What do you do if your bills are more than your income?

Question

It seems as if my husband and I can't get ahead. We have an 11 month old baby and the money we make just doesn't go far enough, so we put what we can't afford, until payday, on credit. Because of this, we now have a $7,000 credit card debt. We also want to buy a house. What do we do??

My husband I make approx. $52,000 a year; however, I am off from work due to osteoarthritis. Very painful, which making going to work and caring for my infant difficult. We aren't eligible for food stamps or WIC...we make too much. I think most of our money goes towards car insurance, rent, car payment, cable TV, credit cards, electric bill, phone bill (we have a company owned cell phone so we don't have a cell phone bill). Also, our credit is OUTSTANDING...last time I checked, three months ago, our credit score was 680. I just don't know what to do as far as money...it feels like the boat is sinking and we are in it!!

I have been reading and thinking about all of your expenses so far. Having a baby isn't cheap. She, too, was premature and we had hefty medical bills after she was born as our health insurance is 80/20. I think that's what killed us....we paid that off and now we have a TON of credit card bills. We, too, canceled BOTH our cell phones (we just have the pay as you go ones with phone cards) canceled digital cable and just went with basic cable, you still gotta pay the rent, car payment (10 more to go!), car insurance, electric bill, etc.

Answer 1

get a loan from a bank. with your credit score you should be able to get a good rate and enough money to save yourself. when able to, buy a house. if you do, about 6-7 months living there, get a cash out refinance and get an even bigger loan to pay off everything, including the loan from the bank, and have a little extra to put into savings. whatever you do, DO NOT mess up your credit score.

Answer 2

Not to argue with you, but while 680 is an ok score, it's definitely not "outstanding". I also suggest a consolidation loan. If you had an 800+ score, you could probably get one with a decent rate pretty easily; you may still be able to find a bank that can help. That would help lower your interest. In the mean time, I wouldn't get your hearts too set on a house just yet. Work some extra hours or get a temp. part time job to help get the debt behind you. You'll have to make some adjustments somewhere; it won't just get easier because you want it to. I'm sorry if that sounds harsh, but that's the way of the world. I'm working 1 full time job and 2 part time jobs to get my wife through school. Sometimes you just have to make sacrifices. ;)

Answer 3

I know how it is......I am in the same boat. There are ways to manage it though. First, make a budget and stick to it. Quit using credit cards immediately. Contact your creditors and try to work out payment plans. Cut energy costs as much as possible. Carpool if necessary. Make double payments on the card with the highest interest payment if possible, while making only minimum payments on any other cards you have until all are paid off. Use direct deposit and a check card and keep track of every penny you spend. If you can get a debt consolidation loan, do so and pay off and cut up all the cards. The interest will not compound like the interest on the cards will. Always live within your means. Possibly get a second job for one of you to help in the interim to get you started. A good rule in finance is always pay yourself first. When you are finally out of debt and ready to buy a home, make sure you are saving 10% of your income for that home and for emergencies. You can do this......above all, keep your head on straight and think it through. There is always a solution.

Answer 4

With your condition, could you possibly apply for Social Security disability? If you don't have the money before payday, I don't think it's a good idea to charge more on your credit card especially if what you owe is more than what you can pay each month. That puts you deeper in debt especially with the finance charges. You and your husband need to sit down and do a budget. Start with what your monthly income is. Prioritize what you absolutely must pay at what time of the month. And try NOT to charge anything more. Do you have any family that is able to help you both financially and with the baby? Maybe you could look into Legal Aid. Good luck and God Bless!!

Answer 5

It would be good to create a budget for yourselves and stick to it, cutting out things that you can live without. You may need to get a better paying job too. Stop using credit right away and work on paying it off to get your credit score up, that will really help when it's time to buy a home, which sounds like you will need to wait on for a bit. A good way to accumulate a large sum of money fast, would be to consign any good quality clothes that you never wear anymore and to have a yardsale, which will also be nice in getting rid of clutter. Whatever you make from that stuff should go straight to the bills, which will eleviate some stress.

Answer 6

You've got to look at what your spending your money on. Are you eating out often? Do you go to movies every Friday? I bet that card is somewhere around 20%. Getting that paid off will free up some money too. Your husband should probably consider another job. Do you have Cable TV? Look around and see if there are any places you can stop spending each month. Can you Car-pool to save on gas?

Answer 7

First of all, the house dream may have to wait. You're in a downward spiral (which you obviously know) and have to stop that before a house can become a viable financial option. What I typically recommend for people facing this sort of problem is to begin by saving your receipts. No matter how small a purchase, save the receipt, know what you're spending. One lady I work with was stunned to find that she spent over $70 per month on Blockbuster, and $90 per month on candy and fast food. Removing those two spending points that she wasn't even aware of allowed her to pay most of her bills the next month. Start there.

Cut coupons. Always. You can cut your grocery bill by 2/3 if you use grocery store coupons to plan all your meals a full weak in advance. One of our friends did this, as her husband was in grad school, only working part-time, she didn't work, and they had a 6-month-old baby. It was one of the only ways they made it through that time.

Depending on where you live, there are very often non-profit financial counselors who can go through your expenditures with you and find ways to make your money go further than you expected.

Your husband may need to keep his eyes open for a higher-paying job, too. As one of my business professors said: "The first law of money management is that you have to have money to manage."

I do volunteer financial counseling for members of my church, although it is not my primary occupation, therefore I would recommend you find what resources are available through your church, synagogue, or mosque. If you have other questions, feel free to email me at [e-mail].

Answer 8

For one month make a list of every penny spent including every thing even a pack of chewing gum. At the end of the month decide what items you didn't need. Cut out all extras. If you get a soft drink while driving try bringing one from home as it is cheaper. Buy in bulk if the price is cheaper in the long run. Large packages of meat can be divided into smaller ones at home. The bags inside empty cereal boxes can be used instead of foil, etc. Cloth diapers are cheaper than disposables.

Answer 9

Apply for financial aid. You may qualify for food stamps, definately WIC, welfare is an option, although most don't like the idea. I would forget about the house until you get things under control and hopefully improve your credit rating. Any family or friends available to help? Maybe someone can babysit while you or your husband work a part-time job. good luck

Answer 10

Consider filing chapter 7 bankruptcy. You can still purchase a home after your bankruptcy is discharged which takes about 4 months. My uncle had a home built at a 4% int rest rate after filing BR. That's the only fix for right now unless one of you start making more money to cover the bills. Good luck!

Answer 11

Change your style of living. You absolutely must scale down and live within your incomes...or change jobs or work extra jobs to make more income. Allow enough money to begin to pay off that debt or you'll never own a home. Very hard to do, but it can be done. All extras need to go...salon appointments, eating out even in fast food places, cell phones, etc.