Author Topic: Reader Case Study - No, no, this not a joke. We did all this stuff to ourselves.  (Read 23330 times)

Cpa Cat

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What's the deal with your lack of information? Do you not have access to your bank statements? Mortgage information? Credit card statements?

You don't know you mortgage interest rate. Why not? Where do you keep your paperwork? Does your husband know?

You don't know exact details on credit cards. Why not? You are either receiving paper statements or you have online access. Why don't you look?

Why did you have to ask your husband about his take home? Can't you just pick up your bank statements or look online? How accurate are any of your other expense numbers if you aren't looking at bills/statements?

Mint.com will be a good tool for you. You should set this up tonight. Without a tool like this, you're really just guessing. With Mint.com, you should be able to meet weekly with your husband to go over spending and address issues.

And I can't stress this enough: You need to look at your mortgage. You need to look at one of your husband's paystubs. You need to look at your tax return. You need to look at your bank statements and most recent credit card statements.

Your lack of fundamental knowledge about your own financial life is kind of shocking.


Rezdent

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What's the deal with your lack of information? Do you not have access to your bank statements? Mortgage information? Credit card statements?

You don't know you mortgage interest rate. Why not? Where do you keep your paperwork? Does your husband know?

You don't know exact details on credit cards. Why not? You are either receiving paper statements or you have online access. Why don't you look?

Why did you have to ask your husband about his take home? Can't you just pick up your bank statements or look online? How accurate are any of your other expense numbers if you aren't looking at bills/statements?

Mint.com will be a good tool for you. You should set this up tonight. Without a tool like this, you're really just guessing. With Mint.com, you should be able to meet weekly with your husband to go over spending and address issues.

And I can't stress this enough: You need to look at your mortgage. You need to look at one of your husband's paystubs. You need to look at your tax return. You need to look at your bank statements and most recent credit card statements.

Your lack of fundamental knowledge about your own financial life is kind of shocking.
Years ago, I got caught in a scary downward spiral where I was struggling just to keep afloat.
At the time, I started not looking at the bills, the statements, the balances.  Just throwing minimums at the bills knowing it was bad but willfully ignorant of just how bad.
So I understand how someone can be there.
But things will not get better with this approach.
Once I sucked it up and assessed everything - I found out that my fears were worse than reality.  And as bad as it was,  knowing exactly where I stood enabled me to climb out.
OP,  if that's happening to you - if you aren't looking due to fear...just do it.  Find out every detail of where you are.  You will only be able to take control once you know.

greenmimama

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You have already received a lot of great advice, I will just say, I look forward to hearing an update, some real concrete numbers and a plan of what you will put into place.

You can do this, it won't be easy, or fun, but in the end you will be in a much better place.

JoyBlogette

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Lots of good advice on here.  Looking forward to seeing an update with your loan and mortgage numbers.  Take a deep breath.  You're going to have to make a lot of changes.  Hopefully selling the house can help get you back on track to living your life, I'm hoping you have some equity here and just a horrible interest rate.  There's no option where you can keep the house I'm afraid.  You'd have to earn an additional $1700 per month to even consider keeping it.

lynnie0921

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I could not even imagine trying to live on that amount of income for a family of 5!!  I disagree with the idea of taking the kids out of recreational activities.  These are the years that define them. 

Your housing is waaaaayyy too much though.  I don't even know how you could have gotten yourselves into this situation. 

Another thing, and I mean no disrespect whatsoever, but, I am a waitress and I bring home more than $2000 a month.  You and/or he went to college and have $400+ in student loan debt and only have $3K in income?

There are two of you, and the way I think, is that is your husband's job is probably M-F maybe 9-5 or 8-6 with commute.  If the two of you get a plan, you could work part time some where and arrange your schedules where you have great family time too.  There has to be a balance and as far as I am concerned, the children come first....ya'll can worry about being FI later.  At the minimum now...you have got to put yourselves in a position that you can enjoy your children, they can enjoy their youth, but you are the grownups like it or not and you have to stop spending more than you make or at the very minimum make a good life for the kids, keep your heads up, love them and teach the kids the value of the dollar.  My parents never talked about money.  You should. 

Wishing you the best,

Lynn


alibean

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I just wanted to say that I really feel for you guys.  I hope you can figure out a way to cut your expenses or hopefully, increase your income.  Even though you are having financial issues, I encourage you to do free things w/your kids to just enjoy this time w/them.  Have picnics, go on walks, to the park, etc.  This is their childhood regardless of your financial situation.  What they need most is time w/you.  This sounds so familiar to the financial situation of my family when I was young. My parents spent the whole time arguing about money instead of enjoying the things we could. 

Also, have you thought of other ways to increase your income while still being home w/the kids during the day.  What about a home daycare? I've even heard of stay at home mom's having a "date night" or "mom's day out" where they charge a set amount for x hours of child care as a way to get some quick cash.  There are regulations w/a home daycare but in most states, you can take a certain # of kids into your care without having to go through the certification process.  It would be a place to start.

I think in this situation you are forced to be creative.  What skills do you have?  I know it's rough but can your husband work a 2nd job evenings and/or weekends? 

lemonlime

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I've been through the facepunches myself, so I hope you are not in too much pain to take a deep breath and make serious changes to your life.

I think you should give Dave Ramsey another shot. If you listen to his radio show, most people are going through years to get out of debt, not months. And many of them are doing it making incomes below the poverty line for a family of four. I'm talking single-income $36K/year for a family of four or five paying off $10, 20K of debt over a couple of years.

You use "my son will only be in fifth grade once" as a justification for things you can not afford. Where does that end? Football is apparently something he can't miss out on, but what will it be next that he can't miss? Plenty of children don't get to participate in these things and they are no worse for the wear. In fact, it would likely be of benefit to the child to feel that he is part of a shared family sacrifice to ensure all of your security. If he knew that you were on the brink of losing your home or not being able to eat so that he could go to football, would he be okay with football?

You may have to look really hard at what it means to love a child. It doesn't mean giving them everything that some of their peers have access too. It means a lot of things, but one of primacy is providing them with security and stability. Experiencing those things far outweighs experiencing football at 10 years old. Let him play for school when he's old enough to join the school team. In a couple of years, if you get things on track, you'll be out of debt, making progress, and able to support him in that endeavor. But if you don't stop this now, you're going to be in the same place, at best, or far, far worse off.

I know you know it's a dire situation, and it makes it scarier when you reveal yourself and other people are freaked out by how bad it is. Take the hard step of loving yourself and your family enough to say, enough is enough. Emergency management is in order, and times call for extreme measures. If you do this now, you'll be able to give your kids all of those things in just a few short years. Work on thinking of years as short, too. Because they are.

CanuckExpat

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Jive's you've gotten some good advice already, good luck on your situation. As others have mentioned the first thing you need to do is get a clear picture of where you stand.
One thing I might suggest is seeing how much stuff you can sell now immediately. Starting with big ticket items like car(s), but also household trinkets, gadgets you don't use, etc. We have a habit of accumlating more things than we need, and Craigslist/Ebay/Yard Sale can be a way of rounding up some cash quick.

I think you already know this, but since it hasn't been linked yet: News Flash: Your Debt is an Emergency!!

lhamo

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I also can't fathom why you are paying for your 10 and 7 year olds to be in organized sports that cost money with your financial situation.

Regarding football, please watch this Frontline episode on what happens to the brains of football players -- it may make it easier to pull your son out of that particular activity, which has serious, long-term risks to his health and safety: 

http://www.pbs.org/wgbh/pages/frontline/league-of-denial/

Same thing with cheerleading, really -- also a very risky sport once they start getting into pyramid moves and throws.  (See this NYT blog post for more information: http://parenting.blogs.nytimes.com/2013/09/13/cheerleaders-at-risk-of-concussion-hide-symptoms/?_php=true&_type=blogs&_r=0)   And for a 7 year old (assuming that is who it is for -- one kid wouldn't be doing both football and cheerleading, I presume)?  Is it really necessary?  If she really wants to cheer, let her try out in high school. If she likes to dance there are plenty of ways to do that for free.  Heck, personally I'd just stream the B-52s channel on Pandora and have the whole family dance around the living room to distress if I were in your financial situation (a good dose of Rock Lobster and Private Idaho are both good for the soul every now and then).

Your kids will be fine without immersion in organized sports at their ages.

And you will be fine once you get your priorities clear and focus on fixing this mess.  We all are behind you, in spite of the tough love you are getting here. 

Hang in there and keep coming back.  It makes a difference when you commit to being publicly accountable.  We'll do our best to help you get where you need to be.   
« Last Edit: August 08, 2014, 11:04:26 PM by lhamo »

N

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Hi Jives5-
I think you have got some good advice in this thread so far.
I wanted to tell you that I recognized a lot of my own story in your story.

Its hard to face the music, but avoiding and denying isnt working for you, so I encourage you to take hope, be positive, and just put one foot in front of the other and starting walking the walk. Corny, right? I personally rely on those cliche mottos to get me thru the tough times. like, the 4th week of every month. ha ha.

I have a journal where I have put up the details of my "mustachian 180". you can always make better choices. not necessarily easier, but better.

obviously you need to first, get very acquainted with the fine details of your financial picture. all of it. every debt, every interest rate, every expense, etc. Cut and reduce all you can. Rethink your housing. use mint or ynab to track and manage your financials.

as far as the kids activities go: the bottom line is you just cant afford them right now. it is money you literally do not have. you are borrowing money with no way to pay it back, and that is really poor decision making. aside from the fact that those particular sports can be really dangerous, and there are probably additional expenses involved besides the fees, (tickets or travel to games/competitions, uniforms, fundraising, for example). they are young and will have plenty of time in the future to get involved in activities, once you can afford them. find alternatives. spend family time together.

where I live we can go to free beaches and the park district has free pools and tennis courts. we do all kinds of free or very low cost activities. search those out. organize meetups of kids at playgrounds or fields where they can play or do stuff with their friends.

Id encourage you to do a journal, so that you can get ongoing support and advice. its a great community in that journal section :)

I am 40, my husband is 50, our kids are 10 and 7. we arent retiring anytime soon. we screwed up a lot and are trying to go forward smarter, but its true that its a lot of sacrifice and change. I will say, that as hard as it is, it does get easier. at first it was impossible to imagine not going out to eat every week (multiple times!) and we went out to brunch for the first time in months and it was a real treat. it hardly ever comes up, the idea of brunch out, and we used to do it every weekend!

new habits get established.

I think if you can be decisive and resolute, make some strong good choices, get some momentum, and you will see how fast things can swing around.  a few combinations of increase income and decrease expense can really make a big difference.

obviously your housing is where you have a lot of room to improve, but gas and car also could be a big deal for you. when our $hit hit our fan, I sold our nice, comfy, roomy car with a loan and bought a 4k car with cash. we have one car now. way less gas, insurance, etc and obviously, no loan.

I wish you the best and I hope you continue to post and update. The support of these forums has made all the difference for me in my journey.

N

Doomspark

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Also...  if they are getting late payment calls, it's very likely that their credit is damaged.  That's going to make moving trickier - many places won't rent to people with bad credit. 

OP:
Pick up DH by the scruff of the neck, sit him down, and the two of you have a frank heart-to-heart about money.  If we're to offer solid advice, we need a complete financial picture.

1 -  Figure out where all of DH's pay is going.  His take-home should be more than 2K a month.
2 -  Get complete numbers and interest rates on all your debts, ESPECIALLY your mortgage.
3 -  Who does your taxes?  Do you qualify for EIC? Do you itemize and claim your Internet as a business expenses since you work from home?  Do you claim a portion of your electric as a business expense?

And check your PMs here.  I sent you a message.

cchrissyy

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Something is really "off" here.
Please go get your bills and especially your husbands pay stubs, and post that.

With accurate, current, full information we can actually be helpful and you can begin making smart decisions based on good information.

lifejoy

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Can you rent out part of your house to help with mortgage? Basement or spare room?
For the record, I didn't join team sports until I was 12. Then I was in judo and baseball, for ten years. I think you could hold off a few years and your kids won't be missing out too much. What would they rather? Sports at age 7, or debt-free parents?

fields

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I just want to say that I understand how you feel a bout paying for activities for your kids.  I spent beyond my income to pay for activities for mine (sports--expensive ones like hockey--international school trips, camps, etc.) and I don't regret it.

BUT, they are now grown and I am fifty years old and stuck working in a job I don't like for the next 12 years at least because I have no savings and and an ENORMOUS school loan debt that I haven't even begun paying off.  Something to think about...

YoungInvestor

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What you really need is an increase in income. Reducing expenses will only take you so far with 3 kids.

It seems hard to believe that your husband would, as a manager, make about 15$/h at a bank. Is he underpaid?  You making <800$/month is hard to understand as well, unless you work less than 10-15 hours a week. Build a plan to at least get your income to 1500 and your husband's to 3000.

I don't like the idea of imposing this on to your husband, though. Just ask him how it is possible for a bank manager to make about 30-35k a year, and it may give you a better perspective on his situation.

Janie

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I believe she said his salary was about $50k

theonethatgotaway

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I believe she said his salary was about $50k


Yes but for some reason he told her he only brings home 1k per pay check. So either he's lying about his gross pay, or lying about 1k and pocketing the rest for some habit.

Don't mean to be rude but that does not add up at all even with high insurance lremiums.

Again where did you get financing? 50k income for a house at 158 seems like a stretch.

beltim

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I believe she said his salary was about $50k


Yes but for some reason he told her he only brings home 1k per pay check. So either he's lying about his gross pay, or lying about 1k and pocketing the rest for some habit.

Don't mean to be rude but that does not add up at all even with high insurance lremiums.

Again where did you get financing? 50k income for a house at 158 seems like a stretch.

False.  Read my post above before calling someone a liar or addict.

Bethersonton

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Tons of good advice on here.

I just hope OP comes back and updates with more information. There are a lot of wise people on here who can offer you solid advice, and I'd hate to see this turn into another "OMG you're financial picture looks like WHAT?!?!" thread where the OP disappears forever.

Good luck on your talk with your husband! Like someone said upthread, reality is never as bad as the fear of facing it.

rmendpara

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Grand scheme of things, you are raising a family on just under $40k per year (assuming your budget numbers are correct, even though they don't add up exactly).

It looks like an income problem mostly. You could cut maybe 10% by buckling down! maybe 15-20% by getting really serious and creative. Even that is only $8k per year. Not enough to start saving, investing for future.

Short term, figure out your true spending and true income. If you don't know the precise shape, size, and color of the situation, it's hard to address it. I can only imagine how difficult it seems, but trust me, you'll thank yourself every day for the rest of your life that one day in 2014 you decided to get your lives in order.

Medium to long term, you really need to find a way to make some more money. Side jobs, new career training, anything should be considered. Even trades like plumbing, electricians, welding, etc make $50k+/yr, so there are no excuses. You can mow lawns and probably net more than $20/hr after expenses after buying a nice used mower for $1k.

My point isn't to go be an electrician or landscaper, but to get creative on ways to earn more. The only limits are the ones you set for yourselves.

Good luck!

chasesfish

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What exactly does your DH do in "bank management"?  I'm in the field and his/her salary looks $15,000 a $30,000 too low, do you live in a small town with only a couple of bank branches?

oldladystache

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Looks like a hit and run to me:
Quote
Date Registered: August 08, 2014, 12:12:08 PM
Local Time:August 10, 2014, 12:41:38 PM
Last Active: August 08, 2014, 03:55:56 PM

rmendpara

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Looks like a hit and run to me:
Quote
Date Registered: August 08, 2014, 12:12:08 PM
Local Time:August 10, 2014, 12:41:38 PM
Last Active: August 08, 2014, 03:55:56 PM

Lol. I like the nomenclature.

Doomspark

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It's possible that it's taking the OP a couple of days to get all the stuff we've asked for together. 

She needs to get a copy of her DH's paystub.
She needs to find the mortgage paperwork
She needs to find bank and credit card statements.

And then, she needs to find time to put together a post.

If she's been sticking her head in the sand, it's possible she doesn't have all this stuff right to hand.  It's also possible that she's waiting for the most current statements to come in.

dodojojo

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Quote
Again where did you get financing? 50k income for a house at 158 seems like a stretch.

Last year when my salary was about 80K, I was approved for well north of 300K. 
« Last Edit: August 11, 2014, 12:37:58 PM by dodojojo »

resy

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What's the deal with your lack of information? Do you not have access to your bank statements? Mortgage information? Credit card statements?

You don't know you mortgage interest rate. Why not? Where do you keep your paperwork? Does your husband know?

You don't know exact details on credit cards. Why not? You are either receiving paper statements or you have online access. Why don't you look?

Why did you have to ask your husband about his take home? Can't you just pick up your bank statements or look online? How accurate are any of your other expense numbers if you aren't looking at bills/statements?

Mint.com will be a good tool for you. You should set this up tonight. Without a tool like this, you're really just guessing. With Mint.com, you should be able to meet weekly with your husband to go over spending and address issues.

And I can't stress this enough: You need to look at your mortgage. You need to look at one of your husband's paystubs. You need to look at your tax return. You need to look at your bank statements and most recent credit card statements.

Your lack of fundamental knowledge about your own financial life is kind of shocking.
^^^ THIS^^^

fallstoclimb

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Commenting to follow.  I normally ignore most of the case studies but this one is heartbreaking.  OP, I hope you are able to become more actively aware of your finances.  Your lack of knowledge is really concerning - is your husband keeping you out of the loop?  Where is his salary going? 

MarciaB

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HOW did you get a mortgage?  Did the owner finance at a high interest rate?  Are you on a lease option or land contract?  What was the down payment or option cost?  What's the market value of the house?  You need to understand exactly what you did and what's at risk if you have to walk away from the house.

I think this is what happened. We sold our old house to my in laws. We used the proceeds to pay for this new house. I don't know what our rate is (DH handled the details). It is a straight out mortgage, not a land contract. What do you guys think about renting? I know some people shun rentals in most cases, but what would be the best for us to do?


Since you own the home already...what about the possibility of renting out your home to tenants, then moving your family into something cheaper? You may be able to hold onto the home this way (and move back later if things look up for you), while pocketing the difference between the rent you charge and the rent you will pay (on an apartment or a smaller house).

Maybe worth thinking about?

Zora

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Yeah, sorry to pile on about the lack of knowledge of the finances but...

Even if the mortgage/house is only in his name, I would think that you would have been required to sign off on it anyway... the bank would require this so that when it comes time to foreclose they will be able to kick you out and you can't claim some kind of residency/homestead rights.  Which I guess leads to the conclusion that this isn't a real bank loan but some type of DIY owner financing?