I am in deep, what do I do??

[momindebt]

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[constanz22]

The best thing to do, in order to get the best advice here, is to post your budget and list out your income and debts.
Ex: Net take home $3000
Rent/mortgage $1000
Day care
Utilities
Food
Cable
Cell phone
Entertainment
Credit Cards
Car loan
Etc.....

[startsmart]

Hi momindebt! First congrats for reaching out and asking for help! Definitely a big step.

It's hard to give specific advice, it's typically not a good idea to borrow from retirement or use debt consolidation because they are complex situations that can get you further into debt.

I know you may not have all of these numbers handy but can you take some time over the weekend and post for us:

Income
salary:
bonuses:
alimony if any:
child support if any:

Expenses:
housing:
insurance (car, life, health, house/apartment):
gas & electric:
trash service:
water and sewer service:
alarm company:
fuel for cars:
food:
clothes:
gifts/household/incidentals:
child care:
pets, if any:
subscriptions, if any:
phone:
internet:
cable TV or other entertainment, if any:

Debts:
List them all including
a) what you owe
b) the percentage rate
c) minimum monthly payment

Consider listing house mortgage, second mortgage, car payment, student loans, credit cards, medical debt and may be behind on regular bills. Also if you owe anything to the divorce lawyer.

Assets:
retirement:
savings:
investments:
cars:
equity in your house, if any:


As you can see there are a LOT of numbers and it may take some time to get them all - that's fine! You can modify your original post and fill in what you know, when you know it.

This will give the posters a complete picture of your finances and allow us to give you suggestions which apply directly to your circumstances.

Remember, it's all anonymous and we don't know you from Adam! That's the wonderful thing, you can be completely honest here without shame or guilt. Just bring us the raw data and the posters here will give you as much help as you request.


ETA: I see constanz beat me to it lol! Definitely adapt these categories too, if you don't spend money on something put $0, if I missed a category and you have a motorcycle, pet monkey or side job - add it in! ;D

[momindebt]

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[Wisconsin Beth]

Karma momin. No advice but I have a DD a bit younger than yours. Hugs to you both.

[momindebt]

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[Wisconsin Beth]

Welcome! Did you know there's a group of the MSN moms on babycenter?

[momindebt]

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[momindebt]

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[Wisconsin Beth]

Aug 5, 2011 14:53:05 GMT -5 @momindebt said:

Beth, I think I am a member, just forget to check it out. I better go check it out on Monday!

I keep forgetting to check too.

Good job on getting the numbers.

[Lindz85]

So you have $2,000 income/child support coming in.

$2,414.00 going out before CC's
$3,029.00 after CC's.

Is there anyway you can make money on the side? Sell something? Do you have one or two cars? If two, can you sell one? Or can you downgrade and use the extra cash to pay off some bills?

Can you cut down on the phones? Just get a cell instead of having a house? What about food?

[mizbear]

I would contact all of your credit cards about pay off plans, try to reduce your phone bills if possible. I know it's hard to say no cable with a little one, but now is a great time to teach frugality. I would cut back the cable or cut it off for now.
Couponing can save a ton of money. $300/month for 2 people? Maybe I am missing something there.

One thing I would definitely say is this- in general, stay away from debt consolidation companies. They often get you in bigger trouble than the debt itself.

[momindebt]

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[Wisconsin Beth]

The couponing thread will have some great advice. There's a pdf or Word doc explaining the basics of how they do it. And you can jump in anytime on the thread. And you're more than welcome on the pregnancy/parenting thread too.

[startsmart]

Great job posting numbers! Feel free to update them if you get more accurate info or look at the bills and realize something has changed. That always happens to me!


Income- $1300 monthly
child support if any: $700

Income $2000

Expenses:
housing: $675
car insurance: $ 70 car
gas & electric:$330
trash service: 0
water and sewer service: $75
alarm company: 0
fuel for cars: $125
food: $300
clothes: $75 for child
gifts/household/incidentals: 0
child care: $85 for preschool
pets, if any: $75
subscriptions, if any: 0
phone: $150 cell and home
internet: $19
cable TV or other entertainment, if any: $85

Total Expenses: $2064 before you pay on debts

Van $350 (is this a payment on your van or how much it's worth?)
Savings 0
401K $23,000

Discover $9000 25% $175
Visa $4500 25% $175
Visa $2500 20% $45
MC $500 0% $20
MC $3700 29% $200

Total Owed: $15,700
Minimum monthly payments: $440

Are the debts 100% yours or will your ex-husband have any responsibility?

So, just to keep your head above water you'll need to cut $500 from your monthly budget OR bring in an extra $500 after taxes.

Personally I'm a fan of cutting the big stuff first because it'll give you the most breathing room.

Top 5 Expenses I would work on:
gas & electric:$330
* I know it's hot but you should be cutting down on usage. Turn off lights and open the blinds, buy a table tan and enjoy iced tea and juice. Run your washer, dryer and wash dishes when the load is full. Keep the TV off and read with your daughter.

food: $300
* cut back here by visiting the grocery thread and learning their tips. To start, shop in your pantry and eat creatively. Use the last box of pasta before you go buy rice, omit ingredients if you're out and it won't impact the recipe, be creative.

pets, if any: $75
* how does this break down? how many pets? I would look at cutting toys, treats and limiting food to what's necessary until you have more breathing room. Continue with routine medical care but cut back on grooming, new leashes or anything extra.

phone: $150 cell and home
* do you have a contract? Cut this down if you can, remove internet and texting plans, go to a smaller plan, don't buy apps. Your goal is to get out of debt without ruining your credit and sabotaging your retirement so fun toys like smart phones will need to take a back burner. Do you need the home phone at all?

cable TV or other entertainment, if any: $85
* another place to cut back. i know it's harder with kids so look into netflix for other movies, institute a weekly walk to the library for books and movies, or pick up kid friendly movies used online for a treat. Even 1 new DVD/month is going to be a savings of $60 for you

[Pants]

momindebt: First, welcome! It's hard to admit you need help. You will get a lot of good advice here: the extent to which it works is up to you based on how open you are to the changes.
Unfortunately, even without the debt your budget still puts you in the hole every month. You either need to increase your income or really slash your expenses, and I think you will need both to get out of this.
First, there are small changes you can make.
-$330 for utilities is A LOT. You need to get this number down. Turn off the a/c and open the windows. Run your appliances at night. Close off rooms that aren't in use.
-$75 for clothes. I know this doesn't seem big, but you need to change to shopping at thrift stores and get this down to $10 or so per month for the short term.
-$75 for pets - a lot of people are going to tell you to give away your pets. I am a pet owner so I'm not going to say to do that.
-$150 cell and home phone - cut this out! Cancel the home phone! Get a pay-per-use cell phone and don't talk on it much. Use skype for long conversations.
-$85 cable - cut this out too!

Based on some assumptions, you can find $400 a month by making the small cuts. Unfortunately, you need an extra $1000 per month.

So, your mortgage is 1/3 of your income. That's really tight. Can you sell the house? Do you have equity that you could use to pay off the credit cards?
Your car payment is big too - nearly 20% of your income. How long left on the loan? What is the value of the car? Can you trade that in for something more value-concious?

And finally: the debt. If you had no debt, you could survive off of your salary + child support if you make the "small" cuts above (phone, cable, etc.) You have a couple options: cash out your 401k, sell the house and use equity to pay off the cards, try to get a home-equity loan, borrow from a family member, or declare bankruptcy.
Even with no debt and lower cost I think you need more income. Either a better job or another job - there's no real way around it. Divorce is very hard financially, often harder for the woman, so know you are not the first person to be in this spot, and it is possible to get out! Good luck!

[constanz22]

Aug 5, 2011 15:07:50 GMT -5 @momindebt said:

$300 too much for me and my daughter?

Yes, $300 a month is a lot for groceries for one person and a toddler. You could easily cut $100 off this by shopping smart, watching sales and doing a minimal amount of couponing. You could probably cut it in half if you had the time and interest in doing a lot of couponing...

The interest rates on your CC's in outrageous. How is your credit? Can you get a small personal loan from the credit union and consolidate them at a lower interest rate? Could you take a home equity loan to pay them off?...the interest rate would be next to nothing compared to what you're currently paying and your monthly payment would be greatly reduced too.

There are a couple of reputable debt consolidations programs, but many, many that will just get you into more trouble. One, I think, is NFCC (someone correct me if that's not it..used to be on MSN) and the other is Consumer Credit Counseling Service.

[Wisconsin Beth]

There's a thread going on YM for someone with a really tight budget. You may want to check it out for suggestions. I'll go find the title.

It's called "Trying to Get My Head Above Water" and it's on YM.

[startsmart]

can you confirm if "Van $350" is this a payment on your van or how much it's worth?

Also, is 100% of the debts yours or will your ex-husband pay any of it?

[midjd]

I would budget EXCLUDING the child support, even if you are sure you'll get it - because I was raised (along with two siblings) by a mom who depended on child support to stay afloat, and my dad knew it and used it against all of us. It is best to treat that money as a bonus or set it aside as an EF than to depend on it for survival - because you never know what can happen. Your ex could lose his job, disappear, or just decide he'd rather face the law than pay it.

That means increasing your income. Personally, I think that is more fun than cutting things out

If you don't mind telling us, what is your current job? Education? Any skills? Could you do something on the weekends like waitress or bartend? Sell items on Etsy? Babysit?

[twinmama85]

Aug 5, 2011 15:07:50 GMT -5 @momindebt said:

$300 too much for me and my daughter?

id say so, i have a family of 4 with twin 2 yr old boys and our budget is $400

also...is there any way you can sale the van and get a cheaper car?id also recommend getting rid of the cable and internet and cutting your cell phone bill down to a basic phone..if you have a smart phone, sell it and get a flip phone that has no internet that comes with a basic nationwide package. doing those things will free up $604/month

also, is there anyway for you to earn more money?anything items you can sell in your house?what about alimony?

also, cut any money you are putting in your 401k til you can breath again...dont touch the 401k to pay off debts because if you do and you lose your job, they will go after you for the balance and you can get killed in taxes and penalties

check out www.daveramsey.com and he has ALOT of helpful tips and such to get you out of debt.

hope this helps out

[973beachbum]

Aug 5, 2011 15:28:23 GMT -5 constanz22 said:

Aug 5, 2011 15:07:50 GMT -5 @momindebt said:

$300 too much for me and my daughter?

Yes, $300 a month is a lot for groceries for one person and a toddler. You could easily cut $100 off this by shopping smart, watching sales and doing a minimal amount of couponing. You could probably cut it in half if you had the time and interest in doing a lot of couponing...

The interest rates on your CC's in outrageous. How is your credit? Can you get a small personal loan from the credit union and consolidate them at a lower interest rate? Could you take a home equity loan to pay them off?...the interest rate would be next to nothing compared to what you're currently paying and your monthly payment would be greatly reduced too.

There are a couple of reputable debt consolidations programs, but many, many that will just get you into more trouble. One, I think, is NFCC (someone correct me if that's not it..used to be on MSN) and the other is Consumer Credit Counseling Service.

I think you could lower this amount also. I live in NJ and our family consists of 2 adults, 1 teenager and 1 8 yr old boy. My "food" budget includes everything edible plus all cleaning supplies and paper type products and we have been able to cut our budget to under $200 a month.

As far as selling your house. If you sold it could you really rent somewhere for less than $675 a month? Where I live you would need to rent a spot in a campground and pitch a tent to get less than that.

I would look at dumping your cell phone. Look into something called a "life line" for your land line. It would help you get a local only land line for very cheap cost, maybe $5 or $10 a month. I would also question the van payment. Is it for much longer? If not it might make sense to just finish paying it off. If not you may have to consider selling and getting a beater.

Does Gas and electric include heat in the winter but you did a per month avg? If so that might be real hard to move much but you could look into lowering you thermostat in the winter type things and maybe budge it another $50 a month.

Hope it helps.

PS I would also start telling people that you could use hand me downs of childrens clothing. Most people LOVE giving away their kids old clothing to someone who can use them I hated dumping clothes that my kids wore once it seemed like. You really need to lower you expenses and sorry to say that $75 a month need to be cut down to as close to zero as you can make it.

[mizbear]

I agree with midwestern about the child support. My ex-SIL depends much too heavily on her CS and knows that between my deadbeat DB and the backed up system that she isn't going to get the checks on time even if he does pay it when he says he did.
Once your divorce is final, I would also go to your local social service agency and see if you can get assistance for your daughter at least. You should be able at minimum to get children's health insurance coverage for her (I did not see health insurance listed, just car) and possibly food stamps, depending on the COLA in your area. Don't be ashamed to apply.
Thrift store clothes- You can find great kids clothes in the thrift shops- or hit the consignments shops. Also, you may be able to start a clothing swap or service swap (you watch my kid while I work and vice versa) with another single mom.

And I didn't mean to sound snarky about your food budget, but I get $880/month right now. It should easily pay my bills. I can easily feed myself on my $40/month food budget- right now I am usually feeding 3 people on that because my DB and ex-SIL send my nieces here and don't provide food or money. And yes we eat balanced meals usually. It's all in how you shop and how you cook. I am sure that right now my freezer looks like it threw up chili, lentil soup, and packs of pre-made chicken dishes because my nieces and I made 12 qts of chili, 5 qts of caribbean lentil veggie soup, and 10 pounds of chicken thighs that we defatted, skinned, deboned, and then sauced and packed. All we have to do is add 2 veggies and a starch to each meal. I usually buy whole wheat pasta when it is on sale 10/10 and there are $1 off coupons out. If you have access to a deep freeze, it's even easier because you can hit the bulk sales. I don't have one and have lost use of the one at my grandmother's since my DB moved home. I had to get creative with freezer storage.
If you need a land line due to having sitters come in and the like or using dial up to keep the cell phone bill down, may I suggest using the most basic package? Unless you need caller ID, etc- cut everything but the basic phone service. And don't let them try to tell you you have to have long distance- just tell them you use your cell phone for long distance. My DM and DGM do not have long distance on either phone. When DGM wants to call one of the family lving long distance- DM lets her use her cell.
Sorry if I ramble, but I want to try and give you ideas.

[Poppet]

Income- $1300 monthly
salary: 0
bonuses: 0
alimony if any: 0
child support if any: $700

Expenses:
housing: $675
insurance (car, life, health, house/apartment): $ 70 car
gas & electric:$330
trash service: 0
water and sewer service: $75
alarm company: 0
fuel for cars: $125
food: $300
clothes: $75 for child
gifts/household/incidentals: 0
child care: $85 for preschool
pets, if any: $75
subscriptions, if any: 0
phone: $150 cell and home
internet: $19
cable TV or other entertainment, if any: $85
Van $350
Savings 0
401K $23,000
Discover $9000 25% $175
Visa $4500 25% $175
Visa $2500 20% $45
MC $500 0% $20
MC $3700 29% $200

___________________________________________



MominDebt you're going $1000 to 1,700 in the hole every single month. That is substantial negative direction. Unfortunately you're in a situation in which one has to make a lot of ugly and unfun choices.

Typically after a divorce the parent (usually the mom) wants to maintain normalcy for the sake of the children (and herself), so she keeps the house and the cars. Yet she cannot afford it. Is this what's happening here?

You need a total money makeover and it's going to be pretty uncomfortable. You're not suffering a little budget shortfall in which you can simply cut your "latte factor" to save the day.

You're in your own financial armageddon.

If you cannot find a better job, or another source of steady income then you'll have to completely change your lifestyle as this one is not sustainable.

Your steady income is $1,300. Don't count on child support.

And with $1,300 coming in you're already spending 83% of it on housing. (675 + 330 + 75). You can't afford this even with child support. Your housing budget should be 34% of your total take home budget tops.

Your food budget is fat. You can cut this to 150- 175 per month with black belt frugal shopping and cooking skills. Time to learn how to do this.

Pets, monthly clothing allowances, and big cell phone bills are history.
These are categories that a $1,300 monthly income cannot sustain. Get a landline for $20. Or go prepaid cell phones.

Monthly car payment is not feasible at all at $1,300. This is a public transportation budget aka taking the bus.

And if you say you live in the country and there is no public transpo, then all the more reason to get the heck out of there. The boon docks is no place for financially destitute people. The destitute need to be closer to the resources. This means in the city usually. Unfortunately.

Plus you said carS. Plural. how many do you have? Sell them. Give them to the ex. Do what you have to do to get away from the payment.

Cable is history. Watch t.v on the Internet. Read a book. Visit the library for movie rentals.

You will not be able to pay those credit cards much longer on $1,300 because you are at this point completely bankrupt. You need to meet your basic need before they get anything. This goes w/out saying you need to stop using credit cards.

I cannot tell you to cut this and that and create a sustainable budget though I attempted it. I quit because you have to get real with your housing first. After you've paid for your shelter and utilities you have $220 to live on:

$1,300 - 1080 = $220.

See how bad the math really is? Do you have relatives you can rent a room from?

Like I said above, you'll have to change everything starting with housing and transportation and working your way down the line.

And most people are just like deer in headlights and refuse to do anything drastic until the thought-seed of change germinate for a while. There's a grieving process to go through when it comes to letting go of a lifestyle one has enjoyed for a long time. I get that.

But at some point you'll have to get medieval on your budget. It won't be fun, probably.

In addition you'll need to seriously get real with declaring BK. I know you don't want to do it, but you already are bankrupt. Get some legal relief.

Also, you need to look into public assistance in the form of food stamps, housing help, maybe aid for families. I know it is humiliating for some to "go there" but it can help you. Again, no shame seeking out relief.

I am so sorry for your troubles. It'll take some time to digest all this
gettin real" and think through all this. Most of it you probably already know.

Hang in there. All of us here are rootin' for you and are more than willing to give tips and insights and plain old prayers and good vibes.

Wishing you the very best of success. It'll take some time, but you can do it.

[twinmama85]

momindebt -- other things to think about..what is your career? do you have other skills?do you want to do something different but are scared? when my aunt got divorced like 15years ago, she had 2 teens and was ripped from her home in texas and moved near my family in utah. she got on foodstamps (your daughter would qualify for WIC..HIGHLY recommend getting her on WIC, buys milk,eggs,PB,beans,rice,depnding on the state, fruits and veggies) and was able to get a grant at a local community college to become a nurse...2 years later she was a LPN and was off the system, another 2 yrs later she became an RN and now she is a traveling nurse, owns her house and cars and has a comfortable cushion... but during that time, she lived in 2nd house my parents had and she didnt have ANYTHING at all but an old car and after a few yaers, she got back on her feet. really look into that, go to a social services and find out how you can get a degree (if you dont have one) that can help you increase your income (usually they have assistance for child care while you are taking classes too) i really hope this helps out

[startsmart]

momindebt- read what tome wrote - it's all correct. Your own original post said it best you're in deep and you'll need to make some drastic changes.

Luckily your daughter is young, she's not going to remember eating pb&j for dinner for most meals or that you didn't have a fancy cell phone.

Do these hard cuts now and you'll find that you adjust to a "new normal" and the divorce and new life is a great time to reinvent yourself and how you live. Especially since how you've been living is unsustainable on this income.

The key here, I think, is to learn frugal ways and make it a challenge for yourself. Several of the posters have alluded to this already

• turn off the cable and read
  
• borrow books on personal finance and hobbies from the library
  
• watch movies only from the library or borrowed/swapped from friends
  
• learn to cook with what you have on hand and from scratch there are so many good recipes free online and a ton of content about how to save money on groceries
  
• when you're feeling cooped up inside take your daughter for a walk, explore the neighborhood, visit a park, go to the Farmer's Market
  
• make it a game to save on those "fixed" expenses
  
• shop around for your car insurance, raise the deductible
  
• when you do drive, drive to save fuel, keep your speed steady, take extra weight out of the car, don't gun the engine - see just how many mpg you can get
  
• identify things around your home you can sell for cash on ebay, craigslist or at a garage sale
  
• make due with what you have, use the mismatched silverware it still works, burn candles you own already, use up the last of your cleaning supplies before buying new
  
• before buying anything look for cheaper options online. I don't buy fabreeze anymore, I make my own. I can make "green" cleaners for almost everything cheaper and that work better than store bought. Instead of paper towels I have cloth napkins and rags. My dog's cage is lined with an old mattress cover that started to fray. There are endless ways to reuse, recycle and repurpose things so you're not spending money as you get your budget back into balance
  

As always, we're here to help and encourage you so log in when you can and let us know what you're thinking.

[midjd]

You say in the OP that you don't want to declare bankruptcy. This is understandable - and there are some women here who have paid off much, much more CC debt than you have. It can be done.

However, you cannot pay off $20K in credit card debt when you're bringing home about $16K per year and spending $13K per year on housing. It is just not possible. And no debt consolidation service can solve this dilemma (though they'll be happy to take their cut off the top for as long as you're willing to pay them.)

So you have a few choices. You can increase your income - you would need to be bringing home at least $3K per month for your current housing/utilities to be a comfortable percentage of your salary - so you're looking at a job or stream of income of about $45,000 per year. If you'll let us know your skills/abilities/education/location (urban vs. rural), we can definitely work with that.

Or you can move to a cheaper house or lower cost of living area. Perhaps moving in with relatives if possible.

Or you can declare bankruptcy (though with your $300 or so per month of discretionary income, you may not be able to avoid getting back in the hole with your current income/housing costs).

Whatever you do, DO NOT TOUCH your 401(k). At 39, you need every penny of that for your future. And even if you withdrew the entire amount, with taxes and penalties it wouldn't pay off your CC debt. The 401(k) is safe if you declare bankruptcy. I work with clients in foreclosure and have seen some heartbreaking cases where families drain their retirement accounts to try to hold on to a house, and end up losing it anyway.

There are some tough choices to be made, but you do have options. There are women here who have been in similar situations and have made it through to the other side - it is possible. But time is of the essence, so you may need to make some decisions pretty quickly. Good luck.

[Poppet]

Yeah, that's good advice from Midwesternjd.

Don't bother touching your 401k. That's not there for you to bail yourself out of a financial bind. It's true, people dip into their old age savings all the time and it makes matters worse.

You could pay your debt off with your 401k, but it delays the much needed moment of Getting Real that much longer.

And guess what?

You'd still not have conquered your fundamental problem of living beyond your means.

You'd end up right back where you started but worse because you no longer have a retirement account. And you'd probably have to pay penalties.

Nope, raiding your retirement account is .....just forgetaboutit.

[phil5185]

Income- $1300 monthly

mom, check your Federal Tax withholding rate at Work, fill out a new W4 in the HR Dept. Not only is your annual tax bill zero, you should get about a $3000 CREDIT for your child in April. So make certain that no Fed Tax is being withheld from your paycheck.

I would do something about the Van, if that $350/m is a car payment, that is $4200 per yr that you need. Use the $4200/yr for your other needs and buy a reliable 6 yr old car for $5000 or $6000.

And as others said, cashing out or borrowing on the 401k is a last resort. (But how much is in the account? Is this a 5-figure asset? Or a 6-figure asset?)

ETA - oh, now I see - mever mind

[Wisconsin Beth]

momin, why'd you bail?