Author Topic: New here, could use some serious help  (Read 3355 times)

bmaharg

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New here, could use some serious help
« on: September 17, 2013, 03:12:04 PM »
A little background. My wife and I were both working full time 2 years ago, we owned 2 homes and rented one out to my inlaws in trade for child care for our child (it was cheaper than childcare). We made decent $ and saved about $500 a month + putting an additional 150 a month into a 401k acct. At that point we had a 2nd child, when the 2nd child was 3 months old we noticed he was having some issues of not developing. At his 3 mo appt our dr advised to keep an eye on him and we could keep watch on him. By 6 mos he was not able to do more than he was at birth. At this point we started him in therapy and saw multiple specialists. The frequent dr appts and therapy left me to go part time and take a 12k a year pay cut, we also had a large amount of medical bills coming in. We decided to sell one of our vehicles that we had a loan on and buy a car with cash to lower bills. We found a nice 70k mile car for $5k. Things were OK but not great on the financial end. We could not continue to save much but we would throw in whatever we could. We spent a full year visiting dr's and not getting answers, we drained most of our savings on therapy and medical bills. I lost my job after being part time for a year. At this point we started to worry as we had used a large part of our savings. We listed our home and had no bites. The in laws started paying rent in january of this year and cover the mortgage on our second home, I have been doing odd jobs wherever and whenever to make excess cash. I also have been searching for jobs non stop. We ended up selling our home for a decent loss, completely draining our savings and having to put a large amount of the sale on a cc via a promo check with 0% interest. We moved into my parents home, which was supposed to be a temp situation. We have managed to put 7K into savings since living here and I am starting to get some call backs one jobs.
Now I am looking at working full time that will produce pay equivalent to what I was making part time. We have made progress with our son, who is still very behind, but is getting county funded therapy and is not having expensive test done on a regular basis. Our issue is this we have $15k in cc debt from selling our home and paying medical bills, and my parents are wanting us out soon (before the end of the year). We have been looking at places to live, but we need 3 br's since our dd child has some sever sensitivity issues and cannot share a room. With that being said any 3 br apartments in our area are 1100-1400 a month. We can get a mortgage for considerably less than that ($800-850 PITI). If we get the mortage out savings acct will be back to 1k and we will still have terrible amounts of cc debt, however we will be able to pay ~double the minimum payment. If we rent we will be able to keep the savings, or pay off some of the cc debt, but not be able to save or pay more than the minimum payment on the cc.
Please help. Here are our current bills. $140mo parking $367mo car payment $240mo car payment 2 (transmission went out in the cash car) (we already tried getting rid of the car payments but we are upside down since we put over 2k miles per mo on the cars living at my parents) $110 cell phone (moving to republic wireless when the contracts are up in jan) $170 student loan $52 min payment on cc 1 (0% for another 10mos) 5k bal $310 min payment on cc2 (0% fo another 13mos) 10,200 bal $65-400mo for medical bills $450mo gas (again, my parents live out in the boonies which is an issue) My wife brings home $2800 a month. Right now we pay extra on the credit cards, my DD child also has a bit of a special diet needs and is still in diapers. He also has medications he is on which I would say run an average of $40 a month.
I have been bringing in a little over 1k a month doing side work. the jobs I have been applying for are going to pay me ~30k if I get one of them.
So that being said, what should we do? Buy a home or rent? I am a very handy (I have been doing contracting on the side) and plan on buying a home we can put some sweat equity into. I am also fine with a very small home since I realize paying off that debt is most important. I wont be doing anything until I land some employment full time.

One last option is buying a cheaper home that needs work (I have an abundance of experience with this). We have found some homes that need ~30-40k worth of work and will cost us ~70-80k. Once fixed up the home will be worth 130-140k. We would get the mortgage and my parents would lend us the money to rehab it. It would keep our mortgage payment around 600mo PITI and my parents wouldnt want repayment for 12mos, at which point we could refinance. I feel this is the best option, but again I am looking for suggestions

Lans Holman

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Re: New here, could use some serious help
« Reply #1 on: September 17, 2013, 04:03:46 PM »
Sounds like you're doing your best with a tough situation.  The fixer-upper sounds appealing.  If I was handy, had a special needs kid at home and a wife with a steady income, and the only jobs around were playing 30k, I think I'd look into going into business for myself.  Can you turn your side work into a business?

mlipps

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Re: New here, could use some serious help
« Reply #2 on: September 17, 2013, 04:41:44 PM »
Why don't you get a 2 bedroom and put one kid in the living room? No, it's not ideal but kids are resilient, it won't hurt them. That might give you enough breathing room to have more options in a year. Also, can you get any deferments on those student loans without paying interest?

nawhite

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Re: New here, could use some serious help
« Reply #3 on: September 17, 2013, 04:47:14 PM »
First off keep up the good work. Your situation sounds really challenging but it is obvious how hard you are working to keep things going.

I added up the expenses you listed and I'm still about $1500/month short of the income you listed (Expenses were ~$2250 income was $2800+~1000). Not sure where taxes or the rent from your parents comes in either but I'm curious what your other expenses are? Utilities/food/insurance shouldn't get you there? Do you track all of your spending with Mint.com (free) or YNAB (You Need A Budget)? Tracking expenses is really helpful at figuring out what your actual expenses are and where little leaks are occuring.

So recommendations... buying a house sounds like it could work very well, even if you can't find a fixer upper, because of the ability to drop your transportation expenses. If you can get a house that your wife can bike to work from, you lose the parking expenses and the gas expenses and hopefully at least one of the car expenses. Even if you keep one car and then drive $100 of gas a month you still end up paying for your $850 mortgage just with the transportation savings alone.

Next, seeing as your parents live so far away, stop driving your children there for childcare and just have your parents pay rent instead (at market rates if possible). I don't know what kind of side work you do but if it can be done at home then you can do your own childcare. If you're at home working on a fixer upper house, then you definitely can take care of the kids. Worst case, make your parents drive to your place to take care of the kids instead of the other way around.

So now you have some income coming from your parents in the form of rent (or you have a very poorly performing real estate asset). You have a house that you pay the mortgage on with the decreased transportation costs. You personally are either still doing side jobs or are working on a house to improve your equity (note this only pays off if you eventually sell the house).

You end up with lower expenses, you get to spend more time with your own kids, and your wife gets healthier by biking to work. Wins all around. Now its just a matter of finding the down payment.

bmaharg

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Re: New here, could use some serious help
« Reply #4 on: September 18, 2013, 11:50:45 AM »
@ Lans: We tried to turn the side work into a business, I have been doing it since 03 and have also held an LLC, we realized it was not conducive to life as some weeks I wouldn't work and some I had too much work. Same went for the cash flow. Its also hard to budget well when some months I make great monty and some months I make none, once I work for a while and get the credit cards and cars paid off I plan to venture back into self employment.

@Mlipps We have tossed around that idea, it would be about the same payment as the mortgage and could work. The problem is this (and I know its kind of anti mustacian), we have a lot of stress in our lives, being around friends is a stress reducer. Our DD child does not do well out so we are typically the ones who have people over. If we had a bedroom in the living area it would be problematic for that situation. I have not looked into deferment of the student loans.

@nawhite
Thank you, we track with mint. We have been saving that money, its where the 7k came from. The biking will not work as we get help in our county for our DD son and the county my wife works in would have a long waiting list for his help. We have looked at her using public transportation though as the bus is nearby and the monthly bus pass is equivalent to parking so we could save all of the fuel $.

mlipps

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Re: New here, could use some serious help
« Reply #5 on: September 18, 2013, 02:53:01 PM »
@ Lans: We tried to turn the side work into a business, I have been doing it since 03 and have also held an LLC, we realized it was not conducive to life as some weeks I wouldn't work and some I had too much work. Same went for the cash flow. Its also hard to budget well when some months I make great monty and some months I make none, once I work for a while and get the credit cards and cars paid off I plan to venture back into self employment.

@Mlipps We have tossed around that idea, it would be about the same payment as the mortgage and could work. The problem is this (and I know its kind of anti mustacian), we have a lot of stress in our lives, being around friends is a stress reducer. Our DD child does not do well out so we are typically the ones who have people over. If we had a bedroom in the living area it would be problematic for that situation. I have not looked into deferment of the student loans.

@nawhite
Thank you, we track with mint. We have been saving that money, its where the 7k came from. The biking will not work as we get help in our county for our DD son and the county my wife works in would have a long waiting list for his help. We have looked at her using public transportation though as the bus is nearby and the monthly bus pass is equivalent to parking so we could save all of the fuel $.

It doesn't have to be a bedroom to sleep there. They could have their things in your room or in the siblings room & a daybed to sleep on, or even just sleep on the couch. It just sounds like you're in a really tight spot right now so making something work like that might be a temporary solution. I'm sure it sounds awful to make your kid sleep on the couch and not have their own "space", but really, it's a very recent idea that children should have their own room, etc. etc. Plus, if your friends are true friends, I'm sure they won't mind.

bmaharg

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Re: New here, could use some serious help
« Reply #6 on: September 18, 2013, 03:07:55 PM »
I was saying more so if we have friends over for a game night we are usually up way past the kids bedtime.

Mazzinator

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Re: New here, could use some serious help
« Reply #7 on: September 18, 2013, 04:01:04 PM »
Could you give each child their own bedroom, and you guys sleep on a pull out couch? We were going to do something similar.
« Last Edit: September 18, 2013, 04:06:06 PM by Mazzinator »

mlipps

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Re: New here, could use some serious help
« Reply #8 on: September 18, 2013, 05:44:34 PM »
I was saying more so if we have friends over for a game night we are usually up way past the kids bedtime.

I have a lot of respect for your family and what you're trying to do. It sounds like you've done everything you could to be prepared before this happened, and obviously there's not much that could have stopped the series of circumstances that put you in this position. That being said, this is MMM and I think that one of the most important tenets is to push the boundaries of creativity to save money. Your game nights sound great but they don't sound like justification for a third bedroom when you're in so much debt. Normally I'd be face punching you for making excuses, but you seem like you have enough on your plate. So instead I'll just say one more time, is it really worth the money?