Please help me put this in perspective...
Here's my dilemma. I owe an enormous amount of debt. I don't really feel that bad about it. I tell myself that the money I "waste" on interest is keeping those companies afloat and therefore, keeping hard working Americans employed. I know, quite a stretch huh?!
And yet... I HAVE to spend a fairly signifant amount of money on my daycare or give a fairly significant amount of money away or pay quarterly payments towards my taxes. I'm not against paying taxes. But they take large amounts of taxes out of my husbands check and I feel that so many government programs are a waste of money that I don't want to pay more than I need to.
If I put my dollars towards paying off bills, it's painfully slow to see much real progress. I have been doing it some. In fact, my credit score is finally over 700 for the first time in about 6 years. BUT, my mastercard and visas are maxed out.
The list of things I want for the daycare, the kids can really use, the parents would like and are tax deductible is long.
Obviously, if I decide to tighten the belt and get a long with less this year, I can make some progress. But if I end up oweing more on taxes and then need to use my credit cards to pay that bill, then what's the point?
I know my attitude towards debt is the reason I'm so far in debt. Am I the only person here that is in debt and is really rather unrepentant about it?!
Just to add... 1/4th of this debt came from when my husband was out of work for a year. Then after that it just snowballed and much of it was from when my industry was hard hit and people were getting laid off right and left. I have had to do utilities at times on my cards. The reason I'm finally starting to think that a plan can work is that I have paid off 2 of my smaller accounts and it does feel good seeing that. I have 2 more small accounts that are going to pay out soon if I am strong enough to leave them alone. But the biggest thing is that I am finally down to 10 months left on my auto note. My payment is 448 per month! When that's gone I can finally make a big dent in the other things. But my total debt load counting the van is currently over 50,000. So it does sometimes feel hopeless.
Read Total Money Makeover by Dave Ramsey. Yes, we have been doing this too. It works and as you pay one bill off at a time you will want to save and not pay Visa, Mastercard, etc another dime. Good luck! You can and will do this.
Another vote for reading Dave Ramsey.
Also, have you ever used an online calculator to show how much money you're throwing away on interest? $1000 at 18% will cost nearly $2000 and take nearly 10 years to pay off. If you don't mind not having that money to spend, put the extra $1000 in the bank and earn a couple hundred dollars on it in that time.
Read Total Money Makeover by Dave Ramsey (check it out at the library.) It is very encouraging and helpful. He gives great tips on how to reduce debt quickly with testimony from families who tried and succeeded.
So you probably won't want to hear what I have to say... but you're not in debt because you pay lots in taxes, or you buy things for your daycare business. You're in debt because you are living above your means. And you're in debt because you refuse to deal with the situation.
Take everyone else's advice and find a solution that works for you - Dave Ramsey or a website or whatever. This won't go away unless YOU take care of it. And someday your creditors aren't going to be as forgiving as they are. Or you'll have an emergency and will need money.
The CCC didn't force you to use their money. The dealer didn't force you to have a car payment of $448 mo.
"If I decide to tighten the belt & get a long with less this year.....", well what can I say about that statement, especially since you are unrepentant about it. Do you believe in being a good person & doing the right thing & being a model to your kids? Those are the things that I think about when I have big or little decisions to make daily, it's called Karma.
The Dave Ramsey class is for you. My DH & I love the class (we are taking it a 2nd time), it's cheap & you can take it as many times as you want without spending any more than the one time cost of about $93. A lot of churches also offer free babysitting. He also has an online class, but you get so many more cool ideas from other people when you physically go to a class. You also get tons of online forms for debt, savings, etc. He will teach you how NOT to buy a car with a $448 payment.
As for your daycare, buy used items on craigslist or bookoo.com. I just sold 3 huge boxes of toys in great shape for $40 to a lady who has a daycare in her home. Garage sales will be coming soon too.
Keep plugging along paying your debt, BE repentant & good things will come to you & your family.
I agree with Jaimee K. on this one!!!!! Dave Ramsey made such a HUGE difference in our lives, and even our future. His program has reduced our financial stress enormously. Less stressed husband + wife= happier marriage also.
If you don't have much time to read (like us), I highly recommend the audio version. My husband listened in the car during his commute to and from work. I listened while getting things done around the house, like folding laundry or ironing.
He has a really good radio show also. You can listen live (or to archived shows) for FREE on his website.
http://www.daveramsey.com/home/
Very best wishes! :)
Hello,
Debt can be a tough, frustrating thing which seems like there is no hope. I haven't read your other comments, but I'm sure you're getting a ton of excellent advice. What I recommend is this... my husband and I are taking a financial class called, "Financial Peace University" with Dave Ramsey. We are learning SO MUCH!! I cannot say enough great things about Dave and the things he's taught us. If I were you, I'd really take into consideration at least looking into this course. You can even take the course at home if you like.
Good luck to you and God bless, ls
If you owe on taxes, ask to set up a payment plan with the IRS. Their interest rate is MUCH lower than credit card companies. I think trying to rationalize credit card debt and interest is a dangerous road and it seems you do recognize that. The longer it takes to get a plan in place to reduce the debt, the longer and more expensive it is going to be to get rid of it. I can understand credit card debt if it was run up because of some emergency such as a job loss. But if, heaven forbid, that happened to you guys, you don't have any wiggle room on the cards to take care of necessary expenses. Get a small emergency fund in place and then start aggressively paying down the credit cards.
I have tried so many things to get out of debt. The only thing that I found that is working is something called Capital Resources. It is a software program that manages your money for you. It tells you what to pay and when. If you have something like 7 bills then there is about 90,000 ways to get that debt paid. This one calculates the quickest way to 0. I LOVE it. I have been using it for about 2 months and I have money in savings and have paid off several bills. I have no idea how it works but man does it. If you want some info on it let me know.
:)
I have not read the book that other's have mentioned but it sounds like a winner!
I have been in debt and struggled to get out. While I am NO fan of the banks or mortgage companies, I am a fan of personal responsibility. You borrowed money that did not belong to you and now you are obligated to pay it back, with incredibly high interest, I'm sure.
I think this attitude gives you more real power than you think. Don't keep yourself a slave to your debtors, pay cash for as much as you can. Only use your credit for true emergencies, like a DR bill or urgent house repair.
I have strong feeling on this issue because I have family members who have been in bankruptcy after mounting debt just because "oh it takes too long to pay it off." Keep tightening your belt and paying your bills, even if it takes a long time, eliminating debt is like losing extra weight, you will feel so much better and happier in the end!
The items that you buy for your daycare, do you keep the receipts for tax purposes? All of those items can be written off as a business expense.
You need to prioritize the list of daycare needs into Required, Needed, Nice to Have. If there is something that is Required, consider talking to your parents about chipping in to cover the cost. Maybe a fundraiser, or yard sale.
I have a lot of debt and it does seem like I'm running in circles, but I have made progress and the monthly required payments are slowly going down. 2 years ago when it all snowballed, I was paying $1000. in bills over 6 cards. Now my payments are $750 over 4 cards.
Try to hold out for the 10m until the car payment is done. Then you'll be able to pay cash for some of the daycare needs.
I hope you have an accountant for your business, if you don't get one! The worst thing people can do is run a business and think they can structure it correctly. The biggest mistake I see just from the little information you give here is you interest is not tax deductable. Why are you using credit cards when you can take out a business loan for the things you need for your day care. That interest is tax deductable.
Like I said, get an accountant, they are always worth their fees. Well if you get a good one. Make sure they have at least one CPA on staff. If you were unaware you don't have to be a CPA to do taxes they are just better trained to minimize your tax liability.
careonecredit.com ~ saved our financial lives. Our credit WAS NOT ruined by consolidating. (We just bought a new car without a problem) We made 1 low payment every month after our interest rates were all lowered to about 5.99% and in 3.5 years is was over! What a weight off of our shoulders.
I think you need to try hard to change your attitude and look at things differently. The amount you're paying in interest must be astronomical and is preventing you from actually paying down much of the debt itself. You need to take care of this so that you have a cushion for an emergency and for your future retirement... trust me, you won't want to be running a daycare when you're 80 just to pay the bills!
As for things you NEED for your daycare, buy them used as much as possible. As for things the parents would LIKE for the daycare, ask them to donate them or else tell them you will create a wish list and pick things up when you can.
As you said, you can tighten your belt and live on less for a year, so you should do exactly that. It's amazing how much money we spend that we don't really need to.
Can you take an additional 1-2 kids into your daycare so that you earn a little more? If so, put the ENTIRE extra money toward paying off your debt.
As for the two cards you have already paid off and the two you are about to pay off - CUT THEM UP and throw them away! Keep just one and use it ONLY for emergencies. Do not carry it around in your wallet so you aren't tempted to use it at the mall, a restaurant, etc. Stick to a cash only policy from now on.
One last thing - track every single penny you spend for a couple of months and see where your money is really going. $50,000 is a huge amount of debt and much of it probably stems from unnecessary purchases.
Good luck.
You need to pay down the debt on the credit card no matter what your justification because God forbid you or your husband is out of work again, you will need to free it up for emergencies. Better yet, pay it down for a peace of mind. No debt is really helping anyone. It's hurting your pocket to give it to a bank for profit.
I was last year and the year before. because of unpaid maternity leave and a high risk pregnancy with extra dr bills I was living off my credit card for the essentials. Then it just made it easier to say well I have to charge anyways I might as well get this that or the other thing. Finally this year I was able to use my tax refund towards my debt. I only have a little over $1000 til I'm debt free! That makes me feel good and actual gives me an incentive to not charge and only write a check for what i can afford!
I know lots of people though that feel they are so far in debt they will never get out so what's more debt.
Pay the bills, tighten your belt, make do...
My attitude would be this: If you want your kid to have it, buy it and provide it. Donate it to the daycare or leave it for your child and the others to play with it until you are ready to have it at home again.
If your daycare parents complain that you don't have the best of everything all the time, tell them that you are in debt and are working to get out of it. They will be happy to help you.
LBC
In my first marriage, my husband had little restraint when he wanted anything at all; drinks with friends, new clothes, a trip or two, parties, a new car. Our debt was horrendous, and since my ex was a student and I was employed, I was the one struggling to pay it off. It took me years to get out from under, but while I was drowning in debt, I was pretty philosophical about it. That is, I rationalized it "away" so I wouldn't worry about it.
Years later, out of that marriage and out of debt, the difference was like night and day. When I eventually remarried, my husband owed on a property investment, but he was paying it down admirably, and he finally sold the property. We built a house, paying for one load of lumber at a time, and got a small mortgage at the end so we could move in (had been living in a garage for 2.5 years). We paid off the mortgage in two more years, even though we both live on a very small combined income.
Since then, we have managed to save, to put away money in retirement accounts, to buy two cars without getting loans for them. We have had to pay a huge amount of our income for really high deductible health insurance, and so all medical care is still out-of-pocket (though he's finally on Medicare now – WHAT a difference!)
My point is simply that living debt-free eats up so much less of one's income in interest that there can actually be funds available for other things. I hope you'll get there, and won't have to rationalize paying all that interest. You'll love the freedom!
with my daycare, I find that periodically I need to replace/replenish. I never, ever use credit cards for this. If it means saving for a couple of weeks, then that's what I do.....or the kids go without.
I am happy with yard sale toys & so are they. The moms all use yard sales to replenish their own toys thru the year....& it's very easy to hit the sales on Saturday mornings. Resale shops are great,too!
I do realize that if your expenses are lower, then you'll pay more taxes. But if you handle it all right, then you will not be paying more than you logically would for your business. It's all in the mindset & attitude! How are you actually saving $$$ in the long run...if you have to use credit cards & pay that interest?
& as for that car payment.....$448 is too much! In today's automotive world, any car with less than 100,000 is still a deal & will last for a couple of years! In '06, we bought a 4yo Explorer.....it's still running strong, with minimal repairs....& the payments were well under $300. It can be done.....! Good Luck!
Two words:
DAVE RAMSEY
that is all....
