Author Topic: Case Study -- Single mom of 3 kids, age 48, low-income seeking Financial Freedom  (Read 939 times)

violetfern

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Life Situation: Single mother of three kids (ages 12, 15, and 17), been struggling financially to get on my feet since 2007.

I currently live in Vermont.

I file as Head of Household.

My 17-year-old is now a senior in high school. Because she repeated 10th grade at another school, we thought she'd be a junior so we'd have a bit more time to think about college, but the school insisted she enroll as a senior. She wants to go to Art School. We'll definitely need a scholarship. I'm working with the school counselor for all of that. My 15-year-old gets mostly straight A+ grades in honors classes and is highly motivated but unsure of what path she wants to pursue in college. My 12-year-old is highly gifted in math and science but he's still quite young for planning his future.

Gross Salary/Wages:
$975 a month as part-time job as town clerk, 15 hours a week. $846 after taxes. This job may go away as the situation in the department where I am working has changed and they are unsure if they need me there. I walk or bike to work so there are no commuting expenses. I took a part-time job so I could have some steady income to cover basic expenses along with child support income while building my Airbnb and professional organizing business.

$1000 a month for child support but this will go away as the children gain independence.

$500 a month = average Airbnb income. I started in December 2016 renting a room in my house and it is growing wonderfully. In September I am earning over $900. But the income goes up and down. Average cost per night is $50. For day-to-day operations of the business, expenses are almost nothing. However, I am slowly renovating my house (an 1860 farmhouse that was badly neglected) and part of those costs are deductions for my Airbnb business.

$500 a month = average professional organizing business income which I just started in June 2017. I haven't put much work into it yet so I hope it will grow as I get stronger in marketing and networking. I currently charge $25 an hour but typical rates are $75-$150 an hour. I plan also on becoming a member of NAPO (National Association of Productivity and Organizing Professionals) for learning, networking, and marketing. That will cost around $500 including required courses.

Adjusted Gross Income: $2975

Taxes: I should pay attention to these but I usually get a refund of around $6000 (which I use to pay off credit card debt and do repairs on the house) so it's not been a big concern.

Current expenses:
Braces for daughter $110 (This will end in July 2018. There is no interest on this monthly payment.)
Electricity $60
cell phone $40
Internet and landline phone $86
Pet insurance: $26
Car insurance $61 (USAA)
Water/Sewer $50
Car gas $100 (average, depending on how much driving I do; about half of the driving is for business and will be a tax deduction)
Heating fuel $40 (2 cords of wood at $240 each, some of it a tax deduction for my Airbnb business)
Eating out $50 (average)
Laundry and cleaning supplies $5
Hair cuts $10
Toiletries $20 (shampoo, conditioner, skin care, soaps, toothpaste, etc. I rarely wear makeup.)
Dog (standard poodle) and two cats care $50
Medicaid copays $5
Gifts $20
Clothes and shoes $50
Wine $40 (two Bota boxes a month)
Entertainment $20
Food $550
SUBTOTAL = $1393

Mortgage payments: $670 Total (breakdown following)
P&I: $417
Property insurance: $81
Property tax: $172 (The full property tax on my house is $5223.04 but I get assistance from the state (calculated each year in the summer) lowering it to $2066.04 this year. Property taxes in Vermont are high, unfortunately, and I am very grateful for the assistance.)

SUBTOTAL WITH MORTGAGE = $2063

Expected ER expenses: I plan to have a smaller house (under 1000 feet) and a smaller food budget, and less mom-taxi-driving, but I'll be getting out more and traveling so costs will likely be similar.

Assets:
House value: $210,000
Car value: approximately $4,000 (2008 Honda CRV with 180,000 miles on it)
TIAA-CREF account: $5820
VT Teachers Retirement Fund: $1580
Redwood fund with Aspiration bank: $184
Aspiration savings back: $220 (earns 1% interest)


Liabilities:
Credit Card: Owe $8400.
It's 0% interest until March 2018. I earn 1.5% cash back on purchases on it. I have been putting as much money as I can each month toward paying it off, on average $1000 a month. If there's any amount still due in February I should have received my tax refund by then and will be able to pay off the rest. Most of this credit card is from renovation costs and will be tax deductible as an Airbnb business expense.

Mortgage: My mortgage principal balance is $125,200.
My house value is currently around $210,000. My interest rate is 1%. I bought it through USDA Rural Development for $140,000 (original loan amount) including funds to renovate it and closing costs. The closing cost of the house itself was $110,000 in May 2013. I put in tons of work on it! $670 is month payment including property insurance and property tax.


Specific Question(s): I have had many financial advisors look at my income and expenses and they all say I am doing very well with what I have but basically I need more income.

My goals --
#1 - Pay off credit card as fast as possible. There is no option to be paying it when I'll be charged interest.

Wild for me goal -- Be earning $1000 a week by December 31, 2017. And then gradually double that by December 31, 2018, through building my professional organizing business and venturing out into the world of lucrative blogs.

Much of what I read about gaining financial independence is based on investments earning 10% interest. How and where does one get 10% income? Please advise about that.

I may be receiving a large chunk of money in October, due to a car accident last October when I was rear-ended and got a concussion and whiplash. My last appointment with a neurologist is in two weeks and then I hope to close the case with my lawyer and receive compensation for injuries. I do not know how much this may be. I want to either:
- buy a rental property (I have an eye for good property, but I can be too trusting and sweet with people. However, I do have people who have my back now and who can stand behind me if needed.)
or
- invest in stocks.
What are your thoughts on that?

Thank you for your ideas and assistance.
I am tired of being poor and struggling. I am smart and capable but I have not figured out how to make income. There are many things stacked against me but I do not want to get into that. Being a victim is now in the past. I am empowered and competent!

I hope this is clear for you all to understand. Please let me know if you have questions and if there are things I need to do to make this clearer. I greatly appreciate your help!

czr

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You are doing a great job for single parent of 3!

You seem very organized and are doing ok with juggling all these partial incomes and your expenses are very reasonable. Maybe set up for a career change? You seem too skilled to be a clerk for a government job. You didn't mention a degree but non-degreed Admin assistants make $40k - $60k but that will usually mean a 40 hr work week with little flexibility for taking care of kids' activities. If you can't go full-time now, just position yourself by gaining skills to be able to get a good full-time job when the kids are out of the house and you can kill it for 10-15 years afterwards and catch-up on retirement. You can also get another side job as a babysitter or maybe have your 17 year old work part-time to cover expenses and save for upcoming college. I think your retirement is more of  priority than her education since she will have the means and youth to pay for it by working or taking student loans. Plus, you don't have the cash flow to pay for it.

As for investments, I would keep it simple and buy some Index funds in a tax-sheltered account which annually earns around 8-10% but that is after you're emergency fund is built up and your cc debts are paid off. Keep grinding it out!

Gin1984

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I agree, you need a better job, not part time.

violetfern

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Thank you very much for your reply. Where I live in New England, admin assistants get paid $20k-35k a year, and require unpaid overtime as well. If one is insanely lucky in New England, outside of the Boston area, one can get work that pays over $40k. Hence my decision to walk away from full-time work because it wasn't getting me anywhere and therefore it was not a good use of my time.

For a while I had a child care business I ran from my home, because working outside the home was too expensive. Three kids in child care for 10 1/2 hours a day cost more than I was earning and I was miserable and crying in my bleak beige cubicle all day long, not to mention I was not intellectually nor creatively challenged and I had never put my kids in child care until I became a single mother. I had to stop breastfeeding my youngest too, in order to take the steps I needed to get away from my abusive husband. It was torture for me. My income after expenses at the child care business was $30 a week, more than I was earning at my full-time job after paying for child care, health insurance, and commuting.

Anyway, full-time work is out of the question. Unfortunately here in New England it's nigh impossible to earn enough working full time to support a family as a single parent. I have worked with the local department of labor, Jobs for Independence program, Women's Freedom Center, vocational rehabilitation, and all sorts of other programs to help people advance in their careers and none of them knew of any way in Vermont/Western Massachusetts for a single parent to make a middle class income. Crazy, huh? So I decided to stop making myself miserable and beating myself up about it and feeling like an utter failure and completely ashamed of myself (etc.) and decided to move forward with self-employment.

I read and reread what you say about investments but unfortunately it's gobbledy-gook to me -- because I am so unknowledgeable about it -- and I can make no sense of it to know where to start with investing.

SuperSecretName

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(btw, single full-time dad of 2, so I know what it's like)

and I know you didn't ask for this, but an art degree is not very marketable.  I fear you are setting yourself up for student loans which will be a struggle to repay.  Have a look at degrees with the highest starting salaries.  If STEM isn't the strongsuit, trade school/nursing/etc...  Especially given your financial condition, you don't want your daughter to be a barrista at 22 with an expensive art degree.

violetfern

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When I originally posted this, it seemed like it wasn't working for around 20 minutes and my post ended up posting 3 times! Then I was unable to delete and now there are multiple conversations going on from very helpful people. Sigh...

Anyway, this is what I had written regarding concerns about art school:
I hear you about art school and the degree thing. ...

My oldest daughter suffers from severe depression and anxiety. She's on meds now and is doing much better but she keeps talking about killing herself by 21 and just wants a survival job (she works at a local restaurant now and has more money saved up than I have) and to do her art. It is hard to support her and emotionally heartbreaking and draining for me. But I seek out all the resources I can and do what I can and love her fiercely. My 12 year old is in a similar situation. I was working full time as a teacher but he refused to go to school if I wasn't at home to make him go and ... well it's been very difficult. Working full time does not allow me to care for my children as they need right now, and it won't get me off of welfare, no matter what I do and how hard I work.

So anyway, art is a way for me to support her to pursue joy and hopefully find a way and reasons to stay alive. She's very excited now to have an internship at the local art museum and she helps teach art to children at the local community art school.

MDM

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When I originally posted this, it seemed like it wasn't working for around 20 minutes and my post ended up posting 3 times! Then I was unable to delete and now there are multiple conversations going on from very helpful people. Sigh...
You could pick the one you want to continue, then go to the others and
1. edit your original post to delete everything and insert "Please go to [insert a link to the desired thread]"
2. Add a post at the bottom saying "Please go to [insert a link to the desired thread]"

RedwoodDreams

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When I originally posted this, it seemed like it wasn't working for around 20 minutes and my post ended up posting 3 times! Then I was unable to delete and now there are multiple conversations going on from very helpful people. Sigh...

Anyway, this is what I had written regarding concerns about art school:
I hear you about art school and the degree thing. ...

My oldest daughter suffers from severe depression and anxiety. She's on meds now and is doing much better but she keeps talking about killing herself by 21 and just wants a survival job (she works at a local restaurant now and has more money saved up than I have) and to do her art. It is hard to support her and emotionally heartbreaking and draining for me. But I seek out all the resources I can and do what I can and love her fiercely. My 12 year old is in a similar situation. I was working full time as a teacher but he refused to go to school if I wasn't at home to make him go and ... well it's been very difficult. Working full time does not allow me to care for my children as they need right now, and it won't get me off of welfare, no matter what I do and how hard I work.

So anyway, art is a way for me to support her to pursue joy and hopefully find a way and reasons to stay alive. She's very excited now to have an internship at the local art museum and she helps teach art to children at the local community art school.

Kudos to you for supporting the thing that makes her happy. Studying art doesn't necessarily mean going to an expensive art college, either... most large universities offer art degrees and can be very affordable. Even if she studied art for one year as a transition to help her out of her depression and see more possibilities in life (high school can be rough!), I don't ever see exploring your dreams as wrong or a failure. She might change her mind, but supporting her in this way might be the thing that boosts her into being able to see and explore other possibilities, if that makes sense. There's also a huge need for graphic designers, user interface designers, etc. Studying art can mean all kinds of things. And if she's depressed and loves art, pushing her into STEM sounds awful!

Also, it's clear that you are needed at home for your kids, so I don't agree about full time work, at least not for now.

CU Tiger

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For your daughter, check out the Baltimore Academy of Illustration - www.baltimoreillustration.com. I heard the founder talk on the radio the other day. They do a lot to help the students get jobs WHILE they study. It might be more reasonable/practical than going to a fancy name art school and only studying fine art.

Also, Baltimore is not super HCOL, and if your daughter is willing to work while in school, she could get a good job as a server/bartender at a nice restaurant that would more than pay for her living expenses in a shared student apartment.

One other question, why are you staying in this older house that needs so much work? Would it make more financial sense to move into a smaller place NOW?
There are two ways to get enough: one is to continue to accumulate more and more. The other is to desire less. - G.K. Chesterton