Need Financial Advice....Expenses > Income

25 Replies

Need some help.Please help me decide on next steps.

Current Bills= $10,300 month

Mortgage - $2,600 month, already discounted.

Credit Cards –$1,030 month………..$150mo @ $7k, $55mo @ $2k, $27mo @ $1k, $35mo @ $3k, $40mo @ $4k,$25mo @ $1k, $47mo @ $1k, $67mo @ $2k, $25mo @ $1k, $25mo @ $1k, $45mo @ $1k, $80mo @ $4k, $25mo @ $1k, $80mo @ $2k, $102 @ $4k, $110mo @ $4k, $90mo @ $2k.

Loans - $470mo @ $10k, $591mo @ $15k, $270mo @$3k, $650mo @$30K (not in my name),

Kid’s School -$900 month

School Loans - $785 month

Cell phones - $200 month

Personal loan to Dad - $1,000 month, $28k left.

Cars - $730 @ $31k, $330 @ $17k

Car insurance - $150 month

Cable/Internet/Gas/Electric/Water - $500 month

INCOME = $7,300 month

Both at 600 credit scores.We spend $10,300 per month above,we have FT jobs and drive Lyft make bring in $7,300 month. I am $3k upside down a month.Don’t know what to do, please help.

Do I stop paying on the loans? I can’t get any more credit/loans approved to get 0%, etc.

Want to sell the car and downgrade with the payment of $730 per month but I owe $7k more than what the car is worth. Can’t stop paying personal loan to Dad since he depends on the $1k per month.

Please help!

Small fixes will not do a dang thing, I'm afraid. You have to go big on this. Big, as in, selling your home, selling car(s), negotiating your credit cards to not just a lower payment, but a deal on how much is owed. Kids need to be in free public school. Cancel anything that is not needed (cell phones, cable, literally anything). This is most likely a 3-5 year dig out process, if you're super diligent. It's time to be upfront and honest with the family about the mess you're in. Pick up Dave Ramsey's book "The Total Money Makeover". Read it, and then live it. There is no easy fix here. None. It will suck and will be a lot of work. But, knowing all that, many people have been in your shoes and have dug themselves out. At least you will be doing it with good incomes. You can do this!!

I would start by getting rid of the cars and house and putting the kids in public schools, at least until you're in a better place financially. That's about $4500/month. Now, you have to add the cost of renting a place back into that, unless you can live with family for a little while. Not sure where you live, but if you can rent a place for $1000 or less, you'd still be $500+ positive each month. You can then use that money to pay down your other debt. It's not going to be quick or easy, but it's gotta be done. Nothing to be ashamed about. It happens to a lot of people. The sooner you start, the better off you'll be.

I really need help with the first step/action to take:

Should I stop paying and call on the loans and credit cards first and call to negotiate?  Also, do I do that for all credit cards or just mine and keep my wife’s going for a chance to save her credit score?

Want to sell the car and downgrade with the payment of $730 per month but I owe $7k more than what the car is worth? Should I hang on to the car and keep making payments or go find something and trade in upside down?

Originally posted by @Bill Drutz :

I really need help with the first step/action to take:

Should I stop paying and call on the loans and credit cards first and call to negotiate?  Also, do I do that for all credit cards or just mine and keep my wife’s going for a chance to save her credit score?

Want to sell the car and downgrade with the payment of $730 per month but I owe $7k more than what the car is worth? Should I hang on to the car and keep making payments or go find something and trade in upside down?

 Do you have any equity in your house or are you upside down on that too? If you do have equity, after you sell you could use that to pay off the $7k on the car and sell it and hopefully have some left to pay off other loans/credit cards. Some more details might make it easier to give you some help. 

Ditto the Dave Ramsey suggestion. I would say to listen to him on YouTube, and do it frequently (daily). It will help your mental state, give you a state of mind that you're actually able to dig out of this. That empowerment is so important when you feel helpless. It will also give you a great sense of accomplishment to start to dig out. First thing you need to do is pay off your lowest balance credit card. That's called the debt snowball. So, looks like you have a few $1k balance credit cards, begin with those. Then when the first one is paid off, you use that extra money to pay off the next one and so on, until you're snowballing into larger and faster payments... I'd also call the school loan dept and see if they can renegotiate you. They're often the most flexible of anyone. You do NOT need to be paying your kids schooling, they need public school. You've gotten yourself in a mess. You can get out again. You need a budget - and you need to stick to it... begin by listening to Dave on YouTube to psyche yourself up! Can you take on a roommate in your basement or anything like that? Cook at home, and don't be buying any steaks or lobster for the near term. :) 

I think you need to write a budget first.  What is in and out, then I think you should find the easiest thing to pay off first. I would also write down what rate of interest different loans/ credit cards are at so you pay off the ones that have the larger interest rate. If you have a credit card at 5k and the rest are 10k then take on the 5k get it out of the way. DO not close it as you will need it for your debt to available credit. Then move on to the next smallest thing you need to pay.  If you have a home equity line do not work on that first as that money is probably the cheapest money you have right now. Pay all your bills normally while you are fixing your credit.  If the bill is 806.00 a month then if you can pay 850.00 that will really move the amount on the principle.  

As for the vehicle....I would not know exactly what you can do to make that better....if you can buy a cheap car for little money I would sell that car on the open market for as much as possible and use whatever credit card I had to finish paying it off. 

This is just my personal idea.  

(I Really wanted to say to Leave the keys in it at a gas station and ...you get the idea but since you are backwards that would not work.  That is a joke and I would never condone doing that. )

Public school

Flip phones no data, cricket

Sell home, get in a rental for a few years. If you have equity use to pay off all credit cards, if no equity short sell and pay off smallest cc balances first and snowball to the next

Get rid of both cars, plenty of cheap beaters or if you need a nicer car for ubet/lyft then downgrade the expensive one, get a focus or civic, roll the 7k into the loan and it should at least cut the payment in half

Get rid of cable and anything that is considered a want. 

Cut up and throw away all credit cards. Don't cancel as that will hurt your score but remove temptation. 

Top Ramin, spagettios, pasta, cereal, basically eat cheap, no deserts, no soda, alcohol, dinning out, etc... 

It's gonna hurt but you can do it. 

@Bill Drutz

Just curious, have you taken the first actionable steps to get your family out of that situation? 

It may seem overwhelming at first and outright discouraging. Keep in mind that most of the suggestions on here are solid and will work in a general sense. However, that's not completely addressing the problem. I don't believe that many people on this site have been in that much of a financial bind (after all, no one would ever invest in real estate with negative cash flow), so it's going to take some creative traditional and non-traditional methods. I will tell you that you will need to learn some new skills and habits as well as getting the whole family involved. 

It's a numbers game so it's not impossible, you'll just have to shift the numbers & resources to your side. Think a game of tug of war, the more numbers you have on your side the more likely you are to succeed. You'll be less likely to give up, and more likely to create the behaviors needed to become a person that's debt free. 

Lastly, if you don't mind me asking how old are you?

Please keep me posted and PM me if you need any support or suggestions. Good Luck Bill!  

-Take Action.

Hi All,

These last few weeks have been going a little better. Lots of driving lyft and wife picking up extra hours.  Still not sure how I'm going to approach the next step.

No eating out.

Read Dave Ramsey's book.

2 now FT jobs.

Can't sell home right now. Too many on the market and will loose out huge.  I much rather struggle and not pay a couple bills vs. loosing our home.

Driving Lyft every minute I can.  I'm 41 years old for the question above.

I'm torn between going with a Debt Management Plan (DMP) or just stopping paying on 2 of the loans above, waiting for them to call and then trying to negotiate next year when I get my bonus.  Even with doing all the Lyft and 2 full time jobs we are going to break even which I can't do for the long term and continue to get by for more than a couple more months. 

@Bill Drutz First, I want to commend you for asking for advice and being open to it to help your situation. You have gotten a lot of great advice.  The biggest one is to try to stay proactive, even if taking small steps. As someone said you’re going to need to change your mindset and how you manage the debt and any income.  Dave Ramsey will help with this!  I also recommend you check out a budgeting software called YNAB (You Need A Budget).  It does cost, but small amount of $60 or so.  You only pay once.  They have a forum for support and to teach you how to manage your debt/income.  Go check it out.  I think if you post this question there with the same details you’re going to get a lot of great advice.  I sent a few people there and they all had success.  Keep educating yourself and seeking advice.  I don’t recommend not paying your loans.  Definitely seek them and let them give you options. Best of luck!  

@Bill Drutz I’d like to weigh in. There’s a 12 step program for debtors that can help enormously sort this stuff out and deal with the issues that got you into the mess you’re in in the first place. Google Debtors Anonymous. It might help. It will help bring sanity around money. Just another thought. Best of luck.

You are living beyond your means. As long as you are not willing to off load your debts, house, car etc, you are not being realistic. You can not afford your present life style. Period.

You need to wake up and smell the roses, you can not and will not ever be able to afford your present lifestyle.

You are on the brink of losing everything and all you are concerned about is holding on. Take the loss now on the car and home, use anything you get to pay down your debts, use public school and move to a rental temporarily before it all comes crashing down.

You could turn your life around over night and rebuild easily if you pull your head out of your butt and stop placing so much value on status.

@Thomas S.

Surely you could have delivered this information in a more respectable manner. You are correct that he can't afford his present lifestyle, and so is everyone who's posted above you. And they all were able to give the same information. He's making strides to change his life, and eventually get out of debt. You're not influencing anyone with this approach. 

-De'Andre Williams

@Bill Drutz

Thanks for checking in with us here. You're headed in the right direction. You will need to find a way to negotiate your bills/debt ahead of time, and create a budget to plan every available dollar to go to paying down your debts. Don't just stop paying your bills, you'd be surprise how much you can accomplish just by calling up your creditors. You'll most likely have to take a few deals on the home and cars just to get this debt down as much as possible. Don't be so attached to the materialistic views, they are just things. 

As long as you have your health, family and the ability to make money you can ALWAYS start over. Make the hard calls now, so a few years from now you'll be free.

Best of luck,

DeAndre Williams

Step 1: consolidate credit cards. Look for any avenue you can to consolidate that debt to lower interest. I count $41K total credit card balance. Can you HELOC the home and pay off debt? Can you take out a personal line of credit? DO NOT STOP PAYING ANY CARDS. If you do that, your credit will tank and all of your credit cards will balloon their interest rates and you will be truly and irredeemably screwed.

Step 2: Look at any and all of your assets and use them to pay off debt.  401K? Stocks? Take out all of these assets and attack your debt with it.  If you can find enough assets, definitely ditch the car so you can free yourself from the payment and buy a beater.

Step 3: Expense cutting.  Cable is a no-brainer. How do you even have time to watch TV when you're working two FT jobs and driving for Lyft?  Cell phones @ $200 per month is a luxury you can't afford.  Kid's school @ $900 per month is a luxury you can't afford.  Buy a clothes rack and let your clothes dry in the sun instead of running the dryer.  You are in a position where every penny counts.  What is this loan that is not under your name?  Can you stop paying this item?  Why is there no line item for food in your budget?  Are you at -$3K before even counting for meals?

Step 4: Loan Deferment.  Student loans you can kick the can down the road.  Call them and ask for forbearance.

Originally posted by @De'Andre Williams :

@Thomas S.

Surely you could have delivered this information in a more respectable manner. You are correct that he can't afford his present lifestyle, and so is everyone who's posted above you. And they all were able to give the same information. He's making strides to change his life, and eventually get out of debt. You're not influencing anyone with this approach. 

-De'Andre Williams

The man bought a $40K car with additional debt while having $41K in consumer debt.  Thomas S is well within his rights to chastise him.  I find myself in the very rare circumstance of agreeing with him.  Being this deep in the hole is an incredibly serious situation and the message that gets delivered should match that seriousness in tone.  You're telling him he's heading in the right direction when there is no evidence of that being the case.  Has he taken the advice that has already been given to him in this thread?  I see no real actions whatsoever.  Tell us about the cable bill.  Transfer to public school.  All I see is "I'll drive for Lyft more" which is a dead end plan.  What's needed here is a splash of cold water to the face, not rah rah "you can do it" platitudes.

@Frank Jiang

Listen, no ones here to listen to anyone’s personal attack on what kind of person this man is and how horrible his lifestyle is etc. instead of attacking him and discouraging him perhaps offer up some useful advice and let him decide what to do with it.  Thomas S can do whatever he wishes, but even you offered some useful information (except for when you offered a man who’s severely in debt to take out more debt to pay off debt?). And unless you’ve been in the same financial situation all the above advice is just repeated and hypothetical. 

Correct me if I’m wrong? 

DeAndre Williams 

Originally posted by @De'Andre Williams :

@Frank Jiang

Listen, no ones here to listen to anyone’s personal attack on what kind of person this man is and how horrible his lifestyle is etc. instead of attacking him and discouraging him perhaps offer up some useful advice and let him decide what to do with it.  Thomas S can do whatever he wishes, but even you offered some useful information. And unless you’ve been in the same financial situation all the above advice is just repeated and hypothetical. 

Correct me if I’m wrong? 

DeAndre Williams 

There's nothing hypothetical about bleeding $3k per month.  You don't take advice about how to stay out of jail from a felon, why would I have to have been in the same financial situation for my advice to be sound?

To me, you are concerned with keeping this guy motivated.  It is well established that in terms of human behavior, motivation will help you for the whole of about 3 days before you run out of it and you fall into a slump where's you think "what's the point?  I'll never dig myself out of this hole.  I might as well buy something that makes me feel makes me feel good."

What's needed here is discipline, grit and a willingness to make sacrifices so the OP doesn't end up being a debt slave for the rest of his one and only life.  I will gladly give a big hoorah when the OP posts again saying "I cut my cable bill" but until then, getting out of debt is just a dream he'll never achieve.

1. Sell house (if positive equity). Rent something with half or less of the expense: Savings $1300

2. Move to area with decent public school. Savings: $900

3. Cut up the credit cards. Burn them. Never use them again. You obviously have a spending problem and a self control problem. You and credit are like a drunk and alcohol

4. No eating out. Ever. As Dave Ramsey says the only restaurant you should see the inside of is one you are working in.

5. Cut all other expenses to the bone. I bet you anything you can find $500 or more in your budget out of wasteful spending. Make a budget.

6. Follow Dave Ramsey baby steps (maybe this should be number one). Make a budget. Write it down. Stick to it. And then follow his debt reduction plan

7. Hustle for more income.

All very simple. None very easy

Good luck

I am wondering if you have taken anyone's advice or if you are still trying to be right?  Everyone has told you what you will have to do to get out of debt.  Are you willing to do it?  I agree tougher words might not be easy but, you can not afford any of this and at your age will die upside down in debt in 40 years from just what you have here in debt.  STOP SPENDING MONEY THAT YOU DON'T HAVE. If you have 5 dollars in your pocket pay it on a credit card. If you can eat at a soup kitchen 5 days a week do it.  Use the resources that this country has to help you get out of this crushing debt.  Driving uber or whatever is a way to make enough to maybe keep one thing that is a want. In other words, you want you kids in private school then driving uber for that is okay if and I stress if you sell the house and at least one car and you live in a small apartment you might make it.  Have you cut up your credit cards?