All right, I want to start off saying hello to everyone, and I appreciate anyone's help.
I'll get started right away, I haven't read much about the blog, and I stumbled across this forum by googling whether or not I should sell my 2016 Subaru Forester. And I guess that's as good of a place as any to start with my financial stickiness.
This last year has been one of the most emotionally devastating years for me, but that's beside the point; this year has been financially devastating for me as well. I've come to this forum looking for advice, and I'l try to keep my personal / emotional details out of it as much as possible. My first issue is my new car, should I sell it, re-finance it, or trade it in? I don't think re-financing would do me much good, I have pretty much the longest note possible. I talked to my brother tonight, and he said he would be willing to take over the note for me. I personally think this would be the best option: I wouldn't lose money from depreciation and I could have it off my hands within a few weeks. The only issue is I would have to get a small loan, I'm thinking $3,000-$5,000 for a reliable method of transportation. I do need a car, I have a 2 year old son to take care of, otherwise I would be completely okay without one. Which option would you suggest?
My next issue I wanted to address was my cell phone plan. I made a dumb mistake about two months ago, and purchased an iphone 7, paying for it month to month. I owe $623 on it, which is insane to me and I honestly cannot believe I purchased one in the first place. I do have roughly $1000 in emergency fund money that I could use to pay it off, and switch my service to selectel, which would save me roughly $115/mo in cellphone bills. Would paying it off, even though it would cost me a large some of my emergency fund money be a wise decision?
Next, I purchased a new bed on credit about two months ago as well, another poor decision on my part. The pay off amount would be roughly $422. The loan is interest free for six months, which if I don't pay it off immediately with my emergency fund money, I would pay it off in the next few months. Paying it off would save me $90/mo, but again I would be using my emergency fund money. Would it be wise to pay the bed off as well as the phone and dump the saved money into savings?
In total, paying off the phone and the bed would save me about $205/mo, which isn't too bad, though I'm hoping to cut that down more with getting rid of my new car for a cheaper alternative.
If there's any questions I can answer, please feel free to ask. I'm going to head over to the blog and read up as much as possible. Thanks again to anyone that has made it this far.
Edit: Case Study:
Life Situation: IRS filing status is Married. I have one dependent, he is two years old. I live in Norman, Oklahoma, USA. I am 23 years old.
Though I am filing married for this year, next year I will be filing Single, because I am in the process of getting a divorce.
Gross Salary: My full time job is an apprentice wireman, at the pay rate of $16.97/hr, which comes out to about $34,000/year.
I do have a second job, though I started last Saturday (11/05), and it's a serving job, so I don't know how much I'll actually be bringing in from there.
Pre-tax deductions: I am taking out 10% for my 401k, my insurance is included in my employment 'package'.
Qualified Dividends: I have a 48 mo traditional IRA CERT through my credit union, with a balance of $2,869.97, paying 1.16% APY
Rental income: I am also renting out my house at $900/mo, with a profit of $134/mo. This is a long story, and I can explain why I am charging so little for my house, but that won't change how much I'm charging, so let's leave it at that.
The rent adds $1608/year, for a total of $35,000/year gross income.
Adjusted gross income: Roughly $35,000
Taxes: I'd have to check a pay stub, if I find one tomorrow, I'll fill this in.
Current Expenses: Okay this is a quick run down of where my money is going; it's something I wrote up on my break earlier this month. It is what made me realize I needed to get a second job, and change my spending habits.
Monthly Bills:
Rent: $754 <--- I am planning on moving when my lease is up in May 2017. I would like to move to a cheaper apartment / house and still rent out my house. Moving closer to my job will never happen either, if you've never worked in construction, it's hard to understand, but I will never, unless I am extremely fortunate or no longer an apprentice, be the same jobsite for longer than a year.
Water: ~ $65/mo <--- The way my complex does it is BS, but essentially one is given an allotment factor (mine is 1.5 for my son and I) and the total complex's water billed is appropriated accordingly.
Electric: ~$100/mo <--- This is an estimate for when my ex-wife lived with me, I keep the house much warmer (I turn the thermostat off before I leave for work in the morning, and do not turn it back on until roughly 6:00 p.m.), as well as turn off lights when not in the room, or using natural light as much as possible, plus I haven't watched T.V. in a month, so I'm hoping to see a cheaper bill for this month.
Internet: $50/mo <--- I considered canceling this, but with my apprenticeship, I have homework to turn in online almost daily, and with my hectic schedule (working 40 hrs/week at my full time job, working Tuesday / Thursday / Saturday / Sundays, and spending time with my son during all the hours I do not work.), I have very little time to visit my moms, or public cafe with free wifi. I am going to call cox to see if I can downgrade to their cheapest service.
Car loan: $350 / mo <--- this is definitely my most expensive bill, and I am trying to cut it back, whether that means signing my note over to my brother, or trading it in and taking the $6k loss on it.
Insurance: $243 / mo, <--- This is lower than what I have been paying, it includes rental insurance, full coverage, and my home owner's insurance. When I rid myself of my car loan, the money saved here will be an added benefit.
Gas: $112 <--- I fill up once a week, at around $28 / week. This I know I can work on, I've begun minimizing my trips out, and I'd like to purchase a bike with a toddler carried wagon, but I may have to wait until I rid myself of the car loan before I see any positive increase in my money to afford a bike
Groceries: $280 / mo <--- I spend roughly $70 / week on groceries, I'm vegan so I'm pretty much forced to cook all my meals myself, so that means no money for eating out (thankfully). This last week, I did only spend $54.
Daycare: $400 / mo <--- I pay 60% of daycare costs, an agreement my ex-wife and I came to. This is a new bill for me, we just started sending him last week.
phone bill: $128 / mo <--- I am already in the works of riding myself of this bill, I have put my iphone 7 on craigslist, but I think my brother is going to buy it as well. I owe $622, and he's paying me $500, A loss I'm okay with, since one month without this phone bill will make up the difference.
Genesis: $90 / mo <--- This is the account my new bed is on, $90 is not the minimum payment but the amount I need to pay every month so that I pay it off during the six months that the load is interest free
Union dues: ~$35 / mo <--- I'm apart of the IBEW, this is something that I cannot change.
Attorney fees: $100 / mo <--- this is an agreement I came to with my divorce attorney
Child support: $100 / mo
Total expenses: $2807 / mo
Assets: I don't really know what qualifies as an asset; between my retirement accounts, I have roughly $9k saved up.
I owe on my house still, so that's not an assets. I owe on my car, so that's also not as asset.
Liabilities:
Auto-loan:
Loan amount: $23,600
Monthly payment: $350 (I always pay a whole number)
Loan length: I believe it's a 7 year note
Mortgage:
Loan amount:$92,000
Monthly payment: $766
Loan Length: 30 year
Genesis (bed financing):
Loan amount: $422
Month payment: $90
Loan Length: 6 mo
Questions:
My original question was what the best plan of action for my car would be, whether it was trade it in and take the loss, or sign the note over to my brother, and be free and clear.
My second question was if I should pay off my genesis account with the small savings I have, or just pay it off in the 6 month interest free window I have, which is what I am doing now.
My third question was if I should pay off my iphone, and move to a wireless company like selectel, but I've already made steps to sell it to my brother for a roughly $122 loss. He is going to give me his old phone, so that saves me from having to purchase one for a cheaper wireless company.
My fourth question is when I sell / rid myself of my car, should I buy a cash car ( I currently only have about $1000 in savings), or finance one through my credit union? I'd only get a load for roughly $3000. I understand it's a bad idea to buy anything on credit, but I do believe this may be unavoidable. I do have decent credit, roughly a 740, so qualifying shouldn't be an issue. My argument for needing a vehicle, vs biking to work, is that my job is over an hour bike ride away, which would mean I'd have to drop my son off at day at least an hour before I go to work, but they are not open at that time. Also, I believe, that while I won't be driving as much as I did before, having a vehicle is good for emergency situations, especially with a toddler. Either option I choose, whether it's buy a car for around $800 or finance one with a small load of $3000, I will be saving money compared to my current situation.
My fifth question is what are some ways I can cut back? I already live decently frugally, I don't eat out, or buy frivolous things (aside from the bed and Iphone 7, but there's a little back story behind those purchases. Bottom line is they are purchases I would not have made on my own.). I know rent is a big thing I can change, but that won't be something I have control over for another 6 months. I'm working on paying off my genesis bill, and my attorney fees, I already acquired a second job to help make up the difference between my monthly income vs my expenses.
And please, not facepunching or whatever, this year has already been hard enough without the extra grief from compete strangers ridiculing me for trying to get help out a situation I sort of half fell into / half caused. I know what kind of situation I am in, I am trying to remedy it, and this situation didn't arise until my ex-wife and I began the divorce process. We had two incomes, and no daycare costs prior to this last month.