Mo-Nee-Kuh (biteduringclass) wrote in personalfinance,

Help Me For I'm Careless With My Money

I am in such a rut with my finances right now.

I have 2 credit cards: One with a balance of 381.28, the other 589.03.

My checking account has been ridiculously overdrawn{protected by overdraft protection = thank you credit union}.

My monthly bills are:

$150.00+/- for electricity
$213.00 for rent
$100.00 for other expenses
$100.00+/- for credit card bills
$169.00 for car payment
$30.00 RIRA
$80.00 for gas

I make roughly $1000/mo before taxes and also about 200+/- with babysitting/bartending.

Somehow....I am still in a financial rut.

Any suggestions?


PS: I am 23, full time job, live on my own w/roomies.
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1. Get a solid handle on the "+/-" items in your budget above.
2. Make sure it's complete - a few drinks on a Friday night will add up fast, as will new pants.
3. What are your limits on these cards? What are your APR's? Transfer as much as you can from the higher APR card to the lower APR card.
4. Over-pay on that card - always. Send in the required payment on time, and then an additional $50 whenever you have it.

How does this "magic" overdraft protection work? Where does the missing money come from? What does it cost you each time it happens?


October 27 2006, 21:44:33 UTC 11 years ago

The first card is a CHASE card w/a $300 limit. {oops} The APR on it is 29.99%.

The second card is a GAP car w/a $900 limit & an APR of 19.99%.

The overdraft protection allows a credit of a certain amount to your checking account w/o returning a check &/or declining a debit card.

Ouch. Have you sat down and figured out how much of your payment is going to just paying off interest? That's wasted money.

Try to get a $1000 personal loan from the credit union. You should be able to swing one for arount 9.99% or 13.99%. That's tens of dollars per month less wasted money with ech round of payments. If you can get the loan, pay off the cards immediately, and close the GAP one. Keep the CHASE, but do not use it. Ever. Then, take the amount you save on interest and use it to over-pay each of your loan payments.

There has to be more to the overdraft protection. A penalty, for example, for each time you exceed the limit, or an APR on what is in effect a line of credit they're giving you. If you can get the loan, take the difference of your card balances and the loan and put it into a savings account. Set that account as an overlow for your checking - so if you overdraw, you're spending your own money instead of going into debt. Any extra money you have each month, until the loan is paid off, should go into this savings account as insurance against overdrafts.
Looking at your listing...that's approximately $850 in expenses...leaving you roughly 150-200 as your disposable...which really isn't in your case.

+/-$100 for CC bills isn't going to cut it, not when you're carrying that kind of balance, and especially with one over your limit. I would suggest paying down your higher rate card/over the limit first, but not necessarily via transferring to the lower rate. I did a quick calculation, and with those balances, your daily interest is the same on both cards (1c higher on your Gap card). So up the CC payments/mo...and switch to using cash, but watch your expenditures really carefully so you don't overdraft. If you can par down "other expenses" as well, that'll help.

I'm assuming you're making at least minimum + some on each CC payment. Once those start getting paid off, try and see if you can negotiate a lower rate. 29.99% and 19.99% are both ridiculously high. If anything, take out a personal bank loan and use it to pay those off. I doubt bank loans will carry rates that high. And then lay off the credit cards for a bit...or charge say, no more than $20/mo on them so that there's activity, but you can easily pay it to no balance. But don't cancel them, as cutting activity short like that will hurt your credit score even further.

Beyond that...I'm not sure what else there is to say. Obviously there are lots of little things that can easily add up over the week...i.e. $2 coffee every day for a month = $40/mo, which can be used towards paying down things.

It doesn't appear that you have any room for savings, but after some restructuring, if you have something left over, stick it into a high-yield savings account.
I would attack the heck out of the $29.9% card first, then the other one second. When I went debt-free, I spent a few months tracking EVERY dollar spent, and then I would budget absolutely EVERY dollar coming in. By keeping it in an Excel spreadsheet I could watch my net worth increase (or at least drop from the higher negative numbers) and I could watch my available funds increase as debts got paid down.

Eventually, I set up 5% "drips" into savings, 401k, and employee stock. I also bought a house. I can now write my own loans with equity when needed or when the mid-life crisis calls. That was a bit of a slip, but at least it was at a low interest rate. 8-)

During the time I was getting out of debt, I adjusted my hobbies to not use funds, and I got more important things done. I cleared the garage, the basement, and even got a bunch of sewing repairs done on the kid's stuff.

Oh, one thing on the debts spreadsheet... I listed debts that I needed to pay that I wasn't paying... old hospital bills, etc. It was easier to pay them bit by bit before someone decided they were due NOW!
The other comments are good, but I'm wondering how and why you're paying $150 for electricity, and $80 for gas, while you have roommates? I own a big house on my own (in the north) and don't pay that much.

Pay off the credit cards first. That debt is relentless.
Easy, I live in New Orleans! LoL! Entergy is killing us w/their electric bills. Blehhhhhhhh!!

Gas = gas for my car. I say $20 a tank give/take.

I dunno, assuming you have two roommates, a $450/month bill is outrageous. How many kWh is that? I spend maybe $100/month on electricity for my whole house. Do you have any huge energy sinks? (outdoor electrically heated pool, etc.)?

Even AC shouldn't be that high, but you might want to cut that down in any case.
Aknowledging that I don't know the particulars of your circumstances, especially vis-a-vis what life's like in New Orleans right now, my very callous conclusion would be:

You're living way beyond your means.
You make 12k a year, well below the poverty line, and are living the lifestyle of someone who makes twice what you do. Assuming you've already trimmed everything that can be trimmed from expenses, you need to focus on increasing income.

Having said that:
  1. You are collecting your Earned Income Tax credit (EITC), right? It looks like you qualify for it, and its designed to help folks like you (i.e. those who work full time but don't make enough to get by) so if you're not checking that box on your tax return then you're walking away from free money.
  2. Have you considered other federal aid, like food stamps, housing assistance, etc? No shame in doing what you need to work full time, so you'd be completely justified in taking whatever help is out there.
  3. Great job on putting money aside for your RIRA, but you might want to look into traditional IRA's instead. Its not as good in the long term, but it will save you a few precious bucks in taxed now.

Along with the federal aid, look at food pantries and thrift stores for staple kind of needs. You're making so little money the food pantries should give you something once a month. And there might be less red tape, although the selection might not be as good.

NOLA Rules! I lived there two years, and my inlaws still live in Metairie. I didn't realize the costs had gone up so much, though.
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When you get paid put 10% into into a special savings account and never with draw it. Live on 90%, things you wanted as much anyway won't get honored with your hard earned money as your spending limit decreases.

To make money feel a bit more important calculat your hourly wage but include the time commuting, the unpaid lunch and and free time occupied by work activities caused by work (ex: decompression). Have this total be how many hours you work a week and calculate your new hourly wage.
That should be "things you didn't want anyway"