Budget/ Getting out of Debt!

**autoxer** · 08-12-2015, 10:08 AM

Originally posted by bigboy1989 View Post

What is the best way to go about this?? THANKS!!!

There are many different ways to attack debt, highest interest rate first, lowest balance, highest minimum payment, but the bottom line is, the best way to go is the one that keeps you motivated.

**riverwed070707** · 08-12-2015, 10:18 AM

Those bills total $972.40... where does the rest of your income going?

Also to clarify, the $2100-2700 is AFTER gas, groceries, insurance, etc? What do you make before those are paid?

**disneysteve** · 08-12-2015, 10:28 AM

Welcome.

You've got quite a mess to deal with. Plus crazy high interest rates, probably due to poor credit I assume.

I think you need to give some serious thought to selling some stuff. You have a car loan and a bike loan (I'm guessing the Yamaha loan is for a cycle and not a piano or lawnmower). You don't need both. How much could you get for the bike?

How about Jared, Cornwell, and Best Buy? Do any of those debts represent items that you could sell to raise money?

Tanning? Seriously? It may not seem like a lot of money but aside from being a really stupid thing to do, you can't afford it. That money needs to be going to pay down debt, not give yourself skin cancer.

Can you give more detail on your spending? If you take home at least $2,100 after gas, groceries, and insurance, you should have plenty left over to attack these bills.

Normally, I would say to focus on the highest interest rate first, but this is one of those times when I would modify that, and all of your rates are pretty high anyway. Knock out the Jared loan. It's the smallest and you've got enough of a surplus each month to pay it this month. Then do the first Capital One on your list, then the second one. You can probably do that over the next 2 months tops and give yourself some breathing room. You've got enough income and low enough expenses to clean this all up pretty quickly if you stay focused and stop borrowing money.

**Jluke** · 08-12-2015, 12:21 PM

Originally posted by bigboy1989 View Post

Minimum monthly Payments:
Jared: 55
Capital one: 25
Capital one: 25
Cornwell tools: 132
Capital one: 25
Car: 318.15
Best Buy: 45
Yamaha: 87
One Main Financial: 175.25

This is the red flag... You can't get ahead by making minimum payments. You have quite a few low balances (under $1000). Pay them off ASAP.

I'm all for leveraging credit to work to your advantage, but this is not the case because all of your rates are high.

Credit cards should be paid off in full each month. Otherwise, save more before you buy items.

**Petunia 100** · 08-12-2015, 02:24 PM

No rent or mortgage? No utilities?

**pflyers85** · 08-12-2015, 06:35 PM

You really need to get on a written budget and get this mess cleaned up ASAP. The balances on these cards and loans are symptoms they aren't the disease. The disease is you spend to excess and don't have control of your money so you are relying on credit to cover what your earnings can't. You need to look beyond the credit card bills and loan payments and get every detail about your spending habits. Go and print out the last 3-6 months of your checking account statements and identify things you spend money on that you can live without. Many of the items you purchased on credit could have likely been purchased with cash if you had the patience to save and did a better job at prioritizing want vs need. It's ok to satisfy some wants here and there and slowly acquire nice things.

**bigboy1989** · 08-12-2015, 08:09 PM

Ive cut back on spending. I do NOT use credit cards at all anymore. After doing some figuiring today, I believe I will be taking 60% of the 2100-2700 every month (60% per week deposited in a seperate account), and that will go towards my debt. I plan on using the snowball method. I also forgot to mention that I have had a simple IRA thrue my work and they match the 3% (Maximum) that I put in.

**Permanent Temp** · 08-12-2015, 08:29 PM

People in this forum can be wicked harsh.

That being said you do have a mess on your hands but that's why you came here yea?

The picture you gave us is not complete. It would be helpful if you wrote out all your expenses and posted how much you make after you take taxes out that would help us to help you. That being said I think its good you do know what your debt is.

When I paid off my credit cards I did it by removing the ones with the highest interest rates first.

In your case you have almost all amounts under 1K and payments of all different sizes.

As far as the credit card side of the mess goes I would pay off:

Cornwell Tools First.

Then I would roll that 132 to help you pay off Best Buy paying 177 a month so you can avoid all those interest issues.

After that's done I would probably pay off the remaining cards by highest interest rate with the snow ball because it shouldn't take long.

e.g.

18.05 % Cap One Paying 202
15.94 % Cap One Paying 227
12.9 % Jared Paying 282
0 to 22.94% Capt One Paying 307

By the time you get that paid off you will have to figure out where you are financially but I'd probably go right on to pay on the Yamaha card at 332 a month. It should be a good start to getting money off of those cards!

I'm confused by what you posted about the loan are you paying 4245 off that loan?

Also do you have a emergency fund? You should really have one or try to build one now if you don't it will really help trust me. I've emptied and re-filled mine twice already and I was so thankful that I was able to do that instead of having to borrow money or put in on a credit card.

**bigboy1989** · 08-12-2015, 09:24 PM

Thanks for the advice! That sounds like a great game plane. Even though I really want to pay off the car and small cards ASAP, I need to make sure the best buy card gets paid off sooner rather than later. In January, the deffered interest of 389 will hit and in June 578!!!!

As far as the Yamaha card goes, this was for a Raptor 700 (ATV). Reason I really don't want to sell this is, even tho I dont ride it much now, If I do in the future I can never buy and modify one to be like mine for what I have into it. I got a bunch of aftermarket parts on it from a buddy for super cheap that make it a dream to ride. To buy one new again and build what I have would cost me $13k plus. I cant justify selling it for the 6500 tops I might get out of it. I figuired I will just buckle down and focus on paying off these debts! Thanks again for the replies, feel free to keep them coming!

**LSams** · 08-13-2015, 07:26 AM

Here's what I would do..

Firstly kudos for being willing to take a look at your situation and ask for help. You are well on your way to resolving this debt.

Without knowing your budget and how much disposable money you have after bills, it's hard to make a specific plan.

I've been through what you are going through and the way I attacked the debt was using the snowball method, forgetting about the % rates and attacking the smallest to largest debts. It really works.

Make sure you are doing a written budget monthly. It's essential to getting and staying on top your debt / finances.

Cut your expenses and increase your income. I joined a gym at my community center for $25 for 3 months, switched to Walmart cell plan for $40 unlimited everything. Sell everything you don't need. Get a second job.

What's the car worth? Consider selling your car and buying something with cash to rid yourself of the car payment and possibly having money left over if the cars worth more than you owe.

You could be out of debt within a couple of years max.

**autoxer** · 08-13-2015, 07:58 AM

Originally posted by bigboy1989 View Post

To buy one new again and build what I have would cost me $13k plus. I cant justify selling it for the 6500 tops I might get out of it.

Beware of the sunk cost fallacy. If it is only worth $6500, then it doesn't matter how much went into it. The only question you should be asking is what is the best decision going forward. Should you sell it for $6500 and put that towards your debts, or should you hang on to it, keep paying interest and let it keep depreciating while you aren't riding it much. If it is such a dream to ride, then why don't you ride it more often?

Reframe the question: 'If you saw that exact ATV on craigslist for $6,500 would you go take cash advances from all of your credit cards to run out and buy it?'

I went through similar emotions, as I modified a sports car and then realized it was affecting my other financial goals. Ultimately I sold off all of the parts, sold the car and started saving for a house downpayment. I certainly miss the car, but have no regrets, because I'm in a much better position now.

**Bob B.** · 08-13-2015, 09:58 AM

I'd just echo what autotaxer said. Sell the ATV, pay off the Yamaha loan, and use whatever is left to pay off as many high interest debts as you can.

Quit going to the tanning booth.

You can be nicely tanned with a sweet ATV, and broke all the time.

Or, you can start acting like a grown up.

**scfr** · 08-13-2015, 10:30 AM

If I am reading correctly, you plan to leave yourself $840-1,440 per month in play money on top of the "play" monthly bills of tanning, cable and gym?

Given the amount of debt you have, that makes no sense to me at all.

Keep the trash service.

Give yourself $50-100 per month of play money and get all of that debt paid off within a year! If you want to keep the tanning, gym, or cable, it has to come out of your play money budget.

Work as much overtime as you can.

That's my advice. Take it or leave it. Your choice.

P.S. I agree with what others have said about selling the ATV.

**snafu** · 08-16-2015, 10:11 AM

I suggest you add up how much you paid in late fees/interest/costs in the month of June for all the loans, CCs, mortgage, outstanding debt. Let's stop that ghastly outflow. I want you to be in charge or your money instead of the money being in charge of what you can do!

Check with an insurance broker to see if you can get a better rate. Put ATV on fire/theft only to reduce the costs, you're not driving it right now. This is financial control vi a thousand small cuts. Call CC customer service and ask them to reduce interest rate. The worst thing that will happen is 'no.' As for a supervisor and repeat request. Some actually co operate. Go through your home and put post--it-note or piece of tape on every items you no longer use, no longer need, no longer serves you and start taking photos, writing a brief ad and posting on Facebook sale page and CraigsList. Price similarly to other ads based on condition. Anything recovered from sums already spent is good, apply immediately to Best Buy pay down.

If you got serious, took on overtime available, temporarily stopped un needed spending like tanning [cancer risk], gym, cut back to basic cable + Netflics for a year and gave yourself a cash 'allowance' like $ 200. a month, [once gone so is fun spending until the following month] you could have the debt gone in slightly more than a year.

I'm confident you can do this and get back into control. If you post all your payments, we'll be here to cheer your every step forward.

Budget/ Getting out of Debt!