Let me begin by saying-- I stink!!! I have made some huge mistakes in my life- all regarding the spending of money. Every year we continue to make more than the year before and I continue to get farther behind in debt. My husband works very hard and has some health issues that keep him in pain many times throughout the year. To try and compensate for the days he will miss at his work-- he works himself to death when he is there to make a great living (around 100K)-- I work around 10-11 hours everyday just like many others and make a modest 32k. We not only don't save any money from paycheck to paycheck-- but we are usually in the hole before the next payday! My husband gets paid once a month (commission basis- which is extremely hard to budget)--- I do not buy ANYthing for me or frivolous things but have a hard time denying my kids (17, 16, 13) things they want or denying my husband anything he wants especially since he works so hard. My question to you is----- where do I start? Where do I start to rebuild my credit which absolutely sucks. I need a link or something to help me in preparing a budget - I can't even do that. I have a college degree and can't seem to prepare a simple household budget. Thanks! Hope B.
Unless you already have currently delinquent bills, it looks like you are dealing mainly with budgeting, and developing a plan to drive down your existing debt. As you do that, your credit will improve, and you can start taking advantage of opportunities to reduce your borrowing costs on the rest. Start with estimating your monthly income, and monthly expenses for living costs (food, rent, utilities, commuting, etc.), debt payments, and discretionary expenses. (You might also want to include an estimate for unknown but random contingencies such as medical, car repair, etc, estimated from prior years spending and converted to a monthly estimate.) Also draw up a list of your debts, including for each both the interest rates charged, and the minimum monthly payments required to keep them current and out of default. When you prepare this list, do it as of the day you do it, not just on statements reflecting what your debt was last month. You don't want to be fooled into thinking that just because you haven't received a statement, you don't have that debt. (The CC companies sell their products to the merchants on the basis that people buy more when using credit cards than when using cash.) Make a list of your CCs, and their 800 numbers, and every week call their automated account systems to obtain the current balance on that day. Adjust for any payments you have sent but have not yet been posted to arrive at the current balance consistent with your check register. Similarly, on the same day, call your bank's automated system, and verify your check register, noting which checks have posted, and checking that your current check register balance matches the bank's balance after adjusting for unposted checks. Your check register balance will now be accurate. You now have your current CC debt, and your current cash. Project ahead up to the next pay period and add in known bills to your current debt, both if you have already received them, and even if you know you will have to pay them but haven't received them (utilities, upcoming monthly rent or mortgage payment, insurance, etc). Note that for this debt calculation, you don't need to add expected CC payments since you have already included that debt in your debt calculation based on the CC balance. Add it all up and that is your total short term debt. (Ignore any long term mortgage debt in this debt calculation, although you must of course budget for the monthly payment, just like you would for paying rent.) Subtract your cash from your total short term debt, and that is your net short term debt less cash, on an accrual basis. That is the number you want to drive down. Paying a bill included in your list of debts won't change this total, since it decreases both your cash and your debt by the same amount. Getting more cash (income) will decrease it, and spending will increase it, at the moment you write the check, or charge to your card. You really can only affect your position at the time you are making a decision on whether to spend something you could choose not to buy, and this calculation reflects this reality. Calculate this number, weekly, and compare the change from the last week. Make it go down, by getting more income, or by spending less. Treat those charges to cards in the current month as required to be totally paid off monthly, even if the minimum charge is less. (Your goal is not to take on additional debt, while driving down debt you already have. That is also why you don't need to include mortgage debt in this calculation: Your goal is that it go down with each monthly payment, as scheduled, not that you replace mortgage debt with rising CC debt.) It helps if monthly charges that you plan to pay off are only on 1 card, or 1 card for each of you, so you can see clearly what you are actually spending. If you have existing balances that are carried over from month to month, you want them on the cards with the lowest rate, to minimize your cost of carrying debt. You also have to estimate your cash needs for the periods between paychecks, but start with the above.
I see you already got some good pointers. My suggestion: Start Somewhere. I had 31 derogs at first and addressed them 1-2 at a time.
I am going to be a complete weenie and out myself as an Oprah watcher and give you the link to her Debt Diet: http://www.oprah.com/money/debtdiet/money_debtdiet_main.jhtml Click the steps, calulators and tools and it is all laid out step by step by some financial experts....one being David Bach and I would say pick up a copy of his book at the library (Smart Couples Finish Rich) and read the "latte factor" chapter. Then credit wise, just sit here and read and we'll help you sort out the mess. Most of us were in your shoes, so you are hardly alone.
Thank yall so much-- I like the idea of thinking of it as a game! And the links to the Oprah debt diet is pretty handy too. thanks guys. Hope B.
