Buried Beyond Belief!

**mrpaseo** · 12-02-2008, 03:57 AM

Omg

**MiikeB** · 12-02-2008, 04:01 AM

You should do a better breakdown of your expenses.

1000 a month on utilities is insane

As is 800 on grocerys. People feed families of 5 for less than half that.

Your health insurance is also very high, but if you own your own business I can see that. Does your wife work, or can she work? If she got a job where she could put you on her health insurance that could save a lot a month.

**maat55** · 12-02-2008, 04:13 AM

Here's what I would do:

First, I would cut every nonessential expense from my budget.(cells, cable, eating out, ciggerettes, dingdongs etc.)

Second, list my necessities in order: Food, utilities, housing etc.

Third, I would sell the car depending on amount owed.(Being upside down is expected)

Fourth, I would cut up my credit cards today.

Fifth, I would sell all unneeded items and find ways to increase income.

If you can get the total reduced and pay through an separate account setup for escrow, I would do so in a few months. For the first three to six months, you should try to make headway yourself. This will condition you to not go back into debt later. Good luck.

**disneysteve** · 12-02-2008, 05:21 AM

I agree with maat55. I'm willing to bet that there are a lot of non-essentials in your budget. As MiikeB said, you need a detailed list of your expenses. As he also said, your grocery bill is insane. How many people are you feeding? As for utilities, I don't know where you live or how large your home is, but in comparison, our gas and electric bill is $225/month, water is about $40/mo., phone is about $30/mo., sewer is about $25/mo. That all comes to $320. If you want to add in internet and cable (luxuries, not utilities), it brings it up to $360. Even if you throw in cell phones for 5 people, we'd still be under $500/month. So $1,000 sounds way high to me.

I would start today selling everything that isn't nailed down. If you don't have an ebay and half.com account, sign up today and start listing books, DVDs, CDs, video games, excess clothing, knick-knacks, and everything else you possibly can.

**arthurb999** · 12-02-2008, 05:23 AM

Do you use any software like MS Money or Quicken for personal expenses. I’ve found that really helps figure out exactly where the money is going and what can be minimized.
What type of mortgage do you have… if you do the credit card thing it will have an impact on your credit and will effect your ability to refi if you are in an exotic mortgage right now.

**disneysteve** · 12-02-2008, 05:40 AM

Originally posted by czubmeister View Post

Roped into 2 barmitzvahs at 18,000 each a few years ago

By the way, I just have to ask, how does one get "roped into" paying for 2 Bar Mitzvahs? Were they your kids? We recently had our daughter's Bat Mitzvah and spent about 25K so I know they are costly, but I certainly can't say I was roped in. We had been planning and saving for it for years.

**MiikeB** · 12-02-2008, 06:38 AM

Originally posted by disneysteve View Post

By the way, I just have to ask, how does one get "roped into" paying for 2 Bar Mitzvahs? Were they your kids? We recently had our daughter's Bat Mitzvah and spent about 25K so I know they are costly, but I certainly can't say I was roped in. We had been planning and saving for it for years.

Agreed. Although I am not Jewish, but this is just like college. When you have kids you know it is an expense that is going to happen in x years, you need to start saving asap.

**Gjowers** · 12-02-2008, 07:31 AM

Is your home worth as much as you owe? If so, as hard as it may, you might consider selling it and moving to a more modest place. You could get an apartment. The utilities would certainly be lower. Since you're that far in the hole you might consider a credit counselor as well.

Continuing to do what you are currently doing will only put you deeper in the hole.

Don't beat yourself up. It happened. Make a decision today to do something about it. Then take action.

**czubmeister** · 12-02-2008, 09:29 AM

Here is some more layers of the onion I'm unpealing.

I have sat down with my wife numerous times to discuss our finances. I use quicken so I know exactly where the money is going. Eating out too much and buying things whenever I wanted them. I will not let this happen any longer and I am going to start chopping up these cards as soon as I post this.

Car 1: 1994 Lexus with 100,000 worth about 4,000. No Payments on this car
Car 2: 1999 Chevy Suburban with 160,000 miles. Worth probably 4,000. I'm a Scoutmaster with the Boy Scouts. I use this to go on outings every month with the scouts. No payments on this car.
Car 3: 2004 Lexus with 65,000 miles. Just came off of least and purchased for 20,000. Payment is 400.00 mo that I run through the business.
Car 4: 2002 Chevy Silverado. My daughters "dream truck" . She purchased with her Batmitzvah money and cashed in her bonds that she was supposed to use for school. Paid off worth about 15,000. Told her to sell the truck when she comes home and buy a compact car with good gas mileage.

Right now I'm worried that if I just stop using the credit cards my health insurance of $580.00 and auto insurance $358.00 may get cancelled if I can't pay it. That's why it's on the card on autopay. I know that it buys me time but it's also digging myself into a whole.

Came off the a few dot com jobs as an it manager and was bringing in 125,000 for about 3 years. After that, IT manager jobs were hard to find so I decided to work for myself. I started processing direct mail and telemarketing data for newspapers about 5 years ago and we all now what's happening with newspspers now. In fact.. as luck would have it, I received an email from my biggest client (I received about 3,000 per month) yesterday who said he wanted to meet for breakfast. He cancelled on me and now I'm in even worse shape. I'm going to hit the phones hard for the next two weeks to see if I can drum up some business.

I will cancel the life insurance and start ripping through my expenses and cut back. Doesn't help with Christmas right around the corner. Pretty tough to tell the wife right now, "Sorry, you can't buy gifts for anybody this christmas.. we're broke" But I guess that's the reality.

I'm still optimistic I can bring in some more money.. that's my only option because I would really hate to go bk.

**disneysteve** · 12-02-2008, 09:42 AM

I'm not sure why your daughter's vehicle is an issue unless you are paying her expenses. If so, stop. Let her pay her own expenses. You can't afford it. I don't think I'd suggest she sell a paid-off vehicle just to improve gas mileage, though.

Obviously, buying the Lexus was a mistake. If you truly need that 3rd vehicle, sell the Lexus and take perhaps 10K to buy a more affordable car and reduce your debt by 10K.

What's the deal on the life insurance? Term coverage is quite cheap. Is that $300 for the whole year? If so, you might want to keep that just in case. Also, get some fresh quotes as you may be able to get it for less.

**arthurb999** · 12-02-2008, 10:16 AM

What do you owe on the house and what is it worth.

You might be able to renegotiate with your mortgage company and your credit card companies.

Since you are in between jobs (biggest client cancelled), perhaps you could look for a full time job for someone else who will provide benefits.
Does your wife work?

It seems like you have tackled the biggest step… realizing there is a lifestyle problem and putting a stop to it.

**czubmeister** · 12-02-2008, 10:33 AM

Just got back from time warner cable. Returned 5 cable boxes and reduced my tv package. Bill went from $160 month to $110.00. That includes our house phone and cable tv...

I owe 549,000 on my first and 250,000 on my 2nd credit line which it tapped out. Total mtg = $799,000. A realtor that came by last week said my house is worth about $750,000.

The insurance I have is term and it is $377.00 for 6months.. and it does seem high. I will look for cheaper insurance.. though I think I'm insured for a little over a million.

I'll look into selling the lexus. I think I should come out even because the residual is pretty cheap. I am using it as a business expense though and pay it through my business.

**jIM_Ohio** · 12-02-2008, 10:47 AM

My first take...

2,700.00 in minimum credit card payments (6 Credit Cards)
3,700.00 1st and 2nd Mortage (2nd mortage line is tapped out)
400.00 Car Payment
1,000 Utilities
938.00 Health and Auto Insurance
800.00 Groceries
---------------------
9,538.00 per month (not including cash and things to live)

then I read further

Bill went from $160 month to $110.00. That includes our house phone and cable tv...

and then

I owe 549,000 on my first and 250,000 on my 2nd credit line which it tapped out. Total mtg = $799,000. A realtor that came by last week said my house is worth about $750,000

slow down...

You need to rethink money. You are paying bills left and right, and have a decent income.

I think the house is the first thing I would look to downgrade, and the third car and fourth car would be the second place. When you downgrade, you need to do better than saving $50 from a $160 cable bill- cable is not a necessity and I pay MUCH less for a satellite dish and the NFL package. Cable should be $40 or less- spending hundreds on cable is not a good way to think.

$800k mortgage with a $3700 payment on 84k annual income is the root cause of your problem.

Question- where is the house located and what is your tax return/refund in a given year? I assume you itemize?

I would look to get a cheaper house and cut the mortgage payment by around $250k-500k.

Even if you owe more on the sale, the issue is to free up cash to pay other bills. You will add a bill (the home equity difference) to the list, but my guess is the difference could be financed at a low rate to free up other money to pay bills.

When you look at income and expenses you listed

2,700.00 in minimum credit card payments (6 Credit Cards)
3,700.00 1st and 2nd Mortage (2nd mortage line is tapped out)
400.00 Car Payment
1,000 Utilities
938.00 Health and Auto Insurance
800.00 Groceries
---------------------
9,538.00 per month (not including cash and things to live)

You need to cut this list by $2500 to break even.
Utility bills are steep. You heating a barn or something?
Groceries is way too high (how many people)?

Post a detailed budget and account for detailed utilities.

When you track income, you are doing it wrong. Instead of lising income then subtracting expenses, you need to list income then immediately pay yourself 20% of that check. If you bring home 7k per month, 20% of this ($1400) is YOURS and pay the bills (including taxes) from the other $5600.

The credit card minimums need to be paid from the $5600. Mortgages too. Utilities and everything else.

The use the $1400 you set aside to pay down the debt.
Once the debt is paid off, use this $1400 to save for financial independance- so your money works for YOU instead of you working for money.

**disneysteve** · 12-02-2008, 10:59 AM

Originally posted by czubmeister View Post

Just got back from time warner cable. Returned 5 cable boxes and reduced my tv package. Bill went from $160 month to $110.00. That includes our house phone and cable tv...

That isn't going to cut it. $110/mo. for phone and TV is still way more than you should be paying or can afford. Our cable bill is $11.30/month and would be the first thing to go if we ran into financial trouble. Cable is a luxury, a want, not a need. You can watch TV just fine with a cheap set of rabbit ears (and a digital converter after February). Our home phone is about $30/mo. So you are still paying nearly 3 times what we're spending. If you are serious about this, you need to cut out everything that isn't absolutely necessary.

That said, I don't see how you can possibly get out of this while keeping a $750,000 house on your income. Even when you were making 125K, you couldn't afford this house. Rule of thumb is that the house shouldn't exceed 3 times your income. Even if you stretch that to 4 times income, that would put you in a $500,000 house with your old income and less with your current income. I think you need to seriously look into getting out of this house.

Buried Beyond Belief!