Made some majorly poor decisions - working them out

[aparker2005]

Hey everyone. I've reached a low point that I didn't ever think I would get to with finances. I don't have many people that I can talk to about it as lots are in the same sort of situations, just different types of debt. We are both in our mid-late 30s. Both have stable, steady jobs. 1 child and not having any more. 

Basically my wife and I in the last 2-3 years did some auto swapping and are now paying the price for it which is the major issue. 

She also just got a major promotion at work. Incredibly proud for her. Together we are making 175k now before taxes. 

We have been back and forth on moving one day or building our own home, but hadn't found any locations or prices we both agreed on. I had a family member offer us 10 acres of land for free. We have both decided it's something we'd like to take them up on and eventually move (10-15 minutes from our current home) and build one day.

That said, she just now realized that we do not have our current home paid off, and the auto loans as well are a major debt. She went into panic mode and is absolutely angry at me since I mostly do all of our bills. 

We have never missed a payment, had any collections, we don't want or go without, and all of our bills are paid. We are able to do activities with our child that some don't get to do. I felt as though for the most part we have a great life and were planning on within the next 2-3 years, paying our home off and planning a build. Sell our home and use that money as a down payment. 

We have next to no credit card debt thankfully. We also have a decent amount in our savings, but nothing major.

So the debts. I again know I've made some majorly poor choices, and I totally acknowledge it. 

Home - $43030 left. 

Auto loan 1 - owe 18k

Auto loan 2 - owe 46k

Loan 3 and story below - 46k

The part I'm most mad at myself on is we got a new shower and bathroom remodel done on our home that costed 15k. It was an insane interest rate so we planned to refi. We took out a heloc to get the interest rate down. That brought our payment way down. 

At that time, I had a vehicle that I did not like or want, and wanted a bigger/more space one for family trips. So with me having a high interest rate on it from a previous trade, I added it to the heloc to get that interest rate down. Traded that car in for the one I have now (which I love and plan to keep), thus making us now owe the 46k between this bathroom remodel and car I don't even own anymore now. Yeah, completely stupid on my part.

Anyway, with all of our bills and paying extra on some of these loans, we still end up with roughly 1200-1500 a month extra. 

Reviewing our finances, eating out and buying stuff we don't need is a major thing that puts a dent in our budget. I told my wife we can easily stop the eating out and the spending extra we do. 

She is angry (rightfully so I believe) that we could pay everything off today if we wanted and that's not the case. So she sees this mountain of loans and says she's not leaving me, but I just feel so stupid. 

I have a plan to tackle these loans and pay them off much quicker.

Not even sure what I'm looking for here, but just venting I guess. I made mistakes and am not happy with them, but I feel our situation is at least manageable and we can still eventually plan our build one day as long as we stay focused on our cutbacks. 

I think in my mind, I saw us getting things (though slower than we may want) paid off, but still getting to enjoy things in life like a small vacation each year, and other fun activities here and there. Nothing major, but with all of our bills always paid, I guess I just didn't see it as THIS huge of an issue. I wish I would have just communicated with her better. 

Any roasting of me is absolutely warranted. Thanks anyone that takes time to read this. 

[DakotaM]

Your main issue sounds like a failure to communicate and what sounds like having a vague idea of what you want but no concrete plan.  The folks on here that are better equipped than me to help you are going to want to know what the interest rates and monthly payments are, so providing those will be helpful. 

Now, your total debt including your home is less than your gross pay.  That's a rather enviable position to be in!  Planning a budget and debt payment strategy is what you need and please, be sure to include your wife in this process and don't try to dicate things.  

Personally, I would focus on the 18k auto loan since it sounds like you have enough extra cash monthly that you could potentially pay it off around a year from now.  That way you have momentum and one of your four debts is gone!  That feeling should make both of you pretty happy.  I'm betting the other auto loan is the next highest rate, so I'd pay that down second.  As for the mortgage and HELOC, I wouldn't worry too much since I imagine you are going to sell it at some point and the sale should cover those (and hopefully a lot more).

[aparker2005]

I really thought I had a better grip on things than I guess I do and I just simply feel terrible at letting things get this way and for feeling even though we have most everything we could want except a newly built home and land, I've really let my wife down. It's just embarrassing and I feel terrible. It's obviously rather tense right now, but I've gotta look at things from her side too. 

I was pretty nervous that she'd be leaving but she told me last night we are married, we are staying married, I'm stuck with her, but she is very much not happy with this and will be extremely stressed out until she sees some progress. 

I guess one other good thing is these debts do go down monthly instead of increasing like credit card debt. 

Both of our credit scores are in the low to mid 800s as well if that counts for anything. 

We also have 1 medical bill from our child's surgery we owe $1400 on and is $115 monthly. Would it make sense to knock that out in about a month vs starting to hit the auto loan hard first? That would free up that 115 to go even more toward the first auto loan. 

She is mostly also upset that as low as our monthly is on our home (bought it pretty cheap in 2014 from her parents) that it's not paid off. For the longest time we were only paying the minimum since it was our first home purchase and I didn't fully get into the financial world until later. My fault again on that. 

She has 1 student loan left also owes around 5k on. $75 monthly on that. 

Monthly payments are as follows:

Home - 546 monthly - paying 1k to knock it down quickly.

Heloc - 414 monthly - paying 664 monthly 

Auto loan 1 - 330 monthly

Auto loan 2 - 720 monthly

These are our only loans. The rest is just normal house utilities, groceries, gas, insurance, etc. There are a few things we each have that are small monthly items but I don't feel is anything major at all like the home and auto loans. 

[JoeRockhead]

Did you make some decisions that got a little ahead of you, yes.  Did you exclude your wife in these decisions along the way, also yes.  That’s (obviously) really what she’s ticked off about but you already know that.

No need to beat yourself up more than you already are.  As mentioned above, you’re actually in a solid position.  Good income, manageable debt, no credit card debt issues, sounds like you both have good credit, and money left over each month. This is very fixable. 

You made some mistakes, and I think you learned some valuable things from it all. But, you’ve got everything you need to turn this into a happy ending in the not too distant future if you both stay on the same page and are committed to a plan.  

[DakotaM]

Yes, I'd pay off the medical bill first since you can do it pretty much immediately, build momentum, and get a sense of getting rid of debts, which seems important here.

[aparker2005]

Appreciate the feedback. 

Credit card debt for us hasn't ever really been an issue and is usually at around a 1k-1500 max and is paid off. This number usually comes from home improvement, medical bills, or vacations. It is always paid off though as I never want to carry CC debt since it's so much harder to get out of. 

I also use the credit card also to get points back on purchases and use those dollars to pay back each month as well.

It just simply became a matter of overspending and not knocking down these debts as quickly as we could. I thought my wife realized this when we did discuss things, but I guess not. I have also learned I need to be a better communicator and not just assume. I didn't want her to stress over things and I tried to take care of it all and still provide fun things for her and our child.

We both have small things like I said that we do monthly. For example, she does vape (not a big fan of that at all, but I can't make her stop), and 1 or 2 small subscriptions. 

I have 2 things financed at 0% interest which are $39 monthly. I have side gigs that most of the time I use to pay those 2. 

I do think as small as those are, we can keep those. You have to have at least something you work for you can enjoy right? 

We can cut back our eating outto maybe once monthly which will save us a TON. I was shocked at how much we eat out weekly just due to laziness and ease of it. We'll likely lose some weight and be healthier as well, so even more benefit. Trips and other excessive spending is also stopping with us both. 

I have 2 very expensive hobbies that I am done dealing with. One was expensive every so often, and my other hobby I usually sell something to pay for anything new if side gigs didn't cover it. 

I again think we have a plan to deal with this and eventually be happier. 

Building I know won't be cheap, but hopefully by the time we're done with most of this debt and what we can sell our home for, we will have a semi decent cushion to start it with. 

Last thing is my wife REALLY wants land for horses. She thinks we could have always already had them if we hadn't bought these cars and redid our bathroom which was expensive as well. In my opinion, I would LOVE to be able to help provide that for her, but then we would again be in major debt due to the horses themselves, barn/shed, fencing, trailers, a truck to haul said horses, food, MAJOR vet bills, supplies, and anything else that goes along with horses. She had them when she was little and her parents made less money than us so she thinks we can easily afford all of this. Her parents already had land they inherited, and didn't have a mortgage either, so I feel that's a little unfair to compare to. 

So either way we go, we would be carrying debt in my eyes. Maybe I'm wrong. 

Thanks again for the encouragement! 

[aparker2005]

Another thought I had and it may have already been mentioned above. But let's say our home sold today through us and not a real estate agent, for 220k. Most people say we can get more for it where we live and how big it is and so close to our school district in a very good neighborhood.

Let's say we owe today roughly 88k between the heloc and our mortgage. That's a 132k profit. No idea how much fees and all would go into selling and potentially starting the build for a new home, but that could be roughly 85-90k as a down payment on said new home. We would of course have a new mortgage to deal with, but we would also be down to only 2 car payments and 1 mortgage, with 1 of the cars also being paid off rather quickly.

It definitely seems to be we aren't in nearly as bad of shape as she's made it out to be, but I completely understand my lack of communication and her frustration. 

Also a lesson learned that will definitely not be happening again. 

[dfwxjer]

Are you a guitarist by chance? The expensive hobby line caught my eye haha and is similar to how I manage my guitar "budget". 

Anyway, it sounds like she's upset that you're putting space between her dream of owning horses with land. That life will be far more financially draining than most any other normal people hobby. Horse owner life is... insane imo. I'd have a sit down with her and ensure you're not beating yourself up too much on all of this. It's not like she didn't see the vehicle being purchased, or the bathroom being remodeled. She's just mad that she wasn't aware of things, but you can bring her up to speed. I wouldn't even remotely call this financial abuse... she just chose ignorance is bliss and that backfired on her part. 

Unless you were intentionally hiding the finances? I just have a hard time believing she wasn't aware that money was being spent... 

[aparker2005]

That's my thoughts as well on the horses. Any of our friends that have horses already had that lifestyle in the family. They also have one spouse that absolutely hates it but deals with it and says they are broke every week because of them. THAT is what makes me afraid. That and who is gonna actually take care of them when we barely have time due to work and our child activities as it is. It seems like something I'd love to be able to give her, but just doesn't seem doable with a new house and everything along with it. We simply don't make that kind of money.

Drummer for hobbyist. I'm a collector, but not to the extreme some people are. I also have a consistent paying side band I get to enjoy swapping drums out here and there with and allows that hobby to stay mostly fulfilled. Though I'm completely content now with what I have. 

Definitely didn't keep her out of the loop on purpose. I explained what we were doing, how much each payment was, and how this was the last car swap we were doing. I told her about the refinancing for better interest rates to save us years of interest payments. She agreed to it and signed her side of the paperwork. I guess I just went on and on about hating the one I had til she finally just gave in. She couldn't possibly think we were paying these loans off immediately. She also knows how much we have in savings and I keep her up to date on that. If she asks how much is in our checking ever, she gets told that as well. I think I just need to update her more so she's more in the know. 

We are paying more on each loan than the minimum, and she also knew that. I guess she kept it up to me as the husband/financial leader of the house to keep things in check. Other than our really bad eating out and expensive yearly vacations, we are absolutely fine I thought. 

Paying off our house 15 years early I feel was a big success, but she doesn't I guess. 

Anyway, I'm getting hugs, kisses, love yous, and her asking me to bring her wedding ring off of our night stand to her to wear for the day, so I guess my worry of her leaving me is gone. She's rightfully still angry, but we will get through this and be stronger in the end. 

[radiofrequencies]

You don't mention the interest rates associated with your debts so it's hard to give targeted advice but in general, the avalanche method will save you the most money in the long run. Make minimum payments on everything and send every possible dollar to the debt with the highest interest rate. It sounds like you've identified areas in your budget where you can cut back, like eating out, and putting that money toward your debt will get you out of debt faster and save you money. The more you can cut back on the better. If the medical bill is not accruing interest, I'd make the minimum payment on that and put any extra available money towards the highest interest debt.

In another comment you said:

Monthly payments are as follows:
Home - 546 monthly - paying 1k to knock it down quickly.
Heloc - 414 monthly - paying 664 monthly
Auto loan 1 - 330 monthly
Auto loan 2 - 720 monthly

Are you paying more than the minimum on your auto loans? If not, and if the interest rates on the auto loans are higher than your mortgage and HELOC, it's better to put the extra money towards the auto loans. Any extra you can put towards the highest interest rate debts will save you money in interest and shorten the amount of time you need to make payments on the high interest debts.

Out of curiosity, what exactly happened when you refinanced your high interest auto loan by paying it off with the HELOC? When you traded in the car after it was paid off, did you not put that money towards the HELOC balance and the trade in value of the car went towards the out-the-door price of the new car? Assuming the $46k auto loan is the new loan, that would mean you bought an expensive vehicle (total price of new car minus trade in value equals $46k) and you are essentially making 3 car payments every month - auto loan 1, auto loan 2, and portion of the HELOC payment. I'm not trying to give you a hard time, but if you're willing to share, it could serve as a cautionary tale for future readers of this thread.

When you take a step back and look at the big picture of all of your debts, it can be eye opening but I don't think you're in nearly as bad of a position you felt you were when you first saw everything laid out.