Author Topic: New Mom, In Desperate Need Of Money Advice!!!  (Read 3599 times)

lilyjames

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New Mom, In Desperate Need Of Money Advice!!!
« on: December 28, 2012, 07:49:48 AM »
Hey Everyone!

I need some advice fast. My husband and I are running into a bit of trouble with our finances. We currently and a 7 month old daughter and would like to get our debt paid off and back on track for the future but I can seem to figure out a way to do it. Im going to give you guys a run down of my income and debt. My husband brings home about $2000 a month, I bring home about $1620. The payments for a month are as follows :
House: 895(includes insurance and taxes)
Hubbys Car:313
Hubbys Insurance: 100
Hubbys Phone: 100
My phone and car insurance:100(my parents help)
Cable:45
H20:50
Electric:60
Gas:60
Gas:250(not sure about this one)
Food:250(not sure about this one)

Now here comes the credit cards and student loans
Loan #1 $48,000-monthly payment has gone to 0 b/c of my debt to income ratio
Loan #2 $23,000-monthly payment is $161
Credit Card 1- $2400-monthly payment of $175(highest interest rate)
Credit car 2 -$534-monthly payment of $25
Credit Card 3-$300-monthly payment of $10.00
Credit card 4-$1520 monthly payment of $25(no interest now but in March 2013 the interest hits for $500 worth of stuff)
Credit card 5-$700
Medical Bills-$250 total

I need to get this debt paid off quick!I am not so worried about the student loans. I would like to be debt free soon but I cannot come up with a plan. Can anyone with fresh eyes give me a budget or a plan to live by. We also like to do things and be with friends. I do not want to be stuck in my house bc I am broke! Please Help!!!

starbuck

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #1 on: December 28, 2012, 08:07:54 AM »
Ok, if that's your complete budget, then there's $1,000 floating around that you could be throwing at your debt (on top of the minimum amounts.) Does that sound accurate? If not, then I strongly suggest opening up an account at Mint.com and REALLY seeing where your money is going. That is absolutely step #1. So you should go do that right now. You can't make good decisions if you don't have good information.

All told, you've got less than $6k in cc/medical debt, and if your budget is accurate, you should be able to kill off the credit cards in no time. Truly you sound overwhelmed, and though most advocate paying off the highest interest rates first, I think you might be happier knocking out all the smaller CC's first.

And... seriously just cancel the cable. Like, today if possible.

TomTX

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #2 on: December 28, 2012, 08:38:19 AM »
Cancel cable. We have a rooftop antenna, and it works great. Free HDTV.

Do you really need a $200/month plan for cell phones? Can you combine down to a simpler/cheaper plan?

On the credit cards/medical bills, there are two philosophies:

1) Pay the highest interest first. This saves you (some) money overall.

2) Pay the smallest one first. This frees up cash flow, simplifies your finances, reduces the time you spend dealing with finances and often gives a nice emotional boost (Whew! Medical is all gone. Whew! That Chase card is paid off. Whew! that BOA card is paid off.)


twinge

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #3 on: December 28, 2012, 09:02:56 AM »
Quote
We also like to do things and be with friends. I do not want to be stuck in my house bc I am broke!

I would strongly suggest treating your debt like an emergency and not doing things that cost money with friends--cultivate ideas for free or very cheap hobbies/outings with friends (potlucks, picnics and group movie/game nights at each others' homes) telling yourself it's can be just until you're out from under all your cc/medical debt.  By that point it may become an enjoyable habit, but it's often easier to endure in the beginning if there's a specific time limit.  The fact you have to face is that you lived beyond your means for a while, and now you have to pay the dues on it--to pay for your prior overspending, you now have to live below your means and then some.  The good part of that is that if you just bite the bullet and do it, once your prior overspending is paid for, you'll have developed habits that free up cash for saving and/or loosening your frugal belt.

I also second rachelshana's recommendation to really track your spending.  There seems a lot unaccounted for and a lot of vagueness in what you posted.  Good luck and congratulations on the baby!

Another Reader

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #4 on: December 28, 2012, 09:04:04 AM »
You are living beyond your means.  The good news is that you now recognize there is a problem and you want to fix it.  Some temporary sacrifices will help with the debt situation, but some long term changes will be needed to make this work.  You will need to reduce your cost of living and/or raise your income.

Immediate changes:

Cancel cable.  You cannot afford it with all the debt.
No more nights out with friends to "get out of the house."  Do pot-lucks, movie nights, whatever is free or very low cost at home or at your friends' houses.
Reduce cell phone expenses.  Are you on a contract for the phones?  If not, go to the cheapest pre-paid plan you can find.  Cut data and do what's needed to get the bill down.
What insurance on your husband is $100? Could you cancel it, at least temporarily?
What can you sell?  E-bay?  Craigslist?  Can you pay off one or two of the smaller debts that way?

Long term:

More info is needed on the $313 car expense.  If it's a car payment, can you sell the car and replace it with something less expensive?
Track every expenditure and get a detailed accounting of where the money is going.  Develop a strict budget and stick to it.
What can you do to increase your income?  Can either of you do side jobs?  Is there some type of certification paid by the employer that would raise your salaries?

I would do the smallest to largest on the cards.  For someone that is as overwhelmed as you seem to be, having fewer things to worry about often relieves some of the stress.  There are a couple of folks here that are also trying to dig their way out.  A good example is Startingfromthestart.  You might take a look at her journal to see what can be accomplished.

Now, take a deep breath, and get started!

frompa

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #5 on: December 28, 2012, 09:10:23 AM »
I echo others' comments, about tracking and getting rid of the smaller cc debts first, so you can see some progress.  Even as you do that, though, I suggest you set up an emergency cash account, say with an automatic set aside of $200-300 per month, until you have enough so that you will NEVER EVER AGAIN have to carry a balance on any credit card.  Really.  Never. Ever. Again.  Basically, you want to set up an account that allows you to become your own lender.  Then when an unexpected expense arises, you pay it out of your emergency fund.  And why all those credit cards?  Get rid of all but one, and then never use it except when you pay it off in FULL when the first bill comes. 

Dealing with debt is so much about the emotion of it.  You should know that from my perspective of not being you, your debt level looks manageable -- pay those suckers down and off, face them head off, and you have set yourself an excellent goal met with success, that can inform you as go ahead to bigger and better financial goals.  You go, girl!!!

lhamo

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #6 on: December 28, 2012, 09:38:26 AM »
Aside from cable and phone, the thing that jumps out immediately to me is how much you are paying for your transportation -- if that second "gas" entry of $250/month is for automobile fuel, then you are paying roughly 21% of your take home each month just for your transportation costs.  This is insane given the debt load you are carrying (and I would argue is insane under any conditions).  Why does your DH have a $313/month car payment?  Is this a lease or a loan?  Is there any way to get out of it -- sell the car and move to a cheaper model?  Fuel costs (assuming my interpretation above is correct) are also very high, and while relocating now might not be feasible it may be something to look at over the long term.

Agree with others above that you need to track your expenses better in order to know where you are overspending and where you can cut back to free up more to tackle the debt.  You didn't list childcare expenses anywhere -- is that free? 

Water bill also seems very high.


lilyjames

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #7 on: December 28, 2012, 09:52:12 AM »
DH is car is 313 thats the lowest he could get. He has bad credit from previous mistakes! Fuel changes all the time because of his job. He is unsure of where he works on a daily basis. Is mint.com safe and secure. I am worried about identity theft?

chucklesmcgee

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #8 on: December 28, 2012, 10:07:04 AM »
Quote
We also like to do things and be with friends. I do not want to be stuck in my house bc I am broke!

Well then cutting the cable should be a no-brainer, since watching the boob tube would involve not doing things and being stuck in your house. That's a basic, immediate, easy $540 savings.

I don't think you're reporting your expenses accurately. I have a hard time believing your food expenses are only $250 for three non-mustachian people counting eating out. You feed 3 people (ok 2 adults and one infant) for $8.33 a day? As in an average of 93 cents per meal per person AKA less than the dollar menu at taco bell for every single meal assuming 3 meals a day? That's not impossible for a mustachian, but I find it very unlikely that the type of person who is still making car payments is also feeding their family for 93 cents a meal.

Do you buy things like, idk, toilet paper or toothpaste or soap or shampoo or makeup or cleaning products? Or ever eat out? Or go out to the movies? Or buy clothing? Or prescriptions? Or buy hardware supplies? Because you've omitted all of these and otherwise sketched what looks like a very manageable budget. As rachelshana points out, you're showing a $1000/month surplus...which should otherwise have you killing your credit card debt, medical bills and cutting into those student loans in just a few months. The devil's in the details and you're leaving them out.

Honest Abe

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #9 on: December 28, 2012, 10:10:31 AM »
Mint is as safe as any bank... They're actually run by Intuit, which has decades of experience of securing financial information. (They made the program "Quicken" which you may have heard of.) Also you're not putting anything like your SSN or checking account number, just your online logins for banks and credit cards websites. It's very safe.

lhamo

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #10 on: December 28, 2012, 10:10:56 AM »
DH is car is 313 thats the lowest he could get. He has bad credit from previous mistakes! Fuel changes all the time because of his job. He is unsure of where he works on a daily basis. Is mint.com safe and secure. I am worried about identity theft?

Sorry, but even with bad credit no one is forced to take on a $313/month car payment.  What kind of car --year, model, new/used/lease?  What did he borrow and what does he still owe on it?  Even if he had to take a loss on it in order to downgrade to a cheaper model, it might be worth it in the long run to get rid of such high monthly transportation costs.

If he is using this car for work, does he get any kind of allowance?  If not, he should push for one.  You shouldn't be subsidizing the business.

I personally don't worry about identity theft.  Been using moneycenter at yodlee.com for over a decade with no problems whatsoever.  But you can track your spending without mint or other similar services -- just keep receipts and a notebook where you write down what you spend, and total it up on a regular basis.

lilyjames

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #11 on: December 28, 2012, 11:28:42 AM »
Yes we go out to eat. That is my issues I am unsure of how much is spent besides the major things that are easy to track. We do buy some products in bulk-paper towels, toilet paper as for shampoo and such i buy a couple when they are on sale. I guess i will check out mint.com to track my spending that is my first step. I am overwhelmed but not totally freaked out yet, I just want to start getting things in order as I would like to have another baby in the next 2 years. I just dont want to dig myself into a deep hole. I do have about 1000 in savings. Should i keep it there or use some of that money to pay off things?


TomTX

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #12 on: December 28, 2012, 11:34:09 AM »
DH is car is 313 thats the lowest he could get. He has bad credit from previous mistakes! Fuel changes all the time because of his job. He is unsure of where he works on a daily basis. Is mint.com safe and secure. I am worried about identity theft?

Sorry, but even with bad credit no one is forced to take on a $313/month car payment.  What kind of car --year, model, new/used/lease?  What did he borrow and what does he still owe on it?  Even if he had to take a loss on it in order to downgrade to a cheaper model, it might be worth it in the long run to get rid of such high monthly transportation costs.

If he is using this car for work, does he get any kind of allowance?  If not, he should push for one.  You shouldn't be subsidizing the business.

Most people can do just fine on a $2,000 "beater" car plus an emergency fund to cover repairs.

chucklesmcgee

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #13 on: December 28, 2012, 12:00:04 PM »
I do have about 1000 in savings. Should i keep it there or use some of that money to pay off things?

I say yes. That money is losing value to inflation otherwise. Worse comes to worse, put your emergency expenses on a credit card. You'll only be paying as much in interest as you already are.

eyePod

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #14 on: December 28, 2012, 12:06:05 PM »
Quote
We also like to do things and be with friends. I do not want to be stuck in my house bc I am broke!

I would strongly suggest treating your debt like an emergency and not doing things that cost money with friends--cultivate ideas for free or very cheap hobbies/outings with friends (potlucks, picnics and group movie/game nights at each others' homes) telling yourself it's can be just until you're out from under all your cc/medical debt.  By that point it may become an enjoyable habit, but it's often easier to endure in the beginning if there's a specific time limit.  The fact you have to face is that you lived beyond your means for a while, and now you have to pay the dues on it--to pay for your prior overspending, you now have to live below your means and then some.  The good part of that is that if you just bite the bullet and do it, once your prior overspending is paid for, you'll have developed habits that free up cash for saving and/or loosening your frugal belt.

I also second rachelshana's recommendation to really track your spending.  There seems a lot unaccounted for and a lot of vagueness in what you posted.  Good luck and congratulations on the baby!

It's hard to have your cake and eat it too...  Going out to the bar with friends really does add up!
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lhamo

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #15 on: December 28, 2012, 05:55:14 PM »
Some people balk at his religious overtones, but it sounds to me like you might benefit from reading Dave Ramsey's Total Money Makeover.  He also has a free podcast that can be very helpful/inspirational as you try to pay down your debt and establish new patterns.  See if you can find the book at your library or get a used copy.

Another Reader

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #16 on: December 28, 2012, 06:19:29 PM »
In your shoes, I would pay off the two smallest credit cards immediately with the savings and redirect the payments to the next one in line.

Cut the cable and stop going out today.  That alone should be over $200 to put towards the debt.  Maybe more.  And get all the expenditures in Mint or something like it ASAP.  Once you know where your money is going, you can make reasoned decisions about where to cut.

What about the income side of the equation?  What were the student loans for and can you put that education to better use?  What about side jobs?

fidgiegirl

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #17 on: December 28, 2012, 06:35:01 PM »
Some people balk at his religious overtones, but it sounds to me like you might benefit from reading Dave Ramsey's Total Money Makeover.  He also has a free podcast that can be very helpful/inspirational as you try to pay down your debt and establish new patterns.  See if you can find the book at your library or get a used copy.

lhamo, I was going to suggest the very very same thing.  DR would advise to leave that $1000 alone and sitting there for a real emergency.  That way you are not adding to the CC debt if something comes up.  I know for a long time for me the big triumph with my debt wasn't paying it faster than minimums, it was NOT ADDING to it.  And the $1000 allowed that to happen.  Under DR's plan, if you tap the $1000 fund, you immediately stop all extra payments going to CCs and replenish that sucker.  The basics of his seven baby steps (you will be on steps one and two):  http://www.daveramsey.com/new/baby-steps/

Lots of good ideas here.  It will require a change, that's for sure . . . I found your first line of your post:  "I need advice fast" to be a little concerning.  It won't be easy, and it won't be fast.  But it will be so worth it.  There is nothing like knowing you can pay your bills and not beholden to credit cards and feeling like your efforts are being flushed down the interest toilet.

Start tracking.  It will be revealing.  I have tracked off and on for years and am still surprised at the things I learn about my spending, and I've been actively working at frugality tactics for about eight years.

Good luck and keep coming back!!  Start a journal thread and read others'.

c

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #18 on: December 28, 2012, 06:40:10 PM »
Dave Ramsey really helped me get out of debt. I found him via CNN a few years ago. I had no idea about the religious aspect of his advice, though that wouldn't have swayed me either way.

I used his snowball method as, like you, I had a ton of credit cards with relatively small balances. Paying off each one was such a victory to me that it more than made up for the few dollars I was spending on interest.

You actually don't sound like you're in too bad a situation, you just need to get a handle on where exactly your money is going, once you know this you'll feel more confident about where to cut. I am a big fan of Mint.com.
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gooki

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #19 on: December 29, 2012, 02:00:11 PM »
And once a credit card is paid off, cut it up and close the account. One CC per household, or at the most per adult is more than enough.

duellingbanjos

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Re: New Mom, In Desperate Need Of Money Advice!!!
« Reply #20 on: December 29, 2012, 04:42:50 PM »
You didn't ask for this advice, and might already be doing this, but get any and all baby stuff used/second-hand except for bottles/cups. Once people are done with a certain stage of kid-ness, they need to get rid of their baby/toddler furniture, clothing and toys. Your child will not mind in the slightest. I'm a parent to 3 year old twins and I wish someone had clocked me in the face with this advice. It may pain you a little not being able to get "nice" things for your child, but resist the urge. What matters is quality time with your child, not things.
There's a whole industry out there now capitalizing on people wanting to buy this and that knick-knack or clothing item for their babies. Don't fall prey to that.