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

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Side note: a foreigner perspective on the 3 kids debate => as a French person I am always struck by how negative Americans are towards people who have 3 children. It is so often portrayed as a crazy, selfish, financially and environmentally irresponsible choice. I think in France we would think the same way about someone who chooses to have 5 or 6 children but 3?? we need some 3 kid families to ensure natural reproductive rate of the population (2.1 given the number of people who don't have kids or only 1).

Not judging. I am actually stopping at 2 myself because I understand it would be too hard for me to afford 3 children while living in the US. But I never thought 3 children would feel impossible. In France with subsidized day care, free education and full day schools you mostly choose your family size based on what seems the best balance in terms of time and love. It is too hard to raise a 3 kids family here.

And to finish my thought: people end up criticizing the 3 kids choice almost as a moral failure. From an outsider's perspective it looks more like a society failure..

What?! My brother is in the EU, pays 45+% taxes, 600 euros per month during the winter to warm up his 2 bed, 1.5 bath condo, double the price for gas, food, high interest rates etc etc. He also has to purchase private health insurance because the nationalized one comes with huge waiting times and no access to good doctors. He can only afford one child. My SIL has been unemployed for months despite a good education and great work history.

"has to purchase private health insurance because the nationalized one comes with huge waiting times and no access to good doctors" in that case he is not in France as that's not how the system works.

But I will add that for the rest I wont contradict you, Europe is certainly not cheap and unemployment is a big issue. There are a lot of people who cannot really afford having children. HOWEVER, it won't be such a catastrophic drain on their budget. If you are financially in trouble you will actually get a lot of free stuff (daycare could end up being almost completely free for ex. and that includes meals), your kids will have health insurance and their chances at higher education are not ruined. You receive a monthly stipend per child (family allocation). It is not the factor that will make you go bankrupt.. And for sure, in the situation of OP, with 2 working parents it wouldn't be an issue.

So it wouldn't be an issue if you bought a home you couldn't afford, insisted on driving two cars to work, purchased convenience food, and enrolled your kids in countless activities? The daycare isn't cheap but it's one of many factors resulting in the financial distress of this family.

[Anonymous]

People have to get the storyline right:

op and husband accrued student loans
then, op bought the house when they were engaged
then, they had the first kid
then, grad school/unpaid maternity leave paid for by cc/more student loans
then, they had the second kid
then, unpaid maternity leave paid for by cc
then, they got pregnant with third kid
bought two bigger cars to accommodate three kids
then, unpaid maternity leave paid for by cc

in this sequence, I can understand why the house was purchased. but at some point along the way, the expenses became unsustainable. as a student, it's easy to put student loans in the back of your mind, and perhaps this mindset led the way to the cc debt. the current income/debt ratio is unsustainable, and so, unless you can increase the income, your mindset must be changed so that you stop accruing debt. I bet it's going to be hard because you probably have a good rhythm going with commute/job/childcare, so assign that rhythm a value and see if it's worth it. if you don't change now, reassess every now and again, and see if you can change things when all three are in the same school or a new job, etc.

good luck.

[Anonymous]

Anonymous wrote:Side note: a foreigner perspective on the 3 kids debate => as a French person I am always struck by how negative Americans are towards people who have 3 children. It is so often portrayed as a crazy, selfish, financially and environmentally irresponsible choice. I think in France we would think the same way about someone who chooses to have 5 or 6 children but 3?? we need some 3 kid families to ensure natural reproductive rate of the population (2.1 given the number of people who don't have kids or only 1).

Not judging. I am actually stopping at 2 myself because I understand it would be too hard for me to afford 3 children while living in the US. But I never thought 3 children would feel impossible. In France with subsidized day care, free education and full day schools you mostly choose your family size based on what seems the best balance in terms of time and love. It is too hard to raise a 3 kids family here.

And to finish my thought: people end up criticizing the 3 kids choice almost as a moral failure. From an outsider's perspective it looks more like a society failure..

My sister is married to a Frenchman. They live and work in Paris. One is a lawyer, the other a very senior consultant. Despite having twice the years of work experience we do, they make significantly less income. They live in a banlieu with decent commute and good but not the top schools. They have a nice but small apartment. Kids share a room. Bath and kitchen are the size of a postage stamp. Their apartment is quite expensive relative to their income. Schools are just as segregated as in DC. Best schools are in top close in suburbs. Good luck getting in to one of those. Most universities are free, but good luck getting your kid into one of the Grande Ecoles if you are not well to do. There are social subsidies to keep you afloat in France, but social mobility is but a dream. Food is expensive, gas is expensive, utilities are expensive and on and on. Very few of my sister's friends and colleagues have three kids. I mention all of this, because most French live frugal lives and would most certainly consider OP's choices a little frivolous.

[Anonymous]

20:04, that's a good point.

It's a good lesson to anyone buying a house pre-kids to factor in the cost of kids.
I just had this conversation with my BIL and SIL (engaged and planning wedding, buying house) and they were floored when I advised them to subtract 2k/month from their current expenses to factor in kids (both planning to work FT and have kids in succession, we all realize that may well not work out but my advice was to err on the side of caution)
They are both educated professionals and it really hadnt occurred to them to look up the cost of daycares.

But I think the problem here is that OP didn't ever say "whoa we need to slow down" in terms of spending and is now in a lifestyle that is going to be really hard socially and emotionally to back away from. To realize you can't send your children to the best camps, sign them up for activities, eat whatever and wherever you want, trade down a car is for most of us what a job loss situation would look like and the difficulty in being stripped of your life as you thought it could be.
Especially when there is no layoff, no medical crisis here, just a lot of bad decisions that saving face is going to be difficult.

Anyone remember that Oprah show from about 10 years back with the government worker (FBI maybe?) and his wife who had to have a family and friends meeting to tell everyone how broke they really were?
The camera panned around the room at people's shocked faces.
This family lived near me so maybe that is what sticks out.
The wife went to Starbucks every single day and ordered breakfast for herself and the kids, only ate out/takeout, bought a piano the day before the crews came to film which was so bizarre since they signed up for this "we are on debt help us" show.
There really are people who just get caught up and can't get out on their own, it must be a terrible thing to have to face the truth.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Side note: a foreigner perspective on the 3 kids debate => as a French person I am always struck by how negative Americans are towards people who have 3 children. It is so often portrayed as a crazy, selfish, financially and environmentally irresponsible choice. I think in France we would think the same way about someone who chooses to have 5 or 6 children but 3?? we need some 3 kid families to ensure natural reproductive rate of the population (2.1 given the number of people who don't have kids or only 1).

Not judging. I am actually stopping at 2 myself because I understand it would be too hard for me to afford 3 children while living in the US. But I never thought 3 children would feel impossible. In France with subsidized day care, free education and full day schools you mostly choose your family size based on what seems the best balance in terms of time and love. It is too hard to raise a 3 kids family here.

And to finish my thought: people end up criticizing the 3 kids choice almost as a moral failure. From an outsider's perspective it looks more like a society failure..

What?! My brother is in the EU, pays 45+% taxes, 600 euros per month during the winter to warm up his 2 bed, 1.5 bath condo, double the price for gas, food, high interest rates etc etc. He also has to purchase private health insurance because the nationalized one comes with huge waiting times and no access to good doctors. He can only afford one child. My SIL has been unemployed for months despite a good education and great work history.

I don't know where your brother is, but assessments of happiness consistently rank the US below many EU countries.

Yeah, all the European and Canada cheerleaders tend to neglect to mention the downsides. Oh, all the paid leaves women get in other countries? The money paid is capped, often at very low amounts. Some companies supplement, most don't, and the ones that do--you're punished just like the lawyer mom in DC who takes the paid 16 week mat leave. The gov payment caps would be like getting unemployment benefits here--max 300-400 per week. It's great for the cashier who works down at the minimart or the office clerk at your nonnprofit making 40K per year, but the delusional DC moms who think the gov't is going to pony up to replace six figure incomes crack me up.

I completely disagree. As an European with close family and friends still living there, I can tell you the morale is incredibly low. People are discouraged, lots are becoming racist and extremists. Research the alcohol abuse and suicide rates by country. Talk to people in the EU. Read about the mean waiting times to see a healthcare specialist - in Finland it's 149 days for a knee replacement consultation. There's very little opportunity for social mobility. My best friend went back to work after 3 months despite having two years paid maternity leave because she wanted some job stability. I don't want to burst your bubble but things are not great there.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Side note: a foreigner perspective on the 3 kids debate => as a French person I am always struck by how negative Americans are towards people who have 3 children. It is so often portrayed as a crazy, selfish, financially and environmentally irresponsible choice. I think in France we would think the same way about someone who chooses to have 5 or 6 children but 3?? we need some 3 kid families to ensure natural reproductive rate of the population (2.1 given the number of people who don't have kids or only 1).

Not judging. I am actually stopping at 2 myself because I understand it would be too hard for me to afford 3 children while living in the US. But I never thought 3 children would feel impossible. In France with subsidized day care, free education and full day schools you mostly choose your family size based on what seems the best balance in terms of time and love. It is too hard to raise a 3 kids family here.

And to finish my thought: people end up criticizing the 3 kids choice almost as a moral failure. From an outsider's perspective it looks more like a society failure..

What?! My brother is in the EU, pays 45+% taxes, 600 euros per month during the winter to warm up his 2 bed, 1.5 bath condo, double the price for gas, food, high interest rates etc etc. He also has to purchase private health insurance because the nationalized one comes with huge waiting times and no access to good doctors. He can only afford one child. My SIL has been unemployed for months despite a good education and great work history.

I don't know where your brother is, but assessments of happiness consistently rank the US below many EU countries.

Yeah, all the European and Canada cheerleaders tend to neglect to mention the downsides. Oh, all the paid leaves women get in other countries? The money paid is capped, often at very low amounts. Some companies supplement, most don't, and the ones that do--you're punished just like the lawyer mom in DC who takes the paid 16 week mat leave. The gov payment caps would be like getting unemployment benefits here--max 300-400 per week. It's great for the cashier who works down at the minimart or the office clerk at your nonnprofit making 40K per year, but the delusional DC moms who think the gov't is going to pony up to replace six figure incomes crack me up.

I completely disagree. As an European with close family and friends still living there, I can tell you the morale is incredibly low. People are discouraged, lots are becoming racist and extremists. Research the alcohol abuse and suicide rates by country. Talk to people in the EU. Read about the mean waiting times to see a healthcare specialist - in Finland it's 149 days for a knee replacement consultation. There's very little opportunity for social mobility. My best friend went back to work after 3 months despite having two years paid maternity leave because she wanted some job stability. I don't want to burst your bubble but things are not great there.

Regardless of whether it's better or worse, I don't think it's a good idea to live so far above your means in any country. This means not buying a house you can't afford and insisting on driving cars you shouldn't be driving.

[Anonymous]

I think this family did not recalibrate when their financial situation changed. However they had already gotten into bad practices.

Early on the OP stated that they accrued credit card debt during graduate school. I think there is a mind set of entitlement of - we are going to be professionals -we can afford to ... go out for dinner, we need to go on that networking trip, if we don't do the mini-mester in London we are not taking advantage of being at a top tier school - after grad school I will pay of my credit card debt with my signing bonus - of course after I travel Europe for the summer because I worked really hard for the last few years to get here and I deserve this.

And this mindset just spirals until you figure out a way to stop it.

To the OP - I would recommend that you cut up your credit cards and use cash for everything. Studies have shown that people who pay cash(and are in similar situations) purchase less. For things where it is easier to have a credit card - take your budget for the month for things like gas and either purchase a pre-paid card OR get a debit card set up specifically for these purchases.

[Anonymous]

Anonymous wrote:OP, this site helped me save a lot of $, the kids can help cook and it's a fun time, we listen to music, talk, etc. In some weird way, learning basic, cheap, healthy cooking was grounding. When cleaning up I packed leftovers as lunches. We all felt better and it spurred me to find other ways of building financial security. http://wegotreal.com/frugal-real-food-meal-plan/

You can lavish borrowed $ on them to show love, or give them the gift of time, happy and relaxed memories and financial security. Maybe even help pay for college so they can start out debt free?

We were a lot like you in lifestyle, but switching to Friday movie night with homemade pizza, Saturday spaghetti and games night and going to the park or a museum on Sunday after church are all free. Sometimes we invite another family along.

If you are lawyers, a switch to private could really boost income but with a lot more hours worked and a lot less security. Why not right size your expectations and spending and relish the job security? My parents grew up poor and never taught me budgeting, cooking, etc. I lavished $ on my kids but also worried about debt. Reading Michelle Singletary and finding healthy affordable meal plans made being secure seem appealing and doable. The lessons she got from family and that she passes on make for a feeling of accomplishment and security that credit can't give you. Imagine what you want kids to remember if they grow up in house you are in. Relaxed loving parents who valued security and family time? Or lots of time in car and delivery pizza? I realized that what seemed gratifying in the moment was not moving us toward what I really valued.

If you do end up splitting, one or both of you may end up in bankruptcy. Start taking steps now to be more financially conservative and to feel good about it. Your husband might not want to engage but you can still make a lot of progress. While they are little, try to maximize family time together while keeping earning potential as high as possible. Mommy tracking does your kids no favors in age of Ashley Madison, many learned that lesson the hard way.

Great post.

[Anonymous]

Anonymous wrote:I think this family did not recalibrate when their financial situation changed. However they had already gotten into bad practices.

Early on the OP stated that they accrued credit card debt during graduate school. I think there is a mind set of entitlement of - we are going to be professionals -we can afford to ... go out for dinner, we need to go on that networking trip, if we don't do the mini-mester in London we are not taking advantage of being at a top tier school - after grad school I will pay of my credit card debt with my signing bonus - of course after I travel Europe for the summer because I worked really hard for the last few years to get here and I deserve this.

And this mindset just spirals until you figure out a way to stop it.

To the OP - I would recommend that you cut up your credit cards and use cash for everything. Studies have shown that people who pay cash(and are in similar situations) purchase less. For things where it is easier to have a credit card - take your budget for the month for things like gas and either purchase a pre-paid card OR get a debit card set up specifically for these purchases.

Yes, another good point. It seems like most people I know have the "oh sh&*t" moment when they have their first child and realize how much daycare costs,
maternity leave, using sick days for child's sickness, and all the other things you never thought of pre-kids and that carries forwards to decisions going forward.
It seems like OP just didn't have that moment until now, and I posted previously about how the lifestyle change is going to be difficult and really uncomfortable, and possibly embarrassing if they are really into keeping up appearances.

[Anonymous]

All this talk about eu v. us, while interesting is so not relevant to op's thread. Please stay on topic or start new thread if your own! Thanks.

[Anonymous]

Thanks to Dave Ramsey we are now debt free. We made a budget for ourselves, sacrificed a bit (not eating out), takes perseverance but it's completely do-able. Good luck.

[Anonymous]

^^ whoops, should read , sacrificed a bit )for example, not eating out, cutting cable, etc.)

But now I read most of the 19 pages and I see that you are not on board to making real changes to get out of your hole. Still, good luck.

[Anonymous]

Haven't read the whole thread, but 1) I can see why OP doesn't want to move, that's a big deal with kids and the mortgage itself isn't that crazy, 2) the cars would be a place to cut back - Kia forte or something, maybe I missed that post, but not sure why OP won't consider, if they could save a few hundred a month on cars, plus cut back discretionary spending, it might go to a good chunk of the loan payment

But really, OP, maybe you already addressed but can someone get a higher paying job? If you could throw extra money at the loan, get thru that and daycare you could come out in a few yrs in a much better position

I feel for OP, we make about the same - 2 Feds - and are in a much better position because we don't have loans, had more money to put down and a lower mortgage, etc (although we also have 2 kids although I would have liked 3 and finances were a consideration)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Side note: a foreigner perspective on the 3 kids debate => as a French person I am always struck by how negative Americans are towards people who have 3 children. It is so often portrayed as a crazy, selfish, financially and environmentally irresponsible choice. I think in France we would think the same way about someone who chooses to have 5 or 6 children but 3?? we need some 3 kid families to ensure natural reproductive rate of the population (2.1 given the number of people who don't have kids or only 1).

Not judging. I am actually stopping at 2 myself because I understand it would be too hard for me to afford 3 children while living in the US. But I never thought 3 children would feel impossible. In France with subsidized day care, free education and full day schools you mostly choose your family size based on what seems the best balance in terms of time and love. It is too hard to raise a 3 kids family here.

And to finish my thought: people end up criticizing the 3 kids choice almost as a moral failure. From an outsider's perspective it looks more like a society failure..

What?! My brother is in the EU, pays 45+% taxes, 600 euros per month during the winter to warm up his 2 bed, 1.5 bath condo, double the price for gas, food, high interest rates etc etc. He also has to purchase private health insurance because the nationalized one comes with huge waiting times and no access to good doctors. He can only afford one child. My SIL has been unemployed for months despite a good education and great work history.

"has to purchase private health insurance because the nationalized one comes with huge waiting times and no access to good doctors" in that case he is not in France as that's not how the system works.

Probably in the UK. I'm a British citizen and had to have private health care there as well. The NHS is a catastrophe. Had to wait 8 months to get an appointment with an ENT due to chronic strep throat in my 4yr old and another 6 months to get his tonsils out?

[Anonymous]

Anonymous wrote:Haven't read the whole thread, but 1) I can see why OP doesn't want to move, that's a big deal with kids and the mortgage itself isn't that crazy, 2) the cars would be a place to cut back - Kia forte or something, maybe I missed that post, but not sure why OP won't consider, if they could save a few hundred a month on cars, plus cut back discretionary spending, it might go to a good chunk of the loan payment

But really, OP, maybe you already addressed but can someone get a higher paying job? If you could throw extra money at the loan, get thru that and daycare you could come out in a few yrs in a much better position

I feel for OP, we make about the same - 2 Feds - and are in a much better position because we don't have loans, had more money to put down and a lower mortgage, etc (although we also have 2 kids although I would have liked 3 and finances were a consideration)

Op has two vehicles 2012/2013 Hondas (minivan and SUV). If they bought them new and got 5 year loans on both - one will be paid off in 2017, the other in 2018. Is it worth it to sell those vehicles and trade down at this point or would it make more sense to just keep the vehicles that work for their family and work on maintaining them AND paying them off?

I say keep them, maintain them and pay them off.

The area that they can trim the most is activities, vacation, entertainment/eating out. Make the next couple of years a time to bite the bullet and go into dig out mode.