2 income no kids about 20K in debt, help?

My spouse and I both work and we earn a decent amount ( between 32-34K each a year) but we have this enormous amount of old debt. We would like to buy the house we are renting (owner is renting with option to buy) in about 2 1/2 years but with our debt it is impossible to even think about buying a home. We can't even finance a car, much less buy a home. I am at my wits end because I am tired of the situation. I feel that we earn enough to pay something but alot of these companies want full payment. I don't want to go to a debt couseling program because most aren't reputable and I haven't met one person who has completed it. I just don't know what to do, my spouses car is now dead and I can't get a car financed nor do I want to. We already have a high car payment and our monthly bills. We do have money left over every week I mean, we buy everything cash. And we always have money in the bank so I know there has to be an answer. Please help us.

The first thing to do is cut the expenses, Disconnect cell phones and cable tv. This is only temporary so don't panic. Sit down together and make a budget. Look back over your bills and see where you went wrong. Don't charge anything. Can your husband take a bus to work or can you drop him off? Is there someone he could ride with for awhile? Explore every option for getting him to work. Even if he has to pay, he was buying gas wasn't he?

You can turn this around but only you know how hard you are willing to work for it. I am in a slump right now myself so no meals out for me!

Also, it is foolish to have money saved if you have debt, use that savings to pay down your debt.

Also, you can borrow from your own 401K and pay it back(this is the Law) and pay a lower rate of interest than the bank would charge.

Hope some of this helps.

Just remembered, you can lease a car much cheaper than buying but be careful as they charge you for every little ping when you turn it in. Also, sell your dead car as junk to a junkyard.

creditinfocenter com

You need to see a debt counsellor - contact your local Citizens Advice Bureau and they should be able to put you in touch with someone. Since you managed to get yourselves into this position it is unlikely you will drag yourselves out without assistance.

Option to buy on a rental is a rippoff.

You live in it, fix it up, they charge you more for rent, put part of it towards the "down payment" But the price they sell it to you, is always for the market price, even though you build in enhancements.

So they are paid extra in rent.

You pay to improve the property, that increases the value, so you have to pay more for the house.

Get a real estate agent and stop charging things.

Pay off your debts fast.

www.clarkhoward.com for great financial advice.

I have a book to recommend:

Total Money Makeover by Dave Ramsey

I know it stinks to be in debt, and also that there are a million books out there, but this was the one my husband and I got for a wedding gift and is sound advice. It may be that you will have to downsize for a while before you can buy a home, and that one answer was right when he said that renting with the option to buy is usually a ripoff. If you have extra you can pay off one thing at a time (usually start with the smallest debt). It may take a while, but be glad that right now you don't have the added expense of children yet. I am married with no kids, both my husband and I work, and we are slowly (very slowly) knocking out the debt on credit cards, our car, and our college loans. We rent a cheap apt right now and share a car (it was important to me that I worked close enough to home that I could walk if I had to). If you really need a new car, I would use that extra to save up 4 or 5k and buy a used car (just make sure your trusted mechanic checks it out first). My parents just bought their very first home right before becoming grandparents, and my husband and I are hoping to be smarter than they were and get everything paid off much sooner. Good luck; I honestly wish you the best!

Keep saving the "money left over every week" until it is enough to pay the debts (or to pay cash for a car).

If you have money in the bank use that to pay off your other debt. You do not HAVE to have high car payments. Take the other car back and get two used ones. Not junky ones, but ones with lower payments. Cut out any extras, like dining out, movies, cut out any premium channels if you have cable, make your own coffee, of if you like espresso buy a machine (You can get a decent one for under $100), ifyou have a gym membership, look into getting your own equipment for your home, shop around for cheaper insurance (AIG is REALLY good and a lot cheaper than most). You can sometimes get a discount on your auto insurance if you get renters insurance on the same policy. My husband and I have 3 kids (2 from his first marriage and 1 together) and we are about $30,000 in debt but slowly getting it paid off. Most of ours is medical debt. We rarely go out to eat, we haven't been to the movies in almost 4 years.
Actually Rent to Own is not a rip-off. I know people that are doing this right now. The landlord is still responsible for any repairs to the home, because until you sign the final papers you are NOT the owners. If you decided at the end of the 2 1/2 years that you don't want the house they would have to make any repairs.

Since you have money left over at the end of the week, you should be able to get rid of that debt. First make a list of every loan you have outstanding and their interest rates. Pay the monthly minimums on everything except the loan with the highest rate. Throw every penny you have at that highest rate loan until it's gone, then go after the next highest rate one. Once you have a system, it's easier to make headway than when you're looking at the whole mountain.

But keep some cash in the bank. Emergencies always come up, and you don't want to take out more debt when that happens. Try to keep at least a month's living expenses on hand.

Also, for the next month, you and your spouse should write down every penny you spend. At the end of the month, take a look back and see if you like what you bought, and set your future spending prorities accordingly. People think of a spending plan as restrictive. Rather, think of it as choosing to spend your hard earned money on what you really want, instead of spending on things you'll forget about in two days.

You're right that a lot of credit counseling agencies are scams. If you do end up going that route, first read http://www.debtadvice.org/PersPlans/guid... then go to either http://www.nfcc.org/ or http://www.aiccca.org/ to find an agency near you. A good one should take you through a thorough budget review (for free) before even suggesting that you enter their debt management plan (which requires payment).

If they want full payment my guess is that they are in collections, if so even paying them off will not remove them from your credit report. Need to cut back on expenses and save a bit even in order to get a car. I have seen cars financed with credit scores in the 550 range, high interest rate but financed. Take a look at your finances, use excel to figure out where your money is going and where you can save, best advice I can give.