Advice Please--Financial Life Story

[trying to be frugal]

Let me start by saying thanks for reading this! We financially Suck!
I think we do know for the most part what we are supposed to do we just haven't stuck to it in the past. Listing all our debt is a great first step for us. Let me think on that for a minute... I think we already made the first step. Eleven months ago we cut up every credit card and have not incurred any new debt.

Now I will try to make this as concise as possible...are you ready?

Three and a half years ago we bought an old farm house. We got into a bad interest only loan no money down, thinking we would refinance after we fixed it up. Then the housing market went belly up. Most of the credit cards you see in our sig went to the house. Plus we put about 15,000 cash into it. At the end of 3 years we were in more debt, no cash, could not refinance because it was worth 60,000 less than we paid. Our payment was high 1680.00 a month on a 198,000 dollar loan and it was due to adjust. To top this off my husbands pay was decreased by 20% by a mandatory pay cut across the board. Utilities were through the roof because the house needed new windows that we could not afford. In winter we kept the house at 62 and our bills averaged about 480 to 520 a month, we live in MN. We let the house go in April and we are living in an apartment now. No complaints there! Heat and water are free, yeah, we will be warm this winter. I'm not going to get all touchy feely about losing our house because I just want financial advice, but, needless to say it was hard on all of us! We have four kids and had to get rid of pets and kind of change our life up a bit, okay a lot.

Where we are at now is we cut all our cards up 11 months ago and joined a debt management program. 11 months later I was getting calls from cards about missing payments and nothing seemed to have changed as far as balances. We fought with them for about a week and we got all our fees back that were paid into the program. We then cancelled. I used that money to catch all the cards up to current status. NOW...here is the deal our interest rates will go back up to normal now that we are not in a program and our payments will go up. I have tried with a few cards to get on a temp hardship arrangement to lower rates and payments. They will not work with me because payments are now current. WHAT? I am telling them my husband pay went down, we lost our house and I want to get things arranged before I go into default with them. I guess that is insane because you have to be late before they work with you! So now what? Do I let them go a couple months so they know I don't have a lot of money and then work with them? Some of my interest rates will be 19- 23 %. Keep in mind my credit already now sucks!

So please take a look at my sig and give me some things to think about please.

[trying to be frugal]

Work Smurk---- Help me out here

[Greebo]

Work Smurk---- Help me out here

= 16 minutes

Sheesh, can't a guy take his lunch break?

[trying to be frugal]

= 16 minutes

Sheesh, can't a guy take his lunch break?

Hmmm I guess you can. Not to long though

[Greebo]

Credit Card Debt $17,504.01
Medical Debt total $ 1582.45
House Foreclosure Utilities etc. $ 2673.20
Mazda Credit $17,500.00 We pay 380 a month

Sell the car.

I don't care if its worth less than you owe - if you have to borrow the difference, but sell the car and buy a beater.

That's step one.

Two - what's your household income?

Three - are you able to make the minimum payments with your husband's reduced income? Evidently so because you got them current.

Four - are you on a written budget? Is it properly prioritized?

Five - the fact that the companies are likely to increase your interest rates doesn't change the fact that you owe the money, and if you have the money to pay them, you have a moral obligation to do so. However, paying them back is the LOWEST priority on your budget.

When they raise the interest rates, will you be able to keep the cards current? Cause if you CAN make the payments, you SHOULD make the payments. Not paying them to give the illusion of not having money you actually have would be something called "lying" at best and "stealing" at worse.

But - if you absolutely CAN NOT make the minimum payments and eat - either now or later after they jack up the rates, then you pay what you can, but you ALWAYS take care of your immediate needs first:
- food
- utilities
- rent
- transportation (Thats GAS/INsurance FOR A BEATER NOT A 400/month car loan!!!)
- clothing (essential only)

Everything else comes after that, so if you can keep 7 debts current and 3 debts you can't pay this month then you don't pay them this month.

What are you doing in the household to increase your income? How soon does DH start flinging boxes at UPS and how soon do you start waiting on tables?

You've got a real mess on your hands - it's taken a while to create the mess - it's gonna be a while before it gets cleaned up - but you CAN clean it up. You're just going to have to get really serious about it.

[ecgsmama]

This is my lunch break advice...

read, listen to, and implement whatever Dave Ramsey says.

He can help you a lot more than I can.

Good luck!

[trying to be frugal]

The car first... My husband has a job that he has to drive a lot and he has to pick up clients. He spends about 4-5 hours a day on the road and in the cities. He can not have a beater or for image and reliability he will not have a job if he does. They pay for the payment but the debt is still ours. My vehicle is paid for and is a beater already.

I just got a job working 15 hours a week. I make 10 an hour plus bonuses based on sales. It is all I can work because I homeschool 3 of our kids ages 15, 12 and 7. They have never been in public school and never will so that is unchangeable. Our oldest is 20 and already graduated 3 years ago. She lives at home and helps out and pays all her own bills. I also have a cleaning job that I do every other Thursday that pays me 125.00 a time.

I could struggle to do the minimums but I will never be able to pay them off with the high interest rates. I just want them to work with me on that. The only way we got them current was that the debt company gave us back all our fees for the year and we used that to catch them all back up.

We have a budget and we do not stick to it like we should. Obviously we NEED to!

[Thevail]

Can you put the credit cards on "hold" until you can pay them off. A friend of mine did that. They froze the account for 6 months so that she could pay off the debt at her current rate of interest .

She did that because she knew that sooner or later a late payment was going to blow her interest sky high. She had the money to pay it off at the cureent rate, but when her hubby lost his job she arranged this just to be sure.

[Greebo]

The car first... My husband has a job that he has to drive a lot and he has to pick up clients. He spends about 4-5 hours a day on the road and in the cities. He can not have a beater or for image and reliability he will not have a job if he does.

Fine - not a beater.
3 minutes on edmunds.com found me a beautiful looking Mercades-Benz E320 for $7,900.
Pick up a client in that and they won't care if it's 9 years old if he says, "Yeah, a beaut isn't it? And all mine - no payment!"

They pay for the payment but the debt is still ours. My vehicle is paid for and is a beater already.

What do you mean "they pay for the payment"? You mean his employer pays for the car and if you got a cheaper car the employer wouldn't pay?

I just got a job working 15 hours a week. I make 10 an hour plus bonuses based on sales. It is all I can work because I homeschool 3 of our kids ages 15, 12 and 7. They have never been in public school and never will so that is unchangeable.

Is there a problem with your local schools?

Our oldest is 20 and already graduated 3 years ago. She lives at home and helps out and pays all her own bills.

Is she paying you rent too?

It does sound like you're doing a great deal, mind you. Please don't take this the wrong way. I'm not judging, I'm simply offering my outside assessment.

I could struggle to do the minimums but I will never be able to pay them off with the high interest rates. I just want them to work with me on that. The only way we got them current was that the debt company gave us back all our fees for the year and we used that to catch them all back up.

Well they're not going to work with you as long as they think they're going to get paid - so if you seriously can't make the minimums, then you revert to the pay who you can and the rest can have fits - feed the family first.

We have a budget and we do not stick to it like we should. Obviously we NEED to!

You will not ever get out of this mess if you don't, I promise.

Money is made to be a slave. If you do not control it completely, it will leave you for someone who does. Master your money - it will love you for it.

[Greebo]

Also I'm not 100% sure, but I think if you "close" a card for future charges, they can't change the rate anymore. So you may need to call those companies up and lock it down from any future charges. Ask them if you do that, what will happen to your payments.

[trying to be frugal]

Not trying to be difficult just help me understand the car part.

Let's say we sell the car for 14,000 and we owe the bank 3500 how do we pay that. Our credit with a foreclosure is shot, we can't get a loan to pay the difference. Let's say in theory we could. How do we buy a 7500.00 dollar "Mercades" or Yugo for that matter? We can't finance that and we don't have the cash for that but he needs a vehicle. I was kind of thinking along these lines. Yes, we paid to much but our interest rate is only 4.9% which is good considering our credit. We have been paying for it for two years already. If we continue to take care of it and do all oil changes etc. it should run forever. Shouldn't we bite the bullet since we at least have a reliable car with a not to bad interest rate? We couldn't get another one right now. Am I missing something? Yes his company will cover the payment on anything but my problem is still the same.

[trying to be frugal]

This is my lunch break advice...

read, listen to, and implement whatever Dave Ramsey says.

He can help you a lot more than I can.

Good luck!

Thanks, I will look into his advice. Mostly snowball right?

[trying to be frugal]

Can you put the credit cards on "hold" until you can pay them off. A friend of mine did that. They froze the account for 6 months so that she could pay off the debt at her current rate of interest .

She did that because she knew that sooner or later a late payment was going to blow her interest sky high. She had the money to pay it off at the cureent rate, but when her hubby lost his job she arranged this just to be sure.

I will see--- thanks!

[Greebo]

Thanks, I will look into his advice. Mostly snowball right?

No, not mostly snowball. 14% snowball.

It just happens to be one of the longer early steps.

The debt snowball is only step 2 of his 7 step plan for financial success.

[trying to be frugal]

Is she paying you rent too? No--but she pays for food, clothes, anything I ask her to get to help out, car insurance, car payment, tags etc. We help her out in not paying rent because she is in a full time ministry and in school and she works for Allstate Insurance. It is our help to her.

It does sound like you're doing a great deal, mind you. Please don't take this the wrong way. I'm not judging, I'm simply offering my outside assessment. That is why I am here.