Rough Calculation of our situation

**SeekingAnswers** · 01-22-2011, 11:31 PM

Ok, the wonderful new friends on this forum have mentioned that I should present our current situation to receive suggestions, thoughts, and advice to begin our process. I posted this in my other thread, but thought I would start a new thread to make it more focused. (Hope that's ok for the moderators?)

Hubby and I sat down and did a real quick, REALLY rough calculation of our situation which breaks down (very roughly) as thus:

Estimated Monthly Income - $4600

($2157 of that total is absolute required household expenses)

Estimated Monthly Outflow - $5116
Estimated Total Debt - $74,000 (gasp)

The total debt includes credit cards, loans, etc.

We quickly estimated some areas where we could cut costs and basically live on pasta, potatoes, and ZERO luxuries or extra amenities and I know we can find other areas to cut, but the impact would barely be a drop in the bucket (if that!).

Hubby still believes the answer is bankruptcy, but I am seeking "wisdom from the masses" to find other answers before making that final decision.

WHERE DO WE START ??!!

WHERE DO WE GO FROM HERE ??!!

I'm hoping for some helpful direction from those who have gone before us to face this seemingly impossible and helpless challenge.

**sunshine** · 01-22-2011, 11:37 PM

So, you're behind $516/month? Not a huge amount. . . . although I'm sure it seems huge to you, right now.

If you post a more detailed budget, we might be able to help you find places to cut.

Groceries, utilities, ect. . . .

**CarolBee** · 01-22-2011, 11:43 PM

I can't say I've been where you are, but I have been in a similar situation and the one thing I can't stress enough is you are not going to get out of this overnight. I know it looks like it will be a long haul, and it will be - sending hugs your way, and hoping you are able to find a way to ease your situation.

**SeekingAnswers** · 01-22-2011, 11:47 PM

Thank you EVERYONE. I will post a more detailed budget tomorrow after I get some sleep and can think a little clearer. Thank you. I don't expect to accomplish much overnight other than getting the ball rolling, however, we can't keep operating in the negative much longer or things WILL be in dire straights.

THANK YOU ALL AGAIN for jumping in to help however you can, even if it is only just the hugs. They help a GREAT deal and make me not feel so alone and desperate any more.

**sunshine** · 01-22-2011, 11:51 PM

When I started on this frugal journey we had over $130,000 in medical debt alone. . . plus house, plus credit cards, plus car loans. . . . on a salary of less than $50,000/year.

Came a time when I put a preemie baby in dish towel diapers with bread wrapper plastic pants - and ate "weeds" from the yard, picked up aluminum cans to have money for the car to get the baby to the doctor. . . .

I know desperate. . . I know panic. . . I know the feeling that the whole world is crashing in on you. . . .

((Hugs)))

**SeekingAnswers** · 01-22-2011, 11:57 PM

Originally Posted by sunshine

When I started on this frugal journey we had over $130,000 in medical debt alone. . . plus house, plus credit cards, plus car loans. . . . on a salary of less than $50,000/year.

Came a time when I put a preemie baby in dish towel diapers with bread wrapper plastic pants - and ate "weeds" from the yard, picked up aluminum cans to have money for the car to get the baby to the doctor. . . .

I know desperate. . . I know panic. . . I know the feeling that the whole world is crashing in on you. . . .

((Hugs)))

All I can say to that is WOW! Brings tears to my eyes to think of ANYONE suffering so horribly!

Did you file bankruptcy and / or how did you climb out of THAT impossible situation? Sometime when you are able (and if you're comfortable sharing), I would like to hear your story, to learn from your experience.

Thank you and GOD BLESS YOU!!

**sunshine** · 01-23-2011, 12:03 AM

No bankruptcy. . . just a VERY detailed, tight budget. . . lots of getting only needs instead of wants. . . . etc.

We're still in debt (health issues have sidelined our rapid progress, but we're still decreasing the debt load).

Somewhere on here is my story from several years ago -- I'll see if I can find it and bump it up.

**bumplett** · 01-23-2011, 12:14 AM

Seeking ~ I mentioned in the other thread, but want to mention again... you expressed an interest in Dave Ramsey's system of doing things - please go to your local library & check out the books - actually, all the frugal themed books you can get your hands on - it will make a huge impact on the way you view the situation. You are not alone.

I agree with the detailed budget, not because we are totally nosy, but because if we can see it, we can pick it apart in ways that you may not see -

Sometimes, it takes a different set of eyes.

You can DO this

**kita** · 01-23-2011, 12:54 AM

One of the ways to look at this is that your budget is only 10% off. Your income is pretty good although any way you can increase it is helpful.

**SeekingAnswers** · 01-23-2011, 05:05 PM

Ok, I hope I'm doing this right. Here goes with a breakdown of our expenses. I'm terrified to do this, but I know it's a big step toward helping us begin the process of climbing OUT of this mess.

Average Total Household Income - 4600
Average Monthly Tithe - 460
Rent - 400
Electric - 155
Gas (Heat) - 160
Water - 70
Cable (Reimbursed 100% by dh's company) - 100
House Phone - 36
Cell Phones - 200

one acct soon to be canceled w/out penalty soon as it expires

Home Insurance - 50
Car Insurance - 116
Groceries - 400
Jeep Fuel (my work car & main vehicle) - 200
Truck Fuel (dh's vehicle) - 70

CURRENT DEBT (secured & unsecured)
(combined debts for both of us prior-to and during our marriage)

Monthly Payment / Balance

CC - 91 / 750 @ 29% APR (ouch!!)
CC - 114 / 6923 @ 13% APR
CC - 247 / 6687 @ 15.99% APR
CC - 300 / 8239 @ 9.9% APR
CC - 499 / 21,104 @ 6%
CC - 50 / 400 (have to get % from dh)
CC - 50 / 400 (have to get % from dh)

Loan - 136 / 1910
Loan - 289 / 11,556
Loan - 200 / 2800
Loan - 50 / 400

Car Pmt - 335 / 10,969
Hospital Bill - 50 / 400
DH's Internet Website Services (home biz) - 143 / 1,000
State Taxes Settlement (from dh's previously closed biz) - 50 / 400

We figured we were spending an average of 260/mo in restaurant meals alone, so we agreed that has to end IMMEDIATELY.

For you expert money-crunching guru's out there, let me know what else you need broken down further.

**sunshine** · 01-23-2011, 05:20 PM

How many are you feeding on $400/month and where do you live (generally speaking, as some regions are more expensive than others). We feed 3 of us, 2 with special diets on about $250/month.

If your dh works from home - is his $70/month for gas able to be cut back?

How soon will the $200/cell phone bill go away?

With cutting out the dining out amount and the cell phone bill - you're 1/2 way to your negative amount already! You have 2 bills that are close to being paid off (the two that are $400 remaining amounts). . . so in just a few months with a little endurance and sacrifice, you could be in the positive again and rolling along a nice snowball on the debt reductions.

Are you expecting a tax refund this year? I ask because you need an emergency fund in place - so you don't resort to more debt when you have a car repair, doctor bill, etc.

**Ramona** · 01-23-2011, 05:41 PM

Can you get the credit card balances transferred from the high % cards and put it all on the 6% card? Or something similar?

**sunshine** · 01-23-2011, 05:43 PM

Financial Peace University | PSFUMC

this site has lots of Dave Ramsey's forms, to print for free.

**SeekingAnswers** · 01-23-2011, 05:55 PM

Originally Posted by sunshine

How many are you feeding on $400/month and where do you live (generally speaking, as some regions are more expensive than others). We feed 3 of us, 2 with special diets on about $250/month.

Live in Pennsylvania. That number actually includes household goods INCLUDING food - like Cat Food, Litter, Basic household goods like cleaning supplies, toilet paper, paper towels, soap, shampoo, toothpaste, etc. etc. Our food is included in that.

If your dh works from home - is his $70/month for gas able to be cut back?

It actually takes around $70 to fill the entire truck tank, which is why we don't really drive it unless necessary because gas is so expensive. In the winter he tries to keep it at least half-filled because the trucks sits and it's not good to leave the gas tank empty in the cold temperatures.

How soon will the $200/cell phone bill go away?

That $200 actually includes an account for dh's teenage son who no longer lives with us. We had taken away his phone privileges a long time ago for behavioral problems, but now that he is gone, we have to wait for HIS account to expire so we don't have to pay the ridiculous early-cancellation fee before the 2-yr contract is up. We calculated the monthly cost compared to the total penalty fee for early cancellation and it was cheaper to just keep paying by the month until we can cancel the account. With all the additional gov't charges tacked on to cell phone accounts, that will reduce our bill to around $150 (+/-). DH required to use smart phone for work and pager purposes.

With cutting out the dining out amount and the cell phone bill - you're 1/2 way to your negative amount already! You have 2 bills that are close to being paid off (the two that are $400 remaining amounts). . . so in just a few months with a little endurance and sacrifice, you could be in the positive again and rolling along a nice snowball on the debt reductions.

I forgot to mention that most of those high-balance, high-interest CC's are closed and that the APR % rates actually dropped (finally) only recently after completing our first year of the payment plan for the closed cards. Most of them were in the 20's and 29's % APR, which was killing us! I kept a few of the lower-interest, lower-balance cards open for absolute emergencies, but have barely touched them for the last year.

Are you expecting a tax refund this year? I ask because you need an emergency fund in place - so you don't resort to more debt when you have a car repair, doctor bill, etc.

I completely agree about an emergency fund, however, we're operating so far in the negative, that any refunds we get this year will be tacked back onto our debt..... at least for this year.

Thank you for the thoughts and questions. Please keep them coming.

**SeekingAnswers** · 01-23-2011, 05:58 PM

Originally Posted by Ramona

Can you get the credit card balances transferred from the high % cards and put it all on the 6% card? Or something similar?

I forgot to mention that most of those high-balance, high-interest CC's are closed and that the APR % rates actually dropped (finally) only recently after completing our first year of the payment plan for the closed cards. Most of them were in the 20's and 29's % APR, which was killing us! I kept a few of the lower-interest, lower-balance cards open for absolute emergencies, but have barely touched them for the last year. None of the currently open cards will allow me any balance-transfer options because we have been late on one or more of the payments when we have to juggle payments from one month to the next.