Help me to pay down my debt, please

[EmilyD]

I am starting this thread in response to another thread to help give me suggestions on ways to become debt free.

Source of income: dh's paycheck (at this time I am not working)
Amount of monthly income: 1425.00 x 2 gross about 1000 net
Overtime: usually 20 hours a check (I don't include this in the budget) With the 20 hours a check overftime he gets what he should make before taxes ... about 1425 take home.

House payment: $489.00 per month (I pay $500.00 per month) 6.35%
Beneficial: 11,401, min. 274.00 I pay $350.00 21%
Citi: $11,030. min. 388.97 I pay $400.00 prob around 21%
Household: 1033.00, min. 15.00 probably 21%

Heating gas: level $60.00
Electric: $60.00
Cable, Internet, phone: 122.00
Car insurance: 77.77 per mon.
Sewer $17.00 per mn, paid quarterly (54.00)
Trash $17.00 mn paid quarterly (54.00)
City Water: 17.00 mn (54.00)

Gasoline: 200.00 per month
Allowance: 200.00 per month (dh cigs, my spending)
Groceries: 400.00 per month (200.00 per check)

Yearly expenses: not negotiable)
$155.00 to ancestry.com
$50.00 year to xbox membership
30.00 for dh's fishing license
Tags: 150 on mine 25 on dh's
Oil changes:
30.00 a year on dh's
$120.00 per year on mine

Explanations:
Taxes and insurance on the house are included in the payment.
We have one car not financed, only driven to work.
Health insurance premiums are taken out of check before we see it.150.00 every pay check)
We eat out several times a week and that usually comes from the grocery money or my spending money.
We have 1 cat, 1 dog, 2 birds and some fish.

Christmas and taxes are usually taken from the 2 extra paychecks a year.

[Greebo]

Taxes as in income taxes? Or some other tax?

[Michelle]

I would cut back your allowance and re-consider getting rid of the Xbox subscription and the ancestry.com membership.

I would also ask the CC companies to lower your interest rates. 21% is wayyyyy too high.

Will keep looking. Good luck

[Michelle]

Another big one I see would be to cut the eating out. Making meals from home is much less expensive.

HTH

[EmilyD]

Thanks Michelle!

Further explanation:
dh smokes and it costs $55.00 a check for his smokes .. when I quit, I was able to save that money and use it for my allowance .. I am not willing to give up mine if he doesn't give up his. *enough said*

Basically the ancestry and the xbox are the same. Ancestry is my only hobby .. I don't buy $100's of dollars of crafting stuff or go to movies (we might go to 4 a year) We don't drink or party or travel.

I have asked, they won't. We are 6 years into bankruptcy.

[EmilyD]

Yes, taxes as in income taxes. This year we didn't have to pay any. The money went toward the trip I took when my dd22 had her baby.

[Greebo]

Do you expect to pay taxes on 2008, and how much do you spend on xmas each year?

[EmilyD]

No, I don't expect to pay taxes unless they get us for the extra they paid us this year.

The amount that I usually figure on for Christmas is 400-500 dollars. If the kids come home, it is always more., so say $500.00 That's for 3 kids, 3 spouses, and 5 grandkids, plus us.

[Michelle]

No, I don't expect to pay taxes unless they get us for the extra they paid us this year.

The amount that I usually figure on for Christmas is 400-500 dollars. If the kids come home, it is always more., so say $500.00 That's for 3 kids, 3 spouses, and 5 grandkids, plus us.

Can you make homemade gifts? Ask people if they'd like to draw names (at least for the adults)?

When we had your amount of debt, we cut wayyyy back and only bought gifts for my kids & my mil. At first Dave balked at giving up his Xbox subscription. I was a bit resentful, but I stopped buying my hobby stuff. I understand that you don't want to sacrifice because your dh won't, but I would do it for the "greater good". (Eventually I was able to convince Dave to give up his Xbox subscription).

[Greebo]

First, thanks for posting this so quickly.

Ok- income - I agree with not using OT in the base budget. So net 1k per pay, that's 26,000 per year, or $2,166 per month on average. When is your next 3 pay month? A lot of ppl will find August as a 3 pay month, if this includes you, you're in luck, cause otherwise it'd be tight for a few months.

Ok - you are in a situation that is going to require change on your part to get out of. Things to cut:
1) Eating out. Beans and rice, rice and beans, and you don't see the inside of a restaurant unless you work there (to quote Dave). Get that grocery bill down to $250/month. For 2, you should be able to do this. $300 tops, I think.
2) Spending - if you can cut back on personal spending, please do. I know, $25/wk isn't much.

Here's the problem - in a 2 pay week your net income is $2,000 but your expenses paying the minimums comes to about $2400 a month. Now if hubby always gets 20 hrs a check, then you're in much better waters. $2850/month less $2400 = $450 extra. More if you can cut back groceries and spending. So I'm going to use $450/month as your snowball.

Since August should be a 3 pay month, #1, that is an extra $1,425. Your EF is funded - over funded in fact, for now. Stop adding to it. You have enough "murphy money" for an emergency, so lets direct all you can to debt.

Start by only paying the MINIMUMS on everything, EXCEPT Household. If August is a 3 pay month, you can knock out Household THIS MONTH, and have $392 left to put onto Beneficial, all from that extra paycheck. Since all three cards are around 21%, it doesn't matter mathematically which you pay off first, but if you pay off household, you've killed a debt completely. Take the remaining $392 and save that for Christmas. That's all you get to spend this year.

I'm going with Citi as #2 simply cause they have the higher minimum payment. The minimum was $388.97. Add to it the $400 you should have left over from hubby's OT. Now I'm thinking your Citi is actually 21.99% because that would make the interest $202 and the principal about 165. If you could pull your last statement from citi and give me teh rate from it, it would help, but anyway... Pay $400 + the 388 minimum for 788 this month and every month thereafter. In feb, which I think will be the next 3 pay month, put the entire extra paycheck + the usual 400 + the minimum to citi. Again in January and again in July. Do this and in 17 months, Citi is paid off.

Now take the 400 plus citi's 388 and the 288 for beneficial to make nearly $1000 a month. Since you're already paying on beneficial, you're about 8-10 more months from paying that off.

So - IF you will scrimp and put every penny you can to debt freedom, you are 2 years from getting completely out of credit card debt. With interest rates of 21%, there is NO point in investing right now - so every penny goes to paying off debt. Its a hard road ahead, but as long as you refuse to take on any more debt, in 2 years, DH can cut out overtime, and you can have $600 a month you can start putting towards retirement.

Now as for retirememt - by removing debt, we've lowered your 2 yrs from now expenses to $1,600 a month or $19,200 a year. In order to live on your retirement investment, you need enough earnings to keep up with inflation and pay expenses. Figure on living on 6% while making 10 in good mutual funds. (Be conservative) To live on 6% you need 6% to be 19,200 a year. That means you need $320,000 in retirement investments. Putting $600 per month into retirement at 10% you need to do that until August of 2025. You said you were 52? That puts DH as working until about 72. If Hubby works 10hrs wk overtime for 2 more years, that'll knock off a year. Obviously the more you can put away, the better.

Plus, in your case you can PROBABLY count on social security - though I don't know for how much it will be. If its $1,000 a month (wild guess), then you only need another $7,200 a year to live on. At 6%, that's $120,000, which at $600/mo to retirement is only ten years off.

Will it be a glorious retirement? No - but anything you can do to up the income, pay off debt faster, and start saving sooner (once debt free otherwise you're fighting yourself) will make it better. If DH keeps on the OT for 3 years, for example, then by end of 2018 you can have 145k saved.

Oh - you wont be taxed on the rebate this year. That was a refund.

[nuisance26]

~Here's an easy to use debt snowball calculator: http://www.whatsthecost.com/snowball.aspx?country=us ~

[TexasPeanut]

I'm sure you'll get alot of responses and hopefully some good ideas to help you out. But I'll take a stab at it on first glance.

Your husbands income, unless I missed something entirely, on regular pay at $2000 a month take home, with your monthly expenses you pay, you are short by $435.77. How are the expenses paid on regular pay if his overtime is not added into the budget?

Including his overtime with the expenses you make that you listed you have a monthly surplus of $415.23. Where is that money going?

(I did not factor in your yearly expenses into the above only monthly)

The mortgage payment, I do not know your mortgage company but with mine if I want to pay extra I have to write a separate check, and state on the check that the extra amount is for principle only. Otherwise it just gets used on the interest. Please make sure the small extra amount you are sending to round up to $500 is in fact being taken off of your principle and not the interest otherwise it's not doing you any good to send that extra amount right now.

The grocery budget...does that include all household, bathroom, personal and pet needs as well? If not then $400 a month might be a bit much for 2 if it's just you and your husband just for food, but that would seem closer to reasonable if you include all of the above mentioned.

Stop eating out so much. Hard to do yes, but it cost far more than you may realize.

Utilities seem not only reasonable but downright low to me (I'd kill for a $60 electric bill, I'm facing the $300 monsters now)

Why such a drastic difference in costs between your husbands and your cars oil changes? If you are getting it done at a shop or dealer and it's costing $120 have your husband do it instead.

$155 ancestry.com = ouch is this really needed?
$50 xbox membership = That's a major want not a need
$200 allowance = This can be shaved down some
$30 fishing license = reasonable expense and can provide food

The debt, I would be taking as much money as I can and paying off the Household debt asap. It's only $1033, far far far less than your others. Save money on the grocery budget by preparing more inexpensive meals at home, trim money from as many areas as you can and pay this off quickly.

Beneficial, paying just as much over the minimum that you are, isn't making that big of a dent in the balance with that interest. Go back to paying the minimum and take that extra $75 and the $15 you were paying to Household and snowball it onto the Citi with as much extra as you can and just keep on doing that. Or pay the min. to Citi and put the extra to Benificial, whichever of the two you choose to tackle first. But by all means, take that extra $415.23 you have extra from your husbands overtime and use it to pay on the debt you are currently paying down.

With your regular income there's not alot of room to play with, in fact there's none, it's going to have to be a "buckle down and take it back" kind of situation for you. Right now you're nickel and diming your debts by paying a little extra here and there to each of them, those small amounts aren't making that big of a difference being spread over all of the debts, but they would make a difference added together and used on just one debt. You are going to have to get resourceful and make it happen however you have to, even it means giving up some of the non-negotiable to you expenses and your allowance. Good luck, you'll find a way and you can do this.

[EmilyD]

I am not sure I follow on some of this stuff.

As far as the extra check in Aug (yes we get one) we would have to take out grocery, gas and allowance money from that check, if nothing else. So that would certainly change the numbers.

My tags will come out of one of the checks this month. Haven't received the bill yet.

I am not sure how you come up with the checks are short? Right now, yes, he gets the 20 hours a check overtime. I pay the extra amounts on the debt out of the overtime. Also, right now I am taking an extra $100.00 out for more gas and more cigs (he is smoking about 1 and 1/2 cartons a week. Our usually gas amount of $20.00 each per 2 weeks is not enough when it went to $4.00 a gal. So I raised that to $40.00 each and raised his "allowance" to $60.00 to pay for the extra cigs. Theroetically, I should be able to to cut that back every other paycheck but he "expected" to use that extra money the next week for spending money. I guess that comes out of the overtime as well.

He has already been warned that if he loses the overtime, life changes drastically ... but we have lived hand to mouth for our entire marriage and I would like to be able to eat out and have a "normal" life for once. What I am seeing here is I have to give up what little I have been able to salvage and go back to hand to mouth??

I don't mean to be difficult but I would like to see a budget that would include eating out and not giving up what little I do get and still pay off the debt .. maybe not as fast as you are trying to advocate.

Is that unreasonable?

[EmilyD]

I am not sure why it is coming up that we are short ... it isn't "short" when I do the bills.

$200.00 for groceries includes all the food, all the pet supplies, all paper products, all laundry supplies, and HBA.

The extra that is sent in every month is credited to the principle. The $200.00 extra payment that was sent was a separate check as priciple only and yes it was credited that way.

[EmilyD]

I am still not seeing where the 2400 is coming from .. did I miss something?

The $60.00 per month for gas and electric are a level monthly pay. I arranged to pay this amount every month so we don't have to pay $300 in the summer and 50 in the winter. (just an example)

The difference in the oil changes is that dh's car is only driven 3000 miles a YEAR and mine is driven about 3000 miles a quarter .. his car is driven only to work , mine is all the rest .. travel, daily driving, etc. So my oil is changed about 4 times a year and his is only changed once.