Expenses and Payment Plan

[chloe0724]

Isn't it amazing that when you finaly sit down with your lawyer and go through everything what the payment amount ends up being. I thought it would be the total of all my minimum payments that I had been making to the credit cards, but he explained that for so long I had not been budgeting for normal things like home repairs and clothing. I have been living so long trying to figure out a way to make the minimum payments, pay the mortgage and utilities and put food on the table that the payment amount is such a relief.

When I sat down with my husband and cruched the numbers with the propsed payment amount, it looks as if we are saving money each month, but it's saving for the budgeted items that don't happen every month. It's amazing how hard psycologicly it is to change how you think about money.

[holding on]

I'm with you on that 100%!! When I did the budget and means test and saw the disposable income amount I was like oh no I've got to pay that much to bk??? then it hit me when I looked at the number that I was currently paying more than that disposable income monthly to creditors already! I realized that those house repairs and clothing and such when needed I would slap on the credit card and that poor planning has got me into the trouble I'm in now. This has definitely been a much needed wake-up call.

[erinb1975]

It has been hard for us to adjust to the new way of thinking. We have adopted the envelope system of budgeting. This has worked well, although I still find myself stressed out at the end of the month, thinking I don't have any more money. We only leave our gas money (plus just a little extra) in our checking account, all the rest comes out and goes into the envelopes. So at the end of the month, and I only have 50 dollars in the account, I go back to feeling like I have no money!!

We counted what was in our envelopes the other day and we have over $2000! I can't tell you the last time I was able to keep 2 grand in our account and not touch it. We really are so much better off since filing, and it was helpful to realize that again.

I have to say that this system has worked really well for me. My problem has always been if it is accessible, it is fair game and gets spent. Even though I know I have the envelopes, it has been really effective just to know that that money is allocated. I highly reccomend that to anyone with a similar problem.

[Flamingo]

Along with a budget, another little trick anyone can do (we did) is, if you can afford it, is at the end of each day, put all your extra change in your wallet into a large container or jar and vow not to touch it. You would be surprised at what you can save over the course of several months or a year and use for a special treat, trip or adventure, or save for holiday/birthday gifts. Just $1 of change a day gives you $365 at the end of the year for Xmas gifts or something special you don't have to charge...

[kitters]

Thanks for sharing this. That really sounds like a bright spot in all this. I'm currently in the process of trying to find an attorney to file Ch 13 and am just so scared of how hard it's going to be to live on the plan - I see how much people say they are paying out on their plans & just panic. Probably a little more scared of giving up that control of my finances (since I've been managing soooo well so far!!! ) But it is so true, I can't remember the last time I bought clothes, cut my hair, or spent anything on home maintenence (only when something critical happens & then am late on other bills trying to play catch up). I've "winged it" for so long that it's going to hard to break those habits but if it means a new start & learning how to work a budget, I'm anxious to get started!! On the envelope system, I've got a couple stupid questions: How do you figure out what to put in the envelopes? I've tried to start a couple of times, but since there is no money to start with (I've always paid what bills I could on payday, then got by on whatever scraps were left until next paycheck), didn't know what to use the envelopes for. I could see how this would be easy to get started on if you were paid monthly, but when it's biweekly, can't pay everything from first check. Do you split up a percentage into each envelope from each check? Also, how does the envelope system work if you make payments for utilities, etc on-line? Right now, about the only categories I could envision actually using cash for would be gas & groceries.

[erinb1975]

I took our budget from our chapter 13 plan and started with that. I have modified it a little, taking some from one category and putting it in another (ex. not needing all your food money and putting some of that in savings).

I get paid monthly, but my husband is biweekly, so we just divide the categories by two, and split it up that way.

We keep all our utilities in our checking account also, as we use our internet banking to pay our bills. We keep our gas in there as well, just for the convenience of paying at the pump. Other than that, everything comes out. It really gives you a concrete feeling about what's going where. Even things we don't pay monthly, like car insurance, which is quarterly, we take out then put back when it is time to pay it. We have a fund for health care, car maintenance, house maintenance, entertainment, food, savings, etc.

It works out pretty well for those of us (cough, cough) that are completely undiciplined in our spending habits.

[kitters]

I did some searching & found a great program (http://www.mdmproofing.com/iym/produ...heck-register/) that does the envelope budgeting as a check register, like Mvelopes, but FREE!!!! So far it looks perfect for I'm needing (since I prefer writing checks or making on-line payments) once I discovered you need to uncheck the password protect button for the cells to change the headings. One side looks like a regular checkbook register, but the other side has up to 25 "envelopes" that keep a running balance at the top of each. I think this will help keep me on track so I can always see exactly what has been spent from each category. Now I've just got to decide on an attorney....

[chloe0724]

Kitters, I think the point of using actual envelopes and cash is to make you feel the pain and become much more aware of your money spending.

My husband and I are planning to switch over to this because eventhough we are only using our debit cards, we still tend to spen a little more than we should and end up having to scamble in order to not bounce anything. I was counting the change this morning to deposit into our account so that we won't have our HOA bill payment bounce. Thank goodness I get paid tomorrow.

It's funny (well ironice) that I have stopped paying the cards, but am paying the attorney what i was paying the cards till he's paid in full. So because I don't have the cards to pull from, we are becomming creative.

[erinb1975]

I agree with chole. The computer program is great IF you are disciplined enough to utilize the "virtual envelopes". Discipline is the whole reason I personally am in this particular boat.



Something about actually having 1-2 thousand dollars in your hand and dividing it up and watching it go "away" makes you alot more aware of where it actually belongs.

[dadkrs]

JUst Beginning To consider Chapter 13

I did the means test and came out with $400 of disposable income. I have 72K in unsecured debt. How likely would 60 month plan be approved