Author Topic: Drowning in Debt--Where do we begin?!  (Read 17423 times)

ellyfinzer

  • 5 O'Clock Shadow
  • *
  • Posts: 14
  • Age: 41
  • Location: Scottsdale, Arizona
Drowning in Debt--Where do we begin?!
« on: July 24, 2013, 01:05:15 PM »
I love what I'm reading in the blog, but I don't have a clue how to start using this great advice in my own life. I feel like we're sinking under the weight of our bad decisions. My husband makes $40k/yr, has $50k school loan debt (no degree-he dropped out), $5k credit card debt, and is leasing a new Honda Accord for $300/month. I am a full time student. I work part time, making $7k/yr, plus $3k in grant money. I will graduate next spring with $20k school loan debt and I have $6k credit card debt and $25k car loan debt because I stupidly bought a new car last year when we had more income. The insurance on both cars is $200/month. We drive everywhere and I don't own a bike. We also have one 12-year-old girl who outgrows her clothes every other month and eats enough food to feed a baseball team, 1 pug and 2 cats.
The good news is: we don't have cable, we eat at home, we have the cheapest internet plan available in our area ($40/month-husband uses for his home business that isn't generating a steady income at this point), I got rid of my smartphone (paying $10/month for basic phone instead of $100/month for fancy phone w/ unlimited data/talk/text), I buy all of my clothing used (total thrift store lover, but my 6'9" husband buys new clothes every two years because he doesn't find anything used that fits him), and we monitor electricity closely but we still average $150/month for electric May-October (living in the desert means summer bills can be outrageous).
I want to leaving this soul-crushing stress behind and maintain a much freer life, but where on earth do we start?

AlmostIndependent

  • Pencil Stache
  • ****
  • Posts: 521
  • Age: 38
  • Location: Anchorage, AK
Re: Drowning in Debt--Where do we begin?!
« Reply #1 on: July 24, 2013, 01:14:52 PM »
Start by ditching the cars if at all possible. Buy a cheap used one and get a bike too. That will help free up cash to pay off other debts.

Spudd

  • Stubble
  • **
  • Posts: 215
Re: Drowning in Debt--Where do we begin?!
« Reply #2 on: July 24, 2013, 01:17:47 PM »
How does it work with the Accord lease? Can he return it early or is he locked in for a full 2 year term (or whatever)? It seems like transportation is a big budget leak for you. You both have brand new cars that you drive all over the place. I assume for your car, you're underwater (i.e. the car is worth less than you owe)?

Have you signed up for Mint.com to track your monthly spending and see if you have any savings opportunities?

No cable & eating at home are great, as is the $10/mo basic phone.

Since you'll be graduating in less than a year, the good news is that once you start working, you should be able to get a grip on this stuff. If you can work out a budget for yourselves now that lets you get by on your husband's salary alone, then once you start working you can direct your salary entirely into debt repayment.

onehappypanda

  • Stubble
  • **
  • Posts: 238
  • Location: Columbus, Ohio
Re: Drowning in Debt--Where do we begin?!
« Reply #3 on: July 24, 2013, 01:24:19 PM »
Your first step is to reduce your expenses as much as possible so you can throw all that extra cash flow at your loans. If you haven't read MMM's "Debt Emergency" posts, do that now. Because you are in a debt emergency.

The basic idea: Since this is an emergency, you need to go into extreme frugality mode. Track all your expenses and cut them down to as bare-bones as possible. Tackle the big expenses for sure (housing, transportation, food) but don't forget that little expenses add up.

General suggestions:
Your cars are eating up a MASSIVE amount of your money. You need to get rid of those money-sucks to free up cash, which you can use to quickly pay down debt. Sell your car to pay off the loan, and work on figuring out how to get out of the lease on your husband's car. If you NEED a car, get beater and limp it along, driving only when strictly necessary. Use bikes (or buses or your feet) for all transportation within a few miles of your home.

Where do you live? If you rent, can you look for somewhere with cheaper rent? If you own, can you look for a roommate to help with mortgage and utility costs? Again, this can save hundreds every month.

Write all your debts down, along with their corresponding interest rates. My guess is the credit card debt is the highest interest, so you'll want to obliterate that first while paying minimums on the student loans. Then start going at the student loans.

Stay positive- you'll have to make changes that right now will probably seem unbearably hard. But just like anything, once you made that life change, you'll adapt and probably even begin to enjoy it. Look for free ways to enjoy yourselves- rent movies from the library, check out free events around town, etc.

Another Reader

  • Walrus Stache
  • *******
  • Posts: 5049
Re: Drowning in Debt--Where do we begin?!
« Reply #4 on: July 24, 2013, 01:30:13 PM »
Start by tracking all of your spending.  Use Mint.com or something similar.  Make a list of your debts, smallest to largest, with the minimum payments and the interest rates.   What have you done about the student loans?  Are they in deferment?  Are your husband's loans on the income-based repayment plan?

Once you have tracked the spending long enough to understand it, look for ways to cut it.  Can you sell one car?  Can you carpool or ride a bike?  Can you eat less expensively?  Rent a cheaper place?

Understanding where your money goes will empower you to control where it goes.  Sit down with your husband and work out a budget once you know where the money is going.

What are your plans when you finish school?  Do you have a job lined up?  If not, can you find part time work today that could turn into fulltime work when you graduate?  You need to go from commencement directly into employment.

Once you get the income up, you will have a bigger "shovel" and the debt will be easier to handle.  However, start now, figure out where the money is going, plug the leaks, and make a plan that will carry you to that point.

Rebecca Stapler

  • Pencil Stache
  • ****
  • Posts: 907
    • Stapler Confessions
Re: Drowning in Debt--Where do we begin?!
« Reply #5 on: July 24, 2013, 01:34:02 PM »
Start by writing it all down -- your take-home income, your fixed expenses, your variable expenses, and information about your debts (current principal balance, interest rate, minimum payments).

I recommend reading Dave Ramsey's Total Money Makeover -- borrow it from the library. He will drill in the concept about getting rid of your debt and a good method for attacking it (the "snowball" method). He has some wacky ideas in there about retirement and investing, but for the debt issues he is first rate.

If you want to slash your expenses and need help, post your budget here and we will pick it apart, showing you where and how you can save $$. The first thing, which you are aware of, are those car loans / lease. Even if you don't own a bike, you can significantly reduce your debts by selling off your $25k car and buying a used car in the $10k range instead. Even better, in the $4k range -- but I'm not sure that you are ready to make the leap from a $25k car to a $4k car. While you're at it, buy a car for your spouse too -- and get rid of that ridiculous lease.

As for reducing grocery costs, MMM has a post about optimizing calories for less $$. See if that gives you some ideas, and then learn how to "extreme coupon" to get things for free or at least so that everything you buy is on sale -- try the tutorials at www.hotcouponworld.com and Stephanie Nelson's book, The Coupon Mom's Guide to Cutting your Grocery Bill in Half

ellyfinzer

  • 5 O'Clock Shadow
  • *
  • Posts: 14
  • Age: 41
  • Location: Scottsdale, Arizona
Re: Drowning in Debt--Where do we begin?!
« Reply #6 on: July 24, 2013, 01:37:30 PM »
Start by ditching the cars if at all possible. Buy a cheap used one and get a bike too. That will help free up cash to pay off other debts.

The cars are our biggest, most immediate problem. We both commute to work and I drive to school (mine and our daughter's). Unable to break our lease and move closer at this point. Will look into turning in the leased car and see if my husband could take the bus to work. That would save $100/mo in gas, $300/mo in payments, and $80/mo in insurance. Thank you for getting me started in thinking about the situation productively!

ellyfinzer

  • 5 O'Clock Shadow
  • *
  • Posts: 14
  • Age: 41
  • Location: Scottsdale, Arizona
Re: Drowning in Debt--Where do we begin?!
« Reply #7 on: July 24, 2013, 01:38:19 PM »
How does it work with the Accord lease? Can he return it early or is he locked in for a full 2 year term (or whatever)? It seems like transportation is a big budget leak for you. You both have brand new cars that you drive all over the place. I assume for your car, you're underwater (i.e. the car is worth less than you owe)?

Have you signed up for Mint.com to track your monthly spending and see if you have any savings opportunities?

No cable & eating at home are great, as is the $10/mo basic phone.

Since you'll be graduating in less than a year, the good news is that once you start working, you should be able to get a grip on this stuff. If you can work out a budget for yourselves now that lets you get by on your husband's salary alone, then once you start working you can direct your salary entirely into debt repayment.

Thank you for the Mint.com suggestion--we'll be setting up a budget this evening when the mister gets home!

ellyfinzer

  • 5 O'Clock Shadow
  • *
  • Posts: 14
  • Age: 41
  • Location: Scottsdale, Arizona
Re: Drowning in Debt--Where do we begin?!
« Reply #8 on: July 24, 2013, 01:39:56 PM »
Your first step is to reduce your expenses as much as possible so you can throw all that extra cash flow at your loans. If you haven't read MMM's "Debt Emergency" posts, do that now. Because you are in a debt emergency.

The basic idea: Since this is an emergency, you need to go into extreme frugality mode. Track all your expenses and cut them down to as bare-bones as possible. Tackle the big expenses for sure (housing, transportation, food) but don't forget that little expenses add up.

General suggestions:
Your cars are eating up a MASSIVE amount of your money. You need to get rid of those money-sucks to free up cash, which you can use to quickly pay down debt. Sell your car to pay off the loan, and work on figuring out how to get out of the lease on your husband's car. If you NEED a car, get beater and limp it along, driving only when strictly necessary. Use bikes (or buses or your feet) for all transportation within a few miles of your home.

Where do you live? If you rent, can you look for somewhere with cheaper rent? If you own, can you look for a roommate to help with mortgage and utility costs? Again, this can save hundreds every month.

Write all your debts down, along with their corresponding interest rates. My guess is the credit card debt is the highest interest, so you'll want to obliterate that first while paying minimums on the student loans. Then start going at the student loans.

Stay positive- you'll have to make changes that right now will probably seem unbearably hard. But just like anything, once you made that life change, you'll adapt and probably even begin to enjoy it. Look for free ways to enjoy yourselves- rent movies from the library, check out free events around town, etc.

Thank you for your suggestions...especially the staying positive. I struggle with that most of all. We will definitely write out the debts and start tackling those.

ellyfinzer

  • 5 O'Clock Shadow
  • *
  • Posts: 14
  • Age: 41
  • Location: Scottsdale, Arizona
Re: Drowning in Debt--Where do we begin?!
« Reply #9 on: July 24, 2013, 01:40:58 PM »
Start by tracking all of your spending.  Use Mint.com or something similar.  Make a list of your debts, smallest to largest, with the minimum payments and the interest rates.   What have you done about the student loans?  Are they in deferment?  Are your husband's loans on the income-based repayment plan?

Once you have tracked the spending long enough to understand it, look for ways to cut it.  Can you sell one car?  Can you carpool or ride a bike?  Can you eat less expensively?  Rent a cheaper place?

Understanding where your money goes will empower you to control where it goes.  Sit down with your husband and work out a budget once you know where the money is going.

What are your plans when you finish school?  Do you have a job lined up?  If not, can you find part time work today that could turn into fulltime work when you graduate?  You need to go from commencement directly into employment.

Once you get the income up, you will have a bigger "shovel" and the debt will be easier to handle.  However, start now, figure out where the money is going, plug the leaks, and make a plan that will carry you to that point.

This is exactly what I needed--the questions to ask and answer and a plan for getting going. Thank you!

ellyfinzer

  • 5 O'Clock Shadow
  • *
  • Posts: 14
  • Age: 41
  • Location: Scottsdale, Arizona
Re: Drowning in Debt--Where do we begin?!
« Reply #10 on: July 24, 2013, 01:43:31 PM »
Start by writing it all down -- your take-home income, your fixed expenses, your variable expenses, and information about your debts (current principal balance, interest rate, minimum payments).

I recommend reading Dave Ramsey's Total Money Makeover -- borrow it from the library. He will drill in the concept about getting rid of your debt and a good method for attacking it (the "snowball" method). He has some wacky ideas in there about retirement and investing, but for the debt issues he is first rate.

If you want to slash your expenses and need help, post your budget here and we will pick it apart, showing you where and how you can save $$. The first thing, which you are aware of, are those car loans / lease. Even if you don't own a bike, you can significantly reduce your debts by selling off your $25k car and buying a used car in the $10k range instead. Even better, in the $4k range -- but I'm not sure that you are ready to make the leap from a $25k car to a $4k car. While you're at it, buy a car for your spouse too -- and get rid of that ridiculous lease.

As for reducing grocery costs, MMM has a post about optimizing calories for less $$. See if that gives you some ideas, and then learn how to "extreme coupon" to get things for free or at least so that everything you buy is on sale -- try the tutorials at www.hotcouponworld.com and Stephanie Nelson's book, The Coupon Mom's Guide to Cutting your Grocery Bill in Half

Wow, thank you for everything you mentioned! I'm going to get really brave and post that budget tonight. I will looking into the resources you listed as well--thank you again. I'm in awe of how quickly this community was able to cut through my laundry list and offer real solutions. So cool!

onehappypanda

  • Stubble
  • **
  • Posts: 238
  • Location: Columbus, Ohio
Re: Drowning in Debt--Where do we begin?!
« Reply #11 on: July 24, 2013, 02:07:43 PM »
Your first step is to reduce your expenses as much as possible so you can throw all that extra cash flow at your loans. If you haven't read MMM's "Debt Emergency" posts, do that now. Because you are in a debt emergency.

The basic idea: Since this is an emergency, you need to go into extreme frugality mode. Track all your expenses and cut them down to as bare-bones as possible. Tackle the big expenses for sure (housing, transportation, food) but don't forget that little expenses add up.

General suggestions:
Your cars are eating up a MASSIVE amount of your money. You need to get rid of those money-sucks to free up cash, which you can use to quickly pay down debt. Sell your car to pay off the loan, and work on figuring out how to get out of the lease on your husband's car. If you NEED a car, get beater and limp it along, driving only when strictly necessary. Use bikes (or buses or your feet) for all transportation within a few miles of your home.

Where do you live? If you rent, can you look for somewhere with cheaper rent? If you own, can you look for a roommate to help with mortgage and utility costs? Again, this can save hundreds every month.

Write all your debts down, along with their corresponding interest rates. My guess is the credit card debt is the highest interest, so you'll want to obliterate that first while paying minimums on the student loans. Then start going at the student loans.

Stay positive- you'll have to make changes that right now will probably seem unbearably hard. But just like anything, once you made that life change, you'll adapt and probably even begin to enjoy it. Look for free ways to enjoy yourselves- rent movies from the library, check out free events around town, etc.

Thank you for your suggestions...especially the staying positive. I struggle with that most of all. We will definitely write out the debts and start tackling those.

No problem. As my SO and I work on becoming more frugal (still very much in-progress) we realize that staying positive and seeing it as a challenge, not a punishment, are really key. Your challenge is to lead a good life on very little money right now, and it can actually be fun once you get into it.

FWIW, I saw you live in Scottsdale. Googling "free things to do in Scottsdale" turns up some decent-looking stuff: http://www.experiencescottsdale.com/fabulously-free-10-things-to-do-for-free-in-scottsdale/

Also, from my experience, looking at your actual spending and how much money you're blowing away can be painful, don't let that overwhelm you. "Staying positive" also means that when you start feeling like "oh man, we effed up" you don't sit there and wallow in the bad emotions. Just shift your focus to "how are we going to address it using the resources we have right now?" and go from there.

Good luck! I agree with what everyone said about writing it down. Both because it'll get you the big picture of where you're at and where you want to be, and because it's nice to see yourself progress along the way. Kinda like those progress pictures people take when they're losing weight, except here it's debt and not weight.

ellyfinzer

  • 5 O'Clock Shadow
  • *
  • Posts: 14
  • Age: 41
  • Location: Scottsdale, Arizona
Re: Drowning in Debt--Where do we begin?!
« Reply #12 on: July 24, 2013, 02:19:18 PM »
Your first step is to reduce your expenses as much as possible so you can throw all that extra cash flow at your loans. If you haven't read MMM's "Debt Emergency" posts, do that now. Because you are in a debt emergency.

The basic idea: Since this is an emergency, you need to go into extreme frugality mode. Track all your expenses and cut them down to as bare-bones as possible. Tackle the big expenses for sure (housing, transportation, food) but don't forget that little expenses add up.

General suggestions:
Your cars are eating up a MASSIVE amount of your money. You need to get rid of those money-sucks to free up cash, which you can use to quickly pay down debt. Sell your car to pay off the loan, and work on figuring out how to get out of the lease on your husband's car. If you NEED a car, get beater and limp it along, driving only when strictly necessary. Use bikes (or buses or your feet) for all transportation within a few miles of your home.

Where do you live? If you rent, can you look for somewhere with cheaper rent? If you own, can you look for a roommate to help with mortgage and utility costs? Again, this can save hundreds every month.

Write all your debts down, along with their corresponding interest rates. My guess is the credit card debt is the highest interest, so you'll want to obliterate that first while paying minimums on the student loans. Then start going at the student loans.

Stay positive- you'll have to make changes that right now will probably seem unbearably hard. But just like anything, once you made that life change, you'll adapt and probably even begin to enjoy it. Look for free ways to enjoy yourselves- rent movies from the library, check out free events around town, etc.

Thank you for your suggestions...especially the staying positive. I struggle with that most of all. We will definitely write out the debts and start tackling those.

No problem. As my SO and I work on becoming more frugal (still very much in-progress) we realize that staying positive and seeing it as a challenge, not a punishment, are really key. Your challenge is to lead a good life on very little money right now, and it can actually be fun once you get into it.

FWIW, I saw you live in Scottsdale. Googling "free things to do in Scottsdale" turns up some decent-looking stuff: http://www.experiencescottsdale.com/fabulously-free-10-things-to-do-for-free-in-scottsdale/

Also, from my experience, looking at your actual spending and how much money you're blowing away can be painful, don't let that overwhelm you. "Staying positive" also means that when you start feeling like "oh man, we effed up" you don't sit there and wallow in the bad emotions. Just shift your focus to "how are we going to address it using the resources we have right now?" and go from there.

Good luck! I agree with what everyone said about writing it down. Both because it'll get you the big picture of where you're at and where you want to be, and because it's nice to see yourself progress along the way. Kinda like those progress pictures people take when they're losing weight, except here it's debt and not weight.

I am happy crying. This has been empowering and I actually believe that we can tackle our mess head-on now. Thank you for the encouragement!

Kipp

  • 5 O'Clock Shadow
  • *
  • Posts: 56
  • Location: Greater Grand Rapids Area, Michigan
Re: Drowning in Debt--Where do we begin?!
« Reply #13 on: July 24, 2013, 03:02:24 PM »
I see a lot of great suggestions, but make sure once you cut those expense you start to tackle the debt efficiently.  Meaning go for those credit cards ASAP, after those are done look at your interest rates on the car loan versus the student loans.  For me, the student loan is actually a HIGHER interest rate than the weighted average of my car loan (also purchased last year before I found this site).  Two car payments (1 one and 1 lease) sounds very painful, but make debt a priority and you can do it!  Best of luck!

ellyfinzer

  • 5 O'Clock Shadow
  • *
  • Posts: 14
  • Age: 41
  • Location: Scottsdale, Arizona
Re: Drowning in Debt--Where do we begin?!
« Reply #14 on: July 24, 2013, 03:12:52 PM »
I see a lot of great suggestions, but make sure once you cut those expense you start to tackle the debt efficiently.  Meaning go for those credit cards ASAP, after those are done look at your interest rates on the car loan versus the student loans.  For me, the student loan is actually a HIGHER interest rate than the weighted average of my car loan (also purchased last year before I found this site).  Two car payments (1 one and 1 lease) sounds very painful, but make debt a priority and you can do it!  Best of luck!

Thank you for the heads up on the interest rates...I have a lot to learn about being financially savvy and this advice came at a very opportune time!

NinetyFour

  • Walrus Stache
  • *******
  • Posts: 6469
  • Location: Southwestern US
Re: Drowning in Debt--Where do we begin?!
« Reply #15 on: July 24, 2013, 04:06:36 PM »
I thought I had always been fairly frugal, but it wasn't until my 90-year-old friend encouraged me to keep track of my spending that I learned some very eye-opening things about my buying habits.  I have been keeping track of every penny of income (even when I find coins on the street!) and spending.  Now, it's a challenge every month to minimize each spending category in my spreadsheet.  And it's fun!  So, for you, I think tracking your spending will be a huge learning experience.  And the other posters are absolutely right--about seeing the process as a fun challenge.  Good luck, and let us know about your progress!

SunshineGirl

  • Pencil Stache
  • ****
  • Posts: 742
Re: Drowning in Debt--Where do we begin?!
« Reply #16 on: July 24, 2013, 04:47:05 PM »
As far as tracking expenses, I use YNAB and absolutely love it. It's been incredibly eye-opening. After simply tracking and planning for two months, I'm going to actively try to cut spending next month, now that I have a better insight as to where my money goes.


jexy103

  • Stubble
  • **
  • Posts: 124
  • Location: Seoul, South Korea
Re: Drowning in Debt--Where do we begin?!
« Reply #17 on: July 24, 2013, 05:10:05 PM »
Start by writing it all down -- your take-home income, your fixed expenses, your variable expenses, and information about your debts (current principal balance, interest rate, minimum payments).

I recommend reading Dave Ramsey's Total Money Makeover -- borrow it from the library. He will drill in the concept about getting rid of your debt and a good method for attacking it (the "snowball" method). He has some wacky ideas in there about retirement and investing, but for the debt issues he is first rate.

My husband and I started DR's TMMO in September of 2011, and it is a powerful program. It's mostly common sense, but I've found his forums to be a great resource of other people who are paying off debt and working on their budgets. I see TMMO as the budgeting basics course, and Mustachianism as the advanced personal finance course. You can't invest and save for retirement with a negative net worth (at least, you shouldn't!). It sounds like you already have minimal expenses, so now it's just a matter of sending every available dollar to paying off your debts. (Keep a small emergency fund though, DR recommends $1,000.) DR advocates paying off debt by smallest to largest balance because you get a few quick wins and free up those monthly payments. Others advocate paying debts with the highest interest rates first. Do what works for you, but do it like your hair is on fire!

Skinnyneo

  • 5 O'Clock Shadow
  • *
  • Posts: 97
  • Location: Yokoahama, Japan
    • Tsumashiku Kurashii - Living Frugally in Japan
Re: Drowning in Debt--Where do we begin?!
« Reply #18 on: July 24, 2013, 06:33:26 PM »
I dont have a whole lot to add but just want to reiterate that tracking your spending is incredibly important.  It will be your map to financial freedom.  Keep positive!  You can totally get ou of this!

thepokercab

  • Bristles
  • ***
  • Posts: 486
Re: Drowning in Debt--Where do we begin?!
« Reply #19 on: July 24, 2013, 07:04:04 PM »
Hi elly-  I live in Ahwatukee, with my wife and two kids and one of the big decisions we made a couple of months back was to ditch our car.  We bought bikes and for the last 2 months have been living car free-  in Phoenix of all places!  Its definitely possible.  I take the bus/light rail- and bike for our grocery shopping.  My wife walks everywhere with our kids.  We've been spending a ton more time at nearby libraries, parks, community center, etc.. 

It can be challenging, especially with the heat here, so we do a bunch of our stuff in the morning and evening.  But even in two months time, we've saved so much money.  The key is looking at it like a challenge and then dominating it- as every week goes by without a car we love the accomplishment.  Plus, you really do stop going out for useless stuff and start looking for fun ways to rengage with family (like game nights, whoo-hoo)!!

Good luck!

TrulyStashin

  • Handlebar Stache
  • *****
  • Posts: 1030
  • Location: Mid-Sized Southern City
Re: Drowning in Debt--Where do we begin?!
« Reply #20 on: July 24, 2013, 08:04:04 PM »
There are great suggestions here but how about this one:

One or both of you gets a second job.

Even if it's waiting tables 2 nights a week, that extra cash thrown directly at debt, can make a huge difference.  If you can't get out of the lease, then you might consider DH getting a second job for the duration of the lease term.

Also, you can trim your grocery bill, I promise.  I have a 16 year old son so I know how challenging it can be.  But a high fiber, high protein (beans, not meat) diet is very filling and cheap.

N

  • Handlebar Stache
  • *****
  • Posts: 1377
  • Location: Chicago
  • You must change your life. -Rainer Maria Rilke
Re: Drowning in Debt--Where do we begin?!
« Reply #21 on: July 24, 2013, 08:20:53 PM »
I agree with other advice already posted:

Write everything down, assets, debts, interest rates, upcoming big expenses, income, outgo.
Mint can help.
YNAB can be a big help with planning and organizing spending. It has a free trial, and if you decide to join, you can get a referral code from the referral thread for a 6$ off.

The first order of business is to reduce where you can. Put everything on the table and keep asking yourself the hard questions.
THe cars are an obvious problem.

Can husband look for better paying job? second job? additonal income?

budgetbytes.com has helpful recipes

the mmm forums are immensely helpful.

good luck! stay positive!

ellyfinzer

  • 5 O'Clock Shadow
  • *
  • Posts: 14
  • Age: 41
  • Location: Scottsdale, Arizona
Re: Drowning in Debt--Where do we begin?!
« Reply #22 on: July 24, 2013, 11:35:31 PM »
I thought I had always been fairly frugal, but it wasn't until my 90-year-old friend encouraged me to keep track of my spending that I learned some very eye-opening things about my buying habits.  I have been keeping track of every penny of income (even when I find coins on the street!) and spending.  Now, it's a challenge every month to minimize each spending category in my spreadsheet.  And it's fun!  So, for you, I think tracking your spending will be a huge learning experience.  And the other posters are absolutely right--about seeing the process as a fun challenge.  Good luck, and let us know about your progress!

Thank you for the encouragement! My husband and I just fine tuned our budget on mint.com. Doing this together has been fun--you are so right about that!

ellyfinzer

  • 5 O'Clock Shadow
  • *
  • Posts: 14
  • Age: 41
  • Location: Scottsdale, Arizona
Re: Drowning in Debt--Where do we begin?!
« Reply #23 on: July 24, 2013, 11:38:05 PM »
Hi elly-  I live in Ahwatukee, with my wife and two kids and one of the big decisions we made a couple of months back was to ditch our car.  We bought bikes and for the last 2 months have been living car free-  in Phoenix of all places!  Its definitely possible.  I take the bus/light rail- and bike for our grocery shopping.  My wife walks everywhere with our kids.  We've been spending a ton more time at nearby libraries, parks, community center, etc.. 

It can be challenging, especially with the heat here, so we do a bunch of our stuff in the morning and evening.  But even in two months time, we've saved so much money.  The key is looking at it like a challenge and then dominating it- as every week goes by without a car we love the accomplishment.  Plus, you really do stop going out for useless stuff and start looking for fun ways to rengage with family (like game nights, whoo-hoo)!!

Thank you so much for sharing your experience! It's really helpful to hear how other families in the Valley handle the particular challenges that arise from desert living! We live in midtown Scottsdale, so it's very conceivable that we could get around on bikes wayyyy more often than we do.

Good luck!

ellyfinzer

  • 5 O'Clock Shadow
  • *
  • Posts: 14
  • Age: 41
  • Location: Scottsdale, Arizona
Re: Drowning in Debt--Where do we begin?!
« Reply #24 on: July 24, 2013, 11:40:35 PM »
There are great suggestions here but how about this one:

One or both of you gets a second job.

Even if it's waiting tables 2 nights a week, that extra cash thrown directly at debt, can make a huge difference.  If you can't get out of the lease, then you might consider DH getting a second job for the duration of the lease term.

Also, you can trim your grocery bill, I promise.  I have a 16 year old son so I know how challenging it can be.  But a high fiber, high protein (beans, not meat) diet is very filling and cheap.

Thank you for this! We will talk about 2nd job options. My grant money is my second job--once school is in session, I'm not able to work more than the 15 hours/week I'm committed to. We are also knuckling down on our grocery budget and finding, like you said, that we can trim that too!

ellyfinzer

  • 5 O'Clock Shadow
  • *
  • Posts: 14
  • Age: 41
  • Location: Scottsdale, Arizona
Re: Drowning in Debt--Where do we begin?!
« Reply #25 on: July 24, 2013, 11:42:43 PM »
I agree with other advice already posted:

Write everything down, assets, debts, interest rates, upcoming big expenses, income, outgo.
Mint can help.
YNAB can be a big help with planning and organizing spending. It has a free trial, and if you decide to join, you can get a referral code from the referral thread for a 6$ off.

The first order of business is to reduce where you can. Put everything on the table and keep asking yourself the hard questions.
THe cars are an obvious problem.

Can husband look for better paying job? second job? additonal income?

budgetbytes.com has helpful recipes

the mmm forums are immensely helpful.

good luck! stay positive!

Thank you so much for the encouragement. We are fine tuning our budget and discussing options to increase income now. We are going to ditch the leased car for starters, that will add another $400/mo. back into our budget.

ellyfinzer

  • 5 O'Clock Shadow
  • *
  • Posts: 14
  • Age: 41
  • Location: Scottsdale, Arizona
Re: Drowning in Debt--Where do we begin?!
« Reply #26 on: July 25, 2013, 02:38:13 AM »
I cannot thank you all enough for the thoughtful advice and encouragement I received on my very first day on this forum! In one evening, my husband and I decided to turn in his car. That adds $300/mo for payment, $70/mo for insurance, $150/mo in gas back into our budget. Wow! After reading more MMM blog entries, we also decided to cut his smartphone out too--another $30/mo in savings there. We recently quit smoking--that was a $150/mo raise. We researched coupons and tonight's $100 grocery bill cost us $53 after savings from the coupons. That's a total of $597 we're saving, which happens to be what the mister's school loans add up to. So many problems solved at once--I'm awestruck! We are well on our way and I appreciate each of us for helping us to get on this path.

gooki

  • Handlebar Stache
  • *****
  • Posts: 2378
  • Location: NZ
Re: Drowning in Debt--Where do we begin?!
« Reply #27 on: July 25, 2013, 03:02:53 AM »
Great stuff, keep it up.

martynthewolf

  • Stubble
  • **
  • Posts: 172
  • Age: 32
  • Location: Hull - UK
    • The Frugal Wolf
Re: Drowning in Debt--Where do we begin?!
« Reply #28 on: July 25, 2013, 03:11:21 AM »
I love reading posts like this. It's obvious that taking control has already had a profound effect on both of your lives. I wish you well for the future. Get that debt gone :) I'm almost there myself and had a very similar epiphany to yourself. It's a great feeling and it doesn't seem to go away.

cerberusss

  • Stubble
  • **
  • Posts: 170
  • Age: 42
  • Location: Netherlands
Re: Drowning in Debt--Where do we begin?!
« Reply #29 on: July 25, 2013, 03:28:27 AM »
In one evening, my husband and I decided to turn in his car.

Heh, in one evening you guys did what most people will never have the courage to do :-)

For some reason, I wish I was in your shoes. Although that sounds strange, hear me out. You both are, what, 25 or something? And now you discovered this forum and its blog. When I was 25, I had about the same debt and got a cushy job. It never forced me to think about my finances. Now I'm 35 and found this blog more or less by coincidence. But you guys start out with all these great ideas. And if you keep up, the math shows that you could be financially independent at my age :-)

kh

  • 5 O'Clock Shadow
  • *
  • Posts: 46
Re: Drowning in Debt--Where do we begin?!
« Reply #30 on: July 25, 2013, 05:38:06 AM »
As a student, you can work on a flexible side hustle. I used American Journal Experts when I was in school: editing papers for $40 a pop. http://www.journalexperts.com/en/about-us

Point is, think outside the box for something that makes your status as a student a perk. Even if that site doesn't work for you (it's science journal articles, and specifies a range of schools), there are lots more out there like it. Even a little extra income can make a difference when you're right on the edge.

aj_yooper

  • Handlebar Stache
  • *****
  • Posts: 1091
  • Age: 8
  • Location: Chicagoland
Re: Drowning in Debt--Where do we begin?!
« Reply #31 on: July 25, 2013, 06:13:31 AM »
+1 on all your changes!   Your budget changes seem very good. 

From your opening post, you and your husband have a mostly frugal lifestyle with the exceptions of cellphone, SL, and cars.  You get the daily picture, but the bigger picture, not so much.  Until now.  As cerberuss pointed out, your current difficult times could significantly help your family bottom line by strengthening your frugality muscles and planning more for the future.

When you finish your education, could the DH complete his degree?  Typically, completed programs yield higher income, especially if he did a STEM type degree or otherwise made him more in demand. 

Rebecca Stapler

  • Pencil Stache
  • ****
  • Posts: 907
    • Stapler Confessions
Re: Drowning in Debt--Where do we begin?!
« Reply #32 on: July 25, 2013, 07:17:07 AM »
I cannot thank you all enough for the thoughtful advice and encouragement I received on my very first day on this forum! In one evening, my husband and I decided to turn in his car. That adds $300/mo for payment, $70/mo for insurance, $150/mo in gas back into our budget. Wow! After reading more MMM blog entries, we also decided to cut his smartphone out too--another $30/mo in savings there. We recently quit smoking--that was a $150/mo raise. We researched coupons and tonight's $100 grocery bill cost us $53 after savings from the coupons. That's a total of $597 we're saving, which happens to be what the mister's school loans add up to. So many problems solved at once--I'm awestruck! We are well on our way and I appreciate each of us for helping us to get on this path.

You're awestruck? I'm awestruck! Way to grab the bull by the horns!

MissStache

  • Pencil Stache
  • ****
  • Posts: 710
  • Age: 36
  • Location: Washington, DC
Re: Drowning in Debt--Where do we begin?!
« Reply #33 on: July 25, 2013, 01:23:22 PM »
Wow!  You guys are doing awesome!  And you're starting so young.  If you can keep this up,  you'll be in awesome shape by the time you are in your early 30s!  Thanks for being such an inspiration!

skyler

  • Stubble
  • **
  • Posts: 108
  • Location: USA
Re: Drowning in Debt--Where do we begin?!
« Reply #34 on: August 12, 2013, 09:55:45 PM »
Just chiming in to tell you many have done it (including me) and YOU too can get out of debt.
D. Ramsey was the starting point for me. I listed all my debts, but paid off the higher % first (contrary to his advice).
I felt motivated enough, so I did not need the "small victories" encouragements by paying the smallest % loans first.
Listening to Podcast almost everyday kept me going strong also, as I was hearing so many people with different income/debt loads coming to his studio to to the "debt free screams".
I use Stitcher radio on my phone to listen when I walk or wait for my kids.
Awesome start and you are so young! You'll catch up in no time :-)

davisgang90

  • Handlebar Stache
  • *****
  • Posts: 1261
  • Location: Roanoke, VA
    • Photography by Rich Davis
Re: Drowning in Debt--Where do we begin?!
« Reply #35 on: August 13, 2013, 06:15:48 AM »
Congrats on the great work so far!  You guys are making all the right decisions.  Not sure if it has been mentioned yet, but a crock pot is a great tool for making easy dinners.  Especially with school/work kids, it can be a time saver and save you from the dreaded "I didn't make anything for dinner, let's order a pizza" trap.

Lots of great crock pot recipes out there (I use allrecipes.com for free recipes and to make up my weekly shopping list). 

I throw a couple ingredients together the night before or in the morning before I leave for work and dinner is ready when I get home.  I freeze leftovers (if I don't take for lunch at work) and use them later to avoid waste. 

infogoon

  • Pencil Stache
  • ****
  • Posts: 840
Re: Drowning in Debt--Where do we begin?!
« Reply #36 on: August 13, 2013, 08:16:45 AM »
(total thrift store lover, but my 6'9" husband buys new clothes every two years because he doesn't find anything used that fits him)

As a fellow very tall man, I feel his pain. I've been buying pants and shoes online for the last few years -- it makes a huge difference when you're unusually sized. Instead of having to spent seventy dollars at a sporting goods store for the only pair of sneakers in stock that would fit me, I can get something for half the price that I actually like. Try Amazon for those items. For shirts, I've had good luck shopping the clearance racks at Kohls and Target.

SunshineGirl

  • Pencil Stache
  • ****
  • Posts: 742
Re: Drowning in Debt--Where do we begin?!
« Reply #37 on: August 13, 2013, 09:08:07 AM »
Speaking of big & tall, I walked through that department yesterday at JC Penney and there is a huge sale going on right now -- racks of 70% off.