Overhaul Needed - What will make the biggest difference? Advice Please!

[Miss_Money_Free]

Hello all,

I've been following the blog for a long time but only recently found out about the forums. I'm hoping for some sense, support and motivation.

Here's my predicament - Coming out of a long road of debt, we want to get on to saving/investing and being comfortable as fast as possible.

This is the breakdown for my and my partner - Me - F/29 Him - M/33

(Apologies if there is already an acceptable format for this, let me know and I can improve it)

DEBTS

$16k CC debt - Him @ 12% apr - this was all equipment to start a event photography business which is now going well. Also the equipment holds it's resale value ( could sell it instantly if need be)
$13k Student loans debt - Me @ 25% (with banks) down from $25k in the last 2 years

LIFESTYLE

We rent
No children
Both have University degrees
We don't drink or smoke
We exercise at home
We have pre-pay mobiles
We eat out/go somewhere perhaps once per week - max $30 spend
No investments

ASSETS

$13k worth of photography equipment, this is at current re-sale value.
$8k worth of bookings for 2014 already - each additional one is $2k
$2500 - His car - used, large, reliable, cheap to repair, good for hauling equipment, 9 years old
$2000 - My car - used, small, reliable, very economical, good for city driving, 13 years old
$2000 - Electronics & equipment used for the business (phone, computers etc)
$16000 - Offer from family (early inheritance) only for the purposes of a house deposit.
We are in Europe & house prices in our range go from $95k (renovation needed & tiny 2 bed) to $160k (ready to live in & spacious)

INCOME

$29k - $1900 take home pcm - Him - Full time job, this is not associated with our photography work
$33k - $2000 take home pcm - Me - Full time contract work, can be very sporadic with breaks every 6 months.

EXPENDITURE

$200 Him per week to cover rent, bills, insurances, food
$200 Me per week to cover rent, bills, insurance, food

Rest current goes towards our debts to bring it down by about $1100 each pcm

*******

Suggestions, kicks in the ass and pointers needed please!

Our obvious solution is to increase our income but we are not near a big city so job options are very poor at the moment.
We regularly jump between being in it for the long haul, getting 15 bookings next year to clear it all OR selling everything we own & not having the business.

Help greatly appreciated, thanks!

[SESW Tech]

In terms of options to increase your income, can you give a bit more background on your professional experience, education, strengths, and skills?  There may be a number of remote jobs that pay well and allow you to work from home.  Just as an example, my company is currently looking to hire people in Europe on a work-from-home/travel basis.  I imagine there may be a lot of similar examples.

[gooki]

Was the 25% interest a typo?

Also you have $400 of expenses, $3500 in income, but are only putting $1100 into paying off debt. Where is the other $2000 going?

[kt]

that's $400 / week so around $1720 per month though that still leaves over $1000

you should do a full inventory of expenditure, including holidays, presents and other expenses which do not occur on a regular monthly/weekly basis. i didn't realise how much of a difference this could make until i used this tool:

https://budgetbrain.moneysavingexpert.com/budgetplanner/edit/1628579

(it's uk based). it will ask you to enter income and outgoings under lots of categories, you can specify if they're weekly/monthly/annual etc and it will then tell you your surplus deficit.

it would be helpful for people here to see out more detailed version of your outgoings (not nec as detailed as in above tool) if you really want personal advice. otherwise all we can really say is pay down those debts or earn more. which isn't wildly useful i'm sure!

[theSchmett]

Here is all I really took away from the OP.

Some giant debts with outrageous interest (although incurred for good causes!).

A potentially thriving full time business of your own.

My advice: Work your tail(s) off, pay down those debts, and if the photo biz works out why keep the day job?

And don't forget to live while you're young. I worked long hours for peanuts through my 20s, and then bailed on that career and went to grad school. I had to reboot my career a little, and the opportunity cost of leaving the workplace for two years is quite high, but a few years later I work for an adult wage and don't need to spend every waking hour in the office. 

And I can move towards financial independence.  Where I messed up was working too hard for too long for too little; building nothing, saving nothing, and barely traveling or taking time off.

[Miss_Money_Free]

Thanks for the responses all!

I wish the 25% interest was a typo. It's CC debt, average of interest over 3 cards which are closed to reject further interest hikes.

All the debt has been at 0% for quite a while and we've reduced it as much as we can in that time.

Our income/outgoings usually add up like this

$1900 - him - $800 to cover rent, bills, utilities, food. $1000 to CC debts, $100 which covers running his car, personal & business phone, presents.
$2000 - me - $800 to cover rent, bills utilities, food. $1100 to CC debts, $100 to cover car, personal phone, haircuts, presents

It sucks that it's going to take another 2.5 years at this rate.

We both have BSc degrees
Maths & Physics - Him
Computer Science & Info Tech - Me. I've worked in tech jobs for the last 6 years.

I would LOVE to leverage the work from home aspect. I have often freelanced for tech companies based in the US & the pay scale is totally different there! Even just 3 months working at that rate would be life changing! I'm constantly applying to companies that work in a distributed fashion, that need folks to cover different time zones. I think they get swamped with applications, so I'll have to try something more creative to stand out!

Please let me know of any companies that hire distributed workers and I'll work my ass off for them!

I will certainly re-do our budget to see if our $800 pcm each is being wisely spent.
We don't really have holidays or anything more than token presents currently. We have the very basics just to keep going with the debt.

I worked for about 2 years, full time day job and then an evening & weekend job with very late nights too. 70+ hour weeks really took their toll and I missed a lot of family events. I switched to a 8-5 job + the photography at eves/weekends and although it's probably the same hours it's much more enjoyable.

Any pointers to help us reboot our careers would be the biggest benefit.

Thanks!

[sassy1234]

Can you sell one of your cars?  Even if it is just for parts.  You might save on insurance then as well.  Then buy a bike?

[Frankies Girl]

Second or third jobs - if you can't find a part time in your fields, then waiting tables, stocking shelves, working a cash register even a day or two a week. I would be freaking out at the interest rates and probably get whatever I could to take that down ASAP.

Look into the possibility of a loan from a bank or credit union at a lesser rate to pay off the 25% interest. There's also places like Lending Club (discussed on the boards here) that probably be able to beat that 25% interest. If you can get a much smaller interest rate, I'd actually roll both of the outstanding debts (12% and 25% are pretty crappy, but wow on the 25%) and be able to stop paying such a huge amount to interest. I have no idea if Lending Club would be available in Europe, tho, and not sure about rates available from banks, but I would hope that consolidating the loans into one and getting a much lower interest rate would be possible.

I would look into selling one of the vehicles.

I would also start cutting down on the extras - haircuts, eating out, presents... those are all unnecessary things (okay yes, you need to get your hair cut eventually, but you can go someplace really inexpensive and still get a cut that is decent and also stretch the amount of time between haircuts as well).

I see the presents category come up often when folks post their expenditures, and I never understand why this isn't gone the instant you want to get serious about paying off debt; presents are nice, but they are not necessary, and you can buy a card or make one for next to nothing, and I would hope anyone that you care enough about to buy a present for would understand that you need to temporarily take care of an enormous pile of debt so they won't be getting something from you for a while. And if it's for kids in your family - there is always the thrift shop or the dollar stores if you feel you just have to buy them something.

In any case, I'd really start taking a HARD look at every expenditure you make and start hitting that 25% debt with everything you've got. That is horrifically bad, and it will only get worse if you don't treat this like a true emergency. (and then do the same with the 12%)

[Christof]

Have you maxed out the 12% credit card? If not I'd go to the credit limit and use this to pay back the student loan. Then try finding a credit that is better than 25 or 12 per cent. Talk to banks about credit, investigate in credit cards with a lower percentage, look for peer to peer lending sites. There are some in Europe, but they are usually limited to one country. Do anything to get that percentage down.

How old is the photography business. Often the government is supporting new small busineses with inexpensive loans. You need to do some research.

[Miss_Money_Free]

Thanks folks.

Yes, my partner already has a bike which is used for his commute. My car is on it's last legs and his car was purchased recently as a replacement. Insurance etc is all paid for the next 8 months on mine, so we're just running it for reasonable journeys as it's just so economical on fuel. We got his as it's a work horse which is more suited to the travelling we're doing with lots of equipment to events. We're currently transitioning from one to the other but getting max value from what we've already paid out for first.

I have personally had 2 & 3 jobs at a time, working full time in the day then straight to wait tables in the evening until 11pm & then in a distribution centre in the day at weekends then back to wait tables/bar 5pm until 2am both Sat & Sun. I did that for 2 years straight and was physically & mentally burned out and we STILL had debts (don't forget we both had student debts to start with, now only mine is left). Now our evenings are taken up with either taking on new clients or working on delivering edited images. We have much more earning power now and we actually get to spend time together!

With the business it would take 15 more bookings & we would be clear. So if we had one every weekend, then we'd start 2014 debt free.


Presents have been stripped down to just token gestures for the past 3/4 years - all home made or effort based. We are literally at the bone in terms of cutting back.
He cuts his own hair & I tend to have haircuts/clothes as gifts from family. 

Our debt free journey could be anywhere from 15 weeks to 30 months. We need to do what we can to pull it down to the shortest journey possible.
As a side note 25% is actually a reasonable interest rate on CC debt here, I've seen cards that go up to 45% interest!

The 12% card has a bit of room but balance transfers cost quite a big fee. It would only be worth it if we can get a really really low rate. Will ring around & see what we can be offered.

It may seem like a loan would be a good solution but I've worked it out so many different ways and the cards are still cheaper.
Just based on my wages it's going to take me 14 months @ $1100 pcm.

Total interest paid will be $1728. I'd have to find a $13k loan that would have less interest, which is impossible to find currently.

There is only so far you can cut back but no limit to what we can earn :)

Earning more will have to be our focus!

Will look into the small business loans! Thanks.

[gooki]

If your not doing it all ready, buy everything on the 12% card, and use any spare cash to pay of the 25% one.

Have you considered lending club, or any similar peer to peer lending platform?

PS what country are you in?

PPS, once you clear those CC debts, and if you can avoid lifestyle inflation you will do very well for yourselves financially.

[SESW Tech]

Hi OP,

This is Tad again - I suggested you look into work from home jobs.  If you send me your resume, I'd be happy to pass on to a few friends of mine who run companies with distributed models.  I can also circulate to the appropriate groups at my company that are hiring.  I don't know if the forum lets me post email addresses, but just go to our website - http://www.ilabsolutions.com/ - if you go to the "contact us" page, you can send to that address and just put "for Tad" in the subject line.

Good luck!
Tad