Author Topic: Reader Case Study? - How can I quickly get out of debt?  (Read 9061 times)

lelandsmama

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Reader Case Study? - How can I quickly get out of debt?
« on: May 01, 2014, 11:05:40 AM »
Income: I work a commission/hourly job selling phones. This is how much I made each month for the past 12 months after taxes.
EDITED to change income: I realized I accidentally put 13 months of income instead of 12, which changes everything which means my income is worse than I thought.

March 2014 2077
February 2014 1699.91
January 2014 2372.80
December 2013 1554.94
November 2013 1580.46
October 2013 1382.79
September 2013 1577.39
August 2013 3201.51
July 2013 2129.76
June 2013 1851.24
May 2013 2012.51
April 2013 2389.62

Total: 23,829.93
Average per month: 1985.83

I'm a recently separated twenty five year old mom to a five year old son living in Louisiana and I really need to get my finances in order. As you can see, some months I make a lot of money and others not so much. I'm currently looking for a better job but not having much luck finding one where I will make as much money. Making a different amount of money each month makes it incredibly difficult to budget my money, especially when I am thousands of dollars in debt. I don't have a college degree and my only experience is in the area of sales and customer service, unless you count my years of blogging experience (which I haven't done in a while) and my entertainment marketing internship I had while I was in school.

Current expenses:

$750 rent (need to try to get this down to $650 or less)
$103 car insurance
$63 internet
$330 car note
$150 electricity (lately it's been closer to $115, but $150 seems to be the average)
$60 gas
$200 groceries
$100 aftercare/lunch for son (this number will more than likely go up this month for summer care)
$400 credit cards
$53 student loans
$25 hospital
$40 - laundry
$0 - cell phone/cable (Thankfully these are free for me from my employer and apartment)
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$2274/month

Debt:

2011 Nissan Cube Car Loan (got the car when I was still with my ex, it is valued at less than what I still owe): $16,448
Credit Cards: $9357
Medical Bills: $20,000+ (I've lost track on how much I owe here because hospitals outsource to so many different companies. I didn't have insurance at the time, and no my current insurance won't cover it now.)
Student Loans: $4,985
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Total: $50790+


At this point, some months I'm not able to pay all my credit card bills and I should be paying more on all of these bills than I actually am because it really isn't chipping away the debt, especially the hospital stuff at $25 per month. When I'm not able to pay bills, the bill goes up the next month with interest, late fees, etc. which makes things even more difficult. I can't really consolidate the debt because a) I wouldn't be able to afford the payments and b) I can't even figure out how much I owe in hospital bills.

Help?! I really need it. What can I do? Is there any expenses I can get rid of? I don't have any family members to help me or anything like that either. Any advice would be much appreciated. Thank you.
« Last Edit: May 01, 2014, 12:47:55 PM by lelandsmama »

seattlecyclone

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #1 on: May 01, 2014, 11:33:03 AM »
Most of your expenses seem quite low already. The electricity bill seems a bit high, though. Mine averages about $30/monthly. Even if your electric rates are double what they are in Seattle (which isn't all that unlikely), you should still be able to cut a bit here. Pay close attention to your usage and be sure to turn everything off when you're not using it. Leave the AC off until your debt is under control.

The car is really hurting you here. Your overall picture would improve significantly if you could somehow sell the car, get rid of the loan, and buy a cheap old car to replace it. That would free up $330/month to put toward your credit card and medical debt, plus a bit more when you're able to switch your insurance to a liability-only policy. Unfortunately this could be very difficult to do if you don't have any savings you could use to pay the difference between the car's value and the loan amount.

Is your ex able to help out with child care expenses at all?

lelandsmama

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #2 on: May 01, 2014, 11:51:51 AM »
My ex and I have a court date set for June. He may or may not have to pay child support. I make more money than him...but I also have more expenses which were mostly accrued during our marriage.

homeymomma

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #3 on: May 01, 2014, 11:56:11 AM »
Hey there, first off congratulations on taking the first step toward confronting your finances head on and make progress. It sounds like you're in a tough situation after a divorce- you must have hard days sometimes. It would be great if you had family that could help temporarily but you said that's not an option.
Do you have any friends with a basement or something they'd be willing to rent to you for a short time at a reduced cost? Anything massive like that to cut your rent significantly would obviously make the biggest difference right off the bat. Or perhaps you could downsize significantly for a year? Ie one or two bedroom down to a studio with a special corner divider as your sons room? I know it doesn't sound glamorous but if it's the difference between starting to come up for air or getting further into debt...

I don't know much  about car insurance, but your monthly cost seems high, we have a 2012 and it's only like 70/mo with progressive. It would definitely be worth shopping around a little to make sure.
 63 also seems high for just internet- consider switching to another company to get an intro rate then asking to extend it when it runs out. Alternatively, do you need internet in the home? Seems like a crazy question, but if you're always at work, kiddo probably gets computer time at school, and I'm sure you could go to a library in a pinch. And now I'm seeing you have a cellphone from your employer... That may mean it would be even easier to cut out internet at home. Or perhaps a neighbor would consider letting you hop on their signal every once in a while if you offer to pay a percantage of the bill.

330 car note- you're going to get a lot of flak for that on here, but we've been there too. I'll let others comment on the wisdom of selling an upside down car. It might help if you included the difference between the loan and the value? Obviously getting rid of 330 per month would be great, but you likely rely on your car for your son and your employment.

150 electricity- I don't see a gas bill so you must have a fully electric apartment. Try fans in the summer and get a little rack to hang dry your laundry if you do it at home. Make sure you turn off lights and unplug appliances, particularly the tv. Speaking of laundry- 40/mo for laundry??? This is crazy. We used to spend 20/mo at a laundromat. Does the $40 mean your paying someone else to do your laundry each week? If so, stop. Get some quarters and set aside a few hours and do it yourself.

60 in gas and 100 for aftercare both seem reasonable to me.
I am hoping your 400/mo credit cards is paying down the balances, not just keeping up with interest. Is that minimum payments? What are your rates? It may not make sense to transfer balances to a new card, when you don't have the money to pay them down either way, but it could be a good first step to save on interest once you free up some monthly cash for the debt.

I'll let others comment more on the debt situation. I've only dealt with student and car loans so I don't know much about medical and credit debt. I would say that as long as your hospital billers are happy with your $25 per month, don't worry about it until your interest bearing (credit card) debt is gone, because medical debt should have 0%interest. If you're getting fees, etc, that's a different story.

Is this a full picture of your finances? Is there any child support coming in?

For now I'd focus on reducing your rent as much as possible, doing something about that car, calling around for internet/car insurance rates, and seeing how tiny you can make your electricity bill.
Obviously bringing in more income would be ideal. Keep up the job search and look into side jobs, like night or weekend childcare. It seems that someone with customer service experience should have a lot of options. Would moving to a different area or city be an option? It would certainly open up the employment options, but may not be possible with your custody arrangements.

Good luck!

Cassie

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #4 on: May 01, 2014, 11:57:38 AM »
I have known people that had small incomes & owed a lot to hospitals and after making steady small payments the  hospitals wrote off the rest of the debt.  I would approach the hospital about this.  Some just do it voluntarily.

homeymomma

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #5 on: May 01, 2014, 12:00:15 PM »
Have you looked into WIC?

lelandsmama

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #6 on: May 01, 2014, 12:05:05 PM »
I make too much for government assistance down here. No WIC, no food stamps, etc.
The $40/month is for the laundromat in my apartment complex. It takes two dry cycles every time because the dryers suck, but it's what I have available.
I'd like to wait until after court to go down to a 1br apartment or anything like that. I'm scared it would look bad in a custody battle that I have a one bedroom apartment while my ex has a 2br.

lelandsmama

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #7 on: May 01, 2014, 12:06:15 PM »
Also I would LOVE to relocate but it just isn't an option right now financially and my ex would not allow it. That's another thing that will have to wait until after court.

homeymomma

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #8 on: May 01, 2014, 12:06:59 PM »
Jus noticed health insurance is not on here? Is it covered by your employer?

lelandsmama

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #9 on: May 01, 2014, 12:09:04 PM »
Yes, it's taken out of my paychecks.

homeymomma

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #10 on: May 01, 2014, 12:11:52 PM »
It does sound like you may have to wait on some changes until after your custody decision. Could you speak to your lawyer about potential changes in case?
If it's costing you 40/mo because of dryer time, definitely get a rack and hang dry. That's crazy $$.

La Bibliotecaria Feroz

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #11 on: May 01, 2014, 12:25:27 PM »
Maybe consider getting a second job, if possible, while your son is with your ex--or maybe something you can do from home while he's sleeping. I do Leapforce At Home myself in the evenings while my kids are asleep--it doesn't require any special experience or a degree. (My blog post about it: http://frugalparagon.com/2014/02/05/why-the-frugal-paragon-loves-leapforce-at-home/). Your expenses are already so low that addressing income might be necessary in addition to cutting expenses.

homeymomma

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #12 on: May 01, 2014, 12:30:37 PM »
Is this a time speaking with a debt counselor would be appropriate? I don't know what they do exactly, but they may be able to help with the constant fees/interest accrual problems, I think they speak directly to the creditors on your behalf.

Weedy Acres

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #13 on: May 01, 2014, 12:31:08 PM »
You list a monthly payment for student loans, but no SL debt under liabilities.  What's up with that?

Your ex should be paying child support, even if he makes less than you.  I have a family member where the lower earner pays the higher earner (who has custody) even though the ex earns 5x as much. 

I agree: skip the drying.  And also do less laundry.  I only do 2 loads every 3 weeks (1 light, one dark), so don't understand how you could generate enough with 2 people to do, I"m guessing 4 loads a week?

You need to work on a plan to improve your skills and get your income up.  What did you start studying?  What skills do you have?  What could you start doing on the side, like mowing lawns or cleaning houses to bring in extra cash?

And yeah, dump the car.  How much underwater are you?

homeymomma

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #14 on: May 01, 2014, 12:39:43 PM »
Yeah I agree on child support. We don't know your specifics, but I know my dad had to pay my mom child support for me, even though she made six figures and he was a delivery guy. Custody is a different animal altogether though, if that is up for grabs.

lelandsmama

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #15 on: May 01, 2014, 12:52:18 PM »
Just added my student loan. Sorry, I thought I had. I was working an at home job as well until recently when the program ended. I was a chat agent for Needle with the Urban Outfitters program. I'd like to do something like that again, so I can work around my schedule easily because I already work over 40 hours per week.

As far as custody goes, we are going for split custody 50/50. I want to be domiciliary parent, the ex wants neither of us to be domiciliary parent. So I'm not sure he would owe me anything. We already split costs like daycare/lunch, etc. The number in my figures is just my half.

lelandsmama

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #16 on: May 01, 2014, 12:57:37 PM »
I owe 15726.60 on my car now and I'm showing it's value is about 11,000 but I wouldn't know how to do anything with that...or what I can do. This is my first car so I know nothing about that stuff.

HairyUpperLip

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #17 on: May 01, 2014, 01:01:56 PM »
Hey there, first off congratulations on taking the first step toward confronting your finances head on and make progress. It sounds like you're in a tough situation after a divorce- you must have hard days sometimes. It would be great if you had family that could help temporarily but you said that's not an option.
Do you have any friends with a basement or something they'd be willing to rent to you for a short time at a reduced cost? Anything massive like that to cut your rent significantly would obviously make the biggest difference right off the bat. Or perhaps you could downsize significantly for a year? Ie one or two bedroom down to a studio with a special corner divider as your sons room? I know it doesn't sound glamorous but if it's the difference between starting to come up for air or getting further into debt...


I really like this idea.


I owe 15726.60 on my car now and I'm showing it's value is about 11,000 but I wouldn't know how to do anything with that...or what I can do. This is my first car so I know nothing about that stuff.


How dependent are you on the car? It's pretty expensive. Could you walk and live without a car?



lelandsmama

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #18 on: May 01, 2014, 01:07:18 PM »
A car is definitely essential here, unfortunately. I just wish I could lower my note or sell it and get another one but I owe over 15 grand and it's worth almost 11 grand. :(

brandino29

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #19 on: May 01, 2014, 01:20:06 PM »
I know you said you earn too much to qualify for any government assistance but I think it would be worth a trip or phone call to your local parish health unit (http://www.dhh.louisiana.gov/index.cfm/page/394) if you haven't already done so.  You should come close to qualifying for SNAP based on your income and household size, after all the deductions are considered.

Regarding your medical bills, you should consider calling a bill negotiator.  They can be pricey but they could end up saving you thousands of dollars.  You could also try tackling it yourself first but medical bills are often a convoluted maze.  It's not glamorous but calling each provider that sends you a bill and saying "Listen, I can't afford this, can we negotiate a lower price and a payment plan?  Otherwise I am likely going to have to declare bankruptcy."  Some repayment is always going to be better than no repayment for them if they think bankruptcy is a possibility. 

http://www.forbes.com/sites/nextavenue/2013/09/17/you-got-a-10000-hospital-bill-now-what/

lelandsmama

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #20 on: May 01, 2014, 01:55:38 PM »
Thank you for those links. I will definitely mention bankruptcy because honestly it feels like something I may have to do when there's so many bills all at once. That helps a bit.

homeymomma

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #21 on: May 01, 2014, 02:24:43 PM »
I make too much for government assistance down here. No WIC, no food stamps, etc.
The $40/month is for the laundromat in my apartment complex. It takes two dry cycles every time because the dryers suck, but it's what I have available.
I'd like to wait until after court to go down to a 1br apartment or anything like that. I'm scared it would look bad in a custody battle that I have a one bedroom apartment while my ex has a 2br.

I hear you about waiting, but after it's settled I'd urge you to look into at LEAST a 1br. You could even have kiddo in the bedroom and yourself on a futon if you needed your space. Plus most one bedrooms have a dining room space that could easily be used as a second bedroom "nook." You can't afford your rent right now. That's just a reality. With some creativity I bet you could make a 1 br work well. Google search some ideas of how to structure the apartment to make it work, there are a ton of people doing that exact thing.

nereo

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #22 on: May 01, 2014, 03:06:15 PM »
Hello Lelandsmamma

From what I can see, your best bet might be to ask for a restructuring of your debt.  Put simply, the lenders don't want you to default on the loans because then they don't get their money, and you don't want to default, because then its very difficult to ever get yourself out of that hole.
Here's what you can do.  Go to each lender and ask to speak to the loan manager about restructuring the loan.  Be upfront with them about your income and your debts.  Tell them if you can't restructure you risk bankruptcy.  The lender can choose to reduce the interest rate, stretch out the payment term or sometimes even reduce principle (all of which would result in lower monthly payments).  Or of course the lender may say no, but then you are back to where you are now.  Debt gets restructured All-The-Time. 

Then attack your spending and do whatever you can to increase your earnings.

Best of luck to you


marty998

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #23 on: May 01, 2014, 03:47:49 PM »
You may have separated from your ex but what about his parents? I'm sure the inlaws would still want the best for your child. Can they assist monetarily with say $100 a week?

homeymomma

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #24 on: May 01, 2014, 05:40:34 PM »
Do you feel like you got any help/direction from all this? If you still have nagging questions, frustrations, post it!

Gimesalot

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #25 on: May 01, 2014, 08:15:24 PM »
I can totally sympathize.  Louisiana living is not easy.  It can be crazy expensive while earning low pay, and little to no government assistance.

I agree with what other people have said about cutting costs and restructuring your debt.  This is going to be your big win.  To me your car insurance is crazy cheap, I pay about $400 a month for two cars. :(

I calculated an average hourly income of about $11.50 an hour (if you work 40 hours a week, 52 weeks a year).  If you are in New Orleans or Baton Rouge, you should look into waiting tables or bartending.  You could earn $100 to $400 a night, depending on where you work. 

If you don't live in those areas, look into staffing companies for the chemical or refining industry.  Admins at engineering companies typically earn about $13 to $15 an hour.  You could earn a lot more if you work direct for a manufacturer.


lelandsmama

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #26 on: May 01, 2014, 10:24:52 PM »
No, my inlaws dislike me. They wouldn't help me. They help my ex.
Yeah, my car insurance is as cheap as it can be. I already got a bunch of quotes a couple months ago. I was already with the cheapest company.
I am in Lafayette if that helps. I've seen ads for those types of jobs but they usually say you need to know about the industry already which I don't.

HairyUpperLip

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #27 on: May 02, 2014, 06:40:20 AM »
I second the 1br idea...

and even better would be an efficiency apartment - basically a studio just not labeled as such because there is no frills.

It's a large room with an exposed kitchen, fair sized bathroom, usually a closet or 2, and that's it. I know I lived somewhere before that had them and rents were $400 or less and usually included utilities.

Good luck with your situation either way.

neophyte

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #28 on: May 02, 2014, 07:08:41 AM »
What is your current arrangement for the medical debt? What happens if you don't pay that?  I wonder if you would be better off to stop paying on the medical bills and put that toward the credit card debt.  The credit cards will really cost you if you miss a payment, but I don't think medical bills usually charge interest or fees if you are late/miss a payment.  That might also put you in a better position to negotiate with them.

Was this debt incurred while you were married?  It might be that your ex will be required to take on part of it as part of your divorce. 

Gimesalot

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Re: Reader Case Study? - How can I quickly get out of debt?
« Reply #29 on: May 02, 2014, 01:20:39 PM »
Oh, I love Lafayette. 

Go downtown, and get yourself a job at one of those clubs that is full of college kids.  Maybe you have to start as a barback but I bet you can move into bartending really quickly.  Bartending in a college town is easy because its all beer and well drinks, no cocktails.  Maybe one or two nights a week will really improve your cash flow.

I looked at a couple temp agencies and it looks like there is some stuff available.  You should really focus on getting a new job with higher steady pay.

One last thing, have you thought about renting a larger space with a room mate or two?  This could bring your rent down, while still giving you a large place for your child.