Am I on the right track?

[maat55]

Get rid of the family pet?

Am I on the dave ramsey website?

My wife could earn a lot of money working the streets too but theres sensible and radical ways of doing things, I happen to prefer the sensible approach to life.

I know this sounds harsh and would always be an last resort. But getting out of debt and staying out of debt calls for sacrifice and mental conditioning. Pets can be an huge expense, so I use it as an extreme example.

BTW, getting rid of a pet does not mean euthanasia or dumping. Some people will spend thousands for healthcare while in extreme debt, these are those who do not need pets.

[BlackDiamond]

Yes, you are still $23,000 in debt.

No. YOU CAN NOT BORROW YOUR WAY OUT OF IT.

You can refi, balance transfer and get better rates, and that will prevent you from getting deeper than $23,000 more *in interest*, but the principle debt, $23,000 remains.

I personally have $12,500 on a personal loan. At the moment, that and a small car loan are my only debt. I recently took out a better interest rate loan to transfer it (smart move) but I still have $12,500 in personal loan debt. I felt horrible for having SO MUCH DEBT and so little cash in the bank (about $3000 cash) until I started reading these forums and talking to my friends about finances. Turns out, I'm doing way better than many people I know.

You want to hear about borrowing your way out of debt? I have a friend who has tried to borrow his way out of debt numerous times. He still has $18K in credit card debt, $20K in student loans, a $250K balance on his mortgage and $15K on a personal loan he borrowed to "get out of debt" 3 years ago. He also owes $5K to his mother, who bailed him out of the last personal loan. (She did that to help him get approved for the mortgage. Which clearly, he can't afford).

With a bankrupcy on his record, and a weak credit score (630 last time we pulled it---I try to help him by reviewing this stuff for him once in a while), he has realized that he can no longer borrow his way out. He can't keep shuffling things around to avoid facing reality. He has less than $1000 in the bank. He has withdrawn from his 401K more times than I can remember. He is probably more in debt now than he was when he took the first balance transfer loan… And now that it's harder to get credit, his plan to keep balance transferring has gone out the window. He can't get approved for things anymore.

You have $600 between two people left over after bills? That is not very much. If it was one person, I'd say that is good. But two people? Do you have an e-fund? If you do, than unexpected bills should not be a problem.

I have between $1000 - $1300 left over an I worry that I don't have enough. Once my loan is paid off, I will raise that $3K cash fund to as high as it can go. You need to increase your income. I make an extra $400 (average) per month selling my old stuff. Cds, DVDs, books, anything I have gathering dust.

I see nothing odd about the suggestion to give up your dog. As others have said, giving up a pet does not mean killing them or dumping them someplace. I gave up pets (guinea pigs) I couldn't afford when I had a ton of debt. I found them a lovely home where they actually receive far more attention than they did with me. (I get occasional updates and they are thriving).

I used to think giving up a pet was horrible but the reason I have most of the $12,500 in debt in the first place is because I wasted a ton of $$$ (upwards of $15K) on surgery for a dog that died anyway. If I had to do it over again, I would have just put him down. It was cruel to subject an animal to that much surgery, he suffered for at least a week before I put him down and I'm still paying it off, 4 years later. In the future, I'd skip expensive vet care and just say goodbye, let my pet pass with dignity and use the money to help a shelter.

As others have said, get your clothes from the goodwill. You and your wife certainly do not need new clothing. I understand that 2 year olds grow out of them fast, but she's 2 years old, she won't care if she has thrift store clothes. She won't know the difference. And sell her old clothes. People buy used baby clothes all the time.

Getting out of debt often takes painful sacrifice. I had $27,000 between loans and credit cards and I made some painful choices to get rid of it.

I gave up my wedding and FI & I are postponing it indefinately, until we are better off financially. We feel better knowing that we'll be better off when we start out. I gave up having children because I sat down and really thought about how much they would cost to give them a good life. I screwed up financially in my 20's really badly and now that I'm in my mid 30's and likely won't be married until I'm at least 40, I opted to obtain permanent birth control. IMO, It would be cruel to bring a child into my world with my current financial situation. I shake my head every day at people who have no money saved, tons of debt and who proceed to have multiple kids. I have to wonder what they were thinking.

On a less touchy note, I have also given up most of my personal belongings. Collectibles I spent years obtaining. Some that held sentimental value as well. I don't go out to dinners or for drinks with friends often. I don't buy new clothing…haven't in 2 years. I cut my own hair. It's turning grey and I opt not to dye it. I don't buy name brands at the grocery store.

I decided, getting out of debt was more important. In less than a year, I have gone from being $27,000 in debt between loans and credit cards, with ZERO in the bank, and maybe $300 left over after bills--- to having $12,500 in debt on a low interest personal loan, $3K in the bank and $1000 left over after bills each month. In the midst of all this, I even took a small vacation (paid for in cash) to remind myself of the things I can have when I have financial freedom. IT CAN BE DONE. I got a small raise at work, but the vast majority of this change came from changing my personal behavior and upping my income by selling things.

[BlackDiamond]

Just a comment on pets. I understand why that is a very touchy subject and I also wouldn't suggest that someone get rid of their pet unless they were truly in a crisis situation and needed every spare penny. What I will say though is that far, far too many people don't think about the financial expenses associated with having a pet before getting one. When the recession struck, there were numerous news stories about the shelters being overrun with abandoned animals that the owners could no longer afford to care for.

I think people need to sit down and run the numbers before making the move to get a pet. Can you afford it? Does it fit in the budget? Where will the money come from to feed and care for the animal?

OP, I'm not saying any of this applies to you. I was just putting it out there as a general comment.

I feel the same way about kids. I have a friend who is single, has 3 kids and makes minimum wage. She is always crying poor. And I just sit there and wonder why she had 3 kids. Actually, she has 4 but she gave the 4th one up for adoption at birth. She is not a religious person who'd be against birth control, and birth control is not that complicated or expensive. I know so many people who have kids without having even $1000 in the bank. It's terrifying. I honestly do not understand why people have kids when they clearly can't afford them. It just continues the cycle of poverty. It's usually not just one "oops" baby either. The examples I know personally have multiples.

People just do not plan.

[BlackDiamond]

We gross $83,000 a year. Second jobs are not an option with a 2 year old in the house, and thats that. I will post the budget later tonight.

I could see both of you not taking second jobs, but I see no reason why one of you couldn't.

[EEinNJ]

I'm sorry you're in this debt situation. Congratulations, though, on facing up to it. Fixing it will be a great life lesson, and if the debt was a byproduct of getting an education, it's still money well spent. The burden of the interest is the painful part, of course.

Since you're just starting with tracking expenses, it will be a few months before you get the full picture of what they are. Knowing and planning for what they are will help you avoid adding onto the debt. Not increasing it, especially if you take a loan, is very important.

Borrowing from family may be a bad idea, but if the grandparents like to buy things for the baby, or if they give you birthday or other gifts, you might suggest that they give you things you'd otherwise have to buy- or even gift cards?

[jIM_Ohio]

Hi everyone,

My wife and I currently have $23,000 in credit card debt, which is eating us alive. Most of this was racked up during our college years as my wife had to put herself through school on her own. We are now both 27.

I started tracking expenses 2 months ago, after all the monthly bills are paid we have $600 left over- or should. The problem is the $600 gets eaten up by clothing for our daughter, toys, vet bills, all the random things that just don't get on the monthly bill list.

I contacted a national bank and requested a $23,000 personal loan to pay the credit cards off. They would only do $15,000 which would pay off the largest credit card we have. The interest rate is 9.9% and would save us $50 a month- and be paid off in 5 years vs 85!

This leaves us with $8000 in debt.

I have 3 options here:

-Apply for another personal loan at a different bank (doubt they would give me one?)

-Ask for a loan from a family member.

-Ask my parents to take a home equity loan out for the full $23,000 and let us make the payments. I do not know if they would help us like this or not, their house is paid for and has been for awhile. The payment would be low enough that defaulting should not be a concern.

I also have $70,000 +/- in a 401K but have been told I can not take a loan out against it (due to program rules?). We are very responsible with our money, but can't seem to get these cards behind us.

My goal here is to just get all the debt off the cards and into something that is a low fixed rate.

Any thoughts out there?

YES
my thought is you need to take a step or two back and add more options to your problem solving approach. Because if the red text was actually a true statement, you would be here giving advice and not asking for it- being good with money means that $600 extra ($7200/year) pays off the debt in about 3 years.

How about an option to drop spending another 5% or 10% and throw 600 plus the 5 or 10% to the debt?

23k is not much debt- really- I knocked 80k+ of student loan debt out in about 8 years on a salary of 40k, and also paid off 10k of cc debt at same time in less than 1 year.

Focus on what your goals are, and what is important to you financially, you will find a better solution than anything you presented.

[Offshore82]

Yes, you are still $23,000 in debt.

.............. I gave up having children because I sat down and really thought about how much they would cost to give them a good life. I screwed up financially in my 20's really badly and now that I'm in my mid 30's and likely won't be married until I'm at least 40, I opted to obtain permanent birth control. IMO, It would be cruel to bring a child into my world with my current financial situation. I shake my head every day at people who have no money saved, tons of debt and who proceed to have multiple kids. I have to wonder what they were thinking..............

It sounds as though you have low self esteem if you feel that without money your children's lives would be "cruel". I feel badly for you.

Most of you on here are radical nuts, no need to post any more advice, really, I am all set!

[Offshore82]

I could see both of you not taking second jobs, but I see no reason why one of you couldn't.

I will send my wife out to the corner, would that be ok?

[cptacek]

I will send my wife out to the corner, would that be ok?

I suppose if that is ok with both of your value systems, it would fine.

Seriously, though, what did you expect to hear? You have debt. You refinanced some of it to lower interest rates, but the bank wouldn't give you enough to refinance all of it. You want to get a loan from family to "pay off" the rest. You are spending $600 a month on misc. stuff that some have suggested how to cut back on, but you don't want to cut back on those things. You don't want a second job. You don't want your wife to get a part time job or a full time job. If you don't change something, the end results will be exactly where you are now: in debt and drowning. So what are you willing to change?

[cici01]

If you are currently adding money each month to your credit cards, then you are living above your means. Only getting control of your spending will leave you with the extra money to pay off the debts. Moving the money around does not pay it off.

I'm not saying don't take out the personal loan, but just make sure you have the finances under control so that you don't end up in the same situation 2-3 years from now. Take the fixed rate on the amount that the bank will allow. Put the extra $50 towards the credit card each month.

Do not ask to borrow the money from family. It changes the relationship you have with them. From family to borrow/lender. Don't do it.

It's also never a good idea to borrow from a retirement account. It's good that your plan doesn't allow this.

Are there things you spend money on that you can eliminate to free up cash to pay off your debt? Cancel cable, gym memberships, subscriptions, caller id, cell phones. Stop a bad habit: soda, alchohol, cigarettes. Look at EVERYTHING you spend money on and evaluate whether it has a bigger priority over paying off the debt. Is there something you can sell to bring in some cash...outgrown toys, clothes, electronics, extra furniture. Look around for things to sell and start listing them on ebay or craigslist.

In my opinion, I think that you can borrow the money from family, this is a good way, it will not let you feel the pressure is too high, at this moment, your family members are most likely to help you out.

[BlackDiamond]

It sounds as though you have low self esteem if you feel that without money your children's lives would be "cruel". I feel badly for you.

Most of you on here are radical nuts, no need to post any more advice, really, I am all set!

My self esteem is just fine, thanks.

Actually, yeah. Without money to purchase them food, clothing and a chance for a good education having children would be cruel. Not really sure why any idiot would think otherwise. If you can't afford children, don't have them. Period. Children are a want, not a need. They are a luxury, IMO and if you can't afford to pay your bills you have no business reproducing and continuing the cycle of poverty.

Money is the most important thing in this world. It is what we use to buy the things that keep us alive and there is simply no argument that can counter that. Unless you are a dirtbag who lives off other people's taxes, I suppose.

No one on this forum is a radical nut. Everyone here just has a really good sense of reality.

[BlackDiamond]

I will send my wife out to the corner, would that be ok?

Oh please. No one is telling your wife to be a hooker. Do you think that lowly of your own spouse that you think the only way she is capable of making money is to be a prostitute?

If I was married to you, and you thought that was the only way I was capable of getting a part time job, I'd probably divorce you.

I am telling you to send her out to McDonalds or the grocery store and tell her to get off her butt and help support the family she chose to create and get rid of the debt she chose to help make. Surely, she is capable of doing basic food service or retail work?

I don't get this mentality that some women have that they can't work. Staying home, much like having kids in the first place, is a luxury and you, Offshore & Mrs. Offshore are in no position right now to have luxuries. The vast majority of mothers I know work full time and their kids are just fine.

If you want to give your kids a secure life, GET OUT OF DEBT. The only way you are going to do that is to get more work and that means you need to increase your income.

You came here for advice and yet, you have ignored everyone's advice and made several comments suggesting that WE are suggesting your wife be a prostitute to earn extra money. I really don't know what else to say to you.

[Offshore82]

I used the work on the corner thing as a radical example to match the line of thinking here.

Also, when did I say my wife didn't work?

[disneysteve]

Am I on the dave ramsey website?

No, but maybe you need to be.

I've been at this site for a long time and I can tell you it is anything but radical. In fact, I have always been a relative non-supporter of Dave Ramsey, though my opinion has recently changed as I've started listening to the podcasts of his shows and I find the vast majority of his advice to be pretty darn sound. I still disagree with him on a couple of points but not all that much.

You have debt. You have a choice. You can keep shuffling it around or you can hunker down and do everything possible to get rid of it. That may include you and or your wife getting extra work. It may include selling belongings. It may include making other sacrifices. In your case, you make a good income and have a moderately low amount of debt, so it seems that you should be able to get rid of it without a big problem. As Jim suggested, your debt isn't that bad. I paid off over $100,000 in student loans when my income for the first few years was well under that.

Take a step back and read the advice here as folks trying to be helpful, many of whom have been in similar positions in the past and are just trying to share what worked for them.

[wincrasher]

Everyone wants a silver bullet. Get out of debt easy or just walk away from it.

Cut back on lifestyle? Work harder (or smarter) to make more money? Sell stuff? Crazy talk!

I say let's see some pics of the wife to see the income potential. Dog meat can be tender and delicious - think about the savings!