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You need to post this in Case Studies with appropriate details for the best responses. I'll bite, though.
First off, great work on the savings thus far. I second
@Laura33 on this. (How does she always beat me to posting?!?)
Now for the face punches:
1. Your mortgage is almost 50% of your take-home pay. Plus your other expenses for housing (maintenance, etc.) on top of that. You don't have a lot of room to work with because of it - though whether to change that is a longer-term issue. I'll assume you keep the house for now and work with what you can. Short-term, keep this. Long term, this may be beyond any reasonable limit - you've got something north of
60% 78%+(!!!!!) of your take-home pay on housing, and you're still in the honeymoon phase, before stuff breaks. ($1,000 / month for utilities and lanscaping is mostly landscaping, I assume, and in either event, counts as well - before even adding the extra $1,000+/month for fix-up, plus, I assume, the $700/mo in rent on top of that.) This is what's really sinking you, and I'm sure that you see that.
You feel poor because you are choosing to spend yourself into poverty JUST on housing. You can't sustain 80+% of your income being spent on housing unless you made
way more than you do (and even then it would be foolish). That hurts even over the short term - your credit card debt is going to skyrocket unless you stop all of the discretionary parts immediately.
2. Your spending figures are off, as you seem to acknowledge. E.g., you're spending well over $200/mo on things I call "groceries/etc." - i.e., those small amazon purchases, household items, and whatnot. You'll need to track it to know, but that grocery/household amount seems way low.
3. This is key: Dave Ramsey it. Cut up the credit card. Ask yourself for EACH AND EVERY PURCHASE: would I buy this at 21+% interest per year, compounded? If not, skip it. Put it off. Wait. Stretch out what you have. Don't spend a dime more than necessary until that high-rate debt hole is stopped, ASAP. The posters are right: this is fixable within months, you just have to want to do it.
4. You're
really going to need those funds you're spending on new house stuff later on when you need to fix basic things, like the plumbing, and you're in too much debt. Save it now. Stop spending, get caught up, and THEN go forward once you're not risking the roof over your head (or retirement safety) for a new couch/patio furniture/whatever. (FWIW, we've furnished a house worth close-ish to a million dollars with Craigslist and thrifted stuff for a fraction of the cost. And people love it. All it takes is a little patience and time...and that time saves you a ton of money.)
5. You want quick, actionable items, so here:
- Slice all home prep spending to $0. You're paying 21% interest on it. Wait until the CC is paid, and even then, do it slowly.
- Pro tip, related to the last point: you'll spend WAY less if you do all of that spending slowly and patiently. Craigslist the furniture. Find out who does what cheaply. Wait and find cheaper solutions. (Ask the neighbors!)
Only buy what you have to later on. You'll be surprised how much simply waiting when you can will slow your spending on a new home. - Quit. Eating. Out. Eat out = ramen at home. Find other social activities to engage with people. Find cheap/quick snacks as meal substitutes. E.g., I put a thing of trail mix in my desk at work so that I am not tempted to eat out when I'm busy, stressed, and don't have much time. Instead, I have a couple of handfuls of nuts and go on about my day, while getting more done and being less financially stressed. That one habit has saved me hundreds of dollars.
- Cut your $1000/month utilities. You literally cannot afford that. Eliminate landscaping as much as you can: mow for yourself and/or trim hedges. Maybe not forever, but for this year. That'll get you back out of the hole faster, and a lot of that spending is pure discretionary spending. I maintain two homes right now on a good bit of land - yes, it's a bit of work, but it's SO MUCH CHEAPER to DIY some of these things. Plus it can be a free workout.
- Slice Netflix, Amazon, Spotify, and Entertainment to $0. Pay the CC first. Then you can decide what to to add back - and you'll know how much you missed X, Y, or Z (or didn't). Besides, Netflix isn't as great these days anyway. There's no point in spending 21% interest on these things.
- Don't buy clothes. At all. $0 spending until the CC is paid. Do thrift stores after that for a while. Ease back in.
- Leave the floors, the lamps, and all of that stuff until you can actually afford it. Adjust first. Life will move on, and you will be OK - and not as poor. We lived in a place with old floors and exposed cement in 1/4 of the living room for 5 years at one point as we spread out those new-homeowner costs (and partly because replacement of it all made more sense than repair, for cost reasons alone, after investigating that route), but we never went into credit card debt or had the associated marital stress over it. And the floors eventually got fixed; no relationships were in any way impacted by having a bad flooring spot that wasn't yet repaired.
- On having people over: people are fine. They'll adjust. You can't control their expectations/impressions anyway. You've got to be you, and you can't afford to keep up with that, so let it go. Either have people over less, if it really bothers you, until you're caught up and have saved up enough to buy some of those things. Or have them over without the expectation that you have to have X, Y, or Z furnishing. (We routinely have people over to our modest home and it's never an issue, even in a HCOL city, and even back when we had little to no worthwhile furnishings. You get there over time.)
- No vacations while you don't have the cash and are accruing 21% interest. Instead, pay the CC and then convert part of that to your future vacation fund - so that you have something to look forward to. Every dollar you pay is a dollar closer to that trip to Tahiti (and with 21% compounding!)
You can have some of what you want, but not
all of what you want. You can either keep going on the house - and into much deeper debt - or pull up now before you crash it. (You may not go bankrupt...but you may drain out/bankrupt your 401(k), or your home equity.) In short, you've got to cut/stop some things that you are really committed to in order to fix this, or even slow it down.
I think if you do all of those things for the short term, you might just knock out the CC debt soon-ish. Either way, you won't even know how big the hole is, really, until you do those things and start tracking spending closely. It's quicker/easier just to cut stuff, if you don't like the tedium of spreadsheets/tracking (which I do myself, but which I also HATE doing because it's tedious - so I get that). The short of it is that you need quick, immediate cuts. This is unsustainable.
Another tip: pay straight out of your bank account. No more CCs. That way you see/feel the burn IMMEDIATELY and can't deny the problem for another month or two. Your #1 challenge here is that you keep putting off the hard decisions. It's easy to do that when stressed, too. But doing that just makes the decisions even worse when the crisis is so bad that you can no longer ignore it, and you're far into arrears.
Or, as one wag put it (and DW likes to remind me sometimes): the first rule of holes is to STOP DIGGING.
You've done what many Americans have done - and many of us here have either done or considered, too - which is taking on WAY TOO MUCH house for your income. And all of the associated expenses. Yay America.
You took on ANOTHER huge problem with buying a house that expensive, which is this: You likely NOW live in a neighborhood surrounded by other million-dollar homes, with other similar spending, which is a lifestyle and spending level way above your means. (E.g. the $1,000/month on landscaping and whatnot.) You've set your partner's expectations, too, for a spending level and lifestyle that aren't possible on your income. That's its own problem, because you may both think that you're able to do/have things that you're now realizing that you can't afford.
And hey...ask me how I know. I cracked up while hearing the neighbors here gab about who had which new gadget...and then all going out and buying themselves a similar mower/car/gun/leaf-blower/you-name-it in short order. It's shocking, kind of amusing...and how humans are wired. It takes a lot of social wherewithal to drive the most boring car on the street as the Mercedes/Teslas/Range Rovers/Porsches drive by, use the most boring tools, and thrift/DIY our stuff while watching the landscapers drive by every morning, or wake up to see that the neighbor's full landscaping for the month is already done by that huge crew by 8.30am (as was true yesterday), while I'm just wandering off to work. (No joke: one of my closest neighbors has a separate garage just for his Porsches, which I didn't know until living here a while.) So again...ask me how I know.
But that's how it is - and the only way to make it financially on less income than everyone else here. You're either going to have to adjust, in short order, or you're going to drown financially. You CANNOT keep up those expenses - period. Short term or long term. You can only keep doing this if you're willing to burn up all of your retirement funds until you get your spending under control.
The sooner you accept that, the better off you will be, and the less long-term damage you're going to do. It also probably means some tough convos with your partner about what you can have and what you trade off. Life is all about tradeoffs.
My other, more positive advice is this:
increase your income however you can. Maybe a job change? Do this if you don't like stress on the housing side of the equation. That can make up some difference and maybe that route is less painful or more open for you. (I don't know your career specifics.) But that's at least another avenue to explore, if you don't like the suggestions above.
You can either lower expenses
or increase income - or
both. But the one thing you
cannot afford to do is to keep on the way you're going.
Again, it's all a series of trade-offs, so figure out what's best for you and move on. Just don't stay where you're at - you've got to address this head-on and ASAP.
