Home     Forum     401k     401k Rollovers
    Register   Login   Members   Search   FAQs     Recent Posts    




Lowering Monthly Financial Obligations

Reply to topic
Money Talk > Personal Finance

Author Thread
Guitarguy690
First Time Poster


Cash: $ 0.25

Posts: 1
Joined: 20 Nov 2017
Location: Minneapolis, MN
Lowering Monthly Financial Obligations  Reply with quote  

Hi all, new to the finance forums. Basically looking for some advice and perhaps some things I haven't thought through. My girlfriend and I have found ourselves in a financial coal situation that is not really setting us up to be financially stable or healthy. I'll list the facts below and where we are at and my thoughts as far as lowering our monthly obligations.

1. Income. We take home roughly $4500-$5000 a month.

2. Obligation breakdown
- 35% housing at $1600 - we currently rent and this figure includes utilities
- 30% transportation at $1400 - this includes both car payments insurance and fuel for a month
-20% other obligations $900 - this includes credit card payments, student loans, childcare for my son and other contracted stuff.

That leaves us with 600-900 for food and everything else to live on for a month. We continue to overspend each month and it is taking a toll.

We are currently finding ways to increase our income with side hustles and things like that but I feel like even if we were to make an additional $1000 a month we would still not be on track to purchase a house and start our business within a few years.

We have access to about $3500-$7500 cash.

My thoughts are to lower the monthly rent. We are currently locked in our lease for 18 months at $1275. However our landlord is a realtor and will let us out of our lease early if we buy through her. I've been playing around with some numbers and a $80000-$125000 house would run us about $650-$800/month with pmi taxes and 3.5% down. This could decrease housing costs significantly but comes with expense of home repairs. The house we could afford would not be our dream home and would serve as a 3-5 year situation. I am fine with being a landlord and managing the house and doing all minor repairs myself (drywall plumbing small electrical etc.) is there something I am missing with buying a house that would hurt us in the long run? We could try and shop around for an even cheaper option like a condo but with HOA fees I think it would even out to be the same as a house like stated above. We would out the loan in my girlfriends name as she has a credit score around 750 her income is around $42000 a year and at FHA DTI guidelines would most likely pre approve for around $120000 or so based off percentages I have found online.

I also am willing to trade in my vehicle for something that would lower my monthly payment by about $100-150 and save me on fuel about $200 a month.

What are some other options or considerations that have not been thought of. I would like to try to get out obligations down to about $3000 instead of $4000 as I think that could significantly help us out.

My thoughts are with the lower monthly obligations and boosted income from side hustles that we should be on track to start saving and being able to live much more comfortably.

Any thoughts or advice is greatly appreciated! I'm willing to provide any additional info or breakdowns.

Thanks in advance
Post Mon Nov 20, 2017 4:46 pm
 View user's profile Send private message
oldguy
Senior Member


Cash: $ 737.05

Posts: 3584
Joined: 21 May 2006
Location: arizona
 Reply with quote  

quote:
35% housing at $1600 - we currently rent and this figure includes utilities

- 30% transportation at $1400 - this includes both car payments insurance and fuel for a month


That's $19,000/yr for shelter, that's not too bad. If you bought a house some added costs are Prop Taxes $2300/yr, insurance $1200, a fund for maintenance - roof, water heater, furnace, AC, paint, etc. A lawn mower costs about $750. The utilities for a house cost 2 or 3 times more than for an apt, with a house all 6 sides of a cube are exposed, with an apt, you may have someone on both sides, someone behind, someone above, someone below, so you are sharing the heating/cooling other tenants.

You list $16,800/yr for transportation. But, with wear items - tires, breaks, batteries - along with oil changes, washes, it's probably closer to $19,000/yr. That means that about $27,000 of your GROSS earnings goes to cars. It's tough to make that up with side jobs - ie, with $8000/y going to SS, MN State, and to the Fed - it will be a real uphill battle for you.


quote:
but I feel like even if we were to make an additional $1000 a month we would still not be on track to purchase a house and start our business within a few years.


You are right, an extra $12,000 of earnings will cost you about $3500 to $4000 in SS, Fed, MN taxes - so only $8000 goes to you - you'll have to find a better answer (such as lower cost cars).

About Businesses - some GenXer started a rumor that the only way to build wealth is with "small business". But that turns out to be wrong - 85% of businesses end in bankruptcy. OTOH, anyone who invested $5000/yr in the US generic stock market over the past 30 yrs is now a millionaire. (that includes most of the guys that I retired with).
Post Mon Nov 20, 2017 7:27 pm
 View user's profile Send private message
tuanthanh15a6
New Poster


Cash: $ 0.40

Posts: 2
Joined: 24 Nov 2017
Location: Việt Nam
 Reply with quote  

thank you for the info
Post Fri Nov 24, 2017 5:42 am
 View user's profile Send private message Visit poster's website

Reply to topic
Forum Jump:
Jump to:  
  Display posts from previous:      





Money Talk © 2003-2016