Author Topic: Need help getting rid of debt  (Read 8350 times)

gbru316

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Need help getting rid of debt
« on: April 27, 2015, 07:01:11 AM »
Situation: Married filing jointly, I’m 30, she’s 28. 1 14 month old dependent. Live in PA, I work in MD (70 mile commute). I’m finishing an engineering degree, she’s disabled (wheelchair bound, denied for disability on first application due to expected disability lasting less than 1 year).
Gross salary: $57k
Pre-tax deductions (bi-weekly):  $120– medical
            $153.85– HSA
            $12.46 – dental
            $6.18 – vision
            Total - $286.31
Other ordinary income – none
Dividends/rental  - none
AGI (per 2014 1040) - $51,611
Taxes – SS/Dis - $124.57
   Medicare - $29.13
   Federal - $77.81
   PA - $61.58
   Local - $22.98
   Total - $316.07
Current expenses – Car payment - $130/mo
      Credit cards – approx $500/mo
      Cell phones - $140/mo
      DSL - $35/mo
      Gas – approx $182/mo
      Fuel oil – approx $2400/yr
      Electric - $150/mo
      Water/sewer - $35/qtr
      Trash - $70/qtr
   
      Food – approx $1000/mo (buy generic, meals cooked at home)
      Total - $1362/mo

Assets - $24k 401(k)
   $17k IRA
        $800 - savings account

Liabilities –Mortgage – approx $800 principal, approx $300 escrow ($152k total, 30 yr), down to $132k
   Car loan – initially $7k, down to $3.5k (5 yr, purchased used Prius due to long commute)
   Credit card #1 - $4k, 10.99%
   Credit card #2 - $7k, 14.99%

My wife and I have decided we're sick of living paycheck to paycheck and that we need to get out of the credit-card cycle. We've been trying for a few years but we keep having things pop up (car transmission, Prius battery, medical issues, etc) which results in making progress, then watching that progress evaporate as we need to pay for these unexpected expenses (highlighting the need for an emergency fund).

She is unable to contribute due to her disability. I'm taxed to the max between finishing an engineering degree (1 yr left) and working full time. In addition, she is having major surgery next week that includes a 12 week recovery so my overtime ability is limited because I'll need to care for our child.

I was previously contributing 10% of my paycheck to 401(k) with 5% company match (average ER of total retirement savings is 0.24%, all in index funds. I'm a Boglehead). In an effort to get out of this situation, I've ceased contributions until our debt is gone and we have an adequate emergency fund. We've already eliminated cable TV entirely. We plan on selling her car (since she can't drive for the foreseeable future) and using the proceeds to pay down debt. We are cancelling our cell phone plan once the contract is up and going back to basic talk/text.

 What's absolutely killing us right now is the lack of emergency fund and the credit card interest (currently paying $500 a month in interest). Our credit card payments are pretty much just covering the monthly interest at this point.

We've considered taking a 401(k) loan, IRA withdrawal, or securing a 0% introductory rate credit card to transfer our balance onto. As a group of people infinitely more knowledgeable about financial responsibility than I am, could you please offer some advice?

charis

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Re: Need help getting rid of debt
« Reply #1 on: April 27, 2015, 07:27:45 AM »
The immediate thing that jumps out at me is your food costs.  $1000/month for groceries for 2 adults and a 1 year old?  We are a family of 4 and are up to $347 in grocery costs for the month so far. 

gbru316

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Re: Need help getting rid of debt
« Reply #2 on: April 27, 2015, 07:29:22 AM »
The immediate thing that jumps out at me is your food costs.  $1000/month for groceries for 2 adults and a 1 year old?  We are a family of 4 and are up to $347 in grocery costs for the month so far.

I agree. My wife used to do the shopping and I always thought they were high. When she lost her mobility, I took over and wasn't able to do much better. We try to buy meat on clearance (expires soon) and freeze, and that helps, but obviously not enough. We also use coupons.

vhalros

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Re: Need help getting rid of debt
« Reply #3 on: April 27, 2015, 07:34:34 AM »
With that kind of credit card debt I would just stop buying meat all together, or at least very little. But even if you do, $1,000 is way to much; have you read the appropriate titled blog post "How to kill your $1,000 grocery bill": http://www.mrmoneymustache.com/2012/03/29/killing-your-1000-grocery-bill/ ?

The other thing that jumps out at me as being really high is electricity and gas. Is that gas as in heating or as in for cars?
« Last Edit: April 27, 2015, 07:42:35 AM by vhalros »

charis

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Re: Need help getting rid of debt
« Reply #4 on: April 27, 2015, 07:41:14 AM »
The immediate thing that jumps out at me is your food costs.  $1000/month for groceries for 2 adults and a 1 year old?  We are a family of 4 and are up to $347 in grocery costs for the month so far.

I agree. My wife used to do the shopping and I always thought they were high. When she lost her mobility, I took over and wasn't able to do much better. We try to buy meat on clearance (expires soon) and freeze, and that helps, but obviously not enough. We also use coupons.

We buy all generic and do not use coupons because it would cost more and cause us to buy things that we wouldn't buy otherwise.  For meat, we stick to items we can get for close to $1/pound (family packs, ground turkey, pork roast), so not much red meat.

gbru316

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Re: Need help getting rid of debt
« Reply #5 on: April 27, 2015, 07:41:43 AM »
With that kind of credit card debt I would just stop buying meat all together, or at least very little. But even if you do, $1,000 is way to much; have you read the appropriate titled blog post "How to kill your $1,000 grocery bill": http://www.mrmoneymustache.com/2012/03/29/killing-your-1000-grocery-bill/ ?

The other thing that jumps out at me as being really high is electricity and gas. Is that gas as in heating or as in for cars?

Thanks, I'll take a look at that link.

Gas is for car. I drive 760 miles a week. Electricity is high because my wife is home all day. Our house is sandwiched between 2 other houses and gets very little natural sunlight. I can't reasonably expect her to sit in the dark all day with our son.

vhalros

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Re: Need help getting rid of debt
« Reply #6 on: April 27, 2015, 07:45:36 AM »
That amount of  electricity usage is not explained by just keeping a light bulb on all day, although it would make sense to get rid of any incandescent and replace them with LEDS (if any are still in your house). What is the cost you pay per kilowatt hour there? Here is a useful blog post about electricity usage: http://www.mrmoneymustache.com/2011/05/10/ill-show-you-my-electricity-bill-if-you-show-me-yours/

Regarding your commute, have you considered options for reducing it (i.e. find a closer if slightly lower paying job, moving)? Gas is only part of the marginal cost of driving a mile, so that is costing you a lot.

gbru316

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Re: Need help getting rid of debt
« Reply #7 on: April 27, 2015, 07:47:35 AM »
That amount of  electricity usage is not explained by just keeping a light bulb on all day, although it would make sense to get rid of any incandescent and replace them with LEDS (if any are still in your house). What is the cost you pay per kilowatt hour there? Here is a useful blog post about electricity usage: http://www.mrmoneymustache.com/2011/05/10/ill-show-you-my-electricity-bill-if-you-show-me-yours/

Regarding your commute, have you considered options for reducing it (i.e. find a closer if slightly lower paying job, moving)? Gas is only part of the marginal cost of driving a mile, so that is costing you a lot.

Yes. The problem is that I'm stuck at my employer because of tuition reimbursement. If I leave voluntarily, I'll have to repay the significant amount of money that they've provided for tuition.  Moving closer would also put us in a MUCH higher cost of living area.

We do have a local Aldi that I'll be checking out.
« Last Edit: April 27, 2015, 07:53:42 AM by gbru316 »

Calimandc

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Re: Need help getting rid of debt
« Reply #8 on: April 27, 2015, 08:27:35 AM »
This is a difficult situation to find yourself in, but there are some things you can do. As has been mentioned in previous posts, your gas, commute, utilities, and grocery bills are high. 

A few things that come to mind for me are:
1. Consider after your wife's operation, her taking on some part-time remote work.  Even though she is in a wheelchair, there is a lot she can still do.  Any additional money picked up in this way throw right at the highest interest credit card to snowball that one, then the next one down to nothing.

2. Yes, check out Aldi, as an alternative.  Also, as mentioned in previous posts, cut the red meat and look for family packs.  Do not buy packaged products, but the raw ingredients, making your own dishes that way.

3. Is there any way you can carpool with other people from work?  You may be able to recoup a little money in this way, or at least not spend as much, depending on if you charge them, or if you simply get a ride.

4. Contribute to your retirement plan up to the match, and then put everything else toward the debt.  That way you're not leaving anything on the table.

5. Finally, look around your house to see if there's anything you can do without: Old books, DVD's, clothes, furniture, anything!  Do a personal inventory of everything you own and see if you've used it in the past year.  If not, sell it.  Take whatever money you make from this and put it directly toward your debt at a 1:1 ratio.  Using Amazon, E-bay, and craigslist can net you quite a bit for the junk just sitting around cluttering up your house.

I hope your wife's operation goes well, and some of what the community offers is useful to you.

Best wishes,

J-

MsPeacock

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Re: Need help getting rid of debt
« Reply #9 on: April 27, 2015, 08:44:58 AM »
The immediate thing that jumps out at me is your food costs.  $1000/month for groceries for 2 adults and a 1 year old?  We are a family of 4 and are up to $347 in grocery costs for the month so far.

I agree. My wife used to do the shopping and I always thought they were high. When she lost her mobility, I took over and wasn't able to do much better. We try to buy meat on clearance (expires soon) and freeze, and that helps, but obviously not enough. We also use coupons.

We buy all generic and do not use coupons because it would cost more and cause us to buy things that we wouldn't buy otherwise.  For meat, we stick to items we can get for close to $1/pound (family packs, ground turkey, pork roast), so not much red meat.

If you are shopping the way you say you are, your grocery costs would not be $1000 per month for 2 adults and a small child. Are you including other costs in your grocery cost list (e.g. household items - like cleaning supplies, toothpaste, detergent, diapers, pet supplies)? I just recently started here and it was eye-opening for me to really track the "grocery" spending and found that a significant portion of it wasn't in fact groceries. Doing so can really help focus you on a area of attack (e.g. do you need to make less expensive meals or do you need to find less expensive pet food, are you wasting money on other household stuff, or something else). Otherwise, the more prepared foods and snack type foods you have in your groceries the higher you costs.

If you can - get to Aldi's or Bottom Dollar for groceries. Watch you food waste carefully, and use meal planning. Dollar Tree has cleaning supplies for much less than they cost at the grocery store.

Switch to ptel, new republic, or Ting to lower your cell phone costs. (I see you are planning to do that).

Apply for balance transfer credit cards w/ 0% or very low interest and move that debt to a place less costly.


ShoulderThingThatGoesUp

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Re: Need help getting rid of debt
« Reply #10 on: April 27, 2015, 08:45:57 AM »
I'm surprised at the cost of your house. I'm guessing you live near York? I know York city schools are in trouble, but >$150k is a very fancy interior unit in most of Pennsylvania that I'm familiar with.

gbru316

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Re: Need help getting rid of debt
« Reply #11 on: April 27, 2015, 08:50:16 AM »
This is a difficult situation to find yourself in, but there are some things you can do. As has been mentioned in previous posts, your gas, commute, utilities, and grocery bills are high. 

A few things that come to mind for me are:
1. Consider after your wife's operation, her taking on some part-time remote work.  Even though she is in a wheelchair, there is a lot she can still do.  Any additional money picked up in this way throw right at the highest interest credit card to snowball that one, then the next one down to nothing.

2. Yes, check out Aldi, as an alternative.  Also, as mentioned in previous posts, cut the red meat and look for family packs.  Do not buy packaged products, but the raw ingredients, making your own dishes that way.

3. Is there any way you can carpool with other people from work?  You may be able to recoup a little money in this way, or at least not spend as much, depending on if you charge them, or if you simply get a ride.

4. Contribute to your retirement plan up to the match, and then put everything else toward the debt.  That way you're not leaving anything on the table.

5. Finally, look around your house to see if there's anything you can do without: Old books, DVD's, clothes, furniture, anything!  Do a personal inventory of everything you own and see if you've used it in the past year.  If not, sell it.  Take whatever money you make from this and put it directly toward your debt at a 1:1 ratio.  Using Amazon, E-bay, and craigslist can net you quite a bit for the junk just sitting around cluttering up your house.

I hope your wife's operation goes well, and some of what the community offers is useful to you.

Best wishes,

J-

We already cook from "scratch." Not a big fan of processed foods. Carpool is not feasible due to nonstandard schedule resulting from evening classes. Employer requires 10% contribution to get the max match. I was doing that for a while, but could not sustain it and reduce debt at the same time. I've also been selling things we no longer need.

There is some relief in sight. My salary should increase by $15-20k next May, and I'm expecting a promotion this month. We've already sworn off credit cards so the increase in salary is not going to towards supporting our currently unsustainable lifestyle. It'll be used to eliminate debt, establish emergency fund and save for retirement.

The immediate thing that jumps out at me is your food costs.  $1000/month for groceries for 2 adults and a 1 year old?  We are a family of 4 and are up to $347 in grocery costs for the month so far.

I agree. My wife used to do the shopping and I always thought they were high. When she lost her mobility, I took over and wasn't able to do much better. We try to buy meat on clearance (expires soon) and freeze, and that helps, but obviously not enough. We also use coupons.

We buy all generic and do not use coupons because it would cost more and cause us to buy things that we wouldn't buy otherwise.  For meat, we stick to items we can get for close to $1/pound (family packs, ground turkey, pork roast), so not much red meat.

If you are shopping the way you say you are, your grocery costs would not be $1000 per month for 2 adults and a small child. Are you including other costs in your grocery cost list (e.g. household items - like cleaning supplies, toothpaste, detergent, diapers, pet supplies)? I just recently started here and it was eye-opening for me to really track the "grocery" spending and found that a significant portion of it wasn't in fact groceries. Doing so can really help focus you on a area of attack (e.g. do you need to make less expensive meals or do you need to find less expensive pet food, are you wasting money on other household stuff, or something else). Otherwise, the more prepared foods and snack type foods you have in your groceries the higher you costs.

If you can - get to Aldi's or Bottom Dollar for groceries. Watch you food waste carefully, and use meal planning. Dollar Tree has cleaning supplies for much less than they cost at the grocery store.

Switch to ptel, new republic, or Ting to lower your cell phone costs. (I see you are planning to do that).

Apply for balance transfer credit cards w/ 0% or very low interest and move that debt to a place less costly.



Yes, that number includes household numbers.

Cutting back on red meat and meal complexity could probably make a big difference. She likes to cook (lasagna, roasts, stews, etc), but I'd be happy with a chicken breast (or maybe some discount sausage), side of rice and some vegetables for most meals.

I'm surprised at the cost of your house. I'm guessing you live near York? I know York city schools are in trouble, but >$150k is a very fancy interior unit in most of Pennsylvania that I'm familiar with.

Lancaster, work in Cockeysville, MD. $150k is a "starter" home in the area. We plan on buying in the Shrewsbury/Glen Rock area in Southern York county once we're in a better financial situation. And this needs to happen sooner, rather than later, because our current house is totally unsuitable for her. She has no access to the second floor and we cannot install a stair lift because the stairwell is too narrow and steep. We agreed that we won't move until our credit card debt is gone.
« Last Edit: April 27, 2015, 08:56:53 AM by gbru316 »

seattlecyclone

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Re: Need help getting rid of debt
« Reply #12 on: April 27, 2015, 08:59:31 AM »
That amount of  electricity usage is not explained by just keeping a light bulb on all day, although it would make sense to get rid of any incandescent and replace them with LEDS (if any are still in your house).

Yes, this is true. Even supposing you still have incandescent light bulbs, leaving a half-dozen 60-watt bulbs running 24/7 only uses 8.6 kWh per day, or 259 kWh per month. Given an average electric rate of 12.92¢/kWh in Pennsylvania (source), lighting a room literally all the time shouldn't cost more than about $33/month to light a room even if you do still have old incandescent bulbs. Upgrade to CFLs or LEDs and the cost for lighting should drop by about 75% or more.

Again, lights probably aren't your biggest problem with electricity. Something else is using a lot of power. Do you have an old, poorly insulated electric water heater? Do you use the dryer a lot? These are more likely to be the cause of your high electric bill.

How high do you leave your thermostat? Any chance you could turn it down a degree or three to save on heating oil?

former player

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Re: Need help getting rid of debt
« Reply #13 on: April 27, 2015, 09:01:40 AM »
You are spending $350 per month/$4,200 per year on fuel oil and electricity.  That is a pretty hefty bill.  I understand that a disabled wife at home with a young child will use more than someone out at work, but that just increases the need to be careful.  You need to draft proof and insulate for next winter, only heat water for your immediate needs, only heat whatever room you are sitting in at the time, and switch off everything at the plug when not in use.

The grocery bill should be less than half what it is.  Are you throwing food away?  You need to be cooking stockpot soups, eating leftovers, etc.

How much of your previous 401(k) contribution is going to pay off your credit card debt?  I hope it is the full amount every month, otherwise you are making a big mistake.

matchewed

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Re: Need help getting rid of debt
« Reply #14 on: April 27, 2015, 09:06:14 AM »
Yep something doesn't add up. Your electricity shouldn't be that high even with your explanation and your food expenses shouldn't be that high at all. You need to dig deeper into those numbers and understand where the waste is.

Also step back from the excuses. You're throwing a great deal of reasons why things can't be and that limits your possibilities when you choose to view them that way. You'll never change if you can't see that you can.

ShoulderThingThatGoesUp

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Re: Need help getting rid of debt
« Reply #15 on: April 27, 2015, 09:12:16 AM »
Why not rent a 2-bedroom apartment? It would be on one level which I understand is crucial, and it would free up some cash from your house to eliminate those debts.

gbru316

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Re: Need help getting rid of debt
« Reply #16 on: April 27, 2015, 09:14:25 AM »
That amount of  electricity usage is not explained by just keeping a light bulb on all day, although it would make sense to get rid of any incandescent and replace them with LEDS (if any are still in your house).

Yes, this is true. Even supposing you still have incandescent light bulbs, leaving a half-dozen 60-watt bulbs running 24/7 only uses 8.6 kWh per day, or 259 kWh per month. Given an average electric rate of 12.92¢/kWh in Pennsylvania (source), lighting a room literally all the time shouldn't cost more than about $33/month to light a room even if you do still have old incandescent bulbs. Upgrade to CFLs or LEDs and the cost for lighting should drop by about 75% or more.

Again, lights probably aren't your biggest problem with electricity. Something else is using a lot of power. Do you have an old, poorly insulated electric water heater? Do you use the dryer a lot? These are more likely to be the cause of your high electric bill.

How high do you leave your thermostat? Any chance you could turn it down a degree or three to save on heating oil?

House is set at 66 in the winter, usually sits at 78-85 in the summer. We only cool rooms we occupy, and only then to the high 70's. Our washer and dryer are very small and wash gets done daily. We also need to run a dehumidifier in the basement during the summer months. Hot water comes from the fuel oil furnace.

You are spending $350 per month/$4,200 per year on fuel oil and electricity.  That is a pretty hefty bill.  I understand that a disabled wife at home with a young child will use more than someone out at work, but that just increases the need to be careful.  You need to draft proof and insulate for next winter, only heat water for your immediate needs, only heat whatever room you are sitting in at the time, and switch off everything at the plug when not in use.

The grocery bill should be less than half what it is.  Are you throwing food away?  You need to be cooking stockpot soups, eating leftovers, etc.

How much of your previous 401(k) contribution is going to pay off your credit card debt?  I hope it is the full amount every month, otherwise you are making a big mistake.

We pay $150 a month for electricity, I think you may have misread.

Agree grocery bill should be less, will work on that.

We are paying off as much as we can afford to on our credit cards each month. Due to lack of significant emergency fund, unexpected expenses (which occur quite often to us, unfortunately) often divert some of the contribution. Our payments far exceed the minimum credit card payments, but they don't make much of a dent in the principal.


matchewed

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Re: Need help getting rid of debt
« Reply #17 on: April 27, 2015, 09:15:42 AM »
That amount of  electricity usage is not explained by just keeping a light bulb on all day, although it would make sense to get rid of any incandescent and replace them with LEDS (if any are still in your house).

Yes, this is true. Even supposing you still have incandescent light bulbs, leaving a half-dozen 60-watt bulbs running 24/7 only uses 8.6 kWh per day, or 259 kWh per month. Given an average electric rate of 12.92¢/kWh in Pennsylvania (source), lighting a room literally all the time shouldn't cost more than about $33/month to light a room even if you do still have old incandescent bulbs. Upgrade to CFLs or LEDs and the cost for lighting should drop by about 75% or more.

Again, lights probably aren't your biggest problem with electricity. Something else is using a lot of power. Do you have an old, poorly insulated electric water heater? Do you use the dryer a lot? These are more likely to be the cause of your high electric bill.

How high do you leave your thermostat? Any chance you could turn it down a degree or three to save on heating oil?

House is set at 66 in the winter, usually sits at 78-85 in the summer. We only cool rooms we occupy, and only then to the high 70's. Our washer and dryer are very small and wash gets done daily. We also need to run a dehumidifier in the basement during the summer months. Hot water comes from the fuel oil furnace.

You are spending $350 per month/$4,200 per year on fuel oil and electricity.  That is a pretty hefty bill.  I understand that a disabled wife at home with a young child will use more than someone out at work, but that just increases the need to be careful.  You need to draft proof and insulate for next winter, only heat water for your immediate needs, only heat whatever room you are sitting in at the time, and switch off everything at the plug when not in use.

The grocery bill should be less than half what it is.  Are you throwing food away?  You need to be cooking stockpot soups, eating leftovers, etc.

How much of your previous 401(k) contribution is going to pay off your credit card debt?  I hope it is the full amount every month, otherwise you are making a big mistake.

We pay $150 a month for electricity, I think you may have misread.

Agree grocery bill should be less, will work on that.

We are paying off as much as we can afford to on our credit cards each month. Due to lack of significant emergency fund, unexpected expenses (which occur quite often to us, unfortunately) often divert some of the contribution. Our payments far exceed the minimum credit card payments, but they don't make much of a dent in the principal.

You guys wash clothes daily?!

RexualChocolate

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Re: Need help getting rid of debt
« Reply #18 on: April 27, 2015, 09:18:01 AM »
1000 a month for 3 people is insanely high as pointed out earlier and his your main overexpense. Cell phones and electricity can come down, keep the heat at like 60 and wear a sweater.

If your credit is reasonable you can likely do a credit card transfer. 500 a month in interest is way, way too high on 11k of balances averaging about 12% interest, so see what is actually going on these. Sounds like new charges are being added (physically destroy these cards IMO).

Set up mint.com.

Your comment
>>>>
Lancaster, work in Cockeysville, MD. $150k is a "starter" home in the area. We plan on buying in the Shrewsbury/Glen Rock area in Southern York county once we're in a better financial situation. And this needs to happen sooner, rather than later, because our current house is totally unsuitable for her. She has no access to the second floor and we cannot install a stair lift because the stairwell is too narrow and steep. We agreed that we won't move until our credit card debt is gone.
<<<<

No. Transaction costs murder the cost effectiveness of owning. Do not buy a house unless you plan to stay there 7+ years. Rent something suitable.

Your wife has to look into bringing in some income. Hire a lawyer for SSD if you haven't already(they're free since the state pays them the 4k), I think the system says no the first time by default.

Prius gas mileage is great during start and stop traffic but has no advantage on highways, assuming your commute is not in bumper to bumper for 70 miles? If you paid 7+4(battery)+2(transmission) for a used car when you could've gotten a brand new one for that (with better mileage), that's a big drain on disposable income as well.

My point is that getting hybrids 'to save on gas' doesn't make any sense for many American commutes from an economic perspective.


gbru316

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Re: Need help getting rid of debt
« Reply #19 on: April 27, 2015, 09:28:59 AM »
1000 a month for 3 people is insanely high as pointed out earlier and his your main overexpense. Cell phones and electricity can come down, keep the heat at like 60 and wear a sweater.

If your credit is reasonable you can likely do a credit card transfer. 500 a month in interest is way, way too high on 11k of balances averaging about 12% interest, so see what is actually going on these. Sounds like new charges are being added (physically destroy these cards IMO).

Set up mint.com.

Your comment
>>>>
Lancaster, work in Cockeysville, MD. $150k is a "starter" home in the area. We plan on buying in the Shrewsbury/Glen Rock area in Southern York county once we're in a better financial situation. And this needs to happen sooner, rather than later, because our current house is totally unsuitable for her. She has no access to the second floor and we cannot install a stair lift because the stairwell is too narrow and steep. We agreed that we won't move until our credit card debt is gone.
<<<<

No. Transaction costs murder the cost effectiveness of owning. Do not buy a house unless you plan to stay there 7+ years. Rent something suitable.

Your wife has to look into bringing in some income. Hire a lawyer for SSD if you haven't already(they're free since the state pays them the 4k), I think the system says no the first time by default.

Prius gas mileage is great during start and stop traffic but has no advantage on highways, assuming your commute is not in bumper to bumper for 70 miles? If you paid 7+4(battery)+2(transmission) for a used car when you could've gotten a brand new one for that (with better mileage), that's a big drain on disposable income as well.

My point is that getting hybrids 'to save on gas' doesn't make any sense for many American commutes from an economic perspective.

The house we purchase is going to be a long-term (30+ yr) home. Location chosen to eliminate the need to relocate as there are ample employers in my field within commuting distance, yet it's still in a low cost of living location. As far as the mileage goes, I average 48 mpg (pulse and glide as much as possible), so I disagree with your assertion that a brand new car would have better fuel efficiency.

charis

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Re: Need help getting rid of debt
« Reply #20 on: April 27, 2015, 09:31:19 AM »
Cutting back on red meat and meal complexity could probably make a big difference. She likes to cook (lasagna, roasts, stews, etc), but I'd be happy with a chicken breast (or maybe some discount sausage), side of rice and some vegetables for most meals.

She can still make lasagna, roasts, and stews for a lot less.  I made a $9 pork roast in the slower cooker last week served with rice and vegetables, fed two families plus enough leftovers for three days of sandwiches and an entire new pasta dinner. 

I might suggest a HELOC for your EF while you pay down your debt, as long as you pretend it doesn't exists unless and until you have an actual emergency.

FranzJoseph

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Re: Need help getting rid of debt
« Reply #21 on: April 27, 2015, 09:58:06 AM »
Is your heat set at 66 all day AND night?  You can drop your temp to 60 during sleeping hours.  That would sure help reduce on heating costs. 

We live in a very non-mustachian 2,300 SF home - electric bill is $50/month on average.

Doing wash daily?  That can probably be reduced - we have an 8 month old and a 4 year old and the wash is done 2-3 times a week.  Jeans can be worn a full week before a wash, t-shirts can get at least 2 days of use. 

Everybody's comments on the food costs are spot on - we finally got our costs down to $400 this month!  Lots of planned bulk meals and eating the same yummy food leftovers for two weeks.  Usually make three different meals at one time and rotate those. 

Ting phone bill is $35/month.




Chrissy

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Re: Need help getting rid of debt
« Reply #22 on: April 27, 2015, 10:02:13 AM »
Did you put 20% down on the house?  Are you paying PMI?  What are the interest rates of the car loan and mortgage?

Are you working on one debt at a time?  Have you heard of a debt snowball?  The idea is to pay the minimums on all the debt, except the debt with the highest interest, which gets everything you can throw at it.  When it's paid off, move on to the debt with the next highest rate, and so on. 

Find a card with a 0% offer, and do a balance transfer.  Do it now.

gbru316

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Re: Need help getting rid of debt
« Reply #23 on: April 27, 2015, 10:06:33 AM »
Did you put 20% down on the house?  Are you paying PMI?  What are the interest rates of the car loan and mortgage?

Are you working on one debt at a time?  Have you heard of a debt snowball?  The idea is to pay the minimums on all the debt, except the debt with the highest interest, which gets everything you can throw at it.  When it's paid off, move on to the debt with the next highest rate, and so on. 

Find a card with a 0% offer, and do a balance transfer.  Do it now.

Did not put any money down, used a VA loan. Car loan interest is 6.99%, mortgage interest is 4.5%.

The debt snowball idea sounds like a really good suggestion.  I do have a question though: If monthly interest applied is greater than the minimum, aren't we just accumulating debt while paying it down elsewhere?

I actually just  applied for a Chase Slate card and was approved for $3k. So $3k of the highest interest rate card will be going on that.

GetSmart

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Re: Need help getting rid of debt
« Reply #24 on: April 27, 2015, 10:24:18 AM »
Apply for a Discover card - they are much more lenient in minimums and giving cards with not so great credit ratings.  Make sure you say it's for a balance transfer when applying.  It should wipe out the rest of your balance.  Last I checked it was 0% for 18 mos. with a 3% up front fee.  It will take the stress off.  And do it immediately - they have a pretty quick turn-around.

Also split out the diapers, other baby stuff from your grocery bill.  It seems impossible that it could be that high, but diapers might be putting you over the top - there are threads here about the best deals on baby stuff - not sure, but maybe try Costco for that?

Laundry every day??! good grief.  If it's a lack of baby clothes; buy some used clothes at thrift, second-hand stores, etc.  If you are doing small loads daily because you have a limited amount of baby clothes, it's worth getting more to make one full load per week.  I can't even imagine finding enough dirty stuff around to make a full load every day - but then I don't have a baby ;)

Good luck - you'll get there.

Chrissy

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Re: Need help getting rid of debt
« Reply #25 on: April 27, 2015, 10:29:40 AM »
One 0% card is good.  Two is better.  Keep all the cards open, but inaccessible.  Here's why:  your credit score is partially based on "utilization", how much of the credit you've actually used.  So, if you have more cards, but don't use them, your credit score will go up, and you will qualify for better interest rates on new debt and refinancing.  You want your max usage to be 30% overall, and per card (though I wouldn't worry about the "per card" part right now, since you want to take maximum advantage of any 0% offers).

I don't know anything about interest accrual being greater than the minimum payment, but, if that's the case, just pay the minimum amount to keep that particular debt from increasing.  Minimum on the mortgage, minimum on the car loan, minimum on CC #1, and everything you got being thrown at CC #2.

Sibley

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Re: Need help getting rid of debt
« Reply #26 on: April 27, 2015, 10:42:29 AM »
Seconded on the SSA disability lawyer. I did a form for a friend applying - she exactly fit the definition of disabled, but they denied her. Her lawyer did the appeal, had her get "testimonials" (the form I did) from friends/family about her daily life, and she was approved. It helped her a lot, and didn't take a huge amount of time from her.

RexualChocolate

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Re: Need help getting rid of debt
« Reply #27 on: April 27, 2015, 10:53:51 AM »
You come across like a typical engineer. Very smart, but not smart enough to know what you don't know.

You're on a board that will help you with a paradigm shift of your life, but you're not able to see the wisdom in the differing worldview since you think your analysis is accurate on everything. Coming from a quantitative field as well, I get that thinking you've found the absolute truth is a seductive delusion, but all models are wrong.

The point about the prius is that 48 mpg is great, but 1. I have lower commute costs than you and my car gets 18mpg(said differently, your distance to work is laughable), and 2 the single digit marginal increase in MPG is less than the added costs you sustained purchasing the Prius.

An actionable example of this flawed analysis is your desire to purchase yet another home(due to "ample employers for 30 years," an obviously weak assumption) when purchasing this one was a massive mistake.

You are not making near-optimal economic choices, people here are. I'd try to take their and my advice to heart instead of defending your existing decisions.

RexualChocolate

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Re: Need help getting rid of debt
« Reply #28 on: April 27, 2015, 10:55:53 AM »
Seconded on the SSA disability lawyer. I did a form for a friend applying - she exactly fit the definition of disabled, but they denied her. Her lawyer did the appeal, had her get "testimonials" (the form I did) from friends/family about her daily life, and she was approved. It helped her a lot, and didn't take a huge amount of time from her.

Yea it has become such a racket from everyone involved that it fails the actually disabled pretty badly. I'd love to see the 'no lawyer' acceptance rates. I think its just a one time payment and not even paid for by the applicant, so no reason not to. Definitely needs more research though.

ABC123

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Re: Need help getting rid of debt
« Reply #29 on: April 27, 2015, 11:08:10 AM »
You've gotten lots of suggestions already on cutting costs.  If your wife could bring in even a little bit of income, it would help you tremendously.  Can she look into any sort of work-at-home type of thing?  Not sure what her educations/experience was before being injured.  Even if she does Swagbucks or online surveys or that sort of thing, she could bring in a little bit.  In your case, it seems like even a little will help. 

former player

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Re: Need help getting rid of debt
« Reply #30 on: April 27, 2015, 02:25:00 PM »
You are spending $350 per month/$4,200 per year on fuel oil and electricity.  That is a pretty hefty bill.  I understand that a disabled wife at home with a young child will use more than someone out at work, but that just increases the need to be careful.  You need to draft proof and insulate for next winter, only heat water for your immediate needs, only heat whatever room you are sitting in at the time, and switch off everything at the plug when not in use.
We pay $150 a month for electricity, I think you may have misread.

I read your first post as saying that you were spending £150 per month on electricity.  You also said you were spending $2,400 per annum on fuel oil, which I took to be heating oil for the house.  Together I make those out to be a total of £350 per month/$4,200 per annum on energy costs for your house.  I'm not seeing where I misread, although I grant you that your listing your expenses in a combination of monthly, quarterly and yearly made it more likely that they would be misread.

Whether you look at the monthly or annual totals, they are too high and you need to devise and implement a plan to bring them down.  The MMM blog has posts you might find useful, most recently this one - http://www.mrmoneymustache.com/2015/03/25/cut-your-power-bill/

Blonde Lawyer

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Re: Need help getting rid of debt
« Reply #31 on: April 27, 2015, 04:02:59 PM »
I use Amazon Turk to make some side money.  When you first start out you get crappy hits that don't pay as well but once you get your numbers up you can pull in $10-$15 an hour.  I'm shooting for $300/month or so right now doing it very part time.  Your wife might be able to do that. 

Also, the company that MMM recommends for refinancing student loans, SoFi, recently launched a personal loan program.  Is your engineering program undergrad or masters? SoFi is funded by alumni investors so it is only open to people w/ college degrees I believe.  The advertised interest rate for a 3 year personal loan is 5.5-7.49 APR.  Not great but a lot better than your credit card rates.  The 0% cards are normally for 6 months - 1 year so they might not be long enough for you.  You might want to look into such a loan to pay off the credit card debt now and then pay the loan off asap.  Here is a link.  Full disclosure, we each get $100 if you are approved.  https://www.sofi.com/refer/148/8854  (Note, this is the link for a personal loan refi, not student loan.) I haven't used their personal loan service but was happy with their student loan process.