Hi Everyone,
Was wondering if any of you could help me come up with a plan to solve my budget issues and get on a path to a financial stability. I'm sorry this post is long. I will be on and off all day trying to respond to any comments but work is crazy so it might take me a few hours between batches of comments.
TL;DR: I'm $37k in debt, weighing options. $150 short on my budget but just making minimum payments. Proposed debt planning options in a bulleted list below, same for assets and current (failing) budget
Background:
I'm 24yrs old, graduated college in 2015 and am employed as an engineer for the past 2.75yrs. I now live in NYC with my GF and we split expenses 50/50. I make double her salary but I have to commute 2.5hrs to work everyday and have debt while she is debt free so a good chunk of my extra income is already accounted for.
I've historically had trouble budgeting, but had managed to get my CC debt down to $0 in 2016 courtesy of a large tax refund. I have not been debt free as a result of a $12k car lease and $35k in student loans. I have however, managed to pay those down a bit and now only owe $4k on the lease and $20k on the student loans. I have never had an emergency fund. I know, I know.
I used to frequent r/churning quite often. I got numerous cards and racked up hundreds of thousands of miles. We went on trips around the country and to Europe. However, I was overspending along the way without realizing it. I participated in manufactured spending which helped mask it at first since I was always able to pay in full. The experiences I had churning were absolutely amazing but I racked up so much debt that I clearly didn't do my math right or act responsibly.
Debt Load
In April 2016 I had $0 of CC debt. By the end of 2016, I was up to $10,000. By the end of 2017 I had hit $36,000. I'm now at $36,500. Trying to stop the bleeding and get on a path to pay this down ASAP. I should add that $22,500 of this is at 0% until a few dates ranging between August and December. $5,000 is on a CU line of credit at 10.24%. The remaining $9,000 is on cards that are still under their grace periods. Originally it was $27,500 (0%) - $9,000 (grace/float), but Bank of America decided to slash my limits by over 50%...to secure better rates on any possible loans/prevent other issuers from freaking out I moved $5k from the Bank of America cards to my CU Line of Credit
Assets
- 401k: $22,500 (contributing $416/mo pre-tax - 6%, company matches first 5%)
- HSA: $750 (contributing $221/mo because of ongoing medical expenses)
- e-fund: $1450 (newly minted from points)
- Other Savings: $1 (that's generous)
Debt Restructuring/Reorganization Options
The way I've been running the numbers it seems I have a few options. I don't like any of them, but to be honest I don't like my situation either so I guess it's good all things considered.
To start, I've just cashed out some of the points to start an emergency fund of $1450. It's not enough by any means but it's a start. The goal is around $3500.
To shore things up on the debt side of things, I'm considering:
- Roll through more balance transfers. A few of my cards still have 0% balance transfer offers with a 3% fee. I could probably lock down the debt at an effective 3% APR and just keep shifting it until it's gone - but if the economy turns south I have a huge issue as a creditor can just cut my limits at will
- Personal loan options around here are looking at about 8-11% but the upshot is one monthly payment and I can consolidate up to $30,000. I would pay more but I can put this monster in it's own expensive closet and move on.
- 401k loan for $11,000 out of a $22,000. Normally I would never touch this, but at 6% APR of interest paid to myself and a stock market that is growing more and more volatile, it actually seems a little appealing. After the S&P jumped 20% last year I imagine that we're looking at a correction soon, and this would lock in half of my 401k at that incredibly high ROI. I know this is just me justifying timing the market...
Current Budget:
| Category | Amount | Notes |
|---|---|---|
| - | Income | - |
| Salary | $4169 | Monthly after-tax |
| Pre-tax 401k contributions | $416* | *6% of salary, employer matches 5% |
| Pre-tax HSA contributions | $220.84* | *maxing yearly limit, employer contributes $800 |
| Pre-tax commuter benefits | $303.01* | *$260 for transit, $43.01 for parking |
| - | Expenses | - |
| Apartment | ($1609) | - |
| Rent | ($1498) | - |
| Renter's Insurance | ($13) | Billed annually in March |
| Utilities | ($40) | Unsure of exact amount, haven't been here a whole year yet |
| Cable/Internet | ($58) | - |
| Transportation | ($920) | - |
| Car Lease* | ($313) | *Actively looking to trade in car for another low cost model |
| Car Insurance* | ($125) | *Got first and only speeding ticket in January...renews in August, but I turn 25 in June |
| Car Registration | ($6) | Billed every 2 years, just paid last month |
| Car Service/Inspections | ($20) | About $100 every 6 months |
| Gas | ($50) | - |
| Parking Permit* | ($0) | $320/yr paid pre-tax from commuter benefits account |
| Metro North Monthly Ticket* | ($215) | $475 but $260 is paid from pre-tax commuter benefits account |
| Monthly Metrocard | ($121) | - |
| Uber/Lyft/Taxi | ($70) | Been working this month to cut this |
| Subscriptions | ($58) | - |
| Cell Phone | ($35) | - |
| Amazon Prime | ($5) | GF pays the other half |
| Amazon Music | ($7) | Billed annually in January |
| Lastpass | ($3) | Billed annually in February |
| YNAB | ($5) | Billed annually in April |
| Website | ($3) | Billed annually in September |
| Everyday Stuff | ($412) | - |
| Groceries* | ($350) | Recently increased from Blue Apron/wanting to eat out less |
| Household Stuff | ($50) | - |
| Haircut | ($12) | - |
| Food | ($520) | - |
| Dining Out | ($100) | - |
| Ordering In | ($50) | - |
| Food at Work | ($220) | - |
| Coffee/Breakfast | ($100) | - |
| Snacks | ($50) | - |
| Fun | ($231) | - |
| Dates | ($70) | - |
| Movies | ($16) | - |
| Video Games | ($0) | - |
| Drinking | ($120) | - |
| Other Fun | ($25) | - |
| Debt | ($472) | - |
| Credit Card Minimum Payments (0% cards) | ($324) | - |
| Student Loans | ($148) | - |
| Miscellaneous | ($85) | - |
| GF | ($60) | - |
| Other Gifts | ($25) | - |
| - | - | - |
| Total | ($138) | - |
Proposed Budget Changes
There's a lot of fat in this budget and I'm still bleeding. Options include:
- I've already started cutting the dining out budget, and we've upped our grocery spend. I think that should correct a bunch of the overage (and help me lose weight).
- Need to cut most of the dining budget and start bringing lunch to work - only downside is the length of the commute makes this impractical for most meals that need refrigeration
- The transportation is a necessary evil because of the 2.5hr commute, but I'm trying to lose the car payment.
- Drinking, dates and coffee are easy targets and I will likely cut them next
- I have debated cutting my 401k contribution to increase after-tax income.
So.....that's it....I'm in way over my head here, trying to figure this out and solve this once and for all. There are a number of options but just not sure how to approach this. Just got a bonus at work so that's $300 that will go to some of the debt/e-fund but just not sure how to proceed from there.
Edit: thanks for all the feedback - food has to go and I understand that. I'm at work so trying to respond to this as the day goes on. Thank you again. This is not a fun place to be in and I'm ashamed to have gotten here but hope I can fix this.
Submitted March 14, 2018 at 09:16AM by ConfusedEngineer743 http://ift.tt/2pbLlnY
