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Thread: Financial Advice and Money Woes

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    A Meat Loaf Aday... ClosetNerd's Avatar
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    Financial Advice and Money Woes

    Sorry if there is a thread like this. I tried a few searches and came up empty.

    Anyway, here's my situation I could really use some friendly semi-anon advice for: Over the years Hubby and I have really had some serious strings of bad luck that has resulted in our becoming massively in debt. After buying our lemon of a house and then several family illnesses and deaths we have completely run out of any more outs and options. Basically, we have about 400 dollars a month more in bills than income because we needed to put a couple of family emergencies on credit cards.

    So here is my question. I have a credit card with a limit of $4000 that is =maxed out. Come Jan/Feb we will get our taxes done and we wind up with a check for about $4250. Now, normally we would use it to pay a couple of small bills and then set the rest aside in an envelope to pay our 3 yearly taxes (town in Jan /village in July/ and school in Spetember) which come to about 2500 total.

    But I had this idea that we should use it to pay off completely my credit card, and then when the time comes, use the card to pay the taxes. That way not only will the credit be revolving (I think that's the right term) But for those months before the taxes are paid, that's all the more CC Debt we are not paying interest on.

    Hubby thinks we should keep the money in an envelope and keep making regular (read: minimum)credit card payments.

    I feel like my way is a faster way to get back on the right track.
    If we do it his way and we have another emergency we are just spending our taxes money and then we have a maxed card AND no money for taxes. If we do it my way, the taxes are paid and we have that extra credit leeway if (God forbit) we have another death or Illness. And if we don't, we are that much closer to paying it off completely next year.

    Do any financial wizzards have any input on this, or maybe a better solution all together?
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    Shark Week! dagwood's Avatar
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    Re: Financial Advice and Money Woes

    I would say pay the cards off and put away the normal payment amount for emergency money.

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    A Meat Loaf Aday... ClosetNerd's Avatar
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    Re: Financial Advice and Money Woes

    Oh I definately will be putting money away for emergencies as soon as we can.

    But right now there's still the $400 more in bills a month than income made to take care of.
    I'm just wondering what the best way to handle this small specific aspect of our juggling would be.

    I've put a stop to all eating out and gotten the grocery budget for our family of 4 down to $300 a month. I'm not sure I can do less without sacrificing healthy choices? I's completely stopped going to see husband's band so we won't have to get a sitter. And we've cut the boy's visits to my parents down to once a month. We turned off the extra features we had for Cable, and negotiated the phone/internet bill down $20 a month. I no longer have a cell phone.

    Is there anything else glaringly obvious that I am just totally overlooking?
    I'll admit that husband has a terrible way with money and a wicked case of (keepinupwiththejonesesitis) I let him run us pretty far into the ground for fear of being a "nagging controlling wife" But Now it's time for me to take the financial reins back and do whats best for our future and family!
    Last edited by ClosetNerd; 11-08-2008 at 09:53 PM.
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    Re: Financial Advice and Money Woes

    I would agree with dagwood also. Most of the financial wizards I've seen on TV (like Suze Orman, etc) say to pay off those credit cards as quickly as possible. They say to pay off the one with the higher interest rate first and then take that money you were paying on it and apply it to your next bill. It also helps your credit rating too!

    Good luck!
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    FoRTer coltnlasma's Avatar
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    Re: Financial Advice and Money Woes

    Is that tax refund amount a pretty standard thing for you? If so, it sounds like you're having about $350.00/mo too much in taken out in withholdings (is that the right wording?)... why loan it to the government interest free every year when you could really use it more wisely each month yourself?

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    A Meat Loaf Aday... ClosetNerd's Avatar
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    Re: Financial Advice and Money Woes

    Hmm. I'm not sure I understand the question.
    Yes, so far that tax refund is standard. We've never made enough that we had to pay in extra money at the end of each year. We always just get it all back when we file. It might even be a tad higher than that now because of the children. I can't remember the exact amount it was last year, but I remember it being over 4k. Do you mean somehow to not pay it in each paycheck in the first place?
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    FORT Fanatic imajunkie2's Avatar
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    Re: Financial Advice and Money Woes

    I think that is what coltnlasma means CN.

    I know it will be different for you because you are in the US but up here that is what I do. Because of my job (I do taxes) I only work seasonal and therefore was getting all my money back at tax time. What I opted to do instead was not pay income tax off of my pay cheques and then get no money back at tax time. For everyone it is different, some like to use their tax return as a type of savings account and get a lump sum at tax time, some do what I do, really to each their own.

    The issue for you is really is 6 of one, half a dozen of the other. You either have more money each month (maybe enough to cover $400 deficit) but no lump sum to pay your different tax accounts or the lump sum at tax time and less money each month.

    Hopefully this is somewhat clear and not sounding greek! Good luck with everything!

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    A Meat Loaf Aday... ClosetNerd's Avatar
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    Re: Financial Advice and Money Woes

    Thanks that does clear it up
    ~There is no way to Happiness. Happiness is the way.~

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    FoRTer coltnlasma's Avatar
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    Re: Financial Advice and Money Woes

    Yes, your example explained it a lot better than I did. I was thinking you might either (1)decrease any additional amount you are having withheld or (2)increase the number of allowances you can claim... but it sounds like you may be already be doing all you can there, if I'm understanding you correctly. And it would be 6 vs. half-dozen in the end, but I just thought that would give you better traction in your monthly budget and working towards building up your savings again. Sorry I don't have more helpful advice!

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    FORT Fan Brodie's Avatar
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    Re: Financial Advice and Money Woes

    I agree with the above... If you are consistently getting $4K back every year, you should adjust your W4 so they're not taking so much out in the first place... The government is not paying you interest on that money they're holding for you... You might as well be putting it to use. You'd have to have the discipline to put the money aside to pay your property tax when it's due... My property tax is paid out of my mortgage escrow account, so I don't even think about it...

    I would pay the credit card off with the tax return and put the money you were paying the credit card with aside to pay the property taxes... Also be sure to fight any property tax increases... The value of your house is probably going down like everyone elses, you should make sure the bill is fair.
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