I am ****ed.

[firefighterjunkie]

OP - To add to what I said above, make a budget. At $126,000/yr, you're taking home between 7-8k per month. That leaves you ~$5500/mo after your house bills are paid. Something is seriously not right if you can't at least make your minimum payments with that kind of money. You need to make a list of all known expenses and see where every penny is going.

Depending on how that $126,000 is split between you and your wife, you may also be better off having her quit her job and eliminating the daycare cost.

I agree with this.

Currently, after your car payments, mortgage and day care payments are made, you have around $2800/ month. That should be enough to start making a pretty sizable dent in your debt if you are smart about it. As other have said, go through ALL of your expenses and start cutting where you can.

Figure if you are paying $300/month on utilities, $200 for fuel, $400 for groceries, $200 for car insurance, that leaves $1700 a month after the non-discretionary spending. Lower any bill you can that you can't eliminate. Can you lower your car insurance?

I think you should be OK as long as you and your wife make a realistic budget and stick to it. Good luck!

And this.



OP - have you sat down and written out EVERY single bill you owe on every month? And then compared it to your income? Do you make enough to cover your monthly expenses - and if so, where is your money going so that you are coming up short?

Could you eliminate smart phones, cable, unused gym memberships, Starbucks, fast food lunches, etc.?

I would definitely get rid of one or both of the cars.

And lastly, how many debts do you have that you need to eliminate before you think you will be back on your feet again? Have you considered having a garage sale or putting items on Craigslist or ebay to bring in some extra dough?

[retro_rocket]

OP - have you sat down and written out EVERY single bill you owe on every month? And then compared it to your income? Do you make enough to cover your monthly expenses - and if so, where is your money going so that you are coming up short?

This x1000000.

I've helped friends sort out their budgets before when they were in a bind and trying to cut expenses, and in almost every case there are some frivolous expenses that they don't always account for, which can be cut to make a difference. Example would be stopping every morning for a $2 cup of coffee at the local coffee shop - it's easy to write that off as "oh well, it's just $2, what difference is that going to make?" until you realize that over the course of the year, that's over $700 spent on just that...if you + spouse both do it, you're up to $1400/year just on takeout coffee, which in the OP's case could cover almost two full months of car payments!

I'm not saying that's the case with the OP, but the importance of itemizing EVERYTHING to help yourself see where the money is going cannot be overstated.

[tbvvw]

To the OP...you've gotten a lot of sound advise as to evaluating your financial situation and trimming expenses. Allow me to address the original post where you mentioned knots in stomach, hard to go on, depression. My brother and a close friend went through the exact same situation.

Make sure you do your very best to build realistic goals, exercise to relieve stress (walking is free) and keep as much stress from both your wife and kids. My friend was so stressed that he took his problems into the office, his work production dropped and he got laid off.

Please make sure you and your wife understand that your problems are solvable with a good plan and time. But make sure to keep your mental health in check.

GL to you!

[AutobahnTDI]

Sell stuff you no longer need on ebay and craigslist.

You situation doesn't sound all that bad.

[TisforTurbo]

I'm not sure if this has been posted already or not, but I just recently discovered mint.com, its a great tool to really help you see your whole financial picture, lay it all out in one place and start making changes.

[jnm2.0t]

I'm not sure if this has been posted already or not, but I just recently discovered mint.com, its a great tool to really help you see your whole financial picture, lay it all out in one place and start making changes.

Mint is far from helping on your whole financial picture, very far. They can spot some budget savings... maybe... and aggregate your banks into one place, but that's about all they are useful for.

[FlashRedGLS1.8T]

It does a decent job of showing cash flow. That's it, mostly.

[Mtl-Marc]

You're having money problems and you haven't canceled your cable service yet?

This.


Lots of cool tips here:
http://moneyning.com/

[maskedSONY]

getrichslowly.org is also useful.

[Mike!]

The OP needs to map out a budget, even a simplified spreadsheet or webform one. With $6300/mo take home, $2100 mtg+ins+pt, and the stated car and child care expenses, there's still a lot of cash left over for living and debt servicing.

You need to map it out to see where it's all actually going.

[zhenya00]

Lots of good advice here. I'll re-iterate the cable/internet/phone stuff. It's EASY to spend $300/month on that stuff. I want to think that you could get away with spending less on cars, but when you owe on both of them and have to come up with cash to replace one, I understand that it may not be practical. I would consider dumping one of them if at all possible though - it will save you not just on the payment, but on gas, maintenance, insurance, etc. Also, shop around for a different auto insurance provider - you may be able to save a bit there.

Lastly, look for support from people like Clark Howard and Dave Ramsey. You are going to need support to get through this and those people excel at helping people do just what you are doing. But no, you don't need to spend money on their products!

[SAPJetta]

I agree with taking a long, hard look at that daycare expense.

If either you or your wife are not clearing much more than what it is costing, there is no point to be working since you are just forking it right back over to a daycare provider.

My wife and I decided that it didn't make any sense for her to go back to work because between daycare and her travel costs (gas, maintenance, insurance), we'd barely be making anything from her full time job. Sure, money is tight now, but her working full time wouldn't have really changed that.

It also drops us into a lower tax bracket with only my single income.

It's definitely something worth looking at.

[mauslick]

if and when you get out of this mess do yourself a favor,

don't spend more than you make
don't buy anything unless you can pay for it (yes I know most can't buy a house or car in cash)
don't buy into the hype that you NEED something humans need air, water, food, some need clothing and shelter and that's about it.
start saving 10% of everything you make, period

enjoy a simpler less plugged in life

you 'll be sleeping much better and isn't that valuable?

[jnm2.0t]

I agree with taking a long, hard look at that daycare expense.

If either you or your wife are not clearing much more than what it is costing, there is no point to be working since you are just forking it right back over to a daycare provider.

Many people find they spend quite a bit more than they expected as a stay at home parent with the activities that start piling up... this class, that group, the other play date, etc. There's also the consideration of socialization that daycare provides for the kid and keeping mom's (or dad's) job skills up to speed and relevant if they have a goal of reentering the workforce.

[dunhamjr]

Many people find they spend quite a bit more than they expected as a stay at home parent with the activities that start piling up... this class, that group, the other play date, etc. There's also the consideration of socialization that daycare provides for the kid and keeping mom's (or dad's) job skills up to speed and relevant if they have a goal of reentering the workforce.

good points, that most of the suggestions to have 1 stay at home parent usually don't take into consideration.

especially the kids socialization and parents job skills.

[zhenya00]

good points, that most of the suggestions to have 1 stay at home parent usually don't take into consideration.

especially the kids socialization and parents job skills.

It might also be better for the relationship. If your wife wants to work and doesn't really want to be at home all day with the kids, you are both going to be happier if she gets out of the house every day, even if it comes down to a net wash cost-wise.

The interruption to her career path is also a huge one - staying home for a few years to save money will likely reduce her future earnings by a significant degree.

[dunhamjr]

The interruption to her career path is also a huge one - staying home for a few years to save money will likely reduce her future earnings by a significant degree.

good point as well.
never completely thought about it that way.

just because one spouse makes barely enough to cover daycare, doesn't mean that with another couple years of work that promotions, and raises won't greatly outpace childcare prices.

for my wife, that's not likely to happen since as a teacher with a masters +90 she is already at the top of her pay scale and near the end of any 'raises' she might get. so if she left and came back, she wouldnt really change in income at all.

but for me, i am in line to make consulting manager within the next 12 months... and since i started at this company 9 years ago to now, my salary has nearly doubled. if i had missed out on 3-5 years of experience, things would be quite different for me trying to come back into things.

[blue70beetle]

Buy a copy of Dave Ramsey's Total Money Makeover. Read it in a weekend, and then do everything he says to do. There are literally millions of people who have gotten out of debt following the principles he teaches, and while it's all common sense, he breaks it down into digestible pieces rather than trying to fix all the problems at once.

Create an accurate and workable budget that you both agree on. Be sure to account for all of your spending, whether it's bills or discretionary spending.


Sell the cars and buy a couple of reliable beaters with the proceeds. If you spend less than $300/month on repairs (and it's pretty unlikely you would spend more than this unless you deliberately buy a crap car), you just came out ahead by replacing the car with the $300 payment.

The credit cards have already taken care of themselves in the sense that you can't run them up any more.

Make a list of all your debts and order them smallest to largest in terms of outstanding balance. Once you have a small emergency fund (~$1k) saved, to cover you in case of emergencies, start attacking your smallest debt with a vengeance, paying only minimums on remaining debts. As soon as this one is killed off, move on to the next largest.

While mathematically this is not the correct way to do it, because it doesn't minimize the interest paid, it has been shown to keep people motivated to finish because they get quick wins, so they are more likely to be successful.

Dave Ramsey also has his own iHeartRadio channel that loops his 3-hour daily radio show over and over until the next day's episode is available. It's pretty interesting and informative, and it's hard to disagree with any of the financial advice he gives. Considering your situation, it's worth checking out...

[dunhamjr]

i know it hasnt been long. but there has been a lot of advice given.

curious if you have started building a plan and making any changes yet?

[Dirty Hatch]

Dave Ramsey and Clark Howard have saved my ass a few times over the past few years I have been listening to them. What also has helped me out a lot is using an online budget program (www.mint.com). I started using it about 8 months ago and have been able to save an extra $200 a month by just simply budgeting.

I feel your pain, about 10 years ago I was 15K in credit card debit and had a $300 a month car payment, and I was only making 30K a year. It took a few years and living in a bad part of town, but I was able to get everything paid off. Best of luck to you.

[TLC Detail]

I hate to say it, but have you watched "Till Debt do us Part"? Sad to recommend a reality show, but seriously, watch a few episodes and tell me you don't see a resemblance! I sure did!

Write out EVERY cost you have for the month, then for the week. Go over bank statements for the past 3-6 months, and tally EVERYTHING into categories. I used 10-15 categories.

Then assign them "Fixed cost" or "Variable cost" and add it up.. I found that 60% of my income was going to fixed cost, and 40% to variable, allowing me HUGE jars of cash money to spend on food/etc... Living within your means is the most important part.

If you have 18k in CC debt, you were NOT living within your means! Time to start NOW!

-edit-

Very helpful in figuring out a budget:

http://www.gailvazoxlade.com/resourc...worksheet.html

[Jacob Matthew]

GolfTango,

I'm curious to hear how/if you've made any progress on your situation. As another CT resident I feel your pain on some levels (although we are at very different stages in our lives).

Something no one has mentioned yet is that, NO, you are NOT completely ****ed. You'll be okay. You literally have no other choice but to do it, so just do it. Make it happen, make the changes. It's going to be hard, you may have to live like you're poor (not necessarily fun for someone with a six figure salary household income).

Just a random note as well, since you aren't sleeping anyway and are having trouble finding part time work that allows you to only work weekends, look into graveyard shift work. Grocery stores and supermarkets (Wal-mart!) are always looking for people to do this kind of work, since hardly anyone wants to. It may not be particularly fulfilling work, but take the time you're there to do some serious thinking. I've worked night crew shifts and have used it almost as a time to meditate while I do brainless hand-labor.

If you can supplement your income by bringing home maybe another $150 a week, that's 600 dollars a month that you can consider a cushion or use to pay off your debt. You will be exhausted and run down, but you are anyway, right?

Feel free to message me privately. Depending where you are, I also may be able to hook you up with some work.

Jacob

[Mike!]

I'm beginning to think GolfTango cut out his monthly Internet bill.

[TisforTurbo]

I'm beginning to think GolfTango cut out his monthly Internet bill.

[Steveo989]

As others have said calculate every little expense, ever deposit and withdrawal from your account. Even if it is a pack of gum.

I also think that if either of your workplaces are less than 5 miles from home, consider cycling. If that is not possible, are your workplaces flexible enough were you and the wife could ditch a vehicle and carpool halfway to whoever is closer, and the long commute takes the car.(maybe not possible due to the childcare.) If not possible consider ditching both cars for cheaper vehicles that can get you through 5 years or so.

Even if you lose money on getting rid of the cars, you can save money by less yearly property tax(registration is cheaper on older vehicles), car insurance should be cheaper due to cars age, if you can shift to a more fuel efficient vehicle you can save money there too.

Same holds true if you can sell a vehicle to either carpool or bike to work. One less car to insure, maintain, refuel, etc. You will be forced to reconsider unnecessary trips so you will likely save money on your weekly expenses by fewer trips and fewer temptations to overspend.

Is public transportation a possibility too, or park/ride. Anything that can cut transportation costs. Especially if you can coordinate the wife to drop you off at park and ride, and then she can keep the vehicle to take kids to school, and her work.

Then once you dump this debt, and get the amount you lose on the cars paid off, reinvest it into your bills that you are behind on. After that, pay down your highest rate credit card, or your lowest balance credit card (if you can pay it off within 2 months). Usually it makes sense to pay off highest rate CCs, but if you can get some of your credit cards to no balance this will give you a psychological boost.

Another note on credit cards. If you have a card with 9000 on it with a 10,000 limit, pay that one down, before moving to a card with say 1,000 with a 10,000 limit. A good chunk of your credit report is based off of what percentage of your limit your balance is off.

Check your credit score annually, but not too often so it doesn't hurt your credit.

Hopefully, all this has your credit score going up into high 600s or low 7s.

Check with refinancing once again. Try getting the payment lower than as of now. If you decide to stick with 15yrs that's ok in my opinion. Just get the cheaper rate with better credit.

Now build your emergency fund.

Then get your IRA/401K going. However, in the meantime if you can fit it in there financially take advantage of your employers match if you can afford it. It's free money that you will otherwise lose if you only get x amount matched per year.

[FISCAL]

I'm beginning to think GolfTango cut out his monthly Internet bill.

[SVTDanny]

I'm beginning to think GolfTango cut out his monthly Internet bill.

He's been posting an awful lot in OT for that to be the case.

[The Ninja]

There is some really good advice in this thread. I have followed a lot of it myself to help avoid being in the same boat. Especially since my wife and I together make half of what the OP makes. Here are some things that helped us.

1. One car payment. The OP needs to find a way to dump one of the payments. Either of your cars will fit two kids. Sell the car that has the most "equity" in it.

2. Bundle up. We turned our A/C off earlier than most would and still haven't turned the heat on. We just dress warmer and put a few more blankets on the bed. Granted we are in NC and it is not as cold as it is in CT.

3. Groceries - Eat less beef, buy the cheaper non-perishables.

4. No eating out - We have cut this down to about $20 a month now. My wife works some nights and doesn't have time to make dinner for herself so she grabs fast food.

5. Make time to cook meals at home.

6. Use the family and friends around you. You said you moved closer to your wife's family. Do they work? Would they be willing to watch the kids? This has saved us from needing daycare.

[blue70beetle]

1. One car payment. The OP needs to find a way to dump one of the payments. Either of your cars will fit two kids. Sell the car that has the most "equity" in it.

Or do one better and get rid of all car payments. Unfortunately, when we bought my wife's car we weren't in a cash position to do that and while her car is admittedly a bit over-the-top (her SRX), she's a realtor and wanted to be sure she was going to drive something clients would WANT to ride in (and we are paying it down faster than required).

And when we got it, I sold her bugeye WRX instead of my Jeep because it was worth more, and also because Subaru parts cost an absolute fortune!

3. Groceries - Eat less beef, buy the cheaper non-perishables.

Aldi and Walmart store brand for non-perishables. And we save a bunch of money on beef by buying a quarter at a time...spent $650 last month on this and it was $3.49/lb. Most cuts cost more than that, and steaks are MUCH more.

5. Make time to cook meals at home.

This. I made a big pot of clam chowder tonight. It was awesome, the kids loved it, it cost me about $11 and took a half hour or so to throw together. And we have enough left for another meal out of it. Last night it was ham, mashed potatoes, and broccoli and cheese, also awesome, and about $17 (with plenty I ham left). With 3 kids, we can't even get out of McDonald's for $25 anymore!

[GeoffD]

This. I made a big pot of clam chowder tonight. It was awesome, the kids loved it, it cost me about $11 and took a half hour or so to throw together. And we have enough left for another meal out of it. Last night it was ham, mashed potatoes, and broccoli and cheese, also awesome, and about $17 (with plenty I ham left). With 3 kids, we can't even get out of McDonald's for $25 anymore!

This is a little bit of a thread hijack but when I was unemployed 4 years ago, I made it a personal challenge to eat well off an unemployment check. I completely stopped buying processed foods. I learned how to make pie crust with my KitchenAid mixer. I learned how to bake. I learned which grocery stores had the best prices. I made Italian sausage burger out of $2.00/pound pork loin and the meat grinder attachment for my mixer. Lots of $2.00/pound boneless chicken thighs. Eggs. Canned tuna bought bulk. Romaine heart 3-packs for $2.00/bag that keep for several weeks. Lots of soups/stews that filled my chest freezer.

I think it was a great lesson. I proved to myself that I can have a high quality of life living off a $425/week unemployment check. I spent the interest income on my emergency fund to pay some big ticket items like property taxes and car insurance. When the time comes, I'll have no problem living off a social security check for cash flow with my retirement portfolio untouched other than the occasional big ticket item.

[Mike!]

This is a little bit of a thread hijack but when I was unemployed 4 years ago, I made it a personal challenge to eat well off an unemployment check. I completely stopped buying processed foods. I learned how to make pie crust with my KitchenAid mixer. I learned how to bake. I learned which grocery stores had the best prices. I made Italian sausage burger out of $2.00/pound pork loin and the meat grinder attachment for my mixer. Lots of $2.00/pound boneless chicken thighs. Eggs. Canned tuna bought bulk. Romaine heart 3-packs for $2.00/bag that keep for several weeks. Lots of soups/stews that filled my chest freezer.

I think it was a great lesson. I proved to myself that I can have a high quality of life living off a $425/week unemployment check. I spent the interest income on my emergency fund to pay some big ticket items like property taxes and car insurance. When the time comes, I'll have no problem living off a social security check for cash flow with my retirement portfolio untouched other than the occasional big ticket item.

Excellent crisis management. It's so satisfying making a meal for days out of less than it costs for one meal out at a 'cheap' place.

[ValveCoverGasket]

Excellent crisis management. It's so satisfying making a meal for days out of less than it costs for one meal out at a 'cheap' place.

not having to eat meat at every meal is also good for you... and much cheaper

[Mike!]

not having to eat meat at every meal is also good for you... and much cheaper

Non-meaty here, and I can confirm that. It doesn't save you much eating out (a veggie sub is usually the same as a processed meat one), but it sure does at home.

[GeoffD]

Non-meaty here, and I can confirm that. It doesn't save you much eating out (a veggie sub is usually the same as a processed meat one), but it sure does at home.

For the "meaty" crowd, a chest freezer is huge as part of the cost savings. When I was unemployed, I bought a half-dozen turkeys for dirt cheap at Thanksgiving and had the meat department slice them in half. I tried to keep my animal flesh cost at $2.00/pound. I live on salt water these days so if I have another crisis, I also can fish off my 22' catboat and gather shellfish.

[ChrisMD]

Even if you lose money on getting rid of the cars, you can save money by less yearly property tax(registration is cheaper on older vehicles), car insurance should be cheaper due to cars age, if you can shift to a more fuel efficient vehicle you can save money there too.

No one can automatically say "You will save money over time even by taking a loss now." It needs to be calculated. You may or you may not break even, let alone come out ahead.

Property tax and registration costs vary by state. Many states don't charge property tax on cars at all. Registration may or may not be dependent on the car's age.

Another note on credit cards. If you have a card with 9000 on it with a 10,000 limit, pay that one down, before moving to a card with say 1,000 with a 10,000 limit. A good chunk of your credit report is based off of what percentage of your limit your balance is off.

Utilization of credit is part of your credit scores but the aggregate is considered so that you aren't penalized for having a high balance on some cards and low balances on others. Think about it. If you have a card with a low rate, wouldn't it make sense to transfer higher-rate balances to that card and max it out in order to minimize interest? Yes. Fair Isaac knows and understands this.

Check your credit score annually, but not too often so it doesn't hurt your credit.

It doesn't hurt you at all when you check your own credit, as long as you do it through the correct means of checking your own credit. You could pull it every day and it would not hurt you.

What I mean by the correct means is that you use myfico.com, annualcreditreport.com, or direct with any of the bureaus. There are a couple other ways too, such as if your bank or credit card company allows you to check your credit as a perk of having an account with them. But, if you work at a car dealership, for example, and think "Oh, I'll just pull my own credit at work" then that will hurt you... probably in more ways than one after your boss finds out you did that. That would show up as the dealership pulling your credit as if you were applying for a car loan, not as you pulling your own credit.