Monday, June 15, 2009

Re: Comment from Rosie

Comment 1: "Your car payment is really high! Have you discovered Dave Ramsey yet? If not, check him out online. Based on what I've learned listening to him he would tell you to sell or trade in your car for a cheaper car with a cheaper payment. Your current car payment is over 1/4 of your monthly income... thats way too high! Thats what I would suggest to you, if its at all possible. Even if you trade it in for a car that has a $450 payment (which is still quite a lot of car!) you'll have an extra $200 a month to pay off debts. Also, do you have an emergency fund? Having an emergency fund is equally, if not slightly more important, than paying off debt. Without an emergency fund if something happens, it will send you into more debt. Totally check out Dave Ramsey or go buy his book "The Total Money Makeover" if you havne't read it. It will totally change your financial life. Good luck... you're doing a good thing here!"

Comment 2: "oh, and what about renters insurance? Do you have that? Thats another emergency must-have. Its not too expensive... I think we pay less than $200 a year for our coverage. Also, another thought, cheaper car = cheaper auto insurance payments."

Comment 3: "Really, I will quit making comments when I quit thinking of more things that might be helpful. Another thought... go to a cash budget system. And to keep yourself from going crazy, budget in entertainment money and frivilous spending money. Take out the cash you have budgeted for the month (or two weeks, however) and seperate it into envelopes for uses (groceries and household, entertainment, frivilous... whatever categories you need). When the cash is gone, you're done spending. Leave the ATM card and credit cards at home unless you know you need them (like buying gas for that car... I do that with my ATM becuase Costco Gas doesn't take cash).
Doing it this way keeps me really well on track. We had an income similar to your (a little higher) until May when I quit my job at the end of my maternity leave with baby #2. Our cash budget was something like this:
Groceries & household (food, personal car, toilitries, paper goods...): $300
Kid Money (clothes, toys, diapers & wipes): $50(before 2nd baby... now that I have 2 in diapers this will have to go up, but I'm hoping to be able to add it into my grocery money without much change when my diaper stash runs out later this summer)
Entertainment (dates & such): $50

For personal spending money we make extra income. My husband donate plasma to keep him in spending money for his guitar hobby, I am an independant sales consultant for a scrapbook company (home parties) for mine. We do have a little wiggle room in our budget, which we try to put into savings. Or at least we had some... lol! My job has cashed my out so my income is no longer coming in! Time to refigure the budget I suppose!
Good luck. Its a hard thing. Seriously though, Dave Ramsey."

You can find her blog, here.

Thank you so much for your comments....I am a little overwhelmed (haha), but I will try and address all the comments/suggestions. If I miss anything let me know ;o) But, thank you for spending so much time offering advice, my family and I truly appreciate it.

Our astronomical vehicle payment is the main source of all my frustration. My husband purchased this vehicle 3 years ago (before we met), and unfortunately didn't think of the consequences of NEEDING (haha, yeah right) this new vehicle. He financed 110% of the cost of the vehicle, he used the additional money to pay off his traded vehicle. He was then making those payments for about a 6 months to a year (I really don't know the exact time-frame), then he refinanced for another 5 years. He decided to refinance because of his even higher monthly payment (I can not even imagine). We have discussed trading/selling the vehicle, but we currently owe more than the vehicle is worth because of the 110% financing in the beginning. We also considered giving the truck back to the bank, but his parents, we are unable to do this without affecting their credit. So, short end of the story is....we are stuck with our current vehicle. Unfortunately :( I will say, in my husbands defense (because I feel like I am totally placing ALL the blame on him), he was earning a higher income and he didn't have a family to support when he purchased his vehicle. Believe me, he has learned his lesson. ;o)

I have heard of Dave Ramsey, but I have not read the book you mentioned. I have read, quite extensively, about his debt reduction plan, and we have put in place some of his suggestions. His book has been on my list to read, but unfortunately I have not gotten around to it.

We currently do not have an emergency fund. We have decided to: get rid of the debt, then emergency fund, then down-payment on a house. I know this isn't the way most would suggest us doing it, but it works in our situation. We live close to both our families, so if something terrible happened they would be more than willing to help us out. I don't expect it to happen, but you honestly never know.

My husband and I are looking into renters insurance, but we haven't decided on a company at this time. We just moved into this apartment three weeks ago, so we are still in the settling phase. Definitely a great suggestion, and something we are looking into.

We do currently live on a cash budget, for the most part. I do pay for gas with our debit card because I can't leave my son in the car by himself, and it is such a hassle to get him in and out of the car just to hand $30 to the cashier.

Your idea of doing something small to pay for an interest or hobby, is a great idea. Something that we will definitely look into. I am sure that my husband will jump all over it.

Again, thank you so much for your comments. I truly appreciate all the advice! You have an adorable family, and it seems like you are extremely crafty. A talent that I simply do not have. Your abilities are truly a gift.

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