Author Topic: CASE STUDY: Help me start my life and another... $50,000 in debt  (Read 8554 times)

RomanMM

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Hi all. I have been reading MMM and listening to Dave Ramsey for about 6 months now. Ready to get serious... I just found out I am pregnant with a baby due in early October. Please help me cure my life and another in a better position. I live with the Daddy to be, but we don't really combine expenses. I will say that he is debt free, has over $20,000 saved, works full-time, and goes to school part-time. He knows about my debt, but it is my job to take of it (my thoughts- I would never ask him to pay). So below is me and my $50,000 debt. Here we go:

Me:26
I have a current unfinished (4 years back) BA in Fine Arts (at the time needed one class to graduate but got burned out). I really need to check into this. Anyways, I currently enrolled in community college (before pregnancy) to study Accounting. My current employer offers tuition reimbursement up to 2500 so that is what the point of this is. Hope is to end up with a 2nd BA at the very least a certificate/associate in accounting with my BA Fine Arts completed.

Current Net Income:


1100/month - after deductions for HSA(20/month) , health insurance(113/month), taxes and 401k(6%)

- Raise coming in April & December. I do get maternity leave & 60 days of unpaid leave.

 -The income is godly low but I do get a public transit card, meal provided, tuition reimbursement, employer 401k match up to 6%)

Expenses:

Rent: $200/month my half (everything included)
Phone:  $33/month
Bank fee: $3

- Will be moving in June, rent will go up unless I try to get government assistance.

Total = $236/ month

Assets:

Checking 4456.42
Savings 1510.73
Secured Visa 525.00 ($500 returned on closure)
Savings #2 525.30
Savings #3  75.00
401k: 524.11

Total: 7092.45 (doesn't include 401k)

Debt:

ALL Student loans are in Deferment (US = unsubsidized, S= subsidized)

1. US 4732.60 @Fixed 6.8%
2. S 1951.73 @ Fixed 5.6%
3. US 2499.84 @ Fixed 6.8%
4. US 2648.18 @ Fixed 6.8%
5.  S 6331.64 @ Fixed 6%
6. S 5612.55 @ Fixed 6.8%
7. US 1029.26 @ Fixed 6.8%
8. S 4120.79 @ Fixed 6.8%
9. S 1381.51 @1.75% (in school defer)
10. US 1632.09 @ 1.75% (in school defer)

SDL Debt Total: 32011.93 current deferment status

Other Debt ( I don't pay currently on any bills or debt and haven't since 2010 these are old debts):

Medical Bill - $810 collections
Phone- $110 collections (I dispute this, because they were to close my account-Tmobile)
School Parking- $125 collections (would have to pay this to get my BA)
Credit Card #1 - $798 written off, closed
Sallie Mae - Balance $7471 of a 4411 original, charged off collections
Wells Fargo - $135.00 (can't open another bank account because this is in chex systems report)
IRS - $700 (haven't filed taxes for 4 years, haven't filed 2013 yet should lower the amount)
Library - 145.00 collections (can pay back with can food up to $75, waiting for that date. Then will pay the rest)
Credit Card #2 - $3962.60 closed

Other Debt Total: $14,256.60

Total DEBT: $46, 268.53 ( I rounded to 50,000 because my gut tells me there is other debts somewhere. Sad I know.)

My Questions:


1. What order should I tackle the Student loan debt (i.e 1.2.3...)?
2. With the other old debt (besides the IRS will take care of that asap), I planning to settle for pennies on the dollar (Dave Ramsey). Hoping to greatly reduce this, my credit is shot anyways. Tips, Tricks, Suggestions? What order should I tackle this?
3. How much money saved do I need baby wise?
4. Has anyone gone back to revitalize an old degree, what should I know or ask?
5.Help me help me, please?!

*note: I posted nothing on expenses like food or clothing because this is basically going to be zero. I have no choice. I have been wasting hundreds of dollars on fast food every month and will stop immediately. What is the baseline for my allowance for grocery in my current state?

Thank you advance, because I am hoping this will be a life charger and before age 30 be living a completely different life.

RomanMM


innkeeper77

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #1 on: March 06, 2014, 07:20:13 PM »
It takes guts posting your situation to the world, so props for that! You have a tough situation, but clearly you know the way out. Stick in there, you can do it! It will likely seem like time is dragging by, and you will never be free, but ovet time your progress will speed up.

As for your questions:
1: Loans like this, pay the minimums on everything, and give extra to one loan at a time. The loan you should give extra to should be the one with the highest interest rate. This means you pay less in the long run.
If you have multiple with the same rate, pay off the smallest one. This way you get rid of a loan faster, and therefore will no longer have to pay minimums on it. (Useful for safety if you have a period of unemployment, etc. Then you have lower minimum loan expenses!)

 Following this strategy, you go:
7,3,4,8,1,5,2,9,10. I assume the subsidized loans are accruing interest since you "finished" school 4 years ago? If any subsidised loans are NOT accruing interest, only pay the minimum until such a time as they do start accruing.

Other debt:
Medical: I would call and ask them to reconsider, or just pay it. It isn't too much..
Phone: If you legitimately told them to close the account and they didn't, this isn't actually your responsibility. Good luck with the negotiations!
Parking: It's in collections, you owe it, it's only $125. Pay it ASAP.
Credit card 1: Work something out? Good luck.
Sallie Mae: Ditto
Wells Fargo: If you honestly owe this, pay it ASAP. It's a tiny amount, and then you can remove a liability account!
IRS: File taxes... the sooner you get that done the sooner you dont have to worry about the IRS. The longer you wait the worse it will get..
Library: Pay this off as soon as you can, it is again a small amount, and they clearly have a way to work it out with the food etc.
Credit card 2: good luck.


Overall, you only owe $50,000, and you have LOW expenses. You can get out of this without filing for bankruptcy or anything! If I were you, I would concentrate on doing the following:

1. Pay only minimums on student loans. Ask for a payment plan adjustment so you can reduce your minimums without adjusting interest rates.. even if they will only do this for a short time. (ONLY try this if you WILL pay more than the minimums as SOON as you can!!)
2. Find all of your other debts. You need to know your ENTIRE financial situation. It may be depressing, but you are in the process of fixing it so you have that going for you.
3. Pay off all of the random debts, especially if they are in collections. You might as well try to be nice to your future credit score, and if you owe money legitimately, you should probably try to pay it...
4. Work out a repayment plan for your larger non student loan debts. This is outside my experience. Luckily, your total "other debt" is low.
5. Once you have all of the collections debt etc taken care of, snowball your student loans using the strategy I explained earlier.
6. Become debt free! With "no" pain or stress. (I know it will be hard, but again, you can do it!)


Other tips: These are things I personally have been doing recently, that are allowing my wife and I to throw a LOT more money at our student loans.

1. Learn to cook food cheaply. Even if your significant other is buying, you might as well be economical! Maybe if you help reduce the food budget for him, he could return the favor and send the money you helped him save to your loans? I personally enjoy budget food websites such as http://www.poorgirleatswell.com/ (Slightly bland- add more spices) and http://www.budgetbytes.com/ - If you can make cooking fun for yourself, you may find yourself happier, healthier, and richer! I spend less than I would at fast food, for much tastier AND healthier meals...

2. Sell things! Do you have stuff? Do you have TOO MUCH stuff? Help out your wallet by selling on ebay and craigslist (be careful, only meet in public). This isn't amazingly time efficient, but it gets you some extra dollars, and I personally find having less (useless) material possessions makes me happier, and less likely to spend money on more "stuff".

Prairie Stash

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #2 on: March 06, 2014, 07:30:47 PM »
Student loans - 7,3,4 since they have the same rates go smallest to largest. It will get you some breathing room. If you pay one off be proud, the first is the hardest.
No tips for #2, except be brave and start talking to each.
Babies aren't necessarily expensive. Get out there and tell people you're having a baby. We were offered clothes, toys and furniture for free. Breast feeding saved on food, a lot cheaper than formula. Cloth diapers can be bought used, sold later. Also, talk to the boyfriend, it's his child too. Your baby isn't yours alone to make decisions for (I'm a father of a beautiful one year old girl).
I doubt you'll have much trouble going back to finish your degree. My university allows 10 years to finish, a break is fine. Go or phone and ask your admissions people.

MDM

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #3 on: March 06, 2014, 09:38:05 PM »
RomanMM,

Yes, it's doable and congratulations for tackling things now instead of delaying.

As I understand your situation, you are currently not required to make payments on your student loans because they are all "in deferment."  Is this correct?  If so...ignore the student loans for now.  Instead, first clean up all your "other debt". 
In other words, I concur with innkeeper77's suggestions, except skip step 1 and start with step 2.  You'll get back to the student loans in step 5. 

Prairie Practicality's ideas on the baby and schooling look good also.  Talk with the OB/GYN and hospital and your insurance company beforehand to understand what you will be expected to pay for prenatal and delivery.

Costs for food depend on your general location (local farmers' market year 'round or only in summer?) and specific access to budget stores (Aldi, Costco, etc. near you?).  I'll toss out ~$200/adult/month as a starting goal.  Others may have more specific advice.

Consider not trying to settle the debts for pennies on the dollar.  I know, easy to say and hard to do.  But if you can negotiate a lengthy payback schedule the payments may be easier than you think now, particularly as your pay increases.

And...what is the chance of exchanging some vows with the father-to-be?  The ones that include "for better, for worse, for richer, for poorer"?  If the relationship is good, "mine" and "yours" becomes "ours". 

Best wishes.




Gimesalot

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #4 on: March 06, 2014, 10:51:43 PM »
Some things to look into:

Can you lock-in a lower interest rate for your student loans?  I took my loans out at 6%.  They quickly jumped to 6.5%.  Two years later, I consolidated at around 2.25%.  It makes a huge difference in the minimum payment amount.

Before paying the credit cards off check this site or a similar one: http://www.creditcards.com/credit-card-news/credit-card-state-statute-limitations-1282.php .  Although some would argue that you have a moral responsibility to pay your credit, you may not be legally required to pay.

Work with the IRS to set up a payment plan:  http://www.irs.gov/Individuals/Payment-Plans,-Installment-Agreement

You have already made huge progress by collecting this information and realizing you need to improve.  Good luck.

mrgrump

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #5 on: March 07, 2014, 04:40:27 AM »
I read your post and it honestly pissed me off. I tried walking away and forgetting about it but as I looked at my 14 month old son playing I thought of your little bundle of joy on the way.

My debt at its highest was 7x the amount of yours. I made mistakes. Bought a house with PMI and several new cars but have always paid them off. So I get it, people make mistakes.

I agree with prior posts action plan to pay it off but You have proven to have zero accountability as a citizen or a student so I don't really understand why they think you'll follow through. I sure hope you do a lot of growing up before that baby gets here. Because every parent on here will tell you "just getting burnt out" on parenting is not an option. I sure hope you find your backbone and pay off these debts IN FULL and not just pennies on the dollar because frankly why do you deserve that?

The world owes you nothing and you owe that baby everything so stop looking for the easy way out, woman up, pay your debts and live happily ever after.

I would start by paying off the 2 smallest debts and finishing your degree that way you can have a warm fuzzy feeling for actually finishing something.

Gray Matter

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #6 on: March 07, 2014, 05:22:07 AM »
I hear passion and a strong desire to change in your tone, but I'm not entirely sure I hear conviction.  Your last sentence is: "I am hoping this will be a life changer and I will be living a completely different life before I'm 30."  You need to get rid of the "hope" and make it happen!

I am glad you're here, because this place can really support you, but you are going to have to do the heavy lifting.  Have you changed the behaviors or life circumstances that got you into so much debt (and behind on payments so things are in collections)?  Having a baby (congrats!) can be a powerful motivator, but I've also found that motivation wanes when we're stressed or tired, and parenting provides ample opportunity for both of those.

It concerns me that you have so many small debts that you could have paid off but didn't.  Why is that?  You'll need to dig deep to understand what drove you into your current situation to make sure you don't fall into the same traps.  Have you heard the expression, "Wherever you go, there you are"?  I always think of that when I hear of people wanting to make significant life changes, because despite our best intentions, changing who we are and how we live is difficult.  I'm not telling you this to discourage you, because your situation is definitely reversible, but just to expect it to be difficult so you don't give up when the going gets hard.

It sounds like you're SO has a stable financial foundation, so that's another thing in your favor.  You can do this!

wild wendella

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #7 on: March 07, 2014, 08:11:11 AM »
I want to give a quick reply with something that is somewhat off-topic.  Don't let any of this financial stuff stress you out right now.  I know that's hard to do, but find a way to partition it off from your emotions.  Stress is VERY bad for a developing baby.  Extremely bad.  Expecially stress that you feel is out of your control.  I've read this in many studies.  A good book on the topic is 'Brain Rules for Baby'.  I think I read that stress is most impactful near the end of the pregnancy.  Don't bathe your baby in cortisone.  Breathe, and let any worries about this roll off you completely.  Go for walks.  Do yoga.  Meditate.  Enjoy music.  ALL of the things you've mentioned above are completely manageable, and you WILL manage it, it will just take time and dedication.  So please don't let it cause you stress, which will in turn impact your baby's development.

I had similar problems when I was in my early 20s.  I took an incomplete in a class in my final semester of college, and didn't go back to finish it (and complete my degree) for years.  I had collections on a student loan, on an amex card, on taxes. At one point I remember being more than two months behind in my rent.  Unfortunately, I had to learn the hard way, as you are doing, but I did learn.  Everything got resolved, I'm 42 and my retirement fund is now healthy. 

I'm married and have an 18 month old son.  Even though we've bought many things second-hand, we've definitely spent more on him than necessary.  You don't need to spend even 20% of what most people do on babies.  Just commit to being frugal.  Borrow and improvise.  Babies don't care about expensive things, all they want is for you to hold them.
 

RomanMM

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #8 on: March 07, 2014, 08:22:23 AM »
Thank you for the positive and reassuring replies. Dave Ramsey advocates negotiating with creditors on old debts. He says by a year or 2 of no payments or communication, most creditors will accept "pennies on the dollar for debt owed" because they have already written you off. So essentially $1000 for $4000 debt. In my case my "other debts" are from 2009/2010 the latest, so it would be an option for me. The settlement goes on your credit report too. But I am planning on using another Dave Ramsey philosophy by cash flowing my life, so I don't really need to have good credit.

@MDM - Yes I don't have to pay on the student loans now (again) because I went back to school. The idea is to use this as my advantage and pay as much to the principle during the deferment time. So I will focus on the other debts which hopefully I can knock out with my savings.

@innkeeper - thank you for your thoughtful post. I do plan to sell things before the move and we are going to start fresh in our new apartment and baby. Things I have: 2 microwaves, a juicer, a blender, clothes, a bedroom set, a living room set, a couple of gift cards, old phones, books, movies, and cds. I actually don't have a lot of stuff.

@prairie practicality - thank you. I have already found an organization that lets you rent maternity clothes, has weekend information classes to earn "bucks" to purchase items through the organization. I am actually the 1st pregnancy in my community so I know there will be an out pouring of love and support to which I will be thankful.

@MDM - For some reason I feel like I could survive on $100 for food a month to start. My hope is to take of this responsibility myself without Daddy to be money, because I have had more education and opportunity than him and I in an worse situation. He will definitely be helping the baby though, so that's lets my monetary focus be my debts. As mrgrumpyfaceman said I want to woman up to my financial responsibility for me, my child, and daddy-to-be.

@mrgrumpyfaceman - thanks!

@Gray Matter - Yes! My hope is by 30 to be debt free. 4 years is a lot of time, but I won't be sitting down waiting for it. The behaviors that got me into debt were ignorance was bliss. I went through hard times right out of college and pretty much dropped everything. I wasn't spending money on anything else, because I didn't have any and nothing to show for my college career. I had a lot of time of deferment and forbearance on my student loans since college so that's why ignored those.  In hindsight I really just didn't fight hard enough to stay a float. I have a few times to turn my life around since then and haven't taken it. I am seeking out counseling to help with the questions you presented. Thank you. I am thankful for Daddy-to-be, he is my rock and the love of my life. And still believes in me despite all this.

@wild wendella - Thank you, thank you, thank you! I would love to hear more about your story. Maybe I could private message you? I'll look at your other posts. Yes I am trying to not be stressed, but I am definitely anxious, because I don't know practically anything baby-wise. I know my life will improve and my overall outlook will improve when I take care of this. I really appreciate your reply. Thank you.




mollyjade

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #9 on: March 07, 2014, 09:09:35 AM »
Your income probably qualifies you for WIC (though I'm not sure how they take into account live-in unmarried partners). Going from eating fast food all the time to feeding yourself on $100/month is a HUGE change, so having a bit of a safety net will help you adjust while making sure you're getting enough nutrition.

Cwadda

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #10 on: March 07, 2014, 09:32:26 AM »
The good thing is that your income exceeds your expenses by five fold.  When you have the baby, your efforts will need to double.

Quote
Medical Bill - $810 collections
Phone- $110 collections (I dispute this, because they were to close my account-Tmobile)
School Parking- $125 collections (would have to pay this to get my BA)
Credit Card #1 - $798 written off, closed
Sallie Mae - Balance $7471 of a 4411 original, charged off collections
Wells Fargo - $135.00 (can't open another bank account because this is in chex systems report)
IRS - $700 (haven't filed taxes for 4 years, haven't filed 2013 yet should lower the amount)
Library - 145.00 collections (can pay back with can food up to $75, waiting for that date. Then will pay the rest)
Credit Card #2 - $3962.60 closed

Call about the medical bill and negotiate. Interestingly enough, when my mother had a colonoscopy exam when she talked on the phone to pay for it, the guy said "if you pay today I can give you 30% off". And my parents have perfect credit. Also, my sister had a bit of an accident and her hospital bill was roughly that amount. She was able to negotiate it down.  Keep in mind: All they can say is no.

Start widdling down this list bit by bit. Start with the more minuscule things.

For taxes, file. It doesn't have to be in April; it can be any time of the year. The IRS makes everyone file taxes because it knows people are ignorant and or/lazy. Don't be one of those. It is "free" money to take advantage of.

dude

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #11 on: March 07, 2014, 09:50:50 AM »
If those are Stafford Loans, I would seriously look into consolidating them under the Direct Loan program.  That will give you options for loan forgiveness (if you find a public service job -- public service is probably more widely defined than you think) and repayment programs, and possibly a lower rate.  And you can take advantage of the 1/4 point interest deduction for setting up auto-pay.

wild wendella

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #12 on: March 07, 2014, 10:41:31 AM »
Absolutely, feel free to private message me.  I'd be happy to load you up with many paragraphs of my acquired 'wisdom', which you may or may not take with a grain of salt.  hahaha!

Weedy Acres

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #13 on: March 07, 2014, 10:56:57 AM »
I think you're more in the Dave Ramsey camp than the MMM camp at this point, and as such would gain much by following his baby steps.

So clear out all your bank accounts down to $1000, and clean up all your itty bitty old debt.  I wouldn't waste time trying to negotiate down the small ones, and sallie Mae won't negotiate, so that just leaves the credit card #2.  I mean you can ask on all of them, but it's typically a long drawn out process, and you have the cash, so I would live up to your obligations.

Then you need to stockpile cash for baby to cover your copy and the potential for problems.  But once it's born and healthy, toss it all at your next debt.

Then work on paying down your student loans even if they are still in deferment. 

Finally, DR would say you have an income problem.  If you're working full time, then you're only just making minimum wage.  Take a second part time job.  Do some side work like mowing lawns or cleaning houses or delivering pizzas (think of the tips you might be able to attract as a pregnant girl) :-)

We do food (all from scratch, shop at Aldi) for $200/month for two adults.  And we eat well.


payitoff

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #14 on: March 07, 2014, 12:45:27 PM »
big tight hug. you will get through this! just focus focus.

1. i will START WITH WIC, google the closest to you and apply, this will help you get all the nutrition you need for you and the baby for free while you are in life makeover mode.

2. file your taxes ASAP, IRS is no joke to be fooling around with, whatever may be the outcome, if you have back taxes to pay, wait for the letter from the IRS to confirm this amount, THEN call them and set up an installment agreement, they are the nicest people and they will work with you, as long as you make this monthly payment you will be off of their hair.  when life gets better, turn around and pay this off, but as for right now, just get this filed, and make small agreed payments.

3. Sallie mae in collections - call them and again tell them your current situation and ask how much will be the lowest they will accept as a settlement. start with $2000, tell them you have save this much and ready to pay them TODAY, call them END OF THIS MONTH, normally they are desperate to make quota by end of the month.

3. call you medical bill in collections, ask how much they are will to take as a settlement
4. school parking - yeah , its only $125 , just pay it

stop all your 401k contributions for now, first use your savings 2 & 3 for settlement, then savings 1 if you need more funds. i agree with the above to keep $1000 as emergency fund, im sure boyfriend will help with the baby costs right?

grab this chance to clean out all collections while your current sallie mae is in deferment, so by the time that takes effect, it will be your only focus, then attack it.

you are in good shape, you have the funds to kill this debt, food will be covered by WIC like milk, produce, eggs, cereal, cheese, formula, check ups if you need to, up until baby is 2 years old. you will have overflow of groceries, i did WIC before and it was a blessing.



marty998

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #15 on: March 07, 2014, 02:00:05 PM »
Congrats on starting to turn things around. Lots of great advice here too.

Please keep us updated, this might turn out to be a very useful and inspiring story for a lot of people in a similar situations.

Mori

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #16 on: March 07, 2014, 02:03:49 PM »
... most creditors will accept "pennies on the dollar for debt owed" because they have already written you off. So essentially $1000 for $4000 debt.

You probably already know this, but make sure the person you pay off is the person that officially holds your debt. These get resold multiple times so double-check before paying.

As far as your degree, make sure you check your school's requirements. Where I graduated from, you had to be making progress towards your degree, otherwise after 5 years your classes started "expiring", for lack of a better word. You'd have to repeat any expired credits (yes, higher ed can be a racket).

SunshineGirl

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #17 on: March 07, 2014, 02:13:09 PM »
Welcome and you can absolutely be debt free by 30. Good to see you committing to it.

I just wanted to say that regarding taxes, you may pleasantly find that you are due a refund, with your income so low and with contributing to a retirement account. Google VITA or "tax help for low income earners" and see what free resources are available to you.

It sounds like the benefits at your company are quite good, so it's unfortunate that the pay is so low. Seeing as you are working toward an accounting degree, can you transfer into the accounting department and do bookkeeping or something to gain experience? It can't pay LESS than what you now make! (Good career choice, BTW.)

Tai

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #18 on: March 07, 2014, 04:39:54 PM »
You can care for a baby pretty frugally, breast feeding and cloth diapers, used clothes etc. But having a newborn will mean not working for a while, I think your bf will need to step up for that. I found that the most expensive part of working with a child was the babysitting/daycare. You don't mention any arrangements that way, that will be a huge factor in whether you are even able to return to work. I'd start investigating options now, in my area subsidized daycares have huge waiting lists (years sometimes) and you want to know what's out there. I hope for your sake that you are lucky enough to have a relative who can help that way. And as someone said ask around, I had my baby on my own and people were really generous with baby stuff, most of which I was able to pass on to other people when mine had outgrown it. Sorry, but pretty soon it will be baby first and you second and that is the way it has to be for a while.

Mazzinator

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #19 on: March 07, 2014, 06:07:54 PM »
Welcome!

For your student loans, i would pay back the US ones first..

Quote
The government does not pay the interest on your unsubsidized loans (or on any PLUS loans). You are responsible for paying the interest that accrues (accumulates) during the deferment period, but your payment is not due during the deferment period. If you donít pay the interest on your loan during deferment, it may be capitalized (added to your principal balance), and the amount you pay in the future will be higher.

Also, in some jobs once you complete a degree, any degree, you could get a raise, or qualify you for a new better paying job. I think you should complete your old degree first. Call them and ask what you need to finish your degree. I'm sorry to say, but i think it's better use of your time and energy even if it's for a field you hate. You really can't be picky at this point and if it is really "just one more class" then do it!! I'm really interested what the old school says!!!

Once your loans are out of deferment you may qualify for IBR.

Good luck!

bogart

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #20 on: March 07, 2014, 07:38:49 PM »
Congratulations on your pregnancy, and best wishes to you as you prepare for the new arrival next fall.

I don't have particular wisdom on the debt issues beyond what others have recommended, but given what you say about a fast-food diet and desire to reduce food costs, I'd recommend both looking into WIC (as others have suggested) promptly, and thinking about (and doing some basic reading up concerning) the nutritional needs of an expectant mom.  I'm not saying your diet needs to be expensive -- it doesn't -- but it does need to be complete and balanced (one supplement that is routinely recommended is folic acid, a B-vitamin that can be taken in pill form).  Ideally you could discuss with your OB or an associated nurse your basic situation -- not all the details, just a need to establish new, nutritional dietary patterns within a limited budget.

It doesn't sound like you're having nausea issues and hopefully you won't, but be aware that what foods "work" for you may or may not change over the course of your pregnancy. 

An easy way to prepare healthy food can be a slow cooker; if you don't already use one and aren't familiar with them, you may want to look into some recipes and consider buying one.

RobertBirnie

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #21 on: March 08, 2014, 01:15:06 AM »

For taxes, its been mentioned, but I'd make sure to get current on them. Next year after your baby you will likely qualify for 'Earned Income Tax Credit', and this can be a few thousand. I don't know specifics so you'd have to do some research.

Also make sure to make some solid investments in your future. Try and learn new skills as much as possible and try to angle your career into something that pays a bit higher. It seems to me you don't have so much of a debt problem (I bet a huge percentage of this forum owe more, home loans are big!) as it is an income problem. A small income bump and $30-50k debt is very manageable. Try and figure out a 10 year plan of where you want your work/career to be and work continually to develop the skills to get you there.

Rest of debt recommendations here sound really good. My last bit of recommendation is super corny. Try and stay super positive through this, likely by the end of the year you won't have made a huge amount headway because cleaning up finances are always really slow going. Remember that a happy wife equates to a happy family; so stay positive, fun and enjoy your life and baby. If you can do this the rest will line up eventually.

mamatroi

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #22 on: March 30, 2014, 11:30:32 PM »
Thank you for the positive and reassuring replies. Dave Ramsey advocates negotiating with creditors on old debts. He says by a year or 2 of no payments or communication, most creditors will accept "pennies on the dollar for debt owed" because they have already written you off. So essentially $1000 for $4000 debt. In my case my "other debts" are from 2009/2010 the latest, so it would be an option for me. The settlement goes on your credit report too. But I am planning on using another Dave Ramsey philosophy by cash flowing my life, so I don't really need to have good credit.

@MDM - Yes I don't have to pay on the student loans now (again) because I went back to school. The idea is to use this as my advantage and pay as much to the principle during the deferment time. So I will focus on the other debts which hopefully I can knock out with my savings.

@innkeeper - thank you for your thoughtful post. I do plan to sell things before the move and we are going to start fresh in our new apartment and baby. Things I have: 2 microwaves, a juicer, a blender, clothes, a bedroom set, a living room set, a couple of gift cards, old phones, books, movies, and cds. I actually don't have a lot of stuff.

@prairie practicality - thank you. I have already found an organization that lets you rent maternity clothes, has weekend information classes to earn "bucks" to purchase items through the organization. I am actually the 1st pregnancy in my community so I know there will be an out pouring of love and support to which I will be thankful.

@MDM - For some reason I feel like I could survive on $100 for food a month to start. My hope is to take of this responsibility myself without Daddy to be money, because I have had more education and opportunity than him and I in an worse situation. He will definitely be helping the baby though, so that's lets my monetary focus be my debts. As mrgrumpyfaceman said I want to woman up to my financial responsibility for me, my child, and daddy-to-be.

@mrgrumpyfaceman - thanks!

@Gray Matter - Yes! My hope is by 30 to be debt free. 4 years is a lot of time, but I won't be sitting down waiting for it. The behaviors that got me into debt were ignorance was bliss. I went through hard times right out of college and pretty much dropped everything. I wasn't spending money on anything else, because I didn't have any and nothing to show for my college career. I had a lot of time of deferment and forbearance on my student loans since college so that's why ignored those.  In hindsight I really just didn't fight hard enough to stay a float. I have a few times to turn my life around since then and haven't taken it. I am seeking out counseling to help with the questions you presented. Thank you. I am thankful for Daddy-to-be, he is my rock and the love of my life. And still believes in me despite all this.

@wild wendella - Thank you, thank you, thank you! I would love to hear more about your story. Maybe I could private message you? I'll look at your other posts. Yes I am trying to not be stressed, but I am definitely anxious, because I don't know practically anything baby-wise. I know my life will improve and my overall outlook will improve when I take care of this. I really appreciate your reply. Thank you.

I realy appreciate your idea of not asking your husband to pay money for the baby. But I think you both should combine expenses and try to find the ways how you can save more and more money after dealing with all expenses. Look first of all you should search people which can provide you things you needed in comparative prices. For example- search for a hospital that does the same surgeries in comparative price, then a shop that provides cheap maternity clothing that can be used after your pregnancy, baby clothes , toys etc.
Managing your expenses according to the plan will definitely save you a lot.   

marty998

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #23 on: March 31, 2014, 02:04:25 AM »

@MDM - For some reason I feel like I could survive on $100 for food a month to start. My hope is to take of this responsibility myself without Daddy to be money, because I have had more education and opportunity than him and I in an worse situation. He will definitely be helping the baby though, so that's lets my monetary focus be my debts. As mrgrumpyfaceman said I want to woman up to my financial responsibility for me, my child, and daddy-to-be.

I realy appreciate your idea of not asking your husband to pay money for the baby. But I think you both should combine expenses and try to find the ways how you can save more and more money after dealing with all expenses. Look first of all you should search people which can provide you things you needed in comparative prices. For example- search for a hospital that does the same surgeries in comparative price, then a shop that provides cheap maternity clothing that can be used after your pregnancy, baby clothes , toys etc.
Managing your expenses according to the plan will definitely save you a lot.   

I don't care if people call me an old fashioned fuddy-duddy chauvanist. It's his progeny too and you should not feel bad about asking him to contribute.

Putting aside all arguments as to whether you are financially ready to have a child (I am not judging, nor do I want to go near the subject), you are in this situation, and it looks like you need every bit of help you can get. Trying to get by without your partner contributing is not a good idea.

kt

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Re: CASE STUDY: Help me start my life and another... $50,000 in debt
« Reply #24 on: March 31, 2014, 02:36:01 AM »
if you are having a child with your boyfriend and he is the love of your life, i think you need to have some serious money talks with him. i know that some people feel guilty for bringing debt into a relationship (partic if the other one has savings) but if you are in this for the long haul, you're a unit and things that hurt you will hurt him too. does he think you should bear the burden of your debt alone (you specifically said this was your opnion)? if not, see what he could do to help you. i'm not suggesting you do joint/merged finances or marry or anything but i think you need to involve him in this process and if he's really in it he should want to help where he can and where he feels is reasonable. and if he does, you should let him.
also, do you need to move to a more expensive flat? (is this so there is more room for baby?) and how much more expensive are you talking? if the focus is debt-repayment, you may want to rethink this if possible.
all the best, you've faced up to what you need to do, now go and do it and starting enjoying life without the worry of unresolved debt!