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[clean]

need to make a budget.  I don't buy Starbucks, and I got rid of cable and I have the $1000 in savings, but I have to find other things I can cut. I can't manage Clean's envelope method.  I think I'm going to find I spend too much at the grocery store.

Only bring what you need!  Dont take a month's grocery money when you are shopping for a week's worth of groceries! 

[dragon_flower]

Like many of the posters, I have an enormous amount of credit card debt.  My 12 year-old car finally died and I have a car payment for the first time in many years.  I'm in the second year of my PhD program and so the student loans are continuing to build (but payments are deferred).  I receive a grad stipend that does not cover my expenses and have added to my credit card debt as a result.  In addition, all of my cards are very close to being maxed out.  I am planning to make some changes that I'm hoping will balance my income and expenses better. 

When my lease is up, I will be moving into a smaller, cheaper apartment.  I didn't have a full-time job last summer (I thought I did, but it fell through) and had to use my credit cards just to make ends meet.  This year, I found a summer job possibility that will cover my expenses over the summer rather than forcing me to rely on my credit cards.  Also, a small personal loan I took out a couple of years ago will be paid off by this time next year.

Because I'm still in school, I know I won't be able to make a serious dent in my debt, but my hope is that I will be able to pay for the necessities with my paycheck rather than with my credit cards.


I also plan to continue following this thread.  It's comforting to know that I'm not the only one in this situation--sometimes my financial situation keeps me up at night...in addition to the stress of school.  It also makes me hopeful that I can follow the examples set by those of you who are successfully emerging from your mountains of debt.

[merit_decrease]

Me too.  This is a great thread.  I need to do something about my debt as well, but never seem to be able to set aside time from my job to make a budget.  I actually don't really know how to do it.

[zarathustra]

need to make a budget.  I don't buy Starbucks, and I got rid of cable and I have the $1000 in savings, but I have to find other things I can cut. I can't manage Clean's envelope method.  I think I'm going to find I spend too much at the grocery store.

Only bring what you need!  Dont take a month's grocery money when you are shopping for a week's worth of groceries! 

Clean, please.  One problem at a time.  Do you think I actually know exactly what I'm going to buy when I go to the grocery store?  I have to make a budget, THEN figure out what I have to live on.  I'm lucky if I even get to the grocery store at all before I eat out 5 times. 

[zarathustra]

Like others here, I figure the student loans and mortgage are here to stay. My costs on the condo are about $400 more than the last apartment, but I am in a better location, with more space and much nicer finishes - my costs are pretty equal to rental on this kind of apartment in this area.

However... I did not take out student loans my last year of the PhD - for some reason I though I could make it; then I got a low paying VAP at a cost prohibitive location. Financially, it was just as bad as being a grad student, while I lived in a smaller apartment that I had ever lived in during my PhD. All of that credit card debt was consolidated into one of those loans that used to be really easy to get, which actually results in a pretty small payment with extremely low interest because of the timing.

The first time I got my savings up, I bough a new computer - not exactly frivolous, and I have solid reasons for using Mac.

The next time I got my savings up, I replaced the 10 year old car - with a hybrid.

The next time I got my savings up, I bought a condo - I did get $8000 from the government as long as I live here for 2 more years, so this was probably a good thing. I am still not sure it was the best decision, financially.

I manage to pay off the cc every month, even when I had surgery. I usually manage to put a little something into savings, but I am no where close to 8 months. I really want to get close to that and start saving so that when this car is 10-15 years old I can just buy a new one, without another loan.

Um, I read this and think "You don't have a problem."  ;)


I'm afraid to get a consolidation loan.  I'm afraid I'd use the credit cards again.

[wet_blanket]

I'm undecided whether I should get a waitressing/retail job for a while to make my finances less precarious.  It would obviously slow down the degree.  I don't know how to weigh being debt free sooner and having a bit of a financial cushion against spending an extra year earning a stipend and part time wage instead of a salary.

Are you close to finishing?  Are you making good progress?  If the answer to both is yes, I think you should finish as fast as you can.  I have seen so many people crash and burn the other way.  If you still have a few years left on the degree, then it might be worth it - otherwise I would say no.  Maybe someone who made the part-time job/finishing thing work could weigh in to give you a different perspective.  But I did some consulting to make ends meet while I was finishing, and as interesting and well-paying as the work was, the end result was that I took way too long to finish and had a year where I stopped receiving university support and had to pay my own way, dissertation fees and all.

I'm 18 mo-2 years away (finger crossed!).  All my CC debt - the capital, not the interest - is from before grad school.  The balance peaked at about $14k, and of the $11k I have paid off, nearly $4k has been while I've been in the PhD.  I long ago cut up the cards,and had been stressed about paying them as quickly as possible.

I realize I'm paying a lot more than I need to by only paying the minimum, but I think I can accept that as the price of being in school. This thread has already been an encouragement.  I had felt like I had to take frugality to the extreme to get rid of the CCs.  But it seems like CC debt is pretty normal for grad school.  Being able to see the long term is helpful - though grad school means this debt will be with me for years to come, once I'm working, I should be able to clear it in a year.

[concordancia]

Um, I read this and think "You don't have a problem."  ;)

Thanks for the vote of confidence - I am definitely going the right direction, but it has been really hard. I have friends who are earning less, but just don't have that student debt hanging over them - the student loans plus what ended up on my credit card come to payments of about $650 a month. Oh, what I could be doing with that now if I hadn't spent it then!!

So Wet Blanket, my advice is basically to think twice. Yes, this kind of debt is pretty normal, but it generally takes a lot longer to pay off than it does to spend in the first place. You will accrue some debt, but you can make better choices than some of us did. You have to weigh what it takes to keep you productive now with what will become crippling debt later on.

[zarathustra]

 One piece of Clean advice I'm going to do is write down everything I buy for a month.  I tried using Mint.com for awhile to track my spending, but I think it too was too easy to ignore.

 

[ellaminnow]

I have one doozy of a credit card bill to deal with.  I have cut it up this plastic demon and I'm making payments at twice the minimum (for now). 

I think I'm going to start the envelope method starting next week after working out my budget.  The trick is getting my husband to agree to this approach (he's a stubborn one).   

[prytania3]

on preview: I am certain Clean would be horrified about my personal finances as well.

Yeah, well Clean is not a mortal among us. 

And Pry, as dramatic as your relationship with finances has been, I am in awe of your ability to tackle such seemingly insurmountable debt.  I am also envious of where you are now.  I know you say you have $126 and a basket of change, but that means you know how much you actually have.  My finances are so out of whack I have no idea how much money I actually have/owe.  That's the first item of business for me this weekend.  That, and taxes. 

My life has been much drama about money. I have always been able to make it--my salary, my houses, the stock market (occasionally)--but keeping my hands on it was a whole different issue. What's more, no matter how much I made, I always spent twice to three times as much.

I do know what I have now. It's a good idea to make your own balance sheet: short and long-term assets on the left, and short and long-term liabilities on the right. That way you know where you are in the scheme of things.

If nothing else, my accounting courses have helped me figure out my finances better.

[minimimi]

I have friends who are earning less, but just don't have that student debt hanging over them - the student loans plus what ended up on my credit card come to payments of about $650 a month. Oh, what I could be doing with that now if I hadn't spent it then!!

So Wet Blanket, my advice is basically to think twice. Yes, this kind of debt is pretty normal, but it generally takes a lot longer to pay off than it does to spend in the first place. You will accrue some debt, but you can make better choices than some of us did. You have to weigh what it takes to keep you productive now with what will become crippling debt later on.

Just wandering onto this thread to cheer you all on. The road to debt freedom is long and challenging, but the destination is glorious: keep it always in your sights. I literally kept a screenshot of my debt snowball calculator spreadsheet as the wallpaper on my monitor for a while. Concordancia is utterly right to point out what a difference debt makes.

It took me 30 months to get out of maybe $30k of credit card debt (very possibly more) and $48k of student loans. That enormous sum was racked up through stupidity (e.g., not having health insurance and then getting into a horrific hit-and-run collision, putting overseas research trips on credit rather than applying for fellowships), as well as crisscrossing the country on serial one-year VAP appointments.

I got out of debt by subsisting on beans and rice, rice and beans, before I'd ever heard of Dave Ramsey; selling stuff (one of my rules is that I may not sell exam copies I request, but unsolicited ones are fair game); avoiding turning on the heat or air conditioning; growing my own vegetables and herbs; not buying clothes; and learning to use coupons.

Some three years after getting out of debt, I have continued these habits--and in fact have sometimes terrible difficulty spending money. But it has been enormously empowering to see how little one needs to live and even thrive; there can be such a sense of abundance in such realizations. I haven't read Thomas Stanley's The Millionaire Next Door, but it argues that wealthy people actually live very modestly. It's astonishing how much you can sock away when you live frugally while unburdened with debt, even on a quite underwhelming salary. But I'll never tell my dean the last bit.

[ellaminnow]

Thank you, minimimi!  I love reading these testimonies.  I am working on a budget this afternoon and feeling bleak about my financial situation.  I anticipate it will take about that long to climb out of this hole. 

My mantra:  It's a marathon, not a sprint. 

[wet_blanket]

So Wet Blanket, my advice is basically to think twice. Yes, this kind of debt is pretty normal, but it generally takes a lot longer to pay off than it does to spend in the first place. You will accrue some debt, but you can make better choices than some of us did. You have to weigh what it takes to keep you productive now with what will become crippling debt later on.

Oh, I'm not planning on spending anymore on the cards.  I just meant that I will be satisfied with paying off the minimum until I'm PhinisheD.  It's funny, when I first realized how far in the red I was a few years ago, I wasn't that worried; I thought I'd easily be able to get myself in order.  The only financially stupid thing I've done since has been starting the PhD, which obviously slowed down progress.  Now, even though I only have $3k instead of $14k, it's far more intimidating.  While I'm studying, I have a lot less scope to tackle it through belt-tightening.

[fullprofessor]

on preview: I am certain Clean would be horrified about my personal finances as well.

Yeah, well Clean is not a mortal among us. 

I don't know about clean's personal finances. I do know, however, that most folks who have been in ridiculous amounts of consumer debt that threatened to bury them (like me) but managed to work their way out of debt and into a stable financial position (like me) without relying on debt for anything other than a mortgage (like me). really wouldn't be horrified about your personal finances. Rather, they would be horrified if you weren't doing something to change that situation.

Life is an endurance race, indeed. Dealing with finances is part of that.

You can do this. I like minimimi's phrasing: "The road to debt freedom is long and challenging, but the destination is glorious: keep it always in your sights."  That cannot be exaggerated. The feeling when you get to the other side is indescribably wonderful.

I am an advocate for cutting up the credit cards (in the most creative way possible) and then living with cash in the envelopes. When the dining out envelope is empty, no dining out. When the gasoline envelope is empty, start walking or biking. Literally. It's actually very freeing to do this.  If you don't like how your cash envelope budget worked this month, then change it NEXT  month and reassess.

We only have a debit card. We rarely use it except when traveling or doing something for which cash is not optimal (which is rare). We pay the ongoing bills (utilities, rent, house payment, HOA fees, cable, phone) using online banking and everything else is cash. Literally. No cash? No spend.

You really can do this and you'll be so glad you did! Financial freedom is a beautiful thing to experience.

[erzuliefreda]

We had lots of credit card debt for 7 years. We managed to climb out of that one when I landed a lucky strike sort of short-term consulting job that paid exactly the amount we needed to cover the debt ($15k). Since then (2002), we have often been broke, but not in CC debt. Our finances improved substantially when we left NYC for the Deep South where we both had jobs lined up. Still, we were going to be broke for some time. Then the Mrs. inherited $60K from an aunt, which was exactly the amount we needed to put a downpayment on an incredible historic home.

Suddenly, even though we still have student loan debt and now a mortgage, we feel like we are so "successful." My student loan debt will be discharged if I stay here 7 more years and the country doesn't go bankrupt, and by then, the Mrs. loans will be paid off. We are paying $300 extra on each mortgage payment, which should turn our 30-year mortgage into a 20-year one. We are frugal, but not cheap. I have brie and mint in the fridge, and buy things when I want them.

I can't say we are more disciplined or better behaved than we were when we were in CC debt, though. We just got lucky. Which is true of many, many people who are born into money/marry into money/enter high salary careers/etc. They aren't necessarily better people than the rest of us, they just have more money. This sounds obvious, but if so, then why did I feel such horrible personal guilt over the credit card balances for so many years?

My advice would be: pay down the debt as you can, but refuse the guilt. Life is too short. Be happy.