Question

Hello!  I’m struggling with my budget and was hoping for some help.Hello! I’m struggling with my budget and was hoping for some help. I’m a SAHM, I have 3 boys 7yo, 3yo, 1yo. My husband works- but we are literally drowning in debt. If I were to go back to work we would literally be spending my entire income for daycare- so that’s why I’m a SAHM. We have a lot of debt- 7 credit cards, car loan, home loan & student loan. Our interest rates on the credit cards are all high, the lowest is 16. 90 but most are 26% and higher. We have one balance around $2, 600 (highest interest rate) and then the others are $1, 000 (x2), $500 (x3), $250. Our car loan is down to $1, 000 with a $200/month payment. What I’m curious about is does it make more sense to pay off the car loan and then throw the extra $200/month towards the highest credit card? I only have around $1, 000 to pay extra on a debt so I’m trying to figure out the best plan. Our monthly bills are currently higher than our income so we are literally struggling and going more into debt and stressful situations so I must get my budget straightened out.  

Answer 1

Do you have an emergency fund?  

Comments

@jotunheim yes.  

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@testamentary then yes. Pay off the car and add $200 to the next one. You’ll get there. I know this feels huge, but it’s not insurmountable.  

Answer 2

I think that would be a great plan. What motivates you more? Paying off cards and getting rid of them or getting rid of higher interest rates. That’s how I’d decide how to tackle the cards. Personally, I find going from the lowest balance to the highest and snowballing the most motivating, but do what motivates you!  

Comments

@pang I’m not 100% on what motivates me the most. I more want to do the smartest move financially since we are literally drowning. I think if I did the lowest first the minimum amount due wouldn’t really add up enough to make a huge dent. Our biggest credit card minimum is about $100 a month so I figured if we tackled the car loan we could double that and knock it down a little quicker since it’s also adding the biggest amount in interest also.  

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@testamentary I think that’s a great plan and will totally work.  

Answer 3

I would put at least $500 in an emergency fund to start with. From there, I'd start with the lowest balance and pay it off. the next month take the money you would have spent on that account and add it to what you're paying on the next CC and continue snowballing through each of your cards. For me, this gives me quicker gratification than attacking the highest amount first, so it keeps me on track. I'd take about $25 per paycheck to go towards increasing your emergency fund. No, that's not a lot, but if you do it for 2 paychecks er month, it will add up. Once you have $1000 in your emergency fund, then take the $50 you've been putting into your EF and put it towards the credit card you're working on that month. As for your car loan. I'll bet that is a much lower interest rate than your CC's, so I would put money towards the higher interest rate debt first. Once those are paid off, you'll have enough to make big dents towards paying off your car. Good luck!  

Comments

@pons5698 yes- the car will be paid off by July anyway was just trying to figure out the best option.  

Answer 4

How much more are your bills than your income? Can you get an evening job around your husband or weekends?  

Comments

@daub1 around 100 over. I do crafts on the side so at times we have a little extra income but it’s not always consistent pay. Adding another job is a possibility if we find one that fits, yes.  

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@tonsillotomy it’s something I will consider now. I have to pick up my oldest from school, busing isn’t available and our car had no more spots open. We are getting a different vehicle from a relative that is bigger so it’s a possibility now without a added cost.  

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@testamentary i would pay off the car so you can make your budget.  

Answer 5

Look into serving. If your husband works during the day you could trade off. That what we did. I still serve I make really good money. More than I made at a 9-5

Answer 6

How much is in your emergency fund? If it’s more than 1 or 2k. I would drain it and if pay those super high interest debts. They are small amounts. Also id try to find some sort of evening work for a short time until it’s paid off.  

Comments

@balbriggan $1k

Answer 7

Before you even think about paying extra on debt you need to figure out how to get positive with your income vs expenses. If you don’t do that there’s no sense in paying debt down as you’ll be short every month and go into more debt. I would write down every expense and see where you can cut things out. If adding income isn’t an option cutting spending is all you can do. Once that’s done I would pay off the car ASAP and use that money to work on the credit cards.  

Answer 8

I'm not sure where you live but I work at Lifetime Fitness because of the same reason of using all income to go towards daycare. I work in the kids center and they can come with me. It's not a ton of money but some AND a free membership. ALSO, I realize that was not your question. I just figured I would throw that out there.  

Answer 9

I'm an SAHM too, and I've been looking for a part time job for ages, but nothing has come up with hours that suit our family. We are not in debt but we could benefit greatly from an extra source of income. Like you, childcare costs are too high for me to return to work full time. I just wanted to say hang in there, and when you get a couple of these debts knocked out you will feel on top of the world. If I were in your situation, I would knock out that car loan first and then use the snowball method with the credit cards, and finally student loans. Best of luck.  

Answer 10

Definitely pay off car then start snowballing your smallest debts. I'm a bad spender too, but I was able to rummage through my house and find a ton of stuff to sell on facebook marketplace and made like $100 in 3 days. People love to buy kids and baby stuff so if you have any of that that you dont use, sell it for extra money

Answer 11

Debt snowball! Pay your car off and then take that extra $200/month and pay off your $250 credit card. Then take the $200/month you were paying for the car, your minimum payment on the credit card, and pay off the $500/credit cards. Etc

Answer 12

Another alternative is to work from home? There are a lot of online jobs you can do, and you don't even need a college degree. I'm sure supplemental income from a side job can help.