sticky situation

[jrtdi]

I am recently married and i am 26. I was doing fine by myself but once i got married things got bad fast. My wife is a foreigner and is currently going to school for hotel management and does not have a job. She just moved here last year, i met her when i used to work abroad. She is doing wonderful in school but i do not think she is ready to hold a part-time job until she settles down. My financial situation is pretty shitty at the moment. I hate debt and i never liked it, i made a mistake for the first time in my life when i bought a VW jetta TDi sportwagen for 356 dollars a month with 3.2% interest. I am going to sell it (i am not upside down) this summer for a cheap car. My wife drives my old car which is a paid off civic from back in the day. Anyways, i earn 35,000 a year and she earns nothing. We just got our taxes back in which i used to almost pay off 1 of my CC's instantly. Since we got married i spent a lot on food and other stuff that i probably didn't need. I am 11,000 dollars in debt between all my credit cards. Here are my expenses

Car- 355
Rent- 710
food-350
utilities- 120 or so for electric/internet/gas in total
Gas for both cars - 150 or so a month probably

I am not really able to pay off crap. every last dollar i don't use goes to paying off debt, i never had debt in my life until this year. Furnishing a house , etc, blew it all up for me. I actually have anxiety because of it. i have a whopping 0 in my checking / savings account.
Are there any ways i can pay this off or am i just screwed? My credit score used to be in the 730's and tanked HARD to the mid 500's so that is just depressing as well, i have high balances on all my cards. What is the best way out? I do see a light at the end of the tunnel, but in terms of credit scores how long does it take to recover from a missed payment once (god that destroyed it!) i forgot to pay a bill cause for some reason i threw the bills away thinking they were spam (maybe i was just avoiding them) and high balances for a few months? In July I'll be moving somewhere through a friend where the rent will be around 300 with utilities a month for a safe and nice place. I cannot move any sooner than that because of my lease. That should REALLY help me out. Anyone have any advice for me? I only eat out once a week and bring my lunch almost everyday to work.

Any advice would be appreciated,
Thanks

[Numbers Man]

Get a second job.

[MrCash]

I am recently married and i am 26. I was doing fine by myself but once i got married things got bad fast. My wife is a foreigner and is currently going to school for hotel management and does not have a job. She just moved here last year, i met her when i used to work abroad. She is doing wonderful in school but i do not think she is ready to hold a part-time job until she settles down. My financial situation is pretty shitty at the moment. I hate debt and i never liked it, i made a mistake for the first time in my life when i bought a VW jetta TDi sportwagen for 356 dollars a month with 3.2% interest. I am going to sell it (i am not upside down) this summer for a cheap car. My wife drives my old car which is a paid off civic from back in the day. Anyways, i earn 35,000 a year and she earns nothing. We just got our taxes back in which i used to almost pay off 1 of my CC's instantly. Since we got married i spent a lot on food and other stuff that i probably didn't need. I am 11,000 dollars in debt between all my credit cards. Here are my expenses

Car- 355
Rent- 710
food-350
utilities- 120 or so for electric/internet/gas in total
Gas for both cars - 150 or so a month probably

I am not really able to pay off crap. every last dollar i don't use goes to paying off debt, i never had debt in my life until this year. Furnishing a house , etc, blew it all up for me. I actually have anxiety because of it. i have a whopping 0 in my checking / savings account.
Are there any ways i can pay this off or am i just screwed? My credit score used to be in the 730's and tanked HARD to the mid 500's so that is just depressing as well, i have high balances on all my cards. What is the best way out? I do see a light at the end of the tunnel, but in terms of credit scores how long does it take to recover from a missed payment once (god that destroyed it!) i forgot to pay a bill cause for some reason i threw the bills away thinking they were spam (maybe i was just avoiding them) and high balances for a few months? In July I'll be moving somewhere through a friend where the rent will be around 300 with utilities a month for a safe and nice place. I cannot move any sooner than that because of my lease. That should REALLY help me out. Anyone have any advice for me? I only eat out once a week and bring my lunch almost everyday to work.

Any advice would be appreciated,
Thanks

Hi jrtdi!

I'm sure with the help of the other Mustachians, we can get things turned around!  First of all, what is your job?  Where do you live and what does your commute look like?

And the $11k debt, what is it comprised of and what are the interest rates?  Also, do you have any investment savings anywhere?

Also, do you have any items that you can sell besides your car?  Why do you need to wait for the summer to sell your expensive car?  In your situation, you need to get into a more affordable vehicle as quickly as possible!

[jp]

Get a second job.

Pretty much.  Your expenses are more than your income, and you say you can't decrease your expenses (don't know why you have to wait until summer to sell the car, but I will take your word for it). 

So, that leaves only the option of increasing your income.  Your wife can't work apparently, so that means you have to get a second job or find a higher paying first job.  Without knowing your skills, pizza delivery is good for a couple hundred bucks a week. 

[Thegoblinchief]

Don't eat out. Bring your lunch to work EVERY day, not "almost everyday".

Food is high for just two people. Lots of threads here about reducing grocery spending.

Why wait until the summer to sell the car? Sell the car now. Buy a bike. Use the rest towards debt.

When purchasing anything, ask yourself whether it's worth taking out a loan (insert APR of highest rate debt)? That's a really good mental trick I use to avoid dumb purchases.

[AJ]

I would start by pulling your credit report, if you have not already done so. A 200 point drop seems extreme for one missed payment, leading me to suspect there may be more you're not aware of. That being said, it doesn't sound like you're in the market to borrow money any time soon, so I wouldn't worry about it. I have a 60-day late payment on my credit report and have taken out 2 mortgages since then without issue. Once your credit report shows that the debt is current, it doesn't take long for the score to improve. Plus if it really was just a one-time mistake, most lenders will see that on an otherwise solid report.

What is the best way out?

One dollar at a time :) $11k debt on $35k income is not the end of the world. Just do what you can while your wife is in school, and know that it will go down quickly once she is employed. In the meanwhile, it's just one day at a time.

Get a second job.

Pretty much.  Your expenses are more than your income, 

Am I missing something? I don't see the expenses adding up to more than his income...

[jrtdi]

I can't sell my car cause i cannot afford another one and there is NO WAY i am going to get a good car loan. I commute around 30 miles round trip a day and my car gets wonderful gas mileage. My wife commutes around 10 miles a day so we live in a pretty central location. I do have around 1300 dollars in some solid stocks that i invested in at 500 dollars when i had no debt. I really am hesitant to pull that out at the moment seeing as how it wouldn't put a massive dent in my debt and its still performing really well.  I am in marketing/PR/web developer and i do not think that i can honestly get a second job cause i work 8-6pm everyday and i am working on my MBA. Once my wife starts working and she has offered to work, but i do not want her to fail school or struggle when she needs to focus on her future. I just recently asked for a raise and was granted one from 25,000 dollars (which i was making when i went into massive debt) to 35,000 dollars, i'm not sure how rude it is to ask for another so soon when i got a raise in January.

my credit cards are all at about 15.25% interest

[jp]

Am I missing something? I don't see the expenses adding up to more than his income...

My mistake.  I cut his income in half when I was doing the math in my head.  Still, he has about $1700 in essential spending each month, and he likely brings home only about $1100 per biweekly paycheck.  Since he has $0 in his accounts, he probably has some other expenses he isn't mentioning (toilet paper or car insurance maybe). 

Even with the corrected numbers, he is probably very close on expenses to income.  But you're right, the numbers he gave are less than what his income should be, not much less, but still.

[jrtdi]

Car insurance is paid for 6 months just recently and im paying 83 dollars total for both cars with good coverage.

[jp]

I can't sell my car cause i cannot afford another one and there is NO WAY i am going to get a good car loan. I commute around 30 miles round trip a day and my car gets wonderful gas mileage.

Going to have to deliver a facepunch here unless you have a non-whiny reason why you can't share a car/ride a bike/take a bus. 

15 miles on a bike should be extremely doable for a young lad like yourself unless you have a health condition.   

Monthly savings= at least $400

[jrtdi]

First, i live in saint louis, Missouri. I commute across the river to Illinois for work. I'd love to see someone try to ride a bike across the bridges around here and live. Secondly, the bus would be around a 2 1/2 hour 1 one way commute cause the public transportation here is a joke. If i could do that stuff i would. I don't mind public transit or biking seeing as i did it everyday when i lived abroad. Noone lives near me to commute with at work.

[MrCash]

I can't sell my car cause i cannot afford another one and there is NO WAY i am going to get a good car loan. I commute around 30 miles round trip a day and my car gets wonderful gas mileage. My wife commutes around 10 miles a day so we live in a pretty central location. I do have around 1300 dollars in some solid stocks that i invested in at 500 dollars when i had no debt. I really am hesitant to pull that out at the moment seeing as how it wouldn't put a massive dent in my debt and its still performing really well.  I am in marketing/PR/web developer and i do not think that i can honestly get a second job cause i work 8-6pm everyday and i am working on my MBA. Once my wife starts working and she has offered to work, but i do not want her to fail school or struggle when she needs to focus on her future. I just recently asked for a raise and was granted one from 25,000 dollars (which i was making when i went into massive debt) to 35,000 dollars, i'm not sure how rude it is to ask for another so soon when i got a raise in January.

my credit cards are all at about 15.25% interest

You have to stop thinking in terms of loans.  You need to sell your car and buy a cheap old car in cash.  And your 30 mile round trip commute is costing you much more than you think.  You need to read this:  http://www.mrmoneymustache.com/2011/10/06/the-true-cost-of-commuting/
You can estimate that your commute is costing you $0.50 per mile or $15 per day.  This is about $300 a month or $3,900 a year.

We also need to know what kind of vehicle your investments are in (401k, IRA, taxable account, etc.).  You say that your investments are performing pretty well at the moment, but I can guarantee you that they are not making over 15.25%, which is the rate of your CC debt.  Your credit card debt is eating you alive.  If your funds are in a taxable account, I would suggest that you use it took pay down your CC debt.

[jp]

First, i live in saint louis, Missouri. I commute across the river to Illinois for work. I'd love to see someone try to ride a bike across the bridges around here and live. Secondly, the bus would be around a 2 1/2 hour 1 one way commute cause the public transportation here is a joke. If i could do that stuff i would. I don't mind public transit or biking seeing as i did it everyday when i lived abroad. Noone lives near me to commute with at work.

I work in St. Louis all the time, so I understand that.  I ride my bike at home and people call me suicidal all the time, but even I wouldn't try to ride over the bridge in STL. 

Where is your income going? It looks like you should have at least $500 extra each month. 

[jrtdi]

i'm paying down my debt with literally every dollar i have. It's just really hard cause i am paid bi weekly and one check goes to rent/utilities/part car and the other goes to groceries/rest of car/debt. Usually i save around 700 a month.  I hate debt so much and have never liked it but it seriously came from out of the blue with me. I got married in May and by january i have 10k of debt. I honestly don't even begin to understand it! furniture and other stupid crap i bought for furnishing our rental unit i should have bought from Craigslist, but that is the past! I learned the hard way. I'm not sure how i can buy a car if i literally cannot afford one with cash.

[MrCash]

i'm paying down my debt with literally every dollar i have. It's just really hard cause i am paid bi weekly and one check goes to rent/utilities/part car and the other goes to groceries/rest of car/debt. Usually i save around 700 a month.  I hate debt so much and have never liked it but it seriously came from out of the blue with me. I got married in May and by january i have 10k of debt. I honestly don't even begin to understand it! furniture and other stupid crap i bought for furnishing our rental unit i should have bought from Craigslist, but that is the past! I learned the hard way. I'm not sure how i can buy a car if i literally cannot afford one with cash.

How much is your current car worth and how much do you owe on it?

[jrtdi]

It's worth about 16.5k through private selling and 15k through a dealer. I owe 15k on it exactly.

[MrCash]

It's worth about 16.5k through private selling and 15k through a dealer. I owe 15k on it exactly.

If you private sell your car, then you'll be left with $1,500.  That's enough cash for car that will get you to work and back.  If you then set aside $355 per month (the amount you were spending on the other car) for 6 months you could even upgrade to a $3,600 car.  Or... you could use this $355 a month to start knocking out the debt and freeing up income.  Right now you can't afford a $16k car. 

[JPinDC]

Could you and your wife share one car? You could drop her off at school on your way to work and pick her up at the end of the day. Even if she doesn't have class that whole time, she can use it to study or maybe pick up some work on campus.

Could she give language lessons or tutoring? I don't know if you mentioned where she was from or if this is relevant, but this or part-time babysitting/tutoring/nannying could be a small time commitment and a big help.

I understand that you're trying to pay off your debt ASAP, but is there a way to consolidate the credit cards so that you're making one payment? I would also caution against throwing EVERY dollar at debt repayment just long enough to build yourself a little buffer in case of emergency.

[rocksinmyhead]

wow! everyone has put forth amazing ideas so I'm not even sure what to add, other than that I agree you should sell your car ASAP and buy a beater, or not buy anything. your wife's school commute is shorter, is it also safer/could she bike? (I do understand the living in a non-bike-friendly Midwestern city though... we are in Tulsa and it is similar although not quite as bad since it's so much smaller)

[jp]

wow! everyone has put forth amazing ideas so I'm not even sure what to add, other than that I agree you should sell your car ASAP and buy a beater, or not buy anything. your wife's school commute is shorter, is it also safer/could she bike? (I do understand the living in a non-bike-friendly Midwestern city though... we are in Tulsa and it is similar although not quite as bad since it's so much smaller)

Off topic, but I would totally cycle in St. Louis.  You just can't go across the bridge because it is all interstate.  Around STL wouldnt be that bad IMO.

[MKinVA]

One thing might be to sell some of that new furniture and then replace, if necessary, from Craigslist or used furniture store. I have little by little gone around my home and sold furniture that was really just decorative not essential. Even though you won't get what you paid, it's cash you can put toward the credit cards. I made 115 dollars at a church yard sale selling a bunch of old purses and cds. If you aren't using it every day, you can probably do without it.

[wizlem]

First, i live in saint louis, Missouri. I commute across the river to Illinois for work. I'd love to see someone try to ride a bike across the bridges around here and live. Secondly, the bus would be around a 2 1/2 hour 1 one way commute cause the public transportation here is a joke. If i could do that stuff i would. I don't mind public transit or biking seeing as i did it everyday when i lived abroad. Noone lives near me to commute with at work.

I don't know much about St Louis but is it possible to combine riding a bike with the bus? Where I'm from the buses have racks for bikes on the front.

Also, which bridge are you crossing? Google maps shows at least 1 bridge with a bike lane(though seemingly no way to get to the bridge on a bike) and another with a pedestrian walk way.

[Exflyboy]

What about a scooter?

Summer is coming and I'm wondering if the cheaper insurance/gas cost would pan out for you?

Frank

[Janie]

how are you and your wife paying for school?

[Daleth]

First, i live in saint louis, Missouri. I commute across the river to Illinois for work. I'd love to see someone try to ride a bike across the bridges around here and live. Secondly, the bus would be around a 2 1/2 hour 1 one way commute cause the public transportation here is a joke. If i could do that stuff i would. I don't mind public transit or biking seeing as i did it everyday when i lived abroad. Noone lives near me to commute with at work.

Why does your wife need a car for the 10-mile round trip? How's public transport for where she's going, or carpooling with others at her school (students, teachers, admins)? Also, how many days a week is she on campus, and what are the pros and cons of ditching the VW and using the paid-off car to drop her at school, go to work and then pick her up?

I agree that some work experience in her field would be helpful. It may be tough to find work that fits her school schedule, and in that case the joint babysitting idea sounds great to me. As long as you limit yourselves to kids young enough to spend most of your time there asleep, it's a great deal for you (being paid to do homework). Or if you're in class in the evening, drop her off to babysit and do homework while you go to school.

Also, unless your employer is paying for your MBA, I would question the wisdom of both being in school at the same time. Can you take time off after this semester ends, and replace the free time with a second job?

[iris lily]

Hey kids, when you are cycling in STL PLEASE stop at the stop signs, 'kay? I am cranky with all of you who breeze through them on your bikes. It is the law to stop.
Fellow St Louisian  here.

[Weedy Acres]

How about taking Metrolink over to Illinois and biking from the station to work?

Or sell the VW, you drive to work and your wife bikes to school?  Or you carpool for a couple months and save up cash for a beater second car. 

[2527]

I sense a lot of anxiety in your post.  People have given some great advice…implement as much of it as you can.  Sell the car, buy a beater, get a part time job, eat out less.  Also relax.  Things right now are about as bad as they are going to get.  You won't borrow any more money.  Your wife will finish her program and get a job.  You will finish your MBA and find a better job.