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I have $ 3,500 total savings. $ 9,500 in student loans. $ 6,000 credit card debt.

My monthly expenses are: $ 1400/mortgage and $ 435/ 2 cars.

I’m 30 yrs old with 2 kids and make $ 90K a year. I can’t seem to save a dime after all bills are paid end of month. My company offers me a retirement plan. Should I sell the home and car? (home appreciated 10K and I can profit $ 6k from one car).

thanks

5 Thoughts on Am I in a Bad Financial Situation?
  1. Reply
    Jason
    February 15, 2014 at 8:28 pm

    You’re not in a bad situation, I think that your not in a great one either, but your situation is perfectly normal.

    Use the $ 3500 to pay the card down to 2500$ (why pay all that interest?) and then keep working on it- tax refund maybe? If you wind up needing the savings again you can always write out one of those convenience checks to yourself, and probably get the money interest free for 90 days or so.

    If you’ve got a 401k you should definitely enroll right away with the %6 contribution you’ll need to get the maximum company matching contribution.

    The hardest thing about savings is cutting your daily cost of living expenses. i.e. stop buying things you want but don’t need.

  2. Reply
    Bacon
    February 15, 2014 at 9:26 pm

    Refinance your home, or take a line of credit to pay off the credit card debt, and as much of the cars as you can. Then, make sure you DON’T RUN UP MORE CC DEBT!

    You might think of selling at least one of the cars and buying something cheaper.

    Try to keep your home. Use the equity in it to absorbe as much of your “bad debt” as you can.

  3. Reply
    ultimatedilwala
    February 15, 2014 at 9:44 pm

    If you can, get rid of the credit card debt, that is the killer with the interest rates. Aside from that you seem to be in a decent financial situation. I would advise taking a loan out from the bank to pay off the credit card debt. Your expenses are actually very reasonably for someone with your salary

  4. Reply
    starofiniquity
    February 15, 2014 at 10:11 pm

    Oh my goodness, you are in a freaking AWESOME financial situation! What the problem is, is how you’ve been raised to handle money, clearly. I mean even if you only cleared 60k, that’s 5k a month, and your bills say after food and all is said and done with kids and that were 3,500 (very generous, including activities), you would be out of debt in . . . 8 months? Cars not included, dunno what’s left on them.

    I have come to understand that people are programmed in how they handle money from a young age. Clearly you’re not unintelligent, and are just fine at making money with that income at a young age, but handling money is a different story. I mean we weren’t born with knowledge of how to spend, so it was clearly learned, and rooted deeply into us.

    My advice? One book, not too long either. “Secrets of A Millionare Mind” by T. Harv Eker. He also has a seminar which you may appreciate, but that book will change your life, I guarentee it. If it doesn’t, IM me and I will mail you the $ 25 cost of the book, I’m not kidding.

    You and I both know the numbers add up to you having enough to get yourself straight, but it would seem that something underneath this makes you just need to get by. And besides, clearly what you’re doing now isn’t working for you, so trying something else (especially a book) can’t do much harm.

  5. Reply
    lfheslin
    February 15, 2014 at 10:18 pm

    No, you’re not in a bad financial situation. First of all KEEP the savings; if an emergency comes up this can get you through. Secondly, if you can, consolidate your student loans, the interest rate should go down significantly plus you may be able to extend the terms. Next, if you have more than one CC, determine which one has the highest interest rate and pay that one off first, with minimum payments to the others until the first is paid off. Then move to the next hightest interest CC, etc. Now, as far as the monthly expenses; if you can refinance your mortgage for AT LEAST 1% lower than you are currently paying go for it. If the new rate is less than 1% lower it may or may not be worth it depending upon how long you plan to stay in the house. You can use online calculators on many financial websites to determine what is best for you. If you like the cars and they are still safe & reliable, I would continue paying them off; after they’re paid off you can use the money to pay down any existing debt and/or put it into savings.

    I think you should sign up for your company’s retirement plan with whatever amount the company will match. ( My company will match 50% on my contributions up to 6%: basically I put in 6%, they match with 3%.)

    Here are a few other things that I suggest:
    1) Make a list of all of your monthly bills that includes the amount & date due, and the remaining balance if applicable. (CC’s have remaining balance, utility bills usually don’t)
    2) Review your bank statements to see what you are spending most of your money on. (When I did this several years ago, I found that we were eating out WAY too often.) When you know where your spending your money it is easier to take control.
    3) Review all of you monthly bills to see if you are paying for things you don’t need; some charges on your phone bill for example may be for services that you never use. I did this and “Found” $ 5 here and $ 10 there that all added up to around $ 50 a month in savings.
    4) If you have a good history with your CC companies call them and ask them to lower your interest rate. This does work most, but not all of the time, and you can do it every six months.

    Lastly, I would have $ 25 or $ 50 a month go directly to some sort of savings vehichle; I use Sharebuilder.com, you can invest in Mutual Funds, Stocks, or Index Funds on a regular basis for a minimal amount of cash.

    I think you are in a good situation. If you formulate a plan of attack, and then take ACTION on that plan, you could wipe out the $ 6k in CC debt by the end of 2006.

    P.S. Just in case: your mortgage interest and student loan interest are both tax-deductible.
    P.P.S. Coupons — I have saved about 10% – 20% using coupons for the products I already buy! Best of luck, and don’t forget to spend time with the family cause that’s what it’s all about! email me if you have any more questions.

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