I have had it, I have been paying high interest on credit cards for years, I keep falling behind on bills and then killing myself getting back up to date only to fall off track yet again. My total credit card debt is basically the exact same as it was this time last year and I am paying $500 / month towards it (Just paying minimums and all the late fees I keep racking up).

So just to get it out of the way, below is the current balances on all of our credit cards, several of them are individual store cards, two of them are Bill Me Later types of accounts for one time purchases we made, and then we have 3 actual credit cards:

Card #1: $1089.57 @ 29.40%
Card #2: $965.06 @ 29.99%
Card #3: $1122.08 @ 26.99%
Card #4: $1541.39 @ 29.99%
Card #5: $647.42 @ 21.9%
Card #6: $790.17 @ 22.8%
Card #7: $339.28 @ 19.99%
Card #8: $580.26 @ 29.99%
Card #9: $2399.89 @ 29.99%

Total: $8894.86

No more money is being spent on these cards, we have not spent anything on these cards in approximately 2 years. We don't even have the physical cards for most of these accounts, I shredded most of them a long time ago and the rest are locked in my safe and never taken out. All of our spending is done via our debit card.

The Bad:
I am currently almost $2000 behind on various bills, however we started buttoning down and I have it figured we will be caught up in the next two paychecks. This is not a new process for us, we get some ahead, have some positive cash flow, get a bit lazy, and the money seems to spend itsself, and then I find I can't make the bills. I then start avoiding opening the mail and just letting it pileup on my desk knowing that I need to get an influx of cash to get caught back up again. We do this over and over again, it is stressful, my wife and I fight about it, and then we really buckle down and get caught up again, and then we start the cycle all over again.

I can't keep going through this, we have to get our finances in order and stable.

The Good:
I make very good money in my opinion, I get paid every other week, and my take home pay is $1,962 per paycheck. I am a programmer, and I also have alot of side work I do for various people, I have a very good reputation for my work and basically I can't do the side work as fast as I can get it and have to turn down work a decent amount. All the work I do on the side I bill the people hourly for it at $50/hour. I have the ability to work about 4 hours a night it seems.

My wife and I are also very good at noticing opportunities and finding new ways to make money or ways to get things we want by bartering for them (we are getting a $2200 puppy in a couple months that I traded some web design and hosting for). The problem is, I keep getting $1000 - $1500 checks and they just disappear, the stuff we buy is rarely frivolous, but it is things we should not be buying now and that should be spaced out and the purchases budgeted for.

In Summary:
I need to work out a budget that will work for our lives, I need to face my bills even when we don't have the money to avoid the massive amounts of late fees and bank fees from overdrawing our account etc. These fees are killing us and we should be smart enough to not get them. We also need to ajust our lives to be able to save money and only buy things when we have money budgeted specifically for them and not doing what we currently do which is buy the item and figure out how to cover for it later.

Marcus, you're getting there.

One thing that was helpful for us was to write out a "wish list" and prioritize it. I know you said in previous posts you said you guys had lots of expensive hobbies. How about "training the puppy" becomes this year's hobby, costing $100 per month, and then you DON'T do hydroponic gardening (or buy any supplies??!!) this year as a tradeoff. Sit down with your wife, and make three lists: me, us and house. Then fill in the list. My list: new speakers at some point, a new ring, a few CDs or DVDs. Our list: vacation for our anniversary; time off at Xmas together; gifts for family. House list: replace kitchen patio; replace driveway; rehab the upstairs closets; renovate the downstairs; add storage shelves next to the fireplace. And each of these items has an estimated cost, along with possible contractors or further info on how to get it DONE.

It's all about PLANNING in ADVANCE how your money is spent.

One other idea for you - I now write out bills only 1x per month, so I'm not overwhelmed with "how to spend this?" "Should I get new tires?" "Is it time to go shopping for more work clothes?" decisions throughout the month. I only make those decisions in the context of the budget.

At the beginning of the month, I look at my wish list, and decide if any of those wishes will be fulfilled this month. If so, I WRITE IT DOWN and plan to spend on it. If it's not written down, I stash the cash until the beginning of the next month, and ask the question again. What I WON'T do is spend the money without looking at all of my other wish list items, and making a decision about cash flow and priorities. You need to do something similar.

You are failing to use your best asset - your INCOME - in a STRATEGIC way. It's a terrible mistake to make. Stop it right now.

There! Did that help?

Sandi

What is your opinion on having an allowance? For the last 6-8 months we have tried each getting $100 per paycheck as our allowance for anything we might want to buy. I find that mostly I didn't need anything close to $100 and I used most of mine to buy gas for the cars, however every few months I find myself wanting to buy something that costs several hundred dollars for one of my hobbies, I would research it for a month or so then just buy it rationalizing that I hadn't spent my $100 in a few months anyways so I was probably due it.

Problem with that of course is since I didn't take my $100 and actually put it away, when I spent that money later I didn't have it and that is one reason we go behind. My wife started out not being able to have $100 cover what she wanted for each paycheck and then just borrowing it from the household, but throughout the last few months she has been trimming different things that were taking her $100.

At this point my wife wants me to start taking $40-$60 (she hasn't decided on the exact amount yet) of her regular $100 and put it on one of the credit cards (but she wants proof I paid that over and above a minimum balance ). I have decided all my hobbies are being put away until at least the new year. I am thinking about taking $40 of the $100 I am supposed to get and put it into my savings account so if I do get the urge to buy something I can only get it if I have the money saved already. I might do the same as my wife and take the other 60 and put it towards a credit card over and above the minimum.

BTW, I know you guys don't know me, but I am soo proud of my wife for starting to limit what she spends, and getting onboard with contributing to paying off our credit card debt. We both have issues with what we spend albeit different issues, but it makes me happy to have her helping with it.

You asked about the $100 allowance you're taking, and indicated that you and your wife would be willing to take $40 or $60 weekly instead. I think it would be very beneficial for you to each take $40 weekly, which would be $80/week total x4 weeks = $320 monthly. At your current rate, $100 weekly each = $200 weekly total =$800 monthly. You could lump $480 per month extra onto your credit cards with those savings.

As for continuing to buy big ticket frivolous items, I would shelve purchasing any expensive items for the time being. I think you should tackle this debt first, not pay minimums while telling yourself that you're saving your cash for those big purchases. With those interest rates, your debt will grow quickly unless you start paying down the principals. You are in a REALLY good position with a high paying job and the opportunity to take on side work, at $50/hour x 4 hours/night = $200/night x 5 nights = $1000/week = $4000/month.

If you bust your ass for 2 months and work those overtime hours for an extra $8000 (in 2 months), plus take $40/week each for fun for a savings of $960, you will have your debt paid off in two months!

You should each have some money that you can spend without jusitifcation or tracking.



Actually, there are TWO problems with this scenario:

1) You buy something for "several hundred dollars" impulsively even though you already spent the money (and no, researching for a month or so does not mean it wasn't an impulsive purchase. It means it was a RESEARCHED purchase. ) If you don't have the cash to buy it, you can't afford it.

2) You are apparently not budgeting for gas. You should be able to predict, with reasonable accuracy, your gas needs. So spending your "allowance" on gas is silly, most especially because you seem to use spending on NEEDS as a justification for later spending money on WANTS. This is not a 1-for-1 deal - you don't DESERVE some hobby items just because you spent cash on gas the past 3 months...once the money is gpne, it's GONE - you shouldn't be spending it twice! (remember what I said in the last thread - I suspected you were spending your available money on wants, and then running out of $$, so you then were charging needs? Guess what? You should be spending the money on needs first, and if you don't have money IN HAND for the wants...you DON'T FRIGGIN BUY IT!)



So she should have some idea of where she's most likely to spend. And she can probably map it out. For me, it would be a haircut every 10 weeks, a mani/pedi every 6 weeks, and a massage 2x per year. She probably shops recreationally. Here's an idea - don't go to the mall. If you stay away and refuse to shop online, you can really save a lot of $$.

Simply having an individual allowance doesn't mean that you don't discuss $$, either. Are you writing down your budget yet? Have you even attempted it? Has she seen it and commented? You can't row this boat with only one oar - she's got to be on board as well.



So, in a budget, this would be minimum payment + $40 on your credit card, and $60 to her for cash. Once it's written down, it's easier to stick to, and harder to change.



Good idea. You're digging the hole deeper otherwise.



Yep, it's called saving for a purpose. Good call.



Dont' go too crazy right off the bat - if you set unrealistic goals, and fail, you're more likely to throw up your hands, walk away, and declare it can't be done. It CAN be done. But improve one area per month, and set the new habits in stone. Goals might be:

1) Stick to cash only for discretionary spending
2) When you get extra $$ (bday gift, rebate, evening extra work, sell something) what will you do with it? Have a plan in place. If I were in your shoes, I'd throw it at the debt, to get rid of it ASAP.
3) WRITE OUT A BUDGET. Go over it with your wife.
4) Stop shopping recreationally.
5) Track your spending, and compare to your budget at least 1x per week.

If you take each of the above items, and devote a month to integrating it into your financial life, that will get you to January 2010. Do you want to be looking back from then, admiring your progress? Or still befuddled and baffled about how you are still in the same old debt as you were last year?

Good luck!

Sandi

Hi.
Sandi did a great job letting you know what you should and shouldn't do.

You haven't mentioned your wife's job. Does she have one? How much is she bringing in? You also haven't written down your budget and where you spend your money. I believe you wrote earlier that you had been tracking, so let's see some actual numbers. If you guys have full cable (~100/month + HBO, Showtime), and 3 per month Netflix AND whatever else entertainment stuff costs, you're wasting money right there. It's easier for us to see where you're wasting than you are. Show us!

If you look at your list of credit card bills, this is what I would do. Some people choose to pay the highest percentage first, some people choose to pay off the smallest amount. I would collect one of your sidework checks (say 400 dollars), and send that right to the bill that's 339.28. That bill can be scratched off the list. The other 60 dollars from that check can be put in the bank for a minimum payment towards something else. Make sure you don't spend it though, and if your'e tempted, immediately write the check out for another bill. Your bills aren't all that high, you just have to be focused.

Do you have any money saved for emergencies, retirement, etc...Do you have car payments? Just looking at your credit card bills doesn't tell the whole story. You must pay for cell phones and electricity, right? We need the WHOLE story, not just bits and pieces. It's hard, but you have to do it if you want to get anywhere.

Lastly, I would not give yourself an allowance. As I told someone else somewhere on here, you've already had your fun. You've splurged to the tune of 9000 dollars. Now is time to buckle down, and once these bills are paid off, then you can buy chotchkes. In the meantime, get these bills paid off, and stop crying. There are plenty of people on these boards make WAY less than you and have paid off all of their debts in no time. They would be jealous to have your salary. You and your wife need discipline and self-control.

I'll be around.

Hi Marcus,

Sandi and peachy have already said a lot of important things here, all of which I second (especially the "not shopping" part). You have already done the most important thing, which is to realize there's a problem and to get so fed up that you are serious about changing things. I'll just add three points:

First, the folks on this board have all been where you are. Me? I charged up $9000 my first year of having a job with a salary and had that "sinking feeling" moment when I realized that even if I sold my meager investments I couldn't pay it all off. We are good at looking at budgets and making suggestions, because we've had to do it ourselves and make those tough choices and learn new habits. And we don't know you, so our only agenda is to help you. If you post your spending habits/budget, with our experience and objectivity, we might be able to point out ways that you could help yourselves. So put those numbers up.

Second, if you automate your savings, you make it easier not to blow all your extra money on Stuff (especially since you have cut up your credit cards, VERY good move!!!!). I use ING to "pay myself first"; it's easy-peasy to set up a savings account online and they are FDIC insured like any other bank. That will take a few days, max. So: go to ING and set up a savings account. Once the account has been verified, set up an automatic transfer of, say, $100 per month from your regular checking account. And then just forget about it for a while and focus on paying your cards off.

Finally, I am not a rabid Dave Ramsey fan, but a lot of people are really into his book. He advocates a very cool concept called the "debt snowball," where you skim all the surplus from your spending and use it to pay off your smallest debt first, then use that extra money plus the minimum payment from the first debt to make bigger payments on the next one till it's gone, then use all of THAT extra money on the next one, etc etc. (You could google "debt snowball" for details, or read the chapter-by chapter analysis of Ramsey's book at The Simple Dollar.) The advantage here is psychological, because you feel as if you're making progress right away, and that positive feeling encourages you to keep on knocking down the debt numbers. Since you have said you feel you can't get on top of this, this might be the perfect method to try, especially since you have lots of little debts on lots of different cards. I bet if you took peachy's suggestion about lowering your monthly spending allowance (the one that would save you $480 in a month), you could kill your smallest CC debt in a month, no problem. Then you could "snowball" that $480 plus the minimum payment from the first card, and knock off the next smallest CC debt by October, and so on...

Give yourself a visual reminder of your progress on your refrigerator (a pie chart, or a graph with a line going down, or a list with numbers crossed off and a dropping total debt -- whatever).

You are not going to believe how much better you feel about yourself when you get on top of this. You are changing habits of mind, so it will take some time and be a little uncomfortable for a while. But: You can do it! You can do it!

Cheers,
Cecily

Thank you for all the replies, I am really reading and trying to take this to heart, and more important, trying to actually implement these suggestions and follow through on them.

I will get up the figures of what bills we have shortly, and I am working on a budget, unfortunalty I do not have much time to dedicate to this for a couple weeks as an opportunity came up I can't pass down. I have two side projects that just came up that if I can get the time to do them should net me between $3000 and $4500 of pure credit card paying money. I have promised myself to not spend anything except what I have to on bills to get caught up and current until I have a budget in place, but I need to take advantage of these projects and so the time will have to go to them instead of making out the budget.

To answer a couple things that were brought up:

* I have no car payments, we own three junkers and I do all the repair work on them myself
* We don't have a cable tv bill, we just have the 2 at a time Netflix, and we do alot of the netflix watch it now on our TV (I build a media computer awhile back)
* Yes I know I make a good bit of money, which is why I need to hunker down and actually spend my money wisely, I would love to be out of debt by January, we will see how possible it could be.
* My wife does not have a job, she is an artist and has been trying to get a business built around that (booths at art & crafts shows, commissions, etc) We just had another opportunity come up that she will probably be taking where she can make 20-30k/year working from home (no scam, will give details later)
* We have no savings, none, like in dollar amounts, I have probably $800 to my name, if I lost my job I would be in serious trouble.
* My wife is on board, probably not to the extent I am hoping to work, but more than enough, she is tired of this as well. We know we have to change things to make things better.

So if you're so busy on the new project job, have your wife draft up a starting budget. It's really not hard, and you both need to invest some effort here.

Mortgage Payment (PITI) plus HOA dues, if any:
Gas/Electric:
Water:
Trash:
Gasoline:
Netlfix:
Groceries:
Credit Card 1: Min payment/Balance due/Int Rate
Credit Card 2: Min payment/Balance due/Int Rate
Pet Expenses:
Eating Out:
Entertainment:
Medical/Dental bills:
Medical Insurance:
Retirement Savings:


That's probably a good start.

I recognize avoidance when I see it, and you've been grappling for reasons NOT to post a draft budget for awhile now. Regardless of our notes that a complete budget would be helpful for us to analyze. So, really - are you telling me that pulling those nubmers would take you more than 10 minutes? Because I don't believe you.

It's hard to confront the stupidity and bad decisions. But it only starts getting better when you do.

I agree that the Ramsey book could be helpful. And I agree that getting the cards paid off that have only 3 figure balances would be a great start, since it gives you fewer checks to write.

But before you start that debt snowball, you MUST have some money in the bank, you MUST have a written budget, and you MUST be current on your bills (which you said would take a couple of paychecks).

Really. WRITE IT DOWN. Otherwise, you'll say you're too busy making money to focus on a budget, and 6 months from now, you will have made no progress.

Sandi

Yikes, I've been in your shoes... I'm still not really honest with myself about my spending, really.

But look, it's great that you can do these side projects, but you seem to be looking at them as "free money" or "extra money". When you're this far in debt, they are NOT "free" or "extra". When you "barter" your web development time for a $2200 puppy (which, by the way, is going to significantly increase your monthly spending), you're not getting the puppy for free, you're getting it for $2200. As you said, the side work comes in fast and easy, so every project you choose to take on in exchange for anything other than debt-payment-money is a wasted opportunity. You aren't being honest with yourself about this. Getting current on your bills, building a small emergency fund, and paying off your debt have to be your FIRST priorities, NOT any of your hobbies or wants. And a new puppy is a huge, expensive want.

Buckle down and take this seriously, and you could be in the clear and building a solid e-fund within months. Keep pissing your money and time away, and you're really going to regret it later.

Amen. If you owe money (and paying loan-shark interest rates on it) your only goal should be to pay it off. No buying anything unless it is absolutely necessary. You need to get that 9K paid off, and start saving some money. Any "extra" money that comes in should go straight to debt payments, or to savings. You said yourself you're screwed if you lost your job. That's stress a lot of us have or have had, and life is LOT better without that stress.

Ok, I think I have an initial budget to post, I will have to wait until I get all caught up on everything to make sure my figures are correct on what a normal bill is. I had mentioned before that I have been tracking my bills for the last several months, however going back over those I realized I have been on a constant roller coaster of being behind and ahead, so I haven't had two normal months for things to stabilize since I started tracking.

So I did a spreadsheet with all my different bills on it, and I did three columns, the first column is bills, second column is credit cards, and third column is savings/personal spending money. Below is my rough draft of my budget per month:

Bills:
Car Fuel: $200
Groceries: $600
Mortgage: $1078.14
Cell Phones: $175
Cable Internet: $57
Electric: $125
Gas: $100
Utilities: $35

Entertainment: $100
Car Repair: $100
Dog: $50
Chiropractor: $30
Clothing: $50
Misc: $50
Netflix: $20
Vonage: $30


Credit Cards:
$386 / month for the minimum balances on all cards
$277.86 I am calling this snowball money, I had this left over once I filled out everything else, so it will go towards paying off the lowest card each month

Savings/Personal spending:
My Money: $80
My Wifes Money: $80
Savings for Emergency Fund: $100

And not counting side project money (as it is very irregular) I bring home $3924 per month.

A few notes, our cell plan is really high because my mother-in-law and my wifes grandmother are both on our plan, neither of them can afford a cell, so its something we have done for the last year or so for them, I am not interested in kicking them off. Also I know our grocery bill is high, we are trying to trim it where we can, however my wife is hypoglycemic and whenever we try to cut back on grocery money she has issues that result in emergency going out to dinners (Not kidding here, she gets to where she can hardly stand, not rational, mental and physical seriously messed up). It is better for everyone involved if we buy high quality ingredients and cook good food.

Let me know where I seem to be totally off on my initial budget, I will not be implementing it until we catch up from being behind on bills as it doesn't seem to apply at the moment. Also the plan is to take all of my side project money and pile it on credit cards. If I get the money I am thinking we should be able to pay off at least half of them in the next 2-3 months.

I forgot to mention a few other details about the budget, where we have failed before with our budgets we have tried is that even though on paper we had the money all split up, it was still in the account as one big amount, so we would spend until the account was empty. This time, I am going to try something new, I can't use a straight envelope system as most of our money is stuff we pay online, so I am going to utilize having several accounts and also pulling out some of the categories to have cash in evelopes, below is the details:

Gas: $200 - I am going to stop each month and get a gas gift card to use, 95% of the time I get gas at the same place anyways, and the place I get it is a nationwide chain so that should work
Groceries $600 - I am going to transfer this to another shared checking account that has a debit card
My Wifes Money $80 - I am going to transfer this to a business checking account of my wifes that hasn't really been used in awhile
My Money $80 - I am going to pull this into my paypal account (I have a paypal debit card hooked up to the account, so its like a checking account)
Savings $200 - This is already setup to go automatically into our shared savings account

Entertainment $100 - Cash in an envelope
Car Repair $100 - Cash in an envelope
Dog $50 - Cash in an envelope
Clothing $50 - Cash in an envelope
Misc $50 - Cash in an envelope

So after I do the transfers on each payday the only thing that should come out of our checking account will be to pay bills, my wife and I have talked about it and we have both agreed, I don't get to buy stuff for my hobbies unless I have the money already saved for it out of my money, and my wife doesn't get to buy the great deals she always finds on stuff for the house and herself unless we have the money in the respective categories already.

If we can keep to that, it will be the best we have ever done financially. I am coming to realize that I have always seen my bills as being random and unpredictable, I think that really points to my lack of planning as once we are on a budget there shouldn't be many surprises in our day to day bills.

Thanks for finally posting your budget.
50/month on the dog is a lot. I remember buying those 30-40 pound bags of dog food for like 20 bucks. Does your dog eat a lot or have some physical problems? I would cut that down.

Also 50/miscellaneous is for what? Put it towards your bills. 100/month on car repair-Are you really spending that much on your car? I guess my opinion of car repair is skewed because I have a Corolla, and all I have to pay for is gas and an oil change every three months. So, car repair isn't even on my radar. I think you should put the car repair money in another account so that you can't access it by having cash in an envelope in your bedroom (it's too easy to access)

I like the gas card idea.

How far behind on bills are you? You really should start implementing your budget today. No clothes until you're caught up. That's 50 dollars right there that can go to catch up. Your wife, I'm sure can buy one less hypoglycemic product so you don't spend 150 week on food. You guys HAVE to start cutting back. Go to 1 at a time netflix, or cut your entertainment for a month in order to cut back. You need to make some sacrifices TODAY. You're trying to start on the right foot, so you need to suck it up for a few months and you'll see how great it is to have 3 at a time movies, and not have to worry about your lights getting cut off. Know what I mean? Have your dog eat generic. He'll either eat or starve. We know what the dog is going to do.

Thank you for the reply, in answer to some of the questions:

$50/month for Dog: This will cover the routine vet bills, food, and grooming. We haven't picked the puppy up yet (getting her in two weeks), but our last dog cost about that, I know this is an extra expense to some people, but our dog is our child, we just lost our first dog we had to cancer and its been one of the roughest months I have seen.

$50/month Misc: I am fine with putting this towards CC bills, when I looked up a few example budgets they all seemed to have a misc category so I put it in. I will move this over to the CC repayment fund.

$100/month Car repair: I would say this is a fair estimate, that is what it costs me to keep three cars on the road, I actually see this as being really cheap, everyone I know has car payments that range between $350 - $700 per month for their cars, mine are totally paid for and I just have to do repairs every now and then. (BTW, I only have to fix them a couple times a year, but it costs a few hundred then, so I am averaging out the cost).

When I first posted a couple weeks ago, we were about $2000 behind, I am working out the details right now, but it looks like we are about $1500 behind right now, and catching up pretty quick. The reason I was going to wait until we caught up to start the budget is because every penny it looked at twice before it is spent until we can get caught up on all of our bills, so there is no entertainment, no personal funds, no clothing, etc until we are caught up. I guess I could implement just the bills part of the budget, but the amount would be off anyways as I am paying more than what is in the budget since I am catching up (double payments and such)

Also the $150 is actually a cut back amount, we normally spend about $200 per week on food. I don't know the prices everyone else pays for food, but we live out in a city and it seems really expensive for food if you want any fresh fruits or vegitables, I grew up in a much smaller town, and whenever we go back we stock up on meat we can freeze and other stuff that will keep as food costs are half the cost there than they are here in the city.