Runaway debt cycle. Please halp.
February 5, 2015 9:43 AM   Subscribe

I've been carefully avoiding paying attention to our debt. Just added it up. Uh oh.

5 years ago we bought a house that we could actually afford. 4 years ago we had a son and suddenly couldn't afford anything. Thus began the cycle of debt.

Without going into a crapload of detail that you don't care about, we're currently sitting on about $12k of card-related debt. There is other debt that I'm not including in that number because it's either interest free (a medical bill) or very long term (mortgage, car, student loan) I very recently started a new job that was a very significant raise ($45k+overtime from $33k salary), my fiancee just got a raise that's going to bring her to something like $32k+/-. I do consulting on the side but that income is in no way guaranteed or even close to reliable. It's blowing my mind that we make almost $80k a year and are very much paycheck to paycheck.

Right now, that debt is spread out between 4 cards, only 1 of which is actively accruing interest. The others will fall off of interest-free in the next 6 months. We've been bouncing the balances between 0 interest promotions for most of the last 4 years, we're about out of new cards to apply for. There are several cards with 0 balances, something like ~$25k of available credit. Our credit scores are both over 800.

I just ran my numbers, and calculating in all expenses save for food, and only looking at minimum payments, I'm cash positive $520/month. Not sure where she is, certainly lower than that. My new job will be taking over my cell phone, so that'll save me about $80 a month and she pays at least one of the cards usually, so that's another $74.

Anyway, I didn't mean to write this much, but I'm wondering if you can give me consolidation advice, or services to use or avoid. Clearly we need to hammer out a hard budget and stick to it and pay off the interest bearing cards first.
posted by TomMelee to Work & Money (67 answers total) 18 users marked this as a favorite
 
Clearly we need to... pay off the interest bearing cards first.

That depends on what the interest rates will go to on the 0% cards once they're no longer 0%.
posted by jon1270 at 9:48 AM on February 5, 2015 [3 favorites]


YouNeedaBudget.com

You can follow the principles in Excel, or you can purchase their software. That is up to you, but the overall way You Need a Budget works is really straightforward in helping you plan better.

Watch a few of the introductory videos and look around in the forums. I'd go with this over jumping to other credit cards.
posted by zizzle at 9:48 AM on February 5, 2015 [4 favorites]


Get Ynab. Read the guides/seminars on their website. Set a budget, assign a job to each dollar of income. Follow this hierarchy (image version) for any funds above the minimum required expenses. Use unbury.us for calculating your debt repayment plan.
posted by melissasaurus at 9:50 AM on February 5, 2015 [1 favorite]


Another hearty vote for You Need a Budget. I have been using it for about six months and cannot say enough good about it. There are tons of tutorials and resources online to get it working for you. I didn't have any debt when I started using it and it was still a game changer for me.

I paid full price ($60) for it, but I have since seen it for sale on Steam for 75% off. Worth keeping an eye out for, for sure.
posted by futureisunwritten at 9:53 AM on February 5, 2015


I should have mentioned that I HAVE YNAB and it really sort of doesn't work for us. I used it heavily when I had the last job and all it did was frustrate me that I simply didn't make enough money to get ahead of the debt. We don't spend off-budget very often, or shop extravagantly, but we do have a lot of small transactions. Coding those transactions and staying on top of them was kind of a nightmare. I realize that sounds like an excuse.
posted by TomMelee at 9:55 AM on February 5, 2015 [1 favorite]


services to use or avoid

You don't need a service, you need a spreadsheet that becomes your spending bible. You're right: you need to budget and stick to it and put as much extra as you can on debt reduction, and once you're there, it's just a matter of paying down the highest interest debt with available money.

Don't be afraid of paying interest on a debt that's being managed properly. In the long run, some not-strictly-necessary interest being paid is a tiny thing, if the result of this whole exercise is that you develop the financial discipline to manage yourself well. And a big part of the problem with people in your position is just that you rotate debt through interest-free cards, consolidate, and generally play a lot of games to avoid doing what you need to do: spend below your means and pay off the debts you have. You certainly don't need to pay a third party to do it for you.
posted by fatbird at 9:56 AM on February 5, 2015 [8 favorites]


There is one big piece of information I'm not seeing in your information above, and I think that you'll need to know about it: "Where Is The Money Actually Going." It is AMAZING how tiny little things can escape your notice on a day-to-day basis, and how much money they can cumulatively take away from you; that's something you need to stay on top of as much as you do your bills.

Try this - take a month or so, and make a list of EVERY single last thing you spend money on. EVERYTHING. The spontaneous Starbucks' run, lunch at work, a quarter for gum - EVERYTHING. You're just gathering information right now.

And then, take that list at the end of the month and add up what you spend on each category of thing. That is how you discover things like "wait, I've been doing that 'spontaneous Starbucks' thing twice a week and that's adding up to nearly a hundred bucks a month. WOW."

Now, you may decide that you do want to keep the ability to go to Starbucks every so often, but at least this way you will know you need to build that hundred bucks into your budget along with the electric bill and the credit cards. And that's totally fine. The thing is that you can't budget for something when you don't know what that something is.

Another thing I'd suggest is - if you can make payments to your credit cards via automated transfers from your checking account, try to set up WEEKLY payments. The beauty of weekly payments is that:

a) it's only a small hit each week - if you've budgeted $100 each month as a payment to each credit card, $100 feels like a big hit, but if you instead divide that up on a weekly basis, then it's only $25 a week and that a much smaller hit.
b) You can automate things that way, so you don't even have to think about it - you just set your bank to do that, and then from then on you get your credit card statements that show the balance shrinking as if by magic.
posted by EmpressCallipygos at 9:58 AM on February 5, 2015 [9 favorites]


Added on preview - I really think that the "lot of small transactions" may be where your Achilles Heel is, especially since you say that it was "a nightmare to stay on top of". I also tried the YNAB approach and it was a pain in the ass, but writing things down on a plain old Excel sheet (so I didn't have to code the damn thing each time or categorize it, I could just write it down) worked way better.

and I really think you need to look at that; I have the feeling that there are way more of those "small transactions" than you think there are, and that they are adding up to way more than you think they might be on a grand scale.

Oh, and I also forgot about an extra advantage to setting up weekly transfers to credit cards - sometimes you end up making FIVE of those payments to your credit cards instead of four, so things can go down a tiny bit faster (i.e., doing it monthly, you always only do $100 a month to your card; but doing it at $25 a week means that you sometimes end up paying $125 a month instead of just $100).
posted by EmpressCallipygos at 10:02 AM on February 5, 2015 [4 favorites]


What are the little transactions?

I budget frequent small purchases using gift cards. When it's out, it's out. For example, I put $50 on a Starbucks card every 6 weeks (or more).
posted by internet fraud detective squad, station number 9 at 10:02 AM on February 5, 2015 [9 favorites]


calculating in all expenses save for food

Worth adding that in. One of the things I learned during the part of my life where my hobby was getting my total expenditure down to $100/week was that I could cook my own meals for a whole week for less than the price of one restaurant lunch. And I'm talking fish and chip shop here, not Chez Paul.

I also learned that a small spiral bound notebook with a pencil stuck down the binding beats the hell out of a spreadsheet for expense tracking.
posted by flabdablet at 10:07 AM on February 5, 2015 [7 favorites]


Also, cash. Pull your weekly walking-around-money allowance out of the ATM at the same time every week, and when it's gone, it's gone.
posted by flabdablet at 10:08 AM on February 5, 2015 [7 favorites]


If you use Mint.com, it does a lot of the categorizing for you (if you are using cards for your purchases). I find it way too tedious to keep an Excel spreadsheet updated with every transaction, but Mint is pretty effortless.
posted by JenMarie at 10:18 AM on February 5, 2015 [1 favorite]


A good and useful book is "How to get out of debt, stay out of debt and live prosperously." It's not very big, nor expensive.

I don't think you need budgeting advice. Most budgeting advice seems to come from a place of "if you can mathematically crunch the numbers (blah blah blah), you can get things under control." I have not found that to be true. I am quite good at math and very aware of financial stuff. In some sense, budgets aren't helpful to me.

I will second the suggestion to track everything for a time. Get a little tiny notebook and little tiny pen. Put them in your pocket. Write down every single cash transaction at the time it happens. Do this for 30 days. I did this many years ago. It was life changing. Do it for the experience of doing it and for what that will do to your mental relationship to money, not out of some fantasy that this is about budgeting. If you do want use it for budgeting, you can add that information to what your bank statements tell you about debit card transactions, etc. It can be useful for that, but that is not the main reason to do it. The main reason to do it is to develop an awareness of your relationship to money.

Then, you need to analyze how to best get your needs met in a way that maximizes satisfaction and minimizes expense. If your real needs are not getting met, no amount of budgeting will solve this problem. It's like trying to starve yourself to be thin, only to find yourself inhaling everything in sight at some point and unable to stop.

In my marriage, we spent thousands and thousands of dollars on furniture and décor and ran up all kinds of bills on that. The reason this occurred was a) having a "nice" home was one of the few things we agreed upon and b) shopping for décor was one of the few times my husband paid me any attention. I really would have preferred to just have his attention, but I couldn't get it. So, I kept going shopping with him, because at least he talked at me instead of ignoring me and watching TV or intently engaging with his computer. It took me a long time to figure that out.

So analyze what your real needs are and find affordable ways to actually meet your needs. Figure out what is driving those expenses. Another example from my life: At one time when we were trying to cut expenses, my husband suggested we cut out all long distance phone calls. Easy for him to say, he never made them. I am an extrovert and I was a homemaker at the time, married to a soldier, so somewhat socially isolated. He is an introvert and worked with people all day and just wanted to be left alone once he got home. So I made long distance calls to stay in touch with family and friends and not lose my mind from the social isolation. Thus, I told him, "No, we aren't going to cut out all long distance calls. That is not happening."

So figure out what human need is being met by the things you spend money on and brainstorm some ways to get those needs met that are more affordable than what you currently do or that is cheaper in the long run. Keep in mind that superior solutions are not always cheaper up front -- for example, cheap solutions for heating often have higher carrying costs, so the lifetime cost is typically far greater than spending more for an efficient system. Once you find affordable alternatives that adequately meet your needs, then you should find yourself able to stick to a budget.

"Budgeting" often seems to treat personal finance like some kind of abstract numbers game, where if you are just better at math, everything will work out. That approach seems to largely overlook the fact that personal finance is almost always out of whack because of personal details. Look to those personal details for a solution that actually works.

Best of luck.
posted by Michele in California at 10:22 AM on February 5, 2015 [18 favorites]


I should have mentioned that I HAVE YNAB and it really sort of doesn't work for us.

I freelance and "budgeting" has never, ever made any sense to my situation. Every personal finance blog or article or book says you need to budget but it just doesn't work for me. It also felt like such a colossal waste of time to categorize every $1.75 coffee or whatever to "figure out where the money is going". I knew where the money was going, I just needed a system for paying off debt and myself first that worked. I could figure out what to do with the rest once that had been taken care of.

So what I do is I have like 10 bank accounts, which I manage (along with my credit cards and investments) through Mint. Every time I get a pay check, I distribute percentages based on my current needs. 15% goes to the tax savings account, 10% goes to long term savings, 10% goes to debt, 5% goes to retirement account, etc. Every month I reevaluate my priorities and adjust the percentages accordingly. Whatever is left stays in my business checking account, and every week I transfer over a small amount into my personal checking based on how well I'm doing with work or cash flow (same idea as "take out cash for your spending money and only use that").

Doing this has given me more confidence and understanding of my income than any budget ever did. I don't stress about the small transactions because all the big picture stuff has been taken care of. It's an adaptable system that works for my in-flux income, but it also lets me focus on what matters instead of obsessing over the details in a spreadsheet.
posted by bradbane at 10:22 AM on February 5, 2015 [13 favorites]


Please yell at me if I'm threadsitting. Just gonna answer questions.

Ya'll drink a lot of starbucks.

Little transactions: We both commute to work, until I started this job it was one car, ~31,000 miles a year. Now we drive separately (and need to), but the total miles are lower and (thankfully) gas prices are helping us a lot right now. Minimelee goes to daycare in our home town because it's ~1/2 as much as the town where we work. Because of this, we sort of have to do things like race home every day. We also, and I'm not joking, have no grocery stores in our town that are anything but gross, so we do a few, usually 2-3, small stops at a supermarket in the town where we work every week because there's legitimately not time to do a FULL trip, save for weekends, and we try to avoid driving the 40 miles on weekends. It's all stuff LIKE that, we rarely buy junk food, never go to starbucks or other coffee places (I'm way too much of a snob for that), but it's popping in to pick up this prescription or a gallon of milk or oops forgot bread or whatever. We're using a shared listing app for that now, and it's helping.

I don't carry cash often because that's my weakness. I've been trying to do what you said though, flabdablet, and live by the cash in my pocket. I pay daycare in cash because sometimes they take 3 weeks to deposit a check, and then they'll do three weeks worth at once. Ouch. I'm not a mobile tech for a large financial institution now, so I DO spend too much on lunches because I'm not in a single location often. I'm planning another askme about lunch suggestions.

I do like the weekly payments on stuff too. That's smart. Part of what's hurting me now, is that in the transition between jobs, I missed an entire paycheck and then just got half of one, I've been here for 2 months and I still haven't QUITE recovered from that yet.

Edit: bradbane, I currently have 5 bank accounts that I've been managing similarly. The trouble is that right now they're all relatively low. I do also have like $1200 in outstanding invoices that I'm currently threatening legal action on.
posted by TomMelee at 10:22 AM on February 5, 2015 [1 favorite]


flabdablet: Also, cash. Pull your weekly walking-around-money allowance out of the ATM at the same time every week, and when it's gone, it's gone.

JenMarie: If you use Mint.com, it does a lot of the categorizing for you (if you are using cards for your purchases).

These are broadly the two different approaches for "little stuff budgeting". They're sort of mutually exclusive. If you leave your cards at home and give yourself a weekly cash allowance, then when it's gone, it's gone. That helps with broad budgeting but won't dig into the 'OMG how much on tall lattes?' details.

If you use cards exclusively and something like Mint to auto-categorise, you can see where it's going even if you can't limit it. But for the latter approach, you have to be willing to do a weekly review and categorise things that Mint doesn't catch.

I suppose you could square the circle and have a little notebook for your petty cash and type it up into YNAB, but that requires time and either discipline or the kind of fussiness about every penny that I certainly don't have, and if you had it you wouldn't be asking.
posted by holgate at 10:26 AM on February 5, 2015 [2 favorites]


Sometimes nixing the small stuff isn't enough to get your budget back in line, and you have to look at changing the big stuff to make your budget sustainable long term.

Some ideas for big things:

selling your house and going back to renting
moving in with family
moving to lower cost of living area
quitting one of your jobs and selling a car+getting kid out of daycare+working freelance
Working nights and cutting out daycare

None of these things are easy, and some might not be possible, but they are all real-life solutions I've seen people in your situation implement.
posted by fermezporte at 10:36 AM on February 5, 2015 [7 favorites]


I still think you should give YNAB another try. The goal is not to get the debt to disappear all at once. The goal is to keep it in a category (pre-YNAB debt) and budget to pay it down over time. Unless you're getting large bonuses or selling your house, slow and steady is the only way to work on it. As long as you're making a little progress and have saved up a cushion (e.g. for a job change), that would be a win in my book.

I also note that you say you don't know how cash-positive your SO is. Are you married? You obviously don't share all finances, and you also don't mention if the credit card debt is just yours or both of yours. (Or maybe the cards are under your name but she is an authorized user.) However, it seems that the child and the house are both shared expenses. So I think you need to get her on board with paying off the debt. For example, it's easy to spend an extra several hundred on grocery bills a month, if you're not paying attention. If she's the one doing the grocery shopping, then you absolutely need her buy-in to try to cut costs.

Honestly, I think if you're married and have a child and a house, you should consider just merging all finances, and budgeting together. That way you can make sane decisions like what if one person took a much-less-paying job, but then you save on daycare and transportation. That's not a conversation you can really have if you keep separate finances.

A lot of people swear by the cash in envelopes thing. It does NOT work for me. I prefer to put everything on cards. Then I use the Mint.com app to see what all has been charged. Then I put all of that into YNAB (mobile app or on the computer). This has allowed me to successfully track all but $80 in the last three years. (And I believe that's cash I either spent and forgot, or is probably in a crevice in the car.) The most important thing is to find a way to track every single cent. Ideally, you'd do that for BOTH of your finances together, rather than your own individually.
posted by ethidda at 11:01 AM on February 5, 2015 [2 favorites]


Maybe too obvious advice, but have you tried Dave Ramsey's plan?

You "don't know where" your wife is moneywise? Are your finances not merged? How do you pay joint bills, etc.?

Also, you mention student loans and car debt. There might be options to make your SLs cheaper if the monthly payments are hurting you. Could you sell your car to avoid making that payment?
posted by chaiminda at 11:01 AM on February 5, 2015


Thanks again all. I realize it may sound like I'm being argumentative, but I promise I'm not. I'm already taking a lot of your advice so far today. More answers:

We live in a place that never experienced the housing bubble and has a massive shortage of rentals. We could not rent for less than we pay for our mortgage. Our daycare is only $400/month, so "not working" wouldn't fix that. We are not married but may as well be, the details of that are...well, I don't feel like sharing.

We only have one car payment. (My fiancee had a catastrophic car crash in August that hurt us a LOT, no real out of pocket loss but we did lose ~$8k of positive equity and she was hurt.) Our agreement bills wise is that she pays the car(s) and utilities, I pay the mortgage. We evenly split daycare, I buy a little more of the food and pay for pretty much any extra-curricular we do. She has kind of a lot of medical bills. In fact, a fair portion of this debt is from when the (*(%"($ hospital bill collector told her that if she couldn't pay $225 a month on her bill, they'd send her straight to collections and she had to make an agreement right that damned second, so she put it on a card because she was scared. Yes, I know illegal but it was done before I could do much about it. Long story. She has a significant immunodeficiency and pretty crappy insurance, adding her to mine is even more cost prohibitive.

Right now I'm immediately taking some of your suggestions and will present to the rest to the SO tonight.

Oh, and one more ninja edit re:moving:
I do not like where we live. I do not like this state or region. My taking this new job was a massive career shift from nonprofit social work to large-scale IT, basically specifically so that I can get the EFF out of here in the next couple years. We're in the buttcrack of Appalachia in a state that's willfully going nowhere fast. We'd already be gone but her family continues to experience crisis after crisis healthcare wise, and so she's afraid to leave.
posted by TomMelee at 11:13 AM on February 5, 2015


Some anecdata: I changed jobs last January (with 2 weeks off for Christmas), and my household went from saving money at a combined family 70k income, to breaking even on 100k. In March I was freaking out, how could we be living giantpaycheck to giantpaycheck?? But by summer everything was stabilized, and the money I thought we'd have left over at the end of the month is in fact there in the bank account like it's supposed to be. My point is, don't panic if things don't seem immediately better when your income goes up.

It seems like everyone's latched on to the idea that $600/month left after expenses is somehow not enough and you need to figure out where your money's going - but it sounds to me like you've kind of figured it out, and $600/mo is kind of a lot. Hurrah! Snips of advice:
- You don't know how much money your fiancee could contribute? Time for a chat. Talk about it, and how much you two want to prioritize paying off debt vs maintaining standard of living vs saving for the future.
- That's $600 after you've made the minimum payments. If you could overpay your debts at $400*12=4800 per year, that's under 3 years till its gone. That's a respectable timescale. No matter how much financial advice you get, you still have to come up with $12k, and that's not going to happen overnight. Don't feel like there's something magic you could do that will make the debt melt away.
- Run the numbers. Look at how fast you'd pay things off with small/med/large payments, and low/med/high interest rates. That will really put into perspective what should be most important to you - paying what you easily can, or cutting all possible corners to pay as much as possible, shopping around for a 0% card, doing a home equity loan, or just trying to get the worst-rate card paid off as fast as possible. What you decide is best for you doesn't have to be the best recommended advice of financial planners everywhere, it just has to be a plan that you and your fiancee are comfortable with.
posted by aimedwander at 11:15 AM on February 5, 2015 [2 favorites]


We live in a place that never experienced the housing bubble and has a massive shortage of rentals. We could not rent for less than we pay for our mortgage.

Do you have an unused room in your house? Would you consider getting a roommate for a short period of time? If the rental market is tight, you could probably find someone, especially if you priced it just below market rate. It's certainly not ideal for many families, but could create some major breathing room if you could put up with it for 6 months or so.
posted by aka burlap at 11:16 AM on February 5, 2015 [1 favorite]


Little transactions: We both commute to work, until I started this job it was one car, ~31,000 miles a year. Now we drive separately (and need to), but the total miles are lower and (thankfully) gas prices are helping us a lot right now. Minimelee goes to daycare in our home town because it's ~1/2 as much as the town where we work. Because of this, we sort of have to do things like race home every day. We also, and I'm not joking, have no grocery stores in our town that are anything but gross, so we do a few, usually 2-3, small stops at a supermarket in the town where we work every week because there's legitimately not time to do a FULL trip, save for weekends, and we try to avoid driving the 40 miles on weekends. It's all stuff LIKE that, we rarely buy junk food, never go to starbucks or other coffee places (I'm way too much of a snob for that), but it's popping in to pick up this prescription or a gallon of milk or oops forgot bread or whatever. We're using a shared listing app for that now, and it's helping.

Okay, telling me how frequently you go to the supermarket or telling me that you don't buy junk food doesn't tell me how much you SPEND each time you go to the supermarket, on whatever it is you buy.

And you need to know EXACTLY that, especially if you're not budgeting for food (as you admit to not doing). The point that we're trying to make is that it may feel like no big deal to only be getting bread or milk or maybe a couple boxes of cereal or whatever a couple times a week, but if you go 2 or 3 times a week and you're spending only about 10 bucks each time, that still ends up being about on average $25 a week, or $100 a month. And if you spend that $100 a month on food, then that's $100 a month that can't be put towards the debt.

The fact that you're using that $100 a month (or whatever) to buy bread instead of Starbucks isn't the point, the fact that it's $100 that you weren't accounting for in your budget is the point.

The reason that people are using "Starbucks" as a shorthand for "unexpected expense" is that it's a perfect example of the tiny incremental expense that people don't think much of on a daily basis ("feh, it's only three bucks, what's the big deal?" but that can really add up "holy shit, that works out to almost a hundred bucks a month just on COFFEE? FUCK that."). Maybe you don't drink Starbucks as such, but there has GOT to be some other thing that looks small on a daily basis but which adds up to a lot on a MONTHLY basis, that you're just not accounting for, and you need to figure out what that thing IS. Whatever that thing is, you don't even have to cut it out either - but you DO need to know to account for it in your expenses.
posted by EmpressCallipygos at 11:22 AM on February 5, 2015 [5 favorites]


I'll tell you what worked for us. We went from $15,000 in credit card debt and not enough money to pay our income taxes, car insurance, etc. at the beginning of 2014 to $14,000 sitting in the savings account now.

1) YNAB, and its four "rules". I've tried other approaches before, this one really works because it's very flexible. Don't feel bad for cheating a bit, we certainly did, but in the end all the numbers have to add up so there's no escaping the facts of the financial situation.

2) Figure out how to increase income. I increased my work hours by 50%, and we switched a cottage on our property from renting out monthly to my wife running it as a B&B.

3) Reduced expenses. With YNAB it became obvious that all our little grocery store trips really added up to a crazy amount, so we stopped shopping at local stores as much as possible. We do one huge trip to Costco and other warehouse type stores every every 2-3 months for the majority of our food. We do a weekly trip to grocery for dairy and fresh veggies. We eat out maybe once or twice a month. Almost all transportation is done by bicycle (but we don't live in a place where it's practical to ditch the car, much as I'd like to).

Basically it took serious changes to our lifestyle, and a serious commitment from both me and my wife that this was a very high priority. But now we have some leeway to make choices about what to do with our money. We've had a bunch of unexpected big expenses (hot water heaters died, insurance company mandated changes to our heating system) in December and were able to handle them easily. It's worth it.
posted by Emanuel at 11:24 AM on February 5, 2015 [2 favorites]


It is unclear to me whether you and fiancee consider yourselves a team financially or not. I'm not fishing for an additional update, I just wonder if you and she are clear on that yourselves. Because it sounds like you're sort of halfway trying to help each other out, which makes for a muddy picture compared to either being totally independent or totally a team.

It seems to me like step one, if you two are a team, is to put all the bank accounts and all the bills on one big spreadsheet. YNAB or Mint.com or anything else won't work if you don't put all the information in there. Don't leave off certain items for any reason. Putting certain things aside (because it's long-term, interest-free, you've agreed that it's "hers" etc.) may be what's stopping you from clearly seeing the big picture of your mutual income and outgo.

As part of stepping back and making changes, consider calling all your providers that send monthly bills: internet, cable, her cell phone, car insurance, house insurance, utilities, and ask them how you can lower your bill. If that means cutting back to a lower grade of service, consider it. If that means calling other providers to compare costs, take some time to do that. One bill might not change much, but if you do all of them, it could add up to a good chunk.
posted by Bentobox Humperdinck at 11:36 AM on February 5, 2015 [3 favorites]


We don't spend off-budget very often, or shop extravagantly, but we do have a lot of small transactions. Coding those transactions and staying on top of them was kind of a nightmare.

That's kind of the point. You need to be more mindful about your spending. There should be zero off-budget spending. This is hard in the first few months, while you're figuring out the amount you should be budgeting. But after you get an idea of the amount needed (including buffer), you should never be spending over your budgeted about.

I live in NYC; I go to the grocery store at least 3 times per week, if not more. It's really not that hard to enter in the transaction on your way out of the store. Now that I've been using Ynab for 3 years (with great success), I do a weekly reconciliation, as precision is not as important. But for that first year, while we were getting out of debt, we made sure to code every purchase at the time of purchase -- it's a small hassle for a huge payoff (plus now we have 3 years of spending data we can analyze, which is so cool!).

It's possible that you do not make enough money to cover your basic, minimum expenses. In that case, you need to make a drastic change in expenses (downsize housing, car pool, etc), or make more money.

Not sure where she is, certainly lower than that.
Do you not have combined finances? How can you determine "your" excess funds if you don't know how her money is being spent? I know some couples keep separate finances, but if you're living together, have a child together, and are engaged, you need to be budgeting on a family-wide basis. You can keep your accounts separate, and have separate discretionary funds or whatever, but you need to budget as a family.
posted by melissasaurus at 11:37 AM on February 5, 2015 [1 favorite]


I'm going to second or third Mint. My husband and I have all of our bank accounts and credit cards logged in the system and both have the app downloaded on to our phones (this requires a shared mint.com account). This keeps us accountable to each other and always aware of how much we're actually spending. Mint categorizes all of our purchases and creates a monthly budget based on our historical spending. It's easy to adjust the budget items as necessary. Like you, we had everything budgeted out but food and couldn't figure out where all our money was going. Once we set up Mint, we discovered my fast food breakfast habit and my husband's gas station soda and candy habit were costing almost $200 a month, plus we were spending way too much on groceries. We managed to quit these habits just in time to take care of some unforeseen car troubles. I credit Mint with keeping us out of the red last month.
posted by galvanized unicorn at 11:39 AM on February 5, 2015 [2 favorites]


I'm going to combine and underline what Michele in California and EmpressCallipygos. This isn't about maths wizardry, or any kind of moral judgement on your spending: you simply need to know where your money is going right now in order to make any kind of plan. And you're going to need to combine your finances for the sake of budgeting -- keep separate accounts, but treat them as a single pool -- in order to do so. Get to know your money intimately, not as a casual acquaintance: give it a hug and remember the moment when you wave it goodbye.

I'll also underline what aimedwander said: once you know where your money is going right now, the kind of adjustments that would clear that $11k in six months may be too steep. If that's the case, then don't do it. It isn't the end of days to pay some interest in a controlled way, directed towards a clear end point, while keeping something on hand for emergencies. Only making the minimum payment is a problem. Borrowing more is a problem. Small steps.
posted by holgate at 11:48 AM on February 5, 2015 [2 favorites]


I do also have like $1200 in outstanding invoices that I'm currently threatening legal action on.

If your business is regular enough you can finance your accounts receivable. It's called factoring. Those guys are vultures but it is a thing--they basically buy your AR at a reduced rate and give you cash. Not sure how it works on your currently-late AR. Maybe see if a collection agency is interested?
posted by resurrexit at 11:59 AM on February 5, 2015


Another update:
I have not been making minimum payments, I just set the spreadsheet as "dead minimum monthly debits." It occurs to me that I should probably start with the smallest balance and way over-pay IT, then roll that into the next one, rinse/repeat, as a more effective way to spend the cash. I have used mint before, actually it still sees all those accounts but it's never been good at categorizing them. I do actually know where our spending is and none of it is particularly out of line, right now we're spending probably about $75-100/week on food, which doesn't seem terrible to me for a family of 3. There isn't really an "out of line" expense, and yes I totally get the "how did we spend $150 on coffee this month!? realization on small expenditures.

The SO and I do need to get on the same page, I said that up front, I realize that. I was actually for a couple years working 3 jobs, including the consulting gig, and had a lot of ins-and-outs that weren't exactly what they looked like ($800 in but I'd already spent $400 on hardware, or something, for example.) and it really kind of went over her head.

Unfortunately my consulting isn't really regular enough or high-ticket enough to pay much attention to. I need to stop wasting my time on penny-ante bullshit and focus more on real paying stuff. I've BEEN using the non-budgeted, cash transactions from some of it (hardware repairs to electronics, mostly) as pocket money for a while, so that my main paycheck can go towards bills. Funny how that never actually pans out the way you think it will, though.
posted by TomMelee at 12:03 PM on February 5, 2015


I have been thinking a bit, and I will add that, in a nutshell, the book I suggested boils down to:

1) Keep making regular debt payments, no matter how small.
2) Figure out how to live within your means.

Number two is key. I suggested the book because you have been surfing 0% cards and you can tell us how much "extra" money could theoretically go towards paying extra on the debt in question, but you don't know your partners financial details in more than a hand-wavy fashion and you don't know where all the money goes on these little expenses, etc. That tells me that the way you think about the problem here is a big part of the problem.

Paying extra on the debt will not break a cycle of debt. It will never ever ever break a cycle of debt. Neither will finding lower interest rates. You have to deal with these personal questions about your lifestyle, about not just where does the money go, but also why? What need is it meeting? How else can you meet that need, and do so both adequately and affordably?

Until you answer those questions, you have a problem. Because people who live beyond their means can do so no matter how large the budget is. There is no upper limit on how much anyone can spend. Millionaires wind up bankrupt, and so do lottery winners. Once you understand how to live within your means -- in other words, get your needs met without running up NEW debt -- the debts will eventually go away, even with minimum payments. At that point, paying extra moves you closer to financial freedom. Until then, it's just a revolving door and the odds are poor that you can get ahead of it that way.

I have paid off 40%+ of my $50k+ debts. My policy is that I raise the money or I go without. Period. Of course, getting to that point was far more complicated than making some edict about refusing to take on new debt. But once you get to the point where you can take that position, the debts come down, even if you are making minimum payments, even if you can't pay on all of them (and I can't -- my situation is pretty extreme).

It's possible that your recent pay raises will make your current lifestyle affordable and it's just a matter of time. In which case, good on you. But you seem unconvinced of that. If you were confident that simply making more money was going to solve this, then you wouldn't have asked the question.

Best of luck.
posted by Michele in California at 12:14 PM on February 5, 2015 [4 favorites]


There isn't really an "out of line" expense, and yes I totally get the "how did we spend $150 on coffee this month!? realization on small expenditures.

Then what ARE your small expenditures? Do they explain why you seem to be living paycheck-to-paycheck?

I've BEEN using the non-budgeted, cash transactions from some of it (hardware repairs to electronics, mostly) as pocket money for a while, so that my main paycheck can go towards bills. Funny how that never actually pans out the way you think it will, though.

And that's precisely why we are suggesting the granular-exam approach we're suggesting, so you can figure out WHY it's not panning out the way you think it will.

What I mean is - I get the sense that there is something that you are not accounting for in your budget. You speak of "non-budgeted cash transactions", but that still counts as your budget if you're using it for things like hardware repairs. We are suggesting a way to help you figure out why, by getting an accurate and detailed snapshot of exactly where every last single penny is going, because I suspect that some of those "non-budgeted cash transactions" are building up.

I hope this isn't coming across as lecturing you, but this is really the biggest thing that helped ME get a sense of my own budget. It's something I've done a couple times to try to figure out my finances - and every time I've done it, something immediately jumps out at me as an obvious place where I'm overspending - once it was books (I was spending upwards of $250 A MONTH on books), another time it was lunches at work, another time it was cabs. Whatever it was it was really smack-me-over-the-head obvious that "yow, I could DEFINITELY cut back on that". I wouldn't be suggesting this if it wasn't the enormously king-size helpful thing I found it to be.
posted by EmpressCallipygos at 12:22 PM on February 5, 2015 [2 favorites]


My ex was bad with money and it ended badly. He hid spending and I constantly had no clue why we weren't getting out of debt. It's because he spent money he didn't have. Nothing fixed it but divorce and detachment. Now I have the ability to save 800+ dollars a month. He makes twice as much as me and still struggles.

Take care of your finances first. Your child needs at least one financially stable parent. Don't bail her out if her spending is beyond what you can handle. Tell her this in advance. Practice detachment towards her financial concerns if you can't control her financial behavior.
posted by internet fraud detective squad, station number 9 at 12:23 PM on February 5, 2015 [4 favorites]


I do actually know where our spending is and none of it is particularly out of line, right now we're spending probably about $75-100/week on food, which doesn't seem terrible to me for a family of 3.

"Out of line" doesn't mean what you think it means. You may think spending ("probably about") $100/week on food is what your family "should" be spending on food. But it's possible that it's too much money in relation to your income and other expenses. I'm a family of 2 and spend way more than that, just in groceries. I know families of 6 that spend less than that. You need to change the "probably about" to a "we spent $X in Dec, $Y in Jan, $Z in Feb" and you need to budget based on the money you have rather than how much you feel you should spend.
posted by melissasaurus at 12:32 PM on February 5, 2015 [1 favorite]


http://www.whatsthecost.com/snowball.aspx works out the most efficient way to pay off your debts to minimise interest.

This calculator allows you to enter up to 20 different debts with their associated APRs, and the total amount you want to spend per month servicing your debts, and it'll work out the order in which you should pay them together with the monthly payments.

It can account for changing rates and the interest-free periods on those cards you have.

If you don't like fiddling around categorising all your spending with YNAB, I've found Billguard is superb . Like Mint it slurps up all the data from your bank accounts (great if you have several) and will 'learn' what category of goods you buy where. I make dozens of little purchases and it takes me less than five minutes a week to sort out the categories. Good luck!
posted by NoiselessPenguin at 12:42 PM on February 5, 2015 [9 favorites]


Like internet fraud detective squad, station number 9, I couldn't get debt under control while with my ex. But I will suggest that you first try to communicate with your SO and get on the same page. Men are sometimes oblivious as to how expensive a child can be and sometimes do not see what the mother is spending on the child. If she is (FOR EXAMPLE) splitting the rent and similar expenses with you equally while making less money than you and possibly doing the majority of spending on the child, just cutting her off on the assumption that she is being irresponsible may be unfair and, at this point, I think it is premature. One of the hidden expenses you may need to better understand is what is being spent on your child and why. Many times, men really just are in the dark about what kids cost. When that is true, it causes problems in the family. So make sure you understand that piece before you make any hard and potentially ugly decisions about the finances and your relationship to your SO.
posted by Michele in California at 12:43 PM on February 5, 2015 [1 favorite]


EmpressCallipygos--please don't think I've been arguing with you, I haven't been. I agree with everything you've said. I'm saying that the reason I'm living paycheck to paycheck is largely because I'm rocking 5 credit card payments and a mortgage and medical bills, not because my spending is so silly. The credit cards really haven't grown, in fact they've gotten lower, I AM paying them down. It isn't so much a matter of buying crap we don't need (this is an element too, but this really isn't about shopping issues) as it is about having unmanageable debt. This month, for example, I somehow missed my BofA cc payment, and what was a minimum $48 payment that I've been paying at $80 is now a minimum $148 payment this month. I realize that's all in the accounting and it isn't really what I'm asking for help with, because you can't save me from stupid.

While I've been interacting with you all I've wrangled the full figures of both of our monthly obligations and incomes. It looks like we're actually bringing in about $900 more a month than we immediately have to spend, which is some serious wiggle room.

I also don't know what I said that made it sound like I think her spending is inappropriate. I really don't think that at all. She kind of hates her job, and I've been begging her to look for a new one for a lot of reasons, but this SHOULD be impetus for her to at least consider it. There are a lot of things going on right now on the less-tangible side (her brother is dying, her other brother is suicidal, her father is not well, her sister just had a baby with a man who is too obese to assist with childcare, I think I've just uncovered that there is a hardcore abuser somewhere in her immediate family, etc etc etc) that have been giving her a rough row to hoe for the last year or so. To be honest, in the scheme of things, I really don't care about some money, I'm mostly just irritated to make what feels like a ridiculous amount of money and still be mostly broke.
posted by TomMelee at 12:48 PM on February 5, 2015 [1 favorite]


I will also suggest this:

You just got a new job making more, but it caused you to go without a paycheck temporarily. Since you say you have, in fact, been paying down debt, consider giving it two to six months and reassess then to see if your new, higher income is resolving things or if you really have a big problem. It's possible that you are just really stressed out from all the financial turmoil involved in changing jobs and somewhat overreacting.

$12k in debt (I realize it is not ALL your debt) is really not crazy high when you have $80k in income.
posted by Michele in California at 12:56 PM on February 5, 2015 [5 favorites]


I'm mostly just irritated to make what feels like a ridiculous amount of money and still be mostly broke.

FWIW, I know this feel. But the truth is that for a homeowning pair with a child/children, nowadays, "around 80K" only *feels* huge. It is rather above the median income nationally. But depending upon where one lives and what one's mortgage is, it's much more likely to be...smack in the middle of the middle class. It's GREAT. But it's not a million dollars, you know? It's still an income where if you have any obligations--and you have a lot of obligations--you're going to have to work it a little.

I hope this does not sound condescending, because again, I *totally know* this frustration. I grew up in a family of five that brought in 30K in a good year. The first year I earned that much as a single human, I about died of joy. I also discovered that in the city where I lived, I was still not able to afford my own apartment. I had debt too, and random bad expensive shit that happened and needed to be handled. I really struggled to wrap my head around it. "I have all this fucking money, my mother would have killed for this kind of money--why do I still need to live like I'm a starving student??" The answer was just, "because you fuckin' do; there's only as much money as there is. And things cost what they cost."

So I feel you. And the first step to wrapping your head around your debt, I think, is going to be wrapping your head around the fact that you don't actually make "a ridiculous amount of money." It only feels that way. In truth, you make enough.
posted by We put our faith in Blast Hardcheese at 1:16 PM on February 5, 2015 [9 favorites]


It sounds like your problem is less logistical and more emotional. You're frustrated, and that's because debt is totally frustrating. Instead of finding new methods, try making a timeline. If you keep *everything as it is* how long will it take to be out of debt? What if you added just $80/month? What about $200? There are some really great tools out there to see this sort of effect, and I recommend SavvyMoney because it is so simple and straight forward. It only takes about 10 minutes if you're being moderately meticulous, and it may really help you feel better about where you are and what you can do.
posted by stoneweaver at 1:18 PM on February 5, 2015 [2 favorites]


When my family is experiencing financial freak-outs, the first thing I look to is the grocery bill, because this is something I can control immediately, fluctuates more than most bills, and it's the one place where what I think is happening and what is actually happening varies wildly.

You say that you go to the store a few times a week, and you spend $100/ week on food. I know, from many, MANY exercises in budgeting that when I think I'm spending around $100 a week, I'm really spending $150, particularly when two people are going to the store. (Not sure why you both have to hurry home from the town where the grocery store is, if you both have a car – one of you should stick around and shop during the week! But that's not what you're asking…)

But let's assume you're right and you spend $400/month on food. From your update, let's say that you have $900/month after all the bills but food are paid. (Are you counting gas in those pre-$900 bills? Because I spend about $120/month on gas, for one car.) So if your grocery estimation is right – and I think you should verify that it is – that's $500/month after the groceries are bought. That's $250 per person per month, or about $60/person/week. Without paying attention, I could blow through $60 a week with no problem at all. (Lunches during the workweek, which I see you also do, for example.)

My point is, from your posts it sounds like you think there should be this wad of excess money that you could find only if you look hard enough. What we're saying is that there could be some excess money if you keep very close track of what's happening all the time. I'm with you! My husband and I make what I feel is a ton of dough and yet the day before payday, I'm broke. What you think should be and what is aren't always the same.
posted by lyssabee at 1:18 PM on February 5, 2015 [2 favorites]


You're looking at it in the most pessimistic fatalistic way possible to make yourself feel like crap.

Reboot.

You've been downplaying this debt and refusing to acknowledge just how BIG it is. So you felt like you were making X dollars, rather than X-12k dollars. So now that 12k pay raise (before tax, so an 8-9k pay raise) was just wiped out by finally acknowledging that debt.

You're not broke. You're finally making enough that you feel comfortable tackling your past. And it sucks to spend the new 12k on past circumstances instead of new shiny things. But it's really a wonderful thing.

It's the weird psychology of class. You adapt to success really fast.
posted by politikitty at 1:19 PM on February 5, 2015 [8 favorites]


The other folks here are much better but I have two suggestions. One, pay off the card with the highest interest first, not the smallest balance. If right now, all of your cards have 0% interest, focus on paying off the one that will increase soonest. Two, try to pay your credit card bills twice a month. I've forgotten to make payments too and I freaked out but if you pay them more than once a month, you're less likely to have a problem. Make a payment every Wednesday if you want, even if it's $4 - it's a step closer to being paid off and then you'll know you're on top of it.
posted by kat518 at 1:27 PM on February 5, 2015 [1 favorite]


I was speaking more of my own tone; I thought I was the one coming across as nasty.

But let's back up a minute.

I'm saying that the reason I'm living paycheck to paycheck is largely because I'm rocking 5 credit card payments and a mortgage and medical bills, not because my spending is so silly. The credit cards really haven't grown, in fact they've gotten lower, I AM paying them down. It isn't so much a matter of buying crap we don't need (this is an element too, but this really isn't about shopping issues) as it is about having unmanageable debt. This month, for example, I somehow missed my BofA cc payment, and what was a minimum $48 payment that I've been paying at $80 is now a minimum $148 payment this month.

So, hang on. Is the problem one of "I don't have enough money to afford things" or is it "I can't remember to make the payments"? Because those are two separate problems. Or is it a sort of combination of those two problems - like, "I put off paying this one bill because I didn't have the money for it, but now it's too late and the payment is even more OH SHIT"?

Either way - you've gotten some good advice in here; automating the payments will help you remember to actually make the payments (I tell you, automating payments to my credit card changed my entire damn life), and making them regular WEEKLY payments was a huuuuuuuuge boon to me. So if your problem is more one of "I keep spacing out and missing the payments and that dicks me over," then automating the payments will help. (FYI - $148 a month works out to $37 a week. Bump that up to $40 a week and you'll end up paying them $160 a month, which is more than the minimum, and that helps you too.)

If it's more a matter of "I don't know why we never seem to have enough money to cover this," then doing the write-everything-down-and-see-where-it-all-goes will help, because it will be like taking a very detailed x-ray of your family spending habits - and then you can decide whether you want to change that or keep it the way it is, or do something else.

And don't think of it in terms of "a family this size should/should not be spending [x] on this", because every family is different. There is no real one-size-fits-all in terms of what an "average" family spends on things - there is only "my family spends [x] on [y], and I can/cannot afford that".
posted by EmpressCallipygos at 1:28 PM on February 5, 2015 [2 favorites]


Just two small suggestions which helped me save money and feel better about myself:

1. Endeavor to go one day a week without spending any money. It's a bit like a game. See if you can go for the double and go a weekend without spending any money.

2. Do you smoke cigarettes? If so: quit. I quit a couple of decades ago, and aside from the many obvious benefits, I was amazed at how much more money I had. Also: it's probably never been easier to quit smoking than it is today.

That's all. I hope this helps you (or someone).
posted by doctor tough love at 1:29 PM on February 5, 2015 [1 favorite]


One thing to consider is to set up an automatic payment to each credit card company each month for whatever amount you decide (at least the minimum payment, hopefully more). Obviously DO NOT do this if it going to put you in danger of overdrafting! But, assuming you're careful enough with your checking account that this isn't an issue, this is a great way to:
a) never miss a payment
b) make the payments feel less "optional" - like, less "After spending everything else I want to spend on, here's how much I have left over to put toward debt." This way, the debt is paid first (maybe schedule it so the autopayment comes 3 days after your paycheck is deposited), and you have whatever is leftover to go towards your everyday expenses and spending.

If the autopayment feels a little to risky with overdrafting, another way to somewhat accomplish a similar psychological feeling is to pay your bill immediately after you get your paycheck rather than waiting until the "due date" for the bill. For example, if you get paid on the first of the month, look at your budget for the month, decide what you can put toward credit card debt, and send that off on the second. Then the money is out of your account and can't be spent on whatever else.
posted by rainbowbrite at 1:31 PM on February 5, 2015


Came to say that if you find yourself unable to make the minimum payments on your debts after the 0% interest goes away, the place to turn to for help is Consumer Credit Counseling - the nonprofit kind. They will negotiate your debt with the credit card companies, set up a single payment per month (you pay them, they pay the companies) and since they work out a general budget based on your income and expenses, when they negotiate with the credit card companies, they negotiate down your debt so that you'll be debt free in five years. Said another way, they make sure you have $ for day care and car payments and mortgageand groceries, and then get your total owed to the credit card companies to equal 5 years worth of affordable payments.

The key phrase is basically "I can no longer afford my minimum payments." (It used to be said that you had to have missed some payments to qualify for help -- that is not what I have seen from some friends and family experiences. They got help before they went into arrears.)
posted by vitabellosi at 1:38 PM on February 5, 2015 [2 favorites]


Husband and I had The Horrible Realization some years ago. What saved us was Consumer Credit Counseling. It took us some time to talk ourselves into it, especially since we felt that our credit card debt was the result of our relatively low incomes, but clearly we could not continue on. We were in our early 30s, long-term cohabitating and most finances merged, no kids, not homeowners.

It was tough. We had to give up our credit cards completely and still - more than 15 years later - only operate with debit cards for online purchases, bill paying, etc. We had to just not buy expensive things for quite a long time, including decent cars. I had to go to the grocery store for a money order and hand-deliver that to the credit office.

However. It was the best thing we've ever done for ourselves. We now live debt-free except for cars, and we like to only have one car payment at a time, so we strive to pay off our five-year car loans in four years at most, take a little break, and then the *other* person can think about buying a car. We generally keep our cars about ten years each.

It helped that I changed jobs and got a nice raise in the meantime, but yeah. Pay. It. Off.
posted by Occula at 1:42 PM on February 5, 2015 [1 favorite]


I'm sorry for assuming. It sounds like you've had a terrible time of stress and upheaval. I feel like ultimately you're in a good position. You have great credit and enough income. It'll take time but you'll be fine.
posted by internet fraud detective squad, station number 9 at 2:18 PM on February 5, 2015


Green Path is a national non-profit providing truly free comprehensive consults where you tell them all about your income and expenses and debts and they tell you what to pay off first, and negotiate better rates where they can to boot.
posted by rada at 2:42 PM on February 5, 2015 [3 favorites]


Thank you all, again. I don't exactly mind setting up the automatic drafts but I'd rather let my bank do it than each individual source, if that makes sense. The problem that is that they apparently bill on 30 day cycles? Like my due date isn't always the first on a few of them, it moves around and sneaks up on me.

What I've tried (and clearly failed) to do, is separate bills by "first half of the month" and "latter half of the month" and then pay them all by chunk on like the first saturday after payday. (Which has been friday for me for years.) That way I can't NOT have enough cash in the account to pay whatever is due. Clearly though, I have failed, lol.

Again, thanks.
posted by TomMelee at 2:49 PM on February 5, 2015


For your smaller question (or possibly the one you want to ask next week), here are a few questions about ideas of what to pack for lunches. I hope some of them can help.
posted by Margalo Epps at 2:51 PM on February 5, 2015 [3 favorites]


I really like this comment from lyssabee:
Not sure why you both have to hurry home from the town where the grocery store is, if you both have a car – one of you should stick around and shop during the week! But that's not what you're asking…

I think it is exactly what you are asking. You've removed food spending from your measurable budget, so it is a place where you really don't know how much you are spending, but it's very important to figure it out. You give good reasons for why you can't shop in your hometown, but now that each of you have a car, only one of you has to run home to get kiddo from daycare. I really think you should do some meal planning, take inventory of what you have already, and then make a list. One day per week, choose the cheapest store in the FarAwayTown and one of you fulfill the list, exactly as written, while the other one runs home to get kiddo.

If you run out of bread in the week, figure out what else is available before going to the store to get more. Have a "clean out the pantry/freezer night". One night of eating canned green beans with saltine crackers and hot dogs is not a sexy meal, but it hits all the food groups and maybe you have enough to bake a pan of brownies for dessert.
posted by CathyG at 2:54 PM on February 5, 2015 [1 favorite]


I don't exactly mind setting up the automatic drafts but I'd rather let my bank do it than each individual source, if that makes sense. The problem that is that they apparently bill on 30 day cycles? Like my due date isn't always the first on a few of them, it moves around and sneaks up on me.

This is yet another advantage to the "weekly bank payment" system! No matter what part of the month your bill's 30-day cycle bills on, it's all good because there will have been four payments by that point in the previous 30 days so it's all good!

I know I am flogging this "weekly payment" thing to death, but it is seriously the best thing I ever did for myself financially. And I did indeed set it up through my own bank - one of my credit cards is linked to my checking account, so it's an easy "transfer between accounts" setup - and the other is with a different bank, but my own bank has a "make a payment to another institute" thing as an automated payment option, so I did that. And for a while I had a third one, but my bank couldn't do an automated-payment thing to that card's bank - so, instead, they automatically generated a check from my account and MAILED it to that card.

Mind you, I have an account in one of the Big Evil Major Corporate Banks, so this may not be something that will be possible if you have a Tiny Podunk Credit Union kind of account. But check with your bank because that may indeed be possible.

And yeah, seriously, consider the weekly-installment-plan approach. It has solved SO many of my financial problems.
posted by EmpressCallipygos at 3:01 PM on February 5, 2015


Honestly, it sounds like your finances have taken so many hits recently, that the larger paycheck is just paying for the past few months of less income/more expenses. I wouldn't be surprised if in a few months to a year, it starts feeling like more. Going on a frugal kick for awhile would speed this up. By this I mean delaying any non-necessary purchases eg. clothes, house stuff, technology for a few months until you feel more comfortable. Fewer transactions would also make it easier to track what's going on. Maybe try giving yourself a cash allowance for incidentals, and carding everything else so you can track it. You won't break your budget if you've got $50/week that is unaccounted for.

Can you look into online grocery shopping? If there's no delivery options, one of the supermarkets near you might offer a pick up service, so you just turn up and they've got everything ready for you. It doesn't sound like you're majorly overspending on groceries, but your current system seems very stressful and hard to track. Or buy a secondhand chest freezer, and start doing a huge bulk shop every couple of months and then buy nothing but a few perishables in between.
posted by kjs4 at 3:16 PM on February 5, 2015


I know I am flogging this "weekly payment" thing to death, but it is seriously the best thing I ever did for myself financially.

But as you describe, it's something that usually has to be pushed from your bank's transfer service rather than through its bill-pay service, or pulled by the CC company. Most CC companies only give you recurring autopay options of "minimum", "statement balance" or "whole balance", with nothing in between; bank bill-pay services work with many of the same assumptions; your bank has the capability to drip-feed weekly payments to those accounts.
posted by holgate at 3:18 PM on February 5, 2015


We've been bouncing the balances between 0 interest promotions for most of the last 4 years, we're about out of new cards to apply for.

Ok, you bought a house, and a year later you had a kid, and then you financed a bunch of spending on the 0% cards. I've been there. When I lost a job, I financed a whole ton of stuff on credit cards and rolled the balances forward on 0% cards.

This month, for example, I somehow missed my BofA cc payment, and what was a minimum $48 payment that I've been paying at $80 is now a minimum $148 payment this month.

Just wanted to make sure this didn't get lost in the shuffle of the (very good) advice you're getting here. I don't want to beat you up or preach at you, but I'm assuming the payment you missed wasn't on one of your 0% cards. Because if you miss a payment on one of the 0% cards, most issuers will instantly jack up your rate. So, at the risk of flagellating, I hope you take to heart the advice to set up automatic payments on those cards. It would be catastrophic for you to get pushed into the penalty rates.

Assuming you are correct that your credit score is in the 800's, I think you have short-term options. You wrote, "we're about out of new cards to apply for" which I will gently push back on. I would guess that you haven't gone through every card in this list, and assuming a credit score in the 800's, I would think you'd be able to find something . If you have unused credit lines, it's also possible that some of those lines might have balance-transfer offers at something less than the purchase rates.

So even though you're worried about your 6-month horizon, if you have good credit you can likely extend the cycle. It may be worth it even if you have to pay a 2-3% fee. (Hey, it's better than ongoing 18% APR.)

Your long-term path, though, shouldn't rely on extending that credit cycle. And that means budgeting and aggressively paying down the existing debt.

With the "0%" debt it is easy to ignore it. I know, I've been there. Think of it as a balloon loan that you've been rolling forward. So yes, you need an emergency fund but once you have that, you should be plowing every extra penny you have into snowballing that debt. (And note that the "0%" credit cards likely have an actual annual cost of 2-3% given fees; with the risk of exploding into something unmanageable if you miss a payment or are unable to roll it forward into a new offer.)
posted by QuantumMeruit at 4:08 PM on February 5, 2015


I got a couple of MeFi messages in response to my post above asking me more about how I do things with the a million-accounts-for-everything system and wanted to recommend this book on personal finance for freelancers/self-employed/etc. if anyone is interested.

I sort of figured out my way of doing things by trial and error, but the authors of that book actually thought it through all the way and reading their take on it was immensely, immensely helpful to me since none of the standard "make a budget, do a debt snowball, start an emergency fund, etc." personal finance advice really applies to people who aren't on a salary. Wish I had read it long ago when I was starting out, it would have saved me a lot of headaches.
posted by bradbane at 4:33 PM on February 5, 2015


I kind of skimmed the other answers, but I did read your replies. My advice might be a little different than others', but I understand your situation. My family has a similar income and income split. Rather than get down to the nickel and dime nitty gritty with YNAB, which didn't work for me either even though I LOVE NUMBERS, you need to simplify. Five bank accounts is too much. You really only need a checking, a savings, and then your retirement or what have you. You should not be operating out of five bank accounts.

Also, I really like Dave Ramsey's plan. It's simple, and it works. Paying off your smallest accounts first is going to SIMPLIFY your bill paying. Bills seem overwhelming if you have 12043 different payments every month. And stop with the credit cards. Just stop. I don't do cash, but I do obsessively check my online bank balance. So I know in my head what I have left. I pay bills on Friday when I get paid, not on their due date. Sometimes you have to do things that may not make sense mathematically, but behaviorally they will work better. Good luck!
posted by checkitnice at 5:20 PM on February 5, 2015


GnuCash and Eatthismuch.

I find it really helpful to be able to look at my complete financial picture at any given moment, which is what GnuCash gives you. After you spend money, immediately enter it, so it doesn't seem like such a hassle. It's like journalling your food, just the act of having to note what you spent should help curb it.

Eatthismuch is a meal-planning service, which will give you a grocery list and allow you to stop having to think about lunch everyday. And since you'll be able to buy everything on your way home from work (since only one person must rush home for baby), this should save you money.
posted by Trifling at 5:21 PM on February 5, 2015 [1 favorite]


calculating in all expenses save for food, and only looking at minimum payments, I'm cash positive $520/month.

What does "all expenses save for food" mean? First of all, a family of three is going to spend a big chunk of that 500 bucks on food, and that needs to be included in your list of "necessary expenditures". It's not like you can stop eating. Plus you say you eat out for lunch a lot. Is that budgeted as a necessary expense or is that part of the nebulous $500? What about prescriptions? Cleaning products? Toiletries? Holey sock replacement?

I also get the feeling you're only counting the big things like car insurance, utilities, student loans, gasoline, mortgage payments, credit card payments, etc., as "necessary expenses". But it's not just bills that are part of a budget and necessary. This is why people keep suggesting tracking every single dollar you spend. It's important to learn if you're misleading yourself about your actual expenditures and lumping necessary expenses in with "leftover" money. (Or vice versa - can you cut cable? Do you still have standard home phone service? Have you called the student loan people and asked what they can do for you? Or the credit card people?)
posted by lesli212 at 5:32 PM on February 5, 2015 [7 favorites]


First, for me Mint is incredibly helpful because it shows how much money I really have, including the three checks that I have written but that haven't been cashed, etc. Also, once you have categorized something once, it will continue to categorize it correctly forever, so the hassle is all in the setting it up part and then it becomes automatic.

Second, it sounds like you guys are handling debt collectively but spending independently, which is a recipe for frustration and disaster. Totally independent finances can work, and pooling things can work, but you are getting all of the bad parts of both systems without any of the benefits. I'm not going to say what path you should take, but I think you guys need to pick one instead of trying to have it both ways.

Third, some couples do well approaching finances as equal partners, and some couples do better by appointing one person as the keeper of the treasury with responsibility for the accounting and the power to make decisions. Just like with the point above, I don't think that splitting the difference is working for you.

Good luck! For what it is worth, from the outside your situation doesn't sound dire at all, and in fact I think that with quite minor changes you will see things move in a positive direction quickly. Don't beat up on yourself for where your life is and for having had to make difficult decisions, and for having had to learn by experimenting. Very few people are in amazing financial positions unless they have family money, but people don't talk about it much and people take extraordinary steps to hide their financial difficulties so it can be very hard to know what someone's real position is.
posted by Dip Flash at 9:28 PM on February 5, 2015 [1 favorite]


Thanks again.

It's worth noting that I grew up super duper poor. Like chores for neighbors for food poor. Really that's where my frustration is from, we made it on literally $6000 a year in the late 80's, and yeah I know that's more now. Whatever. Grates on me.

I have all the expenses known. I have all the income known, save for side consulting. I updated mint last night, but of course it can't connect to 3 of my accounts, goddammit. Hopefully I can at least add payment reminders for them. My bank is pretty big (and now I work for them, heh), but they also do not have a direct-send option for a few of my accounts and so they mail a check, which is suck but works.

Alas, I'd looooooooooooooooove if any of our grocery stores had pickup options. Nerp. There's Sam's Club, but I don't need to buy $80 worth of ground beef at a time.

And yes, as of September/October, I had an 805 and she has an 810 score. I've blown a couple payments since then, so it may have dropped a little.

Oh...and regarding food and being in the "extra money" category, I did that because I can be as frugal or as spendy there as I feel like being on a given day/month. If I need to carve out some dollars, that's the place to do it. I think QuantumMeruit said it better than I did---I need simplification. I'm screwing it up because I'm tripping over the details as I try to navigate a new job and old responsibilities.
posted by TomMelee at 9:33 AM on February 6, 2015 [2 favorites]


Since you grew up super duper poor, one possibility is that you have a poverty mentality. Poverty mentality tends to lead to pursuing short term solutions and missing the long term implications. A hand-to-mouth existence makes long-term planning very difficult and often leads to people just having a blind spot there and that blind spot can keep them in financial trouble, even after they start making good money.

There are books out there that might be useful. One title that comes to mind is "Rich dad, poor dad" (though I have never read it).

I suggest you start by moving food out of the mental slot of "extra money." Yes, I realize that food is a flexible part of the budget and you can eat well for very little by cooking from scratch and buying in bulk and all that. But my ex-husband suffered horribly from poverty mentality. It was a big source of friction in the marriage. And one thing he was terrible about was acting like food was optional and he typically wanted to cut the food bill any time things were tight (meanwhile, his hobbies were viewed as sacrosanct).

Given that you make $80k/year, doing chores for neighbors to get a meal is not a realistic plan anymore and you need to figure out that taking good care of your body is one of the most important things you can do to ensure that you are a) productive enough to keep a good income, even as you get older and b) not being destroyed by high medical bills that are often largely preventable if you eat better. (For example, diet plays a huge role in diabetes and diabetes can come with gruesome complications, like foot amputations.)

So, figure out what a realistic, baseline food budget is for a family of three cooking from scratch most of the time (assuming that cooking from scratch most of the time is a realistic assumption in a two career couple). View restaurant meals as in the "extra" money/splurging category. But FOOD is not. It is a necessity. It is a more basic necessity than housing.

Best of luck.
posted by Michele in California at 10:09 AM on February 6, 2015 [2 favorites]


Heh, I was actually a Ruby Payne trainer for a while---one of the reasons I left MeFi for a relatively long time was that bringing her up in threads was met with a massive amount of negative feedback, but you're right---that when I read her books I was like "How does she know my life?!"

Thanks again.
posted by TomMelee at 11:34 AM on February 6, 2015 [1 favorite]


This is pretty late, but one idea that helped me was basically to separate the regular from the irregular expenses by actually having separate accounts for them. The way it works is that first, you make a list of all of the non-negotiable stuff you get a regular bill for: credit card bills, mortgage, savings goals, utilities, internet, insurance, etc. Then you work out how much of each bill is left over. Finally, when you get paid, you transfer exactly that amount to the other debit card. (Both of my accounts are at the same bank so the transfer is instantaneous.) You then use that debit card for things like coffee, gas, groceries, etc.

This has a few advantages: you can put that debit card through Mint or whatever online tracker you want and track all your variable expenses, but you also get the advantage of giving yourself an "allowance" without having to use cash all the time, and it's also trivial to know how much you actually have left to spend that month/week/etc without having to manually balance a checkbook for minor stuff. (This takes away some of the stress of "hey, when are they going to cash that check, anyway" because that money is hanging out in the other account.)
posted by en forme de poire at 12:48 PM on February 15, 2015 [1 favorite]


that's actually baaaaasically what I've done. It turns out that the bulk of my accounts won't allow me to pay them twice a month (dammitall), but what I CAN and DID do was split all the static bills exactly in half, then set an automated transfer the day after payday for that amount +~$50 to the other account, then set the bills to autopay from there. That way, the money is effectively safe and sound from any dumbassery I do, and it's paid, AND it's secretly accruing a little bit of overhead I can apply as necessary to existing debts or save for a rainy day.
posted by TomMelee at 10:06 AM on February 17, 2015 [1 favorite]


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