About Chris G. Expertise I am a financial counselor that can answer consumers' personal finance questions in following areas: - Beating & Reducing Debt - Budgeting - Building Savings - Careers & Extra Jobs - Dealing with Collectors - Identity Theft - Money & Marriage - Personal Insurance.
Experience The past four years in the banking field have given me a heart for helping families with their finances to better their financial future.
Question QUESTION: Hi,
I hope you can give me practical solutions to my debt problem. I am married and in my 30's, renting and have no kids. My husband and I have accumulated an enormous amout of debt $50,000(car loan, credit cards, personal loans). We are still getting by but it's been really tough. We are making minimum payments on all credit cards, we've never missed a payment though. We take home about $5,400/month, rent is $1350 and utilities (cable, cell, home phone, electric)about $275. We only have enough for groceries and gas and sometimes we even have to charge food on a credit card until payday comes. We are trying our best to save and spend less but I feel like its futile. It's always a struggle when an unexpected expenses come up--I always end up putting on my credit card. We don't live a luxuries life--we seldom eat out, buy clothes or go on vacation. I just don't know what to do anymore. I am very willing to try out anything you might suggest to help us get out of debt fast. I just can't live like this anymore--it's so depressing. Another thing too is that my husband needs to got to school full time this october for a better career and higher paying job. He could still probably work but we will definitely hurt for money--we will need $600 a month to survive for the next 2 years. He will probably take out a loan for his schooling--about $9000 for the whole program.
Please tell me what to do. I appreciate any input.
ANSWER: Dear Anastasia,
Thanks for the email. I have a few more questions that I need to ask in order to clarify the current situation. If you will answer these for me, I will do my best to give you a way to attack this problem.
1) Can you list the debts that you pay each month?? Ex: car payment, student loan payments, minimum credit card payments, etc.
2) Approximately how much are you and your husband spending on food, clothing, and transportation? (not including car payment which you listed above)
3) Is there any expenses that you can either reduce or eliminate for a short period of time as you work through the debt?
Thanks for the input. I look forward to being able to give you a clear answer.
Sincerely,
Chris Gagner
---------- FOLLOW-UP ----------
QUESTION: Hi Chris,
Thanks for taking the time in helping me out.
Here are the answer to your questions:
1. Credit 1 $450
Credit 2 $130
Credit 3 $250
Credit 4 $240
Store Credit $50
Loan $335
Car payment $243
Car insurance $180, cell $120, cable, phone & internet $120, electric $35, supplemental insurance $69, gym $45
2. We spend $150 average on food, $75 on gas every week
plus laundry an average of $35/ week.
3. I can convince my husband to give up his gym membership since he hasn't been going. The supplemental insurance is actually something i plan to use for maternity since it insures my salary. Every paycheck I try to set aside $100 or more for rainy days and unfortunately there are always rainy days so I never get to build that emergency fund as much as I want to. We recently switched to a PPO insurance and it has been a pain since we have all these deductibles that I am paying. I plan to go back to HMO next year.
No students loan yet but like I said, my husband will start school this year and that will add up.
I try hard to manage our budget but despite that, I feel something has to be done since we are living paycheck to paycheck.
I hope I am not giving you a headache with all these debts but I do hope you can offer some help and wisdom.
Thank you very much!
Answer The two of you certainly do have a lot on your plate. I would definitely recommend that your husband hold off on school until you get to a spot where you can better afford school. I understand that he wants a better job, but at the moment, getting these debts cleaned up is going to be a priority.
The first thing that I would recommend is that the two of you get on a written budget if you aren't already. Pick up the book "Total Money Makeover" by Dave Ramsey. The author has one of the best budgeting ideas of anyone in our generation.
Next, you'll need to cut expenses anywhere that is necessary. Some suggestions (they are only suggestions) would be to 1)Reduce your cable to basic 2)Get rid of either the cell phone or home phone 3)Throw out the gym membership 4)If you have friends or family with a washing machine, ask them if you can use their's while you're getting out of debt 5)If you feel that you need supplemental insurance and you are using it, then keep it. Otherwise, I would get rid of it if you have another health care plan. It sounds like you have paid a decent amount in deductibles recently, so the supplemental plan might be worth keeping.
Those are just suggestions of things that could be cut, but you should seriously consider some of them.
The next thing that you and your husband need desperately is to raise your income. This is going to mean doing odd jobs on the side, getting an extra part time job, selling everything that you have that you don't need, and going absolutely crazy about getting this debt out of your life. Keep in mind that the extra jobs will only be for a little while. You won't have to work like crazy for the rest of your life.
In the book "The Total Money Makeover", you will also find information on how to pay down your debt using what is called The Debt Snowball. Check to see if your library has this book and check it out. If not, check out Amazon or Ebay for a great deal. I've also seen it at Walmart for around $12. I'm not trying to sell you this book, but I really think it could help the two of you.
I hope that this has helped. Just don't give up. You'll get through these tough times. Let me know if I can help you in any other way.
