UPDATED: Trouble with Budgeting and Debt.

[Anonymous]

UPDATE:

Just wanted to give it update.

I paid off the remaining balance on my Discover It Credit Card in early December.

I will be paying off my Mother's Capital One Credit Card in a few days.

I know that I should have probably paid off her Capital One Credit Card first, but I couldn't stand seeing the outrageous Balance on my Discover.

Also: Unexpectedly, Discover increased my Credit Limit from $2,000 to $2,400 not long after I paid the Outstanding Balance!

I wasn't expecting the CLI so soon after paying the card off. I don't understand why they increased it at all.

I'm glad that my Discover is finally paid off. I hated seeing the Balance that high, and all of the Interest that accumulated from the Outstanding Balance really killed all of the Cashback that I had earned.

Never again.

I am currently trying to come up with a budget, that hopefully will be followed. It has to be. There's no other option since we will be paying Rent soon enough.

I will be making a new post in the appropriate section regarding my potential budgeting plan.

Thank you guys for all of the advice you gave me. I appreciate your help.

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0riginal Poat:

If this should be in another section of the forum, please feel free to move to the correct area.

I am looking for advice on forming a budget and the best way to pay off debt.

My Mother and I share finances.

Shared Income: $1,545/month*^

*There's some income from infrequent jobs that isn't included.

^$1,545 Income will begin in November.

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Money Spent:

Gas&Electric/Water: $160/month

Phone: $50/month Family Plan

Internet: $49.99/month

Amazon Prime: $5.99/month

TV: $35/month for YouTubeTV*

*I will be pausing my YouTubeTV Subscription for the time being, so that money will go towards paying off the Credit Cards.

Grocery/Household Necessities: ???*

*The money spent on Groceries fluctuates month to month. The amount spent usually is somewhere between $500-$800/month on Groceries and Household Necessities.

Restaurants/Entertainment: ???*

*The money spent on Restaurants/Entertainment fluctuates month to month. The amount spent varies between $40-$375/month on Restaurants/Entertainment depending on if it's a 5% Category or not.


-----------------------

Credit Cards/Debt:


Mother:

Credit Card: Capital One Quicksilver [formerly CapOne Secured Platimum]
Current Balance: $489.39*
Credit Limt: $500
APR: 25.75%


*I had originally paid off my Mother's Credit Card Balance on October 3rd when it was $500.37. So the current $489.39 Balance has accrued since then.


According to CreditKarma, she has two Derogatory Marks/Collections:

-$973 Medical Debt from 2013.

-$829 Cable Debt from 2015*.


*Originally, Credit Karma listed the Collection's "Opened On" Date as 2015 when the Collection Agency was Stellar Recovery.

The Collection is currently owned by Southwest Credit and the "Opened On" Date is noew listed as 2018.

I had assumed that the "Opened On" Date meant when Mom signed up for the Cable Service, but is it actually referring to when the Collection Agency obtained the Debt? I don't understand how the "Opened On" Date could change if it's supposed to be referring to when the account/service first began.



Me:

Credit Card #1: Capital One Secured
Current Balance: $5*
Credit Limit: $600
APR: 25.74%


Credit Card #2: Discover It [formerly Secured]
Current Balance: $1994.91
Credit Limit: $2,000
APR: 24.74%


*My $5 Current Balance with Capital One will be paid after my October Statement cuts, it will not be a "carried Balance".

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We had an unexpected $1313.28 Vet Bill that we had to charge to the Credit Cards. We were always able to pay the Credit Cards in full each month prior to the Vet Bill. I had obsessively made sure that the Statement Balances would report around $5 when the Statements Cut. But it seems like the $1313.28 Vet Bill has thrown all of that off and I have no idea how to get ahead anymore.


We currently have $585 available in our Checking Accounts to pay towards a Credit Card.

I was thinking that I could pay off my Mother's Credit Card [..again..] using most of the $585 and the rest could go on my Discover.. Unless all of it should be used on the Discover.

I just feel like we are treading water. We aren't able to pay these Credit Cards off if the cards are still being used. It kills me that I had just paid off my Mother's Credit Card and she already maxed it out. I had just wanted to pay off her Credit Card in full so that we couldn't have to worry about paying Interest on her Credit Card as well as mine.

I guess I'm just looking for advice on how to pay the Credit Cards down and pay the Collections off so we will be able to start fresh.

[Revelate]

So a couple of things:

Shared finances = shared budget... if your Mom's not on board, you're stuck.  I'm not a fan personally of closing credit cards to control spending but if that's what needs to happen, do it.

I would recommend ignoring the collections for now and focus on the credit card debt, after you're back above the water line financially then check over in the Rebuilding forum for some ideas on the collections.

Budget wise, you're way ahead of the game knowing your incoming money, current assets, and monthly debts.  Really when it comes to your debts just look at the APR's and pay off the highest one and go right down the ladder.

The hardest thing isn't setting up a budget, it's mashing your life into the structure imposed by the budget in terms of not spending anything that's not budgetted.  Even for me, I wasn't really tracking, but when I went through some of my data from a few months ago I was just shaking my head at how much money I was spending in what traditionally I label as "Slush Fund" (money I can spend on whatever outside of the other categories) because I wasn't paying attention and apparently left my budget for dead around a year and a half ago.

So I re-did the budget, and mostly fixed it, but occasionally I do come up with the mental failures "I need (read as want rationally) this and I have the money... but you have a budget yo!" while paying down my own current debt.

But to re-iterate, you have a shared financial life, which means two people have to go through these mental gymnastics... ultimately if it can't be sorted, you may want to consider splitting the finances up, but that's hard too when talking family.

[Appleman]

Give YNAB a try as they have a free trial. You will just need to input the information you already have and get the budget going.

I admit the system takes a bit of time to get working but it makes moneu management easy once established.

If you are going to start paying I would first try to get all cards below 89%. Once you hit 90% utilization the lender sees it as maxxed out. From there, pay them down as your budget allows.

Also, with the income for two of you, have you looked into any type of food bank options or other community services? Reducing the budget for food and dining out for just a few months will really help you attack those balances. Not paying the 25% interest on the cards will also help your overall budget.

I wish you luck, I have been in the situation of being overwhelmed with debt and it is tough.

[19eighty5]

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@Revelate wrote:

So a couple of things:

Shared finances = shared budget... if your Mom's not on board, you're stuck.  I'm not a fan personally of closing credit cards to control spending but if that's what needs to happen, do it.

I would recommend ignoring the collections for now and focus on the credit card debt, after you're back above the water line financially then check over in the Rebuilding forum for some ideas on the collections.

Budget wise, you're way ahead of the game knowing your incoming money, current assets, and monthly debts.  Really when it comes to your debts just look at the APR's and pay off the highest one and go right down the ladder.

The hardest thing isn't setting up a budget, it's mashing your life into the structure imposed by the budget in terms of not spending anything that's not budgetted.  Even for me, I wasn't really tracking, but when I went through some of my data from a few months ago I was just shaking my head at how much money I was spending in what traditionally I label as "Slush Fund" (money I can spend on whatever outside of the other categories) because I wasn't paying attention and apparently left my budget for dead around a year and a half ago.

So I re-did the budget, and mostly fixed it, but occasionally I do come up with the mental failures "I need (read as want rationally) this and I have the money... but you have a budget yo!" while paying down my own current debt.

But to re-iterate, you have a shared financial life, which means two people have to go through these mental gymnastics... ultimately if it can't be sorted, you may want to consider splitting the finances up, but that's hard too when talking family.

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Well said!!

[Kforce]

With the numbers you have provided you have about $500 a month to hit the debt.

No restaurants, entertainment and shop wise for food.

6 months if you work hard at it.

Very doable. Good luck !

[marty56]

back when I had a lot of CVC debt, using an Excel spreadcsheet really helped my keep to a budget since I new ahead of the time how much money I had and where the tight spots were going to be.  Also if you get paid bi-weekly, it will help you in that it could seem like 2 extra paychecks a year to spend on debt or save if you mange bills monthly.

[Anonymous]

Thank you for the reply.

Our situation is complicated. I'm disabled and I still live with my Mom, so our finances have always been joined. She's the one that does all of the shopping at the store and everything.

Before we had Credit Cards, she would always be paid in Cash for her jobs and my SSI would be on a Debit Card in her name [she's my Representative Payee]. So after my SSI was gone, that would be it for the month unless she had Cash from her jobs. She also had a tendency to take any cash money that I had without asking, saying she's "just borrowing it" and will give it back. She never gave it back. Then I feel like I have to always bail her out of things. She owes someone money? I'm just like "Here, take my savings to pay them back!" I feel like I owe her so I have to give her my money if she does ask.

I realize that I don't owe her anything and I shouldn't feel obligated to give her money when she says she needs it. I just have a really hard time saying "No!" because she's my Mom.

Yeah, my Mother is definitely not on board. Trying to explain that we have to stay on a budget and do things a certain way goes right over her head. I feel like she's completely irresponsible with money and Credit Cards. She will see something in-store or on TV and will purchase it if she knows there is money available on the Credit Card. Or she will do a Cash Advance or Cash Over Purchase to get Cash to be able to pay someone money she owes, or to let someone borrow money, or to buy tickets to a local Crab Feast, Bingo Night or other event.

I've told her countless times "DO NOT DO CASH ADVANCE!!!" because I know that it's something that should NEVER be done but she does it anyway, because she "needs" that cash for whatever stupid reason.

I don't necessarily mind her doing the Cash Over Purchase with Discover so much since there isn't any type of Fee like with Cash Advance, but it's gotten to the point where she does Cash Over Purchase for $40 a couple times a week. It's too much, in my opinion. Another thing that bothers me is that she doesn't ask me beforehand if doing the Cash Over Purchase is okay, I only find out once I see the grocery store receipt when she comes home. I guess it's my fault because I haven't set aside a "Petty Cash" amount for her to use when she needs actual cash money. I've just been automatically using all of the money to pay off the Credit Cards and don't really consider leaving some spare Cash available.

I just don't understand how someone can think paying a $10 Fee and whatever percentage in Interest for a $60-$100 Cash Advance is okay.. It makes no sense. I would never do that myself unless it was an actual life or death situation.

After an incident where my Discover was used for a $20 Cash Advance, I talked to Discover and had my Cash Advance Limit zeroed out so my Discover can't be used for Cash Advances. I also contacted Capital One to see if they could do the same but they told me that they can not remove or lower the Cash Advance Limit.. I find that ridiculous!

Overall, I know that we have A LOT of issues and we probably shouldn't have Credit Cards at all. It was my suggestion to even get her a Credit Card to begin with. I knew that she probably had Bad Credit/No Credit because she didn't have any lines of credit. So I had her apply for a Capital One Secured Card because I knew that she NEEDED to have Credit if we ever move and the landlord or rental company does a Credit Check. I wanted to raise her Credit Score so renting an apartment/house, or even purchasing a car, would be made easier because she has a good Credit History. This was before we pulled her Credit Reports and found out about the Collections.

I have considered closing her Credit Card, but I feel guilty if I do that.

I just wish that she could understand that we have to set a budget and stick to it. I wish that she would realize that she can't just take money by Cash Over Purcase or Cash Advance whenever she wants to purchase something that she doesn't have the Cash available in hand for.

[Anonymous]

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@Appleman wrote:

Give YNAB a try as they have a free trial. You will just need to input the information you already have and get the budget going.

I admit the system takes a bit of time to get working but it makes moneu management easy once established.

If you are going to start paying I would first try to get all cards below 89%. Once you hit 90% utilization the lender sees it as maxxed out. From there, pay them down as your budget allows.

Also, with the income for two of you, have you looked into any type of food bank options or other community services? Reducing the budget for food and dining out for just a few months will really help you attack those balances. Not paying the 25% interest on the cards will also help your overall budget.

I wish you luck, I have been in the situation of being overwhelmed with debt and it is tough.

 Is it safe to attach your Credit Cards to YNAB? Is there a way to import transactions that have already posted? It would be easiest for me that way instead of having to manually type everything in.

We haven't looked into food banks, food stamps, or any community-based services. I don't think Mom really wants to.

I will admit that some of the Restaurant expenses aren't food related. One of the Restaurants in the neighborhood used to also sell items you would find in a Convenience Store. Typical things like sodas, pre-packaged snack foods, as well as cigarettes. They still sell cigarettes. My Mom smokes, so that is where she purchases her cigarettes so those purchases code as a "Restaurant" on Credit Cards.

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[blindambition]

I’m disabled, so I understand how things are stacked against you. I buy for need, not want. If it can’t be paid off within 2 months... it’s a no go.
You need to tighten the entertainment belt. I’m not saying don’t have fun, but plan for it. Sacrifice pays off.
I also see some maybe opportunity with groceries. It’s a pain, but wasted savings if not shopping smart.
As crazy as it will sound. Try to budget $25-50 a month in savings. Go to for emergency. That way you aren’t stuck in charge cycle. Good luck!!

[Anonymous]

UPDATE:

Just wanted to give it update.

I paid off the remaining balance on my Discover It Credit Card in early December.

I will be paying off my Mother's Capital One Credit Card in a few days as soon as my SSI comes in.

I know that I should have probably paid off her Capital One Credit Card first, but I couldn't stand seeing the outrageous Balance on my Discover. I just wanted it gone ASAP!

Also: Unexpectedly, Discover increased my Credit Limit from $2,000 to $2,400 not long after I paid the Outstanding Balance!

I wasn't expecting the CLI so soon after paying the card off. I don't understand why they increased it at all.

I'm glad that my Discover is finally paid off. I hated seeing the Balance that high, and all of the Interest that accumulated from the Outstanding Balance really killed all of the Cashback that I had earned.

Never again.

I am currently trying to come up with a budget, that hopefully will be followed. It has to be. There's no other option since we will be paying $800 in Rent soon enough. We were so lucky that we haven't had to pay Rent these last few years.

I will be making a new post in the appropriate section regarding my potential budgeting/savings plan.

Thank you guys for all of the advice you gave me. I appreciate your help.