In debt - looking to get out of it
07-02-2013, 09:28 AM
#1
In debt - looking to get out of it
Hey gang,
My first time posting in Money and Investing..I am about $19,500 in debt. This includes 2 major cc's, a store cc and my car debt. I am currently with a company called Family Fiancial who is "helping me" in my debt. Their monthly fee is $50.00. I started with them about a year and a half ago. The cards have gone down slightly but nothing extravagant. I do not use any of the cards anymore only cash/debit.
I am currently at $50K but was just bumped up to $55K annual salary, effective 7/1. I still live at home and find myself struggling pretty badly. I do buy things for myself, my car, dining with girlfriend and the occasional gifts and impulse spending here and there.
Any tips, suggestion and/or advice...
My long term goal is to own a home by the age of 35. I am currently 28.
Thanks !!!
My first time posting in Money and Investing..I am about $19,500 in debt. This includes 2 major cc's, a store cc and my car debt. I am currently with a company called Family Fiancial who is "helping me" in my debt. Their monthly fee is $50.00. I started with them about a year and a half ago. The cards have gone down slightly but nothing extravagant. I do not use any of the cards anymore only cash/debit.
I am currently at $50K but was just bumped up to $55K annual salary, effective 7/1. I still live at home and find myself struggling pretty badly. I do buy things for myself, my car, dining with girlfriend and the occasional gifts and impulse spending here and there.
Any tips, suggestion and/or advice...
My long term goal is to own a home by the age of 35. I am currently 28.
Thanks !!!
07-02-2013, 01:44 PM
#2
Get rid of Family Financial and put that $50 toward your credit card debt. Stop eating out, buying gifts and making impulsive purchases. The formula is really pretty simple. Spend less of your money, and put it toward your debt.
07-03-2013, 06:52 AM
#4
RWheelz is right--- spend less on arbitrary/discretionary spending and put it towards your debt. If you're not seeing anything useful from your plan with Family Financial, why are you paying them - that's $600 a year? I'd be expecting something more than substantial than as you say 'helping me'. Are they consolidating the debt, paying it off and you pay them? What are they actually doing for you.
My CC bills show what my payments are at 'minimum only' and if I paid an extra X amount per month. See if yours do too, or look for online calculators to help estimate how long to pay off the debt at certain payment levels.
There's a few theories on removing debt....
Generally, pay off the high interest rate items first. This saves the most interest in the long term.
Pay off the smallest balance first. This might cost more in the long run, but gives you the satisfaction of having 'something' completed sooner rather than later and lets you take small steps.
Of course- Stop buying. Even with cash. If you're at the ATM 2x a week for $200 and spending that, its no different than charging something for $400 /week (other than the interest later).
The car is at least an asset. That's not exactly bad debt. It might not be the wisest decision (which car to own, how many, how often to change them), but it takes money to have a vehicle. If you said $15K of the debt was the car, and you were planning on keeping it another 3 years and the payments were ~$450/month, so be it - that wouldn't be so bad. If you said you only owe $5K on the car, and have ~$15K in CC debt, you need to figure out how to handle your money and take responsibility for personal change in that regards.
You could also look at consolidating the CCs into one. You might get free interest for 12 months on a transfer, etc... Read the rules though. If you don't pay it off within the year, does interest back-calculate or is it just on what's left?
Good Luck.
My CC bills show what my payments are at 'minimum only' and if I paid an extra X amount per month. See if yours do too, or look for online calculators to help estimate how long to pay off the debt at certain payment levels.
There's a few theories on removing debt....
Generally, pay off the high interest rate items first. This saves the most interest in the long term.
Pay off the smallest balance first. This might cost more in the long run, but gives you the satisfaction of having 'something' completed sooner rather than later and lets you take small steps.
Of course- Stop buying. Even with cash. If you're at the ATM 2x a week for $200 and spending that, its no different than charging something for $400 /week (other than the interest later).
The car is at least an asset. That's not exactly bad debt. It might not be the wisest decision (which car to own, how many, how often to change them), but it takes money to have a vehicle. If you said $15K of the debt was the car, and you were planning on keeping it another 3 years and the payments were ~$450/month, so be it - that wouldn't be so bad. If you said you only owe $5K on the car, and have ~$15K in CC debt, you need to figure out how to handle your money and take responsibility for personal change in that regards.
You could also look at consolidating the CCs into one. You might get free interest for 12 months on a transfer, etc... Read the rules though. If you don't pay it off within the year, does interest back-calculate or is it just on what's left?
Good Luck.
07-03-2013, 08:39 AM
#5
50 grand a year and living at home?!?!
First off, why are you even in debt in the first place. Second off, you should be able to commit and pay $20k worth of debt off in 8-10 months pretty easily. After that, stock pile cash, because once you leave home your opportunities to sock away cash dwindle quickly.
First off, why are you even in debt in the first place. Second off, you should be able to commit and pay $20k worth of debt off in 8-10 months pretty easily. After that, stock pile cash, because once you leave home your opportunities to sock away cash dwindle quickly.
07-03-2013, 10:35 AM
#7
You folks do realize that a $50K salary in New York City after all is said and done is roughly $600.00 - $2,400.00 a month.
- Insurance ( Medical, Vision and Dental )
- Federal, State and City Tax
- 401K
- Transportation Expense (MTA)
Heck having breakfast (coffee) and lunch in this city will cost you $300-$350 a month.
It's not a lot but I do agree w/ you folks above the rest of the spending needs to come to a halt - eating out, clothing, gifts etc..
- Insurance ( Medical, Vision and Dental )
- Federal, State and City Tax
- 401K
- Transportation Expense (MTA)
Heck having breakfast (coffee) and lunch in this city will cost you $300-$350 a month.
It's not a lot but I do agree w/ you folks above the rest of the spending needs to come to a halt - eating out, clothing, gifts etc..
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07-03-2013, 11:27 AM
#9
Chris - being local to the area, I know that $50K in NYC isn't what it is in say, other parts of the country. I'll avoid that part of it. I made no reference to your income/location, only the situation you're in.
However, you just said something in your last note... "Heck having breakfast (coffee) and lunch in this city will cost you $300-$350 a month."
What does that same coffee and donut cost at the house before you go to work? What does a sandwich and snack in a brown bag cost compared to outside. If you want to get out of debt, you have to make tough choices. You could do breakfast and lunch from the house for under $20/week? $30/week? Even on the high side (the Jello brand pudding instead of Shop-Rite in the bag) will save you $150/month. Maybe it doesn't look like much phrased that way, but *12 months= $1800/year or about 3% of your GROSS pay.
You're currently spending (again, based on 300-350/month) 6-7% of your GROSS income on stuff that's readily available cheaper. On the NET side, maybe its as high as 10 or 12%? I don't know what you put into your 401K, or what insurance or taxes comes out of your check, so I'm just guessing there. People don't think about the 1 more drink, in NY, what's a drink run you $8, $10? Maybe $4 or 5 for a beer. Go out twice a week, and bang, that adds up too - $300, $400, $500 a year. Probably not a big deal later, but now, YES it is.
Besides the stuff already posted on top- You need to put a budget together. It doesn't need to be precise to the dollar, but everything needs to be account for::
GROSS (we know this, you told us) 4600/month
MINUS- 401K
MINUS - Taxes
MINUS - INSURANCE
MINUS - CAR Payment
MINUS - Transportation/MTA
MINUS - Other fixed monthly costs (car insurance)?
What's left is your real take home. Look at this number and figure out how much you can really afford to spend on anything not critical to you getting out of debt. Once that's done, and you want to buy a house do the same exercise, rework the numbers to figure out how much you need to save between now and 35 to have a down payment, closing costs, enough for furniture, utilities and all the other things necessary for a house.
My situation was similar in a way. I was 27 or 28 and wanted to be out of my parent's house. I was making about the same amount, had wasted plenty of money on dumb things with little value. I didn't have the debt you had, only about $10K in student loans and maybe a $200/month car payment. I made the decision to move out the following summer and saved about $25,000 in 18 months. Saving and getting out was more important than a dinner out or another drink. I made those choices. Now, its 16 years later, I own my house and two cars with no debt. I've traveled extensively and have pretty much financial freedom at this point. The payback later to a year or two or three now is much greater but only you can change how often you reach into your pocket.
However, you just said something in your last note... "Heck having breakfast (coffee) and lunch in this city will cost you $300-$350 a month."
What does that same coffee and donut cost at the house before you go to work? What does a sandwich and snack in a brown bag cost compared to outside. If you want to get out of debt, you have to make tough choices. You could do breakfast and lunch from the house for under $20/week? $30/week? Even on the high side (the Jello brand pudding instead of Shop-Rite in the bag) will save you $150/month. Maybe it doesn't look like much phrased that way, but *12 months= $1800/year or about 3% of your GROSS pay.
You're currently spending (again, based on 300-350/month) 6-7% of your GROSS income on stuff that's readily available cheaper. On the NET side, maybe its as high as 10 or 12%? I don't know what you put into your 401K, or what insurance or taxes comes out of your check, so I'm just guessing there. People don't think about the 1 more drink, in NY, what's a drink run you $8, $10? Maybe $4 or 5 for a beer. Go out twice a week, and bang, that adds up too - $300, $400, $500 a year. Probably not a big deal later, but now, YES it is.
Besides the stuff already posted on top- You need to put a budget together. It doesn't need to be precise to the dollar, but everything needs to be account for::
GROSS (we know this, you told us) 4600/month
MINUS- 401K
MINUS - Taxes
MINUS - INSURANCE
MINUS - CAR Payment
MINUS - Transportation/MTA
MINUS - Other fixed monthly costs (car insurance)?
What's left is your real take home. Look at this number and figure out how much you can really afford to spend on anything not critical to you getting out of debt. Once that's done, and you want to buy a house do the same exercise, rework the numbers to figure out how much you need to save between now and 35 to have a down payment, closing costs, enough for furniture, utilities and all the other things necessary for a house.
My situation was similar in a way. I was 27 or 28 and wanted to be out of my parent's house. I was making about the same amount, had wasted plenty of money on dumb things with little value. I didn't have the debt you had, only about $10K in student loans and maybe a $200/month car payment. I made the decision to move out the following summer and saved about $25,000 in 18 months. Saving and getting out was more important than a dinner out or another drink. I made those choices. Now, its 16 years later, I own my house and two cars with no debt. I've traveled extensively and have pretty much financial freedom at this point. The payback later to a year or two or three now is much greater but only you can change how often you reach into your pocket.
07-03-2013, 11:58 AM
#10
Well said man ! It is very true..I am constantly saying it to myself but do little to act on it. I feel like even a full year of not partying - eating out etc.. will do wonders. I am most likely going to acquire a second part time job between Oct. and Jan. to speed things up. I feel that with the increase in salary things will go better but the debt has to go - some way some how. Thanks for your advice man !
