Living on a Budget, Saving Money/credit issues

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QUESTION: Hi I have several debt items that I'm trying to take care of with the limited income that I have. I also have 2 student loans with monthly payments at approx. $100 a month. I wonder if it is best if I talk down the payments with the lenders to only $25 a month each or ask for a deferment or forbearance. I have had both in the past. but I want to know what option would have the least negative impact on my credit? Im trying to increase my credit score and manage my debt better thanks

ANSWER: Hi Tina!  I will try to answer this as if I was in the same situation.  First if you dont have a written budget that you do every month,get started on it.  In your budget pay all of your necessities first, such as food clothing shelter and transportation.Start on a mini emergency fund (1000.00) first, so you do not have to keep going into debt when something happens.    As long as you have food, a roof over your head and a way to get to work, you will be in good shape.  List all of your debts smallest to largest, excluding your mortgage. Now depending on what type of debts they are, if its IRS, they need to get paid.  They can create a lot of havoc in your life.  Jump on your debts with any money left over in the budget, and attack the smallest with all of the money you can spare and pay the minimums on the others.  If you can defer the student loan without any major issues do it until the others are cleaned up.  Do all you can to make any extra money or have a yard sale.  You need all the extra cash to throw at these debts  that you can spare.  Do not miss a house payment or car payment over a credit card bill! If they are credit cards the only way they usually negotiate a lower payment or a settlement is if you are behind. Don't worry about your credit score now, just look to pay off each debt one at a time as you come to it on the list.  Without knowing your income and outgo on my end this is the best advice I can give you at the moment.  I hope this helps!  Let me know if you have any more questions and focus on one debt at a time so you do not become overwhelmed!

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QUESTION: thanks for your prompt response! I was also wondering what is the most conservative approach with finding an appropriate mortgage or rent payment that you can afford? For instance, I make about $3300 a month after taxes. my other major expense is my car note which is $340 and daycare can range from $600-$1000 a month. of course I'll have utilities, phone, cable, clothing expenses, and food expense ect. I also get about $400 a month support from my husband (we live separately). I really need to move, I'm staying with relatives right now.  Just wanted to know what would be a conservative monthly mortgage rate based on my income?

Answer
Tina, for your mortgage/rent I would keep my payment  at 25-33% of your take home pay, 825-1089.  I would probably rent until you get your debts paid off and the car.  If you buy a house something will tear up and you will have to go into debt to fix it. Everyone says you are throwing money away renting, but 10k to replace an A/C unit or new roof etc. will be on the landlord until you can afford it. Also get that mini emergency fund before you start on the debts.  

Living on a Budget, Saving Money

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Tim West

Expertise

Budgeting, credit, collections, basic insurance and investing. Small business budgeting basic will and estate planning.

Experience

Financial coach since 2009. Help coach people in personal and small business financces.

Education/Credentials
Head of financial ministries at Grace Fellowship of Augusta,Dave Ramsey Certified financial counselor and 20 years of doing it my self.

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