Author Topic: Income/Expense crisis after significant progress paying down debt  (Read 2011 times)

kayteemacbee

  • 5 O'Clock Shadow
  • *
  • Posts: 40
Hi all!
I'm in a tough spot with regard to income and could use some advice-

I currently make around $42,764.22 gross. This was my 2018 total income for my primary job. I made approx. $5000 from a 10-99 side job, which I was able to get a lot of self employment write-offs for, and didn't have to pay taxes on. Together, $47,764.22 gross.

Last year, I paid a significant amount of debt off, $13,480.32. I treated it like the flaming emergency that it is, and put ALL of my extra income toward it, sometimes at my own expense (not being able to afford much food, gasoline, etc.). While I did this, I completely ignored saving any money, which perpetuated the "emergency" credit card use for things like food, vet bills, and medicine. I currently have only the below debts remaining, and can't seem to trim my budget enough not to have a negative cash flow. With my second job dying down seasonally, I'm in trouble. I put my student loans in forbearance for a year to help me get my other debts under control.

Creditor (Balance, interest, payment)
*Auto Loan - $17,847.71 - 4.95% - $295.89
*CARE CREDIT #1 - $173.60 - 0 - $86.80
*CARE CREDIT #2 - $200.00 - 0 - $40.00
*CARE CREDIT #3 - $502.00 - 0 - $83.67
*PERSONAL LOAN - $838.00 - 0 - $105.00
*Student Loan #1 - $24,561.22 - 4.88% - n/a in forbearance   
*Student Loan #2 - $37,734.40 - 4.88% - n/a in forbearance   
*Consolidation Loan - $4,376.35 - 10.50% - $160.65 (I usually pay $513 to expedite this pay off)

(Personal loan and care credits are for veterinary issues; they're on a no interest promotion)

My car is the biggest mistake of them all - I bought a used, cheap car in summer of 2016 that fell apart just outside of the parameters of the lemon law. It took months of harassing the dealer to get any kind of resolution, which of course was a new car with negative equity rolled into it. I took the bait because I needed transportation, and have since refinanced several times to bring the interest and monthly payments down. Unfortunately, the payments are still too high. I keep feeling like getting the "car issue" resolved will give me the breathing room I need to make my money work for me.

The original dealer has reached out to me several times to talk about a trade-in. They are offering me "$10-12k" trade-in value, with $1500 "additional trade-in assistance"... so worst case scenario, $11,500 trade-in value on a car I owe $17,847.71 on. To make this even remotely worth my while,  I could try to finance a beater and deal with the negative equity, but the car would need to be $5k or under to lower my payments at all, assuming I have a 10% interest rate (what I was first offered for my last car).

What are your thoughts on how I can reduce these monthly payments? Or is this more of an income issue? Should I keep refinancing the car annually and drive it into the ground? Go for a beater trade-in? Sell it and take out a loan for the negative equity? My partner has not been supportive of the idea of not having any car, because he works in sales and is always on the road himself. He also has a car that's on it's last leg, so my newer car has become our safety net.

Thanks for your input!



**BUDGET**

INCOME   
Primary Salary (NET! GROSS= $3360/mo) - $2,705.20
Commission - varies (low)
DPA - Promo Modeling - $200.00/ VARIES
Random Sales (Offer up, Misc. stuff) - varies
BestMark - Secret Shopping - varies
Postmates / Uber Driving - varies
Misc. Hustles & Gifts - varies
TOTAL TYPICAL - $2,905.20
   
MONTHLY RESPONSIBILITIES   
Rent - $809.00
**Consolidation Loan** - $513.00 ($160.65 actual minimum)
Car Loan - $295.89
Student Loan Unsub - $0.00
Student Loan Sub - $0.00
Cell - $75.00
Water Bill - $100.00
Utility/Electric - $150.00
Furniture (Personal loan, no interest) - $105.00
Care Credit 1 (my responsibility, no interest) - $86.80
Care Credit 2 (Split w SO - $42 mo total, no interest) - $40.00
Care Credit 3 (Split w SO - $42 mo total, no interest) - $83.67
EVG Medical Bill - $1.00
EXTRA LOAN PAYMENTS (finished 8/20) - $0.00
TOTAL - $2,146.00
   
NECESSARY EVILS   
Taxes (small buffer) - $5.00
Savings - $104.00
Health Insurance (SO Covers) - $0.00
Car Insurance - $95.00
Roth IRA - $0.00
Qapital Sinking Funds (small savings - varies, but rounded up to nearest dollar) - $30.00
Qapital Invest (small savings - varies, but rounded up to nearest dollar) - $30.00
TOTAL - $264.00
   
THINGS I SHOULD NOT BE PAYING!   
Capital 1 CC - $0.00
Emergency Credit Card - $0.00
Amazon CC - $0.00
Kohls CC - $0.00
Bank Fees - $0.00
TOTAL - $0.00
   
SPENDING   
Food - $400.00 (family of 2)
Gas (auto) - $60.00
Dogs - Medical - $25.00
Dogs - Food (Chewy/special diet) - $90.00
Personal Items - $20.00
Shopping - $0.00
Movies/Events - $25.00
Travel - $0.00
Misc Unplanned - $25.00
Health (medications) - $20.00
Work related purchases (varies, reimbursed) - $20.00
Donation/Charity - $8.33
Gifts - $0.00
Home Stuff - $20.00
TOTAL - $713.33
   
Total Expenses - $3,236.69
Toal Income - $2,905.20
TOTAL NET INFLOW/OUTFLOW - ($331.49)
« Last Edit: July 24, 2019, 12:30:46 PM by kayteemacbee »

cchrissyy

  • Pencil Stache
  • ****
  • Posts: 743
  • Location: SF Bay Area
Re: Income/Expense crisis after significant progress paying down debt
« Reply #1 on: July 24, 2019, 11:48:31 AM »
the dealer is reaching out to you because they want another bite! it's safe to assume that any move they suggest is bad for you.

merince

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Income/Expense crisis after significant progress paying down debt
« Reply #2 on: July 24, 2019, 11:57:59 AM »
You can improve your cash flow by focusing on the care credit and personal loan. The #1 and #3 monthly payments equal almost as much as the consolidation loan and you can knock them out with about 1 of the extra payment that you make to that guy.

kayteemacbee

  • 5 O'Clock Shadow
  • *
  • Posts: 40
Re: Income/Expense crisis after significant progress paying down debt
« Reply #3 on: July 24, 2019, 12:02:20 PM »
You can improve your cash flow by focusing on the care credit and personal loan. The #1 and #3 monthly payments equal almost as much as the consolidation loan and you can knock them out with about 1 of the extra payment that you make to that guy.

Good point. I will redirect the extra funds to those two next month, thank you!

kayteemacbee

  • 5 O'Clock Shadow
  • *
  • Posts: 40
Re: Income/Expense crisis after significant progress paying down debt
« Reply #4 on: July 24, 2019, 12:03:23 PM »
the dealer is reaching out to you because they want another bite! it's safe to assume that any move they suggest is bad for you.

Agreed- I distrust dealerships, but was hoping to beat them at their own game... which isn't likely :o)

doingfine

  • 5 O'Clock Shadow
  • *
  • Posts: 44
Re: Income/Expense crisis after significant progress paying down debt
« Reply #5 on: July 24, 2019, 12:05:30 PM »
What does your budget look like outside of these debts. Alone they are steep but do not appear insurmountable, but it's difficult for us to give much advice (other than to stay away from the car dealer!) with only half the story.

Aunt Petunia

  • Pencil Stache
  • ****
  • Posts: 903
Re: Income/Expense crisis after significant progress paying down debt
« Reply #6 on: July 24, 2019, 12:22:27 PM »
Look up the private party sale price on  KBB or Edmunds.  You might get more than you think for the car.

Do you have the option to bike or ride the bus to work?  If so talk to your partner about cutting down to one vehicle. If he insists on keeping your car because his is not reliable, then he can sell his and take over the payments on yours.

Consider posting a case study so we can help you find more room in your budget to pay off debt.

kayteemacbee

  • 5 O'Clock Shadow
  • *
  • Posts: 40
Re: Income/Expense crisis after significant progress paying down debt
« Reply #7 on: July 24, 2019, 12:31:17 PM »
What does your budget look like outside of these debts. Alone they are steep but do not appear insurmountable, but it's difficult for us to give much advice (other than to stay away from the car dealer!) with only half the story.
Noted! I have updated the post to show this info :)

kayteemacbee

  • 5 O'Clock Shadow
  • *
  • Posts: 40
Re: Income/Expense crisis after significant progress paying down debt
« Reply #8 on: July 24, 2019, 12:39:51 PM »
Look up the private party sale price on  KBB or Edmunds.  You might get more than you think for the car.

Do you have the option to bike or ride the bus to work?  If so talk to your partner about cutting down to one vehicle. If he insists on keeping your car because his is not reliable, then he can sell his and take over the payments on yours.

Consider posting a case study so we can help you find more room in your budget to pay off debt.

KBB Private sale is running about 13,705, which isn't bad. I could certainly get approved for a loan to make up the negative equity, but that might put me in a tough spot for a while. I'm lucky to have a work from home job for my main gig, but my side job would be difficult to make work via bicycle or public transportation, because I carry boxes of alcohol and swag with me to distribute at bars, which are not always close to me. I'm not terribly attached to this job, but it has gotten me through many financial upsets.

MayDay

  • Magnum Stache
  • ******
  • Posts: 4015
Re: Income/Expense crisis after significant progress paying down debt
« Reply #9 on: July 24, 2019, 01:10:13 PM »
It looks like you are doing various side hustles, that average put to only 200$/month.

Could you instead get one proper part time job, for perhaps 15 hours a week? In many areas the job market is tight- my Target is paying 13$/hour to start, Aldi is around 14, and manufacturing is paying 15+. If you worked 15 hours a week and has 10/hour take home, you'd have an extra 600/month.

The other option is to look for other main jobs- often that is a bigger payoff than a PT job- but you are in an emergency right this second so I'd be tempted to go for the PT job now, and then job hunt if/when you have time.

terran

  • Handlebar Stache
  • *****
  • Posts: 2125
Re: Income/Expense crisis after significant progress paying down debt
« Reply #10 on: July 24, 2019, 01:13:27 PM »
Does your partner live with you? Your housing related costs seem high for being split with someone. Food too. Are these costs for both of you, and if so what is he paying for to offset your spending in these areas?

Between car payment, insurance, and gas the car is killing you. Especially since you work from home that seems like it needs to go if you can figure out a way to get out from under the negative equity. Keeping the $200/month side gig doesn't seem like it's worth all those expenses. I agree that the dealer isn't trying to do you any favors. They'll only give you that trade in amount if you're buying an even more expensive car. 

Cell phone could be less. We just switched to Red Pocket with a $60/year plan for each of us (100min/100texts/500MB). So far so good. Google voice works well to cut down on minutes and would work for texts too.

I know it's not a lot of money, but someone in your level of debt isn't in a position to be giving to charity.

doingfine

  • 5 O'Clock Shadow
  • *
  • Posts: 44
Re: Income/Expense crisis after significant progress paying down debt
« Reply #11 on: July 24, 2019, 01:35:15 PM »
How come your gross pay is $42,764 yearly, but $3360 monthly? Where's the missing $2444 going?

What did your taxes look like last year? Did you get anything back?

Agreed regarding the housing costs - food, water, electric, etc. look like those should be shared amounts?


kayteemacbee

  • 5 O'Clock Shadow
  • *
  • Posts: 40
Re: Income/Expense crisis after significant progress paying down debt
« Reply #12 on: July 24, 2019, 01:46:35 PM »
How come your gross pay is $42,764 yearly, but $3360 monthly? Where's the missing $2444 going?

What did your taxes look like last year? Did you get anything back?

Agreed regarding the housing costs - food, water, electric, etc. look like those should be shared amounts?

The $3360 is my net monthly for budgeting purposes, I should have clarified. Taxes were as follows:

$42,764 Gross annual (primary job, second was a wash for tax purposes)
-$2060 deducted in student loan interest

$3,716 Federal income tax withheld
$459 Federal refund

$1239 State income tax withheld
$278 Refund
I've played with the % brackets above and below what I am now for my state, but they wound up being rather extreme with both refunds and owing taxes. Hope this helps!

kayteemacbee

  • 5 O'Clock Shadow
  • *
  • Posts: 40
Re: Income/Expense crisis after significant progress paying down debt
« Reply #13 on: July 24, 2019, 01:51:39 PM »
Does your partner live with you? Your housing related costs seem high for being split with someone. Food too. Are these costs for both of you, and if so what is he paying for to offset your spending in these areas?

Between car payment, insurance, and gas the car is killing you. Especially since you work from home that seems like it needs to go if you can figure out a way to get out from under the negative equity. Keeping the $200/month side gig doesn't seem like it's worth all those expenses. I agree that the dealer isn't trying to do you any favors. They'll only give you that trade in amount if you're buying an even more expensive car. 

Cell phone could be less. We just switched to Red Pocket with a $60/year plan for each of us (100min/100texts/500MB). So far so good. Google voice works well to cut down on minutes and would work for texts too.

I know it's not a lot of money, but someone in your level of debt isn't in a position to be giving to charity.

He does live with me. The rental market is pretty rough right now, and we negotiated rent down by $200 a month before signing a one year lease. I imagine next year we will do better and try to get something less expensive, but we are currently in a 2 bedroom house in the Phoenix metro.

I have noted Red Pocket, that's insanely cheap! You're also correct about charity - while it gave me some sense of personal satisfaction, it's really not helping things now.

As far as my car -
I'm looking for more at-home side gigs to replace the one I have now. It was originally great for me to socialize, being that I'm at home a lot, but it's gotten to be more trouble than it's worth. Especially if quitting can help me figure out a better situation with my car. It seems like the best approach now might be to sell it to a private party and take out a small loan for the negative equity, which I should have no trouble paying off in less than a year with my track record. Thank you for your input!


terrifictim

  • 5 O'Clock Shadow
  • *
  • Posts: 53
  • Location: San Diego, CA
    • Case Study
Re: Income/Expense crisis after significant progress paying down debt
« Reply #14 on: July 24, 2019, 01:53:32 PM »
First, congrats on realizing that you are in Hair on Fire emergency. You've accomplished alot in the past year and should feel good about that.

Unfortunately, you've got both an income problem and a budget problem.

On the income side - what options do you have with your educational background? Agree with MayDay on the value of the side hustles - can you calculate what your hourly rate is for those side hustles? If it's below minimum wage - it may not be worth it.

On the expense side - rent and food combined are ~44% of your income. That would be high even without the loans - but with them it's a killer. Are these ones you can improve?
I also know that pets are amazing - but right now between the loans and costs it's ~10% of your budget. I won't tell you to get rid of them - but understand it's keeping you from getting a positive cash flow.
Water/electricity - again, any way to reduce these? We are in SoCal and we're at $40 for internet and $50 for electricity per month. Or are these needed for your work?

The facepunch approach says to sell that car since your side hustle doesn't cover the cost of having the car. Then tackle the loans until you have breathing room. At that point you can start looking into saving up for a cheaper reliable car.

kayteemacbee

  • 5 O'Clock Shadow
  • *
  • Posts: 40
Re: Income/Expense crisis after significant progress paying down debt
« Reply #15 on: July 24, 2019, 01:58:04 PM »
It looks like you are doing various side hustles, that average put to only 200$/month.

Could you instead get one proper part time job, for perhaps 15 hours a week? In many areas the job market is tight- my Target is paying 13$/hour to start, Aldi is around 14, and manufacturing is paying 15+. If you worked 15 hours a week and has 10/hour take home, you'd have an extra 600/month.

The other option is to look for other main jobs- often that is a bigger payoff than a PT job- but you are in an emergency right this second so I'd be tempted to go for the PT job now, and then job hunt if/when you have time.

That's a good point. I do have contacts in manufacturing and could easily get some regular work. I have struggled quite a bit with the decision to change my primary job (I have a background in computer science, so it's unrelated to a very lucrative degree), but I work with family and I love the ability to work from home. It's a big leap, but it may be necessary down the road. For the time being, I'll be on the hunt for a more stable PT opportunity!

doingfine

  • 5 O'Clock Shadow
  • *
  • Posts: 44
Re: Income/Expense crisis after significant progress paying down debt
« Reply #16 on: July 24, 2019, 02:01:18 PM »
Thanks for the update on the income numbers. Unfortunately not much to squeeze there!

While the car is an issue, it's not extraordinarily expensive for a new model, and you may find that getting rid of it at a loss, continuing to have a payment on a car you no longer own, plus having to get a new loan for a cheap car at a higher rate (on an older car that now needs more maintenance) is a wash or even a negative compared to where you stand now. I might hold on to it and be glad you have a newer, reliable car rather than those extra inconsistent expenses in your budget.

I think you could probably get to about break-even cashflow with some brutal cost cutting, and hopefully some more cost sharing with your partner (if you could split that grocery bill that'd get you halfway there alone!) but the truth is you need more income. You need a second job that brings in another reliable $700-1000/month or so giving you a bit of breathing room.

The student loans are the big elephant in the room. With $60k in student loans do you not have the capacity to earn more than $40k? Are you actively looking for better options in your field?

kayteemacbee

  • 5 O'Clock Shadow
  • *
  • Posts: 40
Re: Income/Expense crisis after significant progress paying down debt
« Reply #17 on: July 24, 2019, 02:04:57 PM »
First, congrats on realizing that you are in Hair on Fire emergency. You've accomplished alot in the past year and should feel good about that.

Unfortunately, you've got both an income problem and a budget problem.

On the income side - what options do you have with your educational background? Agree with MayDay on the value of the side hustles - can you calculate what your hourly rate is for those side hustles? If it's below minimum wage - it may not be worth it.

On the expense side - rent and food combined are ~44% of your income. That would be high even without the loans - but with them it's a killer. Are these ones you can improve?
I also know that pets are amazing - but right now between the loans and costs it's ~10% of your budget. I won't tell you to get rid of them - but understand it's keeping you from getting a positive cash flow.
Water/electricity - again, any way to reduce these? We are in SoCal and we're at $40 for internet and $50 for electricity per month. Or are these needed for your work?

The facepunch approach says to sell that car since your side hustle doesn't cover the cost of having the car. Then tackle the loans until you have breathing room. At that point you can start looking into saving up for a cheaper reliable car.

There is always room to improve with food. I'd like this to be closer to $200 total per month, but in all transparency, this is my biggest discretionary struggle. I can pass up shopping any day, but food is very difficult. I imagine that my electricity is quite a bit higher working from home, but my internet is covered. We live in Arizona, so we'll have an electric bill of $25 in the winter, but in the summer, it can be as high as $300 in cooling costs. We have an evaporative cooler (these things are incredible and barely cost anything to run), but it doesn't work during our monsoon season because of the humidity. Even so, I don't have to be quite as comfortable as I want, and this could knock back costs. My pets do cost quite a bit, but I have resigned myself to this. One is getting up there in age and requires special care, so I need to pay attention to creating an emergency fund for her, so it doesn't knock me on my ass every time something comes up.

Thanks for the input on this! I think the best strategy is the facepunch.

kayteemacbee

  • 5 O'Clock Shadow
  • *
  • Posts: 40
Re: Income/Expense crisis after significant progress paying down debt
« Reply #18 on: July 24, 2019, 02:13:58 PM »
Thanks for the update on the income numbers. Unfortunately not much to squeeze there!

While the car is an issue, it's not extraordinarily expensive for a new model, and you may find that getting rid of it at a loss, continuing to have a payment on a car you no longer own, plus having to get a new loan for a cheap car at a higher rate (on an older car that now needs more maintenance) is a wash or even a negative compared to where you stand now. I might hold on to it and be glad you have a newer, reliable car rather than those extra inconsistent expenses in your budget.

I think you could probably get to about break-even cashflow with some brutal cost cutting, and hopefully some more cost sharing with your partner (if you could split that grocery bill that'd get you halfway there alone!) but the truth is you need more income. You need a second job that brings in another reliable $700-1000/month or so giving you a bit of breathing room.

The student loans are the big elephant in the room. With $60k in student loans do you not have the capacity to earn more than $40k? Are you actively looking for better options in your field?

Interesting perspective! I thought about that as well - if I sell my car and get something "that works", it's a matter of time until repairs come up. Or if I don't have a car, costly Ubers to and from job sites or unexpected meetings could add up. It's a lot to pay for as it stands, but I'm also serious about cutting down on gas and insurance, so I can tread water a little better.

The grocery bills must come down, I wholeheartedly agree. We have an agreement where I pay certain bills (like food), and he'll cover something else of equal value, like my health insurance plus X or Y. I think there are ways to trim the groceries that I haven't fully explored, like farmer's markets, buying less of the expensive meats and cheeses, etc.

I am terrified of my student loans. They're always in the back of my mind, but I've almost ignored them in favor of paying off the smaller emergencies. I absolutely have the capacity to earn more (computer science degree/light coding experience via Free Code Camp). I haven't moved on from my job because I'm afraid to do something that I may not be great at, then regret leaving the cushy at-home job with my family's business. I am aware that these are silly excuses, but in the interest of being transparent, that's where I am.

slappy

  • Pencil Stache
  • ****
  • Posts: 748
Re: Income/Expense crisis after significant progress paying down debt
« Reply #19 on: July 24, 2019, 02:51:24 PM »
What about a roommate to bring the cost of the rent down?

LittleWanderer

  • Bristles
  • ***
  • Posts: 257
  • Location: USA
Re: Income/Expense crisis after significant progress paying down debt
« Reply #20 on: July 24, 2019, 02:57:40 PM »
I'm still confused by your food costs.  Is that $400/mo for the both of you, or just your half?  If it's just your half, you can cut that down SIGNIFICANTLY. 

kayteemacbee

  • 5 O'Clock Shadow
  • *
  • Posts: 40
Re: Income/Expense crisis after significant progress paying down debt
« Reply #21 on: July 24, 2019, 03:21:00 PM »
I'm still confused by your food costs.  Is that $400/mo for the both of you, or just your half?  If it's just your half, you can cut that down SIGNIFICANTLY.

It's for both of us, for the most part. He does buy his own snacks/occasional lunches at work, but this largely covers both of our eating expenses for the month. Hope that helps! With us doing our best to split everything down the middle, it can cause some blurred lines in our budgeting :o)

kayteemacbee

  • 5 O'Clock Shadow
  • *
  • Posts: 40
Re: Income/Expense crisis after significant progress paying down debt
« Reply #22 on: July 24, 2019, 03:24:03 PM »
What about a roommate to bring the cost of the rent down?

I've been DYING to do this (or airbnb when we're out of town)! Unfortunately my SO doesn't support it. He has valid reasons for feeling that way, but it's a slow process trying to win him over when it comes to $$ changes

v8rx7guy

  • Handlebar Stache
  • *****
  • Posts: 1386
  • Location: Bellingham, WA
Re: Income/Expense crisis after significant progress paying down debt
« Reply #23 on: July 24, 2019, 03:36:55 PM »
What about a roommate to bring the cost of the rent down?

I've been DYING to do this (or airbnb when we're out of town)! Unfortunately my SO doesn't support it. He has valid reasons for feeling that way, but it's a slow process trying to win him over when it comes to $$ changes

And the S.O. does what for work?

kayteemacbee

  • 5 O'Clock Shadow
  • *
  • Posts: 40
Re: Income/Expense crisis after significant progress paying down debt
« Reply #24 on: July 24, 2019, 03:40:44 PM »
What about a roommate to bring the cost of the rent down?

I've been DYING to do this (or airbnb when we're out of town)! Unfortunately my SO doesn't support it. He has valid reasons for feeling that way, but it's a slow process trying to win him over when it comes to $$ changes

And the S.O. does what for work?

He's in sales, also with two jobs. Primary is liquor sales, second job is sales with his family business in HVAC, which is seasonal (spring).

terran

  • Handlebar Stache
  • *****
  • Posts: 2125
Re: Income/Expense crisis after significant progress paying down debt
« Reply #25 on: July 24, 2019, 04:07:37 PM »
He does live with me. The rental market is pretty rough right now, and we negotiated rent down by $200 a month before signing a one year lease. I imagine next year we will do better and try to get something less expensive, but we are currently in a 2 bedroom house in the Phoenix metro.

Sorry, my point was actually, are those numbers half of the total because you split them with your partner, so the totals are rent $1618 (seems high, to me, but this is very location dependent), Water Bill $200.00 (high, but that might be what happens when you live in a dessert. Mine is $50) Utility/Electric $300 (high, some of this might be living where you live and local prices, but that's a lot)?

And if they aren't for your half, but for both of you, as it seems the $400 of food is, what ($809+$100+$150+$400)/2 = $729.50 of your bills is your partner paying to make up for his half of these expenses?

You work from home, are you required to live in the area? What about your partner, if he's a salesman does he at least have some location flexibility?

Edit: I see now that some of my questions were answered by your later responses, but I think my questions are still basically the same as before. Is your partner paying his fair share, and can you move somewhere less costly?
« Last Edit: July 24, 2019, 04:13:15 PM by terran »

kayteemacbee

  • 5 O'Clock Shadow
  • *
  • Posts: 40
Re: Income/Expense crisis after significant progress paying down debt
« Reply #26 on: July 24, 2019, 05:06:31 PM »
He does live with me. The rental market is pretty rough right now, and we negotiated rent down by $200 a month before signing a one year lease. I imagine next year we will do better and try to get something less expensive, but we are currently in a 2 bedroom house in the Phoenix metro.

Sorry, my point was actually, are those numbers half of the total because you split them with your partner, so the totals are rent $1618 (seems high, to me, but this is very location dependent), Water Bill $200.00 (high, but that might be what happens when you live in a dessert. Mine is $50) Utility/Electric $300 (high, some of this might be living where you live and local prices, but that's a lot)?

And if they aren't for your half, but for both of you, as it seems the $400 of food is, what ($809+$100+$150+$400)/2 = $729.50 of your bills is your partner paying to make up for his half of these expenses?

You work from home, are you required to live in the area? What about your partner, if he's a salesman does he at least have some location flexibility?

Edit: I see now that some of my questions were answered by your later responses, but I think my questions are still basically the same as before. Is your partner paying his fair share, and can you move somewhere less costly?

I gotcha! Essentially, the numbers above are what comes out of my paycheck only. We sit down once a month to go over our expenses, and he'll either zelle me money to make everything even out, or pick up another bill (say my cell phone, a prescription, pest control (we had a scorpion infestation in our neighborhood that required pro help for a while...ick)). At the end of the month, we are either exactly at 50/50, or very close.

That being said, I'm much more aggressive about debt than he is, which seems like a familiar story to a lot of us. While he respects my choices, he doesn't always agree with them. It does unfortunately limit what I can do to shift money around and make things easier - if it had only been up to me, I would have gotten a roomie years ago for the passive income :) much more appealing than working multiple jobs. BUT, I am willing to sacrifice to keep the family happy where I can.

doingfine

  • 5 O'Clock Shadow
  • *
  • Posts: 44
Re: Income/Expense crisis after significant progress paying down debt
« Reply #27 on: July 25, 2019, 06:22:34 AM »
I am terrified of my student loans. They're always in the back of my mind, but I've almost ignored them in favor of paying off the smaller emergencies. I absolutely have the capacity to earn more (computer science degree/light coding experience via Free Code Camp). I haven't moved on from my job because I'm afraid to do something that I may not be great at, then regret leaving the cushy at-home job with my family's business. I am aware that these are silly excuses, but in the interest of being transparent, that's where I am.

While I certainly understand being risk averse and wanting to stay where things are comfortable, that only applies when things are moving along smoothly. You arenít yet in that position. You have a current debt emergency and an even larger crisis looming in the background with the student loans. You canít pay your bills today!

You need to step out of your comfort zone and find a better paying job. Especially as your skills are likely fading the longer you wait.

slappy

  • Pencil Stache
  • ****
  • Posts: 748
Re: Income/Expense crisis after significant progress paying down debt
« Reply #28 on: July 25, 2019, 06:53:06 AM »
He does live with me. The rental market is pretty rough right now, and we negotiated rent down by $200 a month before signing a one year lease. I imagine next year we will do better and try to get something less expensive, but we are currently in a 2 bedroom house in the Phoenix metro.

Sorry, my point was actually, are those numbers half of the total because you split them with your partner, so the totals are rent $1618 (seems high, to me, but this is very location dependent), Water Bill $200.00 (high, but that might be what happens when you live in a dessert. Mine is $50) Utility/Electric $300 (high, some of this might be living where you live and local prices, but that's a lot)?

And if they aren't for your half, but for both of you, as it seems the $400 of food is, what ($809+$100+$150+$400)/2 = $729.50 of your bills is your partner paying to make up for his half of these expenses?

You work from home, are you required to live in the area? What about your partner, if he's a salesman does he at least have some location flexibility?

Edit: I see now that some of my questions were answered by your later responses, but I think my questions are still basically the same as before. Is your partner paying his fair share, and can you move somewhere less costly?

I gotcha! Essentially, the numbers above are what comes out of my paycheck only. We sit down once a month to go over our expenses, and he'll either zelle me money to make everything even out, or pick up another bill (say my cell phone, a prescription, pest control (we had a scorpion infestation in our neighborhood that required pro help for a while...ick)). At the end of the month, we are either exactly at 50/50, or very close.

That being said, I'm much more aggressive about debt than he is, which seems like a familiar story to a lot of us. While he respects my choices, he doesn't always agree with them. It does unfortunately limit what I can do to shift money around and make things easier - if it had only been up to me, I would have gotten a roomie years ago for the passive income :) much more appealing than working multiple jobs. BUT, I am willing to sacrifice to keep the family happy where I can.

Does he understand how stressed you are with these bills? Is he really happy with you working so much extra and being under so much stress? You can't/shouldn't be the only one sacrificing.

Have you explored the increasing income option with a better day job?

kayteemacbee

  • 5 O'Clock Shadow
  • *
  • Posts: 40
Re: Income/Expense crisis after significant progress paying down debt
« Reply #29 on: July 25, 2019, 07:34:54 AM »
I am terrified of my student loans. They're always in the back of my mind, but I've almost ignored them in favor of paying off the smaller emergencies. I absolutely have the capacity to earn more (computer science degree/light coding experience via Free Code Camp). I haven't moved on from my job because I'm afraid to do something that I may not be great at, then regret leaving the cushy at-home job with my family's business. I am aware that these are silly excuses, but in the interest of being transparent, that's where I am.

While I certainly understand being risk averse and wanting to stay where things are comfortable, that only applies when things are moving along smoothly. You arenít yet in that position. You have a current debt emergency and an even larger crisis looming in the background with the student loans. You canít pay your bills today!

You need to step out of your comfort zone and find a better paying job. Especially as your skills are likely fading the longer you wait.

I have to agree with you. I've been thinking of how to build my life around this comfortable job, when I should really be building a job around my life. I'll reach out and look for more lucrative things today.

kayteemacbee

  • 5 O'Clock Shadow
  • *
  • Posts: 40
Re: Income/Expense crisis after significant progress paying down debt
« Reply #30 on: July 25, 2019, 07:41:34 AM »
He does live with me. The rental market is pretty rough right now, and we negotiated rent down by $200 a month before signing a one year lease. I imagine next year we will do better and try to get something less expensive, but we are currently in a 2 bedroom house in the Phoenix metro.

Sorry, my point was actually, are those numbers half of the total because you split them with your partner, so the totals are rent $1618 (seems high, to me, but this is very location dependent), Water Bill $200.00 (high, but that might be what happens when you live in a dessert. Mine is $50) Utility/Electric $300 (high, some of this might be living where you live and local prices, but that's a lot)?

And if they aren't for your half, but for both of you, as it seems the $400 of food is, what ($809+$100+$150+$400)/2 = $729.50 of your bills is your partner paying to make up for his half of these expenses?

You work from home, are you required to live in the area? What about your partner, if he's a salesman does he at least have some location flexibility?

Edit: I see now that some of my questions were answered by your later responses, but I think my questions are still basically the same as before. Is your partner paying his fair share, and can you move somewhere less costly?

I gotcha! Essentially, the numbers above are what comes out of my paycheck only. We sit down once a month to go over our expenses, and he'll either zelle me money to make everything even out, or pick up another bill (say my cell phone, a prescription, pest control (we had a scorpion infestation in our neighborhood that required pro help for a while...ick)). At the end of the month, we are either exactly at 50/50, or very close.

That being said, I'm much more aggressive about debt than he is, which seems like a familiar story to a lot of us. While he respects my choices, he doesn't always agree with them. It does unfortunately limit what I can do to shift money around and make things easier - if it had only been up to me, I would have gotten a roomie years ago for the passive income :) much more appealing than working multiple jobs. BUT, I am willing to sacrifice to keep the family happy where I can.

Does he understand how stressed you are with these bills? Is he really happy with you working so much extra and being under so much stress? You can't/shouldn't be the only one sacrificing.

Have you explored the increasing income option with a better day job?

He does see it. I know it bothers him, but it's become a necessary evil to work this much. He's usually out doing the same - every day this week, he has left for work at 6AM for his day job, gone straight to his second job, and gotten home around 8PM. He has tax issues and medical bills to wrestle with after being hospitalized recently, which is why the extra income never seems to stretch too much.

I'm understanding that it's time to work smarter. Using my education seems like the obvious option in this situation.

JestJes

  • 5 O'Clock Shadow
  • *
  • Posts: 79
Re: Income/Expense crisis after significant progress paying down debt
« Reply #31 on: July 25, 2019, 08:00:09 AM »

That being said, I'm much more aggressive about debt than he is, which seems like a familiar story to a lot of us. While he respects my choices, he doesn't always agree with them.

So he doesn't agree with you paying down your debt? What would he rather spend the money on? This is a concern. Do you guys want to have kids some day?Will he be willing to sacrifice to make sure they have security?  I would focus on getting him on the same page or making other arrangements if her refuses. You don't say how old you are but he sounds immature. Does he have any debts that he is not paying down? These are tough conversations but how your future goes will depend on them.

I have a board white board in my kitchen that I write my debt amount on plus any discretionary money I have for groceries or gas. This allows my boyfriend and I to be on the same page at a glace. While I am the more frugal one he has no debts and very low spending and is supportive of me being free from my debt chains. You want a partner who will build a future with you and support you. You can't drag a partner to financial independence.


freya

  • Bristles
  • ***
  • Posts: 328
Re: Income/Expense crisis after significant progress paying down debt
« Reply #32 on: July 25, 2019, 08:08:34 AM »
Good news for OP:  you have enough cash flow potential to get by.  Your immediate problem is that you don't have a cash buffer, and that you should fix asap.  I suggest paying minimums on all debts now and building up a buffer of 1 month expenses - either stash into a savings account or just hold in checking, as it's not much.  When you've got your cash buffer and start attacking debts again, I'd throw all extra cash to the loan with highest interest - not the Care Credit, at least until the 0% grace period ends.   Pay minimums on everything else.

Meanwhile, immediately attack your sky high living expenses.  Honestly, at your income and especially with what you say about your SO, you should be considering studios and 1 bedrooms, preferably within walking distance of work for him (if he doesn't have to lug heavy things to work) or at least to stores so you can run most errands on foot or by bike.   Lots of couples live in these, and you can too.  Hell, I earn WAY more than you and I don't have a second bedroom.  Also if the numbers you quote for water, electric, groceries, cell phone, and gas are your half of the expenses, then those are all ripe for some serious expense cutting.   At minimum you should be able to cut them in half - no joke!

Ask yourself whether the second bedroom is worth all the angst and need for second jobs?  It's those low-return second jobs that are killing both of you, I suspect.  I suspect that your hourly "wage" from putting serious effort into cutting costs will be much higher yield than those side gigs - and will make you feel a lot better about your situation.



slappy

  • Pencil Stache
  • ****
  • Posts: 748
Re: Income/Expense crisis after significant progress paying down debt
« Reply #33 on: July 25, 2019, 11:34:44 AM »
Good news for OP:  you have enough cash flow potential to get by.  Your immediate problem is that you don't have a cash buffer, and that you should fix asap.  I suggest paying minimums on all debts now and building up a buffer of 1 month expenses - either stash into a savings account or just hold in checking, as it's not much.  When you've got your cash buffer and start attacking debts again, I'd throw all extra cash to the loan with highest interest - not the Care Credit, at least until the 0% grace period ends.   Pay minimums on everything else.

Meanwhile, immediately attack your sky high living expenses.  Honestly, at your income and especially with what you say about your SO, you should be considering studios and 1 bedrooms, preferably within walking distance of work for him (if he doesn't have to lug heavy things to work) or at least to stores so you can run most errands on foot or by bike.   Lots of couples live in these, and you can too.  Hell, I earn WAY more than you and I don't have a second bedroom.  Also if the numbers you quote for water, electric, groceries, cell phone, and gas are your half of the expenses, then those are all ripe for some serious expense cutting.   At minimum you should be able to cut them in half - no joke!

Ask yourself whether the second bedroom is worth all the angst and need for second jobs?  It's those low-return second jobs that are killing both of you, I suspect.  I suspect that your hourly "wage" from putting serious effort into cutting costs will be much higher yield than those side gigs - and will make you feel a lot better about your situation.

Agree with this completely, except the part about keeping the buffer in your checking. Definitely want to have that in a savings so you know its seperate and you (or he) arent tempted to spend it.

Basenji

  • Handlebar Stache
  • *****
  • Posts: 1036
  • Location: D.C.-ish
Re: Income/Expense crisis after significant progress paying down debt
« Reply #34 on: July 25, 2019, 07:39:01 PM »

Work related purchases (varies, reimbursed) - $20.00
Donation/Charity - $8.33

If it is "reimbursed," why do you count work purchases as an expense? And your "donation/charity" for now should be your debt.

mistymoney

  • Bristles
  • ***
  • Posts: 379
Re: Income/Expense crisis after significant progress paying down debt
« Reply #35 on: July 26, 2019, 05:49:21 AM »
Hi all!
I'm in a tough spot with regard to income and could use some advice-

I currently make around $42,764.22 gross. This was my 2018 total income for my primary job. I made approx. $5000 from a 10-99 side job, which I was able to get a lot of self employment write-offs for, and didn't have to pay taxes on. Together, $47,764.22 gross.



How much of these write-offs involve the car?

On the one hand, I was going to comment that the side jobs don't justify the car - in that you could go without a car quit the side jobs, and be better off.

On the other, if you are able to write off 2-3k or more of the cost of the car, then that can really defray those costs, making it more reasonable.

But on the third hand - the reason things are written off is because they are expenses. If you are able to write off the entire 5k you make, according to the IRS you aren't making any money with the side job. So - it could be true that they side job is not netting you any income, and in fact costing money due to the car requirements.

Think about a private sale to get the most and quit the side jobbing. What does that look like long term?

You might also consider keeping the side job/s until the car is no long underwater. How long will that take?

mistymoney

  • Bristles
  • ***
  • Posts: 379
Re: Income/Expense crisis after significant progress paying down debt
« Reply #36 on: July 26, 2019, 05:53:39 AM »
Good news for OP:  you have enough cash flow potential to get by.  Your immediate problem is that you don't have a cash buffer, and that you should fix asap.  I suggest paying minimums on all debts now and building up a buffer of 1 month expenses - either stash into a savings account or just hold in checking, as it's not much.  When you've got your cash buffer and start attacking debts again, I'd throw all extra cash to the loan with highest interest - not the Care Credit, at least until the 0% grace period ends.   Pay minimums on everything else.

Meanwhile, immediately attack your sky high living expenses.  Honestly, at your income and especially with what you say about your SO, you should be considering studios and 1 bedrooms, preferably within walking distance of work for him (if he doesn't have to lug heavy things to work) or at least to stores so you can run most errands on foot or by bike.   Lots of couples live in these, and you can too.  Hell, I earn WAY more than you and I don't have a second bedroom.  Also if the numbers you quote for water, electric, groceries, cell phone, and gas are your half of the expenses, then those are all ripe for some serious expense cutting.   At minimum you should be able to cut them in half - no joke!

Ask yourself whether the second bedroom is worth all the angst and need for second jobs?  It's those low-return second jobs that are killing both of you, I suspect.  I suspect that your hourly "wage" from putting serious effort into cutting costs will be much higher yield than those side gigs - and will make you feel a lot better about your situation.

I'm not sure about this......what are the min payments on the student loans when they get out of deferment?

I saw the debts listed, but not the min payments. Which might be higher after the accrued interest at the end of the deferment.


ETA: reread OP and it is forbearance, not deferment.

Based on the balances at about 62K, my guesstimate is that the monthly payment would be about 6-700/month on the 10 year repayment plan.


« Last Edit: July 26, 2019, 06:00:36 AM by mistymoney »

Another Reader

  • Walrus Stache
  • *******
  • Posts: 5077
Re: Income/Expense crisis after significant progress paying down debt
« Reply #37 on: July 26, 2019, 06:25:08 AM »
You are in Phoenix, correct?  If you are splitting rent 50/50, you are paying a total of $1,618 a month.  That is ridiculous.  You should be looking for an inexpensive two bedroom apartment for $1,100.  A one bedroom would be even less.  Finding a place that takes dogs will be more difficult, but it is doable.  That alone will cure a lot of your financial issues.  Even with pets, you should be able to find something in that range.  $1,600 gets you a 3 bedroom, 2 bath home in a nice area of Tempe or similar location.  You don't need that and you can't afford it.

Phoenix has more jobs than people to fill them.  You should be able to find a better paying and consistent part time job that would cover your uncovered expenses.  However, you really need to think about a longer term solution that generates substantially more income.  Yes, it's nice to work from home, but you simply cannot afford to do that with those loans staring you in the face.

How are you handling health insurance?  Your SO has medical debt.  Does he have insurance?

Your SO needs to get his act together and you need to have some serious discussions about money.  You need to be on the same page if you intend this to be a long term relationship.  Otherwise, it might be time to cut your losses and move on.

chemistk

  • Bristles
  • ***
  • Posts: 423
  • Location: Mid-Atlantic
Re: Income/Expense crisis after significant progress paying down debt
« Reply #38 on: July 26, 2019, 06:52:59 AM »
I think the lowest hanging fruit is indeed rent. For now, you're going to be underwater on your car no matter what you do and if/when you sell it you'll still be in the red (and with no transportation!).

I won't address the other items in detail because there's some great advice here already - but if I were in your situation, I'd look at decreasing your food costs (as a family of 4, your $400 nearly covers all of our monthly grocery costs!). I'd also consider paying less toward your consolidation loan to keep yourself at least out of the red monthly (and to allow yourself to build up a small e-fund so that you don't lean on CC's)

Now back to the car - the dealer is ONLY offering you that deal IF you were to purchase a "qualifying" car from their lot. I guarantee you they're not going to even bother if you go in there and try to buy the cheapest car they have on the lot. And if you do, expect that your trade-in offer will be mysteriously deflated so that you'll still have negative equity, on a worse car!

Even as a depreciating asset, at that interest rate you could do much worse for a used car. It's not the popular opinion and you really shouldn't find too much comfort in knowing that, but just look at it this way - you sell your car for the most money you can get for it and you're still underwater on the loan! Then, you need to find another car (a beater) that you'll probably need to finance (at an absurd interest rate), putting you another few thousand in the hole! And then, on top of that, you'll probably have to budget for emergency repairs and maintenance on your older car, to the point that you're still going to be upside down on your car no matter what.

Therefore the only way you could get ahead, right now, on your car is to sell it and use public transport/have your SO drive you everywhere.

All that being said - at the first opportunity you have to offload it and not sink yourself further you should ABSOLUTELY do it!

Bee21

  • Bristles
  • ***
  • Posts: 483
Re: Income/Expense crisis after significant progress paying down debt
« Reply #39 on: July 26, 2019, 04:50:18 PM »
You have an income problem. Is there a possibility to keep your current job part time  as a side hustle and find something more lucrative outside the house? Brush up your resume and start applying, just to see where it leads. In your current situation, you will be better off maximising your primary income than doing the side hustles. If your main job does not make enough to cover your expenses, you either cut expenses or find a better paying job, You will end up burnt out fairly quickly if you work several jobs (talking from experience). You need something where you bring in enough money to cover all your expenses. How much would you need to make on your day job to pay for everything? Would you qualify for a job which pays that much?

I agree about the rent, I guess you need a house with a yard because of the pets, but this needs to be revisited. If you work from home, you don't really need a car.  If you find a new job, it might be worth keeping it, but be careful with those dealers.

Food is high, check Pinterest and YouTube for inspiration, there are plenty of people posting  menus for 50 $ a week budgets. This is the easiest to tackle as it is totally within your control. You can use the money you save there to start paying the student loans.

is there anything you can sell? I would use this money as a baby emergency fund and throw as much as I could on the loans.

freya

  • Bristles
  • ***
  • Posts: 328
Re: Income/Expense crisis after significant progress paying down debt
« Reply #40 on: July 26, 2019, 05:13:17 PM »
The car is unfortunately a complex issue, but there are things the OP and her SO can do right now that will cut substantial $$ without much difficulty.  I'm surprised no one is mentioning these:

Full costs for both OP & SO = 2x the amounts listed above:
Cell - $150 ($75 each).  <== Outrageous.  Go check out prepaid plans at Tmobile or local low cost providers (we have MetroPCS in NYC...do they also service Phoenix)?  Or if you are an Android couple, go for Google FI.  Family plans can also help cut costs.
Water Bill - $200.  <== Where is all this going?  If you're watering anything outside except a vegetable garden, stop immediately.  Reduce water flow in the shower, and limit toilet flushes.  And you don't have to wash everything after 1 wearing.
Utility/Electric - $300 <==  Also insane.  Get a swamp cooler, and/or turn up A/C temp gradually and acclimate to warmer indoor temperatures.   Replace high use light bulbs with LEDs.  Get rid of incandescents.  Minimize use of high wattage appliances, e.g. clothes dryer, hair dryer, electric oven, hot water for washer etc.  Get (or borrow) a Kill a Watt meter to check for energy vampires.

NECESSARY EVILS  <==  I don't get this whole category.  What are these for exactly?

Food - $800 <== yikes!  Several comments on this already.  MMM has useful blog posts on this, for a start.
Gas (auto) - $120 <== Can you run errands on foot or by bike?  Trip link with work commutes?
Dogs - Food (Chewy/special diet) - $180 <== Talk to your vet about this and inquire about less expensive alternatives, including options like homemade.

Assuming you can cut these costs significantly and redirect those mysterious "necessary evils" items, that would free up over $600 per month to throw at those debts.  What do you think?

BicycleB

  • Handlebar Stache
  • *****
  • Posts: 1560
  • Location: Live Music Capital of the World
  • Older than the internet, but not wiser... yet
Re: Income/Expense crisis after significant progress paying down debt
« Reply #41 on: July 26, 2019, 07:09:19 PM »
I am terrified of my student loans. They're always in the back of my mind, but I've almost ignored them in favor of paying off the smaller emergencies. I absolutely have the capacity to earn more (computer science degree/light coding experience via Free Code Camp). I haven't moved on from my job because I'm afraid to do something that I may not be great at, then regret leaving the cushy at-home job with my family's business. I am aware that these are silly excuses, but in the interest of being transparent, that's where I am.

While I certainly understand being risk averse and wanting to stay where things are comfortable, that only applies when things are moving along smoothly. You arenít yet in that position. You have a current debt emergency and an even larger crisis looming in the background with the student loans. You canít pay your bills today!

You need to step out of your comfort zone and find a better paying job. Especially as your skills are likely fading the longer you wait.

I have to agree with you. I've been thinking of how to build my life around this comfortable job, when I should really be building a job around my life. I'll reach out and look for more lucrative things today.

Good!

If you get a significant pay increase, then implement some of the cost suggestions and use the cash flow improvements to reduce payments, you'll be in position to pay the student loans as well. With persistence, you can pay them early, emerge debt free, and use the momentum for a push to FIRE. A lot of your current expense is debt, so when you cut down that as well as the current consumption spending, you'll have a huge investment streak.

That's the high end. Right now, every bit counts - you've got to cut consumption enough to pay off debt. The job will be huge too, but really, you need both. So here is where you develop the muscles that will make everything easier later.