Feel like I'm drowning in debt. Suggestions?

[tillymonster]

I am freelancing making decent money and my husband works full time and NOW we pull in a decent but on the low-end of a middle class income. We live paycheck-to-paycheck and it's becoming scary when we almost can't pay our rent some months. We are terrible at managing money.

I quit the "power" job when I had DD and we lived on a super tight budget and used credit cards. It was hard to go from being able to spend however I wanted and not really paying attention to bills and expenses I've have to cut, etc. to having to budget and even on food stamps for awhile. DH lost his job for a few months. Luckily, I have (or had now...) great credit and I pay my bills on time.

We spent money on credit cards we should not have spent. We bought a (used and less then 10K) car and took out an equity loan on our paid-off car to pay bills and upgrade my computer so I could work more efficiently from home.

Without getting more personal than I already have, I've never had this much debt in my life! I'm freaking out as Nov/Dec are big spending months (DD's birthday is Dec. 20th just to make it even crazier!) and I need your best tips, suggestions, plans of actions, apps to help with budgeting etc. We absolutely should not spend any more on our credit cards as they are almost maxed out. Saving an emergency fund is a long ways off, though I do have about $130 saved as of today.

Halp! 

[goldfishkate]

1) know you're not alone.
2) this wont last forever
3) read Dave Ramsey
4) you can get out of debt.

[honeybee80]

Use cash for everything.  Meal plan.  Stick to your grocery list.  Track your spending for a few months to see where your money is really going and then look closer at your expenses and see where you can cut some out.  Pay down some debt every month and calculate when you can get it paid off--let that be motivation to get your spending under control.  Be patient with yourself!  

[pek64]

Use cash for everything, and track it in a spreadsheet or ledger. Knowing you will have to write it down may get you to think twice before spending. Then you can see what you might be able to cut back on, too. For instance, you may notice you get take out more often than you thought. Good luck

[tropicana]

start saving anyway. even if it's just $5 a month. start. saving. this will force you to see the VALUE of growing that savings account, rather than blowing the money on something that doesn't last.

rationale to saving when you owe credit cards: the money is there, it's yours; if you need to write a check to the CC company, you can use it.

of course, continue paying your cards, too. in fact, pay them EXTRA even if it's an extra check later in the month in addition to the one you paid by the due date. throw money at the CCs to make them go away sooner. again: observe how this is real and lasting vs.spending the money on something that doesn't last.

accept that this is going to be painful and it's going to take awhile. you need to learn the lesson of financial prudence. it is a lesson that many / MOST people in America need to learn. indeed, it is one that America itself needs to learn. you have to live within your means. if you owe, you do NOT have money. stop spending the money you don't have. your daughter is LITTLE. she won't know if the difference between a $300 birthday and a $30 birthday if you are creative and do it well. 

[Kate&Joey]

Originally Posted by tropicana 

your daughter is LITTLE. she won't know if the difference between a $300 birthday and a $30 birthday if you are creative and do it well. 

This may be an unpopular opinion, but I wouldn't bother with birthday/Christmas gifts this year. 

When I was married previously, we were majorly in debt.  We didn't do Christmas or birthday presents...ever.  Won't the grandparents get your DD gifts?  My DS' birthday is right after Christmas.  Between two sets of grandparents (plus now my ILs) and aunts/uncles, he gets plenty of presents.  I can't even think of enough gift ideas to give to them! 

And you don't need to spend a lot of money on a party either.  DS has had ONE formal, planned birthday party (and he's six).  Usually we just get together with friends or my parents...snacks, birthday cake or cupcakes, balloons for pictures...done. 

[Basylica]

1 - go through the last 3-6 months of your bank acct statement and tally up what you spent in diff catagories each month. "fixed" costs like mortgage/utils/etc go in one catagory, "variable" such as food/gas/gifts/entertainment/etc go in another. debt repayment goes into variable, as well as savings

2 - evaluate your "fixed" costs. are you carrying 2 cellphone plans, a land line, internet, tv? what can you possible cut out without disabling your ability to work? can you give up a land line and cut your cellphone plan back, or down to a single phone? turn off tv portion of bill and just watch movies/play games/possibly use netflix instead, and so on. Set your AC up a few degrees, heat down a few degrees. check your energy and water costs and see if you can bring them down even a few bucks.

3 - evaluate your "variable" costs. see if there is anything shocking there. Get an idea of what you are spending on food/etc and budget that ammt on a weekly basis and use the "envelope" or "jar" method of cash only. record receipts. Try and use LESS than you've allotted each week, and if you can start budgeting less.

4 - Whenever i'm flush I tend to stockpile things (not like a hoarder or crazy couponer with entire garage full of stuff or anything!) like shampoo, conditioner, soap, toothpaste etc. Partly because I am often forgetting to run and buy things, but also partly because i've been unexpectedly broke for long periods and only having a stockpile of toiletry items helped me out. When i'm trying to spend less, I challenge myself to use up stockpiles of stuff, and empty out entire pantry before shopping. Usually I have to buy something lacking for food, or buy soap because I have 8 bottles of shampoo but no soap....but you get my point. I tend to do this atleast once every 1-2 years anyway tho. So I use everything up. Anything I LOATHE I give away to friends/family/etc

5 - there are lots of money saving tricks, use for #3 - make some extra cash on the side, work a few extra hours, yard sale, cut out entertainment, coupon, and so forth. Meal planning is my achilles heel. I'm generally not very food oriented and a lot of times i'm hungry but nothing sounds good AT ALL. Was ok when I was single, but my little rugrats seem to want to eat not only daily, but 3-4 times a day! wth? meal planning also allows for you to use up stuff more efficently. I probably throw away half the food I buy :(

Also, replacing paper products with cloth (towels, TP, diapers/etc)...and so on. lots of that info out there!

6 - use snowball approach towards debt. Pay off debt with highest interest rate (not largest or smallest debt $$...) FIRST, putting as much spare towards it as you can, while paying min payments on the rest. once you've paid off first, add that to next highest interest rate debt and so on. Once you've paid off most/all start putting surplus towards savings.

7 - Let family know your situation. This can be hard, but it really will help. You cannot afford to go out to dinner with family anymore, gifts at holidays (with 5 siblings and 6 nieces/nephews and 11 aunts and uncles - NOT counting married in relatives! this could be INSANE for my family) and birthdays...and so forth. Also, when I know a family member is hard up I tend to treat them for a meal when I can (it really does lift the spirits after months of eating pantry items. LOL) or offering items from toiletry stockpiles, or family members may do more holiday/bday gifts to make up for fact you are short right now.

8 - I grew up DIRT poor. banjos in the woods type poor. for my 17th birthday I got a 10 dollar calculator because my calc teacher was refusing to loan me hers anymore. I find it amusing and gobsmacking when I see shows like "my super sweet 16"....heh. I have the money now, but I still don't spend a heck of a lot on the kids for xmas, we only do xmas once every 2 years because as I tell them "santa only comes to one house guys" even if my ex won't respect that. And to be honest, the kids don't need more junk. Both my kids bdays are near xmas (younger dec 6, elder jan 26) and we usually do something "fun" but very cheap or free on bdays, I make a cake and they usually get a small gift. Last year I decided that my kids needed bikes because its shocking my 8yr old couldn't ride yet (I really can't handle the heat here in texas, which is a good part of the problem. 5min in the sun and I will pass out in a hurry) so the kids and I "voted" and we decided that younger DS would wait and they would both get bikes in january for their bdays.

When I DO give gifts, it's usually more useful than toy. jammies, clothes, books, and a few toys. But they get that stuff as I find it or they need it anyway.

As a kid because we were so poor, my mom decided that for your bday you got to pick dinner (either home cooked or super cheap like tacobell which was a treat for us) and choose your cake. I do pretty much the same thing. I don't remember the gifts, but I DO remember the cakes and dinners as a family.

Same for xmas. the only gifts I generally remember are the boxes of pantyhose I got (wth mom? did I EVER wear dresses?? lol) girls usually got a bra since we didn't get them any other time (I think my mom bought me 3 in my ENTIRE 12-18 range, going from B to DD....) usually a pair of jeans using money my grandpa would send for all of us kids, and we generally got a CD and some clothing item like a sweater. That was about it.

It's more about tradition and family than gifts. Thats what your kids will remember. Now when you HAVE to focus on that is when you'll make things that stick no matter how much money you have!

[Basylica]

Originally Posted by Kate&Joey 

This may be an unpopular opinion, but I wouldn't bother with birthday/Christmas gifts this year. 

When I was married previously, we were majorly in debt.  We didn't do Christmas or birthday presents...ever.  Won't the grandparents get your DD gifts?  My DS' birthday is right after Christmas.  Between two sets of grandparents (plus now my ILs) and aunts/uncles, he gets plenty of presents.  I can't even think of enough gift ideas to give to them! 

And you don't need to spend a lot of money on a party either.  DS has had ONE formal, planned birthday party (and he's six).  Usually we just get together with friends or my parents...snacks, birthday cake or cupcakes, balloons for pictures...done. 

popular over here. she's 3....she won't care. Give her a box of tissues to pull ala ramona cleary, and a dish of icecream in lieu of cake and she'll be pleased as punch.

my kids don't really get full tilt gifts and they are about to turn 6 and 9. it's not about the gifts IMHO. it's about family and celebration.

infact, I started telling the kids about the day they were born, catering to their age level of understanding, the night before their bdays.....and now they prompt me to tell them about the day they were born. We all curl up on the couch and I tell them how they were born (generally inserting some gross factoids...they ARE boys) and how they were as little babies. Thats the biggest tradition that has grown out of the "mommy can't afford presents" days.....and it's the one the kids care about the most.

[CookiePie]

Basilica has given you valuable info.  Look for Dave Ramsy's The "Total Money Makeover" at your library! Join us on the thread getting out of debt in November, the no spend challenge!

You can make your DD a playhouse out of an FREE appliance box (just ask at a store that sells appliances), cut out windows and a door, paint it if you want to, or you could let her do it as part of the fun.  You can get as crafty as you like & hang curtains, a mail box and letters, put a small chair inside...how elaborate you want to get is up to you!  Check out the links that I found on some ideas on how to get started!

Check these out

this

this

this

this

other ideas with boxes

Edited by CookiePie - 11/13/12 at 11:53am

[tillymonster]

OMG so many good ideas ladies! THANK YOU! Can't wait to go through them if this kid would just take a nap already... 

[sarafi]

scotch tape for a gift! My oldest is almost ten, and she still hasn't caught on that other people don't think it's an awesome gift. We've shifted it to a stocking-stuffer the last few years, but it used to be a main event. Kids love stuff like that, and don't get that it's cheap, but you do have to pull it off your walls/floors/toilets for a few months. 

[Ragana]

Love all of the above gift ideas! A brilliant friend did two little kid gifts I have always remembered. One for my DD was an old purse with a ring of old keys, old wallet, etc. It was loved because the stuff was "real" not play stuff, and she probably had this stuff lying around in the house. The other was colored/character band-aids. 3 year olds are usually crazy about these & they're an inexpensive little gift. If you have flour, oil and cream of tartar at home for baking, you could make homemade play dough - use cheap Kool-Aid for color and scent. Also a neat, inexpensive gift (especially if you have the ingredients). This recipe is best/looks like "the real stuff": http://musingsfromasahm.com/2012/02/easy-homemade-playdough-recipe/

I also wanted to express some encouragement for your effort to save. $130 may not seem like a lot, but every time you can add a bit to that ($10 at a time?) you are that much closer to not having to put the next car repair or dentist appt. on the credit card. Rinse and repeat. I'm rebuilding our short-term fund right now after having paid the downpayment on my DD's braces in one lump sum. Good luck!!
 

[Ragana]

Originally Posted by Basylica 

5 - there are lots of money saving tricks, use for #3 - make some extra cash on the side, work a few extra hours, yard sale, cut out entertainment, coupon, and so forth. Meal planning is my achilles heel. I'm generally not very food oriented and a lot of times i'm hungry but nothing sounds good AT ALL. Was ok when I was single, but my little rugrats seem to want to eat not only daily, but 3-4 times a day! wth? meal planning also allows for you to use up stuff more efficently. I probably throw away half the food I buy :(

Also, replacing paper products with cloth (towels, TP, diapers/etc)...and so on. lots of that info out there!

I agree about meal planning also. Personally, I don't find couponing helpful because it's mostly processed stuff, but now the grocery stores by us have online coupons you load onto your loyalty card. A lot of those are special deals on fruit, milk, bread, etc. tailored to what I buy. Last week I was careful to load these first and ended up cutting $35 or so off my bill, buying mostly fruit, veg, bread, soy milk, canned beans, etc. basically staples.

[Basylica]

ragana -

not a huge fan either, more for time sake than anything. I struggle with my reusable bags because I usually end up going "crud, we need to go pickup XYZ" because I don't meal plan and my life can be a bit hectic.

remembering to bring coupons and be that organized? nah...

but hey, whatever works!

[CookiePie]

Yes on meal planning!  I have been meal planning the last couple weeks to use up stuff that has been in the freezer and building a meals around those items.  Otherwise I go through the flyers & build my meal plan according to the best sales.  I often got to more than one store.

[MamaBookworm]

My brother just gave my 3 year old a giant box for a birthday present (not even made into anything. Just a box.) and it was her favorite toy.  We bought her a dress up clothes set, which was basically just random hats and scarves and skirts we found at the goodwill (approximately 10 bucks). 

[choli]

Originally Posted by MamaBookworm 

My brother just gave my 3 year old a giant box for a birthday present (not even made into anything. Just a box.) and it was her favorite toy.  We bought her a dress up clothes set, which was basically just random hats and scarves and skirts we found at the goodwill (approximately 10 bucks). 

 My dad was the Super of our building when I was a kid. Oh the excitement when one of the tenants got a new fridge! Fridge boxes were the absolute best toy ever.