Author Topic: Help! Stuck and want to be free, not sure its even possible for us  (Read 12948 times)

N

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Help! Stuck and want to be free, not sure its even possible for us
« on: September 21, 2012, 11:45:46 AM »
So, I just found MMM a few days ago, and I feel like I got religion.
Ive been struggling for a while, trying to figure out how to get out of the financial mess we are in, and somehow find a way to have a life we all enjoy.

A little about us, I am a stay at home wife/mom to two kids, 8 and 5, who I homeschool. Im almost 39.

My husband is 48. He doesnt like his job, and complains every single night about having to go in the next day. Its taking a toll on his (and mine) sanity. He does have deadlines and tiny mistakes can cost the (small family owned) company lots of money, so it is stressful for him, and of course we wish he made more money.

We do homeschool our kids, and would love to travel, have funds to follow our passions by taking classes, etc, and I would be happy to move somewhere a lot less expensive than Chicago to live in. Not sure my DH would be excited to move. He hates change. He hates moving.

Our situation feels pretty dire to me, I will outline it all shortly, though I know that since he does have a pretty secure job, that we are ahead of some of our other friends, where the husband has gotten laid off.

We do have a lot of medical bills due to my DH and I each having a major surgery in the last 15 months.
Also, we currently in default on our mortgage.

A little about the mtg. We have lived in our condo for 12 years. Our mortgage was 145K when we stopped making payments in March 12. (now there are fees and stuff added to that total). We tried to sell it 5 years ago but got no offers. It was right when the market was tanking. Its in a 20 unit building and in the past 2 years, 4 other units have fallen into foreclosure. There are two across the hall from me, one  just sold from the bank to an investor for 59,900. The other 3 are in various stages of foreclosure, but not owned by the bank yet and not listed for sale, but effectively my condo is worth 60K or less.

Our PITI is approx 1300$ plus a HOA of 357$. Its an 1100 sf, 2 br condo that was rehabbed 12 years ago. Our HOA fees went up last year (a long overdue raise, but for us it was $75 more a month) plus somehow our prop taxes went up 200$ a year to 2600$ year. $1650 is way more than we can sustainably pay for housing, and truthfully we could find a comparably sized place for several hundred dollars less. (maybe even half)

While we are not paying the mtg, taxes, or insurance as of right now, we are paying the HOA fee and tring to set aside cash for when we have to move (the 2400$ I mentioned earlier)

So, here is our situation:

Assets:
DH contributes 50$ week into a vanguard target retirement 2035 account. Currently he has 4 funds that have 1419, 1467, 1508, and 1417 totals. $5811 total. (there is some company matching, looks like they contribute $45 a week. not sure how these numbers got decided on)

DH has another idle retirement acct with a balance of $10533. IIRC, I just sent paperwork in to roll that into the vanguard accts, but Im not 100% sure.

I have an idle retirement acct from when I was working that I think is worth about 10k, but I cant find any statements right now. I havent added to it since I stopped working.

At this moment we have $2400 in cash.
We have no other savings. No stocks, etc. , no education funds
We do have health insurance (with 3500$ personal deductibles, 7500$ family, and plenty of copays, plus we pay 20% past the deductible)
No life insurance on either of us

DH makes approx 65$K a year. He gets paid hourly and works overtime, so it varies by his weekly paycheck. He usually gets a bonus worth one week of pay at the end of the year (included in the 65K I mentioned). He gets 3 weeks of paid vacation, but he cant take it consecutively.
Out of each weekly check comes 126$ for health insurance (we pay half, the co pays half) and $50 to retirement acct. He works about 50 hours a week. His commute can vary from 40 min.- 2 hours one way (depending on mode of transport and traffic) he works on the near southside of chicago.

His take home weekly pay is approx 850 on average.
Currently I babysit part time for about 140$ a week, but my hours will change in November to less, but Im not sure exactly how much.

Debts:
Credit Card with balance of $9000 at 0% interest for 10 more months
Credit Card with balance of $1500 that I meant to keep at 0 balance and already has gotten away from me again. Its an amazon rewards card.
Medical Bills approx $6300 total owed. I currently pay approx 300 month (have formal payment plans arranged for a couple, then I make sm. payments to the rest, with one larger payment to the lowest balance one to pay it off the fastest, etc)

Car Loan: (sigh.) 357$ month with 27 months left. Its a 2008 Kia Rondo. I love it so much. It has a third row for storage or 2 xtr seats. This comes in so handy with all the kid activities we do. We often carpool, have lots of supplies to take places, its roomy, it fits me and my DH, who are big people). The part that makes me sick to my stomach is that we also had a 2004 Honda civic that was paid off, but we sold it to my sister earlier this year. I thought it made sense to go to one car (though my husband resisited mightily and is still mad). I didnt think we could sell the KIa since we had a loan on it, and  tbh, I liked it way more than the honda. DH and I agreed to share the car. He drives it to work 2 days a week and takes the bus the other 3. The bus can often take 1-2 hours one way. Its a massive time suck. He has to be at work by 8 and he gets home around 5:30 or 6:30.

Other Expenses:
Yearly:
eye exams : 100 family
contact lenses for DH: 400 (he also has glasses he wears at home at night)
Medical supplies for me: 75

Monthly:
Rent Fund: 1000 (trying hard to set this aside while we arent paying mtg)
HOA: 357
Med Bills: 300
Car Gas: 120
Cigarettes: 120 (DH smokes. Price just jumped up from 100$ month, plus he drives an extra 60 minutes/mo to go get them in the burbs)
Cell: 115 (DH uses 30 min a month, max. no texts. flip phone that w bad audio, I have an iphone with unlimited data, etc)
Cable: 100 (floated the idea of canceling and DH threatened to move into a hotel. I think he was joking. I hope)
Car insurance: 87
CTA fares: 80
Internet: 45 (cable internet as we have no home phone)
Kids allowances: 20/mo each. 40 total
Netflix: 8

Food: another sigh. this is where we always have problems. The past few months I have been seriously cutting back on groceries, and trying to do 100$ per week at the grocery store. However, I had previously made a bulk purchase of meat so my freezer was stocked with meat already.
But, we do tend to eat out too much. DH really loves going out to brunch once a weekend. Its very easy to do drive thur with the kids during the week when we have entire days out of the house. This is an area I know we can improve, but will take some family cooperation. we probably spend another 100$ a week on food out of the house

Other expenses would be clothes, classes for the kids, and any other enrichment activities we do with them. (Im not willing to negotiate on Homeschooling)
I buy most of our clothes at the thrift store. Right now the kids arent taking many activities. But I estimate that all the classes and stuff for Homeschooling ideally would be at 100-200$ a month (more would be even nicer).

So I havent added that all up, but I dont see how we could ever hope to live on 50% of take home pay.

I think that covers most of it.

in regards to the car, condo, commute:
DH works on near southside of chicago. its not that many miles away, but its on the other side of the whole Loop downtown area, and it takes a long time to drive past it/thru it. The housing right near there is not good, and then me and the kids would be on the other side of where all of our social lives are (and their activities and classes) However, I dont mind commuting as much as DH does, and I could do most of mine in off-traffic hours. Im assuming we will move and when we do, the commute is a major consideration. DH has to have a way shorter commute.

We are trying to work with the mtg company (citi) for a modification. I sincerely doubt we would get one, let alone one we would want. We would sell in a heartbeat, if we were not so dead underwater.

Re; the car. It would be a huge adjustment if we had n r at all. I know families who do it in chicago, but it would meet with serious resistance from DH and kids. (even if I wanted to and Im not sure!). DH has big extended family in suburbs and we usually see them once a month or so. I mean, it would just be the hugest lifestyle change we could make. Groceries, classes, everything. oy.

Re: the foreclosure. My dad is an atty and he said if we end up losing the condo, we may want to file for bankruptcy so we dont end up with a major tax liability. Also, if we did, we would wipe out our medical bills and cc debt. But he said bankruptcy might not be best, either. I dont know what to do. DH does not want to (nor has he ever) be involved with financial decisions. Ive always done it all, and clearly I need help. We spent the last 11 years overspending and living beyond our means, and now I see that there is a better way that will actually give us the lives that we really want. But I dont know how to get there. I dont even know where to start. Im beginning to realize that things I thought couldnt (or shouldnt have to) live without are tying us down and actually making life harder.  Not sure DH is going to agree, and not even sure how to talk to him about all of this. He is angry and tired so much of the time.

I feel like its imperative we do something to improve our lives.

Please help. I know I will get punched in the face, but please do it nicely. :)

N

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #1 on: September 21, 2012, 12:16:06 PM »
Dump the car/loan and buy an old minivan/hatchback with similar capabilities and no loan. Stop paying HOA fees if you're not paying the mortgage. Stop DH from smoking.

rtrnow

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #2 on: September 21, 2012, 12:20:35 PM »
I'm not totally sure how, but you have to get DH on the same page as you are now. As you know your situation is pretty dire. Cable and smoking needs to go NOW! I gave up both (smoking 8 yrs ago and cable just a few weeks ago) and you get used to it and ultimately life is better because of it. I would also dump the car and look for something 10yrs old that could suit your purposes.

As for the condo, it's worth working with the bank to try and find a solution. A short sale or deed in lieu could leave you in a better place than foreclosure. Some people may take issue with this but I would look at how to prolong the process in your situation and stay in the home saving money and planning my next move as long as possible. The reality is that you're going to be renters for a few years, hopefully get things on a better path, and then maybe look at buying again.

N

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #3 on: September 21, 2012, 12:26:17 PM »
I gave up smoking 9 years ago. DH is not interested in discussing his quitting, and up till now I havent said much, because i remember how annoying it was when my mother harassed me about it, and it didnt help me quit at all. But I really wish he would quit.

on the HOA...oy. Im on the board. There is no fat on the assoc. budget at all, its all for operating expenses, and If we dont pay, and we are here for  another year, the assoc. loses a lot of money and other famililes suffer. And I have to look people in the face every day. They can also try to evict us for non payment, but no one else has been evicted for not paying (there are 2 with over 4k owed) and those will likely never be recouped.

N

N

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #4 on: September 21, 2012, 12:29:02 PM »
Dump the car/loan and buy an old minivan/hatchback with similar capabilities and no loan. Stop paying HOA fees if you're not paying the mortgage. Stop DH from smoking.

How does it work to sell my car with a current loan. lets say I break even with what i owe and what i sell it for (not a given)
how do I afford any kind of car? We looked at 10 year old minivans with 70k miles and they were all 8-15k. which is why we chose the kia rondo, with a good warranty, and planned to keep it forever.

Use it up, wear it out...

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #5 on: September 21, 2012, 12:29:14 PM »
Startingfromthestart - Congratulations! Recognizing you have a problem is the first step. Now, you need to get a real plan of action that is sustainable for you and your family.

There are a lot of things we can discuss specifically about your finances, but first there's something else we need to discuss.

You AND your family need to want to change enough to take the tough steps to do it. I believe you when you say that you feel overwhelmed and know you need to do something about it, but it doesn't sound from this post that your DH shares your sense of urgency. As MMM would say - YOU ARE IN A DEBT EMERGENCY!!! YOU SHOULD BE RUNNING AROUND LIKE YOUR HAIR IS ON FIRE UNTIL THE SITUATION IS FIXED!!! For you, it's even worse - you not only have a lot of debt, you have so much debt and expenses relative to your income that you can't even pay the debt service until you get ahead.

Step 1 is... get your DH on board with this reality. While you're at it, make sure that you really believe it as well - that you really understand that THINGS WILL NOT GET BETTER UNLESS YOU START MAKING SOME DIFFICULT AND PAINFUL CHOICES.

DH does not want to (nor has he ever) be involved with financial decisions.

By making unreasonable demands for luxuries that keep you spending beyond your means, DH IS VERY involved with your financial decisions.

Once we get past this hurdle, we can start to talk specifics on where to look to make these changes - and I'm sure others in the forum will be diving right in. However, it would be very good to hear from you what you think about and how you might handle this fundamental issue.

You can do this - but you'll have to do it together. We want you to succeed.

jpo

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #6 on: September 21, 2012, 12:34:33 PM »
Quote
HOA: 357
Cigarettes: 120 (DH smokes. Price just jumped up from 100$ month, plus he drives an extra 60 minutes/mo to go get them in the burbs)
Cell: 115 (DH uses 30 min a month, max. no texts. flip phone that w bad audio, I have an iphone with unlimited data, etc)
Cable: 100 (floated the idea of canceling and DH threatened to move into a hotel. I think he was joking. I hope)
These things all need to go, along with eating out.

Your housing cost is about double what it should be for that salary.

rtrnow

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #7 on: September 21, 2012, 12:35:20 PM »
How does it work to sell my car with a current loan. lets say I break even with what i owe and what i sell it for (not a given)
how do I afford any kind of car? We looked at 10 year old minivans with 70k miles and they were all 8-15k. which is why we chose the kia rondo, with a good warranty, and planned to keep it forever.

You have to involve whoever services the loan, but the bank gets paid, you get the extra if any, and then the bank will release the title. Buying another car may be tricky with little cash and already damaged credit. I would look on the low end of your range and it may not be the car you really want. Maybe you can find something in the 5k range, put $1,500ish down and finance the rest. Of course with the intention of paying it off quickly.

freelancerNfulltimer

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #8 on: September 21, 2012, 12:40:52 PM »
Based on simple math you are spending beyond your means every months just adding to the debt.

Your best bet might be a Bankruptcy. Do you have any family you can stay with to save some money once you get kicked out of the condo?

Things I see you can do now:

Save: $70/month - Sell the iPhone and get your husband a pre-paid phone. You're at home all day and can use a Skype phone off the internet or Google voice.

Save: $40/month - Stop with the kids allowances.  You can't afford them.

Save: $120/month - Husband has to quit smoking.

Save: $100/month - Cancel cable. You can watch most shows online right now on the network channels or HULU. You already have netflix too.

Save: $300/month - Stop eating out immediately. Do you coupon?

Save: $30/month - No more contacts. Glasses all the time.

Total Possible Savings: $660/month

Don't stop paying the condo fees. That can mess up a shortsale if you're able to do one.

twinge

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #9 on: September 21, 2012, 12:41:36 PM »
I'm sorry you're feeling stuck...here's some thoughts.

1.  See if you can rent somewhere where DH can bike/walk to work. It saves money, but it also will give him a lot more time.  You're homeschooling so you don't have to worry about school districts, just general safety.  You may end up doing some "social commuting" but you'll also develop ties in a new neighborhood.  Make sure you really calculate the costs of your day to day activities with children.  They may be beyond what you can afford at this point. Make sure you are really realistic not about what kind of life you want, but what kind of life you are able to afford--and how to turn that into a life you want within those limits.

I'll second widerhaken's:
2. Ditch the car and buy an old used one.  I'd go for a hatchback for carrying family.  We do just fine with a family of four in a Scion xa with lots of car travel/carrying things and an occasional extra kid along.  I wouldn't go for a mini-van it's too expensive to pay for gas.  Get an old, small used car.  That's what you can afford if you want a car.
3. Stop paying HOA fees if you're not paying your mortgage, you're just sinking money in there. *Unless you're planning on doing a short sale or other modified option. Your defaulting is already affecting the neighbors.  Start looking at rental options sooner rather than later near DH's work if you can't deal with the day to day reality of living by neighbors in this situation.
4. Do what you can to help DH quit smoking.  Use health insurance for smoking cessation programs/medication.  It sounds like he's in a place right now where he's hard to change, but do your best. He's got to get on board with you for not just smoking but everything if this is going to work out.

5. See if you can pick up more babysitting/tutoring.  The more initiative you show, the more likely you can get your DH on board.
6. Think about whether you can afford to be a SAHM and what you are willing to do/give up to keep that luxury. You cannot afford an iphone or eating out etc.
*Grill your dad more about bankruptcy and give him the full picture on your finances and ask for advice.
« Last Edit: September 21, 2012, 12:45:49 PM by twinge »

Another Reader

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #10 on: September 21, 2012, 12:55:27 PM »
In your shoes I would short sale the condo immediately.  Contact the bank and tell them you have had medical problems with a lot of bills and can no longer afford the payments.  Not sure how HOA's work where you are, but in Arizona, the HOA can come after the owner as well as the property, so it's wise to continue to pay it if that's the case in your state.

If Congress does not extend the income tax waiver on debt forgiveness after January 1st, then you can worry about filing BK.  The current BK law may force you into Chapter 13, but that's next year's problem.

Once you get rid of the condo, the other problems can be sorted out.  Once it sells, you will lose the monthly HOA payment.  You will have rent to deal with, but the biggest debt will be gone.

Your DH needs to be convinced there is a better way to live.  Getting out from under the stress of the condo would be a start.

maryofdoom

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #11 on: September 21, 2012, 02:20:54 PM »
These are all good tips, and I can't add too much to them, but I will say this: YOU HAVE TO GET YOUR HUSBAND ON BOARD WITH THIS. You cannot do this by yourself. I mean, you can do a lot by yourself, but you can't do this by yourself. You and he need to be working together on this, or else he's going to be sulky and resentful, and you're going to be angry and frustrated, and that is BAD NEWS for any kind of relationship.

I hope you'll keep reporting your progress back to us.

totoro

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #12 on: September 21, 2012, 02:52:40 PM »
Sorry to hear of the stress! 

There are a lot of options and one largish obstacle: having your husband participate.  Is your husband on board with you staying home and homeschooling while you have so much debt?  If so, things have to change with him.  If not, then this needs to be addressed too. 

There is always a need for childcare in our area and it pays fairly well and results in some good income tax deductions for homes and cars and materials your kids get to enjoy too.  Move your kids' activities to the weekends so you can be available during the week 8-6 for childcare:  in my area this would earn you $1200/month for two children over three years old.

We have a show in Canada called "til Debt do us Part" - not saying that this is a relationship matter here - it is really about how spending causes stress and how to change it for couples to that the stress is lifted.  Maybe you could google it and show it to your husband?  Is he a reader?  If so, there are quite a few good books out there on this topic too. 

Getting to the bottom of whether bankruptcy is the way to go or not might be something you can focus on with your father?  I think your condo is the biggest sinkhole in the scenario above, followed by your financed car.

I know you are in an emergency and can't do all of these things now, but what I have found that works for us to save money and create a saftey-net long-term is:

1.  Live close to work.
2.  Buy older cars for cash.
3.  Buy a primary residence that has rental income.
4.  If you don't own, rent for the least amount you can.
5.  Cook large amounts at once and package/repurpose for the week:  ie this week on Monday we roasted two chickens and a salmon at once; made a really big greek salad; made a really big pot of sweet potato, kale and coconut curry soup; made four fruit crisps at once; made bread dough that lasts for a week and can be fresh baked easily...  (we meaning me :)) It did not take long and after that, I did not really have to cook full meals and have just frozen the leftover chicken and fish today.  Choose recipes your family likes but the basic idea is that lunches and dinners are made from your once-a-week big cooking with a few extras.  This cuts down on impulse eating out a lot for us.




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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #13 on: September 21, 2012, 04:00:20 PM »
Same thing about what other posters said and I just want to offer my support.

You need to make a lifestyle change. There are so many things you could do to cut back, ie: smoking, car, iphone, eating out.  To be more like MMM's family and cut down on on your overall consumption is a lifestyle change that requires participation of the whole family. Get everybody on the same page and support each other.

N

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #14 on: September 21, 2012, 05:36:06 PM »
thanks everyone. Im going to talk to DH this weekend.

Does anyone think its a good idea to try and stay in condo as long as possible (could be up to a year or 18 mos) w/o paying (not paying HOA, either)
and use that money to do pay down other debt (setting aside a minimum of 4K for the move and rental deposit, first months etc)?
That assumes we cut every bit of fat off everything else (no cable, eating out, sell the car)

I do really appreciate all the responses. Taking everything under consideration.

Also, dont want it to sound like DH is the main problem. He hardly ever wants anything, doesnt buy stuff. Im definitely guilty of overconsuming. Its going to be hard for me, too.

N

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #15 on: September 21, 2012, 05:51:27 PM »
Financially staying might work in your favour but it seems unethical.  Although part of the reason you are in this situation is because of the housing market, the other part is failure to budget and plan and buying beyond your means.  Continuing to live in the apartment without paying HOA or mortgage fees will save you a fair bit, but you are then going to either owe more, or have to declare bankruptcy. 

Running up debt prior to a declaration of bankruptcy, if this is the plan, seems like the basis for an internal decline of morals that you will have to live with.  I don't mean to sound harsh - maybe there is another way to look at this that I am missing?

happy

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #16 on: September 21, 2012, 06:32:55 PM »
So many good replies.....the main thing is to rise out of your helplessness and take action. It seems to me that moving very close to DHs work might make a lot of difference. The man is working 10 hours days in a stressful job, with up to 4 hours commute : on those 4hour days, that leaves him with 10 hours ie 8 hours sleep and 2 hours to eat/bath etc. He may not like change, so he probably needs to get something positive out of the changes.

From now on look at every cent that leaves your purse and make sure there is not a cheaper way of doing things. If DH cannot quit, can he cut down his smoking to half? etc etc challenge all your assumptions and excuses. Keep the spectre of HOMELESSNESS in your mind every time you spend.

Making the changes won't be pleasant, although once done some of them won't be nearly as bad as you think.
BUT you have no alternative....you are going down the tubes.. and life will get a LOT more unpleasant if you don't do something.
Declaring bankruptcy and starting again won't help unless you learn the skills to prevent it happening again: you'll be back in debt again before you know it.
SO you and DH have NO choice but to self administer face punches.... the sooner you do it, the better.

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #17 on: September 21, 2012, 06:35:20 PM »
You can walk away, but you might be better off doing the short sale.  If your situation improves, a short sale will allow you to buy again more quickly and it won't ding your credit as badly, although it's already pretty battered.  You will still be there for a minimum of 120 to 150 days, even if the bank agrees to a realistic price and the unit sells quickly.  The process could easily take 6 to 8 months.  If you can get DH on board, you can make the changes that will allow you to save and pay down the debt during the short sale process.

Some servicers (lenders) are even paying sellers to do short sales.  You could possibly receive several thousand dollars if the lender approves the short sale and you cooperate in the process.  Lenders that participated in the recent settlement of the robosigning case are more generous.

If your father is willing, perhaps he can help you negotiate doing the short sale with the servicer.  Having an attorney advise you and possibly make the phone calls should help.  It does not sound like DH will be of any help with the process.  There's a lot of paperwork involved.  You will need an experienced short sale agent to get the property sold and get the sale through the servicer's asset management department.  Find someone that actually does short sales every day, not someone that says they know how to do them.   Ask them how many short sales they have listed and how many they have closed in the last year.

In the meantime, you need to have a serious discussion with DH.  Your future financial success depends on him being on board.

Use it up, wear it out...

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #18 on: September 21, 2012, 08:57:51 PM »
If you can find a way to swing it, I think a short sale is your best bet. Bankruptcy should be a last resort. You'll need to keep paying HOA fees to make that viable.

Lars

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #19 on: September 21, 2012, 11:26:57 PM »
As you work to bring your family on board and revise your budget, I would encourage you to change the way you spend your money. Staying firmly on a budget especially when reducing expenses takes some practice and you will probably find it helpful to have a system where it is more difficult to go over budget for at least the first few months. The goal of the system is to give every dollar a home and make sure it gets there.

A suggested system - the envelope budget system

Lock all your credit cards and ATM card in a safe or only use them for bills and gas. Delete credit card information stored on websites except phone and utilities. (Make it more difficult to mpulse spend when you don't have money.)

Before a paycheck comes decide where the money will going. Pay any bills and save any money immediately and put the money for things like cigarettes, groceries, restaurants, and kids stuff in separate envelopes. When the money from an envelope is gone that is it until the next paycheck unless money is moved from another envelope.

That is the short version. Let me know you have any questions or want more details. There are a number of other systems too - and other forum would, I'm sure, be happy to share their favorites if your interested.

mustachecat

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #20 on: September 22, 2012, 01:13:16 AM »
So, you guys bring in $4,290/month on average, or normally $3,960 and up to $4,950 when there's an extra week/paycheck.

Your expenses here, including your HOA fee and assuming $150/month for homeschooling, add up to $2,362/month. I didn't include clothing, since you didn't leave a number for it. You also don't mention credit card debt payments; I assume you're not making any on the 0% card, but what are you paying on the other one?

When you say that you're "trying hard" to set aside $1,000/month for future rent, I take it to mean that it doesn't always happen.

Mathematically, it doesn't make sense. There is a giant hole--or more likely, a lot of small and medium holes--in your picture of your spending, which adds up to a nearly $2,000/month gap between what you think you spend and you actually spend.

Over the last seven months, since you stopped paying the mortgage, all of this adds up to $13,500 of money you spent without really realizing it. Yowza.

There are lots of overlapping problems. Your husband's unhappiness seems to be at the center of a lot. It certainly must driving his smoking, brunching, and cable-needing. From a financial perspective, yes, that's all fat that needs to be cut, but I don't know what this guy is going to do if you take away all his crutches at once.

I'm curious that you described him not only as miserable, tired, and stressed out, but angry. The anger is interesting. I understand all of his other emotions, but what is he angry about?

Is it possible that he's angry at you? How does he feel about the homeschooling and you not working? How does he feel about the Kia? How does he feel about commuting four hours a day? How does he feel about your iPhone with unlimited data?

Edited: For math errors. I'm up waaaaay too late.
« Last Edit: September 22, 2012, 01:16:21 AM by mustachecat »

FactorsOf2

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #21 on: September 22, 2012, 07:10:22 AM »
CONGRATULATIONS on starting a new and more hopeful chapter in your life!  The fact that you were open-minded enough to recognize the power of the moustache when you stumbled across it means you've got a lot on the ball - you and your family can do this! Your husband is quite a high-earner, and your income potential hasn't been fully tapped!

I second the importance of getting DH on board. Avoid any sort of accusatory language, thank him for his minimal spending, apologize for your own contributions to the problem (kudos on recognizing your own over-consumption btw). I would have some rough sort of plan that allows you to show him some actual math / timeline. An attempt at switching jobs should absolutely be on the table, he can secretly job search while keeping the current one. Show him this website and especially this thread so he knows there are people here to help. Don't be discouraged if he is negative and resists at first.

Here are some thoughts that might affect your 'plan':

I agree that you need a short sale on the condo and then you need to move closer to DH's work, like 5 MIN AWAY.  Renting is great while you get back on your feet, don't be in a rush to buy. 

Is homeschooling negotiable for your family?  Up till now you were saving a ton in childcare costs by homeschooling, but at 8 and 5 yrs. old you have the option of public school. This would free up a lot of work hours for you - you might be able to work part time and still be home with them starting at 3pm each day. I haven't looked into this too much, but I've heard that (once you control for home life variables) home-schooled children don't perform any better than public-schooled children on average. Mr. money moustache and his wife are both retired (as you know :) but even they are utilizing the public school for their young one. Parents in this country love to obsess about how well their local public school performs, migrate to better school districts, worry about whether their children are being adequately prepared etc....  To be honest, I imagine home-life is by far the biggest determinant of how happy and successful your children will be.

On a similar note, the 40/mo. of children's allowances and the couple hundred / mo. of enrichment activities should be reconsidered. Again, parents in this country seem to think that unless their child gets to do piano and painting and horseback riding lessons etc. they'll turn out to be drug addict or something. I feel very certain that you can find plenty of enrichment for free, and this is something mrs. and mr. money moustache have written about on this blog (if you are reading the posts from start to finish, which I recommend).

You need to decide on a budget for every single category of spending and then meticulously track every penny.  Check out mint.com to link all your financial accounts together.

All in all, I'm very excited for your family!  Your lives are about to get a lot better!


frugal rph

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #22 on: September 22, 2012, 09:05:54 AM »
Congratulations on getting started.  This will probably be an unpopular opinion, but I think you should keep the car for now.  It is easy to say get an old reliable car, but unless you or your husband is able to work on it yourself, that can be pretty scary.  You only have 27 months left on the loan, and after that, you should not buy another car.  Drive this one until it dies.

That being said, I do think you need to let your husband have the car a lot more!  He works about 50 hours a week, so he does not need to spend extra time commuting by bus.  You and the kids can commute by bus during the week when he has the car for work.  That seems only fair to me.  You say that he is unhappy and angry.  Being married to a man in a stressful job myself, I can easily understand this.  Since you are happy homeschooling, it may be difficult for you to imagine how it is to dread going in to work everyday.  Whatever you can do to decrease that stress, you need to do it.

I think it is a good idea to stop paying the HOA fee and just live in the condo as long as you can while aggressively saving for rent on a new place.  $357 a month is just too much right now.  Your credit is going to be wrecked with either a shortsale or foreclosure, so you may as well save as much money as possible.  I know it's embarrasing to be on the board and not pay your dues, but you are in a crisis situation!  In these situations, family comes first and your family needs that money.  However, don't waste the money.  Pleae save at least $1300 a month for your next place.

You are spending way too much on your phones.  Ditch the iphone (if you end up declaring bankruptcy, don't worry about the termination fee) and get a prepaid mobile like tracphone.  You can get a $40 phone and 4500 minutes to last you 1 year for about $200.  Use skype or magic jack at home.

Your food budget should be $100 a week max and should decrease from that as you learn to be more organized about cooking and eating at home.  Can you start a unit on home economics with your kids and involve them in shopping, planning, and eating healthy meals at home? 

After 1 month of seeing you cutting back everywhere you can, ask your husband to choose cable or cigarettes.  Eventually, you will need to get rid of both, but I don't think that's an option right now.  You need to get him on your side, but you can't force him.

I hope this helps. You have a long road ahead of you, but it will be so worth it!

FactorsOf2

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #23 on: September 22, 2012, 09:24:41 AM »
I think it is a good idea to stop paying the HOA fee and just live in the condo as long as you can while aggressively saving for rent on a new place.  $357 a month is just too much right now. 

I disagree.  If you're going to dishonor your commitments, it should be done only after cutting out all discretionary expenses.  For example, I wouldn't feel good about paying $45/mo. on internet, $40/mo. on phone, $8/mo. while not paying HOA. The OP has already expressed unwillingness to screw over the neighbors, I think that's the right sentiment.

N

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UPdate:Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #24 on: September 22, 2012, 12:02:58 PM »
Had a talk with DH this morning. Whew. I so married the right person.
He is not thrilled with the idea of cutbacks, but he has agreed to go along with my plan.
We talked about his anger and frustration, and a lot of it is due to the commute, so we are trying to figure out ways to reduce it, STAT.
He may take the car more days of the week (currently he takes it 2) We talked about downsizing to cheaper car (more discussion needed)

I took responsibility for spending and attitude of acquirement, and showed him what Im changing and doing to rectify situation.
We discussed the goal of living on 50% of our income. We discussed quality of life concerns and eventual retirement. It was good.
I want us to work as a team and I think we can.

A couple things:

Homeschooling: We are both willing to give up a lot in order for me to be home with the kids and to homeschool them. We are both completely in agreement about that. I said, ideally, that I would like to have a couple hundred dollars a month for them, but the reality is that they havent done any classes or stuff like that for well over a year, which was when I broke my leg, which required surgery, and probably set all these changes in motion. The stuff they did before was like, park district gymnastics for 50$ a twelve week session. I signed them up for a homeschool soccer league (there were over a hundred kids!) and it was 40$ per family. I bought cleats at the thrift store for 2$. No horseback riding lessons here.

Saving cash: The past three months I have been socking away the 1K per month. Before that I was aggressively paying down the medical bills, and credit cards, but I got advice to pay less on those for right now, and save as much cash as possible for the move.

After the talk, I called and cancelled the directv. As you all know, they realllly dont want to let you close your account. They offered me a credit of 20$ a month for 12 months...but I said no. Its gone.

I also ordered my sim cards for Airvoice and will get that switched over asap. the cable and the phone should save us 200$ a month. feels good.

DH said that he would be willing to try for at least a 50% reduction in cigarette spending, either by smoking less or finding a cheaper cigarette.
another 60$.

We talked about the food budget and are not going to eat out. This is going to be one of the hardest.

Car- Will have to really think more about selling it vs keeping it. will research what I could sell it for. at any rate, will investigate finding cheaper insurance, and defiinitely use it less and more efficiently. I plan to start acting more like I dont have a car.

Will update more later, but gotta get off the computer.

Thanks,
N

Another Reader

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #25 on: September 22, 2012, 12:46:25 PM »
All I can say is "Wow!"  Keep us updated on your progress!

Use it up, wear it out...

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #26 on: September 22, 2012, 12:57:44 PM »
Congratulations! You might want to start a thread in the "Journals" section to track your progress - we'll be happy to provide advice & encouragement along the way.

I'm feeling so positive after reading about the meeting with your DH.

PJ

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #27 on: September 22, 2012, 01:08:26 PM »
What a great thread ... you really opened up about your situation, got a variety of hard suggestions, took them to heart, addressed them with your husband, and took action (with more planned).  Way to go!  No doubt that as you adjust to new ways of doing things, you'll see other ways you can improve your situation.  Look forward to more updates!

kkbmustang

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #28 on: September 22, 2012, 01:40:45 PM »
Congratulations!!! And, yes, please do join us over in the Journals. :)

HeidiO

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #29 on: September 22, 2012, 09:16:09 PM »
Yay!  Good job. 
Heidi

travelbug

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #30 on: September 23, 2012, 10:54:11 PM »
Good for you!

But...

we homeschool and love it, but seriously even if you put the children in school just for 6 months or so and worked full time to get back on track, or I agree with the PP about taking other children in as a daycare option.

I feel that moving closer to your DH's work would alleviate stress and give him the option of more overtime perhaps instead of a commute.

Good luck OP

caligulala

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #31 on: September 24, 2012, 08:37:50 AM »
Glad to hear your meeting with the husband was productive.

I'm also in Chicago on the near northwest side and a SAHM at the moment. Living in the city on a single income is totally feasible. My husband makes considerably less than yours and we manage to save between 20-30% most months. And we pay our rent!

Moving to the southside would be a huge gain for you guys. Bridgeport, McKinley Park, Bronzeville and Pilsen are family oriented neighborhoods close to your husband's work. Cutting that commute will be awesome for his outlook.

You do not need a car in Chicago. Period. I have two toddlers and we recently sold ours after driving 8 miles in 2.5 months. Choose an apartment within a mile of the El and you'll be golden. Sign up for I-Go or Zipcar and you can use a nice, well maintained car for your trips to the suburbs. You can rent a car from most Enterprises from Friday to Monday for $10 a day if you have a big weekend. Teach your kids how to use a transit and bike map and have them navigate you to activities. The frequency of use for transportation should go like this:

Feet
Bike
CTA
Car Share/Taxi
Rental Car

Living in the city is the best. You can do so much in your neighborhood, but have the entire city just a train ride away. Let your kids experience the adventure of getting themselves places instead of passively riding in a car. You can get refurbished bikes at Working Bikes on Western & 23rd. Taking your kids to line up on Saturday morning to choose their bikes will be so fun! Riding on the sidewalk isn't legal, but not many people will fault you if you are riding slowly and with the direction of traffic. Just be careful to make sure turning cars see you when you are crossing the road.

Best of luck! One last thing I'd recommend is checking out www.youneedabudget.com. We use it and don't know how we'd manage without it. They have a very supportive community and you'll get a great idea of what you're spending and what your priorities are from using the software and its method.

LatteLaura

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #32 on: September 25, 2012, 01:06:24 PM »
Hi, I'm new here and wanted to let you know that I enjoyed reading your story and look forward to any progress reports you may give.  Good luck!

MsSindy

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #33 on: September 25, 2012, 02:02:29 PM »
Congratulations!!  I just read this entire thread for the first time and was elated to see that you were able to talk with DH and had a great outcome!  I think owning up to your part and talking about what makes him stressed was probably keys to a great conversation.  Congrats again on moving forward.

We talked about the food budget and are not going to eat out. This is going to be one of the hardest.

As for this, one of your goals should be to become a damn good cook!  My DH much prefers my cooking over eating out!  Ask your DH what he wants for a 'special dinner'.  If he suggests eating out, you can say, "no, I've already planned for XXX at home" - you have to stay strong.  If you're eating drive-thru because you're so busy running around on the weekends, then do less "running around".  I work a full time job plus an hour one-way commute (I know, face punch!), but I make time to bulk-cook meals, grow a garden, bake bread, and preserve my harvest.  Why?  Because I've made it a priority, both for finances, but also for health.  Stay vigilant about the things that matter.

Also, I wouldn't be so strict and say "we're not going to eat out".  Instead figure out what your budget is for food and just stick with it - it could mean a trade off of a couple of nights of beans & rice type meals for a nice night out.  More about balance and less about deprivation.

Good luck!


palvar

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #34 on: September 25, 2012, 02:44:29 PM »
Others may disagree, or maybe  I'm missing something.  If you're putting away $1,000 a month in savings and just cut down on $400 a month for brunches, wouldn't this cover your mortgage?

N

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #35 on: September 25, 2012, 11:29:24 PM »
I am a good cook, if I do say so myself. And I do quite a lot of from scratch, delicious cooking. However, my DH very much enjoys going out to eat (as do I, I must confess) someone else does the cooking and the dishes, and everyone orders exactly what they want. DH also very much likes "relaxing" on the weekends, and brunch to him, is part of the good life. IF I can be creative enough in the grocery shopping and cooking, perhaps we can fit in a couple of brunches a month. If we had a sitter (free, by swapping) for the kids, it would be even more affordable.

totoro

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Re: Help! Stuck and want to be free, not sure its even possible for us
« Reply #36 on: September 26, 2012, 09:09:00 AM »
What you say regarding the good life is kind of a vicious circle.  If you need to pay more money to have relaxation and the good life you need to work more or not pay your debts as fast which creates more stress which creates more of a need for the "good life" stress release.

A more workable approach might be to address the stress causers head-on:  the commute, the debt, the job.  You can then actually afford to go out for brunch if you want to, but you might find you want to less when everything is under control.