Post # 1
Yesterday I made the FIRM decision to take hold of my debts and finances. I don’t have as much debt as others who own homes, multiple cars etc might have but it’s a little much for a single girl with no kids. My job provides free meals and relatively inexpensive lodging (which is automatically deducted from my check). So that is taken care of. This is a basic run down of my finances.
$372-Monthly car payment
I also have other debts from loan companies, credit card companies and 2 banks. Also 2 payday loans (eek). I make less than $2000 a month after my rent is deducted. I know I have been irresponsible financially, the majority of this debt is from my early 20s when I had no concept of money or financial responsiblity. Any budgeting tips, referrals to debt relief companies or even advice on whether bankruptcy would be an option is greatly appreciated!
Post # 2
$150 for a phone bill sounds insanely high to me. Is that normal where you are?
Does your job provide all meals free or one per day?
Are utilities included in your rent?
Post # 3
Snowball method – Dave ramsey! Look into his teachings, podcasts, etc. It is a very effective method to paying off debt quickly and keeping motivation while doing so.
Post # 4
I account for every penny I spend using a budgeting app. I use Expense Pro. That way, I know exactly where my money is going and where I should focus on making changes in my spending.
Post # 5
Look into zero based budgeting, a la Dave Ramsey. He has a free app called Every Dollar. The theory is to account for every single dollar of your income before you get it, including savings, rather than just being lax about it. I ended up making my own spreadsheet with the same concept, but I base it in 4 week increments rather than the app’s monthly increments since I’m paid bi-weekly.
Another Dave Ramsey trick I’ve incorporated is taking cash out for all my “discretionary” spending, like gas, groceries, eating out, general spending money. This way, when it’s gone it’s gone.
As an attorney, I would highly discourage filing bankruptcy or trying to use a debt consolidation company. A bankruptcy will haunt you forever, and is rarely the best option. Debt consolidation companies might appear to fix your problems, but they won’t fix your spending habits.
In short, check out Dave Ramsey. They have a ton of free resources. I also like to follow Dave Ramsey hashtags on Instagram for inspiration. I don’t follow his methodology exactly, but I have incorporated parts of his teachings that work really well for me.
Good luck! I know it’s daunting!!
Post # 6
$375 sounds high for car payment for someone who makes $2000/mo.
Financial Samurai rule of thumb says cars shouldn’t be more than 10% of annual salary, if you’re in “saving” mode. I’d trade the vehicle for a used car no more than $3k.
Post # 7
Since we’re almost into June- make a promise to yourself that you will write down everything you earn/ spend for the month of June. You can do this online on a spreadsheet or as simple as $ In/ $ Out on paper.
At the end of the month, you can see in print where your money is going. Group and add up your expenses- ie ‘Bills’, ‘Bank charges’, Meals/ coffees out, gifts, over the counter medication, beauty (hair cuts/ make up etc) This is often an eye opener, it was for me (It was like the more I earned, the faster I spent so I needed to reign that in). And all those little incidental purchases (coffee and donuts, lottery tickets, magazines and chocolate bars at the checkout counter) add up.
Try to pay off the payday loans asap, that’s a vicious circle to get into.
Start a small savings account and promise yourself you’ll only touch it when absolutely necessary. This will help you avoid the pay day loan trap by having money of your own to fall back on.
Look for small ways to cut corners- are you paying too much in banking fees? Cell phone bill? Try switching to different plans- do you really need all the bells and whistles the more expensive ones come with?
Post # 8
Yes, it is very high! I’m looking to switch plans. And yes all utilities are included 🙂
Post # 9
Yes, I got my car from a ‘buy here pay here’ place because I have such abysmal credit and couldnt get a proper dealership car.
Post # 10
Well done for making plans to take control! Sometimes admitting that we need to deal with it is the hardest step – I’ve been there and still am to some extent.
I would say:
Don’t get drawn into consolidation. Unless you’ve addressed the spending habits, this is a quick way to double your debt especially with credit cards if you don’t close them.
That said, do try and keep the debt interest free if you can. I’ve just done balance transfers between my two credit cards (for small fees, but lower than the interest was about to be) to extend my 0% interest offers into 2020 which gives me ample time to pay them off.
There are often two plans of attack when it comes to paying down debt. Both involve throwing everything at it, but you might snowball like a PP suggested and put minimum payments on everything but the debt with the highest interest rate, overpaying that as much as you can, then move onto the next one etc. Personally I’d recommend this approach. An alternative, if the interest rates are similar, is to pay off the debts in order of size, smallest to largest. This can feel good because you look like you’re making progress!
I know plenty of people who make a payment a day – even if it’s just a few pence. My bank offers something where they round up your transactions to the nearest £ and put the ‘pennies’ into a savings account so I do that rather than paying it off debt.
Do start an emergency fund, so you don’t have to reach for a credit card if something goes wrong with your car for example. I put £50 a month into mine, plus the pennies above.
I agree with those who’ve said you need some kind of spending tracker, and ideally a budget. I use (an old one-off payment version of) You Need A Budget but alternatives have been suggested. First you need to understand where your money is going. If you bring home 2k and only spend 1k in bills – do you actually have 1k left over? Probably not! Track your spending and start to set aside money for specific jobs. I pay my car insurance annually, but I don’t set aside money towards that every month and I ought to, for example.
Post # 11
I just put a little in savings, then pay my bills… then whatever is left over pay it all towards debt. Leisure and or shopping for things you don’t need just have to be put on the back burner for a while.
I also look for coupons and deals for groceries because cooking for us is SO cheap and fun anyways.
I paid off $25k in 1.5 years (school debt) doing all this. And still took 4 beach vacations… and no… I don’t have a great salary.
You can do this. 🙂
Post # 12
Okay, what I would (some of this is repeating what others have said):
– Track your spending. I have done this in a spreadsheet for the past 4 years. Really helps me to know exactly where my money goes. Apps make it easier, I live abroad though and didn’t find any that suited with the different currencies I use. But you could look into apps instead of creating a spreadsheet.
– It sounds like you don’t have a lot of necessary spending other than what is mentioned above. I would take out a certain amount ($100?) at the start of each month. That’s the money you have to play with. All coffees, meals out, clothes, toiletries, etc need to come out of it. Don’t put anything on a card.
– Put a small amount ($100?) into a savings account each month. Don’t touch it unless there’s an emergency.
– Throw the rest at your debts, using the snowball method mentioned above (paying minimum payments on all and putting the rest towards the one with highest interest).
– Make sure to have some low cost hobbies, so you don’t get bored and go out and spend money!
Post # 13
- Wedding: May 2015 - St Peter\'s Church, East Maitland, and Bella Vista, Newcastle
Change your phone plan. $150 a month is insane – I pay $40 a month for unlimited calls and texts and enough data that I never run out.
Can you trade your car for a used car with a smaller payment or one you can buy outright? That payment is also very high.
Find a credit card with 0% on balance transfers for the first while, and transfer your existing cards to that.
Basically, work out what minimum payment on each loan/debt is per month. Hopefully it adds up to less than your income. Anything left over, throw at the highest interest loan. Once that’s paid off, take the extra and the now-paid off loan’s payment, and throw that at the next highest interest loan. Repeat, and over time you will end up paying things off faster and faster.
Do you have anything that you can sell? Clothes you don’t wear, unused sports equipment, anything. Any profits go to the highest interest loan.
Any way of getting a second job? Babysitting, dog walking, bartending, Uber? Any more income will help.
Post # 14
Can you refinance your car loan with a better rate?
Get rid of your payday loans as fast as humanly possible. Those are interest sucking nightmares and really need to be avoided at all costs.
Pay off your loans with the highest interest rates first (which I can almost guarantee is the payday loan). Stop going out to eat and all your unnecessary expenses for a few months and put every penny you can into getting rid of this debt. Getting rid of this debt will also begin to repair your credit score. Once it’s paid off, be responsible with your credit and watch the number slowly start to recover.
Does your county have a financial planning course? Mine offers a few courses like this, and I think you’d benefit from it.
Post # 15
Switch phone plans immediately. I’ve never heared anyone pay over $30 for unlimited calls, text and data (unless you are paying the phone off in instalments and it’s included in the bill).
$2000/month (or how much less) is quite good when food and accommodation is already been taken off. So basically after your mandatory payments you have about $1200 each month. I think you are doing quite well and can do larger loan payments.
Anyways, my put some money aside to savings account immediately when you get your paycheck instead of end of the month. Also write down all your outgoings. Check all your loans and interest rates and prioritise what need to be pay off first. in cone places it’s possible to take a loan from a bank to pay off all high interest loans so you only have debt to one place, maybe check this with your bank. Good luck!