Spending more than I earn: my current finances and income

As everyone who is trying to make this leap to a simpler existence knows, one of the first challenges is trying to significantly decrease your out of pocket expenses.  For me, that means getting out from a mortgage that is too big and paying off credit card debt.

I currently spend more than I take in each month.

Expenses and Debt:

My financial picture as it stands right now:

  • Mortgage: I owe $238K on my house. I bought it for $262K in June of 2007 and put about $20K in upgrades (see credit card debt).  I didn’t put anything down (though I’ve made some principal payments that have brought it down to $238K) and have a 6.75% interest only loan. With taxes and insurance, that puts my monthly payment at $2,242. (Ouch!)
  • Credit Card Debt: I have two credit cards:
    • American Express: $31,011 at 9%
    • Bank of America (evil*): $13,588 frozen at 1.9% until March.


    For more information on BofA's suckiness, please see Nancy Imperiale at http://nancyimperiale.wordpress.com/

With the exception of my psychoanalysis, which costs about $1,100 a month, the rest of my expenses are pretty typical.

I had a recent appraisal done, which valued my home at $323K. If I can get close to that number, I can pay off my credit card debt, lose the mortgage payment, and be pretty free and clear!

Unfortunately, a larger house across the street just sold for $249K. With a number like that, I am in trouble.


In 2003, I co-founded a small business with my husband. The company did well from the beginning, but my work in the company put my mental health into the meat grinder. After six months of me in bed, seriously contemplating if I should blow my head off, we decided that I should be fired. After my firing, the company really took off.  So, though I no longer work for the company, I still retain 50% ownership and (as an S-corp) receive a distribution of profits. Running at about $4,700 a month after taxes, that number is not covering my monthly expenses. (Again, see increasing credit card debt and/or complete lack of any retirement savings.)

Selling my house at a decent price stops most of the major bleeding. Ruth Ann, my real estate agent, is looking at my appraisal and is going to tell me what she thinks.  With her first comment being, “Wow!”, I should probably keep my expectations in the conservative range.

I used to live, quite well, on a mere $20K a year. I don’t know how I got so sloppy.

*Bank of America is known to be evil because this balance was transfered to this account for a $300 fee to lock in a one  year 1.9% interest rate. (I did this when another card, locked in at 9.9% — without cause, per them — took this debt to 29.9%.) Assured by BofA that this rate was truly locked in by the credit card company (I pushed the point with them because I knew that it probably was not), I made the transfer. Two weeks later I was notified that they were taking it to 16%. In a fury, I disputed the change and was successful in retaining my 1.9%. So, here is the really evil part. I was approved for a 5% refinance on my home this summer, but the application was ultimately rejected because Bank of America had this account marked as ‘disputed’ and we were unsuccessful in getting that removed.


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