Too much month at the end of the money.

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tjevans
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Too much month at the end of the money.

Postby tjevans » Sun Aug 24, 2008 9:03 am

Well, this weekend we sat down and got a good (in the analytical sense) look at our bad situation. We bring in $3810 a month, and have $4131 outgoing. That's just "bills." We haven't even considered living expenses such as fuel, food, etc.

We know the only way to improve the situation is to sell stuff (which we're making a list of what we can sell), and to increase income. The latter doesn't seem to be feasible, because I'm out of town for work 2 to 3 days a week, leaving my wife and two-year old at home, and never know my schedule one week to the next. I'm not saying this to whine, but neither one of us can really see an outside-the-house job as a possibility in our situation.

So, it seems we may be headed to a credit negotiation service. Not optimal, but we don't know what else to do at this point.

How did we get here? Well, two years ago now, I was let go from my job as an attorney. I viewed this as a blessing in disguise because I hated practicing law. I tried being an insurance agent. That job was commission only, so we lived off credit many months. I finally got a salary plus commission job, but for the first 90 days, I was not eligible for the company credit card, so I had to bear my own expenses then too. Fortunately, I now have the company card so no more running up our credit.

I just don't know what to do when our budget has more outgoing than incoming. Where do I go from here?

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Greenewashed
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Re: Too much month at the end of the money.

Postby Greenewashed » Sun Aug 24, 2008 9:58 am

tjevans wrote:neither one of us can really see an outside-the-house job as a possibility in our situation.


What about an inside-the-house job for your wife? Can she babysit someone else's kid in the house, do freelance work such as legal or medical transcription, customer service support, anything like that?

I just don't know what to do when our budget has more outgoing than incoming. Where do I go from here?


If you have student loans, get a forbearance. See if other creditors will work with you. Transfer credit card balances not just to lower interest rates, but to cards that require less for a minimum payment. (Some cards require 1.5%-3%, others just 1%). It's not ideal, but you need to create a little room in your budget in order for you to be able to tackle the problem.

With $4000 in monthly bills, it sounds like a mortgage might be a large part of the problem. You may have to sell your house (easier said than done, I know, but may be necessary) and start over.

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Re: Too much month at the end of the money.

Postby Cleverbeans » Sun Aug 24, 2008 10:22 am

tjevans wrote:I just don't know what to do when our budget has more outgoing than incoming. Where do I go from here?


It can seem overwhelming at first, thankfully it's pretty simple. You need to make more then you spend, so we can either reduce spending or increase earnings.

With that in mind can you break down your bills? It may be possible to get some of them reduced or removed to free up additional funds.

Can you make extra money in the home? Making and selling items can be lucrative, or consulting and contract work. Greenewashed has the right idea with home based income. There are lots of ways to bring in an extra $500 a month that can make a world of difference.

jkf_74
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Postby jkf_74 » Sun Aug 24, 2008 12:55 pm

Cleverbeans is right...if you maybe provided a breakdown, we might be able to help find some cost cutters to reduce spending (since more earnings seems to be out for you)

tjevans
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Postby tjevans » Sun Aug 24, 2008 1:33 pm

A breakdown of bills is as follows:

Mortgage: $1427

Comcast (cable & internet) $52

Directv $75

Power $280

Water $20

Car Insurance $125

Child Support $408

Bank Fee $9

Overdraft loan payment $16

Car 1 $277

Car 2 $241

Home Equity Loan $300

Pay Pal credit $36

USAA credit $126

Chase credit $225

Lane Bryant credit $10

Of that, I can tell you that we will probably lose Directv (the cable is to provide local channels) right off. Also, as one of you has said, it looks like the mortgage is part of the problem.

The good news is that I forgot that my wife will receive a 5% raise starting next week, so our income will go up; we're just not sure how much. Also, I get a car allowance every month that I did not include. It varies per month depending on how many miles I've driven.

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Greenewashed
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Postby Greenewashed » Sun Aug 24, 2008 1:52 pm

Do you have equity in the home? How much are the cars worth and what is the principal outstanding on the car loans? After cutting DirecTV and Comcast, these are the next places to look to downsize because if you can get rid of those payments, it will be a huge impact on your cash flow. Sell one or both of the cars and pay cash for an older car, sell the house and move into something with a payment no more than 30% of your take-home pay.

What are your other assets? Retirement funds, college savings, emergency fund?

peachy
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Postby peachy » Sun Aug 24, 2008 2:07 pm

You don't have a cell phone? Look into reducing the bills there, and get on a family plan so that it's free when you call your wife from out of town or free when you call anyone with the same provider. A lot of people have HUGE cell phone bills that they don't even need.

Your child support is high, but I'm glad you're taking care of your kids.

I hope your company reimbursed you for the charges that you put on your CC. If they didn't, you need to submit those expense reports and get the money returned to you. Some people feel shy about expensing a Coke they bought at the airport, but if you spend it, you NEED to get reimbursed for it, no matter how little. That's why companies have expense accounts.

Your credit cards aren't high, but you're paying interest on that $10 and $126 dollar credits. Pay those off already and stop losing money. Oh wait..those are how much you pay each month? How much do you have on those cards?

I think I've asked enough questions for one sitting. :)

tjevans
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Postby tjevans » Sun Aug 24, 2008 2:13 pm

peachy wrote:You don't have a cell phone?


That comes out of my wife's paycheck. We're on her corporate plan.


I hope your company reimbursed you for the charges that you put on your CC. If they didn't, you need to submit those expense reports and get the money returned to you. Some people feel shy about expensing a Coke they bought at the airport, but if you spend it, you NEED to get reimbursed for it, no matter how little. That's why companies have expense accounts.


When I worked as an insurance agent, they didn't. We were like independent contractors.

Your credit cards aren't high, but you're paying interest on that $10 and $126 dollar credits. Pay those off already and stop losing money. Oh wait..those are how much you pay each month? How much do you have on those cards?


About $170 and $900 respectively.

tjevans
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Postby tjevans » Sun Aug 24, 2008 2:17 pm

[quote="Greenewashed"]What are your other assets? Retirement funds, college savings, emergency fund?[/quote

A big fat zero on other assets.

As far as equity, not sure, but I'm pretty sure I'm upside down in at least one of the cars.

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dtr
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Postby dtr » Sun Aug 24, 2008 6:08 pm

tj, at least make sure you get your tax deductions for those business expenses. How about your W2? Are you getting too much withheld?

Do you know your credit score? You might think about getting a 0% card, and at least stop paying interest on that unsecured debt. Could you tell us what the balance is on each of those Credit cards?

You mentioned your wife pays for the cell phone. Well, what else does she pay for? Does she have any money left over?

Certainly get rid of DirecTV ASAP.

If you are getting paid for mileage (what is it, .58/mi now?) how much does it tend to be? When I was doing field work a few years ago, I was getting .41 and averaged about 2500 miles. That was enough to cover my car payment, if not the gas.

What are the terms of our mortage and HELOC?
DTR

jkf_74
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Postby jkf_74 » Sun Aug 24, 2008 6:17 pm

ok I checked it twice and what you list leaves $183 per month out of your income for food, gas etc etc. Not much I grant you but you can probably manage this without selling your house and such extreme measures.

First what are the 'bank fee' and 'overdraft payment' you have listed? can they be waived or eliminated in some way? I know those two aren't much but you don't have a lot of room right now either.

Are your card account listed the min dues or what you send in?. Use the snowball method if possible and get your lowest BALANCES paid off so you can redistribute that money to higher accounts.

CANCEL both comcast and direct tv even if its just for a few months and put that extra money into getting those low balance cards paid off.

Do you ABSOLUTELY NEED two cars? where are you at on those balances?


You may need to live like a college student again for a few months as far as groceries (remember ramen noodles? :) ) just to get some of those monthlies completely out and free up some of that flow. If you can do this and knock out at least the cc payments you will be in so much better shape.

tjevans
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Postby tjevans » Mon Aug 25, 2008 6:49 am

jkf_74 wrote:ok I checked it twice and what you list leaves $183 per month out of your income for food, gas etc etc.


I left off child care. That's $500 a month.

First what are the 'bank fee' and 'overdraft payment' you have listed? can they be waived or eliminated in some way? I know those two aren't much but you don't have a lot of room right now either.


That's our bank's monthly service fee and payment on our overdraft protection loan that we've had to use. I'm shopping for a no-fee checking account now. I want to use ING, but my wife is wary.

Are your card account listed the min dues or what you send in?


Right now, we're making only minimum payments. If we had any extra, we would put it on the cc.

Do you ABSOLUTELY NEED two cars?


Yes. I travel overnight for work two to three nights a week. We're upside down on both cars.

peachy
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Postby peachy » Mon Aug 25, 2008 7:13 am

This is really confusing.
Isn't your wife's paycheck part of your incoming/outgoing money?

It would really be helpful if you listed all your expenses (bills), and how much you owe, and the interest rates associated with any credit cards, HELOC, etc..not just how much you pay each month.

Also, if you haven't done this already, start keeping track of everything you spend in a month to see where your money is going (or not going). This will also provide some helpful information for us to figure out how to reduce your expenses.

And when I worked for a company where I traveled, if I used my own car, I made money off of the gas reimbursements, like dtr mentioned.

tjevans
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Postby tjevans » Mon Aug 25, 2008 8:08 am

peachy wrote:This is really confusing.
Isn't your wife's paycheck part of your incoming/outgoing money?

It would really be helpful if you listed all your expenses (bills), and how much you owe, and the interest rates associated with any credit cards, HELOC, etc..not just how much you pay each month.


Sorry. Here it goes again with more detail: (all figures are monthly)

Income

My salary: 1860
I also get a car allowance that varies depending on mileage per month. As of 2 weeks ago, I have a company card on which I can put work expenses.

Wife's salary: 1950 (just received a 5% raise, but haven't received a paycheck from that raise yet)
We have life insurance and cell phones deducted through work from her paycheck.

Bills
Mortgage: $1427; Int rate 6.25%; balance $179,470

Comcast (cable & internet): $52

Directv: $75

Power: $286 (last month; usually ~150 in cooler months (we live in MS))

Water: $20

Car Ins: 125

Child Support: 408

Daycare: 500

Bank service fee: 9

PRA (overdraft loan): 15.63 (don't know balance or interest rate)

wife car: $277 (don't know interest rate or balance)

my car: $241; interest rate 5.89; bal 13,977

Home Equity Loan: $300; interest rate 9.25; balance 34,625

Pay Pal Credit: $36; int rate 24.75; balance 439

USAA Credit Card: $125; int rate 8.9%; balance 7366

Chase Credit Card: $225; int. rate 11.9%; balance 10,798

Lane Bryant: $10; int rate 22.8; bal 173

New Development

I have contacted a credit counseling service that can negotiate lower rates for three of the credit cards: Chase would be lowered to 7%; Paypal to 10% and Lane Bryant to 10%. That would make the payment on those three $288, which is $7 more a month than right now, but the payoff would be in a little over 4 years. Their negotiated rate with USAA is higher than what I am paying now.

mallow
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Postby mallow » Mon Aug 25, 2008 8:43 am

And how much did you pay for the credit counseling?

Did you try shopping for balance transfers? Did YOU try calling them and negotiating for a lower rate? Can't you just transfer your Paypal and Lane Bryant balances to your USAA card (8.9%)? These are better options to try before going to outside help (which costs you money).

If you have yet to pull the trigger on their services, try negotiating yourself (explain your situation, most CC companies will lower your rates rather than have you transfer your balance elsewhere) and try to transfer some of your high interest balances to your lowest (USAA).


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