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Personal Finances / Credit Cards and Consumer Debt
|Subject: Bankrupt or try to 'gut it out'?||Date: 10/29/2012 7:04 PM|
|Author: aoeuid||Number: 306073 of 308882|
I have taught school for 24 years (counting this one).
My personal finances are a BIG MESS right now. I'm currently behind on NO PAYMENTS to ANY ONE (in fact, I have never been charged a late fee in my whole life and my credit score is easily over 700), but . . . I have raided all of my savings.
My net monthly income is about 2,500. My wife brings in an additional 500. So, a total net monthly income of 3k.
But, our monthly expenses are about 3,350k. Leaving us with a NEGATIVE monthly cash flow of 350 bucks.
We live in a nice home. I have not checked home values lately. But, I would estimate ours at around 150k. About ten years ago we got our mortgage (CNB) on our home for about 112k (at a fixed rate of 5.6% for 30 years). I think the buying price we paid was like 121k.
We owe CNB 93,500 on the mortgage. We have a SECOND mortgage on it with Meritrust - we owe them about 28k at 5.25% fixed for about 14 more years. So we MIGHT still have about 30k in equity in our home. I don't know. It has not been appraised in a long time.
My wife thinks she can make 1k per month with her own home/business cleaning business (self-employed). She wants to be self-employed because we have three daughters ages 5, 7 and 9. She thinks the cost of daycare, and the fact that she doesn't trust any daycare, makes her having a normal JOB, 'impossible' for her. I don't think she'll make more than 500-700 per month.
Here is the big picture. All we are guaranteed, provided I stay healthy, is about 45k per year with my teaching job. We have the above mentioned mortgages, plus 30,100K in credit card debt (all at 0-1% interest . . . we just keep playing the 'roll it over into another zero percent deal' game, when the current ones expire), 6k in new windows. So, not including our first mortgage - we currently have 64,100K in debt.
We have no student loans. We have no car payments. I have my 21 years of service in a teachers pension, plus an IRA 401 that is worth about 20K.
So, for me, the BIG PICTURE IS -- at least 64K in non-first mortgage debt, on a measly salary of my 45k per year. And as described above, our monthly cash flow is about NEGATIVE 350 bucks a month. I used to be able to cover that with my savings . . . but we have no savings left any more.
I see the 'writing on the wall', and I do not like what it says! I'm trying to get educated and wise advice now in a pro-active manner, rather than later, in a reactive manner, when the ship has sunk.
Does anybody have any suggestions? Early today, I had the ‘dream’ below. I would like more OBJECTIVE eyes, to tell me if it is a workable plan. It is under my sig.
Thank you very much for your time and attention.
PS: I'll be 49 in May. I have been married about 11 years. While single I always had between 4-8k in cash, plus a low over-head. The expense of marriage, family and some bad spending habits . . . I never thought I would be in a mess like this. I'm 'educated'. I know better. UGH.
**If you round our current CC debt off to 30k
**My yearly income plus your (my wife) income equals about 7,400K per year that goes to debt
**each year we get back tax money, we send 2K per year to debt
**I can find a summer job (big IF), that adds another 2K per year to our debt
**The above totals 11,400K per year that we can 'possibly' pay towards our debt each year
**11,400K towards our debt of 30k -- means that in about three years, we could possibly be free from CC debt???
Then actually have a monthly positive cash flow again and never get stupid with CC's again?
Does that make sense? No lawyers needed. No bankruptcy needed. Just lots of 'good luck' (no medical emergencies, our OLD cars keep on trucking without needing any major repairs -DOUBTFUL-)
So . . . we try the above with no third parties involved but yet run into problems -- THEN at THAT time, we could/would call the CC's about modifications to our accounts to avoid bankruptcy.
The book I read said when the CC companies here you say, "I am calling you for a modification on my current loan SO AS TO AVOID BANKRUPTCY..." He said they will be eager to work something out with you because they know that if one goes bankrupt, most likely the CC will not get a single penny out of you. Better for them to cut a deal and get like 40-60 cents on the dollar, then to get NOTHING. That makes sense.
So anyway . . . is the above feasible? Or . . . should I be looking at other alternatives now?
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