How Did This Happen

[frayne]

Frank,

First off, no more credit card charges, operate on a cash basis, pay down credit card debt and get wife and kids on board with a budget plan. The question isn't how you got here, it is how do get out of debt, which is a killer of wealth. You are still young, relatively speaking and can turn this situation around with a well executed plan.

 

[sunsnow]

It sounds like you are ready to get started on creating a better financial plan for yourself and your family, which is really great. Recognizing that there is a problem is a huge step towards solving it. DH and I were in your situation about 16 years ago -- high income, high expenses, negative networth. We were able to change course, and become dedicated savers. Now we are FI. You can do this too. I second all the good suggestions from other posters about belt-tightening, tracking your expenses, paying credit cards off in full, and using cash--all these helped us. In addition, you might want to consider living in a less expensive place. Even with a lower salary, you might end up ahead. Moving away from the NJ area helped our financial plan a lot.

 

[Mulligan]

I agree with previous posters that you have to have a game plan to know where you are at and how to get where you need to be. How much of that Roth IRA is contributed dollars? If it was a significant amount, I am curious to what other posters might say on withdrawing to pay off the home equity loan. If that was wiped out, a traditional refinance is then possible. That could conceivably save $9,000 in interest expenses due to the present high interest rates of home eq. and mortgage. This would only even be an option of course if a developed strategy of budgeting and saving was implemented prior to action. Otherwise you are just robbing Peter to pay Paul.

 

[Njpriceman]

Ok. Getting things in order. Spent three hours yesterday tracking monthly bills. Now onto expenses.
I called PenFed and questioned a refi. She said it wasn't possible given the negative equity.
I'll contact my mortgage company today to see if the loan was sold to Freddie/Fannie and if I qualify for Harp.

My wife and I haven't lived an excessive lifestyle. We live in a modest size home, drive used cars and shop at yard sales. There has been purchases made because I think I've worked hard and I deserve it. I need to get out of that mentality. Some of our debt is related to refinanced student loans and child medical bills. We have lived a life so far that what we get what we want within reason.

Thanks again for the helpful insight. I appreciate everyone's help.

Frank

 

[Texas Proud]

Ok. Getting things in order. Spent three hours yesterday tracking monthly bills. Now onto expenses.
I called PenFed and questioned a refi. She said it wasn't possible given the negative equity.
I'll contact my mortgage company today to see if the loan was sold to Freddie/Fannie and if I qualify for Harp.

My wife and I haven't lived an excessive lifestyle. We live in a modest size home, drive used cars and shop at yard sales. There has been purchases made because I think I've worked hard and I deserve it. I need to get out of that mentality. Some of our debt is related to refinanced student loans and child medical bills. We have lived a life so far that what we get what we want within reason.

Thanks again for the helpful insight. I appreciate everyone's help.

Frank

How long have you been making the income you posted Since you say you are 37, I would assume that you have been over $100K for at least 15 years or so... if so, I would not say you are living a modest lifestyle....

I live on less than $100K and I do not live modestly.... my wife does not beleive me, but we live very well... sure, we live like most of the people who live around us... we have older cars etc., but we still spend money on things that we do not have to.... we have a cleaner come (I hate this as it is a big waste), we have a yard guy (a real bargain IMO), we have a small boat, she and the kids do a lot of things that cost money...


But who knows with what is posted... you will have to put more info down and then you will know....

 

[Lazarus]

Ok. Getting things in order. Spent three hours yesterday tracking monthly bills. Now onto expenses.
I called PenFed and questioned a refi. She said it wasn't possible given the negative equity.
I'll contact my mortgage company today to see if the loan was sold to Freddie/Fannie and if I qualify for Harp.

My wife and I haven't lived an excessive lifestyle. We live in a modest size home, drive used cars and shop at yard sales. There has been purchases made because I think I've worked hard and I deserve it. I need to get out of that mentality. Some of our debt is related to refinanced student loans and child medical bills. We have lived a life so far that what we get what we want within reason.

Thanks again for the helpful insight. I appreciate everyone's help.


Frank

Since you have no net worth I would say your lifestyle is excessive. You must face up to your spending. I never made as much as you but I have never had a negative net worth.

Speaking of net worth. I have found it helpful to track my net worth monthly with a spreadsheet. Once you get in the habit of tracking your net worth it causes you to make decisions based on what it will do to your net worth. When you look at things that way the temptation of buying that luxary car or whatever goes away. You build wealth rather than rent a lifestyle.

 

[easysurfer]

Frank,

I agree with many others here.

Once you track your spending and expenses, important to isolate what is really necessary and versus what is not. Where you can cut/save put that towards the debts.

I'm thinking if you are only able to pay the minimum CC payments, the interest fees must be a killer. If so, you might even consider something like Lending Club as a borrower (hopefully you'd be accepted) and pay off the CC bills that way. I'm more familiar with Lending Club as a loaner and not borrower, but going there to get out of CC debt seems to be one of the top uses.

www.lendingclub.com

 

[Njpriceman]

Well I think I am finished my expenses/debt reports. I saved them as jpgs.
How do I upload them so everyone can view them in this post?

Thank you

Frank

 

[REWahoo]

Instructions here: http://www.early-retirement.org/forums/f32/forums-101-posting-accounts-basics-40168.html#post739527

 

[Snoozie]

Welcome, Frank - and congrats on realizing you need to get a grip on your finances NOW rather than later. Once you go through your expenses, I'm sure you will see many areas that can be cut out - with the $195K you have coming in and living paycheck-to-paycheck, you appear to be living above your means. As the others have said - learn where you can cut expenses (and really, they aren't painful - saving becomes empowering!) and then DO IT. It's just a choice you make - to live frugally and within your means. Once you get out of debt and start saving, you then pick and choose what you want to spend your money on, realizing that you can't have everything everyone else has. Which is what has gotten so many young folks into the deep dark financial holes they are currently in. Thankfully you've got a light on in your hole - so climb on out, slow and steady!

 

[Milton]

Frank, I highly recommend that you read the book "Your Money or Your Life", by Joe Dominguez and Vicki Robin.

You are certainly not the first person to get yourself into this situation. The good news is that at age 37 and with a good employment income you still have the opportunity to fix things ... but it will take a lot of commitment, and you need to start ASAP.

 

[YoungSaver]

Get rid of those cars and buy some decent used cars. There's 25k right there.

 

[citrine]

195K is an awesome income, your negative net worth amazes me!
We also live in NJ....making about $85K total with one stepson in college and another stepson in high school. Their mom does not believe in saying "No" so they are a bit spoiled; however, we tell them "No" or you can do chores to make some money to get what you want.
I am glad that you have "woken up"....you have the ability to amass quite an awesome nest egg for retirement. Just cut out everything that is not essential...gym, cable, haircut/color, shopping, and get the whole family involved in how to live better with less stuff.

 

[lukeaa]

Quit spending money on the kids.

 

[Nords]

Nothing heard from OP for two weeks, and he hasn't checked in since the 12th.

Maybe he's seeking other answers elsewhere that are more pleasant to hear...

 

[Alan]

Nothing heard from OP for two weeks, and he hasn't checked in since the 12th.

Maybe he's seeking other answers elsewhere that are more pleasant to hear...

Maybe he has canceled his internet access to save money.