Help? Please...

[Quidnon?]

My problem with you selling off the rental is that then you'll have $500 less income to work with, and you'll still be your same not frugal selves.  I think you need to exercise your frugality muscles by cutting out shit you don't need, and then you'll have this awesome income to send to your investments.

I agree with this, I think your primary problem is your habits, and you need to at least try to change your habits before you change anything about the rental.  For that matter, you might discover that selling your primary home and moving into your rental is a better overall choice; or maybe selling both and moving into a still smaller apartment until you get your spending under control and start making progress on that debt.  The current age of your kids matters, because teenagers need more space that only a home with many bedrooms can supply; but small children do not.  A set of bunkbeds and matched dressers will fit into a typical 2 bedroom apartment sized bedroom just fine.  I lived with my own brother till I was 12; sometimes it does suck, but I would wager that daddy filing bankruptcy and the court kicking the family out of the house would suck more.

Seriously, though; you need a copy of Good and Cheap, that grocery bill is more than twice what it reasonablely should be for a family of four; even if the kids are teenaged boys.  Ask your parents to buy it for you when you pick up their copy of Financial Peace.

[Quidnon?]

I'm happy to pay what I owe. But to pay another $15k on top of it in fees and penalties and interest is crazy.

Scam or not, they do have the power to do this, and keep doing it.  However, this is fixable. If you simply call them and get a payment plan worked out, the penalties stop building up, although the interest will not.  If you get a tax lawyer involved, you might be able to negotiate a reduction in the penalties so far as well, but get on a plan with them and adhere to it religiously.

[former player]

Posting to welcome you to the forum and add to your cheerleaders.

In facing up to your issues and asking for help you have already taken a big stride towards resolving your issues, so congratulations.  Please ignore any snark you've had  here: we all mean well on the whole, even if it doesn't always come across that way at first glance.

I wonder whether it might help you and your spouse to talk to someone in person.  You could check out whether there are any free, charitable, debt advice organisations near you.  If you go down this route, vet the organisation very carefully: do not go to anyone who wants to enter into a contract with you, or pay them money - there are scams out there, and anyone who wants you to sign a contract either before or after giving you debt advice, or wants you to pay them money in any way, shape or form is a scam.

Otherwise, just continue to take your courage in your hands and take a step at a time.  We love a good success story here and I hope you will become yet another!

[The beatles]

I posted this.

http://forum.mrmoneymustache.com/welcome-to-the-forum/the-beatles-case-study/

[RetiredAt63]

Just  jumping in.

I agree with others that it sounds like you don't need to buy anything, with all the house stuff you have bought lately.  And go cash/envelope - if you can get it where you are, Gail Vaz Oxlade's show Til Debt Do Us Part (HGTV) shows lots of examples of families in your boat, and how to do proper budgets and pay down debt.  She also had couples do activities together and figure out how they got into their messes and how to get out, so they may serve as examples for you and your wife.

Your wife has 2 jobs right now - the kids, since she is a SAHM, and CE/FO - that is chief executive/financial officer for the family company of Beatles Inc.  She (and you of course) needs to pinch every penny until it screams.  Cost analysis on everything that does need to be bought - which right now is food and utilities.  Food - nutrition per unit cost.  Do your kids like the pre-flavoured single-serve instant oatmeal packages?  Gone.  Buy oatmeal in bulk.  And don't buy the fast-cooking unless it its the best buy per serving.  Cold cereals are a total rip-off, they are mostly air, and don't fill kids up. Gone.  Everything others have mentioned, plus - laundry - cold water washes.  Clothes that need dry-cleaning, stop wearing them so the dry-cleaning bill goes away.  House - turn the thermostat down.  Hot water is expensive, cut back. Phones - you have cell phones, do you also have a land line?  If yes, do you need it?  If yes, cut it back to basic services.   Cancel magazine/newspaper subscriptions and read them at the library - same for books.  Subscriptions, if you have prepaid ask for a refund on the unused portion.  No booze.  I mean it, not only is it expensive, but it relaxes you and you waste your evenings vegging.

Your pie chart was basically useless as a guide to future practice, not enough information.  You can't do any of these cost analyses until you look back at your previous spending, so you really need to do that detailed breakdown now.  (I just saw your post, that you have posted - good).

And for what it's worth, I have seen families in more trouble than you are on Till debt do us part, so I don't think you are trolling.

[RetiredAt63]

Also, look at this: http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/ - most people post the case studies on the Ask A Mustachian forum (http://forum.mrmoneymustache.com/ask-a-mustachian/), not here.  You will get a lot more feedback there.  A mod can move this thread over if you ask, or just start another one and direct people here to it.

[The beatles]

I posted this.

http://forum.mrmoneymustache.com/welcome-to-the-forum/the-beatles-case-study/

Thank you and sorry for questioning your validity before. I see you already have some responses, I'm sure you'll have a lot more by the end of tomorrow.

I'll make sure to put my 2cents tomorrow.
Good luck!

Appreciate it.

[Physicsteacher]

Seriously, though; you need a copy of Good and Cheap, that grocery bill is more than twice what it reasonablely should be for a family of four; even if the kids are teenaged boys.  Ask your parents to buy it for you when you pick up their copy of Financial Peace.

No need to buy a copy of Good and Cheap! The author made a PDF available for free.
https://cookbooks.leannebrown.com/good-and-cheap.pdf

[Quidnon?]

Seriously, though; you need a copy of Good and Cheap, that grocery bill is more than twice what it reasonablely should be for a family of four; even if the kids are teenaged boys.  Ask your parents to buy it for you when you pick up their copy of Financial Peace.

No need to buy a copy of Good and Cheap! The author made a PDF available for free.
https://cookbooks.leannebrown.com/good-and-cheap.pdf

Nice find, but buy a copy eventually anyway, once you are back in the black.  If for no other reason than to give back to this woman who put so much effort into this book.

[The beatles]

Thanks for the help everyone.

I added a lot more details to my case study.

http://forum.mrmoneymustache.com/ask-a-mustachian/the-beatles-case-study/

[kms]

BTW - for your income and family to be in debt to the IRS by $40K - you must have NEVER paid any income taxes ever.

In short - how are you $40K in IRS debt?

This is actually rather easy to explain. He's mentioned that he's self-employed so there's no need for a W4 for tax withholding. Instead he has to make quartly payments on estimated tax (basically, you make a rough estimate of what your taxable income is going to be at the end of the year, then make quartly payments based on that number). If he's never done that it means he has never paid any income tax at all.

[honeybbq]

More tough love. If you really want it:

The CC debt was mostly home improvements.

Crown molding, TV's, landscaping etc.

TVs are NOT home improvement.

We do have an Aldi's near us but they don't carry the name brand snacks my kids like. We tried that.

Wat. Children cannot dictate where you shop. Especially a 2 yr old and a 4 yr old. You feed them. You do not ask them what they want.

We were thinking of selling the rental, paying off a bunch of stuff and using the rest for vacation to Hawaii.

This is in the same thread as talking about defaulting on your credit cards?

I really think you need a reality check. You are here, that is good. But you are in DEEP DEEP trouble. Not just a little trouble. A LOT OF TROUBLE. Please read every post, accept your licks, and get whipped into shape. For your children's sake...

[Goldielocks]

YES, sell the rental asap and pay off your debt.  Or just keep doing what you're doing and let the banks/ccc take it from you.

You need to realize you're in deep financial trouble, then man up and stop pretending you're rich and realize you've screwed yourself over and are in fact quite poor. 

If you don't do anything, it will only get worst and you and your family will suffer because of it.  Good thing is you're still young and can turn it around quickly with the sale of the rental.

Ok, so sell the rental.

We were thinking of selling the rental, paying off a bunch of stuff and using the rest for vacation to Hawaii.

That kinda sounds like a bad move though, right?

OMG!   So funny.   "Should I go bankrupt or sell my primary asset to take my family to Hawaii?!!"

Hahaha...if that is how you are actually thinking...   How about you sell your rental, take that family Hawaii trip (bring me along, I will give great advice), update your car, then declare bankruptcy..?  You have to get the order right, you know.

-------------------------------
No idea why your wife can't work for $10-$15 an hour on weekends or nights, if you can...   but then, I have no idea why someone making $65/yr with a family of 4 is buying team lunches 3x per week either...
--------------------------------

Troll?

[Goldielocks]

Okay,   read ARI's response to take you seriously....  So seriously, here is an option for you, and what would happen to many families that are otherwise financially screwed...


1)  Sell rental
2) sell home
3) pay off all ALL debts

4) move in with family (you said you had family in the area)
5) Pay rent to family of $1000 per month to live in their home.

6)  Spouse either goes to work evening / weekends for 20 hours/wk x $10+ per hour, or starts to babysit kids, etc.... OR she goes back to work as MED ASSIST, and you pay family to take care of your kids, at much less that the daycare going rates, so she nets at least $200 per week over the cost of child care.

7)  If she goes back to work, have another family member in charge of pinching pennies to feed all of you, and you pay them $750 per month for food, maximum.  If you and your spouse can't get groceries down, maybe someone else can, and they would be glad to take the profit off that $750 per week to do the work feeding you (and them).

8)  Start saving anew, until you have emergency fund, and then the rent deposits to move into your own place.   

This plan would put your family spending at far under $4k per month...  and debt free quickly.   It relies on the fact that you have family resources to assist you.  In the event that you don't, you may need to look into rental subsidies or some way to drop your monthly rent quickly.

[1967mama]

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