The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Mike58 on January 11, 2017, 11:29:29 AM
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Hi everyone! I am hoping the very wise MMM readers on here can help point me in the right direction. Ill try and keep it simple and to the point.
I am 35 years old, married, 4 kids. my total take home pay every month is about $8,500 - after taxes and health insurance. I am not saving for retirement whatsoever. I have no savings. I want to - and I realize the importance of doing so, however, I am trying to dig my way out of debt. I currently owe about $38k on credit cards. I have 2 car loans - one I owe $23k and on the other one I owe $9k. My mortgage is $2,100 a month. Groceries are $1,400 a month. Plus all the other common bills such as utilities and car insurance etc. I do get tax returns every year of about $8k - so that helps.
Here is the thing - I don't feel I'm living way above my means (ok, I guess I was for awhile hence the CC debt). I'm doing everything I can to get out of that debt but with the kids and their sports and wife and 2 dogs - geez - everything is just so freaking expensive. I want my wife and kids to have a good life - but this is affecting my happiness. I feel that I get nickel and dimed every month and they really add up. Its like I'm a walking checkbook. We have tried budgets - but it seems something is always coming up that isn't budgeted for. Its like I don't make nearly enough money - but yet I know the average family gets by on less. I love the MMM philosophy but need to get my family on board. Easier said than done. I have tried cash budgets, debit cards, etc and nothing seems to work effectively for us. I feel that I'm not a dumb person but as I reread my financial situation, I wonder, lol.
SO - a couple of questions for all of you. Am I totally financially screwed? Also, if you were in my situation - where would you start? I know that sounds like a very vague question - but I'm just looking for some general advice from some very smart people that can provide a different perspective. Thanks.
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Step 1: fill this out (you can edit this post with the information)
http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/
The form was create to supply the other posters with the specific information needed to assist you with your questions. I'm sure there will be a lot of suggestions, advice & comments supplied with the full picture.
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How much of MMM have you read?
The whole idea boils down to living on less than you earn.
I would think your gross is around $125,000.
Their are plenty of families out there living on $25,000.
You have 5 times that much.
You have not made the decision turn things around
When you do, you will see every dollar as important
and whether it should go to reducing debt or to sports
for the kids, expensive food, restaurants a more expensive car than you need.
You need to have a family meeting and find a way to get the wife
on the eliminate debt bandwagon. The kids don't have a choice.
The key, spend less than you make.
You can work your way out of debt in less than two years, one year
if you buckled down, might have to sell that $23k debt and buy a $6k car.
Once you are out of debt, then you need to continue living on less than your
income so you can invest.
Re: the $8k over payment on your taxes, I suspect you know that's coming every year
so you have already spent it before you get it.
If I have any money like that, it goes into the Vanguard Total Stock Market Fund,
I don't spend it.
Can you lower your utilities? Drop cable TV? Build a $5 antenna. Look at you insurance
shop around, raise your deductible.
Harsh, probably, it's a facepunch to get you serious about changing the way your family lives.
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Do you have a 401K or 403b option at your employer? If so, start contributing to that TODAY. If not, open an IRA ... TODAY! These contributions are pre-tax for federal income tax. You're getting SCREWED on your federal taxes! And "refund" is a misnomer. You're just giving the government an interest free loan.
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I am not offered any type of retirement from my employer, however, I do have a ROTH IRA and also a brokerage account. These both have less than $100 in them. I am focused on eliminating debt rather than funding those accounts. Perhaps I shouldn't be?
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And as far as the taxes go, yes - I do need to make some adjustments so that my "refund" isn't that extreme.
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Hi Mike, I'd love to pitch in, but before I comment, I need to know more:
http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/
It seems like a pain in the arse, but the truth is simply writing the case study will actually get your organized, which seems to be part of the problem.
Regards
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Hi everyone! I am hoping the very wise MMM readers on here can help point me in the right direction. Ill try and keep it simple and to the point.
I am 35 years old, married, 4 kids. my total take home pay every month is about $8,500 - after taxes and health insurance. I am not saving for retirement whatsoever. I have no savings. I want to - and I realize the importance of doing so, however, I am trying to dig my way out of debt. I currently owe about $38k on credit cards. I have 2 car loans - one I owe $23k and on the other one I owe $9k. My mortgage is $2,100 a month. Groceries are $1,400 a month. Plus all the other common bills such as utilities and car insurance etc. I do get tax returns every year of about $8k - so that helps.
Here is the thing - I don't feel I'm living way above my means (ok, I guess I was for awhile hence the CC debt). I'm doing everything I can to get out of that debt but with the kids and their sports and wife and 2 dogs - geez - everything is just so freaking expensive. I want my wife and kids to have a good life - but this is affecting my happiness. I feel that I get nickel and dimed every month and they really add up. Its like I'm a walking checkbook. We have tried budgets - but it seems something is always coming up that isn't budgeted for. Its like I don't make nearly enough money - but yet I know the average family gets by on less. I love the MMM philosophy but need to get my family on board. Easier said than done. I have tried cash budgets, debit cards, etc and nothing seems to work effectively for us. I feel that I'm not a dumb person but as I reread my financial situation, I wonder, lol.
SO - a couple of questions for all of you. Am I totally financially screwed? Also, if you were in my situation - where would you start? I know that sounds like a very vague question - but I'm just looking for some general advice from some very smart people that can provide a different perspective. Thanks.
70k in debt and not living above your means... hmm haha. The good news is you have a high income which helps significantly.
I would reassess your taxes - $8k is really high. Ideally you want to your refund to be really low, or even owe a bit of money. Does your wife work?
What are the interest rates on the credit cards?
What are the cars and how much do you owe on them? What are the payments/interest rates? Is it possible to sell one and buy a cheaper one? I am assuming with 4 kids you must either have a large SUV or minivan - is this the one you owe $23k on?
Since you feel "stuck" in a sense, you might want to look into Dave Ramsey's snowballing. Pay off the lowest owed amounts first, and then use that extra free money to continue paying off higher loans.
Mortgage sounds fine (I live in a HCOL so $2100 is rent for a 2 bedroom LOL), groceries sound a bit high - eating out a lot? 4 kids are a lot to feed though. There are some good tips around the forum for feeding large families a bit more cheaply.
Can you fill out a case study? Use something like Mint to see where all your money is going? Right now you only give us about $3500 of expenses (mortgage and food) and that means $5000 is suddenly vanishing someplace. That's a lot of money not accounted for!
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Mental exercise: what would go if you got a 20% pay cut? Say your take-home went from $8500 to $6800 -- what would you do (other than cut back on CC repayment)? There's your starting point. Do that, throw the rest at the debt. Once that's gone, send that to investments. Go on from there.
On managing the family, that's tough. I'd start with the "how to convert your SO" thread -- you really can't make this work if your wife isn't rowing in the same direction. But you also need to change your thinking on what it means to want the family to have "a good life." That doesn't mean "buy things" or "do activities." That means financial security, healthy food, college funding, not having a dad who is ridiculously stressed all the time, not being in a position of losing their home if a job goes away, etc. etc. etc.
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Thanks for commenting.
The debt is between 2 cards. The first card is at 17.15% - $23k on that one. The other card is at 23.24%.
And yes - I will make adjustments so that my tax return isn't that extreme. I always looked at it as forced savings - but I know that's not the way I should look at it.
2014 Ford Fusion: Payment is $320 - owe about $9k. Rate is 4.54%
2016 Chrysler Town and Country - Payment is $440 - owe around $23k. Rate is 4.75%
We don't really eat out very much. We probably could reduce our grocery bill.
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I suggest you write to MMM himself, maybe he'll feature your case on the blog.
He'll eviscerate you - tear you apart - "facepunch" doesn't begin to describe it.
It'll be embarrassing, and it'll get you on the right track.
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Laura33 -great idea.
The crazy thing is I know that if my pay were to be reduced 20% we would somehow make it. And yes - my CC repayments would have to be reduced.
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I wrote to MMM himself some time ago - he didn't respond. I understand he gets lots of emails. I think a face punch is what I need! I need to really change my mindset. I illogically have thought many times that I have an income problem - and not a spending problem.
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Laura33 -great idea.
The crazy thing is I know that if my pay were to be reduced 20% we would somehow make it. And yes - my CC repayments would have to be reduced.
I meant what would you cut without cutting the CC repayments. :-) That's where you put the extra 20%.
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Welcome.
I'm going to pick on this tidbit: "I feel that I get nickel and dimed every month and they really add up. Its like I'm a walking checkbook. "
Can you explain further? Does your wife work? What do you get 'nickel and dimed' on? Who asks for what? Do you have joint finances with your wife? What has failed in the past about budgets?
The cars seem overly expensive. Groceries seem ok for a family of 6 with dogs. House seems reasonable. Where does the rest go? What did you guy with your credit cards?
You have a lot of self reflection and thinking to do. And being honest.
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Do the case study questionnaire that people keep linking to. No one can help if we don't know where your money is going.
How much are you spending on gas? Kids' activities? Childcare? Cell phones? Cable TV? Restaurants? Alcohol? Hobbies? Etc Etc. These are the places you can cut to pay off your debt faster.
I live in Manhattan, my rent is identical to your mortgage, I take home slightly more than half your take-home pay, and I'm saving close to 25% of my income. And I'm *barely* mustachian (I eat lunches out, I take taxis, I go out to concerts all the time, etc.). What are you spending all that money on??
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You can fix this but it takes a lot of discipline. My family of four earns a gross income of about $100K, and in recent years that figure was closer to $85K. DH was a SAHP for a while, now he works part time. Our net worth just hit $712K in 2016. We are aiming for $1M before I turn 40 in August 2019.
Our groceries cost about $420 a month and that is good whole foods, much of it is organic. Granted, my family is 2 kids less, but two more kids wouldn't cost me another $1,000.
Last year we spent about $56K total, and $11K of that was private school tuition. Both kids will be in public this upcoming school year, so our family's base spending is about $45K per year. That includes flying to and staying at Disney for a week and a variety of other splurges. Our rent is $1,400 a month, so 1/3 less than yours, but your mortgage doesn't sound unreasonable if you are in a HCOL area. We drive old cars that we paid cash for when we bought them new in 2004 and 2005. (The 2005 has higher miles since it is our main family car and we plan on replacing it in the next couple years. The plan is to get to 200K miles first and then start shopping around.)
Never had debt, but with your income and some budget cuts, you can probably rid yourself of your debt quite quickly.
I am not special. If I can achieve this level of financial security, I'm pretty sure most people can.
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Budgets often don't work if they're not based on actual spending. People create a fantasy of what they should be paying without considering what they are actually spending and how to lower it.
Your first step is to track your spending. Not in a haphazard way, but by actually importing and classifying your transactions somewhere. Mint.com is a popular site, but you can also use Quicken or some other product. If you're good with Excel, it can be done there - by exporting all of your bank and CC activity to spreadsheets and classifying/sorting - but it doesn't provide an easy-to-use format or reports.
I remember when we decided the grocery budget was too high. My husband said, "You spend too much on groceries! Spend less!" I reacted defensively, "You don't know how much groceries cost these days!" It turns out we were both right. When we sat down and actually looked at our grocery receipts together, we found many items that were unnecessary or more expensive than what we assumed. We started pricing out meals - how much does each meal cost, and do we think that meal is worth the price? We were able to frame a goal for per-meal cost and eliminate those meals that were too expensive. We cut out most snacks. We cut out a lot of extras. Point being - savings didn't come from a general statement, it came from specifically addressing each item.
How much is your cable bill? Is it worth it? What do you lose if you cut to lower cost option? Is it worth it? What would life look like if you canceled cable completely and just used Netflix?
How much is your cell phone bill? What options are out there?
How much do sports cost? Are they worth it? Do your kids think they're worth it? If your kids had to eliminate only one paid activity, what would they choose? Is it an easy choice for them?
How much do you spend on a haircut? Is it worth it?
How much do you spend on random BS? Is it worth it? What do you have to show for it?
How much did you spend on Christmas for each of the kids? Roughly two weeks later, which gifts were worth it? What did you spend on each other? Was it worth it?
You have to look at your real spending and address each thing. The discussion shouldn't be accusatory, just evaluative.
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I will fill out the case study questionnaire very soon. Thanks everyone for the helpful comments. I have a lot of looking in the mirror to do. Others feel free to continue commenting.
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"I want my wife and kids to have a good life"
That line struck me. How do you define having a good life? What's important to you?
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I have some advice that will hopefully help persuade you and your family that you can and should make cuts to your spending.
First plug your household income into this calculator http://money.cnn.com/calculator/pf/income-rank/
It's based on US census data so if you aren't from US it won't be as accurate.
Based on your take home someone in this thread guessed your salary was 125k. So if you use that number you come up with 16%. Which means 84% of Americans households make less than what your family makes!
When talking to your family I'd recommend comparing yourself down instead of up. What I mean is if your neighbor/friends/family spend more than you it's easy to say well I'm spending all my money and still don't buy as much as them. I must not have any room for cuts. But in reality you should be comparing yourself downwards to people who spend less. Then the thought process becomes whoa I'm wasting a bunch of money!
This seems silly but I like to think about what a king from the Middle Ages would think of our lives now. It really puts the whole income ladder into a more "relative" perspective. What I mean is if a King (the richest of the rich back then) saw that families that make say 50k can still 1. Have house with heat. 2. Have a working car 3. A cell phone. 4. A nearby store to get groceries, then they would think almost everyone nowadays is rich.
It's really about maximizing the utility of everything. Once you have a working car (5-10k) range anything over that is often waste. You get the value/utility of having something that gets you from point a to point b after that it's just luxury/show. This concept applies to fancy designer clothes, eating out, jewelry etc.
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So...sports are great...for healthy habits, for challenging oneself, for fun. But as far as I know, these benefits can be attained from fairly inexpensive, local/school participation. From what I've heard, what gets really expensive is traveling teams and leagues (not sure if you're at that level...yet). And many people do those in hopes that their kid will eventually get a sports scholarship. At this point, I wanted to link an article from the Chronicle of Higher Education called "The Myth of the Sports Scholarship," but unfortunately it is now behind a paywall now. But the crux of it is this: for most (unless your kid is showing cream-of-the-crop, 1%? 0.1%? talent and dedication, right now), pouring money into sports is a gamble, not an investment, at least when it comes to college funding prospects. So, perhaps when it comes to considering what a "good life" is, consider the tradeoff between sports now and a college fund later? [I'm not saying take them out of sports. See first sentence. Just...moderate the involvement in the paid versions.]
Also, consider that the fact you are probably comparing your lifestyle to those around you, which is what is making it seem normal, whatever level it is at (most of us do-we'd think gold plated toilets were normal if everyone had them. We'd also think not having running water was perfectly natural if that's the environment we were in). BUT, everyone around you is most likely "normal" and in debt as much as you are, living paycheck-to-sizable-paycheck, etc. Alternately, they managed their money differently (well, let's face it, better) up to this point and don't have the massive debt payments pulling you down and the interest just...vanishing from your pocket...imagine how much better you'd feel about your budget if the car & CC payments were going to savings/retirement instead. Look at how much you are spending in interest alone...buying nothing, except maybe time in debt.
Which means that to make progress, you need to live differently from the rest of your community, for a while, to turn your situation around. Without a case study, no one can really tell you yet what that means...but it's quite possible you won't quite feel normal next to everyone else for a while. But it can be temporary...though who knows, you might get used to the changes you make!
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You are house and car poor like a huge percentage of Americans. Those cars you are presently driving and home you are living in aren't yours, they belong to the banks. Every dime you make is going out in payments and you've probably used the cards for a long time to pay for other stuff you didn't have the $$ for.
That's a ton of high interest credit card debt and will be tough to get out from under without some drastic changes. I'd recommend selling both automobiles and getting a couple paid for cheapos. That frees up a bunch of $$ each month to start attacking the card debt. You should also think hard about selling the house and getting into something cheaper if there is something in the area.
It's going to take big changes like this that make you and your family a bit uncomfortable to break this pattern of living on borrowed money.
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I agree that the case study is a good start, but I suspect you don't actually know where your money is going. So where to start is to figure out where it's all going using a tool like mint.com or even regular pen and paper tracking.
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Posting to follow
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Thanks for commenting.
The debt is between 2 cards. The first card is at 17.15% - $23k on that one. The other card is at 23.24%.
And yes - I will make adjustments so that my tax return isn't that extreme. I always looked at it as forced savings - but I know that's not the way I should look at it.
2014 Ford Fusion: Payment is $320 - owe about $9k. Rate is 4.54%
2016 Chrysler Town and Country - Payment is $440 - owe around $23k. Rate is 4.75%
We don't really eat out very much. We probably could reduce our grocery bill.
I would sell the Fusion and get something cheaper. I don't know the mileage or trim level of your car... but ballpark looks like the value is $10k or a little over for that one. I'm picking this one for a reason (see below).
HOWEVER, if you don't want to sell your car, I again recommend Dave Ramsey's snowball (http://www.daveramsey.com/blog/get-out-of-debt-with-the-debt-snowball-plan) because it seems that you feel frustrated with a lack of results.
Here is what I would do following the snowball method. Your tax refund is approx $8k, correct? Scrape up another $1k alongside the refund, and pay the damn car off. Whew! That's $9k of debt off your back.
Use that $320 you are not using for a car payment anymore(woohoo!), to start aggressively paying off the credit cards. You will see the tangible results that you want!
(The more "prudent" option in this scenario would be to throw the $8k at one of the credit cards, but that has less immediate satisfaction because you still have all this debt hanging over your head. I want you to have tangible results to keep you motivated to pay the rest of the debt off.)
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You're much better off than Beatles, that's for sure. Does your wife work? Again, back to the point about the IRA. If you contribute $5,500 to a traditional IRA then you're reducing your federal tax dollars at your highest bracket. That's a HUGE benefit in my opinion. You can't get these years back! I'm one year older than you and have a household income of about 145K. Because both my wife and I max out our 403bs at 18K we significantly reduce our tax liability. At your income I see no reason why you can't simultaneously fight your debt AND start preparing for your retirement.
You'll get lots of great advice on this board. I have a child and a dog, as well. I'm sure some people here will tell you to knock it off with sports for your kids. I disagree (if your kids enjoy it). Make smart and reasonable decisions. Don't spend thousands to be on a travel baseball team. But also don't deny your kids reasonable priced opportunities to enjoy sports/learn about teamwork/make friends.
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If you are looking for a facepunch then I think the reality of it all is that you are living way beyond your quite substantial means. You could save 20% of that take home pay and be saving more money than most people on this planet get PAID in a month.
Okay, now that the facepunch is over, I agree with those above saying that you need to figure out where your money is going and cutting back on grocery bills for starters.
You mention that you want your kids to have a good life but you do them a real disservice by not teaching them good financial habits now. Odds are that they won't have your income when they are adults, so you are not helping them lead a good life if you don't teach them better money habits as kids.
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Please Write a Case Study.
An easy way to figure out your expenses is to sign up on Mint.com. Upload your bank and credit accounts. Then go to Trends and do a spending report for 6 months or whatever you like.
This should take 30 minutes total.
Sent from my Nexus 5 using Tapatalk
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When I first found MMM we were 47K in credit card debt. one of the things that made a big difference for us was using YNAB. It allowed us to really see where our money was going. I had a meeting with my family and no one really wanted to come along but it was a goal we were going to achieve. Chase has a credit card Slate that is 0 interest and 0 transfer fees for 15 months. Try to open one in each of your names and transfer those high interest cards. Question every item you buy or use. We cut all non essential items. Hiked outdoors instead of the gym and so on. Constantly looked for fun free activities so my family would not feel so deprived. Took 2 years to pay off but totally worth it. I cook almost all food from scratch no convenience items. It was a complete overhaul in every way.
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Agree with others to do the case study. We have 4 kids. I know of no woman with 4 children who works outside of the home because there is absolutely toooooooooooooo much to do inside the home. Plus, with day care/after school care, it would make no sense.
How old are your children?
$1400 for groceries is very high....does it include diapers, formula, etc. Also, and others won't agree, but $2100 for the mortgage--ouch!
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We also are a family of 4 trying to get out of debt and save. First thing first: https://www.irs.gov/individuals/irs-withholding-calculator
Change your withholdings but only if the extra will go to debt repayment every month.
Then read the entire thread about the Beatles on this page for help with groceries. We spend between $800-$950 a month of just groceries and we are trying to get that lower. That doesn't include household stuff. We really like YNAB for keep track of our spending. Take out cash for groceries and when it is gone it is gone. Shoot for $1,000 the first month.
Take all your credit cards and cut them up or something where you can't get to them. Then roll them to 0% balance transfers and pay them off. Chase and Citibank are great for balance transfers.
I find a lot of inspiration from this blog: http://www.frugalwoods.com/
Take what works and leave the rest for now.
Your mortgage is very very high! Can that be changed? Move or downsize?
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Your net take-home pay is over twice the median GROSS FAMILY HOUSEHOLD INCOME in the United States.
Let that sink in.
Fortunately, you do not have an income problem and if you're willing to, you can easily get out of this mess.
I would start by doing a case study. Other than that, I would open a Chase Slate card and transfer as much credit card debt as you can to that (no fee and 0% for 15 months), then cut up your credit cards and delete them from every shopping website in which they're saved. Figure out how to put $2600/mo towards those cards so you can get them paid off in 15 months. If you keep both of your vehicles, refinance them for a lower rate (PenFed typically has 1.99%).
Cut your grocery spending in half, at least. Does your spouse work as well?
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You can't make great decisions without knowing where the money is going now and how it relates to your family's happiness.
Someone may advocate selling a car, but you might discover that you are spending twice that on a child's sport that doesn't even matter to them anymore - and the second car is really important to your family. Or maybe you discover that selling the car might allow one spouse to stay home for the kids.
The case study will help with those decisions.
I don't do well with budgets either. But I do track my spending - all of it. I know where it is going and why.
I read a classic book called "Your Money or Your Life" that forever changed my relationship with money. The change allowed us to pay off enormous debt and save for ER without feeling any sacrifice at all. No "budget" was needed.
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Thank you everyone for the responses. I'm in the process of filling out the Case Study - I'm trying to be as accurate as possible. I love these responses - many of them make me feel like an idiot - others give me hope. My wife and I spoke last night about going to an all cash budget for both of our weekly spending money.
A few answers to some of the questions that I am seeing:
- My wife doesn't not work. She stays at home with our 3 year old.
- I don't have a cell phone bill or internet bill (covered by the company I work for)
As far as being "nickel and dimed" every month - I'll list some recent examples of things in the past 30 days.
- 3 school yearbooks - $105
- Root canal for me - $1,200
- Crown for root canal - $857 -
- Tires needed for wife's van - haven't purchased yet but guessing $450
- Spring Baseball Registration for the 2 boys - $700ish - I still need to buy a bat and glove for one of the boys.
- A random DR bill that I got in the mail for $200
My comment about wanting my kids and wife to have a good life - that comment has seemed to generate some discussion. I meant that I grew up always being one of the poor kids in our school. Not dirt poor - its just that we struggled. I watched my Mother stress (kind of like my stress now, I just have more needless crap). I was never dressed the coolest - my Mother did the best she could all by herself but we never really had any money - it was always an issue. I remember thinking that one day my kids wont have this childhood. Perhaps this is what has gotten me in this mess.
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Also, I found it interesting that one person advised that I take the tax return (roughly $8k) and pay off the car loan instead of throwing it at high interest credit card debt. I get the mathematical reasons not to do this - but perhaps I am overlooking the psychological reasons.
Does anyone else think that I should pay off my $9k car loan ($320) a month vs throwing it at my credit card debt?
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Does anyone else think that I should pay off my $9k car loan ($320) a month vs throwing it at my credit card debt?
I like the idea. Don't underestimate the psychological effect of having paid off that one loan. It will also free up an additional $320 each month to throw at your credit cards.
That is of course if you keep using the car instead of doing what most Americans do: get a new car loan as soon as the old one is paid off.
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My comment about wanting my kids and wife to have a good life - that comment has seemed to generate some discussion. I meant that I grew up always being one of the poor kids in our school. Not dirt poor - its just that we struggled. I watched my Mother stress (kind of like my stress now, I just have more needless crap). I was never dressed the coolest - my Mother did the best she could all by herself but we never really had any money - it was always an issue. I remember thinking that one day my kids wont have this childhood. Perhaps this is what has gotten me in this mess.
I think it is great that you want your family to have a better life than you did as a kid, however you have to define what better really means to you and your family.
If you mean you want them to always have the latest and greatest of everything because you never had it, then you are on the wrong forum.
If you mean you want them to have financial stability then this is the place for you.
What would happen, financially, if you were to be in an accident and die? Or worse what would happen financially if you were in an accident that disabled you to the point you could not work and needed round-the-clock care?
How would your family handle that $70k of debt AND continue to pay the monthly bills?
Chances are neither of those would happen, but you have to really think about what it means to provide "a good life" for your wife and family.
I would much rather have the life of living frugally, however knowing that if they paychecks stop my lifestyle would continue uninterrupted rather than knowing if the paychecks stopped my entire lifestyle would be turned on its head and I would be forced to either "sink or swim".
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Spring Baseball - $700. Wow, so glad my DD played soccer. Is there then a summer baseball season that will suck more money from you? And fall and winter? How much do you spend on baseball in a year - registration, equipment, transportation, after-game snacks, the whole bit. Do the boys love baseball that much? Youngest is 3 so presumably there is an older daughter (or 2) as well? What expensive activities is she in? All part of the budget analysis.
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Posting to follow
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I hear you about the baseball costs, BTW. Our son plays too. Check out Play it Again Sports if you have one in your area. You can get good used equipment fairly cheap. Won't help with the registration fees, but every bit helps.
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Baseball Registration for Spring is roughly $700 - that's only once a year
Tennis for the youngest girl is $120 a month - but only 6 months out of the year
Football registration for the oldest boy is $300 plus snacks and other items.
The youngest is in swimming lessons for $100 a month - he goes once a week.
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Mrs Dinero - I wholeheartedly agree. Buying the latest and greatest was my priority for a long time. Now it disgusts me. I look at my past as wasted time. I could have saved so much more - spent so much less. And now I'm in this mess. Its my fault and only mine. Hence the reason I'm on this forum. I don't want to be one of those idiots with a decent income who live paycheck to paycheck - but I am. I would go under in a month if something were to happen to my job. Talk about stress!
But, that's why I'm here. I'm here to fix this so that it never happens again. Ever. I'm tired of getting paid and writing all of these checks to banks for crap that I don't even own. And I appreciate all of the feedback from all of you who have done it or who are in the middle of your journey!
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Another reason to pay off the entire car loan first would be that it might simplify the logistics of selling it, especially to a private party. If you replace it with something significantly cheaper (say something 5-10 years older) you could bank an instant $5-$10k cash to put towards the other debt.
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Not much detail to go on. But I will offer the solicited advice on what you have provided.
I have in the past made the same $$$ as you. I spent it all, just like you are dong.
I am 35 years old, married, 4 kids.
I am older than you, but I am married with 4 kids, too!
my total take home pay every month is about $8,500 - after taxes and health insurance.
Cool! Killing it!
I am not saving for retirement whatsoever. I have no savings. I want to - and I realize the importance of doing so, however, I am trying to dig my way out of debt.
All good goals, and you have plenty of money with which to do it.
I currently owe about $38k on credit cards.
Ouch! What are the interest rates?
I have 2 car loans - one I owe $23k and on the other one I owe $9k.
Are you aware that overspending on cars and homes is pretty much what makes middle class and upper middle class Americans feel like they cannot get ahead? It affects their happiness. They think they will be happy with the expensive cars and homes, but they are unhappy.
My mortgage is $2,100 a month.
Are you aware that overspending on cars and homes is pretty much what makes middle class and upper middle class Americans feel like they cannot get ahead? It affects their happiness. They think they will be happy with the expensive cars and homes, but they are unhappy.
Groceries are $1,400 a month.
Ouch. My family is the same size as yours. We spent $520 in November on groceries, and we hosted more than a dozen people for Thanksgiving at two different feasting days. I can also pretty much guarantee that I eat way more than you.
Plus all the other common bills such as utilities and car insurance etc. I do get tax returns every year of about $8k - so that helps.
Why does that help? Adjust your withholding to take that $8k spread out in your paychecks over the year and apply it to your debt as it comes in.
Here is the thing - I don't feel I'm living way above my means (ok, I guess I was for awhile hence the CC debt).
What do your feelings matter when you have a brain that can do math?
I'm doing everything I can to get out of that debt but with the kids and their sports and wife and 2 dogs - geez - everything is just so freaking expensive. I want my wife and kids to have a good life - but this is affecting my happiness. I feel that I get nickel and dimed every month and they really add up. Its like I'm a walking checkbook. We have tried budgets - but it seems something is always coming up that isn't budgeted for. Its like I don't make nearly enough money - but yet I know the average family gets by on less. I love the MMM philosophy but need to get my family on board. Easier said than done. I have tried cash budgets, debit cards, etc and nothing seems to work effectively for us. I feel that I'm not a dumb person but as I reread my financial situation, I wonder, lol.
SO - a couple of questions for all of you. Am I totally financially screwed? Also, if you were in my situation - where would you start? I know that sounds like a very vague question - but I'm just looking for some general advice from some very smart people that can provide a different perspective. Thanks.
Wow. I feel for you, dude, because I WAS you.
As for the family being on board, well, the only family that needs to come on board is your wife. I assume the kids do not have your credit or debit cards or ATM cards, right?
Have a deep discussion with your wife on where you want to be, financially, in 10 years. Only after you have a goal can you two start putting together methods for getting there.
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Step 1: fill this out (you can edit this post with the information)
http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/
The form was create to supply the other posters with the specific information needed to assist you with your questions. I'm sure there will be a lot of suggestions, advice & comments supplied with the full picture.
Definitely do this!
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Do the case study questionnaire that people keep linking to. No one can help if we don't know where your money is going.
How much are you spending on gas? Kids' activities? Childcare? Cell phones? Cable TV? Restaurants? Alcohol? Hobbies? Etc Etc. These are the places you can cut to pay off your debt faster.
I live in Manhattan, my rent is identical to your mortgage, I take home slightly more than half your take-home pay, and I'm saving close to 25% of my income. And I'm *barely* mustachian (I eat lunches out, I take taxis, I go out to concerts all the time, etc.). What are you spending all that money on??
Do you have a wife and four kids at that Manhattan apartment?
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Baseball Registration for Spring is roughly $700 - that's only once a year
Tennis for the youngest girl is $120 a month - but only 6 months out of the year
Football registration for the oldest boy is $300 plus snacks and other items.
The youngest is in swimming lessons for $100 a month - he goes once a week.
$700/year for baseball
$720/year for tennis
$300/year for football
$1200/year for swimming
$2920/year in just sports registration fees
I wouldn't advocate cutting the kids' activities as a first step, but is there any way to economize? Our parks department tot swimming lessons are $34 for a 10 week session. Parks department tennis lessons are $53 for 8 weeks.
The thing in your post that stands out to me is "but it's only once a year". A lot of expenses are "only" once a year, or "only" $25/month, but add them up and your whole paycheck is gone.
I sense you are not tracking expenses and budgeting, because otherwise you'd know exactly how much per year you spend on activities and whether you can afford that.
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You are currently spending about $8000 a year on credit card interest! Over time that will definitely impact your family's happiness if you don't turn this around.
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I do not track my expenses. I get paid and watch my balance dwindle down until I have less that $100 in my account. Isn't that ridiculous? A man who makes six figures but can't come up with $100 cash a lot of the time. Well, that's why I am here. I've always been intrigued by the minimalist lifestyle. I think its a learned skill.
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Baseball Registration for Spring is roughly $700 - that's only once a year
Tennis for the youngest girl is $120 a month - but only 6 months out of the year
Football registration for the oldest boy is $300 plus snacks and other items.
The youngest is in swimming lessons for $100 a month - he goes once a week.
Good example of why you need a budget. You just listed almost $3K of annual expenses, all of which are completely predictable over the course of the year. So you do YNAB or something similar and allocate $250/month to the kids' sports, if that's your priority, so you have the cash to cover it and aren't surprised. (PS - I thought the $700 was a typo - our baseball registration is $70/yr!)
The root canal I get and feel your pain (first crown myself this year, thanks to a cracked tooth). But that's what HSA/FSA/emergency fund is for. Tires: yeah, they wear down, and you should be able to predict the replacement interval based on the tire rating and your annual mileage.
The point is that all of these are manageable -- you just need to get ahead of the game a bit (which is clearly what you're trying to do here, so no criticism intended). It feels like you're being "nickled and dimed" because you are reacting in the moment vs. having a plan to cover things like this that are infrequent but inevitable.
FWIW, I came from a similar background, so I get the pull. But what is it you remember the most -- is it the "stuff"? Or is it how frazzled and stressed your mom was about making ends meet? Do you realize that saying yes to everything means that you are unintentionally re-creating exactly the same stressful life for your kids that you want so badly to avoid?
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Yes, the interest on the cards is hurting me financially for sure. I cant wait until they are paid off!
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Do the case study questionnaire that people keep linking to. No one can help if we don't know where your money is going.
How much are you spending on gas? Kids' activities? Childcare? Cell phones? Cable TV? Restaurants? Alcohol? Hobbies? Etc Etc. These are the places you can cut to pay off your debt faster.
I live in Manhattan, my rent is identical to your mortgage, I take home slightly more than half your take-home pay, and I'm saving close to 25% of my income. And I'm *barely* mustachian (I eat lunches out, I take taxis, I go out to concerts all the time, etc.). What are you spending all that money on??
Do you have a wife and four kids at that Manhattan apartment?
No, but I doubt he's spending $4,500+ a month (that's the difference in our spending levels) on food, clothes, and activities for the wife and kids. If he is, he has a MASSIVE spending problem. That's why I'm asking where all that money is going.
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I do not track my expenses. I get paid and watch my balance dwindle down until I have less that $100 in my account. Isn't that ridiculous? A man who makes six figures but can't come up with $100 cash a lot of the time. Well, that's why I am here. I've always been intrigued by the minimalist lifestyle. I think its a learned skill.
THIS IS STEP ONE!
Start tracking, today!
You don't need anything fancy. Just pen and paper (in fact, that is how I do it). Purchase gasoline? Write it down. Buy lunch out? Write it down. Grab a six pack of beer on the way home? Write it down.
Have your wife do the same.
Assign a category to each one (transportation, groceries, alcohol, eating out/fast food, kid's activities, clothing, and so on . . .)
When you add up where the money is going, it will be a lot easier to figure out where to stop frivolously spending it.
Start this right now! Look around. There must be paper and a pen nearby. Right? Grab it. Write down whatever you have spent today. Talk to your wife when you get home. Write down whatever she spent, too. Do this for every little expenditure (our spending yesterday was only $3, but we wrote it down, and now we know where that $3 went!).
This is the most important thing you can do. You cannot fix this if you do not even know where the money is going.
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OP, if you're having trouble completing the case study because you don't know how much you're spending, then you need to go download your bank statements from December and do your best to categorize expenses. You might not be able to remember exactly what you purchased, but you can at least get it down to how much you spent at target or at restaurants.
The first time I did this when I was single and spending freely because I had no debt and low expenses, I was shocked. I was wasting so much money on little trips to target or picking up a snack at the gas station. It was only after I did this exercise that I was able to start tracking my money as I was spending it, not just looking at the receipts and statements after.
Here are my suggested steps:
1. Review December statements and categorize ALL spending
2. Go over your debt situation with your wife to make sure you're on the same page, look over your spending together and talk about what you can do together to cut things. You can make a pact that you'll both make sacrifices (and the kids will too) so that you can pay off the debt. Once the debt is paid you can have a different conversation about what expenses are priorities. Understand that every dollar you don't put towards debt right now is actually costing you $1.25 due to the opportunity cost.
3. Work up a budget and decide how you're going to limit unnecessary purchases (cash only? tracking through a budget app?)
4. Each month look for new ways to cut back and save money
5. Consider more die-hard (as Dave Ramsey would say Gazelle Intensity) options for paying off this debt more quickly. Selling the vehicles and buying something cheaper in cash - even if you buy two cheaper vehicles - is the one that pops out immediately. But you could also look for other income opportunities between the two of you or consider other things you can sell.
6. Rinse and repeat.
If you're looking for motivation about paying off debt and ideas for other ways to cut, we found the Debt-Free screams from Ramsey to be really motivating: https://www.youtube.com/playlist?list=PLN4yoAI6teRO_vPRzFxsaEYrx9f1-nE6i (https://www.youtube.com/playlist?list=PLN4yoAI6teRO_vPRzFxsaEYrx9f1-nE6i)
I wouldn't recommend Dave for much beyond budgeting and paying off debt, but those screams are real people who paid off a ton of debt.
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The Beatles case study might be a good thing to go read.
His situation is worse than yours, but the same advice about groceries and eliminating frivolous expense applies.
I don't think every mustachian is minimalist per se, more that mustachians don't over pay for things, put off buying things to get better deals, and skip frivolous purchases.
Take MMM for example. He lives in a nice house with nice furniture but he does it with minimal spending.
My wife and I eat like kings for $375 a month.
Looking forward to seeing that case study filled out.
The credit card debt looks like top priority. I'd say try to cut your monthly expense back enough that you could pay $3k a month on CCs. Tax return goes 100% to CCs. Get rid of at least one of those cars as well and replace with an older vehicle. The payments for the sold car go to CCs.
Really, you want to eliminate that CC debt now, but it will likely take a year, but you could probably do it in 6 months if you were very ambitious.
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The biggest thing you can do to change is to make sure you and your wife are on the same page. If you and your wife are in agreement your kids will follow suit.
Most likely you are going to encounter resistance when you really realize your family cannot continue on this path. Kids are very adaptable and will follow you and your wife's lead but they you can also expcet them to be resistant to making cuts. You really can't blame them either if they are using to being indulged to now having restraints put on.
I'm not sure how old your kids are (I'll wait for the case study), but if they are teens then I would show them the budget and expenses and ask them for help to get your family back on its feet again. I've found with teens if you are open and honest, they typically respond well. They will most likely have to make some hard decisions like baseball or football, tennis or swimming, but not both. At least not both until everything is paid off or if they start contributing to the costs.
You also need to get the "this ONLY costs x once a year" out of your head. Nothing only costs, it just costs. Some things are more unexpected, like a root canal, but others are more routine, like baseball or a home maintenance.
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I would suggest trying YNAB. Great app for tracking expenses. Go to YNAB.com and sign up for the trial. This will really help you track expenses. Even better, you and you wife can both access you YNAB from your phones, tablet and PCs. Very helpful.
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You are in the right place, Mike!!!
As you know, right now you have a cash flow problem. Not an income problem.
What we need to do is boost the margin between your income and your spending, while not sacrificing your lifestyle, but actually making it better. (That's what Mustachianism is all about!)
Financial independence is 80% decisions and 20% numbers.
Here's two great articles you should read. They will show you you're change is possible (and faster than you could imagine!)
http://www.mrmoneymustache.com/2014/12/10/case-study-average-everyday-complainypants-seeks-redemption/
http://www.mrmoneymustache.com/2011/10/02/what-is-stoicism-and-how-can-it-turn-your-life-to-solid-gold/
What you're doing should not feel like sacrifice. It should feel like improved happiness. (If you're feeling sacrifice, make sure to step back and reassess. Maybe even let us know! Something has to be missing for you to feel the change is a sacrifice.)
Good luck!
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I feel for you. We have five kids and spend $10K annually on kid activities (sports and music primarily along with homeschool material). My DH has a good income ($185K) but I feel like we need more if we want to continue with activities, yearly vacations and save for retirement and college. Right now we are good for retirement but if we want to fully fund college at our current income level we will have to cut out vacations and activities.
My suggestion is to make a budget on a monthly basis, after spending some time tracking your expenses.
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Malum Prohibitum-Please please help us families of 6 with our groceries!! I can get to $800 sometimes. How do you do $540? Please advise!!
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https://creditcards.chase.com/slate-credit-card/
immediately roll those cards to 0% and please cut up the old ones once you do!!!
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I have to second (or third) Mint.com
When we first opened an account, it was amazing to see how much we spent at a particular store over whatever time frame I wanted to examine.
Or to look at how much we spent on any one topic such as for eating out.
It was a surprising thing. So much waste.
You're educating yourself and next you'll need to educate your wife and to a certain point - your kids. We chose to educate our kids on the reasons we had to be careful with money - not the real numbers. We'll cover that topic as they get older.
We drive older cars cheaply, stay home a fair amount, and we don't shop for entertainment's sake. Our kids were involved with Scouts and played sports in the community league for $75 a season or so per sport.
We have no debt aside from the mortgage but at one time had all the typical trappings you mentioned but we had less income and less debt.
These days we have enough that we can do more or less whatever we want within reason and never put a dent in our savings. Need a repair? Need to replace an appliance? Want to vacation for a week on the coast?
We can do things like that occasionally and our retirement plans are fully funded.
Don't beat yourself up about it. Baby steps. Be gentle with your household spenders as you steer them in the right direction. Lead by example. If you want something to happen on the cheap(er) then show them how it can be done.
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I have a 9 and 6 year old. We have a HHI similar to yours. We live in an affluent town. I can imagine the social pressures you might feel with the kids activities.
My point is, you are spending a crazy amount on sports. Are you in an expensive metro or a small town with no other options? I ask because I cannot imagine most, or even half, of families can afford 700$ baseball. Or 25$ preschool swim lessons. That is a racket. Makes me think there are cheaper alternatives but you are choosing the do the more expensive ones.
Swimming: go to the city pool or YMCA for these. Even the expensive private college near us charges much less for group lessons. Skip private/semi-private at this age, its mostly about getting used to the water.
Baseball: downgrade to the rec league. Trust, your boys are not going to the pros and they aren't getting a college scholarship. Play for fun.
Tennis: this is a rich person sport, unless your parks and rec offers lessons (in which case they should be cheap!) Your kid probably has had enough lessons to get the basic idea. From now on, go out and play with her once a week instead of paying someone else to play with her. You can always start lessons again in a year or so.
We put our kids in activities. Some people on MMM go pretty anti-kid-activity. I am not like that. My kids are happier and learn a lot from being in sports and other activities. My kids do horseback riding, dance, swim, and scouting.
The key is, we spend way less than you because we don't do the fancy versions, and we are not in debt! If we were in debt, you can bet my kids would have to deal with swimming with mom for a couple years. In fact, I paid for my son's horseback riding lessons the first 2 years by mucking out the barn, while we got our savings built up.
3K a year is TOO MUCH. Cut that in half (at least!) for the next 304 years. By the time you are in a position to increase it, your kids will be old enough to get more out of it.
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Does anyone else think that I should pay off my $9k car loan ($320) a month vs throwing it at my credit card debt?
I like the idea. Don't underestimate the psychological effect of having paid off that one loan. It will also free up an additional $320 each month to throw at your credit cards.
That is of course if you keep using the car instead of doing what most Americans do: get a new car loan as soon as the old one is paid off.
Yep, this is why I suggested it. :) Mike, I think you need the psychological motivation to kind of get the ball rolling. Your posts kind of give me the sense that you know you need to start, but not entirely sure where because you have so many things going on.
Although your debt is high, your income is also quite high, and I don't think you would be too adversely affected by paying off and keeping the 2014 Fusion, and then using the freed up $320 towards one of the CCs. If you roll the debt from the credit cards into a 0% card, then that $320 will go even further for 12-15-18 months, however long the 0% applies for.
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Assuming that you and your wife agree that this is a situation that needs to be fixed, the most important change is the attitudinal one. The particular spending choices are secondary.
You are not being forced to cut back your lifestyle and suffer deprivation due to external limitations; you are internally deciding to improve your life by reducing your stress, increasing your family's security, and taking control of your future. When you truly see this as a positive, independent act, each spending choice becomes an opportunity to increase your well-being.
Good luck! It can be done. More specifically, it can be done by you, and these forums can help!
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So, where is the case study with the numbers? People here will be able to offer suggestions once they see the numbers. It does not need to be perfect, you can update it as you dig out more data.
How old are the kids? Those sport expenses are over the top. You should be putting that money in their college account if you want to set them up for a better life. Your poor wife must be spending half her life in that van taxiing kids from one activity to the other. What does she think about this? Is she on board?
We don't have a strict budget, but we rough out a spending plan at the beginning of each year and i track the expenses (most of them). Fixed expenses, fun money, anticipated big expenses like a new roof or tires, needs and wants. Don't react to situations, plan for them. I regard savings as a fixed expense though, it is a line in the budget.
If you are the breadwinner, you have to sort this out asap, it is a dangerous situation. You make a lot of money, that should provide for a very nice, comfortable life. We have similar sort of household income, but we both work, and i know that my part time income would cover our basic expenses if my HB lost his job.That, and a hefty emergency fund takes away a lot of stress and pressure. No mortgage, just the last bit of a silly car payment. When he was forced to take 2 weeks extra unpaid holiday our first reaction was yay, the kids don't need holiday care and you can clean out the garage. You want to be in the same position and at that income you can totally do it if you focus. You will have to make some drastic changes in the short term, but it will be worth it on the long term.
Post that case study and start tracking your expenses. Do it every night with the wife. No judgement, no arguments, moving forward. An excel spreadshhet will do for the start.
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Baseball Registration for Spring is roughly $700 - that's only once a year
Tennis for the youngest girl is $120 a month - but only 6 months out of the year
Football registration for the oldest boy is $300 plus snacks and other items.
The youngest is in swimming lessons for $100 a month - he goes once a week.
$700/year for baseball
$720/year for tennis
$300/year for football
$1200/year for swimming
$2920/year in just sports registration fees
I wouldn't advocate cutting the kids' activities as a first step, but is there any way to economize? Our parks department tot swimming lessons are $34 for a 10 week session. Parks department tennis lessons are $53 for 8 weeks.
The thing in your post that stands out to me is "but it's only once a year". A lot of expenses are "only" once a year, or "only" $25/month, but add them up and your whole paycheck is gone.
I sense you are not tracking expenses and budgeting, because otherwise you'd know exactly how much per year you spend on activities and whether you can afford that.
I'm going to go against the grain and say that's 243/mo and LESS THAN THREE PERCENT of your monthly take-home. If sports are something that is important to you, I think it's a luxury you can figure out how to afford (and I think there good arguments for that; in my experience people who did sports growing up have made fitness a higher priority as students/adults...). Find the big leaks, and clamp down on the extras. Sports equipment makes great birthday presents! Or find it secondhand (except helmets). Figure out some filling and nutritious snacks to make from scratch instead of spending a fortune on (I'm guessing here:) organic, college-educated, adjective granola/meal bars.
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I'm posting to follow, because I'm also spending a lot on kid activities. We have "only" 3 kids, but it does pile up and there's a lot of social pressure to do the travel team.
I recently had a talk with my oldest son about shifting him from an expensive music school to a local teacher. We're considering letting him take a portion of the savings as a sort of grant to help him follow different interests, if he likes. We get our soccer cleats from the soccer swap, but younger son wants to buck the trend and go for baseball. I know some families who just decide that they are baseball families, soccer families, or whatever and have all their kids do the same thing.
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Mike,
You must remove yourself from this debt and interest that is absolutely crippling you! To do that you must make first accept that your life and habits will need to drastically change.
This is what helps me:
When you dig real deep and think about what you and your family really need and i mean REALLY REEEEEALYY need to be happy and healthy all the spending just disappears. Since 2016 just finished I have been looking back through every dollar I spent in 2016 and found that 93% of what I spent went into these three categories: Home & Utilities, Groceries, Auto & Transport
Every time I think about spending anything... one dollar, even 25 cents, I deeply consider if I HAVE to have this and do I REALLY need it and will it truly make me happier... It works man, Spending outside of housing, food, and transportation it truly waste in many, many cases.
Do you truly believe that you would be depriving your family of a good life if they were provided a great safe comfortable home, had delicious and healthy home cooked meals ever day, and be able to travel wherever they needed to be on a moment's notice? From the numbers you posted for things such as your mortgage and food budgets I believe that you could save close half of your paycheck if you just took on this strategy even without downsizing your housing or learning to efficiently shop groceries.
If I were you, from this exact moment, You need to question every dollar, every cent that falls outside of these categories and do not buy that thing. Of course there are exceptions and you should obviously pay outstanding obligations or bills and maybe your children's sports and activities can slide or maybe your family can treat yourself to the occasional luxury but you must cut out all the nickel & diming in these extra categories that absolutely tears up the average american budget
EDIT: Now just a note I work very hard to keep my life simple and stressfree and this might not be easy for everybody but even a step in this direction I think could make huge positive changes in many people's lives and budgets.
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- Root canal for me - $1,200
- Crown for root canal - $857
The MMM way is to do your own root canal! Come on man, don't be a wuss!
Seriously speaking, I'm doing a little more thinking and you could probably cut down on the younger kids' activities for a year or two if they are tweens or younger. I know my own kids like having free time. Or, you could trade for cheaper activities until you pay off those credit card bills. When you are tempted to overspend again, you will see that you're choosing between kids and convenience foods, or a smartphone, etc.
We don't have all the details, but I would guess that you could do better with an older van and no car payments, you may have a bunch of mobile phones with unnecessary data plans, etc.
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Mike,
You have taken the simple of action of realizing you are in a bad situation and reached out for help. That is a big first step. Don't beat yourself up over the past. That's all water under he bridge. The first step is to attack that debt like it is a deadly alien parasite. You can Dave Ramsey that shit with a debt snowball or go all spreadsheet mathematical but it's gotta be killed quickly. Once you start nibbling away at the debt and cutting your spending you will be surprised how fast things turn around.
Like others said you should budget, track your spending, or both. I personally find budgeting too much like a diet, but tracking my spending made me much more aware of where my money was going, and I could adjust and reallocate as necessary. Submit your data and prepare for massive face punching!
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Mike,
Consider this: *just* what you pay in consumer interest is enough to fund a retirement, over the course of 30 years. And being 35 retiring in 30 years is *not optional*. Chances are you may want or need to stop working earlier than that.
You really need to buckle up and get rid of CC and car debt ASAP. If needed you can present it as a two years plan. No new electronics, no travel, nothing. Two years *max*. Then the debt is gone and you can reassess, start saving, and bring back *some* of that non-essential spending. In the meantime you really can't afford it: you have lived above your means and now you need to cut back. *now*.
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I don't think that I saw anyone mention this, but your credit card balances are really high. I think that it would be difficult to get 0% credit cards for anywhere near 38K. Depending on your credit, maybe half of that?
We were able to refinance our credit cards with our credit union for 7.9% and also with Sofi.com for about the same. We ended up with extremely high balances at the end of home building project that went off the rails on the budget.
By reducing your interest down to 8 or 9%, a lot more of your monthly payment will go to principal. At that point you can take out 0% cards and put a portion of the debt there to help even more.
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Malum Prohibitum-Please please help us families of 6 with our groceries!! I can get to $800 sometimes. How do you do $540? Please advise!!
I'll see if I can get Mrs. Malum Prohibitum to chime in on that. She does the grocery shopping. She puts a lot of work into comparison shopping and getting our protein requirements (eggs and meat) for the lowest price per pound that she can, and keeping the grocery trip down to once a week to save on gasoline (which unfortunately for us is still a way too big expense).
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Posting to await the case study. :)
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Posting to await the case study. :)
Same here!