Author Topic: Help with big life choices 6 month time frame  (Read 4745 times)

tomq04

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Help with big life choices 6 month time frame
« on: December 30, 2013, 09:41:58 PM »
Specific question, what to do moving forward the next 6 months.

Senario:
Single Income (44k), 2 year old and 1 bun in the oven, due June 30.  Car 1996 Ford Taurus can/will die any moment, my mechanic (i'm his bookkeeper) is convinced the head gasket is leaking and can go any day.

Salary Take Home (minus tax/401k/health insurance: 2748/month
Moonlight: Craigslist/Amazon/bookkeeping $252/month
Total: $3000

Expenses
Mortgage: $900
Food: $500
Health Insurance: $450/month(*)
Utilities: 160
Gasoline: $200
Auto Insurance: 60
Household:60
"loan to dad"- $50 (he paid off my student loan, i put money back into our collective investment club @ 0%)
Tithing: $285 (10% of take home)

Total:         2215 *doesn't include health insurance, since taken out pre paycheck.
     
Savings
401(k) 220 (25% match)
Investment club- 100 (suspended until baby for)
Emergency- 100 (suspended until baby paid for)
Total:       420

2635, leaving a few hundred dollars of wiggle room.  We may go out to eat once/month, we have no family in town (Spokane WA) so visiting family is a 4 gallon 30 mile/each way endeavor, however worthwhile for our sanity.


According to the budget there should be roughly $300 extra, can safely say that isn't true even though we are very frugal with our comings and goings.  I have been taking the CPA exam and that has taken the extra money for the past 6 months, $1500/study materials and $600 test takings.  My wife does craft projects for $20-40/month as well.

Balance Sheet:
Cash Accounts: $2000
Investment club: $4000 (do not want to touch under any circumstances)
401k: $2500

Credit Card: $1500 (DON'T WORRY, I'VE NEVER PAID INTEREST IN MY LIFE! PAID IN FULL EVERY MONTH)
Emergency Room Bill: $200
Baby Bill: we are doing this through a midwife and they want cash, up front at week 30, $4000 left (would be the same price as if billed through insurance, just due about 6 months earlier)
Car Situation:  We have an old 1996 Ford Tarus that works(ish), get blinking check engine when idling and 2 mechanics tried everything easy.  Overheats in summer, no heat in winter.  My mechanic believes the head gasket is leaking and could blow at any point.  This is our only means of transporting our family and we have no real way to pay for a new car (to us).  I'm frantically watching craigslist for a focus/scion/prius/ etc etc, but don't have a real plan for how to pay for it.  I do have a line of credit on the house worth $20k that I could draw from @5%, or I could get a used car loan from the credit union for ~3.5%.

I do have a 0% 15 month credit card I just set up in my wife's name ($1500 limit) that will get us $200 back and hold $1500 for the time being.  I will also do the same thing in my name, my credit cards usually come in at $6000 these days and I will float bills to that as well.

Other interesting notes:  I like my job, it's easy/fun/relaxing, and they are paying for me to do my CPA.  I had to pay for half of my study materials and *ahem* failed tests...  There is an "understanding" that I can't leave until I have put in the time it took for me to finish my CPA (3 years), and I have a feeling a raise past $50,000 isn't in my future.  That being said they are happy to let me moonlight and run all sorts of businesses on the side, and even at work, there is lots of down time.  The salary situation really frustrates me, but I am blessed to have alternative opportunities.

Obviously this wasn't an ideal time to get preggo, but apparently "the boys" can bust through rubbers, or I didn't pay enough attention in health class (seriously used protection in both cases).  Please don't reprimand me on the pregnancy, neither were planned...we wanted to wait 5 years to have kids :0  that being said, we love parenting!

THE QUESTION IS: WHAT DO WE DO ABOUT THE CAR!?!?!?  I just found this out today, and we are both pretty well convinced this is the straw that broke the camels back, I knew we would "survive" this pregnancy by the skin of our teeth, and various financial tricks, but I don't want to buy a car if we don't have the money!!  Not having a car isn't very much of an option with a toddler that is accident prone, a pregnant wife, and family that are miles away.

Frankies Girl

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Re: Help with big life choices 6 month time frame
« Reply #1 on: December 30, 2013, 10:16:13 PM »
Your food bill is extremely high for two adults and one kid. Should be able to reduce it by at least half if you get more savvy about meal planning and shopping for staples.

Tithing is a very strongly held belief, but when you're that close to the bone, I can't believe your church head would agree in endangering your family's future to keep up with this.  You have a family of your own that you need to put first, I think that reducing or eliminating that amount until you have gotten into a better financial position (especially regarding the car) and built up savings is your first priority. I would consider you donating your time or skills to the church would be a good substitute if you feel the need to continue some sort of contribution.

If you made these cuts alone, then you'd have an extra $500+ a month, and that's not counting the reduction of gas cost which should add a bit more besides. If you can reduce your use of the car except for once or twice a week, then you could probably limp along with that until you save up enough for a reasonable beater car within 4-5 months.

I would also ask family to come visit you instead of trekking to them for a while and save the money on gas and wear and tear on the car. You have a large amount of expenses that you need to take care of and an unreliable car, so tell them that you can't travel (or afford to travel) for a while but would love for them to come see you.

Roses

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Re: Help with big life choices 6 month time frame
« Reply #2 on: December 31, 2013, 01:08:40 AM »
Congrats on the bun in the oven!  I went the midwife route and loved it.  Home birth was way cheaper (and our preference) over hospital.

I agree about cutting the grocery budget in half and suspending the tithing for now.  My grandmother also has always said said you should "give 10% to Jesus" (kind of a funny way of putting it, if you ask me :)  But when she was a new mom and times were very tough they stopped doing that.  Later in life she and my grandfather became quite wealthy on a meager income (a teacher and a preacher) and a naturally frugal lifestyle, and at that point started giving much more than 10%.  So if you think about it that way, it might be better all around for you to put your personal finances first at this point.

As for the car, you could let your family know about the looming mechanical issue and ask them to visit you for a while.  Then take the money you cut on food & tithing and put it in a car fund every month.  Add to that the unaccounted for ~$300 that you should watch like a hawk for now + some gas savings if family comes to you.  That way you could get to almost $1000/mo toward a car fund for when your car does die.  I think you should shoot for a car priced under 10K.

The mortgage seems a little high for Spokane.  Are you in a very big house?  Could you rent out the basement or a spare bedroom to a college exchange student?  I've done the exchange student thing and it can be fun as well as profitable.

I didn't get why your salary is stuck below 50K.  Something about the failed tests?  Can you take them again?

Rural

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Re: Help with big life choices 6 month time frame
« Reply #3 on: December 31, 2013, 05:57:51 AM »
I'll second the CU loan. Get that lined up and start looking now for something in the $2,000 range -- use that mechanic whose books you keep to check it out and be sure it's mechanically sound. If y have the time, which you do as long as the current car still runs, you can save thousands on an ugly car. :-)

You can go high mileage, especially with a mechanic you trust to check it over.

Congratulations on the babies. In a couple of years, all this will be past, and you'll still have them. :-)

Cyrano

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Re: Help with big life choices 6 month time frame
« Reply #4 on: December 31, 2013, 06:10:27 AM »
Looking at what you're paying for gas and car insurance, is this a two car household?

Thegoblinchief

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Re: Help with big life choices 6 month time frame
« Reply #5 on: December 31, 2013, 07:28:05 AM »
I'll pile on suggesting you can reduce that grocery bill! Since discovering MMM I've gotten my food bill down to $500 for 5 people. Without alcohol and things like tea/juice it's closer to $400.

Pregnant wives can't exactly bike very far, but can you bike commute?

tomq04

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Re: Help with big life choices 6 month time frame
« Reply #6 on: December 31, 2013, 09:52:37 AM »
We've been trying to get that grocery bill below $400 for 10 months, I do not know what happens...we certainly aren't eating extravagantly and we prepare 19/21 of the meals per week.

Here is some updated info:

Tithing- I have already come to grips with turning this off in the face of coming debt, I did this for 3 months in the summer to pay off wife's wisdom teeth.  I have also reduced it this year from 10% of gross to 10% net, long story short, I believe in it and will do so, but not at the expense of going into debt.

Health insurance (includes dental) is $50 for me, $400 for wife/son, and will be an additional $60 for new baby in June.  I want to get off of this and get my wife/kids on something else if possible, but there aren't tons of options.  Deductible is $1k, $5000 max out of pocket, $250 prescription deductible (no one is on 'scripts).  Biggest waste of money of the year in my opinion, there isn't much we can do until the baby is born as far as I know.  I haven't talked to an Obamacare rep yet though, so that could be my own undoing.

Vehicles:  Yes we have 2 cars, 1996 taurus, and a 1985 toyota pickup (awesome rig! 25 mpg, 114k miles!).  The pickup is not mine, it's my fathers, and it is necessary to emergency drives to work, and for my craigslist side business.  A friend and I are in the business of buying/selling appliances, mostly refrigerators which do not fit well in a van, but they would fit in a trailer if we went that route.  That being said, the pickup adds $10/month to the insurance bill and I put 1 tank of gas in it/month $40.  That $50 has the potential to produce roughly $500(up to $1k I would suspect) in income when I'm operating efficiently.


Time:  This is my arch-nemesis.  I am studying for the CPA exam, 4 evil parts.  Each exam costs $250, and roughly 100 hours of your life over the course of 6 weeks.  Work paid for the first take of each exam, I passed one, failed 2.  I cannot leave my job until this is done, and there is unspoken requirement of me staying for as long as it takes for me to finish.  As soon as I am done I can have a "life" back and can get to hustling in proper form.  As mentioned earlier, I really do like my job other than the salary (which is livable), but I can't really advance until the CPA is done, and I won't be advancing much past $50k at this current employment; but I can start doing moonlight taxes, consulting etc to bring in additional income.


golfer44

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Re: Help with big life choices 6 month time frame
« Reply #7 on: December 31, 2013, 10:18:12 AM »
Time:  This is my arch-nemesis.  I am studying for the CPA exam, 4 evil parts.  Each exam costs $250, and roughly 100 hours of your life over the course of 6 weeks.  Work paid for the first take of each exam, I passed one, failed 2.  I cannot leave my job until this is done, and there is unspoken requirement of me staying for as long as it takes for me to finish.  As soon as I am done I can have a "life" back and can get to hustling in proper form.  As mentioned earlier, I really do like my job other than the salary (which is livable), but I can't really advance until the CPA is done, and I won't be advancing much past $50k at this current employment; but I can start doing moonlight taxes, consulting etc to bring in additional income.

I wouldn't spend a single minute 'hustling' until this is done. This needs to be your #1 priority, IMO.

tomq04

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Re: Help with big life choices 6 month time frame
« Reply #8 on: December 31, 2013, 02:44:51 PM »
Time:  This is my arch-nemesis.  I am studying for the CPA exam, 4 evil parts.  Each exam costs $250, and roughly 100 hours of your life over the course of 6 weeks.  Work paid for the first take of each exam, I passed one, failed 2.  I cannot leave my job until this is done, and there is unspoken requirement of me staying for as long as it takes for me to finish.  As soon as I am done I can have a "life" back and can get to hustling in proper form.  As mentioned earlier, I really do like my job other than the salary (which is livable), but I can't really advance until the CPA is done, and I won't be advancing much past $50k at this current employment; but I can start doing moonlight taxes, consulting etc to bring in additional income.

I wouldn't spend a single minute 'hustling' until this is done. This needs to be your #1 priority, IMO.

That's what everyone says, but bills need paying :( i have a hard time justifying debt...other than when I can focus on making money, I'm certain i'll just fine.

tomq04

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Re: Help with big life choices 6 month time frame
« Reply #9 on: December 31, 2013, 02:52:10 PM »
whoops double post,

forgot to mention I found a 2000 Ford Focus Wagon with 80000 miles for $2750.  I'm inclined to pull the trigger to ease my wifes mind and go into debt for the first time in my life.  Good news keeps rolling, sold a kegerator, and several craigslist items today as well.

I CAN'T STOP HUSTLIN'!

golfer44

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Re: Help with big life choices 6 month time frame
« Reply #10 on: December 31, 2013, 03:07:35 PM »
The hours you're putting in to this Craigslist thing may pay you a respectable wage ($20/hr? $30?) but only for each hour you put in. The time you put in to the CPA exams will pay you dividends for the rest of your life!!

Crude analogy: You're eating baby cows. Delay gratification a while, let them grow, and use them for milk.

tomq04

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Re: Help with big life choices 6 month time frame
« Reply #11 on: January 02, 2014, 07:24:55 AM »
Quick update:

The bank of dad called me and told me i was an idiot for borrowing against the house when he was giving our 0% loans that can be paid back after the CPA.

Bought the 2000 ford focus wagon 89k miles for $2650, relatively happy with it on the drive home.  Mechanic came with us and give it a clean bill of health.  Got $100 off the price for piddly little things.

Family, myself, you guys all agree that passing the CPA is the most important, I just don't want to get into to much debt along the way.  On the same vein, I don't want to fail another section ever again.  even if we ended up with $5k in debt after baby, as soon as I finish the tests income and FREE TIME !!!! will increase tremendously (although sleep might temporarily decrease again... :( )