How Do You Handle Your Debt?

so we are suggesting his wife go out and become a plumber?

school loans are the next bubble.

 

That is so true, Jan...
I'm just a blue collar tradesman with no college degrees who happily "lowered" himself to that level...

...and I live in an $800k home.

 

Damn!! A mansion?!
Or is that a normal house for Cali?

I have a college degree and I'm blue collar tradesman also.
All the white collar jobs I would've liked to be in, were all laid off or downsized 15 years ago. So here I am...College dollars hard at work.

Can't say I regret it. Good Money. But right now... The weekend work and shift rotations are getting old.

(Sorry, off topic)

 

For the area I live in, it's just a modest cottage. And my wife and I could have never afforded to buy, so we built our own home. This is another advantage to being an uneducated undegreed blue collar tradesman...

...you can actually DO things.

Maybe not just now...
...but it is worth your consideration to create your own job by working for yourself in your own business. For me, it instantly doubled what I earned for my work. I only needed to freely choose to take on all of the risks and responsibilities of having my own business.

Once you get a taste of freedom of being your own Captain piloting your own little boat, you never go back to pulling on an oar as a galley slave chained down in the hull of someone elses' ship.

 

My wife and I were in the same spot a couple of years ago. She had left her job and gone back to school so suddenly we went from a very comfortable lifestyle to really having to tighten our belts. We refinanced the house, worked hard to pay off the last of one of the vehicle loans and began cutting out non essential things, Netflix, house phone and on and on. We moved our credit cards to a 0% interest and stopped eating out. It was rough for a while, especially with a kid as there is always something he needs but you get through it. She is now out of school and has been working at her job for a while. She is not making as much as she was before but sticking with a lot of cost cutting we are back to living well. As a result we have also taken care of all but the mortgage, one car payment and a very small amount left on one credit card. It kinda got us back in financial shape if that makes any sence as we are much more aware of what we are spending.

 

I've recently started to scrutinize my finances - not to pay off debt, but to save money so I can properly afford things. So while we're in different situations, the approach can be similar. If you can't track finances personally, I would look into something like Mint.com as others have suggested. You need to separate your "want spending" from your "need spending". If you are serious about tackling debt, limit eating out to once a month. Sure it isn't great, but a few good things will come out of it: 1) you'll save a TON of money that you should ACTIVELY put towards the debt 2) you'll learn how to cook well and 3) you'll eat healthier.

My GF and I cook 5-6 nights a week and try to eat out only once a week now. To us, that was a cutback from eating out a couple nights a week, but I now can save more money to apply elsewhere so I'm not as stretched. Is it a huge amount, no, but it piles up after a few months. Due to our jobs, we eat late, but after a week or two of that you get used to eating later. Most of our dinners are around 7:30-8:30 PM and that is OK. Don't rush the evenings and enjoy the cooking time with your family - even try teaching your little one the ways of cooking can be a fun (keep it safe) activity.

When buying at the grocery store, educate yourself on what to buy generic and what not to - also what to buy organic and what not to. Generic TP..no -- Generic sandwich bags..yes (and so on).

Learn to be more efficient with driving - making more efficient routes and not slamming the gas (and brakes) everywhere. Lots of money saved, no - does it help, yes.

Focus more on organic activity while you try to pay it down. Hiking, camping, and the outdoors provide good, free recreation. Have game nights instead of going out to the movies. Utilize Redbox every so often and honestly just drop Netflix for the time. It's a small amount, but it is a little bit more you can pay the debt down.

To summarize it sounds like family time is a priority and keeping some fun in your life with the SC. I don't know if I'd opt to sell it right away, but I would keep it on the back-burner. Try to track your finances with tons of detail and try seeing what cutting out a good number of little things can save you. You may be surprised. By dropping eating out, buying less "want" items, saving money in the store where you can, saving on gas/etc, and saving on family activity - you may be able to drop your debt by a good amount over the next 6-12 months.

GL.

Beyond food,

 

I'm looking into getting a new CC and just transfering the balance like many of you mentioned. Should I cancel my current card after I transfer the balance? It is a Southwest card and I realized that I never fly anymore so it's pretty useless and has a yearly fee.

Also in case anyone was wondering here is a list of my monthly bills.
Rent
Netflix/Hulu - I know some of you mentioned getting rid of this, but it's $16 combined and we all use it frequently. We do not have cable or pay internet, so this is the only entertainment expense and at $16/month it won't make a big difference in the long run.
PG&E
Garbage (every other month)
CellPhone (only $50)
Gas
Gym membership ($30)
Car Insurance
Preschool
Food

That is all the stuff I have to pay for in a month. Nothing is easily cut out since the things we use as extra's gym and netflix are very cheap. No way I'm giving up the gym as it is a great stress release for me. We are really working on the food aspect and the other big $ drainer is just random purchases that happen throughout the month (daughter and Fiance's clothes, date nights/baby sitter ect.) I'm working with my Fiance to limit her spending and place some money aside each paycheck for the CC and savings.

Thanks again everyone for the help/advice. I really do appreciate it.

 

IMO what I see in this country is the lack of people going into the job market without a valuable skill college or not. College is great if you are going to learn something in demand. With everyone being pressured to go to college, there will soon be no one left who can fix your plumbing, or work on your car, or any number of things. I'm technically a mechanic, but I make more than a lot of people with 4 year degrees. Why? Because I do and learn things that not many other people know or are willing to learn.


Supply and demand...

 

IMO what I see in this country is the lack of people going into the job market without a valuable skill college or not. College is great if you are going to learn something in demand. With everyone being pressured to go to college, there will soon be no one left who can fix your plumbing, or work on your car, or any number of things. I'm technically a mechanic, but I make more than a lot of people with 4 year degrees. Why? Because I do and learn things that not many other people know or are willing to learn.


Supply and demand...

 

Like someone else said, buy baby clothes at garage sales and thrift stores, how much clothes does the fiance buy each month and why? That shouldnt be a every month thing. Do as another said and save all your change, use the extra $80 or $90 in change for your childs clothes or use that to pay the gym, it adds up, believe me. Last, take your income tax return and put it toward any debt first, no questions asked. People always have debt and spend that shit like its nothing. Use it for something good, like getting out of debt.

 

Dropping the gym will save you $300 a year and you can try to get by working out at home. That would be a tough one for me though - I love the gym. Do you have a Planet Fitness? Mine is $10 a month.

As for the CC - cancelling a card will impact your credit. Keeping it open will keep your overall credit limit higher (3 cards with a $1k limit = total $3k limit) which will be good overall on your score. A lot of people have credit cards they don't even use just to have that higher limit (so they don't get close to maxing it). Of course you don't want to max a single card, but it allows you to spread your credit over multiple. However, I wouldn't go getting 8 cards.. not sure how that will impact your score.

This varies a little, but you don't want to use up more than 25% of your credit limit if you can help it. That is, if your limit is $1k - try to stay under $250.. or pay it off to keep it down in that area. Once you start going over that your score will be impacted.

I just did 3 things to help bring my credit up. I opened up two new cards (so now I have a total of 3). One of the cards I'll use for work, which won't be very often. The other I'm keeping "open" and will use quarterly just to have activity post to it. And lastly I extended my credit limit on my current card. Just by getting 2 new cards and extending my limit I tripled my overall credit availability - which is a good thing because now I can use my cards and stay well below that 25% thresh-hold.

 

just a reminder...a high FICO score means you are good at incurring and paying off debt. NO FICA score means you DO NOT incure debt whatsoever, i.e. paying for things when you earn the cash for them.

 

^^ Yup - sorry didnt mean to infer that you shouldnt use your cards, you definitely should. But having a couple helps being able to use "more" without getting towards "maxing out".

 

For the gym, check with your medical insurance..some will reimburse part of your membership. Mine gives $150 a year, that's free money as I see it.

Learn to fix basic house things if you can..I've totally ripped 3 rooms in my house down to the studs and only had to call for an electrician. My part time job is running a dart league and I've met a lot of tradesmen through that who will help me with that kind of stuff if I don't know how to do it.

Shopping..buy the Sunday paper every week and clip coupons. My wife can routinely save $75 off $200 of groceries that way. Also figure out things like sandwich bags, shampoo, etc that you can buy at a dollar store instead of spending 2-3 bucks at the supermarket for.

I'll buck the trend and say keep the supercharger for now. If down the road you have other financial woes you can use that as your ace in the hole, but right now with some discipline I bet you don't have to go that route.

I myself am horrible with money. I don't get into debt, but I don't save either. Since meeting my wife (who is very responsible) I got rid of my $1500 credit card debt in 3 months and started aggressively dumping money into my 401k. I still have one credit card with a low rate that's used for buying things online. I will confess to attending a lot of concerts which is my only real extravagance, but I don't go out much otherwise and when I attend a show I don't drink more than 2 sodas so I'm not dropping more money that night really.

One habit I got into was every day throwing my change into a jar..not a lot but it really did add up fast.

A big change recently was I gave up cigarettes. I was a 2 pack a day smoker for many years and was costing me about $20 a day. Not only good for health reasons but I'm saving money a lot, plus my wife doesn't have to take money out of the joint account anymore..my "play money" for the week now is also her fuel and going out.