Debt reduction.. Suggestions?

myfampgApril 5, 2011

My husband and I have a lot of credit debt and are working on getting out of it. Any suggestions on how you did it or how to do it. It seems like everytime we turn around we have a new bill for something that was unavoidable. We don't spend on our credit cards anymore. It's been probably a year since we charged something so I believe we are doing good there. It's all old debt. Things that are unavoidable are two surgeries for my husband in a years time... Lawyer fees for a custody battle with my ex husband. We have about $15k in attorneys fees. That's coming to an end in the next month or so .. Which hopefully means no more charges from the attorney. We got a good rate on a credit card and that's where we have put it.

We have two children in childcare and that takes a lot of our money each month. There is no way to cut that down because childcare is necessary and we can't find it any less than we already have.

We still have money left over at the end of Paying all of our debts and obligations to eat out occasionally, a trip to the movies on occassion and we are able to buy groceries and gas etc but it's tight we can't trim from anywhere else. We've taken discounts where we can and we cut back on our favorites. It's still barely enough to breathe. I believe if we could knock out a few of the small things, the headache would go away but I can't find anymore room to cut without going stir crazy at home.

Any ideas? I looked up bankruptsy but it is not an option. We owe this debt and we need to pay it plus my husband has great credit and he worked hard for it. We do not own a home, we rent. I do not believe we could get a loan because of the debt ... But I haven't tried ... Just kind of know it isn't going to happen. Any suggestions?? Debt consolidation but we don't own anything so I don't believe we could do that. I've tried getting our interest rated lowered on our cards because Chase raised them so high after the whole credit card thing. Never late.. No blemishes at all but they won't budge. We are paying 29.9% on two cards... Ridiculous... It seems like we are going no where with the balances because we are only able to pay a little more than minimum.

Let me know if you have suggestions.


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It sounds like 99% of your problem here is outlook - not the numbers. If you have the cash to go out to eat, then you have the cash to get out of debt. There are whole lot of "can't" in your post and that isn't going to get you out of this mess.

First, you need a reality check. You can't buy a home. That would be the stupidest decision you ever made even if you could get someone to loan you the money. You are broke. You need to cut your expenses, not add more. You don't have money for going out to eat or going to movies. You wisely spent it on more important things (your husband and kids) so now you are going to have to sacrifice those luxuries to pay those bills.

As for practical measures:

1) you need a written budget for spending and saving. Every dollar needs a purpose at the beginning of the month and you don't get to spend anything that isn't on that budget. (The budget should also include some money for a short term emergency account.)
2) You need to get your interest rates under control. If your husband has great credit, he can get a lower interest rate card and transfer the balance. You need to get very aggressive with this. Take charge of the charge cards!
3) If you own cars that are worth much (or that you owe a lot on) consider selling them and getting some cheap wheels.
4) Look at finding a cheaper place to rent. Maybe you can't do that for 6 months, but it would give you some light at the end of the tunnel.
5) Look at part time jobs. Even a couple hundred bucks a month would make a huge difference for you.
6) Eliminate all the extras you can and put that savings towards your debt.
7) Start "snowballing" your debt. Toss all the extra money you can find at a small balance with a high interest rate and pay the minimums on the rest. Once that one is paid off, move on to the next card and pay that minimum plus all the money you were paying to the old card. It builds like a snowball with every debt you pay off.

Ultimately, you need to get fired up about changing your life. Half measures and small changes just aren't going to cut it. You had some drastic things happen to ring up this debt and you are going to have to take some drastic steps to get rid of it. It is doable though. A generation ago, nobody went out to eat or had cell phones or cable or whatever - and no credit cards. Somehow, they managed to survive their entire lives that way. I'm sure you can do it for a year or two until you can get your head back above water.

    Bookmark   April 5, 2011 at 2:07PM
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Thanks!! You offered some great advice. We have started the snowballing and rid ourselves of all of the smaller debts it's just the bigger ones are left to get rid of. In the beginning we had a lot of 'momentum' and saw little charge cards going away but now I just feel kind of stuck in that I've lost my 'mo-jo'.

My husband drives a 10 yr old truck that has been paid off for years. My car is cheap and will be paid off next year. We carpool since we work together. I'm working lots of overtime on nights and weekends already but just started so haven't seen that pay check yet. He is salary so can't get overtime and stays with the kids while I work late and on weekends.

I believe cutting out eating out and trying to trim our grocery bill will help an hopefully once I start seeing the overtime checks that will help.
We haven't had a raise in 3 years and struggle with the idea of moving on. I'm scared to leave the job I have because I've been here so long and have benefits that matter like paid healthcare and retirement and also the flexibility of taking off when my kids are sick without losing pay or getting in to trouble for missing work.

Thanks again. I am taking your advice to heart. I really appreciate it.

    Bookmark   April 5, 2011 at 3:11PM
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If you are looking for some motivation, you should check out Dave Ramsey. His radio show is full of people who were in similar situations as you and have managed to dig their way out. It sounds like you have already done a lot of the things you need to to get back on track but just need that extra jolt of enthusiasm to keep it going.

If you haven't already, you might want to make a family game out of your debt situation. (It takes a while to fix, so you gotta have some fun along the way.) If the kids are old enough, they can compete for who can save the most at the grocery store. You can post the CC bill your working on paying down like a chuch-style fundraising meter in reverse. Take a layer of debt off it each time you make a payment. Anything you can do to make yourself "see" the progress will help you keep on track. Also, anything you can do to make these joint activities will really help because debt, stress, and overtime can take a toll on families.

    Bookmark   April 5, 2011 at 3:53PM
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>>I'm scared to leave the job I have because I've been here so long and have benefits that matter like paid healthcare and retirement and also the flexibility of taking off when my kids are sick without losing pay or getting in to trouble for missing work. >>

You've given very good reasons why you should stay at your current job. Going to a new job, even a higher paying one, and being 'low man on the totem pole' would leave you very little leeway for emergency calls. What employers will excuse in a long-time employee with great attitude and proven skills, they will NOT be so lenient about for someone new and trying to 'find their feet'.

I've been in your situation (sans kids) and know how discouraging it feels when you're in the middle of it. But you seem to be doing the right things, and although it's a long-term process where improvement comes in tiny steps rather than big ones, please do not get discouraged.

Sometimes it's as simple as going outside on your front doorstep at night and looking up at the full moon and the stars. Take a deep breath and let yourself consciously relax. You're alive, you have a loving spouse, you have two great kids. You have food on the table and a roof over your head, a soft bed to sleep in. It's the little things in life that make it good.

Ask your friends if they have any tips for busy working moms or free/cheap things to do with kids. Don't be too proud to use second-hand clothes and toys, free public services or offers from friends to help.

Stick with a budget, as billl suggests, and you WILL eventually succeed. We did, and so can you. The measure of a person's life is not how they handle success, but how they handle failure. Everybody fails at something; that's how we best learn.

    Bookmark   April 6, 2011 at 3:14PM
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Billl and jkom gave great advice. I will just add some examples. If you are paying extra for cable or anything else, see if you can stop without a huge penalty. Get the kids involved in cooking at home (make it a fun evening) instead of going out. Go to the thrift store for clothes instead of regular stores. (You would be amazed at the quality you can find if you go to a nice area of town.) If the kids ask for something you can't get at the thrift store, explain to them that you don't have the money. They will usually understand, and if not, they can get odd jobs to earn the $$ they need.

Consider selling your car or your husband's truck. If you are carpooling, why do you need two vehicles? Consider how much you would save on insurance and taxes with just one.

Eat vegetarian as much as possible. Beans have protein; you don't need meat every night. You will see other threads here on how to save money on food. Cutting all sugar is the most obvious one.

    Bookmark   April 9, 2011 at 2:31PM
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Thank you all so much! I have gotten a little 'down' about it especially as I see on paper how much we make as opposed to how much we have left... One thing I remind myself is that I had no choice but to retain an attorney to protect my child and my rights as her mother, so all of these legal fee debts were and are worth the struggle to pay them off.

I got a little smart and spoke to my attorney. If we pay him by credit card, we are paying interest so I asked him for a payment plan instead of paying him in full with a credit card every couple of months. We transferred some balances to a 0% introductory rate and got 9.99% after the first 9 months. So we are slamming that hard for 9 months and hopefully it will be paid off and we are paying him monthly at NO interest. That gave me a little light at the end of the tunnel -- we are having a garage sale in a few weeks and we have managed to clean out the house which gave me a feeling of relief on my organization side... So I'm feeling better.

The reason we need two vehicles although we carpool is because some days we don't carpool. Some days I get off earlier than he does because of kids activities and those just can't be missed. We are taking the summer off from activities, got grandma to agree to keep the kids instead of daycare, so I'm looking forward to three months of $1600!!! Extra. I can't believe how much we spend in childcare but we don't have a choice -- grandma doesn't live close enough to help during the school year. My husband's truck is so old, it isn't worth anything and the insurance is so little -- that would be a little savings in insurance and tax per year is only $69. We need the truck and need two vehicles but at least we don't pay on a loan for it.
I also found that the hospitals will allow us to pay them monthly without interest instead of us putting it on a cc to get them paid, so now that the most recent hospital bills are coming in, I've made payment arrangements and just going to slowly pay rather than charge on the card... I don't know why I never thought of that.

Things are looking green rather than blue but it's still going to take time -- but atleast like you said, we have what we need and the kids are young enough, they aren't having to go without or even notice if they do.

    Bookmark   April 16, 2011 at 11:42PM
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Using credit cards is so automatic in our society, it's not surprising we don't always think to negotiate loan terms on a direct basis.

Sounds like you've got a good strategy and the willpower to execute it. Good luck and keep us apprised. We're concerned and wish you all the best.

    Bookmark   April 17, 2011 at 10:59AM
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Sounds like you are doing a lot of things right! I would suggest that you give Grandma a little something each week for watching the kids. Also, if you kids are school age, do the schools there offer a afterschool program? They are always less than daycare.
I took the Dave Ramsey course and he says to do the snowball on the credit cards (which sounds like you are doing!). He also says to take whatever extra money you can get your hands on and apply to the lowest credit card balance. Like the yard sale money you are getting ready to have. Also, take all that extra summer money and apply to get a card paid off. Instead of going to the movies, take the kids to the local redbox and rent them a favorite movie. Just be sure to have it back the next day so it only cost $1.00. Pop some popcorn and stay at home. Spring is here, so pack a picnic lunch and go to the park. Join some of the coupon groups online for suggestions on how to save money there. I belong to Money Saving Mom who sends me a email every week with the specials and what coupons to use to get the best deal. There are a lot of places like it on line and it can help a great deal.

Hang in there, you are doing great. Just keep it up and you'll be clear of this soon!

    Bookmark   April 18, 2011 at 12:44AM
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Thank you for the coupon idea. I fell into the clipping coupon hole and I never felt like I was saving -- it seemed like I had to buy two to save. I also stopped buying in bulk. I found that our small family didn't need to buy in bulk and that I'm saving more at the check out by just buying what we need each week. Not eating out and not buying all the junk food not only saved in our wallets but on our waistlines as well. Which... Saved money in healthcare because I honestly have to say.. I don't think we are as sick as we have been. My poor husband just has awful sinuses and had to have sinus surgery and then had an awful kidney stone attack the required surgery. Since he is no longer drinking soda... I can't tell you how MUCH that has saved me AND his kidneys!!

Thanks again. I love all of the ideas. I have not taken the Dave Ramsey course but have the book on hold at the library when it comes back in.

My husband has been asked to do some IT consulting on the side for a friend and so I'm excited that he might be able to make some extra cash there. Nothing in stone but man this week is getting better already.

Thanks again!!

    Bookmark   April 18, 2011 at 10:30PM
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