CASE STUDY - Down a well

[SugarFemme23]

So, I have some questions.

My wife and I are about 60k in debt, of which about 50k is student load debt. Most of our debt is in collections and has been for years. I am in default on my student loans, she is well on her way.

Our take home pay is about $3200
rent is $850.00 (our lease states we have to pay off the entire rent that would have been paid if we break the lease. So, if I leave 3 months early, I have to pay 3 months rent)
Car note is $306.00 (We owe much more that it is worth)
Cell phone bill is $200.00 (still have a year on our contract)
Electric is about $75.00
cable is $125.00
Insurance is $86.00
Food for 3 is about $500.00
Hulu $8.00
Netflix $9.00

Total going out is $2159. My wife is not frugal and has no interest in being frugal. She has agreed to take an "allowance" of about $100 from each of her checks. She wants cable and isn't interested in dropping it.

I am so confused on what I should tackle first. Should I ditch the car even though I won't get enough to cover the loan? Should I let the loan lapse and take care of it in the future? What should I do about the student loans that want approximately $500 a month from me? I've done the forbearance and whatever the other thing is. They aren't budging anymore. If I work on debt first, does it matter what I tackle first?

I feel completely lost, and honestly since my wife isn't really on board with me it's easy to lose focus and just go shopping or out to eat.

I'd love some advice so I can have a solid plan. My ultimate goal is retirement and then to travel in an RV around the country.

Thanks in advance!

SugarFemme23

ETA

Yes, we do rent the modem. Can we just buy any modem?

With the car, we made a spectacularly bad decision. Both of our credit ratings are terrible. We were there forever, it got late and would have signed anything to leave by the time we were done. It's unfortunate and we know we screwed up but not much we can do but clean up our mess now.

The car note is about 15% (I know, I know!) We had no idea what we were doing before I found MMM and I'm trying to do better now.

The student loans, I have no idea of the interest or on any of the other stuff. It's all in collections and is really old debt.

ETA 2:

Okay, assuming I can get her on board. I am just trying to figure out what I should be tackling first.

1) drop the internet and cable, netflix and hulu and find better cell phone options?
2) Throw money at car? Or emergency fund? Or debt?

I just simply don't know what I need to be doing other than not spending money. It seems like we've gotten ourselves into such a mess I don't know which way to go first.

[gimp]

Christ. Cable, hulu, and netflix? Ain't that some shit. Pick one of those. Or none of those. Internet can be had for thirty bucks a month.

Cell phone bill is outrageous. If T-mobile buys out your contract you can drop that to 80 tomorrow. If you just break the contract, pay early termination, and get republic wireless or ting, you could drop that to 50... or 25.

Food is quite a lot too. You can cut that in half, with a bit of work, in the next two months.

How much money is left on your car? How much is it worth? Yes, you should probably sell it and get something used for 3-5k instead.

Your income level looks like you're both working full-time for around $10/hr. Is that correct? If so, it is literally costing you twelve hours of your life every month to have cable, netflix, and hulu. Twenty five hours of your life every month to eat too much / too fancy. Fifteen hours of your life to have no better cell service than you can get elsewhere. When you come home, get the fuck out of the house, go for a long walk every day, breathe the fresh air, you'll find yourself not needing what almost looks like an addiction to media and screens. You can't bloody afford it. You're not "not living frugally", you are "wasting money while bankrupt".

You're literally considering not paying for your car, and getting it repossessed, because "she wants cable and isn't interested in dropping it." Cable, or a vehicle. Cable, or a vehicle. Hmm, tough choice.

[matchewed]

A) you and your wife need to get on the same page regarding your debts. Paying that off won't work very well with constant strife occurring. You guys have two conflicting goals, paying off debt and consumerist attitudes. Engage here and determine if this is a goal for her as well. If so what does she recommend you guys do about it?

B) Break the cellphone contracts. It probably won't cost as much and you can get a much cheaper deal. Even assuming it gets to 50 a month rather than the 200 you'll have 150 to throw at your debts or save up for the car.

C) The car. Yes selling the car and just getting something simple for a much lower amount would help. I'm a big fan of buying used cars for 1-5k and just driving them to the ground and saving enough to buy the next one in that time.

D) Break down your food expenses better. Understand them more as I think 500 is a bit much for three people.

[gimp]

I have comcast too. $30 a month. But let's not quibble about the precise values: what plans are available for internet-only from comcast? What do they charge for 5 megabit? (And please don't tell me you're renting a modem from them. New modems can be had on amazon for under $50; ebay for under $30; comcast charges, what, $7 a month?)

I am really curious why you have a 3k car you owe 7k on. Collisions? There's no point in selling, I guess, unless you're able to get around without it. (Biking is cheaper.)

At what % are your loans? You have a car payment and student loans; credit card debt too? How much?

[snshijuptr]

That is not all the money going out: gasoline, restaurants, spending money. You need a better picture of your spending.

As to your wife, I'm sorry to say that she is living in denial. If you guys aren't paying your debts then she is acting like that debt doesn't exist by the way she spends. Your first problem is not financial, but psychological. You need to get her to see how crazy it is to spend your precious little money on Cable and $100/month in free wheeling spending when you can't pay your debts. If you can't convince her of this, then no advice from us on cost cutting will really help you because your family will just spend that money in one of the areas you didn't list.

[okashira]

That only looks like half of your spending.

Not sure what to do about the wife.

I mean, "not interested in being frugal," "Not willing to drop cable." that's rough.
Have some more conversations with her?

[sleepyguy]

There is ZERO POINT on nickel and dime'ing the issues if you have some serious budget and financial communications issue.

Sit down and iron it out with your SO... if she doesn't agree there is no plan... you will fail financially as partners... that is the blunt truth.

If she does, great... take baby steps first and take the guidance above.

[wtjbatman]

There is ZERO POINT on nickel and dime'ing the issues if you have some serious budget and financial communications issue.

Sit down and iron it out with your SO... if she doesn't agree there is no plan... you will fail financially as partners... that is the blunt truth.

If she does, great... take baby steps first and take the guidance above.

Best post in this thread. There is clearly a lot more going on here than what can be described by dollar signs, and just dropping Cable TV won't solve their problems.

[Chrissy]

The difference between your take home ($3200) and your expenses ($2159) is $1041/mo.  Is that true?  Do you feel like you have $1000 extra every month?  If it is, you can give the student loans the $500/mo they're asking for and throw $541/mo at the car loan.  You can throw even more at it if you can cut out or down on the cable/hulu/netflix. 

If there's no way your family has $1000 extra every month, then you have a leak somewhere.  You need to look at your bank statements and find out where the money is going.

Are home phone and internet bundled with the cable?

You say your wife's student loans are about to be in default.  How much is she paying now?  What's the interest rate?  Did you accidentally leave that out of your expenses?

What about this $100 per cheque allowance for the wife?  I don't see it in the expenses.  Does she plan to cover the cable and some other expenses with it?

You ask what you should tackle first, but internet, netflix, hulu, cable and phones can all be tackled in about an hour, so they all come first.

Yes, throw money at the car.  The 15% is eating you alive.

Also, y'all have spent a lot of money going to school.  Can somebody use that schoolin' to get a better job?

[Roland of Gilead]

$50K in student loans for a $10/hr job?   I would ask for my money back...

[TheSimpleLife]

All the talk about cutting back on expenses are worthless if you don't get on the same page as your wife.  Increasing your income or cutting expenses without her on board is a pipe dream.

From someone who has been married for a few years with many of those years spent without spousal agreement on finances, NOTHING ELSE MATTERS until you can come to some places of agreement with you wife.

On a personal note, I could be quite a bit more frugal than my wife wants to be.  I sacrifice some debt payoff and FI by letting her spend some more money in areas that are more important to her.  For me, it has just been easiest to let some of my obsessive tendencies go and let her enjoy it.  That has taken a lot of work on my part, but it has improved our marriage ten-fold.

I'll take a happy wife and a few more years of work every day of the week over a more frugal lifestyle and an unhappy, bitter, cold wife.  Life is too short to sweat every little financial detail.  Some are born spenders, some savers.  My wife has made great strides when I've given her some "blow money" and was kind and gentle rather than fighting about it.  I think the change in attitude by her will continue as she sees the practical benefits of saving, investing, and living way below our means.  It just takes time.

You might want to look for some type of financial counselor.  I would look for someone independent who specializes in helping couples communicate about financial problems (especially debt).  Money really is the number #1 reason for divorce.

Just my two cents.  Again, you have many holes and problems with the money side of things, but take care of the relationship side first before trying to fix it all.  I hope you are able to work through these problems with your wife and get on the same page!  It will be worth the pain and heartache to work through it all!

[nereo]

Okay, assuming I can get her on board. I am just trying to figure out what I should be tackling first.

1) drop the internet and cable, netflix and hulu and find better cell phone options?
2) Throw money at car? Or emergency fund? Or debt?

Step 1: find a way to get your wife on board.  Otherwise, everything else is pointless
then it's time to cut your spending and apply it to your debt.  If you have $50k in loans in default or about to be in default, that constitutes a "hair-on-fire" emergency.  You cannot afford the luxuries you are paying for.  The debt issue will just get worse.

If you want my honest feedback, you need to cut cable and cut either netflix or hulu.  Then there's your car - even though it's worth less than you owe, that's a "sunk cost".  Sell the car.  If you absolutely need a car to commute buy the cheapest car you can find (under $5k for certain).  Yes, that might mean you still have to pay the $306 for the nicer car you no longer own, but in a few months (or years) you will have no car payment at all. 
For your cell phone, how big is the penalty if you cancel early? At $200/month with a year left on the contract it would have to be HUGE for it not to make sense to cancel.
Food should also go down by about $200/month

With those changes you should be able to throw several hundred $ extra at your loans every month.  At first it won't seem like much, but over the next few years the balances will start dropping like stones.
As others have mentioned, there's about a $1k discrepancy with what you listed and what you make.