I'd sit down and realistically figure out what obligations you will have and how much you need to allocate toward those obligations in order to meet your goals. As a young person, you have a long time horizon on your side, but you need to have a plan in order to take advantage of it.

How much money do you need to purchase rental property? What type of rental property are you interested in buying? What are financing guidelines for purchasing that kind of property? If you know what you'll need, it'll be that much easier to plan for it.

when you grasp reality and dig yourself out of the hole you're in.

Get out of debt.

Get a solid emergency fund

Save for retirement, college, maybe prepay mortgage (if you have one)

Beyond that whatever you want to save for is your choice. But don't even think about adding more variables to your situation. Yes, if you have rental property it can bring in money IF you find a renter and IF they are good tenants and low maintenance.

I would recommend selling the cars. I dont think the interest rates tell the whole story here although it is the focus.

The payments are also important here... I bet the vehicles represent over 6-700 a month in cash flow. At least vehicle 2 is more then I believe you should be trying to pay for.

Maybe keep vehicle 1, find a beater to sell vehicle 2 which would free up 20K in debt and at least 500 a month in payment. After that I would pay minimium on the CC1 and CC3 pay off CC2 first, then CC3, then CC1, and finally Student Loan. By the time that is done I assume Vehicle 1 will be paid off as will 401K.

I would say that you should make you payments hurt so that you dont want to fall into the debt hamster wheel again.

Well I've come up with a plan after talking it over with the wife. First of all, this is how we do our budget... I get paid every other Friday, but I'm able to see exactly how much I'm getting paid the Tuesday before I get paid. So, on Wednesday we figure out which bills are due for that two week period after I get paid. Then we take all that is left over after bills and put it at the top of the budget spreadsheet, and that's our starting number.

We keep the budget pretty simple... for example, last pay period we budgeted $505 between these categories: Grocery/Household, Car gas, Truck gas, Motorcycle gas, Dining/Ent., Cash, Misc. When we started budgeting we assigned higher amounts to all of these categories, but as we've went through it a few times we've got them down about as low as we can. Last period we had 1118 extra, next period is only 180, then 993, then 892, 386, 687, and so on.. (I've got it mapped out through the end of the year)

So anyways, the plan with everything that is left over after bills and what we have to budget for the two week period is this... 75% will go to paying off debt, 10% will go savings, 5% will go in an automobile repair envelope, 5% will go in a holiday envelope (until it reaches a certain amount), and 5% will go in a fun envelope.

We decided that we think these numbers will work for us... most of the surplus is going toward debt, but we're still saving something for the emergency fund and a little bit for some fun.

Right now we've got exactly $1,000 in the emergency fund, but would like to see it grow a little.

We're also going to pay off the debt in the order that DH suggested (and maybe others, but I don't remember). The higher interested CC's first, the lower interest CC, the car, the 401k loan, Sallie Mae, then my truck (well the truck should just be paid off by then anyways)

This seems like it will work for us, but the only way to know is to try it out and see.

This is an excellent choice. It is essential for both spouses to be on the same page.



A few questions/suggestions:

Did you consider getting rid of one of the vehicles (there are 3)?

What about driving the motorcycle to work and not using the truck for a few months?

When was the last time you got a quote on your car/truck/motorcycle insurance? With our one vehicle we got a new quote and saved about half of our bill a year (over $500!). Discounts can often be greater with more than one vehicle…

Have you gotten rid of your landline phone and/or cable bill? Have you looked at the cell phone bill (smarthpnoe/data plans?) to see if you could reduce it?

Have you had a garage sale lately to get rid of some of your old junk and raise a little $$? We raised this way $200 last year in 2011 and $180 in 2010. And we plan on raising about that this year! (If we have anything left worth selling )

You have two small children… Are they two boys, girl/boy, or two girls? If you have boys, an easy way to save money would be to buy a hair cutting kit for say $20-30 and just use it instead of paying for haircuts for a few months. In our area haircuts can be $10-$20. With girls it is a bit trickier... But maybe going to a beauty school would reduce costs ($10 instead of $30 or more at a salon).

After reading the thread you seem to be working 6 days a week. Is it possible for your wife do so something on the side to generate a little more income? Say babysit neighbors kids or something online? (I assume she keeps the kids) A friend of ours babysat a neighbor's kid and recieved a little extra for a year. It helped both her and the neighbor.

For more see this thread on ways to save money.



This seems like a good plan. Is the savings specifically for your Emergency Fund or a general savings fund?



The first thing to do is to have a plan. You’re on the right track! I would try to make that E-fund grow into $4-8k. With little kids and several vehicles there will always be emergencies to count on. What DH suggested is a good plan for the debt. Keep up the good work!

I think I have answers to all of your questions... let me give it a try


I do drive the motorcycle to work most of the time (and it's paid for). The only time I drive my truck is when it rains. And I am in South Louisiana so it rains a good amount of the time. I did consider selling the truck and buying a beater, but we decided to keep it and pay it off since I've always driven a beater until now. We are going to keep it and run it until the wheels fall of.

By the next time we need a vehicle we will have been able to save up cash to buy it.


When we moved back to LA around thanksgiving we shopped around different insurance companies and we went with the best deal we found. There were cheaper quotes, but they were from cut rate companies that didn't provide much coverage.


We don't have landlines or cable. We only have internet at home and the cell phone plan we have is the cheapest one we could get with a data plan. I also get an 8% discount through work.


We had a big one before we moved back home so we'd have less stuff to move. As a matter of face we're probably going to have to buy things now when we move into our new house because I may have gotten rid of too much.


We have two girls (almost 3 & 4 yrs old). My mom actually cuts hair so we all get free haircuts



We seriously talked about her babysitting some kids out of the house for extra money, but decided against it because I work nights and already have a hard enough time sleeping with just our two kids in the house during the day. She's selling cakes from home now, but so far it's only paying for itself... everytime she sells something she uses the money to buy more equipment that she needs. I believe she is almost to the point that she has everything she needs and soon some of that money will make it's way into our budget. But it isn't very much money.


Thanks I'll check that link out.



It's for an emergency fund. Once it reaches $10k, all savings will go toward my investment property down payment fund.

Thanks for responding to the questions! It sounds like you have already thought through most of what I suggested.



Buying a vehicle cash is such a rush. Plus you can usually get a discount by showing them the greens.



Nice! If you ever do want to talk with family/friends (grandparents?) a good alternative to regular phones is Skype (it also allows video feed). I’ve also recently come across oovoo.com which allows multiple users video conference. I plan to use it this weekend.



My sister cuts my brother-in-law’s hair. Perhaps I should pay her the money instead of going to the barber or just buzzing my head… I’ll ask her this weekend. Thanks for the idea!



I understand. A business startup takes time. But if you put in the time and effort there is always chances of becoming a great cash cow. I had a snack business (ice cream, soda, juice, energy drinks, breakfast biscuits, chimichangas, gum, and candy) that I did for about a year to supplement our income. It took a little while to get it going but after the initial investment (about $250) and some hard work I was making profit (about $300-400 a month) after 3-4 months. After getting a new job there was no reason to continue this little venture.

Other ideas:

Wife to start a blog? Your wife likes to cook so why not write about that? Not saying the income will poor in quickly but after 6 months to a year (or so) I hear a nice income can be generated from a blog.

Or why not tutor or give lessons on how to cook?

If she is so inclined perhaps starting her own photography business? This has become easier with the influx of the digital world.

Run errands for the elderly? If she does the grocery shopping anway might be a good way to make a little cash on the side.

Sell stuff on eBay. Find a niche and sell!

Become a published writer – making an eBook isn’t that difficult these days. And companies offer opportunities for self-publishing like Xlibris.com as an example. My wife did this and published her book of poetry.


On a seperate note while trying to get out of debt this is an article I found very useful regarding going on dates with your wife that wouldn't break the bank. (especially when trying to get out of debt).

Once again you’re on the right track. Keep up the good work!

Make a budget. Add your total income. Add costs that you can possibly not be without (home, food, basic clothing, insurance). Try to imagine cutting back on some stuff for a cuple of years. Evaluate every singel dollar in the budget, and try to make better deals. Cheaper car insurance? Cheaper telephone? Show no mercy. Remeber - every single dollar counts and you said you had the time to work seven days a week. Bring food to work instead of spending $8-12 on lunch every day ($200-300 a month for you). Put all your credit cards in a cup of water and put it in the freezer. Evaluate all the stuff you have - sell all the stuff you don´t need - show no mercy.

I would be surprised if you could not sell stuff you don´t need for a couple of thousand, and cut out a monthly stream of at least $1.000 (family, not only you) that could go towards paying off crappy debt. If that is not the case with a $75.000 income, you probably have to make a bigger changes in your life. Where you live (area), how you live (house), cars you drive and so on.

Hey Shaun,

The first thing that I would tell you would be that you need to get on a budget. You need to know where every dollar is going every month. This budget needs to be written out every month. Once you figure that out, you can start paying off your debt, and I would say smallest amount to largest amount.

My wife and I are trying to get out of debt also, and we have about the same amount that you guys do, just more student loans, and less credit card. That $19K car loan that you have is probably a bit too much car for you, and I'd say to sell it. My wife and I had two cars, and we decided to sell one of them, and that REALLY got our Debt payoff rocking and rolling!

Also I'd recommend selling some crap that you might have around the house. It was hard to part with, but I've been selling my drumset on Craigslist, and I've made some decent extra money doing that and selling other items around the house. Last weekend we also had a garage sale, and we made over $700 getting rid of junk that we never used. The way I look at it, is I can always buy it again when I am out of debt.

If you want to follow my wife and I's Debt-Free Journey, we make YouTube vidoes of all of the things that we're doing to live with no debt. Watch a few videos, and hopefully you can get some ideas, and it might get you motivated!

Here's a video from how our last months went!

http://www.youtube.com/watch?v=GR3vSdCv_t8

Hope this helps!
-Lane

Before you commit - contact your credit card companies directly. Depending on the card company and your payment history, you can probably get them to give you a better rate. After you find out what the lowest rate is going to be, start looking for rollover specials to roll your debt to the lowest rate card possible. Just watch out for any fees or higher rates on rollover funds if the low-rate card company isn't offering lower rates.

This might allow you to re-balance your planned pay-offs and improve cash flow with very little effort aside from a quick phone call or email to customer service.

The other thing I think you might be missing is your mortgage. If I read correctly, you put 3.5% down on your house through FHA loan. If this is the case, you have most-likely have an extra PMI payment in that loan until you reach 20% equity. Depending on the value of your new home, this is also "extra" payments that will negatively effect your cash flow. You should be able to determine when this will fall off if you have an amortization table for your loan.

Given the immediate risks - one source of income (variable from what it sounds like), two children, and a new mortgage coming, your immediate risk is debt and this outweighs any future thought of owning a rental property. Saving up for the added debt of rental property should be the last thing on your mind. Wipe it off of the budget now and re-visit it in a year or two. If you hit your 10K safety-net funding during the year (or two), put any overrage towards your debt and revisit the idea of starting a rental property investment fund then.