Financial Advice

[WrongWay 0]

Never let your debt get to be more than 3x your income. People will try to talk you into buying a house that is 4x or 5x your income. DO NOT DO IT!!!! Total debt NOT greater than 3x annual income, EVER!!!!!!!!!!!!So, with $70K income and $280K debt... well, 4x. You're hurting.That means you give up the comforts of life and pay down your debt, or you figure out how to raise your income (roommates or 2nd job).Life will suck until you get the debt back under 3x income.

[WrongWay 0]

If your wife is working full time and her take home is only $1,800 then it's almost not worth it with you having to pay $900 in child support. I don't have any kids but $900 for child support sounds really expensive.

No.. that is dead on right. At the time of my divorce, I made $65K a year and my ex made $20K. I pay $969 a month.They take the two incomes, multiply by 18-20% and say it takes like $16K to raise the kids. Since I had 75% of the income, I had to pay 75% of the $16K.That's how it works. On top of that, I have to pay 75% of medical expenses. The kid (now 16 y/o) had migrains, an overnight hospital stay, mono, and a couple other problems last year that cost me an extra $1500 or so.

[speedz99 145]

Is all of the debt in your name even though it was accrued by both of you during the marriage?

[TheMathProf 0]

I think the term "child care" got renamed "child support" and now some people think the OP is getting/has been divorced. As best I read the thread, this is not the case.

[Actuary 3]

take home $1800 a month is about a $14/hr job, right?that's not great; but gosh, I'd imagine it's worth keepingBut, here's snother point in support of asking her to quit: You may gain more than you think, because the marginal taxes on her income are at highest point of your brackets. That is to say, you aren't paying 10%, 15% but 25% (I think that is the rate?) on most, if not all, of her pay.Read: Financial Peace, by Dave Ramsey. unless you hate Jesus.lots of great ideas on this thread.**********Why not provide a sample monthly budget for us?Perhaps a "perfect" and a "typical/actual" example.***********Dont drop your LTD insurance, or Health Insurannce!

[pckt10s 0]

Hmmm....stripper? Some of those dudes make bank!

prolly would involve some waxing... not really looking foward to that...

[Tiltinagain 973]

Just looking for some help getting organized I guess.....I totally understand the spend less than I earn concept...but obviously I am not doing very well with applying that concept. Just looking for a little guidance I guess..Jayray

Didn't read the whole thread so I'm sorry if it's been offered before....www.daveramsey.com Dave Ramsey is a guy that has been rich, broke and back to rich again. He has a nationally sydnicated radio program and a business who's sole design is helping people like you get out of debt. I would highly recommend any of his books as well but "Total Money Makeover" is the one I would buy and read tomorrow if I were you. If you can't afford to buy it, go to the library and check it out. I can tell you from personal experience that, if you follow his advice, while not easy or fun, it absolutely will help you get your finances back under control.Two things that may have already been said but are absolutely critical to your getting out of this:1. This issue will not go away until you and your wife both agree and make a commitment to take this on together.2. It will not be comfortable. Your friends and family will think you've lost your mind. Yes you can live without cable tv, the internet and happy meals.You are not bankrupt. You simply spend more money than you make. Get a hold of your spending and you will come out the other side of this.Good luck

[WrongWay 0]

"Even in the current market buying a home is the ONLY investment that is a no brainer. Investment, tax breaks, stored non-liquid value, leveraging someone else's (the Bank's) $ for your investment... all contribute to make buying a house a GREAT use of your $ and Credit."I had a friend pushing this on me a year or so ago. But, having and using my brain, I decided to analyze.I had a kid that was looking at going to ASU. The friend tried to convince me to buy a house near ASU, put my kid up in it, get a couple roommates for her, and sit back and rake in the CASH!!!!A small 3-2 near campus had been selling for about $150K back in 2002, but by 2006 had doubled to $300k. Rent for a 1-bedroom apartment was about $500 and hadn't budged in the last 4 years. Rooms in a house were going for $300 non-mater, or $400 master.No way I can come up with $60k for 20% down. I'd be stretched to come up with $30K for 10% down. $2000 a month PITI minimum.So, by buying the house, I'd save $500 on renting her an apartment, plus make about $600 from roommates. For that $1100, I'd be paying AT LEAST $2000 a month PITI. Let's just assume I can keep it fully rented.How is this a good deal?Oh, says the friend, tax savings. Okay. I pay $17K a year in interst + $2000 in property taxes. Call it $20K deductions. At 33% fed + state, I save $7K in taxes. But I'm losing $10K a year on rent to save that $7K on taxes. Now add on maintenance and repairs, as renters TRASH houses. Heck, I don't trash my house and still constantly have to fix things.Again, how is this a good deal?Appreciation!!! The house will go up in value.Wait? It is a horrid deal for me, and someone will come along in a few years and buy the house for more, making it an even worse deal?This is pure greater fool investing, and is exctly what cost people billion in the tech bust of 6-7 years ago. No brainer indeed.... No one with a brain would do it.Okay, buying your own home rather than a rental isn't QUITE as bad of a deal. My house that is "supposidly" worth $250K would cost minimum $1800 to buy. It can only be rented for $1300 a month. So the $500 loss per month is offset by tax savings... But, the $15K a year deduction is only $5K over the married standard deduction of $10K. So, 33% of $5K is $1650. So, I'd pay $6K a year + maintenance and repairs, to save well under $2k in taxes.But, there is appreciation!!! Oh really? The house doubled in the three years beteween mid-2003 and mid-2006. What goes up, must come down.Right now, the only no brainer is to sell if you can, and book your gains!!!!!!

[TheMathProf 0]

If the OP were looking at buying a house, I would be similarly inclined to recommend against purchasing one given the debt situation at this particular time.The difference that I see is that OP already has bought a home, and I think selling at this particular moment in time would be a bad choice for him:For one, psychologically, many women look at a house as something that they develop and nurture into a home. It's something that really can't be done with an apartment.For another, let's look at some of the financial aspects of his situation. In the OP, he claims that the value of his house was $230,000, and that it was 115% equity loan. So let's assume that the loan is for $265,000, and that in addition to taxes and interest, we also have mortgage insurance. Let's presume that he's owned the house for the duration of the six-year marriage. He'll have paid off only about $15,000 on the actual loan for the house (that interest really sucks during the first half of the loan). What this means is that he'd have to get $250,000 + closing costs + moving expenses + first or last month's rent + a security deposit from the price of his home to be ahead. Can he do this? Probably, but he's also basically given up $60,000 in interest payments (I don't actually know the cost of mortgage insurance, but there's that, and the other portions of the PITI equation, too) to the bank in exchange for "renting" his home for six years. Within the next five to ten years, he'll be getting to the point where he can shed the mortgage insurance, reducing his payment further.And to make matters worse, the new apartment will almost certainly be smaller than the home he lives in. He'll make some money from the sale of furniture that no longer fits, so to speak, but at the same time, there's that psychological aspect again. You sell one of your wife's precious pieces of furniture and you'll be sleeping on whatever's left.Another advantage of living in a home is that the "rent" so to speak only goes up when the taxes go up. On the other hand, living in an apartment is subject to rent fluctuations. WrongWay, you suggested in your post that the rent never increases that college students pay. This seems like it could be true on a college campus, but almost certainly wouldn't hold true outside those campus zones. This means that even if he can find a lower payment now for his apartment, there's a decent chance that he'll be paying a similar rent in the next five to eight years for something that's substantially worse than what he has now.But what's all this talk of long term? We have a short term issue! Except the issue is that you don't want to mortgage your future in order to save your present. Keep in mind that even with the current market correction for the cost of housing occurring in most markets right now, the cost of housing generally does tend to rise over time. What this means is that when he tries to get out of his house now, the idea would be to leverage that extra money into paying down/off his credit card debt. When he tries to get into a house later, once he's built up some money down the road, he'll have to in essence start all over again. Ultimately, in order to build up the amount of money that he'll need to avoid mortgage insurance, he's going to have to find these other cost-saving opportunities in his own lifestyle that we're advocating for him to pay off his credit card debt. So... if he's going to have to cut some corners in order to eventually maintain a worthwhile lifestyle, my claim is that it's going to be better to do it while trying to cut the credit card debt, while still maintaining the home (a big part of that lifestyle) rather than trying to do it in a deliberately downgraded apartment.