Earning Well but Drowning in Debt...how to dig out?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Op again. We are navigating the summer camp thing now. $450 (or even higher... Smithsonian camps are closer to $540/week with aftercare!) seems to be pretty standard unless you do a city camp or Ymca type camp, which are ok but not for the whole summer. They aren't always well organized. We are looking at sending kids to stay with relatives for part of the summer.

I honestly think a big problem is the cost of living here. $450/week per child for camp is so crazy. Housing is so expensive. Even food is more expensive. Daycare most expensive in nation. I would love to move somewhere cheaper. But I am a fed and DH also works on the Hill.

No. The problem is your mortgage is too high for your income and you chose to have three kids and two cars. Why do you need two cars if you live in dc in a rowhouse? Does this mean you're also driving to work?

Here is what you need to do:

Sell your house. Use proceeds to pay off credit card debt and some of student loans
Rent a two bedroom apartment in DC
Sell both cars and use public transportation
Pack your lunches


You're not being honest with yourself about the unpaid maternity leave. You are basically saying you spent 50k in three months. I assume only one of you was on unpaid leave. This equates to maybe 10k in earnings MAX. What was the other 40k spent on?

You're going to have to make major changes. Even if you were to move from dc, if you purchase a home too expensive for you and own cars you don't need you'll always be poor.

Bad advice. Don't sell you house to rent. Address the spending first and the credit card debt. If you live in DC, you could get rid of one of your cars.

[Anonymous]

^pp. the op can't afford her home. She has a 3400 mortgage payment on a 280k hhi plus three children! The house is also requiring her to have two cars and prevents her from using FREE transportation to get to work.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:(not a huge amount by DC standards, $285k HHI.

Yeah, I thought this too. OP is a dimwit.

It is good money but not a huge amount for two earners in DC. That is a fair statement. They do need to get better at budgeting and determining what is a necessity and what isn't.

[Anonymous]

Anonymous wrote:^pp. the op can't afford her home. She has a 3400 mortgage payment on a 280k hhi plus three children! The house is also requiring her to have two cars and prevents her from using FREE transportation to get to work.

It is expensive to get in and out of houses. Her mortgage in not unreasonable for her income if she can address her other debt. She also hasn't offered any information on equity she might have in her home. The tax benefit for home ownership is another consideration that would close the price gap between owning and renting. And by the way, there is no such thing as FREE transportation!!

[Anonymous]

Anonymous wrote:OP, the only long-term fix that will make a big dent is the mortgage. It's too high for your family. You need to be spending no more than $2000/month on the mortgage. There are two ways to get there - sacrifice space or location. Get a smaller place close-in to save commute or go out and deal with the commute. I know people in Manassas who take the train in and out daily.

I don't understand why your DH is so closed off to moving. It may not be ideal, but it's the most obvious solution. What is his plan for paying off the debt?

THIS. lower HHI than you (225HHI) I live in Takoma Park, just bought a small home with 3 bdrs (unperfect setting, one bedroom is at lower level with not a lot of light, one bedroom is very small). we have a 2000$mortgage, 2500 PITI and with that we can:
- walk to the metro (but again not perfect, a good 10 min walk),
- have what we consider a very good public school (but not perfect),
- do the drop off and pick up of our 2 kids in daycare walking (daycare is close to metro but as you can imagine it is not easy either, in winter time pushing a double stroller up and down the hills for 10-15 min)
- we only have one car we use once a week for costco+whole foods (yes I admit we have ridiculous organic groceries budget, that's the bad expense we should work on)

I agree with other posters OP, with this level of debt there is no magic trick, at least one of your very big monthly exchange needs to go. And in your situation the House + 2 new cars combo is the "easy" one. A nanny for 3 would also save you money compared to 3X daycare and simplify your commute and dog walking expenses but it is a more temporary fix. I don't want to pile on but you can find a better house solution than you have, if you are ok letting go of what you think. My house is cramped, that's true, and it is fine, we are happy, def more happy then with the stress of debts. You need to rewire. good luck OP, you can do this!

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, the only long-term fix that will make a big dent is the mortgage. It's too high for your family. You need to be spending no more than $2000/month on the mortgage. There are two ways to get there - sacrifice space or location. Get a smaller place close-in to save commute or go out and deal with the commute. I know people in Manassas who take the train in and out daily.

I don't understand why your DH is so closed off to moving. It may not be ideal, but it's the most obvious solution. What is his plan for paying off the debt?

THIS. lower HHI than you (225HHI) I live in Takoma Park, just bought a small home with 3 bdrs (unperfect setting, one bedroom is at lower level with not a lot of light, one bedroom is very small). we have a 2000$mortgage, 2500 PITI and with that we can:
- walk to the metro (but again not perfect, a good 10 min walk),
- have what we consider a very good public school (but not perfect),
- do the drop off and pick up of our 2 kids in daycare walking (daycare is close to metro but as you can imagine it is not easy either, in winter time pushing a double stroller up and down the hills for 10-15 min)
- we only have one car we use once a week for costco+whole foods (yes I admit we have ridiculous organic groceries budget, that's the bad expense we should work on)

I agree with other posters OP, with this level of debt there is no magic trick, at least one of your very big monthly exchange needs to go. And in your situation the House + 2 new cars combo is the "easy" one. A nanny for 3 would also save you money compared to 3X daycare and simplify your commute and dog walking expenses but it is a more temporary fix. I don't want to pile on but you can find a better house solution than you have, if you are ok letting go of what you think. My house is cramped, that's true, and it is fine, we are happy, def more happy then with the stress of debts. You need to rewire. good luck OP, you can do this!

Meant "if you are ok letting go of what you think is a NEED" ie you dont need 4 bedrooms, you dont need 2000 sqft, you dont need 2 new hondas.. and you def dont NEED the most expensive camp in town

[Anonymous]

Anonymous wrote:

Anonymous wrote:^pp. the op can't afford her home. She has a 3400 mortgage payment on a 280k hhi plus three children! The house is also requiring her to have two cars and prevents her from using FREE transportation to get to work.

It is expensive to get in and out of houses. Her mortgage in not unreasonable for her income if she can address her other debt. She also hasn't offered any information on equity she might have in her home. The tax benefit for home ownership is another consideration that would close the price gap between owning and renting. And by the way, there is no such thing as FREE transportation!!

Actually the transportation IS free. Or at least is provided as an employer benefit. Each fed receives a monthly metro card for their commute. I commute via bus and use this card. I've never paid a penny to get to work.

[Anonymous]

didn't op say that daycare + aftercare was only $2450? a fulltime nanny for 40+ hrs/week is going to cost way more than that. in fact, whatever child care situation op has seems to be a good deal for three kids. she's even found a way for grandparents to subsidize enrichment. op, there are camp programs with aftercare that cost less than $450/week. just search a little harder.

I agree with the pp's who suggest first focusing on getting rid of the cc debt. how much are your monthly payments? are you making any headway with the interest you're paying? maybe you can make a dent in the cc debt by reevaluating your car situation. op didn't mention how much the car payments are. op, what's wrong with a trading in the suv for a used Honda civic? you don't need the suv. too much gas, short longevity, superhigh property tax. you can fit three carseats just fine across a civic. I do it with my three kids.

can you refinance your student loans? don't they have programs to temporarily adjust payments? that way you can focus on the cc debt, then return to focusing on the student loan debt.

then, are you able to refinance your mortgage? what's your rate?

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, the only long-term fix that will make a big dent is the mortgage. It's too high for your family. You need to be spending no more than $2000/month on the mortgage. There are two ways to get there - sacrifice space or location. Get a smaller place close-in to save commute or go out and deal with the commute. I know people in Manassas who take the train in and out daily.

I don't understand why your DH is so closed off to moving. It may not be ideal, but it's the most obvious solution. What is his plan for paying off the debt?

THIS. lower HHI than you (225HHI) I live in Takoma Park, just bought a small home with 3 bdrs (unperfect setting, one bedroom is at lower level with not a lot of light, one bedroom is very small). we have a 2000$mortgage, 2500 PITI and with that we can:
- walk to the metro (but again not perfect, a good 10 min walk),
- have what we consider a very good public school (but not perfect),
- do the drop off and pick up of our 2 kids in daycare walking (daycare is close to metro but as you can imagine it is not easy either, in winter time pushing a double stroller up and down the hills for 10-15 min)
- we only have one car we use once a week for costco+whole foods (yes I admit we have ridiculous organic groceries budget, that's the bad expense we should work on)

I agree with other posters OP, with this level of debt there is no magic trick, at least one of your very big monthly exchange needs to go. And in your situation the House + 2 new cars combo is the "easy" one. A nanny for 3 would also save you money compared to 3X daycare and simplify your commute and dog walking expenses but it is a more temporary fix. I don't want to pile on but you can find a better house solution than you have, if you are ok letting go of what you think. My house is cramped, that's true, and it is fine, we are happy, def more happy then with the stress of debts. You need to rewire. good luck OP, you can do this!

+1. You clearly have this figured out. It's what you have to do if you want to live on a certain salary in this area and save money. Even if you make a ton of money it's smart to only require one car and purchase a home well below your means.

[Anonymous]

If you move further out you will save on mortgage and daycare as it's cheaper out of DC. If your husband travels so much why is his commute a sticking point. Move closer to an airport if he flies.

[Anonymous]

Anonymous wrote:

Anonymous wrote:^pp. the op can't afford her home. She has a 3400 mortgage payment on a 280k hhi plus three children! The house is also requiring her to have two cars and prevents her from using FREE transportation to get to work.

It is expensive to get in and out of houses. Her mortgage in not unreasonable for her income if she can address her other debt. She also hasn't offered any information on equity she might have in her home. The tax benefit for home ownership is another consideration that would close the price gap between owning and renting. And by the way, there is no such thing as FREE transportation!!

The problem is the OP doesn't have any other options. She needs to come up with thousands each month to pay down debts. its not like she can put her kids up for adoption. The largest expenses for OP are housing, childcare and transportation. Making cuts from discretionary spending may save 1k each month but that won't make a big enough dent in the massive amount of debt she has accrued.

200k of student loans aren't a joke. Especially when the op should have moved onto saving for her own childrens' education. She hasn't even paid for hers yet and has no plan as to how to do so!

Apartment living could save op a lot. There aren't any repairs and there's a limited amount of money you can spend doing things to a rental property. It would allow her to rely on public transportation if she lives near a metro or bus.

For example - OP is probably spending around 750 a month to commute to work. I spend 0. My work provides a metro card. My 750 is being invested in the market. This is why I'm ahead and she is not.

[Anonymous]

The OP fails to remember one thing: they did this to themselves. They made a decision to have 3 kids(or not!), they chose the cars they have, the places they live, and, and this is key, they CHOSE to incur the debt they did. Yes, it might be medical issues, but, you chose to make those pymts. Or, you chose a job that has crappy or no medical coverage. It is a story of choices made. And, unfortunately, unwise choses made. Asking for help, or even, paying for help, won't get you there. You need to make rational decisions.

[Anonymous]

3400 for mortgage is not too much on $280 hhi.

We have that mortgage and "only" make 200k.

Op, people have been mean in some if these posts, but you have to find savings or sacrifices somewhere in your budget to pay off the debt. Have a 5 year plan with DH in what it will be. Only you two can decide to solve this together.

[Anonymous]

Anonymous wrote:3400 for mortgage is not too much on $280 hhi.

We have that mortgage and "only" make 200k.

Op, people have been mean in some if these posts, but you have to find savings or sacrifices somewhere in your budget to pay off the debt. Have a 5 year plan with DH in what it will be. Only you two can decide to solve this together.

Yeah but do you have 2k in monthly student loan payments? 2.5K in childcare? Three children?

[Anonymous]

Anonymous wrote:The OP fails to remember one thing: they did this to themselves. They made a decision to have 3 kids(or not!), they chose the cars they have, the places they live, and, and this is key, they CHOSE to incur the debt they did. Yes, it might be medical issues, but, you chose to make those pymts. Or, you chose a job that has crappy or no medical coverage. It is a story of choices made. And, unfortunately, unwise choses made. Asking for help, or even, paying for help, won't get you there. You need to make rational decisions.

+1. This is why I don't have much faith in OP turning things around. I can't imagine a normal person would ever make these decisions to begin with. I would die from stress if I lived off of a credit card during maternity leave. I could understand maybe a single mom who has NO other options during leave. But a wife with a husband making six figures? They couldn't buckle down and live off of his salary for ONE month? Then to make that same mistake over and over again?

I remember waiting to have kids with my husband because I knew we could afford to save for a home while also paying for childcare. I don't think OP gets it and understands one has to think this way.