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Discussion Starter #1
Hi there! I came to share my progress with the baby steps and hope you'll help me keep my motivation up.

I'm both the nerd and the spender in my marriage - my husband and I recently finally got on the same page and are working this together. We're both very motivated about getting this gone!

Numbers:
~$178K debt (not including mortgage - big hole!)
$29K car
$85K student loans
$40K CONsolidation loans
$24K credit cards

Household income somewhere around $120K (difficult to tell as husband recently started a higher paying job and is getting overtime, plus I've received bonuses at work).

To date this month we have paid almost $3K extra to debts.

Steps we've taken to reduce debt:
- selling things
- stopped 401K contributions (possibly one of the hardest steps, to feel like I'm giving up the company match)
- cancelling warranties and such on the car (expect ~$2K to eventually come through as reduction on car note as that is refunded directly to the lienholder)
- sold $1300 in stocks received as bonus at work, expect to receive that check in a week or so
- awarded a $12.5K bonus at work, payable march 4th (expect to receive maybe 2/3 of that after taxes)
- Husband and I both received raises this month.

As I'm listing things to sell on Craigslist I like to keep an eye on the Wanted section for people that I can help. Yesterday I located someone that needed clothes for a young boy, and was able to give some of my son's clothes away.

Thank you for reading, I look forward to sharing further progress :)
 

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* Look into selling through consignment shops. Usually they offer a higher value share if you take a store credit instead of cash. You then get a double bonus of purchasing discounted clothing / items AND you're able to use your credit. I did this with my current DD until she "aged out" and I wouldn't be able to find anything new in her size.

* I differ with Dave in that I think continuing a retirement plan that at least gets you the company match is a good idea. Why leave money on the table?

* I usually reduce food purchases last. Instead start saying "no" to or delay non-food, consumable purchases. For instance, the other day I was reading about "hair masks" to make hair shiny, silky and smooth. Sure enough I became dissatisfied with my hair and felt the impulse to run out and buy a hair mask to try. Do I really need it? No! Instead I combined products I already had on hand with great results. If I really need a hair mask, I'll look up DIY combos on Pinterest first. In short, there are very few products I absolutely NEED that aren't nutritious food served at a real meal (cutting back on processed snacks is good idea - does one NEED potato chips? ever?) I'm picky about TP and each of us have a favorite toothpaste but everything else is up for debate.

* Try to go through and identify where you spent money that got you into debt with the consolidation loan and credit cards. Vacations? Eating out? Clothes? Gifts? Medical bills? Emergencies? How will you handle those situations in the future?

* With those credit card companies, call them up and try to get the best deal you can in terms of lower interest and lower minimum in order to make your money go further toward pay-off.
 

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Discussion Starter #3
Hi cookie! Thank you for your advice and input.

I'm pretty frugal about food, while maintaining health at the same time, so check on that one. Our grocery budget is $250 (I coupon, preserve local in season produce, and we replenish our meat freezer a couple of times a year).

I'll definitely look into the consignment shops; we have an 8 and 12 year old so clothes are certainly an important thing to keep in mind/ costs down on.

Almost all debts are on zero % interest with good amounts of time before it runs out, so doing well there.

As to how it got so big...earning one income while still living like a two income family, some vacations, splurges when we got a raise, stupid things like that...its been piling up over the last ten years honestly.

Agreed on the retirement; but after a lot of thought and calculating on the true cost did decide to follow Daves advise as 1) there's a fair amount already in retirement 2) will still have plenty of years to make up for it.

Thanks again for your tips
 

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I have a 14 yr old and the costs only get worse as they get older! Just this year we put her on a clothing budget. It was the only way to get control over the situation (because I have a hard time saying no). As they get older, involve them in the bill paying process. Kids have a hard time understanding that the income doesn't go as far as they think. No matter how much we make, they always think it is a lot of money.

Some parents also have time / financial budgets for extra-curricular activities. For instance, one of my co-workers had to put her daughter on an eating out budget. The girl plays a highly competitive sport so is forever grabbing food before, during and after games. On the night of a game she can buy a full dinner three times! She gets that hungry! When you're playing or practicing several times a night, that really adds up. Her mom finally said enough and gave her a spending limit in hopes she'd make wiser food choices. Another friend of mine, purposely limits the number of activities: one musical instrument, one scouting / club, one sport a year. Even with that limit, they have two kids so they are running all the time and are rarely home as a family. In our case, DD is moving on to state-wide and (soon) national activities so not only are we gone many evenings, our weekends get filled up quickly, too - with traveling.

And then there is the cost of cellphones for everyone which, in this day and age with kids as pre-teens / teens, seem like a necessity but it really adds up. If anyone has hints on reducing that cost, let me know! Restricting the use by the teen isn't an answer.

Anyway, go back and check those non-food consumables: paper towels, aluminum foil, plastic wrap, baggies, paper plates, impulse-purchase toiletries, etc. Those are the areas where I save first with the least impact on our quality of life.

As for coupons, make sure you're truly saving money for the effort you're putting in. Use the pantry principal - stock up on items at their lowest price so you always "shop" from your pantry first then replace when you find a good price. Look to purchase items at "third tier" vendors that normally wouldn't take coupons but are cheaper. First tier vendors are specialty grocery stores like Whole Foods or Kroger or a high-end specialty store like a butcher / deli. Second tier vendors are stores that purposely market themselves as low-cost: Costco, Sam's Club, Aldi, Trader Joe's, Cash Saver's, etc. Third tier vendors are sources most people wouldn't think to use: farmer's CSA, farmer's markets (some, not all), direct from the rancher meats, surplus from game processing plants, dented can stores, buying clubs, etc. Even consider price-comparing to on-line sources such as Amazon Pantry.
 

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stopped 401K contributions (possibly one of the hardest steps, to feel like I'm giving up the company match)
- cancelling warranties and such on the car (expect ~$2K to eventually come through as reduction on car note as that is refunded directly to the lienholder)

(not including mortgage - big hole!)
How much is the mortgage? (Often that is a big source of capital, I've taken lots of seed money from my rental houses).

Some obvious ones -
1. Too much car, you can cut expenses by at least $6000/y by driving an affordable car.
2. Self-insure whenever possible, eg, an extended warranty is a high-profit item for the seller - and a notoriously BAD deal for the buyer. (most modern cars go 200,000 miles with minimal repairs.)
3. And cutting the 401k is a classic penny wise/pound foolish. Eg, if you put $18k/y into the 401k and get a $3k match, that $21k/y at 11%/yr = $4.6M in 30 yrs. Your out-of-pocket is only about $13,500/yr after taxes. I would choose to pay interest on the $178k almost forever before I would derail a $4.6M family plan. (and thankfully, I did exactly that).

But, in general, you seem to be doing well - a good family income, good jobs (bonuses and a student loan indicate high income potential).

You might consider doing a Pareto Analysis of expenses - list your annual costs at gross, include you fed tax cost, your state tax, your SS/Med, etc. (it should sum to your gross annual income). Then do a 'descending sort'. This will highlite the "significant few and the insignificant many'. You'll see that about 80% of your costs are in the top 20%. Probably House, Taxes/SS, Cars. At the bottom of the list is your latte factor. Eg, the house might be $25,000/y, taxes/SS might be $20,000/y. And your daily latte might be $1000/y. The point? You can't solve a $178,000 debt problem by cutting out your $1000/y lattes - you have to look at the top of the list.
 

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Discussion Starter #6
Our mortgage is 133k on a 200k house, totally monthly payment (with taxes/insurance) is $1024 per monthly.
 

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133k on a 200k house, totally monthly payment (with taxes/insurance) is $1024 per monthly.
Maybe you could refi to $180k, <4%, 30y. That adds about $145/m to your payment. That nets you $45k or $50k to put toward the $24k CC loans and some of the $40k loan. And cuts your consumer debt payment by about $1100/m. That adds about $955/m (1100-145) to your cash flow. Use that $11,460/y for your 401k. (It also lowers your tax bill by >$3500.)
 

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welcome to the village!! You will find a "wealth" of information and great ideas on this site.
 

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bio - from my earlier post -

3. And cutting the 401k is a classic penny wise/pound foolish. Eg, if you put $18k/y into the 401k and get a $3k match, that $21k/y at 11%/yr = $4.6M in 30 yrs. Your out-of-pocket is only about $13,500/yr after taxes. I would choose to pay interest on the $178k almost forever before I would derail a $4.6M family plan. (and thankfully, I did exactly that).
But, in general, you seem to be doing well - a good family income, good jobs (bonuses and a student loan indicate high income potential).
Good that you have cut $5250 from your $311,000 debt. But be aware that the $5250 came from somewhere. To raise the $5250, you had to redirect it from somewhere (your stock funds, from your future 401k, etc). Ie, you did nothing to change your net worth, you just moved it around. Money is fungible - think of your income stream as fixed - and you are in control of how you direct it. Eg, if you direct $5250 to your 401k, that equates to $121,000 in 30 y. Conversely, if you spend that $5250 on consumer debt, it is "spent" - and you can no longer direct it to its highest and best use.
(BTW, $5250/y for 30y would be $1,160,000, you could write a check for the $311,000 debt and have $850,000 left over. - Of course, with your $120k/y income stream, you have the potential to build way more.)
 

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Sounds like you are on track. Some things to look at would be your day to day budget and where you may have holes.

Cell phones are a big one. For us we pay $35 a month for two phones. My husband doesn't use the phone much at all so he has a pay as you go phone that runs us $10 a month. My phone is a tracphone prepaid at $25 a month for unlimited talk and text. I spend an additional $10 every three months for data (don't use that much intentionally and look to use free wifi when possible).

Also look at extras such as cable tv or club dues that can be eliminated while working your plan.

One huge saver for us was menu planning. Kept us from eating out after a stressful day and kept our food budget on track. Second hand clothing is another big saver. The key is to only buy what you need and never set foot in a store unless you actually need something.

We are on baby step 6 right now and while we can't afford to make extra payments at this time we are building up our savings account (sinking funds) to cover any major stuff that may occur. Efund is at 4 months living expenses. You can do this. Just chip away
 

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Discussion Starter #15
Hi artist, and thank you! This site's been very handy already, good info. I'm nearly out of dishwasher detergent and was happy to find a "recipe" for homemade on here. Luckily I also have all of the ingredients too so woohoo for free soap! (That made my day)

This has been challenging my cooking skills too, which I find fun in a way. Leftover chicken from dinner becomes chicken salad for lunches! We had pizza night last night; completely from scratch and with on-hand ingredients. The sauce was made from tomato sauce I'd made/canned last summer. Extra sauce was left on the table so the pizza crust could be dipped like breadsticks- no wasting! I think my grandma would be proud.

I have a healthy stockpile of home canned foods that we're putting to good use. Almost out of bread flour and both times I've gone to the local store that sells it in their bulk section they've been out and that's getting annoying.

We have a CSA share that's prepaid through the summer, so our produce is covered til then, but I'm trying harder to find creative ways to use up everything that's in the share...have a big jar of beets pickling away in the fridge right now and they're pretty yummy.

Also considering signing on to be an Uber driver, if anyone has experience with that I'd love to hear your thoughts.
 

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One area to consider cutting back if you're willing- cable. Look into streaming services (Hulu, Netflix, Amazon prime) instead. Could save you big $$s each month.

You have a deep hole there (the debt), but a big shovel to fill it with (your income). Seeing how on-fire you are to get this taken care of, I've little doubt that you will. Many of us here have made our own journeys through such a mess (me included). Keep up the gazelle-intensity and you WILL get there!
 
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Discussion Starter #17
Khaski I love the words of encouragement, thank you so much! We did just recently negotiate our cable bill wayyyy down, I'm not sure if we're under contract with that new pricing so I'll take a look at that. We do already have prime so that'd be an option with no additional expense.

We are under contract for our cell phones, but DH was promised when he started his new job a $100 monthly payment for that as it does require a smart phone. We haven't seen that yet though so he needs to ask about it.

The kids are doing a great job cleaning up around the house today, with the challenge of using NO paper towels, and they're killing it!

I have some dough going for soft pretzels as a treat, have never made them before so this should be interesting (group activity when it comes time to form them too, fun!)

Pretty proud of our family embracing this challenge to make every penny count.
 
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