Financial advice for my wife and I

"Breakfast is yogurt, banana, nuts, and choc chip, cereal mix. $1.50. Lunch is orange, apple, banana, nuts, and pretzels. $2.50. Dinner is pasta with meat, steamed veggies, and bread. $3. Total $7 per day. Always include pasta, rice, bread, or potatoes and you can eat for almost nothing.

"Maybe it depends where you live, but by using coupons, buying generic, stocking up when things are on sale, and focusing on lower cost recipes I spend under $100 per week for groceries for two people.

Example of lower cost recipe: I pretty much don’t buy steak. I can’t ever find it under say $6/lb. Instead with chicken I’ll wait until there is a sale for $2/lb then buy a month’s worth at that price.

Similar with vegetables. If asparagus is on sale for $2/lb I plan recipes with asparagus that week. If it’s not on sale then it’s $4/lb and I don’t buy it.

Use this mentality for you entire grocery list.

I live just outside New Haven CT for reference. If you live in a major city prices may be higher."

Rojo-these folks have it right. For me, it was most of the above and I was able to eat very well on under $50/week in NJ.

1. Go to Hispanic veggie/fruit store and you can get a hand-basket overflowing of fresh stuff for 10 bucks.

2. Go to Asain store and get 20-25lb. bags of brown and jasmine rice. Stock up on beans and sauces/spices.

3. Get my local ShopRite flyer and pre-choose those items on-sale only. Pasta for .50, chicken for 1.49, pork for 1.29, 2-2lb bags of Tilapia fillets for 4 bucks, etc. NO red meat. Then, go to the "about to date expire" section but only choose those items that are healthy and you can cook immediately and freeze.

I ate (still do) very well. And, call me crazy but when my GF was over or I had company my food budget didn't double. Sure, it increased a bit but not by much. So, the point is that the OP can eat VERY WELL on $100/week for 2 with a little planning and some fiscal discipline. (=$300/month easy-savings). And, you too can do it if you wanted.

You can make moves to get beyond this tough situation. The feeling of having no debt is awesome—it will just take a few years of small changes.

- Ditch the time share.

- Change cell phone plan, T-Mobile family for 4 lines unlimited is $160 per month.

- Car payment seems high. Maybe sell your car for a more modest, reliable vehicle.

- Limit your credit cards to ONE card with good cash rewards, (quicksilver isn’t bad). Destroy all other credit cards.

- A no-interest balance transfer, where you set automatic payments to pay off the debt weekly before the interest kicks in.

- Pay off high interest debt first and aggressively.

- Cook at home and meal plan. Pack a lunch every day, make coffee at home. $700 a month on food is good—but none of that can be dedicated to dining out. It should only be spent on groceries.

- Why are work supplies not reimbursed by your employer?

Good luck—stay disciplined—you can do it—it just takes time.

Credit Cards - $40K total

You can pay this off in 5 years easily with focus! Faster depending on how hard you attack it. Target making a dent in this - even cutting it in half will feel freeing and save you a fortune in interest. The Chapter 7 poster is a little extreme if you want to buy a house anytime soon, but for real try and open up a new credit card with a lower interest rate and transfer some balances. Quit using them for debt accumulation, just keep paying on. Cash for everything else. Or else get a 2nd new credit card with a good cash back program (BofA travel rewards is 1.5%, Discover has 1% back on everything w/ quarterly bonuses) and ONLY charge stuff you can pay off each month going forward.

Food $700

Instead of the extreme suggestions above - try to slice $100 off this a month. Try some of the savings apps, digital coupons, shop the sales flyers as the poster w/ the asparagus example said. If you have a farmers market or as others have said, international fresh produce grocery story type of thing - get a lot of fresh veggies cheap... grill out at home to keep meals exciting. If you buy lunch out at work, you will save $100 easily just bringing coffee from home and making lunch at home, then keep your dinners the same. Make it a manageable transition - if you go extreme no changes you make will stick more than a month or so

Gas $120

Sunpass $160

Rail: $100

Car $459

Insurance $130

Car maintenance: Average $25/month

This is a lot of transit costs. I bet you're paying $1k in rent to live farther away from town and have a heck of a commute. What if you actually increased your rent, moved close in town, and then were able to cut down on some of the transit costs?

Cell phones: $250

What happened here? I hope there is an end in sight to whatever contract you have. We have two iPhones and pay $110/mo unlimited data on Sprint.

Vacation timeshare: $175 monthly

If your timeshare is like most, this is a contract you can't get out of easily and would have to sell at a loss. I would not start here first for the savings. Taking a $10K plus loss on getting out of it is not going to help you and you'll still want to take a vacation somewhere. This at least fixes your costs and doesn't distract you with "oh, lets go spend $10k on Paris this year!" ;) Keep the vacation but focus on it as a reward. That's your fun thing to look forward to. When you want to go out and buy "stuff" focus on putting it in the pay off credit card debt.

1. $700 on food!?

2. What is a sunpass?

Is the $6,600 gross or net? Does your employer offer a match for the 401k? Why are you paying $250/ month for 2 cell phones? Does the $459 car payment include insurance?

Assuming this isn't a joke, the $6,600 is net, your employer offers a match, and the car payment does not include insurance:

- contribute up to the match in your 401k- You're leaving free money on the table and waiting to save only compounds

this problem.

- Drop the time share

- Trade in the car- you can get a gently used Honda/ Mazda/ VW for significantly less

- Get an unlimited cell plan- I pay ~$200 for 3 people on an unlimited plan

- Open up an online savings account- set up direct deposit to contribute 5% of take home automatically. Don't even

look at this account. Out of sight, out of mind.

- Start paying down your student loan debt- forbearance doesn't mean it is not accruing interest and compounding the

problem.

- Rank your other debt- start paying down the highest interest rate items off as aggressively as possible.

- Cut up credit cards- See if you have any points or rewards. If so, use it to pay down the balance.

Honestly, you need to have a tough conversation and determine wants versus needs. You're in this situation because you've convinced yourself that you "need" certain items that you really don't. People generally get into financial trouble by continually making small mistakes which compound over time. A $5 coffee here and a night out there all go on a credit card which charges 15-29% interest. You pay the minimum and think you're in control but you're not. The unpaid balance grows while you have your head in the sand and all of the sudden you wake up one day with an uncontrollable mountain of debt. Keeping up with the Joneses just isn't worth it. Be realistic and live simply.

FInance 101, pay off the debt with the highest interest 1st and work back from there.

While I do believe you are in bad shape financially, you have realized your situation and that is a start. Debt and poor money mgt. is more of a behavioral issue as well as adult priority issue rather than just bad math skills. I am an avid Dave Ramsey follower and have also listened to the advice of Suze Orman. What I like about Dave Ramsey is that he has a solid 7 step plan that will work for everyone, provided you put the effort into it and set long term goals and get real about your adult priorities. No, following Ramsey's advice is not get rich quick, its a slow process that will help you achieve financial security. Another thing about his program, it works 100% of the time and you will learn a lot about personal behaviors, life priorities, careers, etc in addition to money. Finally, when you stray from his program you will have a little voice in your head screaming about what the right thing to do is...that's guilt because now you have the tolls to know better and not allow yourself to fall prey to the financial pitfalls that exist.

Thank you for all the feedback. This gives us at least a good place to start.

LetsBank wrote:

Thank you for all the feedback. This gives us at least a good place to start.

A great place to start is by showing your wife this thread in a loving way...

Glad to hear you've realized the situation you're in, but did it take LRC to tell you to quit spending money you don't have? You're not alone, 90% of the US adult population doesn't have a lot to pis$ in. Most have no plans to change that situation.

Lots of advice here, but to boil it down, here's what you do. Pay yourself first. Put away 10% of your income minimum every month. Then pay your debts. Whatever is left is what you live off. You dont deviate from that because you want to do a getaway trip, or you want a new car, etc.

I'm sure I missed it, but your employers have matching 401k plans that you don't contribute to?

I feel anxiety for you just reading this. Turn this around today.

LetsBank wrote:

Thank you for all the feedback. This gives us at least a good place to start.

I just read and didn't comment, but am surprised by the quality of the recommendations. Good luck getting a grip on your finances!

The cold truth wrote:

LetsBank wrote:

Debt:

Credit Cards - $40K total (minimum payment $700/month between

Wife student loans - $40K. Been paying $425 per month but thinking of going into three year deferment since she is eligible for public forgiveness by then.

Private loan: $1800 (100 monthly payment no interest, about 1 year left)

Bills (per month)

Food $700

Cell phones: $250

Vacation timeshare: $175 monthly

We have no savings. No retirement accounts. We would like to be smarter with all this. Up to now, we’re pretty much spending all our disposable income on things that make us happy.

?

It's not difficult to figure out what your problem is.

Your wife is going to make ME pay for HER student loan? R U serious?

F YOU!

GROW.UP! The both of you.

Wondering if OP's wife is a school teacher. That may account for student loan forgiveness.

Weren't timeshares considered to be a worthless spending of money long ago?

I'm starting to think that Dave Ramsey was responsible for the OP. That being said, there've been some great responses.

No there’s been a collection of idiotic responses and only a few decent responses.

First people who say just sell the car and get something cheaper aren’t being realistic. It depends on the car, how much is left etc.

It cost and time and money to get rid of a car and most likely you’ll get screwed. Plus a cheaper car often come at a price. I take a more expensive reliable car over a cheap POS.

Secondly. Most people simple avoided the fact he had $3K/month to work with. They start harping on the food bill or cell phone bill before adressing that.

He should focus his $3k on paying down debt and setting up savings/ER fund/401k.

get freedompop and you immediately save 250/month.

LetsBank wrote:

Thank you for all the feedback. This gives us at least a good place to start.

This situation is going to go from bad to worse in three years if not addressed quickly. That $100k student loan payment will be $1100/month.

You are doing many things wrong to get where you are. Here's what things look like when you are doing things right. We are mid-30s with a family of 5. I'm a school teacher w/coaching stipend and will have a healthy union pension in 20 years. Wife taught 5 yrs and has stayed home for past 7 yrs. No car payments. No credit card debt. Student loans paid off. $250,000 combined in Roth IRAs, opened mine at age 20, hers once we married. 9 years left to pay on 15yr fixed $250,000 home. We are helped by living in Midwest. You should look into it. We live simply, but when we have a need we address it with cash.

Easy to save wrote:

Breakfast is yogurt, banana, nuts, and choc chip, cereal mix. $1.50. Lunch is orange, apple, banana, nuts, and pretzels. $2.50. Dinner is pasta with meat, steamed veggies, and bread. $3. Total $7 per day. Always include pasta, rice, bread, or potatoes and you can eat for almost nothing. I have never had a cell phone other than my work provided one. I have no cable tv. Rabbit ears get 15 channels.

It's easy to write this, but this is fantasy. The cheapest yogurt at the store is $1 per serving. You cannot add a "banana, nuts, and choc chip, cereal mix" for $.50. Cereal plus milk is more than $1 alone.

Lunch of "orange, apple, banana, nuts, and pretzels" does not have enough protein to be feasible long-term and AGAIN pretzels alone (even if they were NOT empty calories) cost $1.00 per serving, Maybe you could add "orange, apple, banana, nuts," for $1.50 but I would think they would spoil most of the time.

Don't get me started on dinner. There is no way in the world that "pasta with meat (and sauce), steamed veggies, and bread" costs $3 long term. Pasta with store-bought sauce could go for $1per serving, but a chicken breast more than $1 and veggies and bread does too.

I believe someone could eat this diet (even though it is not a good one) for TWICE this dollar amount, but not how you have laid it out.

Some people are saying to contribute to 401K up to match and others are saying that we should focus on paying down debt first.

Wife and 2 children. We live on $38k per year so we have every penny budgeted. Greek yogurt at Walmart is $.59. Regular yogurt is $.49. Bag of chic chips $1.99. I use a fraction of it. Cereal box on sale is $1.50. I use a fraction in my yogurt. No mile with it. Banana is less than $.25. Bag of nuts on sale at Walgreens is $2.99. Store pretzels 16oz is $1. It lasts me 1 week at work. Pasta is $.69 per box and sauce is $1. Bread is $.69 per loaf. Chicken is $1.99. Broccoli is $1.99. That is close to $1.50!per person for 4. I don’t understand your point about fruit spoiling. We buy a bunch of fruit twice per week and have no problem consuming it. As far as health, My wife went to college to be a dietician but stays home with children. You can get a much healthier dinner than the one that I laid out. Another night will be a stir fry of rice and vegetables and shrimp. Again, it costs in total about $7 for a family of 4. Obviously not enough people here no how to grocery shop or cook at home. Others have pointed out how little they spend on groceries. In the summer, we get some stuff at farm markets for so little money that we save even more. Try living on what we do and you will start finding deals. I wouldn’t even know where you get yogurt for $1 unless you re buying it at a convenience store.