our house was #1 priority. This turned to #2 when we had fertility issues and our adoption fund became #1. DH said when we had $20,000 saved we would start the adoption (it took a year!) DH's salary went down due to a bad market at the time (he is in finance/brokerage business) but we managed it within a year. Our big night out was splitting a blizzard at DQ!!! We actually saved my entire salary for three years, once you get used to not spending it's easy to keep it up. We had some bank stock that did extremely well that helped too. Thankfully we can look back on that and smile as it all worked out, but it was tough at the time.
My girlfriend is budgeting now (wants to start her own business and is saving $ to start). If she sees something she wants, she leaves the store to "think it over" and almost never goes back to get it. Another friend who is a car salesman agrees....don't let them leave the lot. So not going shopping sounds like good advise.

My new business is something part time. It is costing me a bit per month, but DH and I are willing to give it 6 months if it means I will be able to be a SAHM someday.

As far as DVC. I appreciate everyone's advice. We realize that we didn't buy it at the optimum time in our lives, but we really know what a good investment it is for the future. Right now that $200 a month is just part of my budgeted bills just like the CC bill or the rent. And by renting out our points, it allows us a vacation at a time when we really can't afford it.

 

[HaleyB]

I have always wondered about the value of DVC... do you mind if I ask a few questions?

How much did you put down on your points, is the $200 a month the cost of buying the points and the yearly upkeep fee or is that fee on top of the $200? How many points do you have and how much do you bring in renting them out? I have always wondered how the DVC works for people...

I am very much on the fence about this timeshare- it is MUCH more expensive than a lot of them- my parents love time shares and have several, they are always telling us they are a good deal.

Edit--> Darn, I just read up and saw you bought DVC w/CM discount. I really wanted DVC to be a good deal...

 

[dvcgirl]

I appreciate the advice. Yes we have our credit cards in consolidation. We are working really hard to pay them off. DH and I bought into DVC on our honeymonn because of the great CM discount I had at the time. The way I look at it, is in the scheme of my bills, $200 a month is not that big a difference. I am learning ways to save in other areas. We feel that DVC is an investment for our family and in 20 years when we have it and rack rates have gone through the roof, we can sit back and smile. I have though on several occasions about selling the DVC but in the long run I think it is worth it to keep. Don't worry, no flames from me! I appreciate all the advice everyone is giving!!

Well, as a former DVCer, I understand why you want to hold onto it. It does make a luxury stay at Walt Disney world cheaper. So, if you normally can afford to stay in at least a moderate or a deluxe, then DVC will save you money. But it's not an investment. It's a pre-paid vacation plan. And DVC in and of itself comes with a whole lot of additional spending that you must commit to in order to enjoy the Disney experience. First, you have to get there, then you have to buy the tickets to get in, the expensive food and souvenirs. It's expensive as far as timeshares go. And so it's not just the $200 a month (and does that include your dues as well?), it's the additional spending that goes along with it.

I hate to say it, and I know how tough it would be initially(because there is an emotional attachment to owning DVC), but I'd sell it. I'd use any of the profits to pay down your revolving credit card debt, and you'll also have an additional $200 a month not flying out the window.

As for your spending budget. I don't think it's reasonable. It seems like you're trying to cut back on monthly spending, but not being realistic about things that do and will pop up. $50 each per month, or even $150 per month for both is just not enough. What if you need the oil changed in your cars, a hair cut, co-pay on a physician visit...all of these things will throw you off-kilter. I think that you said somewhere that 56% of your income goes to bills, including rent. Does that mean that you have 44% of your take-home pay for fun money? I guess you lost me there....but if so, you should probably apply a great deal of that to getting out of debt.

I see that you are starting your own business as a home-based travel agent. Unfortunately, there isn't a whole heck of a lot of money in that field. I have several Disney friends who are either attempting the same thing, or have done it and already bailed out. The internet has resulted in the decline in jobs for travel agents overall, and I just don't see a huge market for it at home either. Some statistics from the Labor Department...

"So as the need for travel agents declines, so too will their salaries. And salaries of travel agents are already low. The United States Department of Labor, says that the "Median annual earnings of travel agents were $26,630 in 2004. The middle 50 percent earned between $20,800 and $33,580. The lowest 10 percent earned less than $16,530, while the top 10 percent earned more than $41,660."

And you have to be doing a *ton* of business to making over 40K as a travel agent.

I don't know how old you guys are, but it sounds like you're newlyweds. It's best to get this kind of debt/spending under control before you buy a home and *definitely* before you have children. Think you spend money now? Wait until you buy a home! And I'm not even talking about the mortgage, taxes, utilities...just the maintenance, decorating, furniture, unexpected big expenditures....it can be overwhelming. And then add on a few kids....

 

[DVDGuy]

I don't mean investment like I will make money off it. But when rack rates are through the roof in 20 years and I have my dvc...

My $200 is paying off the principle and my annual dues.

As far as the $150 for extras, without going into every bit of detail, that is what we can afford right now. I put away $100 amonth for cars, so that takes care of oil changes and the like. It is just dh and I right now, so I can do a lot of cost control.

 

[Lyn5]

I don't mean investment like I will make money off it. But when rack rates are through the roof in 20 years and I have my dvc...

My $200 is paying off the principle and my annual dues.

As far as the $150 for extras, without going into every bit of detail, that is what we can afford right now. I put away $100 amonth for cars, so that takes care of oil changes and the like. It is just dh and I right now, so I can do a lot of cost control.

Please understand that I love vacations too and I can appreciate that sometimes it does your mental health good to getaway, but a vacation is still a luxury and not a need. I am just concerned about you since it seems that you want a family and home and I think somethings may be hindering your ability to do those things...plus, as others have said once the house and kids come money gets even tighter.

 

[disneysteve]

And by renting out our points, it allows us a vacation at a time when we really can't afford it.

Plese don't take this wrong, but I think this sentence says a lot about your money mindset. If this is a time when you "really can't afford" a vacation and you are working diligently to get out of debt and starting a new business that is currently operating at a loss, perhaps you need to reconsider if going to Disney right now is really such a wise decision. Disney will still be there after your credit cards are paid off and when, hopefully, your home business will be earning a profit.

The regulars here know that I love my vacations, Disney and others, but only because we are fortunate to be able to comfortably afford them without trying to figure out where the money will come from. As Lyn5 said, vacations are luxuries. We all like them and want them, but we don't actually NEED them.

I hope things work out for the best.

 

[agotta]

No you are right that we can't afford a vacation, but the trip was booked back in January when I thought we could and now it would cost us too much to cancel it. That is why I said that by renting out our points, it would pay for our vacation (the package plus airfare). That allows me to still put as much away as I would if I was working that week.

I have the bills and such under control. The point of my post was all the other expenses, i.e. grocery shopping and all those little trips to the mall and Target...

I appreciate everyone's advice and concern. Unfortunately I (we) have gotten into this situation but it is not dire. We both have great jobs (knock on wood) and can afford our bills, and can even afford to save (if I stick to our budget). If going to Disney truly meant not being able to pay rent or any other of our bills, we wouldn't go, flat out. This is our last vacation for quite a while. We are also planning on moving in with my parents to save some money to purchase a house and to build a decent savings.

Again, I appreciate everyone's help and would love to continue hearing advice on how better to work my budget.

 

[barkley]

dvc is def. not an investment opportunity. it is simply prepaying for the ability to stay at certain wdw properties and some contracted properties. the idea that it saves money in the long run "when rack prices go thru the roof" is only justifiable if you know for certainty that you would already be traveling to wdw and staying at those same resorts with or without dvc.

we looked and turned away from many time share options in our early 30's (when we were "dink"-double income/no kids). we did not find them appealing because the majority were on a 30 year basis and we could not justify putting out the money for a program that would end just as we neared our retirement years. we bought into dvc in my early 40's because it was then a 42 year contract that i knew would be available for our use into our retirement years. we also looked at the fact that wdw would not be our primary destination, we wanted a program that could afford us opportunities to take nicer trips every few years or so. we end up banking and borrowing points to do disney and alaska cruises, have stayed some short stays at disneyland as well as a nearby resort. so we budget within our dvc use as well-we weigh how much we can afford for a family vacation and then use dvc to meet our needs. it can be an awsome program, but it is def. not designed to save any money in the long run (crunch the numbers, even with a c.m. discount-the interest spread over 10 years plus the dues for the next 37 years: at the rate hotels have increased their prices it does not end up near the savings most believe.

re. the childcare cost issue-my little ones have been out of childcare for a long time, but when i quoted the $800.00 per month full time on an earlier post i should have thought to add-does not include any diapers, wipes, food, beverages, provide your own crib or nap cover sheets, blankets, sippy cups, bottles... also must bring monthly "donation" of tissues, toilet paper (if potty training). in addition to a $250 per year building improvement fee, and $300 per year registration fee. this is also a place that is closed every school holiday, during christmas and spring break, a week when school lets out, a week prior to the start of school year- as well as many staff development days it works out to be much more than the monthly fee.

also consider (re home bsns as a travel agent) the successful ones need to be available full time to their client base. they also need to travel to and view properties so that they can effectivly speak with clients about a particular locations pros/cons. the expenses and the time committment can be much more than you anticipate. you state that you are paying off student loans-can i assume you have a degree? have you considered seeking employment in your field while you are able to work outside the home. you could build up savings, initiate retirement funding, take advantage of what may be lower health insurance costs...if you wish to be a stay at home mom, you may need to currently be an in the workforce woman.

 

[dvcgirl]

No you are right that we can't afford a vacation, but the trip was booked back in January when I thought we could and now it would cost us too much to cancel it. That is why I said that by renting out our points, it would pay for our vacation (the package plus airfare). That allows me to still put as much away as I would if I was working that week.

I have the bills and such under control. The point of my post was all the other expenses, i.e. grocery shopping and all those little trips to the mall and Target...

I appreciate everyone's advice and concern. Unfortunately I (we) have gotten into this situation but it is not dire. We both have great jobs (knock on wood) and can afford our bills, and can even afford to save (if I stick to our budget). If going to Disney truly meant not being able to pay rent or any other of our bills, we wouldn't go, flat out. This is our last vacation for quite a while. We are also planning on moving in with my parents to save some money to purchase a house and to build a decent savings.

Again, I appreciate everyone's help and would love to continue hearing advice on how better to work my budget.

Agotta,

Have you ever read any financial books, like Dave Ramsey's Total Money Makeover? This is a book that I've recommended to a few relatives who have been in a similar situation that you are in. Personally, I don't necessarily agree with everything he says, but it speaks to helping people in situations exactly like yours get out of debt. It requires lots of sacrifice and dedication to the cause, but in the end, you'll be in a far better financial place. It's not dire in your opinion right now, but trust me, it could get ugly pretty quickly. It's an interesting read, and I think you'll look at your finances quite differently once you've read it....

I hear what you're saying on renting the DVC points. We used to rent half of our DVC points each year when we owned (we sold recently because we moved to Orlando). But we paid cash for our DVC points and had no debt at all....so we looked at like getting a Disney vacation for *free*...and we really did...to a point. We got the room, tickets and dues paid for in our case by renting points, but we still had to get there and also had to eat...so there is additional spending involved. But in your case, any excessive spending, which unfortunately includes Disney vacations (and doesn't that stink?)....will just dig you into a deeper hole.

Anyway, give Total Money Makeover a shot. Many here swear by it. It's a good wake up call for anyone who is struggling a little (or a lot) with climbing out of debt. It will also give you a good idea about how you should be saving for retirement, your future childrens' education and all of that good stuff. It will help you to understand how to get your money to work harder for you, and maybe to realize that you need to spend less, make more or a combination of both. Have your DH read it as well. And you'll see what you need to do to get where you'd like to be....

Best of luck to you!!

 

[metivier]

$800 a month for daycare? I wish! It's more like $1200 around here, for infants anyway.

Absolutely agreed. I'm right around the corner from the original poster (well, next town over) and infant care is easily $1250+ per month and preschool for a 4 year-old is $800+ per month.

The Washington Post has an article in today's paper citing a report that states in Fairfax, a two-parent household with an infant and a preschool-age child needs $71,833 in yearly income to subsist. And that's with no fun visits to Best Buy thrown in!

http://www.washingtonpost.com/wp-dyn/content/article/2005/09/13/AR2005091302131.html

 

[TDC Nala]

thanks for posting the article.

I'm doing pretty good for a single person in Fairfax County.

BTW...wondered when someone would bring up the price of housing in this area...I have a condo and it would now sell for more than twice what I paid for it almost 5 years ago. Don't know what an actual HOUSE in this area would cost...but it's lots more, probably.

 

[SleepyatDVC]

agotta,

Looks like a lot of people are advising you to sell off DVC because it is adding to your financial burden. It also seems that you aren't ready to do that. Only you know what you can truly handle.

While I wouldn't have bought into DVC in the first place if I wasn't financially stable, if I already had it and was having financial difficulties, I would have a hard time parting with it too! Lol!

As someone mentioned, DVC is more expensive than just the buy in price and the annual maintenance, the added expenses of the actual trips to WDW are even more $$$.

Seems like you are already prepared to forgo vacations for a while and you have rented out your points recently so are familiar with the process.

So, if I were you and were not prepared to part with my DVC, I would be renting out the points for the next few years to not only pay for the annual dues and loan payments, but to help pay down my debt.

If I wasn't prepared to sell it, I would promise to not use the points but rent them out annually until I could afford DVC and the subsequent WDW vacations.

Obviously, if renting out the points still left me in a deep hole after a few years, I would need to reconsider keeping it. But like you I would wait awhile to make that decision.

Anyways, good luck with the budgeting. Oh, and enjoy this upcoming trip since you mentioned that it would be your last for awhile.

 

[barkley]

thanks for posting the article.

I'm doing pretty good for a single person in Fairfax County.

BTW...wondered when someone would bring up the price of housing in this area...I have a condo and it would now sell for more than twice what I paid for it almost 5 years ago. Don't know what an actual HOUSE in this area would cost...but it's lots more, probably.

yup-houses around us have gone up to 3x the amount we paid for them-its craaaaaaaaaaaaaaaaaaaaaaaaaaazy! still cannot fathom how people manage $5000 month payments but then we have lots of latch key kids who wake up alone and get themselves ready for bed long before mom and dad make it home peoples need to rethink thier priorities in life

 

[HaleyB]

So back to the topic at hand.

I agree that you might want to consider working full time untill you have kids. It is the only way a lot of people manage to be a SAHM. It will also help you reenter the work force if you ever need to.

Don't dispare right away when you try to put yourself on a budget. It is hard to change any habbit and spending is a habbit. At the grocery store- meal planning is a key, otherwise you buy and throw away... avoid stores like the plauge. Target, the Mall, anywhere you like to spend money

Then remember Rome was not built in a day. If you cut back 20% of what your final goal is this week and add 20% a week you will be there in a little more than a month. 20% is something you can do. Baby steps, baby steps (are you too young to have any idea what movie that comes from?).

I am sure I am way older than you- you will be here some day, with your emergancy savings and no debt, because you are starting on the right road while you are young.

 

[agotta]

also consider (re home bsns as a travel agent) the successful ones need to be available full time to their client base. they also need to travel to and view properties so that they can effectivly speak with clients about a particular locations pros/cons. the expenses and the time committment can be much more than you anticipate. you state that you are paying off student loans-can i assume you have a degree? have you considered seeking employment in your field while you are able to work outside the home. you could build up savings, initiate retirement funding, take advantage of what may be lower health insurance costs...if you wish to be a stay at home mom, you may need to currently be an in the workforce woman.

As for that, I have a great full time job right now. And because I am focusing on Disney, I am able to do it part time. And like I said before, I know it's an adventure and I didn't go into this preparing to be profitable. I did my homework

We have decided to move out of the are and back to my home town, in which the housing market is much better. That being said, we aren't quite sure what kind of jobs we can find and what the difference in salary will be. My parents are nice enough to let us move in for 6 months or so....

I am headed to the library this weekend and plan on looking for Dave Ramsey's book. Thanks for the suggestion.


Yes right now DVC is part of our life and that is the way it will stay. I do plan on renting out points the next couple years and that will help pay off some cc debt. I am fully aware that DVC just "prepays" for the room, but we have crunched numbers and I do believe it will save us in the end. We are a family that plans on visiting Disney once a year. Dh's family bought into DVC and as a kid they went every year too. Just a tradition I guess. Plus DH and I met there, so it's kinda special

We are doing well at working together at this and have agreed to stop going out, taking away the temptation. I told DH that his last 4 trips to Best Buy were no no's!! He is also canceling his blockbuster membership and joined some free one where they trade dvd's instead.

Thanks again everyone. I didn't realize how many neigbors I had!!

 

[aka-mad4themouse]

Does anyone have a good worksheet that I could print out to track every thing I spend and how much it cost and examples of budget categories? I do not have a computer at home so I would need to be able to write on it.

I realize that I'm jumping in a little late with this but here's a link to Bankrate.com's Free Budget Spreadsheet. It's an Excel spreadsheet but you do not have to do it in Excel. Just print it out and crunch the numbers yourself. Some values are already filled in as an example. Of course, you may have no need for some of the categories or you may need to add a few of your own. That's what makes a budget unique to each household.

 

[Nancyg56]

Oh, and why does it show up negatively on our credit report? We were told it doesn't (of course that was by the agency.)

I'm not sure that it does. My DS consolidated all of his debt many years ago. He was never, ever behind, he just hated the bills. His credit was not looked at negatively, although he was told by the credit counselor that it might be. Now, at thirty he has an excellent record. and keeps it that way. He worked very hard for it.

 

[Nancyg56]

even if buying a house is in the distant future-consider going in now to talk to a local lender. tell them you are considering purchasing in the near future. they will pull up your credit reports, let you know about anything you need to clean up as well as positive steps to build up your rating. it costs nothing and can be some of the best budgeting advise you can get. just use a local company-that way you get face to face advise from an expert vs. emails from the on-line companies.

Excellent idea. My DD did this, (did not manage her finances very well, and got into trouble that would not "just go away") She listened to the advisor, and was diligent in paying off the debt in the order that gave her credit score the biggest impact. She did this without lowering the amount that she sets aside every paycheck for the future,never even sees it..removed before she gets her pay. She is on track to purchase a home, now, and has a substancial down payment for it. She recently purchased a new vehicle, which was proof that theh system did work for her.