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  #1  
Old 04-11-2015, 01:13 AM
varoz varoz is offline
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Default losing my mind

Hi,
I am stressed out beyond anything I have experienced, even as I write this I am experiencing a crazy headache from all the thinking I do. I came here in hopes that someone could just give me some thoughts on what to do next.

Basically, I am 38 years old with a mortgage $280k, $47000 in a bank loan, and $4000 in credit card debt which I dont use. I am paying these off slowly but not as fast as I would like. Also and I will be owing on taxes this year which I will be under on as well.

This would be fine if I could budget my way out of this hell I have created for myself. The problem is that I absolutely hate my job, to the point it effects my health and has turned me into a very miserable depressed person. I have come to realize that this is not what I want to do for the rest of my life and would like to change careers. The issue is that I would have to go back to school for a year or 2 and right now that doesnt seem at all possible.

So I struggle with sitting in this job that is hurts me in many ways health wise but pays more than I could else where (72K). I have thought of changing companies, but its the industry itself I have come to hate. High stress, very long hours etc.

I feel like i'm getting old and should make a change now but how with all this debt. I cant possibly go to school and incur more can I? All i think about is debt, and how I just want to fix this mess so bad so I can breathe and get ahead in this life.

What would someone with more smarts than me do in a situation like this?

sorry for the rant i'm just so lost. =(
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  #2  
Old 04-11-2015, 09:12 AM
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DavidBibby DavidBibby is offline
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Default Re: losing my mind

Quote:
Originally Posted by varoz View Post
Hi,
I am stressed out beyond anything I have experienced, even as I write this I am experiencing a crazy headache from all the thinking I do. I came here in hopes that someone could just give me some thoughts on what to do next.

Basically, I am 38 years old with a mortgage $280k, $47000 in a bank loan, and $4000 in credit card debt which I dont use. I am paying these off slowly but not as fast as I would like. Also and I will be owing on taxes this year which I will be under on as well.

This would be fine if I could budget my way out of this hell I have created for myself. The problem is that I absolutely hate my job, to the point it effects my health and has turned me into a very miserable depressed person. I have come to realize that this is not what I want to do for the rest of my life and would like to change careers. The issue is that I would have to go back to school for a year or 2 and right now that doesnt seem at all possible.

So I struggle with sitting in this job that is hurts me in many ways health wise but pays more than I could else where (72K). I have thought of changing companies, but its the industry itself I have come to hate. High stress, very long hours etc.

I feel like i'm getting old and should make a change now but how with all this debt. I cant possibly go to school and incur more can I? All i think about is debt, and how I just want to fix this mess so bad so I can breathe and get ahead in this life.

What would someone with more smarts than me do in a situation like this?

sorry for the rant i'm just so lost. =(
Hi Varoz,

I absolutely understand where you are coming from. I used to be in debt as well.. and getting out of it took a lot of time. As of right now, I am debt-free other than the house (which has 219k left from the original 270k).

I know what it feels like to be in a job you don't like... and feeling the burden of all the debt on your shoulders and seemingly no way out.

Do you have a family to take care of as well? A spouse and/or children?

The reason I ask is that (proportionally speaking) an income of 72k a year is a lot of money (compared to average) and your debt-load is right around the average. So I'm sure I don't have the full picture.

With a little more information, I can give you a step-by-step plan on how to get out of all this debt.

Specifically, I need to know the balance, interest rate, and monthly payment of your mortgage, the 47k loan, and the 4k credit card. If you have other debts or smaller debts I'd need to know that as well. If you owe money to other people with no interest rate... we'll figure that in too.

If you don't wish to post your personal business in this forum... you can send me a private message here.

I'll be glad to worth with you in a back and forth conversation here.

Warmly,
David Bibby
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  #3  
Old 04-11-2015, 11:59 AM
varoz varoz is offline
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Default Re: losing my mind

Thanks David for your reply. I will get you the information you need when I get back home it will either be Sunday night or Monday. I do have a spouse who is scared and wants to start planning a family but with me being so miserable in my job and the debt its hard. I feel so guilty for putting her through my mess.

Thanks again and talk to you soon.
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  #4  
Old 04-11-2015, 05:29 PM
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DavidBibby DavidBibby is offline
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Default Re: losing my mind

I'm looking forward to hearing from you... take this as opportunity to learn and grow in this area of your life. It can also be an incredible bonding experience as well for you and your wife. And we'll talk about easing her fears as well. Be strong for her.

Talk to you soon.
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Old 04-13-2015, 10:32 AM
varoz varoz is offline
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Default Re: losing my mind

Thank you David. I am trying to be strong and I think with your help I can get there...right now i am in a very dark place and cried my way to work today.

Here is exactly what I have going on. I was off on the loan.

Mortgage $273,846
1.950%
$500 paid twice a month.

Loan $56,224
2.850%
$540.46 per month

Mastercard $3816
20.5%
Minimum due is $72 but I've been paying $200 per month

$5000 loan from friend



If you need anything else please let me know.
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  #6  
Old 04-14-2015, 11:36 AM
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DavidBibby DavidBibby is offline
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Default Re: losing my mind

Hi Varoz,

Thanks for being patient with me. I've run the numbers and the situation is not hopeless, though it may not be super exciting either.

If you didn't pay a penny more than you do now on a monthly basis, you could be completely out of debt - including your house in about 19 years. Which is 11 years FASTER than your mortgage company would have you do it. You'll also save at least $55,000 in interest that you would otherwise have to pay.

But if we work together and get a handle on expenses and things... we could make it happen a lot faster and save you even more in interest charges.

By and large your biggest enemy here is the MasterCard charging you 20.5%. Your mortgage and your bank loan, though they have large balances, aren't raping you with their interest rates. The master card, on the other hand is public enemy #1.

I would advise you to attack the mastercard with everything you've got... except that you also have a $5000 from your friend.

How is your relationship with your friend right now? Is he/she expecting to be paid back immediately? are they charging interest? and would they take payments or do they want the $5000 back with no due date and you pay back whenever. How long ago did you borrow it and what is the due date if there is one?

Here's my thoughts. If your relationship with this friend has changed in any way because of this loan... then this MUST be your 1st priority over and above the MasterCard. Money has a way of ruining friendships... and if you value this friend and want to pay them back first... I suggest paying the mastercard ONLY the 72 minimum payment.. and start paying your friend the difference of $125 a month.

So we have two possible payoff orders... depending on whether you want to payback your friend first... or the Mastercard first.

If you decide to pay your friend back first... the order is:
1.Friend - $125
2.Mastercard - $72
3.Bank Loan - $540.46
4.Mortgage - $1000 (or $500 twice monthly)

or if you want to pay the Mastercard First and your friend is ok with waiting a while, then do this order.

1.MasterCard - $200
2.Friend - $0
3.Bank Loan - $540.46
4.Mortgage - $1000 ($500 twice monthly)

Ok.. The KEY to paying off debt is to focus your emotional and financial energies on ONE debt at a time. You should only be focused on the FIRST item in you list. So whether that is your friend first... or the mastercard first... this is the ONLY debt you focus on and you pay the minimums on everything else.

It's the same if you have 4 debts or 14 debts!

So let's say that you decide to pay your friend back first. That means during this time you do NOT pay $200 towards the mastercard... just the $72 minimum payment.

You do what ever you can to pay your friend back as much as you can and as fast as you can. At $125 a month it will take 40 months to pay him/her back... some months will be better than others.. and you may be able to pay them sooner than that. I'll help you find extra money in your budget to make this happen faster.

Let's now say that you were able to scrape together an additional $100 to pay your first debt off each month. Now you're paying $225 a month to your friend instead of $125. You're friend gets paid back in 22 months instead of 40.

In this scenario.. you'll get your friend paid back somewhere between 22 and 40 months. Once that debt is gone however... you don't stop. You now have $125 to $225 a month to now put towards the NEXT debt in your list.

So you already were paying $72 towards the mastercard...now you'll ADD the $125 to $225 you were paying to your friend. You've already been used to paying this so.. keep doing it now until the 2nd debt is gone too! You'll be paying $200 to $325 on the master card each month... it won't take long to finish it off.

Then... roll that payment into the 3rd debt on your list.

You'll be able to put $740 to $860 towards the bank loan... each month... it will disappear right before your eyes.

Then... do the same thing with your mortgage. Paying $1740 to $1860 on your mortgage will KILL it and save you a ton of interest.

I wish I could say that we could eliminate ALL OF your debt (including the house) in 7-9 years. That would take some EXTREME changes. But it is absolutely do-able that you could have your Friend, the MasterCard, and your 56k bank loan paid off in 5 years time. The house could take another 10 years... but you could slow the pace down a this point and fine tune it.

I know that this seems like it's going to take forever. The average person or couple doesn't pay attention to their debt until they reach their 50's and 60's... and THEN it's dangerously close to being TOO LATE. There folks would LIKE to retire... but they can't!

It's not too late for you and your wife though. Even if you don't go aggressive with your debt payoff...and just work at a serious level... you'll still have paid off house and at least 15 years to save for retirement before you turn 65. That is much better than the average couple can say.

So before we continue... please let me know if you think you'll be paying your friend back first... or the mastercard.

Also... what is your monthly NET take home pay. After taxes and deductions what's left of your paycheck each month?

This will help me give you more accurate numbers and I will give you a .pdf file of your debt-elimination plan. There's no charge for this.

Please let me know if you have questions.. I'll be happy to talk about anything.

David
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Old 04-14-2015, 06:34 PM
varoz varoz is offline
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Join Date: Apr 2015
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Default Re: losing my mind

Thank you so much David.

I would be paying off the MC first and then the loan to friend, as it is okay with him.

I haven't calculated my taxes yet but I would guess my net pay per month would be around 4500
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Old 04-15-2015, 02:57 PM
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DavidBibby DavidBibby is offline
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Default Re: losing my mind

Hi Varoz,

I tried created the PDF file and it just looked like crap... so I'm going to write your plan out here.

Your Debt Payoff order is:
1.MasterCard - $200
2.Friend - $0 (until MC is paid off)
3.Bank Loan - $540.46
4.Mortgage - $1000.00
--------------------------
Total - $1740.46

Your net income is $4500 so your debt payments of ($1740.46) take up 39% of your take home pay. Which means that 61% or ($2759.54) is the money you are living off of for food, gas, utilities, services, fun, entertainment, savings, etc.

While I don't know the make up of the rest of your expenses... I believe with some small changes you might be able to put another 5% towards your debt. This is called a "debt payoff primer". I want you to see how powerful this is.

Right now you've committed to making $200 payments towards your Mastercard. The balance is $3816 and the interest rate is 20.5%. It will take 23.29 months to pay off the MasterCard with payments of $200. That's two years before you can even begin to start paying your friend back. If you then start paying your friend back the $200... it will take another 24.76 months to pay your friend back. That's another 2 years.

I propose adding a 5% debt payoff primer to payments. That 5% of your net income so the calculation goes like this:

$4500 (net income) x .05 = $225

This is money you ADD to what you've already committed.

Let's suppose you made some changes and you are able to come up with the 5%. This is what the numbers look like now.

Mastercard $3816 will take 9.86 months to pay off with a $425 payment (that's your $200+$225 debt payoff primer)

Just think.. 10 months from now you can start paying your friend back, because the MasterCard is GONE!

When you begin paying your friend back.. you pay him the $425 each month (what you WERE paying the mastercard before.)

You'll pay off his loan in 11 months. I'm sure he'd like that very much, and so would you!

Then you keep it going down the line until your bank loan and your house is paid off.

So the next question is... where will you get the $225 from to add to the $200 you're already paying?

Like I said before, we're looking to make small changes that won't change your lifestyle much.

Let's start with SERVICES - Here's some common services that add up quick when they are all stacked up together.
Premium Cable Channels
NetFlix
Hulu
Amazon Instant Video
CBS.com and other monthly subscriptions
Lawn Services
Pest Control
Pool Cleaning
Laundry Service
Maid Service
High Speed Internet Service
Home Phone Service
etc.

How much is going out each month to pay for services like these? Some of these COULD be eliminated... but others could be reduced. Maybe the you can downgrade to a lower package and still enjoy the services. Instead of the ULTIMATE cable packages..downgrade to the GOOD cable package. These are just examples... I don't know what you currently subscribing too.

The best thing about services is that IF you reduce them... you only have to make a phone call once, and you save money from the start from then on.

Let's look at another area: INSURANCES
Are you paying too much for any of these?
Auto Insurance - You can reduce your auto insurance by opting to have a higher deductible. Going from a deductible of $250 to $500 or $1000 will significantly reduce your premiums.
Health Insurance - your choices are rather limited by your employer. It may be possible to have a higher paycheck by going to a low-cost HSA plan. The premiums are much lower... but the deductible is much higher. If you are normally pretty healthy... this option might be a good choice.
Other insurances such as Cancer Insurance, Life Insurance, Accident Insurance... all these things add up.

Again.. reducing or eliminating these can affect your bottom line.

Cell Phones - I've got 5 lines with T-Mobile for $145 a month... all unlimited talk... all unlimited text. We don't pay for data plans because we have wi-fi at home. I personally have not found anything cheaper than this... but I don't know where you live or if options like this are available to you.

Utilities - If your electric, water, and heat are too high... do what you can to reduce them.. I wouldn't find too much savings here though.

And now we get to everyday spending:
How much do you spend doing the following:
Eating Lunch with Co-Workers
Eating out with your wife
Eating fast food
Going to the movie theater
Going to the grocery store
Going to Walmart (I know some people who never spend less than $250 at walmart EVER!)
Ordering Pizza
How much do you spend on soft drinks, beer, and bottled water?
Make-up
Hair Salons
Spa days
Manicures and Pedicures
Buying DVD's, CD's and other media
etc.

I am confident that there are places you can reduce spending without changing your lifestyle. I for one USED to spend a lot on soda... I'd get a 20.oz diet coke 2-3 times a day and spend $1.79 each. Now I buy it all in 12-packs that I got on sale... I save over $100 a months just from change the METHOD in which I buy soda.

So... this is a question and a challenge... How can you get that 5%?

I'm here for you man... if you have questions, just ask.

Last edited by DavidBibby; 04-15-2015 at 03:06 PM.
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