basically within the past year I lost my job, had a baby, and then got a new job (yay!). I had to put about a month of bills on my credit card to get by.
as a young family we want to pay off this credit card, and start being able to save for a family home. I am a teacher and work in the day and my partner works nights to offset the cost of childcare. Budgeting is a nightmare for us. We know we bring in well more than our bills now, but we find ourselves still scraping by paycheck to paycheck.
should I look into a balance transfer for a credit card to work on paying this off within the next year? if possible, im also open to messaging monthly income numbers to get a better answer.
Thank you!
how to rebuild from being unemployed?
byu/Firm_Ad2383 inpersonalfinance
Posted by Firm_Ad2383
9 Comments
This doesn’t jive “We know we bring in well more than our bills now, but we find ourselves still scraping by paycheck to paycheck.”
You need to cut your spending or increase your income. You can’t cut your spending until you know where your money is going
Click the pf wiki click budgeting
Just start going through last few months of transactions & catorgize them
Look at your expected monthly income
Create a proper budget
You have to tackle this budgeting nightmare.
If you’re really living paycheck to paycheck, what you “know” about what you’re bringing in is incorrect.
List out your required bills- housing, child care, electricity, water, internet, all utilities.
Then look at your discretionary spending. How much are you sownding on grocery shopping versus eating out, delivery, etc. Look at other recurring expenses like streaming services and other subscriptions.
You’ll need to comb through your past few months of expenses to see where your money is going to have a accurate picture. Then start trimming the unnecessaries.
If you bring in well more than your bills and are still living paycheck to paycheck, you are doing it wrong.
Budget better.
Did you mean your partner works nights to AVOID the cost of childcare or do you truly mean OFFSET?
Cut back on non essentials . It’s really that simple. Pay the essentials first and see what you got left over. To me it sounds you’re buying things that aren’t NEEDED. If you know you bring more than needed , yall have a spending problem.
There’s nothing to rebuild just get another job. There is always another job. No I’m not saying everyone magically gets a job offer a week after they lost whatever job they had before, but they are just jobs. They don’t care about us we shouldn’t care about them
As others mentioned, you need a budget.
There’s also no numbers here for anyone to help you with.
Monthly income? Bills? Credit card debt and interest? Etc etc.
If you feel like you’re making enough now and should be making faster progress on the debt than you are, you may be spending more than you realize and can turn it around by being more aware and intentional.
Go through all of your transactions from the last 3 months at least (12 months is better in order to capture seasonal and annual expenses, but 3 months can give a rough estimate). Categorize every single dollar spent to separate money going to needs (including debt payments) vs wants (everything that isn’t essential to keep you and your family alive, healthy, and employed) vs savings (if any).
Keep them in sub-categories like that so you can target things where you might be able to cut cost (like maybe you can reduce grocery costs by shopping sales, using coupons, going to Costco, or making larger meals and eating leftovers).
Needs
* rent/mortgage
* insurance
* utilities
* groceries
* childcare
* gas
* minimum payments on your debts
Wants
* subscriptions
* eating out
* entertainment
* hobbies
* gifts
* travel
Savings / Getting out of debt
* emergency fund
* retirement funds
* saving for a house or other goals
* additional payments to your debts over the minimums
If you want to share your numbers, you can get better recommendations of what you should target for cuts. No one on the internet is going to identify you based on your income and expense numbers and anonymous username. If you aren’t comfortable with that though, then you’ll have to decide for yourself what to cut and what to prioritize. The way to get out of debt is to pay as much as possible, well beyond the minimum, which means cutting everything out of your wants budget and using all those funds for the debt. Assuming your credit card interest rate is over 10%, it’s already an emergency, so I wouldn’t save anything for the emergency fund or house fund or any other goals when it could be used to pay downt the debt instead. Retirement savings are an exception if you have an employer match, since that’s free money. If so, contribute enough to get the match, but no more until you’re out of high interest debt. If you don’t get match, then don’t contribute to retirement until you’re out of high interest debt.
Once you know how much you can consistently pay on the debt and how long it will take you to get out of debt, see how much total interest you will pay from now until you’re debt-free. Then look for 0% APR balance transfer cards and see how much you’ll pay for the balance transfer fee. If it’s less than the amount of interest you’ll pay and your certain you can pay off the debt before 0% ends, then go for the transfer.
But don’t do this unless you’ve taken a thorough look at your spending and you’re sure that you’re spending less than you’re earning (which I assume to be true since you said you only put 1 month’s bills on your credit card while in between jobs, but only you know the truth and you have to be completely honest with yourself). Doing a balance transfer while having active bad spending habits just makes it worse and results in doubling the debt due to thinking no interest = no emergency. Balance transfers and consolidation loans only benefit people who are living within their means already and just need to stop the bleeding on the interest in order to get ahead.
Once your debt is paid off, then you rework your budget to balance adding back some wants while building your emergency fund, then increasing your retirement savings, then building savings for the house and any other goals.