Here are some tips for you and your honey.
- Figure out just how much you owe in total to all the places you owe (loans and credit cards) as well as how much you are spending monthly to stay current with the loans, and for all other expenses - housing, utilities, food, eating out, entertainment, clothing, insurance, car registration, pet supplies, and be sure to include your coffee habit or vending machine habit!
- Figure out just how much you actually have coming in each month BEFORE all that spending occurs.
- STOP USING YOUR CREDIT CARDS. Right now, right away, today. Take them out of your wallet, and put them in a container of water in your freezer. Seriously. Only have your debit card and your store loyalty cards (Kroger, Safeway, Staples, whatever) along with your ID and insurance cards.
- List out your consumer debt (car loans, student loans, credit card debt, medical debt) in order from SMALLEST balance due to largest along with the amount you pay monthly.
- Write down exactly where you're going to spend every single dollar that comes in on your honey's paycheck. Seriously - set a budget for EVERYTHING including getting your hair done, buying a couple coffees a month, ALL the groceries you need to get through a pay-period, the cable bill etc. The goal is pay for all the necessities, and as many of those debts as you can each month, and have a 0 balance at the end of each month. Any "extra" money you have should go toward that first debt on your list - get that balance paid off ASAP!
- If you have no extra money - meaning if you took your total monthly income and subtracted your essential expenses, find out if you can cut things out - cancel or lower your cable subscription. Stop paying to download things to your phone. Go to a basic "phone call only" plan on the cell phone. Change internet plans to a slower speed, or bundle your utilities to save a couple bucks. See if you can stretch that color from 8 to 10 weeks to spend a bit less on hair, stop drinking gourmet coffee drinks or grabbing a "few things" from the store - make a meal plan and a grocery list and stick with it so you don't have impulse shopping occur.
- If you can't find things you're willing to stop spending as much on, or you're at the lowest possible way you can do things, start looking around your house and storage areas and start selling things to help make some extra money. The mantra we live by these days is "Live like no one else, so later you can live like no one else." Basically it keeps us focused that this lifestyle of cash only and little sacrifices is only for the short-term, and that by doing this, we're affording the kids college without borrowing money, no car loans, weddings of their dreams, and a healthy attitude about delayed gratification. It's also teaching us to be more respectful and grateful for that which we have.
- As you pay each balance off, roll that payment into the payment of the next one on the list. For example - if you pay:
Visa - $100
Discover - $250
Student Loan- $96
Layla's Ride - $300
J's Ride - $325
When you pay that Visa balance off, take that $100, and add it to the $250 you're sending Discover, so you're now sending them $350. Then add that $350 to the payment to your student loan, and then to the car loan, and then to J's car loan... (can you tell I have no idea about student loan balances and payments????)
Once you do this, do NOT start spending that money again. Instead, aim to put 3 - 6 months of your expenses into savings for a true emergency (oh, say...insurance denying a claim, or J losing his job before you get one), so that you don't have to use the credit cards again. So seriously, take them out of your wallet. For good. Once you have the expense money saved, THEN you can start to think about budgeting some of that money monthly to replace a car (so you can pay cash instead of taking out a loan), or make a down payment on a house somewhere. Invest some for retirement, put some aside to take a vacation someplace special, or, if kids do become a certainty, you can start a college fund so they don't end up having loans...
We learned all of this through Dave Ramsey's Financial Peace University. Take some time to check out his website, find his show on air or tv in your neck of the woods. See if your library has any of his books, and check them out to read them.
Most importantly, you and J need to be on the same page about changing things around. It might mean that you just take a job, any job, even if it's working at your favorite store to earn enough to buy the groceries each month, so all of J's salary can be funneled toward paying off the debt and your living expenses. It might mean J takes a 2nd job, or that you trade one of the cars for something less expensive (if you're not upside-down on the loan I'd seriously consider it).
It means feeling like that college kid again, waiting for the loan money to show up so you can buy groceries and get the oil changed in your car, BUT, if you commit to living on LESS than you make, it can be done.
If you have any questions, ask FarmWife for my real information and email me. I'll happily chat with you - heck, we have a phone package with unlimited long distance - I'll call you and talk in real life with you.
I don't claim to be a master, or a financial adviser or planner - I just know that we needed to throw out EVERYTHING we'd ever learned about getting out of debt, and relearning it. Dave truly gave us the information on what to do, but then he actually taught us HOW to do it.
If you take the class, you get access to some online resources (debt repayment calculator, budget forms etc) that make things super easy. The forms are in his books, but sometimes can be confusing to use on your own.
If I knew how to do computer things like rip CD's and send you the mP3 files (and it was legal and ethical), I'd send you the audio recordings we have from the class...
I hope that helps, and if you have questions, please don't hesitate to ask. Ordinary Sarah and her family are doing the same thing, so I'm not the only crazy bloggy person out there.
Live like no one else...