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Spin off - getting out of debt

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I know we have talked about this but it’s a favorite of mine to hear from others about, especially since we keep falling back in!  What are you best life hacks or methods for getting out of debt, aside from not accruing it to begin with?

How do you nibble away at or without high fixed expenses when life keeps smacking you in the face?

Give me your stories, please?

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21 minutes ago, Arctic Mama said:

I know we have talked about this but it’s a favorite of mine to hear from others about, especially since we keep falling back in!  What are you best life hacks or methods for getting out of debt, aside from not accruing it to begin with?

How do you nibble away at or without high fixed expenses when life keeps smacking you in the face?

Give me your stories, please?

Well, I am right in the middle of this right now.  Last week Dh took $300 out of our account without mentioning it to me,  I discovered it when our bank gave me a notification that our account was at zero and they had charged us $5 ( which I realize is very cheap) to take money from our savings to cover the charges.  The charges were for physical therapy that he went to three times last week.  I knew he was going but I foolishly assumed they would file on our insurance and then bill us.  Anyway, side rant there, but we are going to have to figure out how to put 3k a year into our budget because that is the deductible for Dh and he always uses it. I always think, well, he had that big surgery or whatever last year, so maybe this year we can get by with a few hundred on doctors visits.  But even his blood thinners are hundreds per month, so really I just need to be realistic and face the fact we need 3k a year for his medical.  
 

That is actually on my list of things to do today...go through our financials and prepare it in writing to show Dh that we have to tighten our belt unless we want to drain our savings completely.  
 

Have you ever gone to llnoe.com? (Living like no one else)  It is Dave Ramsey followers......they have some good ideas, but they are just a little too radical for me.  I like reading over the ‘hep me with our budget’ posts by others.  I do come up with some good ideas and more so motivation. 
 

One thing I have been going around and around with in my head is our vehicle situation.  We have a Prius with a payment...and a truck that his mom loaned us money for.....Dh drives 82 miles a day JUST for work. 410 miles a week.  If he drives the Prius it saves us a lot of money in gas.  Gas prices are low right now, but rough numbers are $18 per week for the Prius vs $45 for the truck.  So that is over $100 in monthly savings when gas is cheap.  And of course it is more than that because we drive the Prius a lot outside of work.  But the payment is $300...insurance is about $60 per month.....so is it really smart to keep the Prius?  I mean if we got it paid off yes it would be smart....and if gas prices go up, it will sure be smart....but I struggle with that whole thing.  I really blame Dh for getting us in this mess....he had a newer truck that he traded in for the Prius and then within 6 months decided he couldn’t do without a truck ( and we do have a need for one OFTEN it seems ) ...I was of the mind to never have two payments.....oh mom wiLL loan me money for it....and he acted Ike paying it back could be whenever....but now he is pressuring me to make a payment to her monthly!  So now we will be forking out MORE for the two payments then we were for the truck and so we are right back to where we were I thInk.  Arrggg.  If anyone has any insight on how to view that I would be grateful.  

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We get cash every paycheck to keep our spending in check.  Every time we stop getting out budget cash, we start spending more than we should.
 

Although my compromise is gas. I hate having to guesstimate how much gas I need, go inside to pay, go back to get change (or not get a full tank). We used to get gift cards so I could pay at the pump, but I can no longer pay at the pump with gift cards at the two stations I use most frequently. 
 

Biweekly budget meetings help. 
My husband is handy too. He can do most of our vehicle maintenance which allows us to drive cars longer. When our ac quit, he fixed that, when our 7 year old microwave quit last week, he was able to replace the switch with a $10 part instead of us having to replace the whole thing. Every time he fixes something like that we should set aside what it would have cost to hire someone. 
 

I don’t use it, but lately I’ve been hearing about the app Fetch, which gives you money back on certain items you buy. 

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13 minutes ago, Scarlett said:

Well, I am right in the middle of this right now.  Last week Dh took $300 out of our account without mentioning it to me,  I discovered it when our bank gave me a notification that our account was at zero and they had charged us $5 ( which I realize is very cheap) to take money from our savings to cover the charges.  The charges were for physical therapy that he went to three times last week.  I knew he was going but I foolishly assumed they would file on our insurance and then bill us.  Anyway, side rant there, but we are going to have to figure out how to put 3k a year into our budget because that is the deductible for Dh and he always uses it. I always think, well, he had that big surgery or whatever last year, so maybe this year we can get by with a few hundred on doctors visits.  But even his blood thinners are hundreds per month, so really I just need to be realistic and face the fact we need 3k a year for his medical.  
 

That is actually on my list of things to do today...go through our financials and prepare it in writing to show Dh that we have to tighten our belt unless we want to drain our savings completely.  
 

Have you ever gone to llnoe.com? (Living like no one else)  It is Dave Ramsey followers......they have some good ideas, but they are just a little too radical for me.  I like reading over the ‘hep me with our budget’ posts by others.  I do come up with some good ideas and more so motivation. 
 

One thing I have been going around and around with in my head is our vehicle situation.  We have a Prius with a payment...and a truck that his mom loaned us money for.....Dh drives 82 miles a day JUST for work. 410 miles a week.  If he drives the Prius it saves us a lot of money in gas.  Gas prices are low right now, but rough numbers are $18 per week for the Prius vs $45 for the truck.  So that is over $100 in monthly savings when gas is cheap.  And of course it is more than that because we drive the Prius a lot outside of work.  But the payment is $300...insurance is about $60 per month.....so is it really smart to keep the Prius?  I mean if we got it paid off yes it would be smart....and if gas prices go up, it will sure be smart....but I struggle with that whole thing.  I really blame Dh for getting us in this mess....he had a newer truck that he traded in for the Prius and then within 6 months decided he couldn’t do without a truck ( and we do have a need for one OFTEN it seems ) ...I was of the mind to never have two payments.....oh mom wiLL loan me money for it....and he acted Ike paying it back could be whenever....but now he is pressuring me to make a payment to her monthly!  So now we will be forking out MORE for the two payments then we were for the truck and so we are right back to where we were I thInk.  Arrggg.  If anyone has any insight on how to view that I would be grateful.  

 

For the medical it sounds like you need to have a sinking fund for that 3k.  If you know you are going to reach it every year have it as bill every month.

For your cars, do you need 2 cars? 

Edited by mommyoffive

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4 minutes ago, mommyoffive said:

 

For the medical it sounds like you need to have a sinking fund for that 3k.  If you know you are going to reach it every year have it as bill every month.

For your cars, do you need 2 cars? 

Ha we have 3 cars but yes we absolutely need 2.  

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Just now, Scarlett said:

Ha we have 3 cars but yes we absolutely need 2.  

 

How long until the prius and the truck are paid off?  Can you get rid of one car?

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I am a big fan of Dave Ramsey.  Sometimes the devil is in the details with him.  For example, emergency fund.  I think the concept of having a starter emergency fund while you are focused on the getting out of debt step is a very sound concept.  For us, with the $100k we were staring down and the size of our family, the $1k he recommends just wasn't working.

But, also, something Dave doesn't talk about enough, though he does mention it, is saving for the things that feel like emergencies when they happen, but really aren't.  Like....cars will break down, it will happen.  So, put some money in a separate account from your emergency fund to cover car problems.  Not like a crazy amount, you don't want like $5k in a car repair fund, a $1k emergency fund, and $3k of debt sitting around.  

Scarlett-for us, we put close to the maximum into our HSA each year.  His company puts some money in, and then they also have a wellness program where if you do X and Y or Y and Z or whatever, they put additional funds in.  So we calculate all the company's contributions for the year, then figure the difference between that and the maximum, and then round it down to a nice round number.  And we just let it roll, because that's almost like a second emergency fund for us, specifically for medical emergencies (like when DD9 broke her arm.)  In truth, doing that already brings us right at about what we would be paying for the PPO plan that doesn't have the high deductable but does have the co-insurance each time.  

 

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We have never been in deep debt just periods of time with zero savings and up to $6000 in credit card debt. These have mostly always been times when we knew it was coming. For example, dh's recent underemployment. We didn't know it was happening but once we found out we had enough time to come up with a game plan. Other example is when we unexpectedly had to replace all the plumbing in our old house. We had enough time to figure out a game plan.

Each time that game plan has been utilizing 0% credit card deals. So, we sign up for a credit card that has a 0% promo for at least 12 months, usually 18 and we pay for the expense on that. Then we figure out what needs to happen to pay that cars off before the promo ends. Sometimes that is with our tax refund. Other times I have to ramp up my pet sitting or we go to a bare bones budget. 

Our bare bones budget means we get rid of anything that isn't absolutely necessary, such as, Netflix, dance classes, anything going towards homeschooling because we work hard to find free resources, gifts, and eating out. Even groceries and gas are drastically cut. Basically I set an amount for gas each week and once it is gone we don't drive anymore, it is always enough to get dh to work or me to work if I have a pet sitting gig.

Then once the debt is off we stay in that mode until our savings are replenished enough to feel comfortable

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Just now, mommyoffive said:

 

How long until the prius and the truck are paid off?  Can you get rid of one car?

3 1/2 years on the Prius.  $10250  the truck which is roughly 4 years paying $200 a month.  
 

Third car was given to me by my Dad. It is a 2003 Mitsubishi Eclipse GTS. With less than 50k miles.  I have really not wanted to sell it because A) it means a lot to my dad, B) it won’t bring too much unless I find just the right buyer and C) it is the paid for vehicle...

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5 minutes ago, Scarlett said:

3 1/2 years on the Prius.  $10250  the truck which is roughly 4 years paying $200 a month.  
 

Third car was given to me by my Dad. It is a 2003 Mitsubishi Eclipse GTS. With less than 50k miles.  I have really not wanted to sell it because A) it means a lot to my dad, B) it won’t bring too much unless I find just the right buyer and C) it is the paid for vehicle...

Have you thought of selling the Prius and driving the Eclipse? You’d get rid of that payment and if you can sell for more then is owed(?), I’d put that money toward the truck.

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Just now, May said:

Have you thought of selling the Prius and driving the Eclipse? You’d get rid of that payment and if you can sell for more then is owed(?), I’d put that money toward the truck.

Yes, I have thought of that.  But Dh drives the Prius to work (82 miles per day).  If he starts driving the truck daily we spend a lot more on gas and it ends up not saving us that much.  And Dh can’t drive the Eclipse daily.  He is too big, and has too many issues....neck, back, knees that make it really difficult for him, especially getting in and out of it.  Plus the Eclipse only gets slightly better gas mileage than the truck. Maybe 22 vs 18 ish for the truck.  

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1 minute ago, Scarlett said:

Yes, I have thought of that.  But Dh drives the Prius to work (82 miles per day).  If he starts driving the truck daily we spend a lot more on gas and it ends up not saving us that much.  And Dh can’t drive the Eclipse daily.  He is too big, and has too many issues....neck, back, knees that make it really difficult for him, especially getting in and out of it.  Plus the Eclipse only gets slightly better gas mileage than the truck. Maybe 22 vs 18 ish for the truck.  

Then I’d probably sell the Eclipse and put the money toward the vehicle you want paid off sooner. I’m sure your dad would understand🌺

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3 minutes ago, Scarlett said:

Yes, I have thought of that.  But Dh drives the Prius to work (82 miles per day).  If he starts driving the truck daily we spend a lot more on gas and it ends up not saving us that much.  And Dh can’t drive the Eclipse daily.  He is too big, and has too many issues....neck, back, knees that make it really difficult for him, especially getting in and out of it.  Plus the Eclipse only gets slightly better gas mileage than the truck. Maybe 22 vs 18 ish for the truck.  

If you sell the Prius, you are saving $360 a month (payment plus insurance.)  It looks to me like the Prius is actually costing you $260 a month rather than saving you any money.  In the 3 yrs it will take to get it paid off, that's nearly $10k.   Financially, I think it makes more sense to sell it, drive the truck daily, and use that $260 a month to pay the truck off in 2yrs instead.  

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7 minutes ago, happysmileylady said:

If you sell the Prius, you are saving $360 a month (payment plus insurance.)  It looks to me like the Prius is actually costing you $260 a month rather than saving you any money.  In the 3 yrs it will take to get it paid off, that's nearly $10k.   Financially, I think it makes more sense to sell it, drive the truck daily, and use that $260 a month to pay the truck off in 2yrs instead.  

I totally agree with this.

 

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I just don’t know what we can shove off.  And unfortunately my husband manages the bills.   But our fixed expenses are high and not dropping anytime soon, and we got hit with a bunch of things we weren’t able to budget for - anesthesia, funeral and marker costs, 7k for medical that we didn’t have time to set aside in our HSA from the first few paychecks of the year, our insurance refusing to cover enteral formula now, tripling of to property tax on our land, etc etc etc.

It’s been about 20k in six weeks.  And while we have a tax return and bonus due that should cover it, our monthly expenses are high enough we still are barely scraping by.  

Many of the reductions Ramsey recommends we are either already doing, they don’t apply, or we just cannot seem to get ahead enough to get it done (how does one save for an emergency fund when emergencies keep happening before the fund can be built?!).  It’s demoralizing, especially when we are already eating zucchini and lentils and the kids are out of pants and pajamas without holes.  

And I can’t talk with my husband about it because he already knows and it just makes him feel bad.  WHILE he is working more than forty hours every week already.
 

The only expense we could shift from homeschooling is piano lessons, but if we lose our teacher we cannot get our time slot back and she travels to me, which enables us to get way more school done.  We already service our own vehicles and gas is what it is, none of the trips are really voluntary. We already fix our house and appliances ourselves.  We already shop at OUAC and the local thrift stores.  We could ditch Netflix but honestly it’s pretty much the one recreation we have that is a monthly cost and it’s minimal - a single screen.

I can cut some food expenses for when I’m out of the house, that would save us maybe $100 a month.  But it greatly increases the prep time and stress because the days I tend to grab on the go I physically don’t have margin in the schedule to pack (like yesterday, where I left the house at 7, drove all over creation, went to two different medical appointments with Benjamin that were four hours total, and didn’t make it back until after 3 - we barely got out of the house, let alone packed an entire set of meals for two specialized diets, I was lucky to get his pumped feeds into the bag!).

Since I got out of the hospital we have kept our expenses bare bones.  And yet the debt keeps accruing and I don’t see a way out we aren’t already trying.  If it wouldn’t destroy our credit we would declare bankruptcy and be done with it. But that still doesn’t solve the ongoing budget issues of not having much left each month after mortgages, insurance, medical, food, personal hygiene products, and trying to keep up with our house’s issues. This doesn’t even cover our needs with building so we can get out of this money pit.  
 

 

WHIIIIIINE.

 

It does feel good to lay it all out there, because it’s been driving me nuts.  Still listening in for suggestions we may not have considered, and all of you who have managed to do it give me some hope.

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Well, our only time of serious debt was when we married (dh brought it into the marriage).  I juggled 0% credit cards, and we lived on cash envelopes for almost two years.  He seriously brought pb and j to work every day.  And if we had money in our envelope at the end of the month, we’d rent a blockbuster movie.  But wow, did that make the debt disappear!

Since then, I’ve done what I was taught to do- have sinking funds (in separate savings accounts) for a variety of future needs.  They got paid first with the paycheck along with the 401k, so we learned to not really miss the money since we didn’t see it.  We used what we had left.  We lived a lot poorer than we actually were which kind of stunk at times, but it also provided financial peace. We still do the same.  I just started YNAB in January to further break down our sinking funds, thinking of any more main ‘surprise’ expenses we might face, and fund them.

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Is housing/property taxes the biggest part of your fixed expenses? Just throwing out ideas below- not sure if any are practical or doable.  Just trying to address some of your biggest fixed expenses (if it is housing).

How far away from completion is the new house you are building?  Are you having it built or doing it yourselves?  You are carrying a current mortgage plus the new place? And your current house is a money pit? Trying to recall your situation.  Is there anything house wise you can do?  Sell current house?  rent? or build just a basic house so you can move in, and then finish it nicer later?  Put a nice manufactured house on your lot instead of building from scratch?  Basically to be able to move onto your new lot much faster.

 

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I feel for you with the property tax dramatically increasing.  We doubled every eight years twice until the state put a cap on school tax increases.   I'd suggest renting out garage, driveway, or outbuilding for either stuff storage or people living.  Any property tax exemptions you could qualify for? 

Is the medical on a payment plan? If not,work with them. 

 

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AM I hate to be the one to say it but the only thing I can see you could do is give up the dream for now if that house you are planning to build.  Sell that lot, focus on finishing the house you are in and either sell it for  something that suits your family better ( I can’t remember , could it work long term?) or just stay there.  

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First, lots of hugs.  I figured the medical costs and stuff were starting to file it.  

Our get out of debt journey is not finished, and has been long, slow, plodding, frustrating, and punctuated by making smart decisions with windfalls.  Like you we aren't big spenders, but there is still money that needs to be spent.  Kids gotta have shoes that fit, for some reason, everyone in this house likes to eat every day lol.  And sometimes, that's really just how it is.  When the hole is pretty deep, it just takes time to get out of it.  It's not something that's going to happen right away.

 

One thing I am going to suggest...........

Put the tax return and the bonuses into the emergency fund/HSA and do NOT throw it at the debt.  Dave's baby step 1 is the baby emergency fund.  But even Dave says that when you have special circumstances, you need a larger baby emergency fund.  Take the entire thing and throw it in savings.  (I mean, unless they total like $100k or something lol)  

Once you have that emergency fund, I think you guys should pick a set amount, say $25, $50 or whatever, and set that in the emergency fund each paycheck.  Then, you can make a plan to work on paying off the debt. 

 

Also, check with the hospital to see about any sort of financial relief program.  They might be able to write off a portion of the medical debt.

 

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1 hour ago, Scarlett said:

One thing I have been going around and around with in my head is our vehicle situation.  We have a Prius with a payment...and a truck that his mom loaned us money for.....Dh drives 82 miles a day JUST for work. 410 miles a week.  If he drives the Prius it saves us a lot of money in gas.  Gas prices are low right now, but rough numbers are $18 per week for the Prius vs $45 for the truck.  So that is over $100 in monthly savings when gas is cheap.  And of course it is more than that because we drive the Prius a lot outside of work.  But the payment is $300...insurance is about $60 per month.....so is it really smart to keep the Prius?  I mean if we got it paid off yes it would be smart....and if gas prices go up, it will sure be smart....but I struggle with that whole thing.  I really blame Dh for getting us in this mess....he had a newer truck that he traded in for the Prius and then within 6 months decided he couldn’t do without a truck ( and we do have a need for one OFTEN it seems ) ...I was of the mind to never have two payments.....oh mom wiLL loan me money for it....and he acted Ike paying it back could be whenever....but now he is pressuring me to make a payment to her monthly!  So now we will be forking out MORE for the two payments then we were for the truck and so we are right back to where we were I thInk.  Arrggg.  If anyone has any insight on how to view that I would be grateful.  

 

44 minutes ago, happysmileylady said:

If you sell the Prius, you are saving $360 a month (payment plus insurance.)  It looks to me like the Prius is actually costing you $260 a month rather than saving you any money.  In the 3 yrs it will take to get it paid off, that's nearly $10k.   Financially, I think it makes more sense to sell it, drive the truck daily, and use that $260 a month to pay the truck off in 2yrs instead.  

Yup. Sell it, and if you have to, get a used one. Buying a used one with no payment makes sense for the gas savings, but otherwise, no, it doesn't. 

 

30 minutes ago, Arctic Mama said:

 

Since I got out of the hospital we have kept our expenses bare bones.  And yet the debt keeps accruing and I don’t see a way out we aren’t already trying.  If it wouldn’t destroy our credit we would declare bankruptcy and be done with it. But that still doesn’t solve the ongoing budget issues of not having much left each month after mortgages, insurance, medical, food, personal hygiene products, and trying to keep up with our house’s issues. This doesn’t even cover our needs with building so we can get out of this money pit.  
 

 

WHIIIIIINE.

 

It does feel good to lay it all out there, because it’s been driving me nuts.  Still listening in for suggestions we may not have considered, and all of you who have managed to do it give me some hope.

I get it. And I get that it is hard to talk to DH about because they are already working so hard! And they take not being able to "support the family" personally. But...is there anyway to increase his income? Or you to make some? Because it sounds like this is an income problem, unless you can do something cheaper for housing, etc. 

I feel you. DH wants to find a way to quit his part time teaching job and instead focus on consulting. Which would be more lucrative. But until he actually HAS a consulting job lined up, we can't afford for him to do that. And trying to find time to work on the consulting thing so he can get a job (putting together requests for work or whatever the heck they are called, updating website with video/photos of him doing his thing, etc) is nearly impossible when he is already working 2 jobs (one full time plus the part time teaching) plus commuting 1 1/2 hours a day, plus finishing up his masters degree online. 

We are getting by with things like tax refunds, bonuses, etc but that's not sustainable or smart as an actual strategy. Plan is for him to finish the masters in the next month or two, then take that time/energy and work on the consulting thing. And for me to actually get my rear in gear and get back to writing. It isn't a ton of money, but it really really helps. 

I'd also like to get into my dog training more but the time..sigh. 

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48 minutes ago, happysmileylady said:

If you sell the Prius, you are saving $360 a month (payment plus insurance.)  It looks to me like the Prius is actually costing you $260 a month rather than saving you any money.  In the 3 yrs it will take to get it paid off, that's nearly $10k.   Financially, I think it makes more sense to sell it, drive the truck daily, and use that $260 a month to pay the truck off in 2yrs instead.  

The gas savings I posted is JUST for work.  But we drive it a lot more than that.  And the truck is such a gas hog.  

That is part of what I am going round and round about.  

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8 minutes ago, matrips said:

Is housing/property taxes the biggest part of your fixed expenses? Just throwing out ideas below- not sure if any are practical or doable.  Just trying to address some of your biggest fixed expenses (if it is housing).

How far away from completion is the new house you are building?  Are you having it built or doing it yourselves?  You are carrying a current mortgage plus the new place? And your current house is a money pit? Trying to recall your situation.  Is there anything house wise you can do?  Sell current house?  rent? or build just a basic house so you can move in, and then finish it nicer later?  Put a nice manufactured house on your lot instead of building from scratch?  Basically to be able to move onto your new lot much faster.

 

Housing mortgage and the personal are currently the biggest.  We had to move medical expenses to a loan to clear them, plus about 40% of what we paid for our land.  We bought it concurrently with an inexpensive ranch for wheelchair accessibility, since our rent was about 35% higher than a mortgage for a better school district AND the house is accessible.  
 

Inspection was clean and it looked good for a house of its age.  
 

Problems have come about mainly because even a good house in this area is midwestern construction - IE shoddy and barely to code even when built new.  I wish I was joking. Getting this temporary house livable was supposed to be 10-15k, which we had set aside.  But then the electrical was hazardous once we opened up some walls, plumbing has been a nightmare, HVAC died the week we moved in and had to be replaced, etc.  Even doing all the work ourselves we are a good 50k into it and not done yet.  The saving grace is that the house was a steal and selling it we would at least break even.

We will be building our other place ourselves, too, to save money and because my husband is a perfectionist.  But we cannot finish out a cheaper house, it isn’t allowed by HOA and we are already trying to maximize the costs of running it to be as lean as possible, which means more money on the outlay.  But the shell is the bulk of our cost and the amount we have to somehow try to save for once this temporary home is done.  That plus the ground work is probably 100k to seal it up - foundation, cladding, windows, utilities.  Nothing from studs in.  If someone were building it for us it would be way, way more, if we could even find someone to do it (unlikely, since it isn’t stick frame and has to be ada compliant).  
 

anyway.

 

Those costs are pretty much fixed, we have already shaved everything we can from both housing budgets, it has just been a lot of unforeseen costs.  And the timing of our insurance, tax increases, medical catastrophe, etc, is where the pressure really is.  We have about 30% of our budget to spend on gas, food, clothes, and anything to renovate or build with.  At this point it’s going to be getting a raise or hubby taking a second job, I think.  Which is actually in the works, but I’m tired of running him down so hard.  
 

If we sold the land and just finished renovation the temp house we’d be fine, but it doesn’t fit our needs long term and appropriate housing for our family size and wheelchair use in the location we need to make everything else live cheaply costs more than what we are spending to build.  This WAS the economical choice, obnoxious as it is to admit 🙄

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1 minute ago, happysmileylady said:

First, lots of hugs.  I figured the medical costs and stuff were starting to file it.  

Our get out of debt journey is not finished, and has been long, slow, plodding, frustrating, and punctuated by making smart decisions with windfalls.  Like you we aren't big spenders, but there is still money that needs to be spent.  Kids gotta have shoes that fit, for some reason, everyone in this house likes to eat every day lol.  And sometimes, that's really just how it is.  When the hole is pretty deep, it just takes time to get out of it.  It's not something that's going to happen right away.

 

One thing I am going to suggest...........

Put the tax return and the bonuses into the emergency fund/HSA and do NOT throw it at the debt.  Dave's baby step 1 is the baby emergency fund.  But even Dave says that when you have special circumstances, you need a larger baby emergency fund.  Take the entire thing and throw it in savings.  (I mean, unless they total like $100k or something lol)  

Once you have that emergency fund, I think you guys should pick a set amount, say $25, $50 or whatever, and set that in the emergency fund each paycheck.  Then, you can make a plan to work on paying off the debt. 

 

Also, check with the hospital to see about any sort of financial relief program.  They might be able to write off a portion of the medical debt.

 

This intrigues me. It sounds like something I saw on youtube, abut instead of a baby emergency fund, starting out by having a fund large enough to cover your healthcare and auto insurance deductibles at least. Plus in our case the homeowner's insurance deductible, etc. 

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8 minutes ago, HeighHo said:

I feel for you with the property tax dramatically increasing.  We doubled every eight years twice until the state put a cap on school tax increases.   I'd suggest renting out garage, driveway, or outbuilding for either stuff storage or people living.  Any property tax exemptions you could qualify for? 

Is the medical on a payment plan? If not,work with them. 

 

We have no outbuildings.  We have eight people in 2100 sq feet as it is. Property tax exemptions are already at work, but because we are paying them on two properties at the moment that situation won’t improve until we have built and can move.  
 

Medical is ongoing and being paid, we just had to put it all on a credit card since we spent our out of pocket individual and family max in the first week of the year, and had additional out of network services plus the funeral stuff to manage.  That is as lean as we can get it, and not getting better without medical bankruptcy.  It will be manageable, but I’m pissed that our bonus and tax return aren’t coming until the first week of March.  We had al the expenses in January and have had nothing to float with except the bare minimum groceries and gas since then.  It should get better, but fixed is still high.  Paying off the credit cards with the bonus and tax return will help a bit in lowering our interest back to zero on those, at least?  That’s about $800 a month right now 😵

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1 minute ago, Arctic Mama said:

We have no outbuildings.  We have eight people in 2100 sq feet as it is. Property tax exemptions are already at work, but because we are paying them on two properties at the moment that situation won’t improve until we have built and can move.  
 

Medical is ongoing and being paid, we just had to put it all on a credit card since we spent our out of pocket individual and family max in the first week of the year, and had additional out of network services plus the funeral stuff to manage.  That is as lean as we can get it, and not getting better without medical bankruptcy.  It will be manageable, but I’m pissed that our bonus and tax return aren’t coming until the first week of March.  We had al the expenses in January and have had nothing to float with except the bare minimum groceries and gas since then.  It should get better, but fixed is still high.  Paying off the credit cards with the bonus and tax return will help a bit in lowering our interest back to zero on those, at least?  That’s about $800 a month right now 😵

In the future with medical I'd put those off rather than on credit card. Usually you can get a payment plan with zero interest from the medical provider, and even if you are late they take a while to put it on your credit vs a credit card company. 

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7 minutes ago, Ktgrok said:

 

Yup. Sell it, and if you have to, get a used one. Buying a used one with no payment makes sense for the gas savings, but otherwise, no, it doesn't. 

 

I get it. And I get that it is hard to talk to DH about because they are already working so hard! And they take not being able to "support the family" personally. But...is there anyway to increase his income? Or you to make some? Because it sounds like this is an income problem, unless you can do something cheaper for housing, etc. 

I feel you. DH wants to find a way to quit his part time teaching job and instead focus on consulting. Which would be more lucrative. But until he actually HAS a consulting job lined up, we can't afford for him to do that. And trying to find time to work on the consulting thing so he can get a job (putting together requests for work or whatever the heck they are called, updating website with video/photos of him doing his thing, etc) is nearly impossible when he is already working 2 jobs (one full time plus the part time teaching) plus commuting 1 1/2 hours a day, plus finishing up his masters degree online. 

We are getting by with things like tax refunds, bonuses, etc but that's not sustainable or smart as an actual strategy. Plan is for him to finish the masters in the next month or two, then take that time/energy and work on the consulting thing. And for me to actually get my rear in gear and get back to writing. It isn't a ton of money, but it really really helps. 

I'd also like to get into my dog training more but the time..sigh. 

The second job is actually an adjunct teaching position at the local Christian college, they're trying to beef up their engineering department and have civil, but not structural.  He can only take on maybe one or two sections a semester though, when his main job is already taking nights and weekends because they’re too busy for their staff size already.

The lack of long term sustainability is my bigger worry.  This temporary hole is awful, we have spent more in six weeks than most people in our area make in six months.   But long term I want to get a good 25% margin in our budget so we actually CAN get the house done without living on plastic and a prayer, you know?

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Just now, Ktgrok said:

In the future with medical I'd put those off rather than on credit card. Usually you can get a payment plan with zero interest from the medical provider, and even if you are late they take a while to put it on your credit vs a credit card company. 

Or CareCredit.  I got zero interest for six (or more depending on what you negotiate) loans with them as long as you pay it off in that time.  Even if you don't make the payment deadline, the interest was still cheaper than credit cards. 

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9 minutes ago, Ktgrok said:

This intrigues me. It sounds like something I saw on youtube, abut instead of a baby emergency fund, starting out by having a fund large enough to cover your healthcare and auto insurance deductibles at least. Plus in our case the homeowner's insurance deductible, etc. 

When you have larger expenses out of necessity (like ongoing medical therapies, etc) then you have to have a larger emergency fund.  This is true for both the "real" emergency fund and the "baby" emergency fund.  

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1 minute ago, Ktgrok said:

In the future with medical I'd put those off rather than on credit card. Usually you can get a payment plan with zero interest from the medical provider, and even if you are late they take a while to put it on your credit vs a credit card company. 

Yeah. I’m not sure why DH didn’t.  But we had a lot going on, I think he was just trying to get as much cleared as possible so it wouldn’t keep taking up mental energy. We do have other bills on a payment plan still, like remaining costs from my ankle break and allergist.  But I think to get the discount from the hospital on our non-covered bills we had to pay in a lump?

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5 minutes ago, Arctic Mama said:

The second job is actually an adjunct teaching position at the local Christian college, they're trying to beef up their engineering department and have civil, but not structural.  He can only take on maybe one or two sections a semester though, when his main job is already taking nights and weekends because they’re too busy for their staff size already.

The lack of long term sustainability is my bigger worry.  This temporary hole is awful, we have spent more in six weeks than most people in our area make in six months.   But long term I want to get a good 25% margin in our budget so we actually CAN get the house done without living on plastic and a prayer, you know?

You guys for sure need some margin.  But I think you need it now, rather than long term.  I really think you should plunk the tax returns and bonuses into the emergency fund and not use them to pay off debt.  Baby emergency fund first.....even if the "baby" part is really more like toddler or even tweenage sized lol.   

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2 minutes ago, Arctic Mama said:

We have no outbuildings.  We have eight people in 2100 sq feet as it is. Property tax exemptions are already at work, but because we are paying them on two properties at the moment that situation won’t improve until we have built and can move.  
 

Medical is ongoing and being paid, we just had to put it all on a credit card since we spent our out of pocket individual and family max in the first week of the year, and had additional out of network services plus the funeral stuff to manage.  That is as lean as we can get it, and not getting better without medical bankruptcy.  It will be manageable, but I’m pissed that our bonus and tax return aren’t coming until the first week of March.  We had al the expenses in January and have had nothing to float with except the bare minimum groceries and gas since then.  It should get better, but fixed is still high.  Paying off the credit cards with the bonus and tax return will help a bit in lowering our interest back to zero on those, at least?  That’s about $800 a month right now 😵

 

How much do you need to make a month to ease the situation?

People here rent their driveways out; RV storage etc over the winter, etc.

Does it make sense to borrow from your IRA/401k?

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Just now, happysmileylady said:

You guys for sure need some margin.  But I think you need it now, rather than long term.  I really think you should plunk the tax returns and bonuses into the emergency fund and not use them to pay off debt.  Baby emergency fund first.....even if the "baby" part is really more like toddler or even tweenage sized lol.   

But she said they will save  800 worth of interest monthly  with what they pay off with bonus and tax return.  That is significant!

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2 minutes ago, happysmileylady said:

When you have larger expenses out of necessity (like ongoing medical therapies, etc) then you have to have a larger emergency fund.  This is true for both the "real" emergency fund and the "baby" emergency fund.  

Our emergency fund was about 5k.  We have spent four to five times that, and that’s just what he has deigned to tell me about.  Building up the emergency fund out of the coming funds wouldn’t save us money because of the interest costs, I don’t think.  I’ll ask him about it as an idea, but I imagine trying to not spend so much for the privilege of someone else carrying our debt is critical.  We do usually retain a cushion of some cash plus credit for emergencies, we just happened to hit those all in rapid fire this year so we couldn’t catch back up incrementally before more piled on.

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4 minutes ago, HeighHo said:

 

How much do you need to make a month to ease the situation?

People here rent their driveways out; RV storage etc over the winter, etc.

Does it make sense to borrow from your IRA/401k?

We couldn’t rent out our driveway, I’m not even sure that’s legal here in this township - maybe along the side of the yard? They post a sign for grass that is too long within three days 🙄

I’ll ask him about the RV storage or borrowing from the 401k, but he’s good enough at compounding interest math to be very, VERY resistant to touching retirement.  And my own mom, who has gone through bankruptcy several times for various reasons, drilled into me that her very worst financial mistake was touching anything from retirement.  That’s something they haven’t recovered from in two decades of trying, now.

Can’t hurt to ask, though.

Oh, to ease the situation?  We need a good $1000 per month.  It’s doable with a good sized raise, or second job.  But it’s the time - the more he spends working the less he can spend getting us out of this house and out from under these expenses.  I’d also rather he not have a heart attack, since he is already sleeping six hours or less pretty much every night 😑

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4 minutes ago, Arctic Mama said:

Our emergency fund was about 5k.  We have spent four to five times that, and that’s just what he has deigned to tell me about.  Building up the emergency fund out of the coming funds wouldn’t save us money because of the interest costs, I don’t think.  I’ll ask him about it as an idea, but I imagine trying to not spend so much for the privilege of someone else carrying our debt is critical.  We do usually retain a cushion of some cash plus credit for emergencies, we just happened to hit those all in rapid fire this year so we couldn’t catch back up incrementally before more piled on.

I do understand that saving on interest is important, but I think savings is more important, because you never know when something else will happen.  

Or maybe if you guys aren't comfortable plunking the whole thing in savings, maybe discuss splitting it.  Half to savings, half to debt.  Or the tax return to savings, and the bonus to debt. 

 

If you launch the whole thing at the debt, how long is it going to take you to build the savings back up?

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Aaaaanyway, like I said, I’m definitely reading along with everyone else’s solutions and making a list of things to ask DH about.  We are not opposed to radically switching things up, but we already did that once and I’m not sure we have many more tricks up our sleeves.  It’s really probably some more incremental budget and savings changes going forward, and that’s what I’m going to ask him about 🙂

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4 minutes ago, Arctic Mama said:

Aaaaanyway, like I said, I’m definitely reading along with everyone else’s solutions and making a list of things to ask DH about.  We are not opposed to radically switching things up, but we already did that once and I’m not sure we have many more tricks up our sleeves.  It’s really probably some more incremental budget and savings changes going forward, and that’s what I’m going to ask him about 🙂

Sometimes, that really is all it is.  (((hugs)))

 

Medical debt is such a stressful type of debt because it's not like it's there because of reckless spending or stupid decisions.  And it's one that we have the least amount of control over.  

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2 minutes ago, happysmileylady said:

I do understand that saving on interest is important, but I think savings is more important, because you never know when something else will happen.  

Or maybe if you guys aren't comfortable plunking the whole thing in savings, maybe discuss splitting it.  Half to savings, half to debt.  Or the tax return to savings, and the bonus to debt. 

 

If you launch the whole thing at the debt, how long is it going to take you to build the savings back up?

Hmmm, we could get back to $1000 emergency fund in two paychecks, maybe one, if we obliterate all the current credit debt.  We don’t keep cash for most of our emergency fund, but a credit card we pay off in full each month. The physical envelope system was a big fail for us, but digital envelope systems in our checking and savings have been pretty successful when we aren’t getting nailed with thousands in house or medical expenses outside of the 7k in our HSA set aside to deal with this.  
 

Moving forward though our education expenses are slowly climbing as we enter high school years, so really I think the ticket is keeping our spending the same (we have done pretty well at that with predictable expenses actually) and trying to find some additional income streams.

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1 minute ago, Arctic Mama said:

Aaaaanyway, like I said, I’m definitely reading along with everyone else’s solutions and making a list of things to ask DH about.  We are not opposed to radically switching things up, but we already did that once and I’m not sure we have many more tricks up our sleeves.  It’s really probably some more incremental budget and savings changes going forward, and that’s what I’m going to ask him about 🙂

Someone mentioned up thread how these holes take time to get out of.  I usually want a quick fix.....but it just doesn’t work that way.  I do feel for you.  

We are at a completely different stage.  No kids to help lower tax liability....only 10years from retirement with no retirement....so we are on a mission to pay off the house in 10 years and to be able to live very inexpensively.  Plus the apartment on our lot can eventually be fixed up for extra income. 

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13 minutes ago, Arctic Mama said:

Our emergency fund was about 5k.  We have spent four to five times that, and that’s just what he has deigned to tell me about.  Building up the emergency fund out of the coming funds wouldn’t save us money because of the interest costs, I don’t think.  I’ll ask him about it as an idea, but I imagine trying to not spend so much for the privilege of someone else carrying our debt is critical.  We do usually retain a cushion of some cash plus credit for emergencies, we just happened to hit those all in rapid fire this year so we couldn’t catch back up incrementally before more piled on.

I agree with paying off the credit cards. I don't understand the point of putting money in a savings account with little to no interest, while continuing to pay high interest on CCs. If you pay off the CCs, you save the interest and still have the CCs to use as a back-up while building an emergency fund (or you can apply for a new 0% interest card to tide you over). If you put the money in a savings account and keep the CC debt, that will clearly cost you more in the long run and won't make you any better prepared for an emergency, because you will still have CC debt!

I always assumed the Dave Ramsey focus on emergency funds was because he has people cut up their cards, which I guess might be necessary for people who don't have the self-discipline to control their spending. But for people who are responsible and just need to get out of debt, cutting up cards doesn't make any sense. Used correctly, credit cards can actually save money.

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8 minutes ago, Arctic Mama said:

Hmmm, we could get back to $1000 emergency fund in two paychecks, maybe one, if we obliterate all the current credit debt.  We don’t keep cash for most of our emergency fund, but a credit card we pay off in full each month. The physical envelope system was a big fail for us, but digital envelope systems in our checking and savings have been pretty successful when we aren’t getting nailed with thousands in house or medical expenses outside of the 7k in our HSA set aside to deal with this.  
 

Moving forward though our education expenses are slowly climbing as we enter high school years, so really I think the ticket is keeping our spending the same (we have done pretty well at that with predictable expenses actually) and trying to find some additional income streams.

Does that mean you could be back at the $5k in like say, 3 months or so, if all the debt is gone?  If you can build it back up that fast, then maybe chucking it at the debt is the way to go. 

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If you need an extra $1,000 a month, and if the credit card interest is $800 a month, then yeah, it makes total sense to pay off that credit card debt. That gets you immediately to within $200 of where you need to be on a monthly basis. Finding $200 a month to cut or increase income by is a LOT easier than finding $1,000!

 

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Re medical debt, I was listening to a NPR podcast series the other day on money, and there was an episode about medical debt. It was recommended NOT to pay for medical with a credit card, because your credit score takes a bigger hit from credit card debt than medical. Also, and I don't remember details and may have this wrong, there was something about the possibility of medical debt disappearing after a certain number of years, varying by state. I meant to go back and listen again, as I was distracted the first time. Anyway, it might be worth checking details on that. I understand what's done is done, but maybe work on a set plan for what to do with medical.

We are within 2 years of having house paid off, assuming no huge unforseen expenses. We would very much like a larger home; it would be an advantage to us both in regard to mental health to have some small bit of personal space and lose the neighbors. BUT we also really love the idea of no mortgage payment. Not sure where we will end up on that. 

 

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10 minutes ago, happysmileylady said:

Does that mean you could be back at the $5k in like say, 3 months or so, if all the debt is gone?  If you can build it back up that fast, then maybe chucking it at the debt is the way to go. 

Yeah. Assuming nothing else happens to cut into that.  I’m not sure we can assume we will have smooth sailing on the house or with insurance (who completely hate us because we cost them so much 🤣) for three months, but provided we avert catastrophe and don’t have to spend the cushion I’d say that’s very doable.  
 

That’s why I don’t think I could talk my husband into not paying off debt, I don’t think it makes sense when the current load is almost 20% of our take home pay, and we only maybe have 30% total that isn’t going into fixed expenses.  Last month I think our interest plus minimum balance payments were almost 2k by themselves, and the bonus plus tax return would take that to zero.  Then we usually put all our groceries, gas, entertainment, etc, on our highest reward card and pay that off monthly.

When we aren’t under water it’s not too bad, we just can’t get *ahead* on that.  It’s never comfortable enough that we can really move forward with our bigger expenses at more than a snail’s pace, like buying paint for the house one month and tile for the backsplash another, thus making the kitchen be in pieces for at LEAST two months.  That sort of thing that is a day to day pain, you know?

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This thread makes me feel like a huge whiner, I don’t mean to be a contrary brat after asking for advice 😂 We are in that weird spot where we have spent ten years trying to do the easy and basic parts and are finding them not sufficient to get us where we need to be. It’s like blood from a very tired turnip (poor hubby!).

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2 minutes ago, Arctic Mama said:

Yeah. Assuming nothing else happens to cut into that.  I’m not sure we can assume we will have smooth sailing on the house or with insurance (who completely hate us because we cost them so much 🤣) for three months, but provided we avert catastrophe and don’t have to spend the cushion I’d say that’s very doable.  
 

That’s why I don’t think I could talk my husband into not paying off debt, I don’t think it makes sense when the current load is almost 20% of our take home pay, and we only maybe have 30% total that isn’t going into fixed expenses.  Last month I think our interest plus minimum balance payments were almost 2k by themselves, and the bonus plus tax return would take that to zero.  Then we usually put all our groceries, gas, entertainment, etc, on our highest reward card and pay that off monthly.

When we aren’t under water it’s not too bad, we just can’t get *ahead* on that.  It’s never comfortable enough that we can really move forward with our bigger expenses at more than a snail’s pace, like buying paint for the house one month and tile for the backsplash another, thus making the kitchen be in pieces for at LEAST two months.  That sort of thing that is a day to day pain, you know?

If you are going to be able to fill it up again pretty quickly then yeah, maybe it does make sense to chunk all or most of it at the debt.  I just would hate for you to have nothing in savings, chuck it all at the cards, and then have like the clutch go out on his car and you have to put more money back on the credit cards that were just paid.  

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Just now, happysmileylady said:

If you are going to be able to fill it up again pretty quickly then yeah, maybe it does make sense to chunk all or most of it at the debt.  I just would hate for you to have nothing in savings, chuck it all at the cards, and then have like the clutch go out on his car and you have to put more money back on the credit cards that were just paid.  

Ugh, that has been the story of our lives.  But paying on the existing balance that gets smaller glacially doesn’t feel much better, honestly.

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