Need Help Catching Up, suggestions welcome

[JennaC]

Ok, we'll start of by saying that I handle all finances in my house and my husband is pretty clueless. He does though like to have alot of "toys" and I have a hard time saying no, so although he won't buy anything himself, if he bugs me, I'll usually do it. That's why we're in this mess. Also if everything is being paid he doesn't concern himself with interest rates or how long it takes to pay things off, he only looks at monthly payments.

Here is our income:

Mine $625/wk net after taxes and health insurance - I'm salary so this never changes
His $1054/bi-weekly. He is on Workman's comp and will be for several more months because he's having major back surgery at the end of the month. He's already been told he can't go back to the same type of work so we don't know what's going to happen yet.

Total income:
$4608/month

Debts
1st Mortgage - Balance $156K- 6.75% 30 Year (26 left) Monthy payment with insurance and taxes - $1450

2nd Mortgage - Balance $36K - 5% - 10 year (9 left) Monthy payment $412 (this is a private mtg through my company because the original 2nd used to purchase the house was 15yr balloon at 12% so my boss payed it off and I'm paying them)

2005 Highlander 18month left on 60 month term 2.9%, balance $8K Payment $430

2008 Yaris 2.9% 48 month, payment $318, we've only had this a few months (side note, we traded in DH truck because of gas only for him to get hurt and not be able to work right after purchase but value dropped so much we couldn't get what we owed even 2 weeks after purchase)

Capital One 0% until october then 13%, balance $3500
we used this card to buy a side by side ATV that we need around our property because our 4 wheeler died and we no longer had a truck

Household bank 0% until January balance $3900
I used this to buy an above ground pool this summer, I didn't really want to but DH was going to be home all summer with the kids and we couldn't afford a vacation or anything. Only $2K was the pool and stuff for it, I used the rest on groceries and stuff

Juniper balance $800, we pay this off every month, DH uses this one for gas and stuff he buys because he doesn't ever know how much is in the bank and overdraws the account

The minimums are very low on all CC's but I always pay several hundred on each

Student loan $3700, this isn't due because I'm still going. This was for my first year, my company now pays for my schooling.

Car insurance is $1200 a year, payed quarterly

Electric is $300-400 a month for two bills (my mom and Stepfather live in an in-law apt. they don't pay anything because my mom moved their to take care of the kids while we worked. The 3 older ones are now is school, but she will have to watch my 2 year old when/if my husband goes back to work)

Food is running $150/wk right now because we bought a pig and half side beef right before he stopped working but it will go up when I have to start buying meat.

Phone is $65 month and I can't get anything cheaper. We live in a rural area so no DSL/cable/VOIP. We also live in PA but work in MD and both cell phones are Baltimore numbers as well as all family/friends so we have unlimited long distance and the only service available is Verizon.

Cell phones are payed for by our companies as well as my verizon laptop card is payed for by my company.

I also have a company car and gas is paid for. When DH works is $100 a week but I won't count that right now.

We also pay $100 month Direct TV, but with DH, Mom, and step dad all home, all day, it is watched all day. My mother has said that when her husband get pension starting next month they will pay their electric bill. She gets small pension and social security but that pays all her personal bill from before and food and what not.

My DH smokes and I hate it but I can't make him quit. I did make him start rolling his own though and it's running about $30 every 2-3 weeks instead of $50/wk.

Even when adding all these up not including the CC I come up with about $3970 a month. We should have money left over but we never do. I do though pay hundreds to the CC when I can. I also get quarterly bonuses of between $1500-2500 before taxes. The last two though I had to use for household expenses because there were some issues with DH and his WC and he didn't get a check for 4 months. He also required surgery not related and we had to pay our deductable of $2K for that.

Oh a we both have to take meds everyday so it's $60/month for prescriptions.

We also have 4 kids 7, 6, 6, 2. I went and got backpacks for $5 each yesterday, and shoes for all four for $42 at payless.
ETA: we have oil heat that ran $600 each time they came, which I think was 3, so I have to consider that. We do have a wood stove, but wood is $150/cord and with DH having surgery again I don't know how well he can handle all that goes with that, and I'm not home most of the day.


OK all comments welcome.

[Russ]

1. Stop charging.
1. get everyone on board with debt reduction.
1. start tracking expenses and find out where that money is going.

somebody will go into more detail than I, but the first thing I would do is pay minimums on all but the smallest bill. Start knocking out that balance first and then roll that payment into the next lowest.

Since you have a company car, can you get rid of the Yaris?

[JennaC]

I'd love to get rid of the Yaris, but I'd have to lose about $5K to get rid of it. My highlander already has 110K miles on it. I don't want to put alot more on it because it's the only thing that fits us all. When DH goes back to work, he'll be racking up about 800 miles a week, so buying used doesn't make a lot of sense.

[JennaC]

Forgot to add, I'm putting $50/wk in ING for saving right now. We used to have savings but spent it all during the couple months he didn't have a paycheck.

[Greebo]

First of all, thank you for sharing this with us - this had to be difficult for you!

I assume you've added up all the costs and realized that you are running in the red right now?

Ok, we'll start of by saying that I handle all finances in my house and my husband is pretty clueless. He does though like to have alot of "toys" and I have a hard time saying no, so although he won't buy anything himself, if he bugs me, I'll usually do it. That's why we're in this mess. Also if everything is being paid he doesn't concern himself with interest rates or how long it takes to pay things off, he only looks at monthly payments.

This needs to change before you can make any progress.

Having reviewed your post, there is a very important message you need to convey to DH. I'm going to be completely frank and blunt here. This will hurt to hear, but it is truth, and you didn't post this, I think, to be lied to about your situation. So here it is:

"We have sold our future to pay for our present. We've sold our retirement and our kids college education to have toys.

At the rate we are going, we have no financial future."

This is the message to convey to hubby. If you can not get him on board, you will find fixing this mess nigh upon impossible. Two oxen pulling one cart in opposite directions goes nowhere. And wrecks the cart.

Only once you're both on the same page is recovery likely. As long as DH wants to buy new stuff, if you're giving into him, managing the money and giving him what he wants like you are his mother instead of his wife - and by that I mean "life partner in the business of marriage" you're going to find it nearly impossible to make any progress.

The two of you both need to start being responsible for your money, together, as a joint venture.

You need to stop using credit cards, and get on a CASH BASED budget.

You need to slash and burn, go into scorched earth mode. You need to start selling stuff - so much stuff the kids think they're next!

ATV: Don't need it - use the Highlander. Don't look at me like that, I own one and I've hauled everything including Drywall on or in it. It's a TRUCK. Put a hitch on it, get a cheap trailer, sell the ATV and deal with it getting dirty.

NEVER buy a new car again! Not till you have a net worth of at least $1,000,000.

Sell the pool. That thing is gonna cost you a few hundred a year in chemicals and maintenance alone. Trust me, I know, I used to have one - 20+ yrs old too.

I don't know what else you've got, but sell it.

No dining out. You don't see the inside of a restaurant unless you work there.

No vacations until you're debt free but the house and on a cash basis for everything.

If you're making contributions to retirement right now - stop - you're already burning your future with the debt you've got - time to stop the bleeding!

You don't know what Hubby's income is going to be going forward - this should be putting BOTH of you in red alert, omg we've got to do something now mode.

Hubby's home watching the kids, which means you can get a 2nd job.

In order, I recommend the following:

1) Get on the same page.
2) Develop a written budget that is CASH BASED - no credit cards. Your top five priorities for payment are: 1) Food, 2) Lights, 3) Essential clothing, 4) House, 5) Transportation costs. You pay those first every month. If you run out of money before you run out of month, these get paid first, and I don't care how much the credit card companies pitch a fit.
3) Get current on everything if you're behind.
4) Save $1000 as a baby emergency fund
5) Start paying every single extra dollar you can towards debt elimination, starting with the lowest balance debt first. Pay minimums only on everything else. When the first debt is gone, add it's old minimum payment plus what you've been paying to the next largest debt. This creates a debt snowball.
6) Once everything is paid off but your first (and maybe your 2nd...maybe), save up 6 months of expenses (not income, expenses) to fully flesh out your emergency fund.

But first and foremost is GET HUBBY ON BOARD!

You need radical change, and you need it yesterday.

I hope this hasn't come across as harsh - it isn't intended as such - but it is intended to be blunt and also a bit scary.

Now - the good news is - you're by no means hopeless. You have what it takes to turn this ship around and start building a sound future, but you need to start right away!

If you and DH commit to change your lifestyle, you can do this together, and the Village will be very happy to offer counsel and support!

[McD]

Here's what jumped out at me right off-hand:

Okay, I didn't see a few things on your list of expenses. What do you pay/budget for water, sewer, trash pick-up, car insurance, hair cuts, etc? Are your property taxes and house insurance included in your mortage payment?

First thing, stop charging and start planning. You are left over with nothing at the end of the month. Right now, your intentions are good--you are wanting to pay your cards down, get out of debt, etc. but you don't have a plan. Not having a plan when it comes to debt reduction is like a fart in a wind tunnel---all over the place and kinda stinky. I know this, because I've been there.

You said dh uses one card for gas and stuff b/c he overdraws the checking account. It has a balance of 800$. That's a LOT of money to be spent on 'gas and stuff'. Either switch him to cash or a pre-paid cash card and when the money is gone it's gone.

I figured it up like this, your net income is $4608. I added up the cost of both your mortgages, your two car payments, your electric bill (calculated this on the high side @ 400$), your grocery total for the month, phone, t.v., cigs,and prescriptions. That total comes to $3865. I subtracted the net income from total expenses (not including your credit card minimums or the card you pay in full every month) and it only leaves you with 743$ a month. Are you saving for your irregular expenses like license plate renewal, etc?

[Greebo]

Not having a plan when it comes to debt reduction is like a fart in a wind tunnel---all over the place and kinda stinky. I know this, because I've been there.

ROFL that one made me laugh out loud!

I figured it up like this, your net income is $4608. I added up the cost of both your mortgages, your two car payments, your electric bill (calculated this on the high side @ 400$), your grocery total for the month, phone, t.v., cigs,and prescriptions. That total comes to $3865. I subtracted the net income from total expenses (not including your credit card minimums or the card you pay in full every month) and it only leaves you with 743$ a month. Are you saving for your irregular expenses like license plate renewal, etc?

One or both of us messed up - I went thru the numbers (including parsing the ones w/ vague figures like "couple hundred a month" w/ a calcluator and came up with her being in the red right now...

[McD]

Make your husband look at the big picture.

I know you said your minimum payments are low on your credit cards and that is because the credit card companies WANT to keep you in debt. Right now your Capital One Card has a balance of 3900$ on it. THe 0% interest runs out in October and if you can't pay it off in full before then, they will most likely charge you back-interest on that balance (usually how 0% offers work). So what happens in October when your interest rate goes up to 13%?? Let's assume your minimum payment is roughly 100$. According to the calculators at bankrate.com if that's all your paying, on that balance it will take you 213 months (4 YEARS!) to pay off that debt. Now I'm going to tell you something that will make you sick. Guess how much Capital One would make off you in interest? $2,803.47.

Now..what I would do is go to your dh. Ask him, what he would do with 3K? After he is done listing all the ways he could spend that money and wants to know why you ask, calmly tell him, "Because if something doesn't change, that's how much we'll pay in interest to Capital One."

That's a wake-up call to him. Lots of people don't see it that way until it hits them in the face.

I wish you the best of luck.

[knitnmom]

I agree with everything Greebo said.

Just so you know, my husbands parents are like that and have spent their future so they can keep up with the Jone's and have new stuff. They are retired and have NOTHING! They are in their 70s and 80s and are worried about finding work to pay their bills. They do not listen to any advice and continue to worry and spend.

That right there scared us straight! We know we don't want to end up like that and be a burden to our kids. I actually started a small ING account with their name on it because it stresses me out when they call and need money for something.

I really hope you get your hubby on board and headed in the right direction.

[JennaC]

We are not in the red, although we're close. We have well and septic so nothing there, it's 220 every 2 years to get the septic pumped. Trash is $80 every 3 months. The credit card with the 800 didn't get paid last month because I sent the doctor $1550, because DH is having surgery with him again end of the month. This one is covered by Workmans comp but the other was something else. We don't eat out, because DH hates it so no money there. I wanted to get a 2nd job but he says no. He is home with the kids by himself from 8am-6pm. When I get home I want to spend time with them. They are young and I feel like I already miss so much of their childhood being gone all day at work, I'm not willing to give that up for a 2nd job. We have at least 6 months of Workmans comp until they decide what they do with him. It could be retraining or settlement depending on the outcome of his surgery and what we decide. I'm hoping to have everything paid off by then. I'll probably get $2500 3rd quarter bonus and I have recieved $5k for the past 3 years for Xmas bonus.

[McD]

ROFL that one made me laugh out loud!


One or both of us messed up - I went thru the numbers (including parsing the ones w/ vague figures like "couple hundred a month" w/ a calcluator and came up with her being in the red right now...

Thank you. I thought you might like that analogy.

I didn't include minimum payments on the credit cards. I'll show you my math real quick--let me know if I'm off.

4608 Income
-
1450 1st mortgage
412 2nd mortgage
430 car 1
318 car 2
400 electricity
600 groceries (150X4)
65 phone
100 t.v.
30 cigarrettes
60 prescripts.
=
743

I might have missed something.

[Greebo]

income:
$4608/month

Debts
1st Mortgage - $1450
2nd Mortgage - $412
2005 Highlander $430
2008 $318
Juniper balance $800,
The minimums are very low on all CC's but I always pay several hundred on each - $200 estimated
Electric is $300-400 a month
Food is running $150/wk - $600/mo
Phone is $65
We also pay $100 month Direct TV
My DH smokes about $30 every 2-3 weeks : $60/mo
$60/month for prescriptions.
oil heat that ran $600 each time they came, which I think was 3 - $150/mo

On the horizon
Capital One 0% until october then 13%, balance $3500 - WILL BE about $125, if my math is right, but not counting it yet) Bad

Household bank 0% until January balance $3900 - (WILL BE about $140 if math is right, not counting yet) Bad

Student loan isn't due because I'm still going. Bad

My mother has said that when her husband get pension starting next month they will pay their electric bill. She gets small pension and social security but that pays all her personal bill from before and food and what not. Slight improvement


Don't understand if this is good or bad
I also have a company car and gas is paid for. When DH works is $100 a week but I won't count that right now.

So my total, after parsing this more carefully, is: MINUS $437/month.

Got it - I included "Juniper" (Gas and stuff...oi vey), min payments, and heating oil.

[McD]

Gotcha Greebs.

[Greebo]

What has me really scared are those 0% cards coming up. That's gonna be another $250+ a month these folks don't have.

[Ms. Clear]

I would sell the ATV and swimming pool. You need money. Those things are worth money. If you don't want to get a second job, I don't see many other options to generate more funds. Are there other things you can sell? Extra furniture? Could you hold a giant yard sale?