Loads of debt. Lots of potential. No momentum.
June 27, 2010 7:28 PM Subscribe
I am in my mid-twenties, gainfully employed with job security, single, and struggling to get by each month. What steps have you taken to get out from under your debt(s)?
I am four years out of college with a dual degree and am teaching in those fields. My job is very secure and I make $40,000 a year. In my early 20s, while in college, I made a series of catastrophic financial decisions and have the following debts: $35,000 in student loans, $22,000 in credit card debt, and a $225 car payment on a very reliable car that I fully intend to keep for as long as it runs.
Although I’m in a long-term relationship, I live alone and well within my means. My only luxury is my iPhone. I do not have a television, I do not travel, and I do not go shopping, ever. I don’t have any big collections of anything, other than a few dozen hardback books that I would like to keep.
Here is what happens to me each month: after I have paid rent ($600 for a 1BR apartment), utilities (elec, gas, internet: $80), my phone bill ($75), and the minimums on my debts, including student loans, credit cards, and my auto loan ($1075), I am left with about $100-200 for food and gas, which is approximately $200 less than I need.
To supplement this, I tutor quite often and earn (in bad months) from $250 to (in good months) $600, cash. I put $50 a month into a savings account that I don’t touch, save for big car repairs. It currently has $650. I usually put $75 of every $100 earned tutoring towards my highest-interest credit card each month. I use the rest for gas/food.
I have never missed a payment or had any bill go into collections. I am an ideal debtor, I suppose. I live well within my means: I spend $30 a week on groceries, $11 a month on a gym membership, and $9 month on Netflix. My girlfriend and I cook every weekend and read and watch movies. She doesn’t have any debt and is in graduate school.
I do not have parents to whom I can turn for help, which is perhaps a small contributing factor to my poor financial choices in college. I am going to get a part-time job in August just before school starts (I’ve had a few before, but tutoring ultimately paid better), but even if that job gave me an extra $500 a month, it wouldn’t stop the crush of the compounded interest of the credit cards.
What are my options? If I continue to pay them at this schedule, I should be able to do it by the time I’m 34, but that doesn’t account for the cost of graduate school, which I must start soon to keep my teaching licensure current.
I am watching my friends (whose parents supported them throughout college, etc) get married, purchase homes, start families, and I am just sinking. I’m quite familiar with David Ramsey’s debt snowball and the various ways to maximize the money I pay towards my credit cards each month, but my debt-to-income ratio, I think, is simply too high.
Given my job, degrees, and skills (I am fluent in four languages), I should be making more out of my life, but I simply can’t move on with the debt. What do you recommend, hive mind?
Throwaway email: vhjaecdi@gmail.com
I am four years out of college with a dual degree and am teaching in those fields. My job is very secure and I make $40,000 a year. In my early 20s, while in college, I made a series of catastrophic financial decisions and have the following debts: $35,000 in student loans, $22,000 in credit card debt, and a $225 car payment on a very reliable car that I fully intend to keep for as long as it runs.
Although I’m in a long-term relationship, I live alone and well within my means. My only luxury is my iPhone. I do not have a television, I do not travel, and I do not go shopping, ever. I don’t have any big collections of anything, other than a few dozen hardback books that I would like to keep.
Here is what happens to me each month: after I have paid rent ($600 for a 1BR apartment), utilities (elec, gas, internet: $80), my phone bill ($75), and the minimums on my debts, including student loans, credit cards, and my auto loan ($1075), I am left with about $100-200 for food and gas, which is approximately $200 less than I need.
To supplement this, I tutor quite often and earn (in bad months) from $250 to (in good months) $600, cash. I put $50 a month into a savings account that I don’t touch, save for big car repairs. It currently has $650. I usually put $75 of every $100 earned tutoring towards my highest-interest credit card each month. I use the rest for gas/food.
I have never missed a payment or had any bill go into collections. I am an ideal debtor, I suppose. I live well within my means: I spend $30 a week on groceries, $11 a month on a gym membership, and $9 month on Netflix. My girlfriend and I cook every weekend and read and watch movies. She doesn’t have any debt and is in graduate school.
I do not have parents to whom I can turn for help, which is perhaps a small contributing factor to my poor financial choices in college. I am going to get a part-time job in August just before school starts (I’ve had a few before, but tutoring ultimately paid better), but even if that job gave me an extra $500 a month, it wouldn’t stop the crush of the compounded interest of the credit cards.
What are my options? If I continue to pay them at this schedule, I should be able to do it by the time I’m 34, but that doesn’t account for the cost of graduate school, which I must start soon to keep my teaching licensure current.
I am watching my friends (whose parents supported them throughout college, etc) get married, purchase homes, start families, and I am just sinking. I’m quite familiar with David Ramsey’s debt snowball and the various ways to maximize the money I pay towards my credit cards each month, but my debt-to-income ratio, I think, is simply too high.
Given my job, degrees, and skills (I am fluent in four languages), I should be making more out of my life, but I simply can’t move on with the debt. What do you recommend, hive mind?
Throwaway email: vhjaecdi@gmail.com
Have you considered some kind of shared living situation? You'll cut the amount you're spending on rent and utilities, and possibly food.
posted by 6550 at 7:45 PM on June 27, 2010
posted by 6550 at 7:45 PM on June 27, 2010
One thing jumps out at me: you live alone. Get a roommate. Living alone is a luxury. Sharing rent and bills with another person can cut down your monthly expenses significantly.
posted by donajo at 7:46 PM on June 27, 2010 [8 favorites]
posted by donajo at 7:46 PM on June 27, 2010 [8 favorites]
A few thoughts:
1. Does your "pay off by 34" include anticipated raises over the next few years? As you earn more, you should be able to pay off your debt quicker.
2. How much longer do you have to go on your auto loan? Depending on the rates of interest on that and your credit cards, it may make sense to shift extra payments to defray that debt earlier to free up cash flow. Though you may end up paying a bit more in interest because you're not defraying the highest interest debt, having your auto payment eliminated sooner may compensate for that, depending on your situation.
3. You've probably already considered it, but another possibility would be to move into a two-bedroom apartment with a roommate. You could save $200-$300+ per month on rent/utilities in that kind of situation. Indeed, that's what many folks in your situation do for a few years until they get their debt under control and can afford to live on their own.
4. Does your $40k/yr include your private tutoring income? Because my calculations don't quite add up. With the additional 200-600/month you make from tutoring, my quick math suggests you should have better cash flow than you're mentioning. What am I missing?
posted by darkstar at 7:49 PM on June 27, 2010
1. Does your "pay off by 34" include anticipated raises over the next few years? As you earn more, you should be able to pay off your debt quicker.
2. How much longer do you have to go on your auto loan? Depending on the rates of interest on that and your credit cards, it may make sense to shift extra payments to defray that debt earlier to free up cash flow. Though you may end up paying a bit more in interest because you're not defraying the highest interest debt, having your auto payment eliminated sooner may compensate for that, depending on your situation.
3. You've probably already considered it, but another possibility would be to move into a two-bedroom apartment with a roommate. You could save $200-$300+ per month on rent/utilities in that kind of situation. Indeed, that's what many folks in your situation do for a few years until they get their debt under control and can afford to live on their own.
4. Does your $40k/yr include your private tutoring income? Because my calculations don't quite add up. With the additional 200-600/month you make from tutoring, my quick math suggests you should have better cash flow than you're mentioning. What am I missing?
posted by darkstar at 7:49 PM on June 27, 2010
5. Definitely look at loan consolidation if you can get a lower rate of interest than you're paying on your debts.
posted by darkstar at 7:50 PM on June 27, 2010
posted by darkstar at 7:50 PM on June 27, 2010
Right now, you're probably right - ie, you're running on a treadmill you can't escape from. But one thing you may not realize right now is that your condition is not static. For example:
1) You're in a long-term relationship; how likely is it that you and your girlfriend would be interested in moving in together? I'm certainly not a fan of cohabitation purely for financial reasons, but given the timescale of getting out of that much debt (ie, decades), that could mean a big change. If that's not on the radar, you may want to consider getting a roommate - not the most appealing thing, I know, but it could probably free up a big chunk of money. Your area may be different - I happen to live in a large city, cheaper than most but much more expensive than a lot of places - but I know for a fact that if I were willing to have a roommate, I could easily cut my monthly rent & utilities costs almost in half.
2) Your car loan won't last forever. Generally I'd suggest putting aside a car-loan sized chunk of money every month even after it's done - ie, for the next car - but you have credit card loans and those are ruinous. After the car's paid off, you can redirect that cash to the CC bills, which are at a higher rate than any car loan would ever be.
3) You don't say exactly what kind of teaching you do (community college? Elementary school?) but an awful lot of teachers are paid on a strict seniority basis. What kind of compensation increase can you realistically expect over the next few years? Again, it may not be much when you're looking twelve months out, but again, debt of this magnitude requires a longer-term approach, and especially for someone who's extremely frugal like you, even a modest increase in salary can mean a huge boost in debt payment speed.
4) There are probably ways you can leverage your knowledge, teaching skills, and/or language skills to increase your cash flow - especially during the summer, when you can apply them full-time. This is an area where I'm not particularly well-versed, so I'll leave it to others to offer more concrete suggestions, but with two degrees and four languages, there's probably something you can do that can pull your income up over the summer and allow you to make some additional progress.
posted by Tomorrowful at 7:51 PM on June 27, 2010
1) You're in a long-term relationship; how likely is it that you and your girlfriend would be interested in moving in together? I'm certainly not a fan of cohabitation purely for financial reasons, but given the timescale of getting out of that much debt (ie, decades), that could mean a big change. If that's not on the radar, you may want to consider getting a roommate - not the most appealing thing, I know, but it could probably free up a big chunk of money. Your area may be different - I happen to live in a large city, cheaper than most but much more expensive than a lot of places - but I know for a fact that if I were willing to have a roommate, I could easily cut my monthly rent & utilities costs almost in half.
2) Your car loan won't last forever. Generally I'd suggest putting aside a car-loan sized chunk of money every month even after it's done - ie, for the next car - but you have credit card loans and those are ruinous. After the car's paid off, you can redirect that cash to the CC bills, which are at a higher rate than any car loan would ever be.
3) You don't say exactly what kind of teaching you do (community college? Elementary school?) but an awful lot of teachers are paid on a strict seniority basis. What kind of compensation increase can you realistically expect over the next few years? Again, it may not be much when you're looking twelve months out, but again, debt of this magnitude requires a longer-term approach, and especially for someone who's extremely frugal like you, even a modest increase in salary can mean a huge boost in debt payment speed.
4) There are probably ways you can leverage your knowledge, teaching skills, and/or language skills to increase your cash flow - especially during the summer, when you can apply them full-time. This is an area where I'm not particularly well-versed, so I'll leave it to others to offer more concrete suggestions, but with two degrees and four languages, there's probably something you can do that can pull your income up over the summer and allow you to make some additional progress.
posted by Tomorrowful at 7:51 PM on June 27, 2010
Fluent in 4 languages? I feel like there must be some job out there where you could earn more than $40k a year. Also, how soon is your car paid off? That'll free up a hefty chunk of change (either $225 or $1075 a month; not sure which is the right figure).
posted by ThePinkSuperhero at 7:52 PM on June 27, 2010
posted by ThePinkSuperhero at 7:52 PM on June 27, 2010
Getting a roommate will probably save you more money than anything. Looking at your other expenses, an iPhone is an expensive luxury at almost $1000/year, and it looks like one you can't afford. If I were trying to save money, I'd also give up NetFlix in favor of my library's DVD collection, if they have a decent one. If not, then $9/month is a pretty good value for entertainment. It sounds like you might spend a fair bit of money on gas. Is public transportation an option at all for you? What about carpooling?
posted by grouse at 7:58 PM on June 27, 2010 [1 favorite]
posted by grouse at 7:58 PM on June 27, 2010 [1 favorite]
Just so my assumptions are clear:
$40,000 gross
-30% taxes, etc.
= 28,000 net
/12 = 2333/month
+ $250 minimum) = $2583 minimum monthly net income.
2583 net monthly
-600 rent
-80 utils
-75 phone
-1075 debt repayment
=$730 remaining!
$730 for food, auto repair emergency fund and extras (including extra principle payments on your debt:
$300 food
$9 Netflix
$11 gym
$50 auto emergency repairs
~$50 auto insurance?
$200 extra principle payments n debts
= $110 unallocated
Any additional funds you make in good tutoring months would be over and above this, of course.
Consolidate your loans into a single LOC and pay perhaps $700/month on the debt instead of $1075/monthly. Remainder to go into your tuition fund for your Master's degree?
Then, as your income increases with raises, you can pay increase principle payments on your debts..
posted by darkstar at 8:00 PM on June 27, 2010
$40,000 gross
-30% taxes, etc.
= 28,000 net
/12 = 2333/month
+ $250 minimum) = $2583 minimum monthly net income.
2583 net monthly
-600 rent
-80 utils
-75 phone
-1075 debt repayment
=$730 remaining!
$730 for food, auto repair emergency fund and extras (including extra principle payments on your debt:
$300 food
$9 Netflix
$11 gym
$50 auto emergency repairs
~$50 auto insurance?
$200 extra principle payments n debts
= $110 unallocated
Any additional funds you make in good tutoring months would be over and above this, of course.
Consolidate your loans into a single LOC and pay perhaps $700/month on the debt instead of $1075/monthly. Remainder to go into your tuition fund for your Master's degree?
Then, as your income increases with raises, you can pay increase principle payments on your debts..
posted by darkstar at 8:00 PM on June 27, 2010
Yep, consolidate your loans and get rid of your credit card(s), or at least swap it for a debit card (same functionality but doesn't use imaginary money). Also I may be parsing incorrectly but what kind of crazy Italian sports car from the future did you get that it's costing you $1075 per month to pay off?
But my big thing is: get rid of your credit cards. Cut them up into tiny little pieces and call the credit card people after you've worked out a more comfortable budget and tell them your terms: you can afford to pay X on these things a month and that's it.
posted by turgid dahlia at 8:04 PM on June 27, 2010
But my big thing is: get rid of your credit cards. Cut them up into tiny little pieces and call the credit card people after you've worked out a more comfortable budget and tell them your terms: you can afford to pay X on these things a month and that's it.
posted by turgid dahlia at 8:04 PM on June 27, 2010
Try to get student loans deferred for 2 or 3 years until you can clear up the credit card debt.
Pay additional principal on the Auto Loan to get rid of it first (especially if there's only 1k of principal left).
Then debt snowball your credit debt. Paying credit interest is where all your "minimum payments" go and it is impossible to ever pay them down completely if only the minimums are met.
posted by ijoyner at 8:06 PM on June 27, 2010
Pay additional principal on the Auto Loan to get rid of it first (especially if there's only 1k of principal left).
Then debt snowball your credit debt. Paying credit interest is where all your "minimum payments" go and it is impossible to ever pay them down completely if only the minimums are met.
posted by ijoyner at 8:06 PM on June 27, 2010
No, I think s/he's saying that minimums on all of his debt (student loans, credit card) PLUS his car payment equal $1075 a month. The car payment is a reasonable $225.
posted by kate blank at 8:10 PM on June 27, 2010
posted by kate blank at 8:10 PM on June 27, 2010
The biggest luxury item you have is living alone. Moving into a shared two-bedroom apartment is a great way to reallocate money from rent and bills to your debts.
Whether you keep the iphone or not, get a family cellphone plan with your girlfriend or roommate.
posted by PueExMachina at 8:10 PM on June 27, 2010
Whether you keep the iphone or not, get a family cellphone plan with your girlfriend or roommate.
posted by PueExMachina at 8:10 PM on June 27, 2010
As an extreme option live out of your car and shower at the gym. By the time you pay off the car you could have around an extra $1000 per month to play with if I'm counting correctly.
posted by XMLicious at 8:12 PM on June 27, 2010
posted by XMLicious at 8:12 PM on June 27, 2010
what kind of crazy Italian sports car from the future did you get that it's costing you $1075 per month to pay off?
I think that's the total of all debt repayments: car loan, student loan and credit cards.
p.s. I wouldn't advocate getting rid of all credit cards. Until you are able to build up a cash reserve, you do need to be able to call upon some credit in case you get in a serious (well, more serious) cash flow emergency. Plus, it's good for your credit ating to have older credit accounts that are in good order, so once you pay them off, keep the account open but don't use it except in extreme duress. But the point is well taken and one which it sounds like you've already learned: credit is like fire...if you don't use it with extreme care, it can burn you.
posted by darkstar at 8:13 PM on June 27, 2010
I think that's the total of all debt repayments: car loan, student loan and credit cards.
p.s. I wouldn't advocate getting rid of all credit cards. Until you are able to build up a cash reserve, you do need to be able to call upon some credit in case you get in a serious (well, more serious) cash flow emergency. Plus, it's good for your credit ating to have older credit accounts that are in good order, so once you pay them off, keep the account open but don't use it except in extreme duress. But the point is well taken and one which it sounds like you've already learned: credit is like fire...if you don't use it with extreme care, it can burn you.
posted by darkstar at 8:13 PM on June 27, 2010
Move in with your GF so you can halve your rent and bills, then sell your car and get a bicycle or take public transport. Once your are biking to work you can ditch the gym membership!
posted by beccyjoe at 8:18 PM on June 27, 2010
posted by beccyjoe at 8:18 PM on June 27, 2010
If you are a teacher can you take a summer job? There are summer jobs that pay quite well and cover your living expenses: for example fieldwork with a forestry or fish & game agency (port sampling or fire crew support type things), teaching English overseas or working at a lodge or summer camp. None of those jobs require special skills and will pay at least $12-15/ hour, potentially a lot more. Waitressing or bartending at a seasonal establishment can pay really well but those jobs are hard to get.
It's probably too late for this summer and you'll probably have to up and go somewhere for 2-3 months but if you time it right you can give up your apartment and move into a shared living situation with friends when you get back saving yourself quite a bit of money in the meantime.
An alternative to tutoring is to take on translation work as a second job, if you're that fluent. A lot of hospitals, cities, courts and the like have translators on call. You take a test, work with an established person for a bit and then you are available to take calls as needed. The rates are decent.
posted by fshgrl at 8:37 PM on June 27, 2010
It's probably too late for this summer and you'll probably have to up and go somewhere for 2-3 months but if you time it right you can give up your apartment and move into a shared living situation with friends when you get back saving yourself quite a bit of money in the meantime.
An alternative to tutoring is to take on translation work as a second job, if you're that fluent. A lot of hospitals, cities, courts and the like have translators on call. You take a test, work with an established person for a bit and then you are available to take calls as needed. The rates are decent.
posted by fshgrl at 8:37 PM on June 27, 2010
nthing finding a shared living situation (but DO NOT move in with your girlfriend if it's not the right time in your relationship for that; much better to move into a larger apt. or house with a roommate or two than to rush prematurely into living together solely because of financial worries). My insistence on living alone for several years after grad school (and again for several years after I got divorced) is pretty much what kept me treading financial water and in debt for much longer than necessary.
As for using your language skills: what about finding work as a translator, in addition to tutoring?
posted by scody at 8:40 PM on June 27, 2010
As for using your language skills: what about finding work as a translator, in addition to tutoring?
posted by scody at 8:40 PM on June 27, 2010
You can try to defer or reduce the minimum on your student loan until you get the other debt out of the way.
posted by fifilaru at 9:05 PM on June 27, 2010
posted by fifilaru at 9:05 PM on June 27, 2010
That $225/month for the car loan is pretty crushing. I know you love your car and want to keep it forever and always, but you know that a car is a pretty bad investment!
I would start really crunching the numbers on the car. What's it's Blue Book value? How many payments do you have left? Looking over your stats, it looks like you're not accounting for the cost of car insurance. That cost would be far less on a cheaper car.
Are you living in a city? Could you get by without a car for one month, six months, twelve? Bike and take public transportation? Do you know someone who might be willing to sell you their car for cheap?
Just to put it in perspective, you're spending over twice as much on your car as you are on food. That is a bad ratio.
Once you're out of debt you can get any car you like. But if you're really serious about getting out from under... yeah, I'd sit down and have a real heart-to-heart with the car.
posted by ErikaB at 10:21 PM on June 27, 2010 [1 favorite]
I would start really crunching the numbers on the car. What's it's Blue Book value? How many payments do you have left? Looking over your stats, it looks like you're not accounting for the cost of car insurance. That cost would be far less on a cheaper car.
Are you living in a city? Could you get by without a car for one month, six months, twelve? Bike and take public transportation? Do you know someone who might be willing to sell you their car for cheap?
Just to put it in perspective, you're spending over twice as much on your car as you are on food. That is a bad ratio.
Once you're out of debt you can get any car you like. But if you're really serious about getting out from under... yeah, I'd sit down and have a real heart-to-heart with the car.
posted by ErikaB at 10:21 PM on June 27, 2010 [1 favorite]
Know that you did NOT fuck up while in college! Sure, you've got debt, but you're in your mid-twenties and you have a savings account! You're a good kid! You have a job and you're paying your bills and you're doing an excellent job in the middle of a freakin' recession. Don't forget that.
Good luck!
posted by goblinbox at 12:01 AM on June 28, 2010 [1 favorite]
- Refinance your credit card debt. You're paying hella interest and you know what? FUCK THAT NOISE.
- Get a roommate. No matter how cool s/he is s/he'll irritate you, which will help you live longer. Bonus! ;-)
- Make your savings work for you: put it into a retirement fund of some kind. Go talk to your bank's financial advisor; it's free.
- If you're more than three years away from owning your car, trade it in on something you can own ASAP. Car payments suck.
Good luck!
posted by goblinbox at 12:01 AM on June 28, 2010 [1 favorite]
Actually, I just checked and I still have it! If you want the book, message me with your mailing address and I'll send it to you. IN THE MAIL. Srsly.
posted by goblinbox at 12:04 AM on June 28, 2010 [2 favorites]
posted by goblinbox at 12:04 AM on June 28, 2010 [2 favorites]
I started writing basically the same as everyone else, and then thought, are there any opportunities for free or subsidised housing that you could explore?
In my city (in Australia), there are opportunities for people to be the 'lead tenant' in houses managed by the government or charities for young people who can't live at home and are transitioning to independent living. The lead tenant gets free rent and is basically there to model adult living to people who may not have had good role models.
There are also live-in tutor opportunities at some universities and private high schools where you also get paid for some tutoring work. Sometimes I see ads for housing in return for some basic living assistance for someone elderly (helping them do their shopping and looking after their garden). A large church here has a program where people live communally in a large inner city property for a year and in return, provide volunteer work to their soup kitchen and other programs.
Not many people would want to do these forever, but 12 months could be worth nearly $8000 to you.
posted by AnnaRat at 12:12 AM on June 28, 2010
In my city (in Australia), there are opportunities for people to be the 'lead tenant' in houses managed by the government or charities for young people who can't live at home and are transitioning to independent living. The lead tenant gets free rent and is basically there to model adult living to people who may not have had good role models.
There are also live-in tutor opportunities at some universities and private high schools where you also get paid for some tutoring work. Sometimes I see ads for housing in return for some basic living assistance for someone elderly (helping them do their shopping and looking after their garden). A large church here has a program where people live communally in a large inner city property for a year and in return, provide volunteer work to their soup kitchen and other programs.
Not many people would want to do these forever, but 12 months could be worth nearly $8000 to you.
posted by AnnaRat at 12:12 AM on June 28, 2010
Some good suggestions above, in particular:
1. Consult with a bank (or even better, a credit union, if there's one you're eligible to join) about taking a low-interest personal loan you can use for your credit card debt.
2. If at all possible, ditch the car. Cars are a notorious money suck: monthly payments + gas + insurance + repairs add up pretty darn fast, I'd estimate $350 a month for your car.
3. Get a roommate.
I'd do some thinking about which is more important to you- having a car or living by yourself. Those are your two biggest non-necessities, and if you cut one of them, you'll lower your expenses significantly.
Lastly, it seems like you're on the right track, so don't beat yourself up too much about financial mistakes you made when you were younger.
posted by emd3737 at 4:32 AM on June 28, 2010
1. Consult with a bank (or even better, a credit union, if there's one you're eligible to join) about taking a low-interest personal loan you can use for your credit card debt.
2. If at all possible, ditch the car. Cars are a notorious money suck: monthly payments + gas + insurance + repairs add up pretty darn fast, I'd estimate $350 a month for your car.
3. Get a roommate.
I'd do some thinking about which is more important to you- having a car or living by yourself. Those are your two biggest non-necessities, and if you cut one of them, you'll lower your expenses significantly.
Lastly, it seems like you're on the right track, so don't beat yourself up too much about financial mistakes you made when you were younger.
posted by emd3737 at 4:32 AM on June 28, 2010
There are some good suggestions here. My only contribution is to think about everything you're putting money toward every month, and ask yourself: "Do I need this?"
You've acknowledged that your iPhone is your one luxury item. That's great, and you should keep it around if it's the one thing you treat yourself with in your otherwise spartan life. However, if I were you, I would cut off the Netflix, the gym membership, and the internet. Those are all luxuries, not needs. That has to be at least $40 per month combined, if not more. You'll still be able to email, message, and surf the web through your phone, and you can always visit your local library if you need the more traditional experience. You can still get exercise and stay in shape without visiting a gym. Take up running, or check out some exercise videos from your local library, or ask for a set as a gift for a birthday or some other occasion.
Until you get rid of this albatross, you'll need to make some of these serious compromises between wants and needs.
posted by litnerd at 8:36 AM on June 28, 2010 [1 favorite]
You've acknowledged that your iPhone is your one luxury item. That's great, and you should keep it around if it's the one thing you treat yourself with in your otherwise spartan life. However, if I were you, I would cut off the Netflix, the gym membership, and the internet. Those are all luxuries, not needs. That has to be at least $40 per month combined, if not more. You'll still be able to email, message, and surf the web through your phone, and you can always visit your local library if you need the more traditional experience. You can still get exercise and stay in shape without visiting a gym. Take up running, or check out some exercise videos from your local library, or ask for a set as a gift for a birthday or some other occasion.
Until you get rid of this albatross, you'll need to make some of these serious compromises between wants and needs.
posted by litnerd at 8:36 AM on June 28, 2010 [1 favorite]
Look into translating - when I was at university I 'sub-contracted' for a freelance translater, i.e. when he'd accept work from his customers which he was too busy to do himself and passed this on to me. He earned a small margin on it, I had a fairly regular income stream that was very easy money and allowed me to work at night/the weekend.
posted by koahiatamadl at 1:32 PM on June 28, 2010
posted by koahiatamadl at 1:32 PM on June 28, 2010
I paid off about $35k in CC debt in 3.5 years. Here's how I did it:
CCCS.net - Consumer Credit Counseling. I used it to decrease my (large, large) interest rates. With their plan I was scheduled to be out of debt in 5 years. I paid more than they set up in their plan. You are not allowed to use the cards that are in the program, which is a good thing.
I had the bare minimum cell phone plan, bare minimum cable (I realize canceling cable is a good option, too, but staying home and not spending money was key), bare minimum internet. When I realized what shape I was in financially, I had to get a roommate. I was just divorced and it was a bitter pill to swallow - but in a 2 bedroom townhouse rent was too much on my own. Once I was in a secure relationship and my roommate could replace me, we found cheap house and stayed there as long as we could.
I put my student loans on deferment. I had less than $10k in student loans, but the additional payment was a stress I didn't want to deal with.
No new clothes/purses/fancy hair salon visits/etc. Stopped buying a new cell phone every year. No vacations. Used the computer I had way longer than I could really stand. No fancy dinners out. No more trips to the bar.
The debt snowball is BS, in my not so humble opinion. It's silly to prioritize how you pay debt off in any way other than "highest interest rate first". If you pay your lowest interest rate card off first just because it's the smallest one, you are paying a ton of extra interest. Some of my cards (including the ones that had the most money on them) were approaching 30% interest. CCCS helped greatly here - got my interest down to 6-8% in most cases, and the cards that didn't participate were paid off first.
I also asked around for work for extra money. For about 4 years (with a 1 year break in between) I worked my regular salaried job and also 15 hours extra a week.
posted by getawaysticks at 6:26 AM on June 29, 2010 [1 favorite]
CCCS.net - Consumer Credit Counseling. I used it to decrease my (large, large) interest rates. With their plan I was scheduled to be out of debt in 5 years. I paid more than they set up in their plan. You are not allowed to use the cards that are in the program, which is a good thing.
I had the bare minimum cell phone plan, bare minimum cable (I realize canceling cable is a good option, too, but staying home and not spending money was key), bare minimum internet. When I realized what shape I was in financially, I had to get a roommate. I was just divorced and it was a bitter pill to swallow - but in a 2 bedroom townhouse rent was too much on my own. Once I was in a secure relationship and my roommate could replace me, we found cheap house and stayed there as long as we could.
I put my student loans on deferment. I had less than $10k in student loans, but the additional payment was a stress I didn't want to deal with.
No new clothes/purses/fancy hair salon visits/etc. Stopped buying a new cell phone every year. No vacations. Used the computer I had way longer than I could really stand. No fancy dinners out. No more trips to the bar.
The debt snowball is BS, in my not so humble opinion. It's silly to prioritize how you pay debt off in any way other than "highest interest rate first". If you pay your lowest interest rate card off first just because it's the smallest one, you are paying a ton of extra interest. Some of my cards (including the ones that had the most money on them) were approaching 30% interest. CCCS helped greatly here - got my interest down to 6-8% in most cases, and the cards that didn't participate were paid off first.
I also asked around for work for extra money. For about 4 years (with a 1 year break in between) I worked my regular salaried job and also 15 hours extra a week.
posted by getawaysticks at 6:26 AM on June 29, 2010 [1 favorite]
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posted by decathecting at 7:41 PM on June 27, 2010 [1 favorite]