How Do You Handle Your Debt?

I'm looking for some insight into how you guys handle your debt. I'm 26 with a Fiance and a 2 year old. I'm the only one that works as my Fiance is trying to finish school, so we are trying to get by on one salary. At times it hasn't been bad, but the last year it's been really tough since my daughter started preschool (so my Fiance can go back to school), which has been a major strain on our finances. Unfortunately with the added costs I've racked up about 8k in debt from day to day purchases and a wedding we had to attend out of state this summer (about 2k in expenses alone). Now I'm stressing out because I don't know how I'll pay it off. I finally got a raise, but it's only about $500 more a month, which will cover the amount I typically put on the cc or maybe a little more. I'm putting my 2.5k bonus all towards the debt, but that still leaves me with a good chunk to pay off.

I'm very tempted to sell some car parts, specifically my supercharger, which could net me about 2k, but the selfish part of me wants to keep it since I work my ass off and never buy myself anything. I'd get a second job, but I can't be away from my daughter more than I already am and the only job I would want to get is a early morning (4-8 am).

Sorry for the long story, but none of my friends have kids or can relate since they are single. Just wondering how some of you manage or make it easier to pay off. Thanks!

 

sometime youre gonna have to sacrifice. credit is everything nowdays. if youre feeling the bind, i would sell off some of your extra stuff to help with the bills. if youre really squeezing from paycheck to paycheck, im sorry, but the fiancee should put school hold and pick up a job to help out around the house. i know exactly what its like. when i came back from iraq i saw my credit go from 700s down to 450 because of unwise choices. its been a long road but ive managed to get back to around 780. sitting down and actually look at whats coming in and going out is gonna give ou a better financial picture. at the same time its gonna tell you where you need to cut back on.

 

I figure there are three ways to increase your income: Spend less, earn more, or both

I use mint.com to track every single penny that comes in and out of all of my accounts. It's the best financial app/website that I've ever used, and I've tried about 10 different ones. That's the best way I've found to keep track of my spending, they even have an app that works great.

It's a good idea to sit down and figure out what you really need and what you can do without. I've long since ditched satellite because I can find any show or movie I want on the internet for free. I currently stay in the bottom half of a house, so me and the guy upstairs share the cost of internet.

If you pay your own power bills do your own personal energy audit in your house and figure out how to save some energy = save cash. Figure out ways to save fuel by changing your driving style aka hypermiling.

Take a look at your food situation and how you keep yourself fed. If you buy a lot of convenience foods, you can save a fair amount by making home cooked meals and preparing lunches for those that are working/schooling from scratch rather than taking frozen products and fast food to eat. I used to spend $1200+ every month on food! I couldn't beleive it when I started actually watching my spending, now I'm down to about $500 on an avg month.

If you have a specific skill, you can try to make some money on the side for some extra quid, some guys do mechanic work or undercoating or detailing in their garage on weekends for an example.

If you are having trouble with keeping up with your monthly payments, do sell something off if you are going to miss a payment. Missing payments and therefore messing up your credit score is the worst thing you can possibly do financially because it will cost you for years. Trust me, I know!

Some of these things require you to work harder at home, like prepairing meals, I F%#@# hate cooking, but I do it because I know how much cash I used to blow on convenience food. You might feel like things are pretty dire if you have to give up something you enjoy. But when your fiance finishes school she'll be bringing income to the table, don't forget that. $8000 in debt isn't all that bad, just do what you have to to keep up with the payments, put extra cash you come across into the debt, it will take time but you'll pay that off and hopefully leave it behind you.

Hope this helps and good luck.

 

Thanks for the advice. I really don't want to sell the supercharger as I've wanted one for my 4runner for 3 years, but it will bring in the most $ if I sell anything. My Fiance is staying in school though. She has one more year and she is done, so it would be stupid to take her out now since there is no guarantee for her to go back. Might as well finish it up while she is already in the groove. Plus we are planning on having our second child after her schooling is done so that would throw everything off. She's talked about getting a part time job, but with school and watching our daughter full time she won't have the time or patience to work and get homework done. Last thing I need is her slipping in school or stressing out all the time because she's working a couple days a week. Not worth it for the mental health of our home life.

Wow thanks for the lengthy reply. I can make all my monthly payments no problem and utilities, internet and tv (netflix/Hulu only) are about $100. My mother in law is our land lord so she is flexible in our rent if we really need it. So all bills can be paid for, it's more the little random stuff that costs a lot. My daughters school had a $650 enrollment fee that wasn't budgeted for because we didn't if she was even going to get in at this particular school.

We do have a problem with eating out too much. I work till around 6 everyday and often my Fiance will not make dinner or will be out till I get home anyways. So we end up at a taqueria or the like. I prefer cooking and a home cooked meal, but I can't really "make" my Fiance cook. I've talked to her about it many times, but she hates cooking as well and never knows what to cook or doesn't make it to the grocery store. It frustrates me and I've been getting into cooking myself when I get home, but that means we don't eat till 7:30-8. We are working on making a menu for the week and shopping on Sunday for it so we have everything. I think that will really help with that problem. I never buy lunch at work as I eat left overs, so I'm good on that front.

Are you comfortable with putting you personal info into Mint.com? I really like the idea of it, but feel a little hesitant to put my cc and bank info into an online database.

 

How is your credit? You can really offset some of your CC debt by finding deals on CCs with 0% APR on balance transfers, and even no balance transfer transaction fees. Ask your bank or inquire at another bank.

Don't sell the SC. You're able to make your monthly payments, so you're not totally under shit. See if you can sell anything else of value. Post on CL, eBay, or even here.

How much longer does your fiance have in school? Because if it's a matter of struggling until then, when she can get a job after, then it won't be as bad as trying to just maintain until then. Lets face it, its hard to get rid of family debt with only one income. If you can maintain until she gets a job, then when she does, then concentrate on reducing your debt.

 

My credit is good. I have had a cc for about 8 years now and never missed a payment or maxed out a card. That's a good idea about transfering the balance. I have a Southwest cc that I'm not too into since we never travel anyways. Been thinking of getting rid of it once the balance is paid.

My fiance has one more year of school, so she will be done this spring. Not too far away. I will be getting another raise in 4 months that should bump up my income another $500. That will really help as well. I just can't stomach digging myself deeper. I will reassess my situation at the end of the month when my raise gets here.

I forgot to mention that we are planning on getting married this summer which is another factor that is stressing me. We already postponed the wedding one time because we couldn't afford it.

 

dont close any credit cards. you'll credit will take a dip. keep it, even with zero balance.

For our wedding we refi'd the truck. It appraised at $20k so we got that in cash, and it helped a ton. Now we just have a car loan again. But it's a secured fixed loan (unlike most CCs), and interest is ony like 3% over 60 months

Also, to help with our honeymoon, we put all wedding expenses on a CC with good rewards, then either paid it off after the billing statement (with the cash we got from the truck refi), or transfered the balance to another CC with 0% apr. We were able to get 8 nights comped for our honeymoon with the rewards from that CC. And the balance that was transferred to the other CC with 0% APR is now paid off from the wedding gift $. So in that time, we paid 0 interest, which is huge when you're spending thousands of dollars on a wedding

 

If you can truly reduce your outstanding debt by $2k (or 25%!) just by selling an optional piece of equipment from your vehicle that doesn't impact it's dependability, why wouldn't you? Do you really care about the supercharger that much that you're willing to pay the additional interest on $2k in debt for it each month? Seems to me like a really quick and easy way to make a big dent in your problem.

As far as lifestyle changes, etc. to help with debt, I think the recommendation to limit eating out and other frivolous uses of your cash is a great one. You say your fiance hates to cook - does she know what your financial situation is like? Maybe if you sat down with her and went over the numbers in detail and explained the money you could save by cooking at home, she would be more understanding and willing to cook at home more. Just a thought.

You're doing great just by acknowledging the problem and trying to fix it. But to correct a situation is often harder than avoiding getting in it...you have to make sacrifices (supercharger, car parts, etc.) for the benefit of your family over the long haul.

P.S. - Mint.com sucks for me, doesn't work at all. I run every expense through my CC and then pay it off each month, so it tells me that I spend 2x what I really do (counts my CC payment as an expense on top of what I spend on the CC). I just do a good old fashioned spreadsheet to track my expenses.

 

Check out the Dave Ramsey channel on I Heart Radio or better yet go to his website read some stuff on there and watch his daily online show. www.daveramsey.com

If you're serious about getting out of debt and being financially free in the future he is the guy you want to listen to! People with similar questions, and more complex ones, call in his show and he answers them and helps guide them on what to do.

I have a rather monotonous tasks I have to perform at work each morning so I listen to his radio show on I Heart Radio everyday. Makes the time go by faster and he will be able to get you pointed in the right direction.

 

x2

 

I sometimes have to go in and change the transaction category to "credit card payment" and then it figures it out. That credit card also has to be registered on your mint.com account or it won't know where the cash is going.

 

I married at about your age. At that time I made a spreadsheet, listing the major items I owned, along with their cost and expected life. Then I calculated the monthly savings needed to replace them. I put that amount into a savings account and was able to pay cash when it came time to get new ones. My reasoning was that if I couldn't afford to do that, I was living beyond my means and the interest costs of buying on time would eventually catch up with me. It was a bit rough the first few years, but I have been debt free for over 30 years. Achieving clear home ownership was largely a bit of luck, but I think anyone should be able to be nearly debt free with careful management of his money. It takes a bit of self discipline, but pays off fairly quickly.

 

^^sorry, but this makes no sense. if the schooling will help in the job market, this is the expense you SHOULD put up with.

going to a wedding, even if it was for a family member was the mistake. sorry. you should have sent a nice gift and a note saying how you cannot make it.

next dump the attitude that since you work you deserve to have some stuff. i had this same way of thinking. it is STUFF!! just stuff. if you want it bad enough, save for it. i found most of the stuff i thought i wanted, i kinda let fizzle by the time i got up the money for it.

bottomline. quit buying stuff. break it down into two list. NEEDS and WANTS. dont buy many wants..spend on the needs.

you shouldnt even effen own a supercharger. do you have any emergency money saved up? no. quit buying things, change your selfish attitude that you deserve things..cuz you work. trust me, it wont be easy. it wasnt for me.

i got over it. my wife graduates DEC 13th from nursing school. it was 5yrs of hard work. she had a degree, but need undergrad prereq out of the way before nursing school would let her in. we did it.

we owe no more money that when we started. just our home. we stopped buying toys on credit. if i wanted it, i saved. i am saving for a new hunting bow right now. i should get it by Christmas.

we still managed to save money. my wife whisks it off right away. first thing, then pay morgage..then we look at what we have left. it is working!!

you are gonna kick ass..why? because you are thinking about it while you are so young. me, not so much. i had a lot of ground to make up.

 

Horribly....

 

You don't really seem to want to be out of debt. You put your 2 year old daughter in an expensive $650 a month school. You plan to get married as soon as your fiance graduates. Just elope and don't take on debt for an expensive wedding. As soon as you fiance graduates you are going to have another child. Just these 3 choices could put you in debt for the next 20 years. If that is what you want then keep the supercharger that you don't need and keep spending money like there is no tomorrow.

If you want to change your life to a positive financial mode, than act responsibily

 

WOW! Bottom line-PAY OFF credit cards-FIRST PRIORITY.
Do not spend money you do not have.If you must use credit cards-PAY IT OFF evey month.
INTEREST gets you NOTHING.
Second job for you? NO!= weekend job for fiance-Yes.
Get rid of the debt-be cheap-FRUGAL.
This is advice from an old guy- boats-trucks-two houses-and property.(Forgot to add--two kids-one in college-one married w/ family).
Good credit is a blessing-and a curse-if you abuse it.
Live within your budget-and pay off debt.
BOTTOM LINE--Do not have the $$$-Do without- UNTIL you have the $$.

 

26 years ago me and the wife got married by a justice of the peace, honeymoon was a few nights in a nice hotel in Colorado Springs and 2 months later had a small wedding reception at a popular country bar in WI with total out of pocket less than $800, asked for no gifts, just attendance, and everyone had a good time just the same.

You don't want to be paying off a wedding by refinancing anything.

 

All good advice. I want to chime in about Mint.com, it is a tool that works better the more you put into it. I took the plunge about three years ago and put my personsal info into it. It is awesome! You do way more than just track spending. It has credit monitoring, budgeting tools, asset and net worth calculations, and tips to save money based in where you are spending it. You have to spend some time with it though--I sit down once a week for ten minutes to review transactions and categorize them. This is what the previous person above didn't do correctly, that's why the cc transactions weren't showing up right.

 

Yes. It amazes me how many young couple go into marriage crush by the debt of a wedding.

I did it cheap. Later when we are financially secure I hope to renew my vows in Paris or something.

 

Lots of good financial advice from some of us that have been around the block a couple of times.
You do not need to spend BIG money to have a good time or memorable experiences.
Life is what you make of it. Enjoy what you have,compare youself to No-one. Someone ALWAYS has more-AND-someone ALWAYS has less. WHO CARES! Be good to EVERYONE.
LIFE IS GOOD--enjoy it along the way.
GEEZZZEE got way off base here!