Buried Beyond Belief! (pay, million, rent, debts)

[czubmeister]

Yea, I guess you could say that I have been living beyond my means. Credit card companies just kept raising my limits so I just kept going. It is my fault I know but now I have to pay the price. Roped into 2 barmitzvahs at 18,000 each a few years ago that went on the cards. Stupid.

I started putting my insurance, cell phone payments and other bills on the credit cards to get mileage. But those items just kept pushing my balance to the limit.

Here is the problem..
2,700.00 in minimum credit card payments (6 Credit Cards)
3,700.00 1st and 2nd Mortage (2nd mortage line is tapped out)
400.00 Car Payment
1,000 Utilities
938.00 Health and Auto Insurance
800.00 Groceries
---------------------
9,538.00 per month (not including cash and things to live)

I have to make over 100,000 just to cover my nut!

I only make about 7,000 right now but working on trying to make more.
My total credit card debt exceeds 145,000 between my business and personal cards. I've already got all the interest rates to around 9%

I'd rather pay my mortage first than pay my credit cards so I don't see any other way out but to not pay. I do have a friend in Florida who says he can work with attorneys to widdle the 145,000 down to around 70,000. I would have to put payments into an Escrow account.

I'm goint through all my expenses right now to see what I can cut out. I can probably save a few hundred dollars right away but that's nothing compared to what I owe.

Probably going to cancel the life insurance policy on my wife. Just got a bill for $300.00 and I don't really feel like paying that one.

Any suggestions?

[azoria]

$1,000 utilities?! Good grief, where do you live? Remind me not to move there.....terrible.

I am no financial expert and we are currently under employed and under financed as well, but not at the bottom of the pit that you are in.

I can't imagine how you will dig yourself out of a hole that deep. You may have to file for bankruptcy. Soon. If $10,000 a month only keeps your head above water, that's a lot of money every month for years to come without ever getting one step ahead. I can't imagine having to come up with that every month just to meet minimum payments.

You're done. Get a lawyer. A bankruptcy lawyer. You may have to sell something to pay the lawyer--they demand payment in advance--just do it. Corporations file for bankruptcy every day and the world doesn't stop turning. You can do it too. After it's finished and your assets are gone, rethink your lifestyle and learn to live with less on an income that you can manage.

Life is a lesson in learning. Never make the same mistake twice. You screwed this up big time, it made your life a miserable hell, don't do it again. Living small has many advantages. After the bankruptcy live within your means and stay happy. It will take years to overcome this mess.

[bls5555]

sell your house. That cuts out the mortgage payments and most of the utilities. Im assuming your utilities are high because it is a massive house. Doesn't sound like you have kids, so sell it and rent something SMALL AND CHEAP.

[Robhu]

You could ask Congress for a bailout. They are bailing out everybody else these days.
Seriously, I think you have learned a hard lesson.
I have bills also and live on a retirement pension but I am no where near you're predicament.
Thats not saying I don't have to watch what I do.
I plan for at least the next 5 years and try to leave some leeway for emergencys.
You must have had a really good credit rating to get those kinds of high credit limits on your cards. Maybe you used your business income history to obtain some of your high credit limits. I don't know. If you used your business to obtain those and then ran up the max you are putting your lively hood in jeopardy. You never know when economics might change your business profits.
Looks like you might have to make some serious lifestyle changes, some re-thinking of financial decisions, and maybe even bankruptcy.
Plastic is great untill you have to pay for it. You have to remember that it is much easier to hand over the card than it is to hand over the cash when the bill comes due. And if you only pay the minimum you are just giving them a gift, you are not really lowering the principle by any substantial amount.
As far as living beyond your means, our society as a whole has done that for years. And the banks and credit card companys have exploited and taken advantage of our gullablility of taking advantage of their credit offers that in reality they knew some people would have problems paying back on time. That means more money for them in late fees, over draws, etc.Then when it comes to the point of individuals not being able to make the payments they ask our kids to pay for bailouts in the future to keep them afloat.
They are as much to blame as the individuals who let themselves be suckered into believing life is great as long as you can flash the plastic credit card to maintain a certain lifestyle. I think that is what has got us in this economic mess.
I think it is time for the general public to get back to basics and take care of what we really need in a prudent way and stop letting big money companys sucker us into believing we are all plastic millionaires.

[FLPL75]

Originally Posted by czubmeister

I do have a friend in Florida who says he can work with attorneys to widdle the 145,000 down to around 70,000. I would have to put payments into an Escrow account.

ok lets address this first.
You friend is talking about a settlement company which has been discussed many times in this forum.
Run do not walk away from these companies !!![/b]
The "escrow" account you would be putting payments into will have a withdrawal; each month from the settlement company to pay their fees.
Then once the balance reaches a certain amount they will "offer " this to one of your creditors as a settlement. Their fine print says "they do not guarantee the company will accept the low settlement amount.

Now here is what they don't tell you.
The late fees,any over the limit fees and interest will not stop.
The accounts will continue to go past due each month causing negative reporting on your credit.
They also are not forth coming that the credit cards could pursue litigation, especially if you are not in a debtor friendly state and have equity in your home.

When I worked for one off the major cards out there and we received correspondence from one of these companies the first thing we would do id pull a credit report.
If we saw :
Current mortgage payments
A older mortgage which would indicate equity
Recent usage
Cherry picking accounts that were kept current.
The account holder lived in a state that was not debtor/bankruptcy friendly
The account would be sent to our attorneys for litigation.

Some folks will recommend filing Bankruptcy.
What you need to do is speak to an attorney
Any usage with in 6 to 9 months of the BK could possibly result in the credit card "challenging" the discharge. So if you have been using it for day to day living expenses this could be a problem.
You also want to find out what your states BK exemptions are.
Different states have different levels of exemptions for
Equity in your home
Equity in any vehicles that do not have a lien(loan)
Personal property exemptions.

You mention that you are aware you have been living above your means
It is time to sit down and list every dollar you spend you may find that you can cut out more than a few hundred dollars a month.
I would take a serious look as to why your paying $1000 a month utilities too.
Also does you wife work ? if not, she could look into getting a job that can help cover some of the monthly expenses.
The mention of the bar mitzvahs a few year ago suggest you have teenagers. How much are you spending on insurance(if they drive) as well as things like cellphones for them ?
Maybe they could get a job on the weekend to contribute to this.

[dramamama6685]

You said something about a business, would it be a possibilty for you and the wife to get 2nd jobs? I'm also aghast at the $1000 in utilities and $800 in groceries though you could be supporting a lrger family than mine. If you have teens old enough to work, a part time job so they can cover all their own extras and some restructuring may help.

Good luck.

[czubmeister]

I do have two kids. I live in california. My daughter just started University of Arizona but only lasted one semester and is coming home in December to go to school locally. (That whole moving to a dorm thing was a huge expense as well) Probably spent over 700.00 in one semester flying her home 3 times.
My son is a couple of years away from starting college so I have to deal with that one as well.

As for the utilities,
$149.00 Cable (includes house ip phone thorugh Time Warner and a bunch of cable boxes that I'm returning today.
91.00 gas company
$275.00 Cell Phones including a internet connect card for my pc (business expense)
$500.00 Department of Water and Power. Bill is starting go to down a bit due to the cooler weather.
$176.00 Office phone. (I work out of the house doing sales calls)
$51.00 800 Line
.. Actually 1,241 in utilities

My wife works as a mommy and me teacher at 3 locations but only brings in about 12,000 per year.
My house is upside down. I bought it for 285,000 14 years ago (2200 sq ft) and now owe over 750,000 due to refinancing every few years. (another stupid mistake)

I have about $18,000 left between our two retirement accounts and not sure what to do with that money. Cash it all out and pay off some debt... or keep the cash in case we need it for something.

[christina0001]

1. If you are paying your daughter's tuition, stop. Sounds cold, but you can't afford it, and you have to make sure you are able to keep a roof over everyone's head before you can afford tuition.
2. You list 3 different phones (cell, office, and 800#) you pay for, for work. If your job isn't covering 100% of the costs, I have to wonder if you can cancel at least one of them. Make sure you have the most affordable plan for all three, also.
3. Cancel the life insurance. Your daughter is an adult and your son is almost an adult. They won't starve if you or your wife die. Your wife, who is healthy and able to work, won't starve if you die. I would definitely cancel hers and probably yours too.
4. I think you both need to take second jobs. Your kids are old enough where you won't have to worry about childcare expenses if you are both out of the house more. At the very least, find weekend work. An extra few hundred dollars a month won't seem like much, but it will help, and it will also keep you both too busy to spend money.
5. Sell stuff. With all that credit card debt, I have to believe there is plenty of stuff around the house to sell. Have a yard sale, list stuff on craigslist, in the newspaper, etc. Clean out the closets.
6. Cut down on your grocery bills. Suck it up, live on pastas, cheap cuts of meat, go meatless a few nights a week. The kids will complain but you have to do whatever is necessary to get through this.
7. Is it possible for your wife to get a job that will pay more? $12k/year is nothing, especially for CA.
8. If you have an extra room, think about renting it out. That's another few hundred dollars a month.

When will your cars be paid off?

If you have not already done so, STOP USING THE CREDIT CARDS IMMEDIATELY.

If you are serious about wanting to pay off your debts, you and your family are going to have to make serious lifestyle changes. Talk to your wife, make a plan, and then talk to the kids about it. It has to be a team effort, or it won't work. If you don't take care of this, your golden years will not be so golden. I would leave the retirement accounts alone, just because the tax penalties are so high for withdrawing that money, and eventually you and your wife will be too old to work. You are in no position to add to what is there, but at least leave what is there, alone.

[SuSuSushi]

Holy crap. I don't know what to say except that you were very very stupid. I think you realize that so I won't belabor the subject.

First off, if you have one kid in college and another almost in college, your wife doesn't need to "work as a mommy". That **** should have quit when your youngest was about twelve. Tell her to get off her butt and get a job.

Secondly, stop paying for your adult child's tuition, etc. She can get grants or loans and pay for her own schooling. And if she's going to be living with you while going to school, she needs to get a part-time job and pitch in for living expenses.

Third, you're spending way too much for food. Stop going out to eat and stop buying prepackaged food. You should be able to cut your food bill in half if you just try.

Fourth, too many phones. Cut it back to one for you, and one for your wife. Use a prepaid cellular service. Make your kids pay for their own phones if they "need" them.

Fifth, cut out all luxuries. This includes cable television, and possibly even cable internet.

And so on and so forth. You have dug yourself an incredibly big hole. I'm boggled that anyone would go $750k into debt on a $285k house. You and people like you are a big part of why our economy is so screwed right now, and sadly you're going to get away with it. I just wish there were some way to make all of you pay every cent you spent/owe. Those of us who have been responsible financially are taking it up the arse because of this kind of crap.

[joe moving]

Sell the car, get a cheap car. I'm talking Honda Civic, Yaris, whatever. Cancel cable entirely. YOU DO NOT NEED TO WATCH TV! Cancel anything that does not relate to your business.

Why does a phone line cost $176??????????????????????????? Unlimited calling to USA and Canada with VOIP is like 20 bucks. Vonage... Sounds like your power and water consumption is too much, also.

Did you take out equity each time you refinanced?