OK, I've been reading this site for a couple weeks now, and figure I'll go ahead and throw myself to the wolves, so to speak. I warn you, this is going to be the kind of graphic info that makes you cringe, frugality lovers and debt-free denizens of the forum. This will be long, too.
I'm 30. Bought my first house at 22 and rode the wave of climbing prices. Am currently in my third house. I'm a cubicle jockey for a telecom company. To be honest, in 2004 I was living high on the hog - discretionary income, could do what I wanted when I wanted, plenty in the 401k (started contributing when I was 20, still work for same company), the whole nine. 2006 was really the killer for me. Sources of extra income dried up (stocks, bonuses, etc) and then the decline...
The bad news now:
- Housing decline means my house is only worth $360k or so, when I have $390k financed. 5.25% 1st mtg, 8.99% 2nd, can't refi because LTV is upside down and i *do* have pretty good rates already. I can't sell yet because of the severe short position, and a short sale would put wayyyy too much on a 1099 at the end of the year, for me to be able to tackle.
- some $32k in credit card debts. 4 cards, the largest balance of which is $17k at 13.49% and I have NO IDEA how! (this card was paid off less than 2 years ago.) And my total balance to limit ratio is 78%. Bad.
- I thought it would be a great move to trade in my flashy sports car, bought in '05. I had put 19k down on it and it was still $600/mo for 72 mo. I could afford it *then*, but in '07 realized it was getting harder to handle. Let it go and bought an SUV for $15k. The bad news? Yeah, I had realized it would cost more in gas every month, but not DOUBLE. ouch. Half the car payment, double the gas? Not saving nearly enough monthly.
- I have $25k in two outstanding 401k loans - that's $300 a paycheck gone. And I found that one cannot use the vested balance in a 401k to cover loans on the same account.
- The absolute kicker? Basically at this point my income is less than my outlay each month. Some of that big credit card debt I know came from having to refill the coffers every few months to get the bills paid. My significant other makes a very small amount of money, but still gives me several hundred dollars a month as "rent" because she doesn't expect to live with me for free.
- Oh, and while I used to have a credit score in the mid-700s, it's now down below 700 because I've been trying to find ways to get this shored up.
The good news, and yes, there is good somewhere here:
- I am chipping away at every "set expense" I have.
*I switched car insurance companies 6 months ago, saving me $40 a month then, and just found an even better rate this week, switched again and am saving another $50/mo now.
*I rarely use my landline and it was $60/mo. I called to cancel and they dropped it to a 10.99/mo plan so I could have service when I needed to.
*I worked it out with my job to telecommute 1 day a week, thus saving me 20% of mandated driving. My commute is an hour each way in traffic, so this helps on gas.
- Since my girlfriend is in the Army, we can shop for groceries at the Commissary. We stacked one of our checkout receipts against a simulated Peapod order (giant food's online service) and we spent $130 less for the same items.
- I use a two-account system for ensuring the bills get paid; the bulk of my paycheck is DDed into savings, then on the 1st a set amount is moved from savings to ckg, and the bills go out via online autopay. I also recently moved both of my primary accounts (where this all happens) to ING Direct, as the interest rates at BoA are a joke. (the problem here is as stated above, though, the outlay is greater than the monthly income, so I have to keep adding oil to the leaky engine)
- As soon as I am able to get started in earnest, pretty much every single thing in my home that I don't need is getting sold.
- EDIT: Forgot to mention, I round all payments up to the next $100. So for instance my car payment should be some $270, I pay $300.
The objective, obviously, is to get rid of all this crap. As soon as it's in tip top shape, I'm selling the SUV and getting something even more frugal for the bottom line, for example. This year is The Year I Clean Up My Own Mess. Hell, I decided to lose some weight, like everybody does each new year.... but unlike most, I'll bet, I've already lost 10 lbs in 2008. This year I am not accepting excuses for myself. I know the biggest culprits are usually runaway spending on frivolous items, but there's only one frivolous item in the lot and it was $2k. The rest, no real idea but I know it's just a result of my not paying attention.
- Is there a bank in the world that will take on my $32k on maybe a 0% balance transfer card? With all the finance charges I'll never get on top of this mess.
- Is there any way at all to have my 401k eat its own loans and leave me with whatever is left vested? In the fund, not in cash. (and I don't qualify for any of the hardships they count, and even then i could only get about 8k out)
- Anybody wanna buy a truck? =0)
Thanks for reading, I know it makes you want to pull your hair out. Me too.
Last edited by jammadave on Wed Feb 06, 2008 12:23 pm, edited 1 time in total.