Oppos with financial expertise, canst thou provideth advice?

"WesBarton89 - The Way to Santa Fe" (wesbarton89)
07/13/2015 at 18:59 • Filed to: None

I’ve got some pretty nasty debts that I’ve been wanting to take care of, and I’m not sure the best way to go about this.

My credit score is awful , and that’s due to mainly medical bills, and an unpaid college tuition bill of not quite $1,000 from 2010 that will be paid after I get my next tax return. Since it’s been open so long, I’m going to try to settle for a good bit less. TransUnion and EquiFax scores are a shade below 450, and Experian is a little above 500.

I’ve thought about filing chapter 13 bankruptcy, but that could be a mjaor headache and pretty expensive. My household income, before taxes, is probably in the $40k range, and that’s for three of us. We generally clear about $2200 a month after taxes, and here’s what that goes towards:

$400/mth mortgage

$200/mth escrow (prop taxes/homeowner’s insurance)

$160/mth car insurance

$200/mth gas

$250-$300/mth utilities (down from Winter when we had heat running, utilities were an absolutely unaffordable $1100/mth)

$300/mth groceries

$150-$200/mth on my daughter (diapers/underwear, clothing, shoes, etc. constantly because of how quick she grows)

$120/mth misc expenses - toilet paper, paper towels, cleaning supplies, pet food

$60/mth cell phone

$102/mth health insurance

Total $1942-$2042/mth

That leaves very little for any emergency issues that pop up (and in my life, that seems to happen a lot), like home repairs, car repairs, health expenses that insurance won’t cover, and so on. We just can’t seem to get out from under the debt. My blue Durango is for sale, but that’s not selling. Other stuff we’re trying to sell isn’t selling. Our credit (mine and my fiancee’s) are too poor for any kind of loan, nor do we have anyone financially well-enough off that can co-sign any sort of loan to pay off some debts. At tax time, I’m going to try to pay off some debts, but that’s only going to go so far, because there are still lots of home repairs that need to be done, and it just seems to be endless. For sure I’ll be paying off my tuition bill so I can go back to college, and some other debts, but it’s not going to fix everything.

Has anyone else been in this situation and escaped?

DISCUSSION (16)

dogisbadob > WesBarton89 - The Way to Santa Fe
07/13/2015 at 19:04

check your spam folder about how you can make $8000 a day :p

Alex from Toronto > WesBarton89 - The Way to Santa Fe
07/13/2015 at 19:17

I’m not a financial expert but /r/Personal Finance might be able to help you.

Link: https://www.reddit.com/r/personalfina…

lone_liberal > WesBarton89 - The Way to Santa Fe
07/13/2015 at 19:23

You might try a credit counseling place that might consolidate your debt so that you only make one payment. The problem is finding a legit one instead of the many scam places.

someassemblyrequired > WesBarton89 - The Way to Santa Fe
07/13/2015 at 19:34

I know you want to use your tax refund but it may make some sense to adjust your witholding rate so you get the cash now rather than giving the government an interest free loan.

In terms of how to handle outstanding debts that’s a tougher call without a lot of detail since some debts cease to be collectible/reportable after a period of time. Crediy counsellor might be a good idea, but get a recommendation from the BBB or a trustworthy community organization for someone local.

jguttes > WesBarton89 - The Way to Santa Fe
07/13/2015 at 19:35

Go to your library and check out a book titled Total Money Makeover by Dave Ramsey. It’s a little preachy but the facts are solid, he lays out a good plan for people in debt and living debt free.

I'm a fan.

RockThrillz89 > WesBarton89 - The Way to Santa Fe
07/13/2015 at 19:46

You’re not in bankruptcy territory yet, in my opinion. One quick thing you can do is lower your tax withholdings. If you’re consistently getting a refund thats doesn’t fluctuate much, you’re withholding too much. For example, if you’re getting $1500 back every year, drop withholding about down by $1000. There’s about $83 a month extra. That gives you some some buffer so you shouldn’t have to pay, and adds a little to your bring home each month. People tend to make the mistake of looking at a tax refund as a yearly income bonus; it’s not, you’re just giving the government an interest free loan. Not a very popular tactic, but one to consider.

Does that utilities number include internet and cable? If it does, do you really need cable? That could save you a good deal each month. Drop cable and pick up Hulu and/or Netflix.

I’ve been trying to cut my debt load too recently. I’m wanting to buy a house, but I don’t think my current credit card debt would look good to a lender as far a good rates go. I just bought a car, so I know my credit is good enough to get a decent rate (I got the best rate on offer at the time). Just going through and getting rid of unneeded subscriptions helps a good bit. $8 here, $15 there adds up quick.

extraspecialbitter > WesBarton89 - The Way to Santa Fe
07/13/2015 at 20:03

Some simple savings options for ya:

I know it’s not the most appealing option, but have you considered a second job? I had to take on another job while I was in college just so I could at least eat something everyday. Could barely afford ramen.

Do your parents or in-laws live in the area? Maybe cut down the grocery bill with extended family meals?

Also, how many cars do you own? The $160/mo for insurance seems pretty high for a single vehicle. If multiple, then consider carpooling.

Is public transportation an option? Not saying sell your cars, but essentially returning the tags to get rid of the insurance bill, and therefore knocking out the gas costs as well.

Finally, see if you qualify for a loan modification to lower your mortgage, since refinancing is going to be unrealistic.

WesBarton89 - The Way to Santa Fe > extraspecialbitter
07/14/2015 at 10:51

Parents and in-laws work schedules are about the opposite of mine, so we really only see them on the weekend.

Insurance is for two vehicles because of mine and my fiancee’s work schedule, we need two. I take public transportation when I can to get to work, but it doesn’t run after I get off.

Loan modification is impossible, because my mortgage isn’t actually a loan. It’s a good faith payoff of what my mom and grandmother owed on the house before they moved, no banks involved. No risk of foreclosure either, so that’s a good thing. I could extend the payments out, but my uncle, who I’m making the payback to, is already 80 years old, and I don’t want him to deal with that any longer than he has to at his age.

Second job I’ve thought about, but no places good are really hiring that would work with my schedule. But I have definitely looked and will continue looking.

WesBarton89 - The Way to Santa Fe > dogisbadob
07/14/2015 at 10:51

I’ll be rich!

WesBarton89 - The Way to Santa Fe > RockThrillz89
07/14/2015 at 10:54

Utilities do not include internet and cable. I don’t have those right now. I did drop my withholding down, so hopefully that will help. I should still get several thousand back for taxes. I normally get about $7500 back, so I’d still get a good amount back even with the drop in withholding. I absolutely hate tax stuff though.

WesBarton89 - The Way to Santa Fe > lone_liberal
07/14/2015 at 10:55

That’s crossed my mind, but finding one is rough.

WesBarton89 - The Way to Santa Fe > someassemblyrequired
07/14/2015 at 10:59

I did lower my withholding about a week or two ago, so that should help. I’ve got debts going as far back as March of 2009, and as recent as February 2014. I also have hard inquiries from applying for a few loans here and there, but they only stay on for two years I think. By 2017 most everything will have fallen off.

WesBarton89 - The Way to Santa Fe > jguttes
07/14/2015 at 11:02

I’ll check that out.

WesBarton89 - The Way to Santa Fe > Alex from Toronto
07/14/2015 at 11:02

Reddit’s blocked at my job :/

someassemblyrequired > WesBarton89 - The Way to Santa Fe
07/14/2015 at 15:27

OK good - it’s probably a good idea to set up a little emergency fund with the difference in withholding (put it in a separate account), and once that gets to a reasonable level start knocking out house repairs or dealing with the old debts if it makes sense (it may not for all of them depending on age/size/fees & interest added to initial debt). Usual rule is knock out the newest/highest interest debts first, but remember making a payment can reset the 7 yr clock on the collectability/reportability of a debt. Again a legit credit counselor might be a very good idea, especially as it sounds like your primary need for credit is for emergencies rather than for a mortgage or car loan.

WesBarton89 - The Way to Santa Fe > someassemblyrequired
07/14/2015 at 15:51

Yeah, I know making a payment, or even a dispute, can reset that clock. That’s why, with the oldest debts, I’ve just let them sit. Though some just get re-reported on their own, and I don’t know how that affects the timeframe.

I’ll see if I can find a good credit counselor. And I’ll see about a separate account.