I am 37 y/o from NW Indiana and need financial advice

[Audie Murphy]

The sacrifices are all temporary. Suck it up in the short term for the long term win.

[Mdlerth]

Quote:

Originally Posted by Jerry1 ...First, you and your husband are not on the same page. This is no exaggeration, you need to treat this like living with an alcoholic. Him wanting to buy a 70” tv while you’re in this level of debt is proof enough that you have a serious problem on your hand. I would take this opportunity, his interest in Velocity (scam), and see if he will go to a Dave Ramsey meeting with you. If not, many other non profit credit counseling programs are out there. Don’t do anything but pay down your existing debt. Transferring money to another loan is just a shell game that will get you into trouble. My prediction is that if DH went on Velocity’s program, he would realize that he now has more credit available and that 70” tv would be in your house in no time. Get serious, because this is serious. Budget. A budget makes no sense until you get a DH on the same page, but you do need a budget and he needs to be committed to it. If you ask people on this site how they got financially independent, I’m sure none of them did it with a spouse that wasn’t on the same page. In my time here I’ve seen stories that mention their first spouse not being compatible financially. Sure, there can be some tension between spouses, but if you’re not walking in the same direction, you’re walking apart. Use this time to work with DH to get together on this...

What am I missing that seems obvious to everybody else? So many of the comments read as if OP is in a death spiral. I reread the whole thread and I still don't see that.

A mid-30s couple has some consumer debt, but 33k is hardly a crushing amount. Their mortgage of 180k doesn't sound like they went crazy and bought the Biltmore House. The wife is home tending their baby (plus a 9 year-old), in exchange for leaving a j*b that represented about only 20% of the household monthly take; in the big picture, an excellent decision.

The husband made a few comments about buying a tv so large it won't fit in the house, and we're supposed to think he's serious? I give voice to idle speculation all the time. That's all it is, idle speculation.

Seriously, what does she need to do? Read up on indexing and AAs? Easier done than said. Trade the sports car for a more practical family vehicle? Piece of cake. Put together a budget, prioritize saving and debt reduction, and stick to it? Well within her grasp.

Also, there is consensus about this Velocity scheme being sub-optimal, but if it serves as a leash on hubby's impulse buys, then it could be a good thing. Not perfect, but one should never let perfect be the enemy of good.

At 37, the OP is looking for ways to get on the FIRE track, and my perception is that she has a lot going for her. They have only moderate debt, DH has a decent job, and they're young enough that it's not anywhere near too late. There was no mention of disabilities, medical challenges, or addictions. Certainly there was no mention of soul-sucking Death Eaters such as some of the members of my family.

What data did OP share that others interpret differently?

[Pellice]

Quote:

Originally Posted by Mdlerth What am I missing that seems obvious to everybody else?

I totally agree and made the same point above. OP has already started on the path, there are a number of positives to her credit, the obstacles are not insurmountable. She - and he - can do this! I do think it important that they get on the same page, but I think that is doable. OP sounds motivated and observant.

[Jerry1]

I may be reading too much into it, but I think where we differ is as follows:

I think $33K of consumer debt is a lot.

She is 37. That's about the time where things should be getting better, not worse.

Husband is enthralled with a debt scheme that I think could be disastrous. Exchanging a mortgage for a line of credit is, I think, a scam, crazy to do and could risk the house.

The 70" tv is just a signal, maybe incorrectly read, that the husband is a spender and the wife is coming across as a saver. This is a big deal as we've seen described here a few times.

I agree that at their age and with husband having a good job, they can get this going in the right direction but the current signs lead me to want to warn the OP to take this seriously. 37 becomes 47 and before you know it, you're 67 and living on SS because you never had a plan and were on separate pages from your spouse.

The absolute worse thing is the belief in Velocity as a good path forward. If that was off the table, I'd feel like a huge step was made in the right direction.

As always, this is just my opinion. Worth what it was paid for. However, I have enough life experience at 58 and 63 with my spouse and enough financial acumen as a CPA/Financial professional to think my opinion is at least worth considering in this case. I've seen a few train wrecks and this is one way they start.

[jazz4cash]

PB4’s assessment in post #38 is spot on. I watched that one also. All of the Velocity banking examples include people with excess cash flow. Rather than apply it directly to their debts they create a convoluted scheme that adds cost to the solution. Worst case they will create additional debt at high interest rates. They claim the rate you get doesn’t matter.

[Robocp4]

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Originally Posted by pb4uski Also found this: https://www.thesimpledollar.com/ques...sics-and-more/ You could much more easily accomplish the same result by just periodically writing a check for the balance of your checking account over $x as additional principal payment on your debt.... with less risk of losing your home. In your case you don't have enough home equity to get a HELOC so I'm not sure how you could do it even if you wanted to.

He said we would get a personal line of credit not a heloc. Of course there are possibly more stipulations because it would be unsecured. I have no idea I haven't looked into it because I'm against it but he is really ready to go to the bank and get one.
I tried telling him about the interest that you mentioned, that we could just make extra principal payments, no it wouldn't go away that quick but the debt would go down slowly, but we would have to stay on track doing it that way vs the LOC and having $x just dangling in front of us.

[Robocp4]

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Originally Posted by Jerry1 Lot of good advice here. I’ll focus on a few. First, you and your husband are not on the same page. This is no exaggeration, you need to treat this like living with an alcoholic. Him wanting to buy a 70” tv while you’re in this level of debt is proof enough that you have a serious problem on your hand. I would take this opportunity, his interest in Velocity (scam), and see if he will go to a Dave Ramsey meeting with you. If not, many other non profit credit counseling programs are out there. Don’t do anything but pay down your existing debt. Transferring money to another loan is just a shell game that will get you into trouble. My prediction is that if DH went on Velocity’s program, he would realize that he now has more credit available and that 70” tv would be in your house in no time. Get serious, because this is serious. Budget. A budget makes no sense until you get a DH on the same page, but you do need a budget and he needs to be committed to it. If you ask people on this site how they got financially independent, I’m sure none of them did it with a spouse that wasn’t on the same page. In my time here I’ve seen stories that mention their first spouse not being compatible financially. Sure, there can be some tension between spouses, but if you’re not walking in the same direction, you’re walking apart. Use this time to work with DH to get together on this. It was also mentioned that you should consider making some income. I agree that staying home is ideal and that it can seem hardly worth it if you have to pay for child care. However, $700 per month is a nice chunk to put down on your debt every month. Try to find ways to bring in some money. Maybe you could watch someone else’s child. Get creative and put all that money down on your debt. I hope the best for you.

That is a very good analogy with treating him like an alcoholic. I would have never thought of it that way. We have fought a ton just over this velocity banking. He is ready to go to the bank and do it without my approval. I have tried to work with him but I'm 100% against VB and he is 100% for it. I'm not sure what else to say to him to get on the same page. He wants to pay things off quickly which ok I get but we still have that debt just in a different place. And with giving them his paycheck every week doesn't do crap when we need almost all his check to live. So then we aren't getting anywhere.

As far as income for me. Yes we did lose that $700/mo but I should have mentioned that we were paying childcare (for only child at the time) and it was $500-600 /mo. So for me to work and only bring home 200 a month isn't worth it when we would have 2 in childcare. I also am not one to watch other people's children. That is just not my fortay. I have tried to find side jobs but I can't get a PT job as hubby is in the trades and goes to different job sites weekly of not daily. Right now he is driving almost 2 hrs one way for work so he isn't home until maybe 6pm if he doesn't catch traffic. So finding a job that would let me work whenever I could come in, isn't likely. I have tried to sell my essential oils but I don't like pushing people to buy things like that. I have been applying to remote jobs from a specific group mom group that's credited. Just havent gotten anything yet.

[Robocp4]

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Originally Posted by Go-NoGo Another analogy that might help: think of it as moving a bunch of IOU's from your left and right front pockets to your back pocket. As others have mentioned debt consolidation by itself is not a bad thing, but as always the devil is in the details. 1. How much does this "service" cost? 2. Could you not do the same by paying the higher interest rate debt first? 3. And most importantly - once your debt is consolidated off, will you then be tempted to spend more and potentially acquire more debt? Rather than confronting DH head on why velocity banking is a bad idea, perhaps you can get the number$ for VB and then do a side by side comparison ?

Yes it would be exactly moving the IOUs to the back pocket.

1. It doesn't cost anything, as we aren't going to take courses on it of get help from a financial guru. His brother doesn't make anything off of it either.
2. Not sure what you mean by doing the same with the higher debt. The highest debt in interest is the store credit card and the highest amount is his suv.
3. I wouldn't be tempted because I have self control but I'm not sure about him. Like I said earlier he wanted to buy a 70" TV with the money left over from our insurance claim (we did the work and saved a ton)

The problem with the numbers and side by side is that he did them and VB looks great on paper. Everything looks great in paper. It's like a burger King commercial, the whopper looks great on TV but when you get it, it definitely doesn't look like the TV one. He also thinks because we would pay them off quickly, that once the LOC is paid off, we could use that for say a car for me or something. But I said in another post that his whole paycheck would go in but almost all of it would come back out leaving us with what maybe a $200 payment technically. (I am trying to save while doing all this so some money goes into savings each check).

[Robocp4]

Quote:

Originally Posted by Audie Murphy The sacrifices are all temporary. Suck it up in the short term for the long term win.

I wish I could just tell him that but he will not listen

[Robocp4]

Thank you everyone, this is great advice and help. Of course we fought again today about VB since his brother is now in town. He was ready to go to the bank and get one without me. (he didn't)

So to clear a few things up from my OP...

The $700+/- that I brought home went to paying childcare so I only had roughly $1-200 left. Also, that was only 1 child and he was also going to school. So for 2 kids, (one who definitely needs to be watched) I was getting $1000+ in childcare. And that $1000 was from a trusted neighbor. This is why we decided it was better for me to stay home since we would have been losing money. Now I don't pay childcare nor gas every week so I tech save some money.

My sports car.... I won't get crap for trade, I did it on KBB and it's worth about $500. I figured I'd just keep it since that is crap for trade in dollars and it's paid off. I just don't go anywhere unless I absolutely, it can't wait, have to go (Dr appts).

I am very motivated to become debt free as I am tired of worrying all the time about bills and our future.

As far as any disabilities, mental illness, or addictions, I have a severe anxiety disorder. I am on meds daily and see a counselor however, when I get this stressed out about something, I get sick. DH sees this but his answer to me being sick when he talks about VB, is to "not worry about it" and "we won't be in debt more" I like to have a plan and control over things and with VB I wouldn't be in control. With my way, I am in control 100% and feel way better knowing I can check a bills off as paid.

Oh and lastly the 70" TV, he was series about. He was measuring our wall and pricing them out. Our living room isn't big enough for that TV. We would be blind watching it. We have a nice 40 something inch and it works perfect for me. Maybe get a 50 inch but no bigger. Heck our couches are only 5-6 feet off the TV wall. The roon is only about a 12x12 (there a foyer attached that makes it one large long room but there is a door there so it's kinda ends where we put the edge of the couches.

I hope that cleared a few things up.

[pb4uski]

Quote:

Originally Posted by Robocp4 He said we would get a personal line of credit not a heloc. .....

You might be worrying for nothing. With all the debt that you have and your income he probably couldn't get a personal line of credit to do it anyway.

Would he agree to meet with a debt counselor?

[jazz4cash]

I’ve immersed myself into the world of Velocity banking. Every video I’ve watched is so flawed it is very difficult for me to sit through. Lots of red flags there. If you do a side by side comparison I can’t see how it would come out ahead unless you make crude assumptions like they do in the videos.

As bad as it is I dont see much harm in it if you don’t pay for one of the VB gurus. There is real risk of making the situation worse because you don’t follow the plan, take additional debt, etc.

All the VB examples include situations with positive cash flow and I’m not sure that fits OPs situation. It would be a pretty easy fatal flaw to create cash flow with additional debt.

I think it may be better for OP to support DHs plan since he seems convinced. It’s not worth straining the relationship. Maybe negotiate support with an agreement of no additional debt (big screen tv) until goal ‘x’ is achieved. Good Luck.

[dirtbiker]

Quote:

Originally Posted by Robocp4 So I'm a married 37 y/o woman with a 9 yr old step son and a 1 yr old son. After baby was born we decided that I needed to stay home. (I only brought in 700-900/mo extra). Well it's been a year and it's great however DH has decided that he wants to try Velocity banking. His brother turned him to it and that is all I hear about. DH is a 33 y/o working in the trades as a union Ironworker. He keeps telling me that he doesn't want to bust his butt and have nothing to show for it. We need a new car for me with the baby and he would love his paid off. A little about what we have: *My car is paid off (2 dr sports car not baby friendly) *DH has an suv that we bought used in 2017. We owe 12k on it still *We have a house with a mortgage of about 180k *we have a lawn tractor that he took a personal loan out for... We own 3k on it * have 4 credit cards (2 store, a m/c and the care credit card) between them we owe 6k *and I still have a student loan that I owe 12k on (I'm on an income repayment plan so I pay $0/mo right now) I know we live paycheck to paycheck (he brings home about 4k/mo) but he has a "vacation fund" from the union that we can use monthly. I've been using it to slowly pay down some bills. The care credit will be paid off next week. Has anyone heard of velocity banking? Tried it? Does it actually work? I'm not so sure about taking a personal line of credit (LOC) out to pay off credit. Yes smaller interest rate and it's figured differently on the LOC but its basically consolidation with a reviving account. Help please? I want to pay things off so that we can have a great retirement when the time comes. As of right now that won't happen quick enough for him. P. S. I want to learn about stocks and bonds but have no clue where to start with that.

I haven't read all the replies, so I may be repeating some things, but...

1. Velocity banking might work for someone who already has good financial habits and is very strict about spending. However, for someone who isn't, it's a recipe for disaster. It's just an easy way to go further in debt. I'd avoid it.

2. Why aren't you working? You have student loans that are accruing interest and other debt and are living paycheck to paycheck. Get out there and work. I know this may sound harsh, and others may disagree, but the age of the stay at home partner is over, unless one spouse has a very high income. Get into the workforce and add money to the table. We have four children, ranging from 6 months to 16 years, and both my wife and I work. We wouldn't have it any other way. Even if you come close to breaking even on childcare costs (which only the 1 year old should be really expensive), you will presumably get raises and promotions and make more in the future. As long as you stay unemployed, you won't move up in pay scale or promotions. Oh, and stop having kids! As someone who has a lot, I know firsthand just how expensive they are!

3. Sell the tractor and buy a used one and pay off that loan. I have about 1.5 acres and use a $500 tractor I bought used five years ago. It isn't as nice as the newer or more expensive ones, and requires maintenance, but it works just fine. Of course I drool over the more expensive tractors, but I can't justify the cost. And for comparison, our annual household income is $330,000.

4. I will second (third, fourth, maybe) the recommendation to read Dave Ramsey's book The Total Money Makeover. I don't agree with everything he says, but his principles are sound, and whether you follow it loosely or to the tee, you'll get out of debt.

5. Once you're done with that book, read the Millionaire Next Door. It's hands down my favorite book and was life changing for me and my family.

6. Is he contributing to a 401K or does he have any other investment plans? Do either of you have any savings, retirement accounts, brokerage accounts, etc.? If he has a 401K with matching, I'd advise to start contributing to that up to the point of maximum matching. This is where I differ from Ramsey, in that he says to wait until debt is paid off to start contributing to a retirement account. I disagree because any funds that are matched earn far more than any debt you're paying off (usually 50-100% matching, depending on the employer).

7. I like the idea of refinancing high interest loans, AS LONG AS it's done congruently with a plan to change your financial habits. If you refinance and never change your financial habits, it won't make much of a difference in the long run.

8. Any thoughts on downsizing your house? I'm not sure how much your house is actually worth/cost you, just your mortgage. From a quick Google search, it appears northwest Indiana has low house prices, even lower than my area. And in my area a $200k house gets you quite a bit. Just a thought in order to put more money in your pockets both with a lower mortgage cost and lower utilities.

9. This should be obvious, but no nonessential big purchases. Especially not on credit, but if you have the cash saved up, put that toward paying off debt, not a new toy.

9. As far as stocks and bonds go, you're still a little ways from diving into that, but keep reading everything you can here, and pick up a beginner's investment book.

Good luck!

[pb4uski]

Robo,

I have a couple better examples for you and your husband to consider that I believe show that if you have free cash flow that just making additional principal payments to your mortgage is preferable to velocity banking.

This first link is a good primer on velocity banking and offers a good example of someone with $4k of income (interesting coincidence), $3k of monthly expenses and $1k of monthly free cash flow available for debt service. They have a mortgage of $100k with $25k in equity and take out a $12.5k 7% HELOC (but it could just as easily be a $100k mortgage with negligible equity and taking our a $12.5k personal line of credit--- if they could get one).

The velocity banking example results in them paying the mortgage off in 77 months (6 years and 5 months) and paying $17,438 in interest.... a great accomplishment!

This link is to a mortgage amortization schedule calculator. If I put in a $100k balance, 30 years at 5% consistent with the velocity banking example, the total interest over 30 years is $93,256. If I add to that $1,000 per month of added principal (in the Add Extra Payments section.... the same additional cash outflow as the velocity banking example) the mortgage is paid off in 77 months as well... however, the total interest paid is only $16,888.

In the first link they indicate:

Quote:

Velocity banking is not the fastest strategy for paying off a mortgage. Making extra payments equal to your free cash flow on your mortgage is actually the best strategy when it comes to quick repayment and less interest paid.

IMO simple is better.... the example demonstrates that there is no particular "magic" to velocity banking AND for either to work you need to have free cash flow to apply to debt service (that extra $1,000/month).

At the end of the day though, the difference isn't worth getting stressed out over or marital strife... but the interest rate of a personal line of credit like your husband plans to use would likely be a lot higher than a HELOC so the difference will likely be much more significant.

[4legsgood]

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Originally Posted by FlaGator \ ..In the meantime, ask DH to find some neighbors' lawns to mow to help payoff the lawn tractor.

That, or sell the tractor, and do what I've transitioned to (for large yard) - use a regular lawn mower or weed eater to mow 'trails', and diy landscape for bike (add little hillocks), plants that support mini nature walks with dogs and small children, meditation walks. I'm more and more pleased with this approach.

[joeea]

Quote:

Originally Posted by Robocp4 Try telling my husband that. He doesn't think velocity banking is a problem. He raved about it because his brother is doing it. It's not for everyone and we are one of them it's not good for. He just will not see my side of things.

I guess we all have our personal burdens to bear.

[joeea]

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Originally Posted by Robocp4 As far as income for me. Yes we did lose that $700/mo but I should have mentioned that we were paying childcare (for only child at the time) and it was $500-600 /mo. So for me to work and only bring home 200 a month isn't worth it when we would have 2 in childcare.

Bringing home 200 a month isn't worth it. Okay.

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I also am not one to watch other people's children. That is just not my fortay.

Sometimes we don't have the luxury of our forte.

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I have tried to find side jobs but I can't get a PT job as hubby is in the trades and goes to different job sites weekly of not daily. Right now he is driving almost 2 hrs one way for work so he isn't home until maybe 6pm if he doesn't catch traffic. So finding a job that would let me work whenever I could come in, isn't likely.

Unless hubby works 7 days per week, Saturday and Sunday would be available.

Quote:

I have tried to sell my essential oils but I don't like pushing people to buy things like that. I have been applying to remote jobs from a specific group mom group that's credited. Just havent gotten anything yet.

Lots of reasons why you feel that you can't increase your income.

Sadly, it appears that you are stuck, unless you or your husband are willing to change your attitude/approach.

Sorry for being blunt - I wish you luck.

[samcat]

A lot of people in California lost their homes by doing something like this. They used their homes as ATMs during the good years but when housing prices went down, their homes were worth less than what they owed. Then, they had a mortgage rate that was resetting and couldn't refinance at a good rate because they owed more on their home that what it was worth. The mortgage reset at a higher rate and they couldn't afford the payments.

I'd say Velocity banking is a recipe for disaster.

You need to become disciplined about paying off debt. If you pay off your debt with funds from you house, there is nothing stopping you from getting into debt again. As someone mentioned, read Total Money Makeover. I have a copy I can send you if you want to private message me your address.

[Retired Expat]

Quote:

Originally Posted by Robocp4 I wish he would understand that velocity banking is not the way to go. Ex. You take out a 10k LOC, pay off the 6k in little debt. So yes you freed up your credit cards but now you still have 6k to pay as you just transfered it to the LOC. So then you take that 4k/mo he makes and give it all to the LOC. Then take back out what you need for expenses, bills etc. So 3k expenses means you only give 1k to the LOC. I hate this and he will not listen to me about it. His stupid brother started it and supposedly paid off 2 cars and credit cards in less than 2 years. However he also has more cash flow as we do not. Dave Ramsey... Yes his snowball debt plan is what I'm trying to work on hence the care credit paid off next week. It's the smallest. The book you're talking about, is that the financial peace university one? Or his baby steps? I wish I could tell him to go mow lawns but all of ours are 2.5 acres. Hence the tractor to cut it all. Plus he is actually working OT right now so at 10 hr days he's home by 6pm. Thank you for the info. I will Def check back here for more advice on investing.

Most all of it is a bad idea. Freeing up credit on your credit card is too easy a way to spend money you don’t have.

But the idea of consolidating your debt at a much lower rate is a very goo$ idea. Credit cards and personal loans are designed to keep sucking you dry! I don’t like putting you house at risk but if jobs are lost then everything might be at risk anyway.

Pay off the high interest debt and get rid of the credit card. Switch to a debit card that only allows you to spend what you have. Review all expenses and figure out what to cut out? Do everything to learn how to be more frugal for some years until spending is under control and you know where it is all going. You can’t worry about savings and investment when personal debt other than mortgage is sucking up any spare cash you might have.

Your issue is not rocket science and no financial guru can help you until you deal with the fundamentals. Slash spending, eliminate high interest deb, eliminate wasteful spending until you are on solid ground again and saving money. Then worry about the next steps....

[Robocp4]

Just so everyone knows we would NOT be getting a heloc. It would be a personal line of credit that we would get. Unsecured as I am NOT putting my house up for anything. I know most of you are referring to helocs when you talk about VB but in our case it would be a PLOC.

I also figured out the snowball and I can have all 5 debts (minus house) paid off in about 2.5 years. I think this is a good time line for us. Just as long as we don't add to it. It should work out great. I have started it this month so we will see what he says.
His brother just left town to go home so I'm not sure how much more it will come up.