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A place for Get Rich Slowly readers to ask questions
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It is currently Thu Apr 24, 2014 10:14 pm




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 Post subject: Going to make a mess into a success!
PostPosted: Fri Feb 14, 2014 9:14 am 

Joined: Fri Feb 14, 2014 8:25 am
Posts: 7
I like these reading these journals and seeing how much people improve over the years. Helps me remember it takes time to build wealth and have someone to talk to about this because my wife hates talking about money and my friends are the Jones' and want to do nothing but vacation and blow money all the time (part of the reason I'm in the mess is I fell in with their line of thinking, but that's gone now).

I'm about to turn 31, married with 2 kids and I've been awful with my money for years. Spent the better part of 3 years trying to get into my current career and it took awhile, but I'm finally caught up and also getting paid very well. The problem is I also have a ton of debt. However, I'm finally on a budget and even working a 2nd job to speed up the process. Here's the breakdown (monthly amount ~ total amt due)

Mortgage $1,600/mo ~$213,500 4.5% fixed(just bought in August 2013, it's worth $215,000)
Student Loans- $150/mo right now ~ $42,000 (2 went to collections years ago and have a judgement out)
Truck- $630/mo ~ $30,000 6.9% interest
Car- $465/mo ~ $15,000 22.0% interest (I know, I know. Stupidly took the deal with hopes of refinancing later before I fully understood car depriciation and refinancing)
Amazon Card-$25/mo~ $1960 0% interest until Dec
AAFES Card- $56/mo ~ $526
Home Depot Card- $25/mo ~$308
Kohls- $25/mo ~ $204

Cell phones - $190
Electric, Water, Gas- $365
DirecTV - $81
YMCA- $70 (family plus daycare)
Car Insurance - $135
Netflix - $11
Internet -$45
Misc Item -$80 (have to pay this for 2 years, don't want to say what it is though)

Total bills- $3953/mo Income after all deductions and 5% to the TSP (matched)- $5200, which will go up to $5600 within the month thanks to a schedule change.

We budget in $300/week for gas, groceries, beer, smokes (i'm working on quitting), and any fun money. So basically the total is $5150 going out a month. :sweat:

Checking-$600
TSP account - $20,000
E-Fund $500 :(

I work a 2nd job that brings in about $100-200/week depending on the week. My wife currently is starting a business that in about a year will have some real nice profit. For now, there won't be a paycheck until about August but there aren't any start up costs. She sells stuff from time to time to bring in some extra cash. She also is a coach and gets paid $700/mo from Aug-Nov.

I'm getting a tax refund of $4652. As of now I claim Married 0 dependents on my taxes. I think I need to change that.

So to start out, any suggestions on ways to lower the monthly bills? If I cancel DirecTV, I'll have to pay a $360 early termination fee.

As for the tax refund, I wanted to use it to pay off the credit cards so I can free up $131/mo, then build up my E-fund to $2000 before I start hammering away at the car with 22% interest.

Should I build up the E-fund then pay the credit cards instead? With my 2nd job, I should have both done by the middle of March.

I know there is a lot going on and A LOT to work on.


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 Post subject: Re: Going to make a mess into a success!
PostPosted: Fri Feb 14, 2014 9:29 am 

Joined: Fri Jul 29, 2011 8:38 am
Posts: 174
Welcome to the forum! Wow...you do have a lot going on here. :tmi: But just remember that it will take time to dig out of the mess you're in now. It gets easier once you get some momentum going.

My first thought is that you're paying over $1,000 a MONTH for cars! That's insane! Any possibility of selling one or both and getting something cheaper? Wouldn't have to be forever, but until you get your finances in better shape. Just something to think about.

I hope you'll keep posting...my journal here has helped me a lot by giving me a place to think "out loud" about finances.


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 Post subject: Re: Going to make a mess into a success!
PostPosted: Fri Feb 14, 2014 9:36 am 

Joined: Fri Feb 14, 2014 8:25 am
Posts: 7
Ya the cars are the things I regret the most. The truck is my wife's and she refuses to get rid of it. She has the emotional attachment to it since I called it her 30th birthday gift when I bought and she uses it for her business a lot hauling stuff.

My car is so upside down it's ridiculous, which is why I want to pay that off first after the small credit cards instead of building up a big E-fund. The interest is killing me.


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 Post subject: Re: Going to make a mess into a success!
PostPosted: Tue Feb 18, 2014 8:36 am 

Joined: Fri Feb 14, 2014 8:25 am
Posts: 7
Well crap. My nice $4500 tax refund got offset to pay for one of my wifes student loans. The problem is it's NOT a federal loan and they don't have a judgement against us, so they shouldn't have been able to take the refund. May have to talk to a lawyer about this.

In the mean time, this means that the credit cards I had planned on paying off are now back in the budget. This is gonna be a long journey.


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 Post subject: Re: Going to make a mess into a success!
PostPosted: Tue Feb 18, 2014 10:42 am 

Joined: Tue Dec 17, 2013 5:59 pm
Posts: 28
Welcome Colts!
We sound like we have similar backgrounds. I'm about to turn 32, married with one kid and planning #2. I was laid off for the better part of a year, underemployed the following two years after that, then spent another year and a half working my butt off only to never get a promotion I was promised. I left that job and I'm happily back in career I love doing. We don't have SLs but racked up a $20,000 CC bill at it's peak and a personal loan that amounted to $9,000 at it's peak.

I hear ya on your wife's truck. We paid off Hubby's truck about 2 years ago and he is itching to get a high end car, ugh! |( He is the type that wants to keep up with the Jones'.

Good luck on your debt payoff journey. It's a process but you will always find support here!


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 Post subject: Re: Going to make a mess into a success!
PostPosted: Tue Feb 18, 2014 12:06 pm 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1691
Location: Ottawa, Canada
Those car loans are insane. Both the amounts and the interest (22%!?!).


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 Post subject: Re: Going to make a mess into a success!
PostPosted: Tue Feb 18, 2014 1:45 pm 

Joined: Fri Feb 14, 2014 8:25 am
Posts: 7
Ya, I'm paying one hell of a stupid tax. I never want another car loan again. I'll drive these cars til they cost more to fix than the car is worth. Then it's cash only for cars.


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 Post subject: Re: Going to make a mess into a success!
PostPosted: Wed Feb 19, 2014 6:10 am 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1691
Location: Ottawa, Canada
ColtsATC wrote:
Ya, I'm paying one hell of a stupid tax. I never want another car loan again. I'll drive these cars til they cost more to fix than the car is worth. Then it's cash only for cars.


Or you could dump them now while they still have SOME resale value, take the hit in the deficit amount, and buy a couple of reliable used cars that are vastly more affordable for you. You owe $42k in student loans and you have debts that have gone to collections! What are you doing rationalizing $1,000+/month in car payments???


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 Post subject: Re: Going to make a mess into a success!
PostPosted: Wed Feb 19, 2014 6:41 am 

Joined: Fri Feb 14, 2014 8:25 am
Posts: 7
kombat wrote:

Or you could dump them now while they still have SOME resale value, take the hit in the deficit amount, and buy a couple of reliable used cars that are vastly more affordable for you. You owe $42k in student loans and you have debts that have gone to collections! What are you doing rationalizing $1,000+/month in car payments???


The car is about $8k upside down, which I don't have available, and the truck my wife refuses to get rid of. She has an emotional attachment to it but I told her anything she makes from her job in the fall and her new company goes straight to the truck. So she agreed to that.

Anything that went into collections went there years ago while I was moving all over the place and working on getting my current job. Actually, all that's left in collections are the student loans. I paid off about $7k worth of stuff last year.


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 Post subject: Re: Going to make a mess into a success!
PostPosted: Wed Feb 19, 2014 7:27 am 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1691
Location: Ottawa, Canada
You're still rationalizing. If you're serious about turning your "mess" into a "success," you're going to have to make some tough decisions. $1,000+/month in car payments is absolutely insane. My wife and I make considerably more than you do, and my wife and I share 1 car (2005 Mazda 3) with over 300,000 km on it. She takes it to work. I take the bus. My bus pass is $122/month.

Of course you're upside down, but you still have options. You could borrow the deficit amount (probably at a far better rate than 22%). But that's fine, you're clearly not interested in this, I'm not going to berate you over it. But having tens of thousands of dollars of debt at 22% interest is absolutely outrageous. I want you to understand how incredibly detrimental that is to your finances. Those cars are eating you alive.

So let's look at some other aspects of your budget. $190/month for cell phones??? Why so high? My wife and I have iPhones and pay $45/month. TOTAL. We don't have caller ID, voicemail, or data plans. Just 200 minutes of voice and 1,000 texts. $190/month for cell phones is incredibly high.

I didn't see any retirement savings in your budget. Or savings for your 2 kids' college funds. Or any life or disability insurance at all. Or a budget for travel, building up an emergency fund, gifts or pets.

I think you would benefit from reading Dave Ramsey's "Total Money Makeover." His plan would be great for getting your family on the right track. Just ignore everything he says about investing specifically. Everything else is pretty good advice for a family like yours.


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 Post subject: Re: Going to make a mess into a success!
PostPosted: Wed Feb 19, 2014 8:48 am 

Joined: Fri Feb 14, 2014 8:25 am
Posts: 7
kombat wrote:
You're still rationalizing. If you're serious about turning your "mess" into a "success," you're going to have to make some tough decisions. $1,000+/month in car payments is absolutely insane. My wife and I make considerably more than you do, and my wife and I share 1 car (2005 Mazda 3) with over 300,000 km on it. She takes it to work. I take the bus. My bus pass is $122/month.


I am rationalizing on the truck. I'd like to get rid of it (wanted to months ago), but after months of fighting and it causing severe problems in the marriage, I just told her she has to put her income towards it if she doesn't want it sold. Bus is not an option for me. I live in the country 22 miles from my job. 1 car is also not an option for us.

Quote:
Of course you're upside down, but you still have options. You could borrow the deficit amount (probably at a far better rate than 22%). But that's fine, you're clearly not interested in this, I'm not going to berate you over it. But having tens of thousands of dollars of debt at 22% interest is absolutely outrageous. I want you to understand how incredibly detrimental that is to your finances. Those cars are eating you alive.


I've looked into this and it's incredibly hard for me to find someone who will give me an unsecured loan with my credit. (I have yet to find one). It's much better than it was last year, but still not good enough to get unsecured loans.

Quote:
So let's look at some other aspects of your budget. $190/month for cell phones??? Why so high? My wife and I have iPhones and pay $45/month. TOTAL. We don't have caller ID, voicemail, or data plans. Just 200 minutes of voice and 1,000 texts. $190/month for cell phones is incredibly high.


Another thing I've been trying to reduce. You must not be in the USA cuz I haven't found plans where caller id or voicemail are even options in a plan anymore. I'm looking into cheaper options.

Quote:
I didn't see any retirement savings in your budget. Or savings for your 2 kids' college funds. Or any life or disability insurance at all. Or a budget for travel, building up an emergency fund, gifts or pets.


Retirement (5% matched), life insurance, med/dental insurance, disability insurance all come directly out of my paycheck. We aren't doing any traveling anytime soon. A small weekend camping trip to the local lake is the only vacations we will be doing until most of this is cleared up.

Quote:
I think you would benefit from reading Dave Ramsey's "Total Money Makeover." His plan would be great for getting your family on the right track. Just ignore everything he says about investing specifically. Everything else is pretty good advice for a family like yours.


I have read it. I'm nearing $1000 in my E-fund now ($700 now, will finish it before March 1). We really woke up to our financial situation at the beginning of the year and realized we have been wasting SO much money. Our problem was for YEARS we would blow any excess money we had. Never saved. So when periods of unemployment or excess costs came along, we just didn't pay certain bills. It's gonna take about 5 years to clean up all of this mess most likely, unless my wife's business really takes off. As for now, we are really cutting down on any expenses and stashing money away as fast as possible. We've identified quite a few problem areas over the last 2 weeks and are cutting back big time. She is selling like crazy on Ebay and local facebook pages.

I know the cars are a big problem, as is the interest. I'm hoping with a few more months of paying down bills, my credit score will go up enough to get a loan of some sort to ease the pain. If not, I'll just keep plugging away and paying stupid tax.


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 Post subject: Re: Going to make a mess into a success!
PostPosted: Thu Feb 20, 2014 7:58 am 

Joined: Tue Oct 29, 2013 2:14 pm
Posts: 58
I think you've definitely realized your mistakes, and as terrible as it is, sometimes eating the costs are the only way to do it.

It really sucks when you don't have people in your life to talk to about finances. The forum is wonderful place to chat with people who are in or have gone through similar situations and can give you a different perspective. Still, when the most intricate conversation you can have with someone in person regarding finances is "student loans and mortgages suck," it's not very helpful.

Any way you can minimize a $300/week budget? Kudos to you for starting to quit smoking, that'll definitely help with your budget (and, more importantly, your health)! What else is in there that you really don't need? When I started cutting back on buying snacks and junk food, that definitely gave me a lot more wiggle room in my budget (and my clothes :) ). Think of it this way, if you can figure out a way to cut $50/week, that would be $200/month, and $2400 a year! Can you break down that budget a bit more? Separate your necessary costs like gas from unnecessary costs like eating out, and figure it out from there.


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 Post subject: Re: Going to make a mess into a success!
PostPosted: Mon Feb 24, 2014 9:37 am 
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Joined: Thu May 17, 2012 10:05 am
Posts: 884
fiddlefaddle wrote:
I hope you'll keep posting...my journal here has helped me a lot by giving me a place to think "out loud" about finances.


I agree... :?: :clap:

My journal has helped me a lot. And the suggestions are usually pretty good from other posters. 8)

_________________
~ Eagle


Last edited by Eagle on Mon Feb 24, 2014 9:54 am, edited 1 time in total.

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 Post subject: Re: Going to make a mess into a success!
PostPosted: Mon Feb 24, 2014 9:53 am 
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Joined: Thu May 17, 2012 10:05 am
Posts: 884
ColtsATC wrote:
Should I build up the E-fund then pay the credit cards instead? With my 2nd job, I should have both done by the middle of March.

I know there is a lot going on and A LOT to work on.


Welcome to the forums! :hai:

Wow yes that is a lot of information...

First, some things you are doing well.

You (and your wife) realized that some things needed to change regarding your finances this year. Taking the first step in a journey is usually the toughest. So you are on your way! That is good. :clap:

You took on a 2nd job to help alleviate some of your expenses/debts. That is good. :clap:

Your wife has realized that she needs to help with the financial situation by bringing in an income. That is good. :clap:

You started your fiscal fitness journal to track your progress. That is good. :clap:

Things may look tough now but with some effort, sacrifices, and a good plan you will get through this. :rock:

_________________
~ Eagle


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 Post subject: Re: Going to make a mess into a success!
PostPosted: Mon Feb 24, 2014 10:32 am 
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Joined: Thu May 17, 2012 10:05 am
Posts: 884
Second, some things to work on and consider:

ColtsATC wrote:
So to start out, any suggestions on ways to lower the monthly bills? If I cancel DirecTV, I'll have to pay a $360 early termination fee.


Questions:

1. Have you considered various ways of saving money in the short-term? Please check out this thread: Tips to Save Money and let me know what you think might apply to your situation.

2. Specifically, I think getting a different cell phone plan might benefit you... We have a plan with 4 cell phones (unlimited texting and 3 data plans) and pay about as much as you do each month... Have you considered shopping around for cell phone service?

3. Since you have Netflix have you considered getting rid of Direct TV for a while why you get your finances in order? When will the contract be over and you won't have to pay a cancellation fee? That is about $1000 a year that you could put towards eliminating your debt for perspective.

4. When was the last time you got a car insurance quote? $135 a month seems a bit high to me...

5. Have you heard of mint.com as far as budgeting and tracking expenses goes? Might want to check it out has been very helpful to our family.

6. The $700 a month your wife will bring in towards the end of the year as a coach... Is she willing to put that towards your debt? You said she agreed to put that towards her truck... Is that really the best way to use that money?

7. You didn't list what your total monthly take home pay is... What is your monthly income after taxes, health insurance, etc.? You listed $5150 in monthly epenses.

Welcome to the forums again! You came to the right place. 8)

_________________
~ Eagle


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