| Advice Needed. General Money Management |
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serenamp
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Cash: $ 3.65
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Joined: 27 May 2011
Location: Tennessee
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| Advice Needed. General Money Management |
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My husband is a professor and we go through a period in the summer during which we have no income. The first year this happened we were unprepared, he'd been working a second job through grants that disappeared. We used all our savings and put everything on credit cards and used one of our cars as collateral for a personal loan. (My husband had credit card debt before marrying me and he consolidated that in 2008. We still owe 7,000 on that consolidated loan) We've trimmed every bill imaginable and we're now down to one car, our house is currently on the market but we're approaching another summer during which my husband has again unexpectedly lost his second job. (My part time work pays very little) We're unsure of whether consolidating again is an intelligent move or even possible. Our multiple credit cards and now the personal loan put us with 20,000 in consumer debt, not counting our house or my husbands school loans. We now only own one car outright, our home and have my husbands 401k which cannot be touched unless he quits his job or it reaches a certain period of time. To get through the summer, because we have saved our tax return we only need around 4,000 but I'm honestly at a loss of what to do. If our house sells we will make a small profit, because of when we bought and the work we put into it but I'm terrified to count on that happening. I really need some sound advice on what a smart move would be for us. I had no debt and owned my car when I married my spouse and living with this much debt has put me in constant fear.
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Fri May 27, 2011 4:45 am |
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coaster
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(((spouse post-tax annual income) + (your post-tax annual income)) x 0.90) / 12 = amount you have to live on each month of the year. The 10% gets diverted first to an emergency account, then to retirement accounts. Since your spending is calculated on an annual basis rather than a monthly basis, you accumulate enough extra money during nine months to live on for three months.
Honestly, I don't think your problems are knowledge or intelligence. I think your problems are wisdom and discipline. Neither of which in the latter case have anything at all to do with the two in the former case.
Now, enough ragging. Take a deep breath and get out of that deer-frozen-in-the-headlights mode you're in. Step #1: look for a local free financial counseling service. Notice I said financial counseling, NOT debt counseling. Your debt is not the basic problem, it's only a symptom of the problem. You need to learn how to make wise and prudent use of whatever income you have available to you, which means more than a budget, it means planning. You and your husband need to be in lock-step on this. Step #2: hubby goes out and gets a summer-time job. He doesn't care what it is, so long as it brings in $$. McDonald's is hiring, and I'm not kidding.
Best wishes and good luck. It's going to take time, but you can work this out. 
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Fri May 27, 2011 6:22 am |
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ttammie98
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I can understand your fears and overall frustration. To me it appears that you need to focus on getting more income in over the summer and living very frugally to cut your expenses. I am not sure of the job market in your area but you and your husbnd could offering services to others for extra casuh. Perhaps you have a hobby that you can turn into a business. Can your husband do some yard work?Start thinking of other things that you can do. I don't think that consolation is your answer as the debt will still remain.
How To Stay Out Of Debt
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Fri May 27, 2011 7:10 am |
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littleroc02us
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I think a household budget for a years time would help you visualize what's happening so that when the summer rolls around your prepared. What you need to do is take your income and his and whatever that equals you divide it by 12 months and that's what you have to spend each month. The rest goes into savings for that summer account. You could even open a savings account that houses this money until the summer comes and then you won't have any problems. Now if you cannot live on that monthly amount the problem is in either spending or not making enough income. So write down on an Excel spread sheet your income and expenses and try to find areas to cut. I think once you see where the money is going you'll figure it out.
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Fri May 27, 2011 1:12 pm |
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oldguy
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It appears that low income is a big part of the problem, rather than over-spending. You seem to have a good handle on costs and what to trim. (Your one-car plan is a winner, most couples spend WAY too much on multiple late model cars).
A way to see it better is to do an annual budget on excel - eg house payment $15,000, SL is $8000, credit cards are $4000, gas is $2400, elec bill is $1500, etc. Then do a 'descending sort'. That separates the 'signifcant few from the insignificant many" for you.
But the big issue is your low income. My professor cousin drove a ready-mix truck in the summer, it is a seasonal job, cement can't be poured in the winter. And it pays $18/h or $20/h - he usually got OT that paid time and a half so the 60 hour weeks were very profitable - he enjoyed it, a relaxing change. Can you work more? Or are there constraints/childcare? A fulltime low paying job, maybe $12/h is $25,000 - not big money but it would sure help a $20,000 debt problem, ie fix it in less than a year.
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Fri May 27, 2011 4:07 pm |
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serenamp
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Joined: 27 May 2011
Location: Tennessee
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| thank you |
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thank you all so much. our pay cut when the grant summer work ended slashed our yearly income 25,000 a year, despite this we managed to eliminate 15,000 of debt in the face of increased gas prices, our home/taxes rising and having a second child (pregnant when we lost the grant money) we have two kids under age 4....our youngest 18 months. I've stayed home because my degree (Political Science) puts me at best making only slightly over minimum wage and the cost of childcare would outweigh the benefit. My husband works two jobs all year round and makes small amounts on textbook reviews and the slowly returning grant work with Appalachian teachers. Monthly, for the nine months of consistent pay, we're making 3,100 and he tutors online which can make at most 800 but because he's not driving we save on the gas and wear and tear on the car it would take to get him to another job that could perhaps? pay better. Just paying minimum on all bills and using only 700 a month for food/diapers/and other required goods we're spending 4,000 a month. No cell phones, no vacations, no cable. We negotiated our internet down to 30 dollars a month and pay a stable fixed amount on electricity 130. We're paying three hundred dollars a month on student loans from William and Mary and VA Tech and what is really killing us now is interest. Any small monthly expense now requires us to fall back on credit. Initially all extra was thrown at the debt we accumulated during the summer that we were without money, all of which now after all this time and little change carries large interest. My husband looked for work that entire summer on top of teaching all three summer sessions (his pay for this is just shy of one regular pay check and doesn't come to us until September). I realize we're now in a hole that only a major life change can fix, so we're selling our house and moving to a less than 1,000 square foot rental minutes from where he teaches. I quilt, but quilts aren't currently selling and fabric prices have risen considerably. Our one functioning car is now ten years old and it often requires some amount of monthly upkeep. We've gone through a period of bad luck. We were rearended by an insured driver less than a year ago, had our hot water heater explode, and had our heat pump go out this past winter. Through posting here I do realize and know that our income is low and that instead of focusing so hard on eliminating minor debts I should just be flat out saving anything I can. It does answer for me that a secondary consolidation would in no way help the problem and that our best bet is to simply work as hard as we can and use what little we've paid off of credit cards and loans to get by until the house sells or until September rolls around and we resume regular pay. Thank you all for your thoughtful and timely responses. I will look no further into consolidation unless major changes occur. Again thank you all so much. I'll curb my panic and we'll do our best. Many thanks to each and every one of you.
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Fri May 27, 2011 4:51 pm |
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oldguy
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IMO you are missing the boat by rationalizing reasons to not use regular W2 jobs. Eg, a 40-hr $12/hr job pays $25,000 - that will pay for childcare, plus carfare, and have plenty left over. And driving a ready-mix truck for the summer at $18.hr is another $13,000 - yes, it will take $200 to $300 worth of gas, that still leaves $12,750 income for the summer. Way more efficient than waiting for an $800 grant that may or may not come to fruition.
When our kids were preschool, we worked different shifts when we could, that made a big difference on childcare costs. She dropped th ekids off when she went to work at 3:00, I picked them up at 5:15 after work - so only about 2 or 3 hrs at DayCare. Later when the kids were in school we both worked day-shift. If you start working now, you will build up your skills and get raises - then when you can work full 40-hr shifts, the pay will be significantly above entry-level.
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Fri May 27, 2011 6:39 pm |
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littleroc02us
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| Re: thank you |
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quote:
Originally posted by serenamp
It does answer for me that a secondary consolidation would in no way help the problem and that our best bet is to simply work as hard as we can and use what little we've paid off of credit cards and loans to get by until the house sells or until September rolls around and we resume regular pay.
I like your plan of selling your home and renting something smaller and cheaper, but what bothers me is that you still haven't learned the fact that when your down borrowing money isn't the path to go down. How does that help you situation? As for the student loans, can you put them on hardship deferrels? Write out your budget and stop paying your consolidation loan. You are in emergency mode and it's time to find all the work you can, sell anything you own on craigslist, do whatever it takes, but stop borrowing money. It hasn't been a blessing yet has it?
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Fri May 27, 2011 7:23 pm |
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serenamp
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Location: Tennessee
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In emergency mode you do what you can. Obviously he'll be working as hard as he can through summer, our area has a 9% unemployment rate jobs aren't as easy as they had been to get and most don't pay well. It's actually not terribly easy to walk in telling someone you'll only be working for a few months and have them waste the money and time training you, not the mention the fact that many people know if you walk in with a masters degree you won't stay long. With me having no car I've no idea how I can get out of the house to work, what will I do with my kids. If we can find no work during the already limited time in our day what do you do? As for selling we've never made enough to have "extra". What do I sell? My kitchen table, which is now five years old? Our one 24 in television? The computer my husband built himself? A year of used kids clothes gets you $50. Used books are now bringing in less than a dollar a piece, with the market now flooded with used goods what little I owned is either depleted or essentially worthless. At best selling everything in our home on craigslist would get us 1,000, assuming everything sells, which in our area it just doesn't. I too think borrowing more is horrible. I've also got two kids and a refusal to default on my mortgage. We're already assuming we're not paying student loans, but that just puts us paying them later. It doesn't take those payments away....it defers....The consolidated loan is unyielding. Automatic withdrawal of 450 every first of the month. I think it's horrible, I also don't see a better reality other than working as hard as we can and borrowing if we have to vs. consolidation.
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Fri May 27, 2011 7:42 pm |
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littleroc02us
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I understand your frustrated but borrowing more just puts you even further behind, you may think it's will get you by, but get you by until what? It still doesn't solve the problem of low income vs. expenses, you'll still be in the same position but worse now because you have racked the debt even more. Your not in Congress you can't spend more then you make and think that it will solve all of your problems. Honestly, until you can solve the income problem, there's going to be some major problems.
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Fri May 27, 2011 7:57 pm |
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serenamp
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Location: Tennessee
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| i realize |
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I realize what you're saying. I'm saying we're doing the best we can to trim expenses. I can't get my husband or myself a new career overnight. The area around the college my husband teaches at has very little job alternatives as it is....coal is about the only industry, now dying, there. He recently applied and received a "better" job in central TN making....shockingly two thousand less than he makes now. Higher education has suffered...We've seen no pay raise in six years, increasing class size (more work on professors), entire positions slashed (increased class load for teachers). My question was how to get through the month we've been unable to save money for....did it make sense to consolidate or keep doing what we've been doing until our home sells and we can make the drastic changes we already realize need to be made to how we live.
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Fri May 27, 2011 8:09 pm |
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serenamp
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Location: Tennessee
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quote:
Originally posted by oldguy
IMO you are missing the boat by rationalizing reasons to not use regular W2 jobs. Eg, a 40-hr $12/hr job pays $25,000 - that will pay for childcare, plus carfare, and have plenty left over. And driving a ready-mix truck for the summer at $18.hr is another $13,000 - yes, it will take $200 to $300 worth of gas, that still leaves $12,750 income for the summer. Way more efficient than waiting for an $800 grant that may or may not come to fruition.
When our kids were preschool, we worked different shifts when we could, that made a big difference on childcare costs. She dropped th ekids off when she went to work at 3:00, I picked them up at 5:15 after work - so only about 2 or 3 hrs at DayCare. Later when the kids were in school we both worked day-shift. If you start working now, you will build up your skills and get raises - then when you can work full 40-hr shifts, the pay will be significantly above entry-level.
In the last few years he's carrying two jobs throughout nine months and then adding another in the summer....the second summer job is what has been lost. We've not depended on grant work for anything other than the little extra it brings in. The same with textbook reviews, which are unpredictable as well....monthly the most he can make tutoring online, which he does all year long....is $800....teaching already an 6-5 day, classes plus office hours and commute and coming home to log online from 6-10. I've no car to use until 6 at night. Childcare here is minimum 175 a week for two kids, one still in diapers. I know of NO nightly childcare option and you can't watch two toddlers while working online. I work weekends making at most 250 to three hundred a month. I realize that we're just getting through this summer, we're trying to make big changes. For me I cannot understand why I would have two kids not to ever have at least one parent see them occasionally. I don't personally see working up a ladder more beneficially than renting a shack and being a family from time to time.
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Fri May 27, 2011 8:18 pm |
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littleroc02us
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| Re: i realize |
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quote:
Originally posted by serenamp
I realize what you're saying. I'm saying we're doing the best we can to trim expenses. I can't get my husband or myself a new career overnight. The area around the college my husband teaches at has very little job alternatives as it is....coal is about the only industry, now dying, there. He recently applied and received a "better" job in central TN making....shockingly two thousand less than he makes now. Higher education has suffered...We've seen no pay raise in six years, increasing class size (more work on professors), entire positions slashed (increased class load for teachers). My question was how to get through the month we've been unable to save money for....did it make sense to consolidate or keep doing what we've been doing until our home sells and we can make the drastic changes we already realize need to be made to how we live.
I think you consolidate the loan and they may help a little, defer the loan. Do you own a lawn mower or have another skill he could do by posting flyers? Can he do a paper route before work? Could he deliver pizzas at night? I think once the house is gone and you are renting cheap things will get better.
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Fri May 27, 2011 8:32 pm |
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littleroc02us
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So I thought about this for a while and since your income probably isn't going to change you know exactly how much income you will average for the year. Here is the plan that will get you back on the right track and although it will hurt on the short term, you can come out stronger then ever. You gave these figures to work with so far. Your husbands professor job for 9 months of consistent work gives you $3100 and for tutoring give you around $800 a month. So if you divide $3100 by 12 months you get $2325 a month income plus $800 equalling $2835. So that is the number you have to spend and that's it you can't go over that. So how will you do that with your expenses. I never saw how much your mortgage payment was in this post, but your simply not going to be able to pay it. You cannot because you can't afford it. DON'T PAY YOUR MORTGAGE. This will free up extra money per month. I would never tell someone to do this but your expenses are higher then your income. Yes it will ding your credit, but you have to try to sell it out right, if you cannot try a short sale and if that doesn't work then a foreclosure. Meanwhile you have the extra disposable income to use to pay down the loans and credit cards. Stay in the home as long as you can and then when you either sell or get served papers move out and rent as cheap as possible. There is light at the end of the tunnel but it will take some time. This is the only way I see possible unless you get a significan income raise.
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Fri May 27, 2011 9:12 pm |
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serenamp
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Location: Tennessee
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| Budget |
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When we were first married my husband owned a home directly across from the college, 185,000. (The area is not cheap to live in because there is NO middle class. Only people who moved out of the area and made money and returned to build Mcmansions or people who made money in coal. Everything else is a shack that people live in because they are on welfare) We sold this. Making only enough profit to move us a little further away where housing was cheaper. We rented with the hopes of saving enough for a smaller home. Our rental caught fire and in the middle of this we found a foreclosure for 100,000. That's exactly what we paid, throwing all of our then savings, that we had from living in the cheap rental, at our down payment and closing costs. It needed some work but nothing major and the FHA appraiser appraised it at 120,000 before we even stepped in the door. We painted, put in appliances, patched walls. We did nothing exotic or amazing. We made it livable. This also gave my husband an hours commute. At the time our home was assessed at 98,000. This past year we were reassessed and our value is now 110,000. Our house payment is now 825 a month. We have it on the market at 129,000 a price that seems reasonable seeing as a 1,000 square foot house across the street sold six months ago for 115,000. Same age we've 1,900 sq. foot, 2 bed, 2 bath on a little over half an acre with a nature preserve behind us. We've had it on the market for two months. The first we carried it ourselves and almost had a buyer who unfortunately was unable to get qualified for anything near the amount. Now we've listed with a realtor. Obviously we will make at least some money on a sale, although we'll be leaving the all the new appliances, including those mounted to the house, with it.
House Payment 825
Consolidated Debt 450
Student Loans 310
Loan, Car Lien: 150
Credit Card Min: 190
Credit Card Min: 173
Credit Card Min: 100
Credit Card we're closest to paying off Min: 55
Insurance: 125
Phone: 32
Internet: 34
Water: 40
Electricity: 130
Diapers/Wipes/Kids soap: 110
Food/Toiletries/Dry Goods: 700
Gas: Only my husbands commute 650. It costs about 65 dollars to fill up the tank right now and our gas price monthly has risen from just shy of 400 to what it is now.
4,074 Total.
3,100 over 9 months. Max. 800 a month online work (this fluctuates during holidays and winter) Undependable grant work/textbook etc. 0-800 a year. I make at max 200-300 dollars and again because it's part time it cannot be something we "count on" to pay bills. Anything over a dr. copay, needing new shoes, minor car repair throws us back into requiring credit cards, so that despite that fact that over time we're paying monthly without default (which we've never done on any of our bills) we cannot get ahead. The few times we've gotten balances down fairly low something rather tremendous has happened, like the car wreck, heat pump etc. Through summer my husband works online as much as possible, again it's a slow time for students needing help and he will essentially lose this job during one month of the summer. The company has changed how it pays tutors logged into the system and this is a new thing this year. He is required to teach summer classes, despite the fact that working all three sessions puts him working regular hours like through the year and only makes less than one months salary that will come in during the middle of September 2,900. We're both non smokers, non drinkers and we're on no prescription medication. We've no real family to lean on. We're both adult children of alcoholic fathers neither of which are in the picture, my husbands mother suffers from terrible mental illness and is neither working nor able to lend support of any kind (most of my husbands initial debt came from helping her and his sisters who also are collecting government help) and my mom works for children services making only enough to support herself. Both of us have gotten where we are through really hard work. I know the intelligent decision is to sell the house, looking back I wish we'd done it a lot sooner, but hindsight and all that. I plan on working as soon as my kids are in school providing I can find work in the isolated area in which we're now looking to return to, while pregnant with my daughter and living there I was unable to find work and made very little by driving back into the city in which we're now living.
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Fri May 27, 2011 10:22 pm |
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