Budget review-input and help needed

[MisaGoat]

Ok, I've been putting off posting here because I know our budget needs some work and we need to pay down our debt. Frankly, I am embarrassed at the state of it, but it needs to be addressed.

I was laid off last week, so this is the revised budget based on the unemployment pay I was approved for.

Income: $4900
Bills:
Mortgage: 1890 (includes property taxes and home insurance)
Phone/Internet/TV: 120
Car payment 1: 278.69
Car payment 2: 310
Electric: 110
Water: (waiting on 1st quarterly bill)
Car Insurance: 127
Student loan(me): 185
Student loan (dh): 230
Netflix: 11
Minimum payments on credit cards: $300 (roughly)

Total 3261.69
leaves: 1338.31 for additional credit card payments/food/gas etc.

I need to come up with a good payment plan to pay down our credit card debt. I don't have specific amounts set aside for the other expenses either. I am not really looking to make drastic changes right now (like selling the second car or cutting any of the expenses listed above) but to get a realistic plan to pay off the debt and keep track of the money we spend on food/gas and other expenses that can be reigned in.

I am ready to stop using credit completely, which means I have to keep a closer watch on our money so I don't run out and pay for something on credit 'just until payday'.

We have a total of $17134.50 of credit card debt.

9 cards:
1- Balance 6114.88 rate 17.99
2-Balance 961.14 rate 27.24
3-Balance 1478.26 rate 19.8
4-Balance 0 rate 23.24
5- Balance 6469.46 rate 12.24
6- Balance 130.64-0 rate 19.99 (paid off)
7- Balance 780.66 rate 21.24
8- Balance 484.55 rate 13.24
9- Balance 714.91 rate 17.9

Most of the debt was accrued while we were both in school full time.

Alright areas to focus on:
plan of attack to pay down credit cards
food budget

Other plans in the works that aren't finalized:
For me to go back to school and finish my BSN which would be paid for by the GI bill and also give us a 'housing allowance' payment each month. I applied last week for my GI bill benefits and applied to the BSN program. Right now I am waiting to hear back from the VA and from the school to accept my application. It is all last minute, rushing to meet the deadlines for the fall semester since I wasn't planning on going back this year.

I called my last boss (from the job before the job I just got laid off from) to see if I could come back to work there. My old FT position is filled but she was going to check if I could come back per diem and pick up some shifts.

Send out my resume and find a new job. I am pregnant and due in November so I am not sure a new job would work out right now. If I got an interview and could get into a September orientation I would probably only be able to work for part of October and some of November before going out on maternity leave. That would also mean adding some childcare expenses for my son.


Questions and input welcome. Be gentle though, I am embarrassed that our finances are in such bad shape.

Thanks in advance for taking the time to look at this.

[meadow123]

Have you thought about looking at Dave Ramsey, reading Total Money Makeover?

Your budget is missing a lot of categories. Off the top of my head, I don't see food, gas for your cars, life insurance, baby items, pet care if applicable, gifts, clothing, eating out, etc... You have to get a realistic budget in place so you can see where you really are, no matter how hard it might be to look at the whole picture. I see now you mention that the leftover money is for everything else, but you should try to give every dollar a name and a place to go so you can get in better control of the situation.

You should think about putting your student loan in unemployment deferment or forbearance temporarily.

What is the situation on the cars? It would be a very good idea to sell your cars and get out of those payments. Do you really need two cars, or is being a one car family possible?

Do you want to work, or do you want to try to be a SAHM, or what is your goal here? Would you consider a job working at home, and what is your profession?

Other suggestions: meal planning, cut cable, shop around for car insurance (although I don't think yours looks horrible), sell things on craigslist to start knocking out some of that debt, and of course, no more credit cards! You have lots of small balances there that would be pretty easy to take care of, which would be very satisfying.

I am sure others will have more suggestions... Sending positive thoughts your way.

[VisionaryMom]

Originally Posted by MisaGoat

Questions and input welcome. Be gentle though, I am embarrassed that our finances are in such bad shape.

I know it's tough, but try to spend some time working on these feelings. I'm completely serious, though I know it may seem like a waste of time. We've been in a really, really similar position, and it's awful. I spent a lot of time spinning my wheels because I was so ashamed of how things were.

I will post more later as I have to get dinner together now, but here are the first things that jumped out at me.

While I think having 2 cars is fine, I would look into selling one and getting something reliable but less expensive.

Do you have other children? If not, try temping for right now. I temped in a call center when I was pg with DS, and it worked out really well. (I don't know how this affects UI.)

[mamaofprincesses]

It's not so bad! I would track expenses because that is always eye-opening for me.

There are lots of good threads on here about cutting the grocery budget. Depending on how the "other" category (for gas, groceries and the like) pans out, and how many shifts you can pick up, you could knock off credit card #6 very quickly, and #8 soon after that. If you do put your student loans into forbearance, you could use that money to rapidly pay down credit cards and then the car loans.

I do think your car loans are high; I know you said you aren't interested in going to one car, but I would seriously examine how much they are costing you. You might consider refinancing too, especially after paying off the credit cards, if that makes your credit score go up. We recently refinanced to save a little on interest, lower our monthly payment, and also save a bit on car insurance - because the new credit union allows for higher deductibles than the old one. All little things but they can add up.

[its_betty]

I might not pay off all credit cards for now. (Except that $130 one would be gone asap!) Just in case finding a job takes a longer time than anticipated, you might need the cash so that you don't ADD to your debt. Used to be that you could count on using a paid off CC as an emergency fund. Now, the CC companies might close the account on you just when you need it.

Keep sending out the minimum payments and build up your savings. When you have several months of expenses put aside, THEN start looking at your CC debt. By then, you'll have tracked your spending enough to know how much extra you really have each month. Personally, I'd pay off the under $1000 debts highest interest rate first for the psychological boost of never having to write a check to those companies again: you should be able to take care of all of those in less than a year by sending $300 extra a month. Then take the higher CCs highest interest rate first.

Otherwise, just get started. Don't worry about doing it perfectly, just start. Set a food budget RIGHT NOW. My dh and I find that using the envelope method (family of 3, we do $100/week cash in an envelope) helps a lot with the grocery and food budget (which includes eating out). It's very obvious how much we have left, and it's easy to share so that one of us doesn't blow the budget without the other knowing. As you get used to spending less, you might be able to lower the budget even more.

Track all your spending, and make a list of ongoing expenses that should be in your budget but aren't yet, for example gas and oil changes, medications if you take any, etc. Limit your entertainment and other discretionary spending (we do a set allowance for dh and me so we each have a few dollars to spend as we want, but it's not much).

Good luck! So long as your discretionary spending isn't too high you are actually doing just fine. It just takes extra attention to the details to get your savings up and your debt down.

[smokeylo]

I agree that tracking expenses is an eye-opener that has been invaluable for me. Websites like mint.com are really helpful -- or just keep your receipts for a week and see what happens.

I would get your student loans put in forbearance until you are back to being employed.

I would also track those day-to-day expenses you haven't included, like food, because those are the places you can create space in your budget. Just by tracking/paying a LITTLE attention we cut our food budget significantly.

Consider dropping your landline if you have one. We did, we don't miss it, and it saved us $40/mo.

You need to read/listen to Dave Ramsey! You can listen to his show during the day for free, or get 1 hr of it via podcast any time. Go listen, I think his plan will really work for you guys and give you a way to approach this.

[MisaGoat]

I am a RN, I don't plan on being a SAHM but maybe would go down to part time if it worked out. I am unemployed because the hospital laid off 200 employees including 50 nurses.

I'll look into putting my student loan in forbearance or deferment depending on what I am eligible for.

I am not selling one of the cars at this point, if we really needed to I would, but I think we can just keep track of the money we are spending better and put it to use paying down our debt.

As far as other budget categories that aren't listed, I don't have them yet. I think I'll track our spending this month and see what recurring expenses we have. We have two cats but they don't really cost much in food or supplies, only when they need to go to the vet. My husband's life insurance is through his work and is taken out before he gets paid. Baby expenses, we are having our second boy and have plenty of baby stuff from our first son. I know when he arrives we'll have more expenses but there isn't anything major to buy for him. I should set aside the hospital co-pay.

My husband was planning to sell a few things and I can take some stuff to the consignment shop.

I paid off the $130 balance (I got my last paycheck today, unemployment starts next week).

Food budget, $100 a week seems like a good place to start and work from there. I have, over the past couple weeks, been working on meal planning. I am not sure if it is helping our grocery bill yet but it is definitely reducing ordering take-out.

Ok, so steps to take:
1) no more credit
2) food budget/meal planning
3) track other expenses to better develop a budget
4) put money aside in savings

I think the reason I am embarrassed about the finances, is because we do have enough money but we aren't using it well. We spend too much on stuff we don't need and have more debt than I am comfortable with. 4 years ago we had no credit card debt, we had paid off our car early and had 12,000 in savings. The we moved back to the states, had our son, both went back to school full time and things seemed to get out of control.

Thanks for your input. I feel better having our budget out here and actually looking at it, instead of just feeling stress and dread.

[happysmileylady]

I am not going to suggest getting rid of one or more cars completely...my household just doesn't function well without both DH and I each having a vehicle, plus some sort of spare incase one needs work.

BUT, of the vehicles we have, none has a loan on it. Being without a car payment is SO liberating. Like, I will NEVER EVER have a car payment again. I suggest at least considering selling one or both of the car, then replacing them with something without loans. If you are upside down, a loan for the difference will cost you less than the loans you currently have. If you are right side up, you can use the difference to buy the replacement vehicles without having to save up too much out of your budget. You will have a savings in not only your monthly payments on those loans, but in your car insurances as well, because you don't need all the coverage your loan requires...plus you can look for cars that cost less to cover in the first place. Even just selling one and replacing with a "clunker" would save you money.

And when I say clunker, I am not talking about something you need to put a lot of maintenence into. I am talking something that an 80 year old lady used to get to the grocery store and back and she's not going into a nursing home and can't drive anymore so she is selling it for super cheap. Or the car that a couple bought with cash a year ago and is now getting divorced and she's selling his car for SUPER cheap for revenge. Or whatever. Something that you pay clunker prices for but isn't really a clunker.

As to the budget you posted, I think it's a great starting point. As you work with it, make sure you have a REAL name for every dollar, and nothing in an "other" or "misc" catagory. Again, it's ok to start with that, but when you find you are using that other catagory for, say, supplies for school, then you make a "school supplies" catagory and allocate money from that "other" catagory to the "school supplies."

As far as the debt payment plan-forget interest rates. List all the debts, including the student loans, from smallest to largest. Budget for the minimum payments on everything except the smallest one and then put all the extra you have towards that littlest one. With the numbers you have listed, those smaller ones should be gone in no time using that method.