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

[Anonymous]

Anonymous wrote:

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.

I doubt they got 5 year car loans - I would guess 6 years. This is a not a family that attempts to aggressively pay of debt and looks at amount of interest strategically. They look at cash flow (or lack there of)

[Anonymous]

I would use the savings to eliminate a good chunk of the credit card debt, as PPs have suggested. Then cut all the extra activities, eating out, vacations (even driving ones) for the next year to pay off the rest of the cc debt. Cut up the credit cards and just use cash for necessities (or your debit card for the gas station). Cover the summer with YMCA camp, grandparents, and parents taking all accrued PTO separately. It's one year, OP--you can do it for one year.

Konmari your house, to make room. Do not move.

That gets us to 2017, no credit card debt (probably adding $1500/month back to cash flow that was going to minimum payments on the cc debt), middle child in aftercare (so a reduction of daycare costs), and car 1 almost paid off. I would add $500/month back to your entertainment budget, but I would continue to take it in cash. If you register online for an activity or something, pay with a debit card, and put that amount of cash back into your account. If you don't spend the whole $500, put it away for vacation. The rest of the additional money ($1000 from credit cards, and extra from daycare savings), I would use to replenish savings. When car 1 is paid off, I would put that money towards savings, earmarked for maintenance/savings for a new car (because even Hondas need to be replaced eventually, and hopefully by then you'll have enough to pay in cash). Same for car 2.

So in 2018, you'll have rebuilt your emergency savings, have zero credit card debt, have two paid-off cars that should be reliable for at least another five years. You'll still have SL and mortgage debt, but a lot of us do at your income, and hopefully they are at low interest rates. Your kids will all be in ES, and they will want to pay little league, or join the band or something, and you'll be able to pay cash for those things. I would focus on paying off SL debt, and when that's gone, redirect the money into college savings for the kids.

I would plan to stay in the house for the long term though. You really don't need a bigger house.

You can do this OP. It's going to involve a little short term pain, and a lot of discipline going forward, but just keep your eye on the yearly goals, and in a few years, you'll be in a much better place.

[Anonymous]

OP--
Are you still reading these? I think you got caught in a trap of thinking you were going to get caught up at some point but kept spending and spending. I'm not going to fault you on having 3 children at all, but I don't think you prepared well for your maternity leaves. But too late now.

I'm most likely going to repeat what other people have said.
Read Michelle Singletary, she can really help you get motivated. Dave Ramsey is good too--- it might be helpful to stick with cash for a while.

Everyone pointed out big changes are necessary, but small changes are needed to!
1. Pack lunches every day-- read all the tips on budgeting websites
2. Consider moving. It sounds like you are trying to keep up with your neighbors-- Smithsonian camps? Come on, your kids will be just fine with a community center type camp. Or see if you can hire a college student for the summer. I don't think your mortgage is horrible but the lifestyle around you may make it hard for you to make life changes
3. No vacations for the next few years. Take the time off. You can still do day trips to the beach, and DC has plenty to offer, or go and visit family
4. Be honest with your friends-- I'm guessing you don't want people to know that you are drowning in debt but it will be easier for you to turn down things that are expensive if you just tell your close friends you are concentrating on trying to pay off your student loans and cc debt
5. Since your jobs are secure I would pay off a good chunk of your cc debt with your emergency savings. Then concentrate on paying the rest off with the extra money you can come up with each month
6. No new clothes. I'm sure your closet has more than enough of what you need.
7. I'm not sure if it would be worth it or not to sell one of your cars at this point, but at least look into it
With your earnings you can get back on track but you and your husband really need a reality check. If you have not already you and your husband both need to get on the same page on what your goals are if you ever want to get out of this mess and make a budget and stick to it. No more excuses

[Anonymous]

Anonymous wrote:OP--
Are you still reading these? I think you got caught in a trap of thinking you were going to get caught up at some point but kept spending and spending. I'm not going to fault you on having 3 children at all, but I don't think you prepared well for your maternity leaves. But too late now.

I'm most likely going to repeat what other people have said.
Read Michelle Singletary, she can really help you get motivated. Dave Ramsey is good too--- it might be helpful to stick with cash for a while.

Everyone pointed out big changes are necessary, but small changes are needed to!
1. Pack lunches every day-- read all the tips on budgeting websites
2. Consider moving. It sounds like you are trying to keep up with your neighbors-- Smithsonian camps? Come on, your kids will be just fine with a community center type camp. Or see if you can hire a college student for the summer. I don't think your mortgage is horrible but the lifestyle around you may make it hard for you to make life changes
3. No vacations for the next few years. Take the time off. You can still do day trips to the beach, and DC has plenty to offer, or go and visit family
4. Be honest with your friends-- I'm guessing you don't want people to know that you are drowning in debt but it will be easier for you to turn down things that are expensive if you just tell your close friends you are concentrating on trying to pay off your student loans and cc debt
5. Since your jobs are secure I would pay off a good chunk of your cc debt with your emergency savings. Then concentrate on paying the rest off with the extra money you can come up with each month
6. No new clothes. I'm sure your closet has more than enough of what you need.
7. I'm not sure if it would be worth it or not to sell one of your cars at this point, but at least look into it
With your earnings you can get back on track but you and your husband really need a reality check. If you have not already you and your husband both need to get on the same page on what your goals are if you ever want to get out of this mess and make a budget and stick to it. No more excuses

I wouldn't if I were her. Bashing hwr for having 3 kids? Abhorrent. You people are sick and unhelpful.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP--
Are you still reading these? I think you got caught in a trap of thinking you were going to get caught up at some point but kept spending and spending. I'm not going to fault you on having 3 children at all, but I don't think you prepared well for your maternity leaves. But too late now.

I'm most likely going to repeat what other people have said.
Read Michelle Singletary, she can really help you get motivated. Dave Ramsey is good too--- it might be helpful to stick with cash for a while.

Everyone pointed out big changes are necessary, but small changes are needed to!
1. Pack lunches every day-- read all the tips on budgeting websites
2. Consider moving. It sounds like you are trying to keep up with your neighbors-- Smithsonian camps? Come on, your kids will be just fine with a community center type camp. Or see if you can hire a college student for the summer. I don't think your mortgage is horrible but the lifestyle around you may make it hard for you to make life changes
3. No vacations for the next few years. Take the time off. You can still do day trips to the beach, and DC has plenty to offer, or go and visit family
4. Be honest with your friends-- I'm guessing you don't want people to know that you are drowning in debt but it will be easier for you to turn down things that are expensive if you just tell your close friends you are concentrating on trying to pay off your student loans and cc debt
5. Since your jobs are secure I would pay off a good chunk of your cc debt with your emergency savings. Then concentrate on paying the rest off with the extra money you can come up with each month
6. No new clothes. I'm sure your closet has more than enough of what you need.
7. I'm not sure if it would be worth it or not to sell one of your cars at this point, but at least look into it
With your earnings you can get back on track but you and your husband really need a reality check. If you have not already you and your husband both need to get on the same page on what your goals are if you ever want to get out of this mess and make a budget and stick to it. No more excuses

I wouldn't if I were her. Bashing hwr for having 3 kids? Abhorrent. You people are sick and unhelpful.

Did you read this post? Not bashing for having 3 kids, saying that her and her husband didn't plan for maternity leave. Most people try to save extra for an extra time off rather than put it on credit cards

[Anonymous]

Anonymous wrote:I would use the savings to eliminate a good chunk of the credit card debt, as PPs have suggested. Then cut all the extra activities, eating out, vacations (even driving ones) for the next year to pay off the rest of the cc debt. Cut up the credit cards and just use cash for necessities (or your debit card for the gas station). Cover the summer with YMCA camp, grandparents, and parents taking all accrued PTO separately. It's one year, OP--you can do it for one year.

Konmari your house, to make room. Do not move.

That gets us to 2017, no credit card debt (probably adding $1500/month back to cash flow that was going to minimum payments on the cc debt), middle child in aftercare (so a reduction of daycare costs), and car 1 almost paid off. I would add $500/month back to your entertainment budget, but I would continue to take it in cash. If you register online for an activity or something, pay with a debit card, and put that amount of cash back into your account. If you don't spend the whole $500, put it away for vacation. The rest of the additional money ($1000 from credit cards, and extra from daycare savings), I would use to replenish savings. When car 1 is paid off, I would put that money towards savings, earmarked for maintenance/savings for a new car (because even Hondas need to be replaced eventually, and hopefully by then you'll have enough to pay in cash). Same for car 2.

So in 2018, you'll have rebuilt your emergency savings, have zero credit card debt, have two paid-off cars that should be reliable for at least another five years. You'll still have SL and mortgage debt, but a lot of us do at your income, and hopefully they are at low interest rates. Your kids will all be in ES, and they will want to pay little league, or join the band or something, and you'll be able to pay cash for those things. I would focus on paying off SL debt, and when that's gone, redirect the money into college savings for the kids.

I would plan to stay in the house for the long term though. You really don't need a bigger house.

You can do this OP. It's going to involve a little short term pain, and a lot of discipline going forward, but just keep your eye on the yearly goals, and in a few years, you'll be in a much better place.

This is good advice.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP--
Are you still reading these? I think you got caught in a trap of thinking you were going to get caught up at some point but kept spending and spending. I'm not going to fault you on having 3 children at all, but I don't think you prepared well for your maternity leaves. But too late now.

I'm most likely going to repeat what other people have said.
Read Michelle Singletary, she can really help you get motivated. Dave Ramsey is good too--- it might be helpful to stick with cash for a while.

Everyone pointed out big changes are necessary, but small changes are needed to!
1. Pack lunches every day-- read all the tips on budgeting websites
2. Consider moving. It sounds like you are trying to keep up with your neighbors-- Smithsonian camps? Come on, your kids will be just fine with a community center type camp. Or see if you can hire a college student for the summer. I don't think your mortgage is horrible but the lifestyle around you may make it hard for you to make life changes
3. No vacations for the next few years. Take the time off. You can still do day trips to the beach, and DC has plenty to offer, or go and visit family
4. Be honest with your friends-- I'm guessing you don't want people to know that you are drowning in debt but it will be easier for you to turn down things that are expensive if you just tell your close friends you are concentrating on trying to pay off your student loans and cc debt
5. Since your jobs are secure I would pay off a good chunk of your cc debt with your emergency savings. Then concentrate on paying the rest off with the extra money you can come up with each month
6. No new clothes. I'm sure your closet has more than enough of what you need.
7. I'm not sure if it would be worth it or not to sell one of your cars at this point, but at least look into it
With your earnings you can get back on track but you and your husband really need a reality check. If you have not already you and your husband both need to get on the same page on what your goals are if you ever want to get out of this mess and make a budget and stick to it. No more excuses

I wouldn't if I were her. Bashing hwr for having 3 kids? Abhorrent. You people are sick and unhelpful.

Did you read this post? Not bashing for having 3 kids, saying that her and her husband didn't plan for maternity leave. Most people try to save extra for an extra time off rather than put it on credit cards

Yes, I did. I was responding to your first statement. Didn't get past paragraph 1. Everything being said is just a repeat (and a lot of people patting themselves on the back). Let me guess, pack lunches, sell cars, move, don't spend money on clothes or vacations...amIright?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP--
Are you still reading these? I think you got caught in a trap of thinking you were going to get caught up at some point but kept spending and spending. I'm not going to fault you on having 3 children at all, but I don't think you prepared well for your maternity leaves. But too late now.

I'm most likely going to repeat what other people have said.
Read Michelle Singletary, she can really help you get motivated. Dave Ramsey is good too--- it might be helpful to stick with cash for a while.

Everyone pointed out big changes are necessary, but small changes are needed to!
1. Pack lunches every day-- read all the tips on budgeting websites
2. Consider moving. It sounds like you are trying to keep up with your neighbors-- Smithsonian camps? Come on, your kids will be just fine with a community center type camp. Or see if you can hire a college student for the summer. I don't think your mortgage is horrible but the lifestyle around you may make it hard for you to make life changes
3. No vacations for the next few years. Take the time off. You can still do day trips to the beach, and DC has plenty to offer, or go and visit family
4. Be honest with your friends-- I'm guessing you don't want people to know that you are drowning in debt but it will be easier for you to turn down things that are expensive if you just tell your close friends you are concentrating on trying to pay off your student loans and cc debt
5. Since your jobs are secure I would pay off a good chunk of your cc debt with your emergency savings. Then concentrate on paying the rest off with the extra money you can come up with each month
6. No new clothes. I'm sure your closet has more than enough of what you need.
7. I'm not sure if it would be worth it or not to sell one of your cars at this point, but at least look into it
With your earnings you can get back on track but you and your husband really need a reality check. If you have not already you and your husband both need to get on the same page on what your goals are if you ever want to get out of this mess and make a budget and stick to it. No more excuses

I wouldn't if I were her. Bashing hwr for having 3 kids? Abhorrent. You people are sick and unhelpful.

Did you read this post? Not bashing for having 3 kids, saying that her and her husband didn't plan for maternity leave. Most people try to save extra for an extra time off rather than put it on credit cards

Yes, I did. I was responding to your first statement. Didn't get past paragraph 1. Everything being said is just a repeat (and a lot of people patting themselves on the back). Let me guess, pack lunches, sell cars, move, don't spend money on clothes or vacations...amIright?

Not PP but Op came on here ASKING for advice didn't she. Nothing in the quoted post is bashing her. And, believe it or not, many of us actually DO many of the things that we are suggesting to Op. If you have better advice feel free to offer it.

[Anonymous]

Has any one mentioned possibly refinancing the car loans?

Likewise, if the house has been lived in for more than 3-4 years, a home refinance might be able to save a couple hundred.

Yes, it's a band-aid but it is one that can save a few hundred a month.

If those few hundred are applied to some other cause or goal (credit cards, student loans, etc.) that will help.

The Smithsonian camps seem like the biggest money sink there. But that is just IMO.

11:58, there's a universe of things they can cut.

[Anonymous]

(continued) 11:58, there's some things that are so cliched, you're right, you can just have a bot come in and make those posts. There's others that boil down to "live in a room a medieval monk might consider a bit spartan" but that is IMPOSSIBLE unless both parents are really on board, because otherwise resentment builds up on the kids, the parents, etc.

But OP needs to take the sum total of the advice and decide which is easiest to implement.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

I doubt they got 5 year car loans - I would guess 6 years. This is a not a family that attempts to aggressively pay of debt and looks at amount of interest strategically. They look at cash flow (or lack there of)

I thought car loans were usually 3 or 4 years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

I doubt they got 5 year car loans - I would guess 6 years. This is a not a family that attempts to aggressively pay of debt and looks at amount of interest strategically. They look at cash flow (or lack there of)

I thought car loans were usually 3 or 4 years.

I think that used car loans are generally 3 or 4 years (or less). New car loans can go a bit longer.

[Anonymous]

Anonymous wrote:(continued) 11:58, there's some things that are so cliched, you're right, you can just have a bot come in and make those posts. There's others that boil down to "live in a room a medieval monk might consider a bit spartan" but that is IMPOSSIBLE unless both parents are really on board, because otherwise resentment builds up on the kids, the parents, etc.

But OP needs to take the sum total of the advice and decide which is easiest to implement.

No one is suggesting that Op live off of Ramen and tap water for a year. People are advising her to forgo her annual vacation for a couple of years and put that money towards paying off bills. Use her leave to cut back on childcare expenses, etc...

Op lives in a nice house, in a nice city. She has a good job, a husband that has a good job, 3 great kids and 2 nice cars. Op is doing pretty darned good, she just needs to trim down some of her extra expenses to continue to afford her lifestyle.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP--
Are you still reading these? I think you got caught in a trap of thinking you were going to get caught up at some point but kept spending and spending. I'm not going to fault you on having 3 children at all, but I don't think you prepared well for your maternity leaves. But too late now.

I'm most likely going to repeat what other people have said.
Read Michelle Singletary, she can really help you get motivated. Dave Ramsey is good too--- it might be helpful to stick with cash for a while.

Everyone pointed out big changes are necessary, but small changes are needed to!
1. Pack lunches every day-- read all the tips on budgeting websites
2. Consider moving. It sounds like you are trying to keep up with your neighbors-- Smithsonian camps? Come on, your kids will be just fine with a community center type camp. Or see if you can hire a college student for the summer. I don't think your mortgage is horrible but the lifestyle around you may make it hard for you to make life changes
3. No vacations for the next few years. Take the time off. You can still do day trips to the beach, and DC has plenty to offer, or go and visit family
4. Be honest with your friends-- I'm guessing you don't want people to know that you are drowning in debt but it will be easier for you to turn down things that are expensive if you just tell your close friends you are concentrating on trying to pay off your student loans and cc debt
5. Since your jobs are secure I would pay off a good chunk of your cc debt with your emergency savings. Then concentrate on paying the rest off with the extra money you can come up with each month
6. No new clothes. I'm sure your closet has more than enough of what you need.
7. I'm not sure if it would be worth it or not to sell one of your cars at this point, but at least look into it
With your earnings you can get back on track but you and your husband really need a reality check. If you have not already you and your husband both need to get on the same page on what your goals are if you ever want to get out of this mess and make a budget and stick to it. No more excuses

I wouldn't if I were her. Bashing hwr for having 3 kids? Abhorrent. You people are sick and unhelpful.

Did you read this post? Not bashing for having 3 kids, saying that her and her husband didn't plan for maternity leave. Most people try to save extra for an extra time off rather than put it on credit cards

Yes, I did. I was responding to your first statement. Didn't get past paragraph 1. Everything being said is just a repeat (and a lot of people patting themselves on the back). Let me guess, pack lunches, sell cars, move, don't spend money on clothes or vacations...amIright?

Not PP but Op came on here ASKING for advice didn't she. Nothing in the quoted post is bashing her. And, believe it or not, many of us actually DO many of the things that we are suggesting to Op. If you have better advice feel free to offer it.

20 pages of the same, I'm assuming at least. The first 5 were redundant and now we are on page 20. Can't imagine there is anything mind blowing to add.

[Anonymous]

Anonymous wrote:I would use the savings to eliminate a good chunk of the credit card debt, as PPs have suggested. Then cut all the extra activities, eating out, vacations (even driving ones) for the next year to pay off the rest of the cc debt. Cut up the credit cards and just use cash for necessities (or your debit card for the gas station). Cover the summer with YMCA camp, grandparents, and parents taking all accrued PTO separately. It's one year, OP--you can do it for one year.

Konmari your house, to make room. Do not move.

That gets us to 2017, no credit card debt (probably adding $1500/month back to cash flow that was going to minimum payments on the cc debt), middle child in aftercare (so a reduction of daycare costs), and car 1 almost paid off. I would add $500/month back to your entertainment budget, but I would continue to take it in cash. If you register online for an activity or something, pay with a debit card, and put that amount of cash back into your account. If you don't spend the whole $500, put it away for vacation. The rest of the additional money ($1000 from credit cards, and extra from daycare savings), I would use to replenish savings. When car 1 is paid off, I would put that money towards savings, earmarked for maintenance/savings for a new car (because even Hondas need to be replaced eventually, and hopefully by then you'll have enough to pay in cash). Same for car 2.

So in 2018, you'll have rebuilt your emergency savings, have zero credit card debt, have two paid-off cars that should be reliable for at least another five years. You'll still have SL and mortgage debt, but a lot of us do at your income, and hopefully they are at low interest rates. Your kids will all be in ES, and they will want to pay little league, or join the band or something, and you'll be able to pay cash for those things. I would focus on paying off SL debt, and when that's gone, redirect the money into college savings for the kids.

I would plan to stay in the house for the long term though. You really don't need a bigger house.

You can do this OP. It's going to involve a little short term pain, and a lot of discipline going forward, but just keep your eye on the yearly goals, and in a few years, you'll be in a much better place.

Not the OP but this sounds like a vrey good plan