Hi. My name is tofuchampion, and my hair is on fire. I've known this for a while, but only recently decided to, y'know, DO SOMETHING about it. My husband and I started using YNAB in July, and in that time, broken the horrible cycle of overdrafting every paycheck (we were about $800 in the hole at the worst of it), gotten caught up on all our regular bills (we were a month behind on everything, all the time), and paid off an additional $500 of debt on top of the overdraft. So we've improved quite a bit, but we still have a metric asston of debt, and are still living paycheck to paycheck. We want to kill the debt, have some money in the bank even at the end of the month, and eventually become super badass. My tentative goal is to be debt free in 5 years and FI 10 after that (I say "my" goal bc he is pessimistic and doesn't really think this is possible). We are 29 and 31 now, so this would put us at 45ish.
In case it matters, he's a prison correctional officer and I'm a nursing assistant at a hospital. I would like to go back to school this winter and start working on my RN, but I'm not sure how that would work financially.
Here's a nice breakdown for ya... thanks in advance for the advice and facepunches! I've noted the obvious facepunches and provided explanations/plans to deal with them below. :)
Net Income: $3900/month, soon decreasing to $3300/month.
His - $2700/month, could be up to $3300 if he maxes out available overtime.
Mine - $1200/month right now, but we're having a baby at the end of this month and I'm only going back to work part-time after that, so as of January I estimate it'll be between $480 and $800/month, depending on how many shifts I actually work. I've committed to one 12-hr shift per week and am willing to do more if needed, which I will be. I'm going to aim for $600/month net.
Regular Expenses:
Rent - $655 (2br/1ba townhouse; this includes a $30/mo pet fee and trash pickup)
Electricity - $96 (this is on the equal payment plan bc I like consistency; facepunch me if this is a bad thing!)
Water - $30
Internet - $25
Cell phones - $145 FACEPUNCH! #1
Groceries - $400
Toiletries/household goods - $100
Pets - $100 (dog + cat + guinea pig)
Gas - $200 (FACEPUNCH!#2)
Car + renter's insurance - $135 FACEPUNCH! #3
Spending money - $200 ($100/ea) FACEPUNCH! #4
Medical - $120 (he is type 1 diabetic; $85 of this is insulin, testing supplies, and insulin pump supplies)
Clothing - $50
Entertainment - $8 plus tax for Netflix; anything else comes out of our individual spending money
total = $2264/month
Debts: (aka one giant facepunch)
Car loan - We owe $9156.01 as of today. $327.24/month payment on a 2009 VW Tiguan at 22.03%. BIGGEST FACEPUNCH EVER!!
Student loans - ~120K total, mostly his.
Medical bills - $3K total; again, mostly his due to a couple of diabetes-related ER visits.
Credit cards - $5670 total, all mine. :(
Misc - $2K total? (this is a couple of old utility accounts, $400 I owe a friend, just random stuff)
total = $139,826 (ish)
I am not 100% sure of all the numbers for debt, mostly because a lot of it is defaulted/in collections/whatever and I need to sit down and go through everything to see exactly where it all is and what's owed where.
Assets/Savings: $516.55 in a 403(b). I've been at my current job putting in 2% for a year and a half. That's all we have. There is no employer match because they have a separate pension program. I just upped my contribution to 10%. It's still not much because I don't make much, but I wanted to have more than $26/mo being set aside.
FACEPUNCHES!
#1 - cell phones. We are currently in a 2-year contract with US Cellular; it's up in August. With the early termination fees, it wouldn't actually do any good to cancel now in favor of Republic/Ting/etc., so I've resigned myself to sucking it up for the next 9 months, but the day that contract is over, we're switching.
#2 - gas. We live 30 miles from my husband's job, and our car is not exactly a gas-sipper. It also requires premium grade. Our current lease is up in May, at which time we plan to move to the town where he works. My hospital also has a campus there, so I'll be able to transfer - and even if I can't right away, I'll only be making the drive once or twice a week, instead of the 4-5 nights he does it now. I usually bike to work, though at 38 weeks pregnant, I'm temporarily driving. On nights when we both work, he drops me off and picks me up.
#3 - insurance. This is because of that stupid car, which I'll address more in a minute. It's through USAA. I've been with them for years and always been very happy with the customer service, but I'd be willing to switch if we could save money. Unfortunately, the quotes I've gotten from other companies haven't been any lower.
#4 - spending money. This is actually an improvement for Husband, who tends to be something of a spendthrift. He used to spend closer to $150/month, and it's all on silly things like energy drinks and video games. Mine covers my athletic pursuits - Aikido club dues, events such as powerlifting meets, 5K runs, workout clothes & gear, etc. - as well as craft supplies and any little stuff I want (I may or may not be typing this from a coffee shop, sipping a $4 mocha, but that happens maybe once a month). We also have a gym membership through my job, which costs us $20/month, and that amount is deducted from my paycheck, which is why I didn't list it above. Facepunch me for that if you want, but working out is a sanity-saver for me and I feel that $20/mo is worth it.
#5 - that stupid car. Obviously it's a subprime loan. Our $1100 beater died last year and we had no savings to pay cash for a replacement, and couldn't get a decent loan. We couldn't even get a subprime loan for a $5k car, which is what we wanted; the lender said that in case we defaulted, it needed to be something more valuable so they could get more of their money back. I want to sell it. I really really really do. It's too big, too expensive, etc. However, it also has about 115K miles on it, as well as some minor cosmetic damage, and I'm not sure it's worth what we still owe. If we could at least break even, and had the cash, we could sell it and buy a smaller car outright. But we don't have the cash right now. Our second choice is to refinance with our credit union, which would bring our interest rate down to 4.75% and our monthly payment to $219, according to the calculator on their website. But his credit score is about 525 and mine is about 600, so I really really doubt we'd qualify for anything right now. We're hoping that if we keep going in our current direction, in 6 months or so we might be able to do this. Or, even better, have a low enough balance and enough cash on hand to just sell it and replace it.
#6 - all that debt! He went to a private college and paid out-of-state tuition. Some of those loans are cosigned by family members. His uncle paid one $10K loan off for him and we're about to start paying said uncle back at $200/month. His mom also paid one, I believe. Even though these two aren't costing us interest, they're ruining family relationships, and it's high priority for us to get them taken care of because of that. The rest of it... well. We were just stupid; there's no excuses. We were both underemployed for about a year, which contributed to getting so far behind, but there were so many bad decisions both before and after that, that it still should never have gotten that bad. I'm trying to look forward instead of back, though - and hey, at least we're only 30 and not 50, right? There's still time. BTW, my student loans are currently on forbearance (or deferment? I forget which is which). This is one reason I want to go back to school in January - not only could I start working towards the next stage of my career, but I'd only need to take 2 community college classes at a time (for $180/semester total, plus books) in order to keep those loans deferred while we tackle our other debt.
Random: I have some small side hustles (MTurk, Swagbucks, mystery shopping, etc.) that collectively bring in about $80 a month, depending on how much I do. This isn't included above because I keep it separate. It goes towards birthday & xmas presents, extra debt payoff, and pretty much whatever I think is important at the moment. Lately it's almost all gone towards baby stuff. :)
Speaking of - when the baby comes, I'll be breastfeeding and cloth diapering, and almost all the clothes & gear we have were bought secondhand. The reason for only working part-time is to avoid paying for daycare, which would negate any additional income. My husband works a set rotating schedule, so I can arrange my shifts around his pretty easily and one of us will always be home with the baby.
So. What do we do now? What changes should we make? Would it be worth it to go ahead and switch cell phone plans now? What about the car? I'd love to get rid of those 2 things right now, but I really don't know if it's feasible. Is going back to school, even part-time at first, a bad idea? What else do you see that I'm not seeing? Should I even bother with 403(b) contributions right now? Like I said, we've made a lot of changes (the current house is smaller and $150/mo cheaper than where we used to live!), but I know we could do more.
I'm looking forward to all the input. Thanks in advance!
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UPDATE!!
I've gone through our actual expenses, and some are less than what I had above. Like the "toiletries/household" - that has been high because of things like last month, Husband decided to replace our old quilt with a new comforter, and buy me a body pillow to try to help with my inability to sleep comfortably. That was $65 total. We also bought a (used!) washer/dryer from craigslist, and a couch (we didn't actually have a couch; our old one was falling apart and wouldn't fit in the car, so we left it behind when we moved last spring). Both craigslist finds; the couch was $60 and the w/d was $130 for the set (and is kind of necessary with a baby coming, esp if we're cloth diapering). But all that got put under "household." We are not actually spending $100/month on shampoo and laundry soap!
Clothes has been higher because of maternity stuff. Husband also had to have some alterations done to his work uniforms, and that went in the "clothing" category, too.
Basically, we've had some uncommon expenses in the past few months, and I was just looking at recent history, so the numbers are skewed.
I've decided to close the separate checking account I have, and my side hustle money will be factored into the main budget. I don't like the idea of not having "my" money, but there is no reason for me to keep this out.
AWESOME NEWS: As I suspected, US Cellular's ETF is per-line. So $350/ea, or $700 total. That's not the awesome part. The awesome part is, it's pro-rated. So since we only have 9 months left on our contract, our ETF would be $262 total, which is doable and would be paid for in the savings from using a cheaper carrier. I've compared carriers and talked with Husband, and we're going to go with Ting. We can't bring in our current phones (literally no one that I found will let you use a US Cellular phone), but we can get 2 refurbished ones for $87 total, and then our monthly bill would be $30. They'll also reimburse us for 25% of our ETF, bringing that down to $196.50.
ETF after reimbursement @ $196.50 + new phones @ $87 = $283.50
Minus $59 for selling our old phones = $224.50 to switch
Current monthly cost $145 - new monthly cost $30 = savings of $115/month
This would pay for itself in less than 2 months. Woohoo!
Here is a breakdown of our monthly expenses, implementing a ton of changes and with more accurate estimates. Changes, etc., are in italics.
Income = $3900 net this assumes he maxes out overtime, I work an average of 2 shifts per week, subtracted health care premiums, and including my side hustle money, which I no longer plan to keep separate
Expenses:
rent = $655
electricity = $75 I'm stopping the equal payment plan because I know we can use less than $96 of electricity every month, and I'd rather have that money now than at the end of the year
water = $35 assuming this will go up a little when I'm washing diapers every other day
cell phones = $30
groceries = $300 toiletries, etc., will be included in this; bigger household purchases will just be put off as much as possible
gas = $200
car/renter's insurance = $135
pets = $60
medical = $100 for now - this will change in January
spending/entertainment = $50 including Netflix
total = $1640
surplus = $2260
So that's $2260/month to put towards debt. Holy cow. We can do this!
I'm not sure how we'll break down the debt snowball just yet; he & I need to look at everything together and prioritize. Right now all I know is that we need to start repaying his mom & uncle, and we need to put as much as possible towards the car.