Financial Mess

Christy - posted on 09/22/2010 ( 39 moms have responded )

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Yesterday, as I overdrew my bank account for the 5th month in a row, I realize I am a disaster when it comes to handling money. My problem is two things: 1) I'm an impulsive shopper when I see good deals and 2) I have two kids, a husband who is laid off (since December) and zero dollars in savings. I have NO idea how to get myself out of this mess and I am self-loathing over it. I enrolled in a debt management program last October. I was in so much debt that my minimum payment now is $746 PER MONTH! And now I have no credit, so I only have my checkings. I was so used to charging everything without credit I'm overdrawing my account.

I'm in a desperate panic.

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Christie - posted on 10/01/2010

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I was in the habit of spending whenever I saw something that I "thought" the family, the house or me needed. I didn't buy huge or expensive items, just small stuff that didn't seem like that big of a deal until you total it up over the course of a week, a month, etc and see exactly how much I was spending on things that we could have lived without. I don't know where you make your money, but this has helped me put things into perspective when I'm compulsed to impulsively purchase something.....STOP and think how much you make per hour...figure it out if you're on salary...figure out the ACTUAL amount you take home from each check and divide that by hours worked that week. Get a REAL number. When you see something for only $9.99 plus tax, think to yourself, is this really worth me working for say 2.5 to get this item that we really don't need? When I started looking at things that way, I realized when I went to lunch at work and spent $$$, I really didn't enjoy knowing I had just worked for 45 minutes to pay for that lunch out when I could have brought leftovers or soup and a sandwich. When I find that "darling" item that would look so cute in the kitchen, on a shelf, I ask myself if it's worth me working for 2 hours to pay for that.....hope any of that helps, it truly does help me.

Amber - posted on 09/28/2010

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In February of this year, I got a notice from the water company, I was $1800 behind and they were going to shut me off. So this is what I did. I got on the computer, in a spreadsheet, and typed in the name of each of my bills, then I made a column and filled in how much I owed. I put everything in from the money I owed the dentist, to my water, hydro, mortgage, car payments, you get the picture. I totalled the bottom. I owed $8000.
I made a column for each paycheck I received during the month and a month end column, I started figuring out what money I could use to pay what, and filled it all in. It took me a while at first, I haven't stopped using it yet. I follow it precisely, when I get paid, I don't pay anything until I consult the budget. I did other things to help me spend more wisely, most of which has been suggested above, taking only the money I needed, leaving the credit card at home, etc. I started meal planning, and buying only the groceries I needed. I started making lunch snacks for the kids instead of buying prepackaged ones. Rice krispie squares are so much easier when you make them. But the budget was the biggest thing I did. After that first initial month, I copied and pasted so I could see two months. Made whatever adjustments I needed and not only did I have a whole new budget for the current month, I could see what things looked like before. This is good encouragement for me, when I owed $4000, it would have been really easy for me to say, look how much I owe, rather than, look how far I've come.
It's been 8 months, and now I owe under $1000. The good part about it was, I really didn't feel like I was changing much, I was simply paying more attention to where my money was going, and making sure it got to the high priorities first. I also started making sure I always had $20, which meant, if all I had was $20, I wasn't spending it unless I really needed to (like I ran out of milk for my kids).
If you want help designing your own personal spreadsheet budget, send me a message.

Dawn - posted on 09/23/2010

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I have found that the best way to change spending habits is to focus on your goals. Whether that's getting out of debt, traveling the world, buying a home, or something else, only you can decide. Once you've set the goal, you have to write it down and put it somewhere you'll see every day. On your mirror or on your computer, for example. If your goal is to get out of debt, write it down on a small stick note and attach it to your credit card. My husband and I survived on my salary after he was laid off for almost a year. We had to make a lot of changes to our lifestyle. It can be done, but you have to commit to making the changes now. When you do start working again and have that second income, spend it wisely. Don't go back to your old habits. Find an accountability partner, too. Someone you can call when you are tempted to spend above your means. I hope this helps!

Lynette - posted on 10/02/2010

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I would suggest becoming a "cash only" shopper. When you do your budget and after you pay all of your bills, take the money you have leftover out of the bank. Then when you go to the grocery store or wherever, you can only spend what you have in your wallet. When you are tempted to buy something on impulse, open your wallet and count your money and consider how much time there is left until the next paycheck and any upcoming expenses before you give in to temptation.

Susan - posted on 09/26/2010

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to avoid overdrawing your bank account try going cash only. I have also had to start doing this. i only have money in our account for things like our mortgage. that way i don't have large sums of cash on me. but if i have to go to a store, gas station, etc. i take cash. that way i can't overdraw our account. the amount we've spent on NSF fees is crazy! good luck to you.

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Jane - posted on 12/11/2010

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Christy, you need to read all your replies and list the ones that will help you, especially the ones that say only use cash, buy what you NEED not want you want, and the idea of putting your income into dollars per hour, - lunch out equal $$$ or that weeks fuel bill, so and so forth. Good luck and hopefully next year you will see the end of it.

Pebbles - posted on 12/10/2010

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oh my goodness...the only thing that helps me to somewhat budget is try to remember no matter what ......don't spend more then u make. hope this helps

Sylvi-jane - posted on 12/10/2010

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get a diary or a calender white all you bills on it and when, ie date they have to be payed how much ten pay them outright whats left is you shopping money make quick simple foods from fesh fruit and veg if a supermarket has free recipy cards use them try them out but shop around you may get cheeper fruit and veg else where it pays to be canny with your money

Sylvi-jane - posted on 12/10/2010

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Like everone else we learn to take control of our money dont eat out unless you need to pay bills first is a good start then what you have left divide what is need and what is not like presents for xmas into dont use credit cards in shops if you can help it withdraw what you need anbd dont go over what you have in your purse what coins you have left after shopping pop them into a moneybox for the kids

[deleted account]

That is about what we pay in debt too... our bank also refuses to remove the overdraft protection on my husband's bank account that is connected to our over the limit credit card. I hate banks soooo much.

What I suggest is to put your debt card in a drawer and only carry cash with you. You can't overdraft cash. Once the cash is gone that's it no more.

Anna - posted on 12/02/2010

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As far as people living outside the USA, going cash-only in envelopes (see my earlier post) and reading Dave Ramsey's financial website should still work. It's even possible you could find his books there, depending on your country.

Anna - posted on 10/08/2010

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Go cash only (put it in envelopes for each category and no "borrowing" between categories--when the clothes envelope is empty, don't "borrow" from the groceries budget). Snowball your debt--pay off the smallest one first, then apply that same monthly amount to the next largest debt. Once it's paid off, apply both amounts to debt #3.

Both of these are Dave Ramsey tips. You can't afford the class yet--check out his books from the library and/or listen to him on talk radio.

[deleted account]

A tip not mentioned here,
Your recreation activities need to pay you back.
My recreation/ mom's night out is bingo Because, I only spend $20 - $30 and I go to a small, paper only bingo hall so I bingo often and bingo pays for itself (and then some).
My husband's recreation is hunting. One deer, taken to the butcher to be processed costs b/t $1.00 & $1.50 per pound of meat.
My husband's new hobby is raising tarantulas. Depending on which breed, they will sell b/t $250 - $450 when they're grown.
Another recreation I have is entering sweepstakes daily. I have never won a major prize, but I have won several $50, $10 prizes, I won a box full of school supplies, free food, gas cards etc.
I want to start a vegetable garden. This will serve as recreation for me, education for my kids and food for our table.
Your recreation needs to pay you back.

[deleted account]

It's a maturity issue and a personal responsibility issue. Stop it. Pay your debt and be thankful to God with what you DO have. Count your blessings and realize how good it will feel when you pay that off--as lone as it takes--and become a fan of Dave Ramsey. Follow his advice religiously and use him like you would an AA program. But the main thing is YOU have to control yourself. Replace this inner need to fulfill yourself with "things that don't matter" with something that does.

If you will get control over your life, you will be fine! Be strong!

Jenelle - posted on 10/03/2010

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Christy, just know that you are not alone. Things will get better. You must have faith and change, in order to get new outcomings.

Melissa - posted on 09/29/2010

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over here - Australia, bankruptcy only lasts a maximum of 5 years (just letting you know)

Melissa - posted on 09/29/2010

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i'm in australia, and am looking into using 'My Budget' to help us manage our money, they deal with the creditors, plus help you put money aside for bills, car registration/insurance, and food shopping, they don't give you a loan, they just help you make a budget with your own money and become debt free.

Natalie - posted on 09/29/2010

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A lot of the people above have listed a lot of good advice for paying off your debt, managing your money, etc. What I haven't seen are ways to free up some money! When I was permanently laid off while pregnant with our first baby at 7 months, we made the choice for me to stay home with the baby. It is what we always wanted anyway, but didn't have the courage to decide on our own. We have made some hard financial choices to keep me home but we manage to run our entire household including mortgage and 2 vehicles, on less then what my income alone was before the layoff.

Some ideas for you:
1. Buy your kids clothes at garage sales and mom 2 mom sales. You can get them super cheap. Stock up in advance for the next size or two. I have not had to buy one single thing new (except some socks). I have *chosen* to buy a few new things, but those were choices, not necessity.
2. Cancel cable and phone. Keep high-speed internet. You can get Magic-Jack for $20 a year and it works wonderfully. My husband has used it at his office for over a year, and we just started using it at the house and are very pleased with it here too. You can watch TV online too. You might have to drop some of your favorite shows if they were on cable channels, but it is a small sacrifice.
3. If you must have a cell phone, use a prepaid one. I have a pageplus cell phone that is for emergencies (or last minute changes of plan) only! It costs me $10 every 120 days for 100 minutes. I never use them all. I don't give the number to anyone but my husband and best friend. If someone needs to call me, they know to call the house.
4. Learn to use coupons effectively. Every sunday, get the biggest city paper you can because those have the best coupons. Plan your grocery shopping based on what is on sale and what you have coupons for. Ultimately, your goal is to get it on sale WITH a coupon, but that is not always possible. Some things just don't have coupons. Some stores, like Target, will let you "stack" their store coupons WITH a manufacturers coupon. When you find something on sale that doesn't go on often, stock up. I buy my husband's deodorant like it is going out of style when it goes on sale, because it only goes on sale every 3 months or so.
4. Buy your own clothes at a Goodwill or Volunteers of America or some other similar store. They only sell really nice things! VoA has items tagged in certain colors and every day, one color is 50% off, and another is 75%. I think they change the colors daily, but it might be weekly. I've never been in on back to back days, so I don't know. They also sell furniture, books, linens, and toys.
5. Learn to buy generic! Sometimes you can get brand names on sale with a coupon for cheaper then generic, but often for the day to day stuff you have to rely on generic to save you some money. Many people don't know this, but a lot of store brand items are actually packaged by brand names and they just change the label.

That's all I can think of at the minute, but feel free to contact me if you want more info.

Kathy - posted on 09/29/2010

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No matter how bad your situation is, DO NOT overdraw your bank account. It adds penalities such as bank fees, plus you have to go pick up the bad checks at additional cost, a lose-lose situation. Several good suggestions have already been mentioned such as budgets, listing total income and total bills owed. Your constant bills must be listed (and paid) first, such as house payments, utitlity bills, car payments. Most of us mess up on the variable costs such as eating out, shopping, and making large purchases we cannot afford. Eating in costs a fraction of eating out, even for two people. Even take-out is cheaper when you have your own drinks at home. I strongly suggest after you assess your total variable debts and pay off the smaller ones first to stop interest payments, paying minimum on larger debts. Like bank charges, interest equates to flushing your money down the toilet. After all smaller debts are paid off, pay as much as possible on the remaining large debt each month until it is gone.. Consolidation loans, which you have apparently done already, can be a blessing to some people if they offer a smaller interest rate. If you have your car loan paid down pretty low, you may be able to borrow the money to pay off your all your other debts at a very low rate by refinancing the car. This serves the same purpose of a consolidation loan without creditors being paid off by finance/debt management people. None of this will do much good if you don't change your spending habits. Several good suggestions have already been made in that area. I plan to benefit from some of them myself like checking out Dave Ramsey's book. Good luck. Remember the key is self-control.

Deborah - posted on 09/29/2010

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small things make a difference. Start by making it a rule to only shop with a list and stick to your list. Really annoying, hard to do - and amazing if you can do it! Next, don't go into a store unless you HAVE to. I shop for household stuff (toilet paper, dish soap etc) once a month at most! Usually, I aim for once a quarter. I cannot walk into a department store without spending $100-$300, so I just don't go. Start with these small and simple things. You are already stressed, you are already having a hard time - so start small and simple. Also - I highly recommend Dave Ramsey's method. I bet you can find all the info on the net without having to spend a penny, but his methods have helped 2 family members correct some serious financial messes! Good luck and post again to let everyone know you are doing better (hey, peer pressure to post good news is another small insentive isn't it... :))

Heather - posted on 09/29/2010

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Just a note about bankruptcy - It completely destroys your credit for 10 years, at which point you can start building it again. Unless you think you can go ten years without ever needing a loan (even a small one), a credit card, a new car, etc, don't do it! It's not a quick fix or an easy way out, it's a last resort when you cannot manage everything you have gotten yourself into.

Dawn - posted on 09/28/2010

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It really stupefies me the misconceptions behind managing debt. Bankruptcy hurts ALL OF US. The Federal Trade Commission recommends against filing for bankruptcy except in the most extreme cases. The U.S. Department of Justice has a list of government-approved credit counseling operations at www.usdoj.gov/ust/.

Ceri - posted on 09/27/2010

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only take cash when you go shopping and only allow yourself so much when you leave the house. Then you have to stick to it cause you don't have anything else. I leave my check book at home when i shop, i have for the last few months and it works great, i only spend what i have in my pocket and i still have money in the bank. Spending cash is so much easier cause when it runs out it is gone!!! not extra spending.

Um Obada - posted on 09/26/2010

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will i have the same thing going on with me,but i started to do one thing and it is helping....if you are going shopping just see how much money you need and take no more and if you are going out just for fun take also what you need no more...leave creidt cards at home ....

Stephanie - posted on 09/26/2010

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I took the dave ramsey financial freedom class and it has completely changed every thing for us. We live on a cash basis only. the only thing that comes our of our bank account is bills that we preset after each paycheck.
For the cash we use envelopes.....Grocery, gas, clothes etc. Whatever is in that envelope is what we use and when we run out that is it. This has also made us very resourceful when we run short on gas money but we are making it work!
Getting a handle on your finances and teaching yourself to know where ever penny goes is worth it and healthy. We plan to teach our daughter what we didnt know and realize about money.
Best of luck to you and I hope you find something that works for you.

Trisha - posted on 09/25/2010

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Please stop beatig yourself up! You are not alone in your situation. The economy is terrible and many people are in the same boat as you. Lots of people have difficulty handling money, I was one of them, but when the economy tanked a few years ago I had to learn a new way of doing things. If your circumstances are as dire as you say they are, you should consult a bankruptcy lawyer...most will do an initial consultation for free. Debt consolodation companies are a rip off in my opinion and look just as bad on your credit report....especially if you are delinquent on your debt. If your husband is unemployed you may qualify for Chapter 7, which wil lwipe out all of your debt. If you own a home and are current on it, you may be able to reaffirm (or keep the house and continue paying for it) on it, same with a vehicle. Bankruptcy will damage your credit, but creidt is repairable over time. Hundreds of people are filing these days because of similar situations, so please do not feel any shame if you do end up filing. If you do file and get a "new financial brginning", you need to learn to better manage the money you do have. There are lots of "systems" out there to look into. I've read Financial Peace by Dave Ramsey and use several of his suggestions now myself. I hope things start to turn around for you :)

Anna - posted on 09/24/2010

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Hi, I feel where you're coming from. Dave Ramsey has a website that might be helpful to you. he has written a few books and has this program called Financial Peace University that might be something to buid up to. He has a radio program too. If you check out the website, you can access some clips of people who've gotten out of this same mess. You are not alone. You might have to learn a little about yourself and put some practical steps in motion, but it's doable. Don't give up. Look into it, I'm not paid to say any of this stuff, I just have had to learn about some similar behaviors that I can do if I let my guard down. Like I said You're not alone.

Bobbi - posted on 09/24/2010

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Thanks to everyone, all of this has helped a lot and has made me really think... I now know I have to make a change for me and my family right NOW!!! Thanks Again...

Sarah - posted on 09/24/2010

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Dave Ramsey!! The Total Money Makeover! He gives you the TRUTH about debt and how to handle it. It is hard, but if it is really important to you, you will do what it takes. We live a debt free life and love it!

Heather - posted on 09/24/2010

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We really started buckling down in my house when my daughter was born. We were drawing from our savings (aka tax refund and wedding gifts) for a long time every month, until it finally ran out on my maternity leave.
One thing that really helped was printing our bank statements at the end of the month. I have a budget on the computer, just a simple spreadsheet with two columns, on for amount I think we will spend and one for actual spent. I add up all the money my husband and I spend on restaurants and fast food, groceries, misc. stuff from target, etc. It was a HUGE eye opener the first time we did it and realized my husband was spending upwards of $300 a month on food (not groceries) without even realizing it! I am like you and spent several hundred on things I'm pretty sure I could have done without. Over the course of 6 months we have been able to change our spending habitsa lot and don't need to take from our teensy savings anymore, not that it would help us much. I also started using coupons and a shopping list when I go grocery shopping. If it isn't on the list, I can't buy it. And I totally agree with Jennifer. Even if you circle the store and come back to the item five minutes later, you may realize you don't NEED it, so take a second to think about it.
Good luck!

Angie - posted on 09/24/2010

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I was in the same position as you a couple years ago. I realized I had a problem when I tried to use my last credit card that wasn't maxed out to buy a sandwich and it was rejected. I knew I needed to make a change, but I didn't know what. Then I read the book "Total Money Makeover" by Dave Ramsey and it changed my life. He is a motivational financial advisor who helps you get in control of your life. I felt like it was too overwhelming to try to make changes, but he makes it so easy using baby steps. My husband lost his job two months after we began the program and I hate to think where we would be if I hadn't read this book. With less money than we've ever had before we've managed to pay off all our credit cards and cancel them. We've gotten rid of all our debt except for house debt and my husband's truck. I can't say enough good things about the book. I finally feel in control. You CAN do this without filing for bankruptcy and without a debt management program. Good luck to you.

Angie

Jennifer - posted on 09/23/2010

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You have to stop shopping for one thing. When you see something, don't buy it right away. Think about it, sleep on it. Think "Do I really need this?" I have become VERY practical since I had a car accident (two years ago), lost my job, became homeless for a while, moved back in with my parents (where I still live), and discovered I was pregnant. My son is a year old now, and thanks to the generosity of my family and friends, he always has plenty of clothes - new and hand me downs. I only will buy clothes for myself if I absolutely need them...but usually I don't.

I find it helps to write out how much I make every day (I'm a server), and what bills are due, and also to write down EVERYTHING I buy. It helps me keep things in perspective.

You have to be really practical, and tough. Think about how hard you work to make the money you have, and keep your eye on the ball. Remember what is really important, and absolutely necessary. I have no savings, but I always pay my bills, and my son always has diapers, and that sort of stuff. My son and my bills are my top two things. Nothing can come before them.

Bobbi - posted on 09/23/2010

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Sounds just like myself to the 'T'... I want to change but I find it hard to do so... I have been laid off work for over a month now and we are barely surviving on my Husband's income... I'am hoping to go back to work in the next couple of weeks but I'm afraid my habits still won't change and with more money coming in will only make it worse... HELP... Any Suggestions?

Dawn - posted on 09/23/2010

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Debt settlement programs are a rip off. Debt management programs from reputable companies like Consumer Credit Counseling Service and Cornerstone Financial Education are completely worth the money. Bankruptcy should always be an absolute last option and the decision should be made with the advice of an attorney. Bankruptcy costs all American consumers money because the businesses who don't get paid by the consumers who claim bankruptcy find ways to charge the rest of us extra money to cover their losses.

Linda - posted on 09/22/2010

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sounds like you may need to consult a bankruptcy attorney. Debt management programs are a rip off.

Dawn - posted on 09/22/2010

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As a financial educator and counselor, I can say that you are not alone. The fact that you are on a DMP shows that you care about your situation and are trying to improve it. Perhaps you could call your DMP provider and find out if they are able to renegotiate the payments for you so you free up some cash flow. Another idea is to contact your financial institution and explain your situation to see if they have any solutions to offer.

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