Case Study: new beginning

[charlietioli]

Greetings!  All input is appreciated.

We are a middle-aged couple who filed bankruptcy during the recession and have started over by renting from former customers.

Premise of my question:  For the past three years, we have simply held the ends together, and I would like to do more to get off the ground.

Not included in the income/expense list are our rents which include $1000 home plus $300 utility, another $1000 paid in trade for farm labor; and $1690 for the warehouse where we manage our shop.  These two rent figures come "off the top" of our shop income.  Anything left over is our pay, which has averaged $800 per month for the past three years.  This summer, we weren't able to pay ourselves for two months.  (You may note, we live in Hawaii, one of the most expensive places on the planet...)

Income: Co-managers of a consignment shop  $800/month take home

Current expenses: Saturday coffee for two $20/week
                            Sunday breakfast out $20/week
                            Savings $40/week
                            Petrol $90/week
                            Consumables (bathroom tissue, soaps, beer) = whatever is left in the month, up to $800/mo.

Groceries are presently covered by food stamps, for the past two years, and I would LOVE to release these with our appreciation and be able to buy our own food.  In our State, this qualifies us for medical coverage, which I would also like to figure out how to provide for ourselves.

Assets:

a:  we have two vehicles which should have died a couple of years ago but refuse to give up the ghost.  Both need repairs in excess of their $ value, but are priceless to us in getting around.  Because of reliability/safety concerns, we're borrowing a vehicle from my brother which he wants to sell, and will give us whatever we get over his asking price.  At present, and with his agreement, I've marked it at a high price in order to have a steady to/from work car.

b:  my beloved scrounges for "fixer upper" motorcycles and turns them from trash to treasure.  This is a potential future income source and vein of interest.

c:  a whole lotta love and resilience.

d:  personal assets probably would earn us $500 if we consigned them in our shop.  Most the stuff we have already done so.

e:  creativity.


Liabilities: two dogs, some health issues

no debts, no credit either...


Specific Question(s):
1.  best/safest way to rebuild credit
2.  I'm currently tucking away $40 a week and am building an account with TD Ameritrade, reading all I can on investing
3.  we need more income, but the only avenue I can see is by marketing our shop better... I have done zero marketing as I am unclear about how to do this in a changed economy AND I'm ambivalent about consumerism.  Being a consignment shop eases my angst, but I hate to push sales on anyone.   Should I just hang it up and join a monastery?
4.  by most people's view, we are old.  I don't think so, however, and wonder is there still a "retirement age" ahead for us?  Any hope?
5.  how do I encourage my beloved to "keep the faith"? when we can't pay ourselves and it doesn't look like it's going to get better, including no job prospects offering more than we can make in the shop other than medical benefits?

Again, your thoughts and ideas are greatly appreciated!

[Chrissy]

How old are you?  Middle-age is a broad term.

Do either of you have a college degree?

Can one of you work, while the other runs the shop?

[charlietioli]

Hi, Chrissy,

I am 52, my husband is 55.  We both have Masters Degrees in Education and have applications in with the DOE (enrollment numbers are still going down in HI).

We have tried having one work while the other runs the shop, and yes, we can.  It gets us less take-home cash because PT only  is available and due to fuel expense on the commute.  If we move closer to town, the rents double.

I forgot to mention that I have managed to save 4K so far doing my weekly savings and putting in any unused coffee/breakfast/beer money along with half of any gift money we are given.  At some point in the near future, my savings will automatically kick us out of food stamps and medical coverage.

[LadyStache]

If you cut out Saturday coffee and Sunday breakfast, you can basically double your savings.

[swick]

3.  we need more income, but the only avenue I can see is by marketing our shop better... I have done zero marketing as I am unclear about how to do this in a changed economy AND I'm ambivalent about consumerism.  Being a consignment shop eases my angst, but I hate to push sales on anyone.   Should I just hang it up and join a monastery?

I don't mean to sound harsh, but you need a very serious wake-up call. Optimism will only get you so far and you are in DIRE straits.

IF the shop is your only source of income, you need to be treating it like a business and not a hobby that provides some write-offs. You need to be marketing it. You need to be conducting market research and filling a local need. You need to be reevaluating your beliefs around money and consumerism. You are fulfilling a need, providing a service and keeping things out of the landfill.

You need to have a very clear idea of ALL your income and expenses for both personally and the shop. Do you know how much extra you will need to bring in if you no-longer qualify for food stamps and medical? Do you have a plan in place for making this money?

Would be VERY CAREFUL about saving money until you have these numbers worked out. If you loose your social assistance without having a way to pay for the ongoing extra expenses you will be in trouble

Quite frankly, you shouldn't be bothering with investing books right now. It is a waste of your time. You need to be absorbing everything you can about business and marketing and pouring all your energy into making the shop successful or at least one of you finding another job. As repugnant as you might find it, Dan Kennedy's book "Marketing to the Affluent" is a good place for you to start if you want to cultivate higher spending clientele - but really you need to do some market research, create a business plan (it is never too late)  to figure out if a consignment shop is viable in your area and what types of products/services will give you the best return.

[charlietioli]

Thank you, Swick!  This is very helpful.

[mxt0133]

Putting aside all moral values on social welfare and going with just pure numbers. 

You state that your increased savings will eventually disqualify you for food stamps and medical benefits.  This is the current issue with our social welfare program.  There is no gradual decrease of benefits as you try and improve your situation, you either qualify of you don't.  So if you are just making enough to quality and an small increase will disqualify you from benefits, there is no incentive to justify that small increase because you will loose much more in benefits.  Unless you significantly increase your income that it will surpass the benefits that you were receiving, which is highly unlikely, it is rational to limit your income to continue qualifying for benefits.

It is very admirable that you are trying to save and improve your situation but you have to know how you will be able to supplement your lost benefits.  Otherwise you will just fall back down and eventually have to go back on those benefits.

[charlietioli]

Thank you, mxt.  That is really the crux of my position.  I want to never have to ask for such assistance again, much as I appreciate the help.  It is a bizarre experience to see a trap in it when the intention is to help me regain my independence.

[Chrissy]

What's this about a farm/farm labor?

[mozar]

Marketing is a tough subject. Maybe you can take out marketing for dummies from the library? 60% of consumption is by the affluent, maybe that helps? There may be hawaii specific marketing advice. Part of marketing is knowing exactly what sells, profit margin, and selling more of your high margin items. Is there a consignment store association, is there a low cost radio station you can advertise on? Time to stop hoping and get realistic.

[Allie]

I live in the other distant state.  I understand you may be less than enthused about consumerism, but let's be honest.  In our far flung states, things are freaking expensive.  It is hard to find gently used items that are quality made instead of paying for something made in China at Walmart.  I get a lot of feedback to just go get things at thrift stores, but it isn't like living in a large urban area in the lower 48. 

Unless there are tons of second hand stores, you are doing yourself and your neighbors a disservice by keeping it low key.  You may not want to push consumerism, but by not letting others know you are there, you're pretty much pointing them to a big box store.

Use craigslist and Facebook to start and they will come.  It will be win-win.

[iluvzbeach]

Having a Masters in Education sounds like you ought to be employable by teaching at some type of facility, evening serving as a substitute would (I think) earn more money than you do now. What have you done to try to get gainful employment in your line of education? I agree with the above post that this is a DIRE situation that needs to be addressed. Best wishes.

[swick]

Another option you could both consider is tutoring. With very little work (again marketing yourself) you could bring in quite a good income. You can also make your students come to you so you don't have to worry about travel time.

[iluvzbeach]

+1 to what Swick said. Tutoring is an excellent idea.

[jodelino]

I've never been to Hawaii, so can't say what the market is like there, but I live in a town with many affluent retirees and many second homes, and several upscale consignment stores flourish here, fueled by the buying and selling of second homes, retirees shedding extra stuff, and wealthy retirees dying far from their kids and roots. Estate sale businesses thrive. I admire these businesses and I patronize them when I need to buy something for my home; I love buying cool stuff with a history rather than junk just shipped from China. The people who run these businesses are go-getters; they advertise in the newspaper, on Craigslist & Facebook, through e-mail lists that they build up, and signage when they're running an estate sale. Several of them have trucks with their company logos on the side for pickups and deliveries. They are clearly making money for themselves and their consignees and the people they employ. Could you ramp up your business?

[charlietioli]

Thank you, mozar, Allie, iluvzbeach, and jodelino!  Your input is valued.

Chrissy:  our landlord was renting our home - a wild-looking four-room coffee shack, at $500 a room to twenty-somethings.  He wanted them to pick up plant debris and take care of the place in trade for "low" (for here) rents.  The clean-up would never happen, and the place would decline.  So, instead, he rents the entire place to us for $1000, plus $300 toward electric and water, with the other $1000 covered by us maintaining his entire property.  It's a win-win because we can give the time, although it's exhausting on top of the shop, but no money to cover a real rent.  (Yes, we could rake in $$ renting out the extra rooms, except for the fact that our landlord is militantly private.)

Swick and others:  tutoring and substituting are both possible options.  As a retirement community there is a serious glut of retired teachers doing just that, and they are well-established.  It's not impossible, just requiring more energy than we may have on top of the other two "jobs".  Additionally, the HI education system is undergoing major upheaval (basically, reorganization from the Federal level) because it's a mess.  That was why we opened our own business in 2005 and left the system.  It was a quality of life decision.   We have to pay several hundred dollars and give a month to training to qualify as substitutes even though we are already certified teacher/administrators in this state.

I appreciate the comments:  you all are giving me some ideas I had discounted as wishful thinking (Kennedy & marketing to affluent population; how rare a good C shop is - and ours is awesome; and I might just do a hybrid "tutoring in upcycling" idea...)

THANK YOU!