Author Topic: Looking for advice, encouragement, or face punch - whatever it takes  (Read 6459 times)

Mint Chip

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After years of financial screw ups, the light finally went on earlier this year, and I'm eager to be debt-free once and for all. Since finding this site, posting a few questions, and reading many recommended resources, my husband and I have made many changes and have made some progress -- dh got a new job with a higher salary, we're selling whatever we can on craigslist/donating lots of other things, got rid of an suv and replaced it with a car (more on that in a minute), paid off an $8000 credit card and have agreed to only pay cash for everything (more on that, too) and have set up a great budget on ynab.

We replaced the suv that we sold with a $2k car that seemed to be a great deal -- low mileage, and only a few hundred $ in minor reconditioning, but, after 3 months, it died, and instead of paying cash for another replacement, dh took out a $9k loan for a more reliable relacement. So that completely negated the progress that we made in paying off the credit card, went against our intention to pay cash for everything, and put us back to square 1 essentially. This new job is an hour commute each way by car, and there is no nearby public transportation. Dh works from home 1 day a week consistently, and occasionally 2 days are from home.

We have 3 kids under the age of 8, and we own our home.  We live in a rural area with no sidewalks and have to drive everywhere. We paid $165k, owe around $114k, and it's worth around $185k. Our monthly payment, including taxes & insurance is $980.  Dh makes $72k, and health ins will be deducted each month beginning Jan.1, so that will leave us around $4400 per month, net. We have another credit card with an $8k balance, the car loan of $9k, and student loans totaling $67k. We also own a minivan that is paid for. Here's what our budget currently looks like:

- mortgage/taxes/ins 980

-food/groceries/toiletries 500  - 600 per month

-Electricity 186 per month (we have no a/c, no microwave, no tv, no dishwasher, but we live in NH where electricity is among the most expensive in the country; we have a 3 br, 1 ba home that is approx 1100 sq feet.)

-car ins 152 per month

-term life ins $77 per month

-prescriptions $100 per month

-gas $450 per month

- kids activities/supplies $200 per month

- car payment 177 per month

- heating oil per month approx $75 per month

- cord wood per month approx $50 per month

-student loans $250

-car maintenance/repair/registration approx $100 per month

 - home maintenance/repair approx $50 per month

- $125 per month in misc medical/dental

I'm sure that I'm leaving something out, but whatever is left over at the end of the month goes toward the debt. We have $1000 in savings for an emergency.

At the rate we are going, it will take us a long time to pay off the debt (not including the house), and I'm thinking that there must be something that we can do to help move things along faster. We have no retirement savings and are in our early 40s. I am wiling to sell the house and move, but dh refuses to move close to work b/c he works in the city. He would consider moving close to public transportation, but I don't think he's open to renting for awhile.

This is not an excuse, but I was raised by parents who encouraged getting into debt for education, cars, homes, and buying stuff on credit. Needless to say, my mother is in her 70s and still needs to work. I don't want that to happen to us. Better late than never, I guess, and at least our kids won't be such financial illiterates/idiots and make the same mistakes we have made.

So, what recommendations, advice, suggestions do you have for us? I need all the encouragement I can get right now. Thank you very much.


annaraven

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #1 on: December 18, 2013, 05:44:52 PM »
Have you check on whether you can save anything by switching your car insurance? $152 a month seems pricey - unless you've had some accidents or something on your record.

Mint Chip

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #2 on: December 18, 2013, 06:19:26 PM »
We both have clean records. I'll call tomorrow to review my coverage. Thanks!

Cooperd0g

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #3 on: December 18, 2013, 06:42:44 PM »
The term life insurance seems pretty high, but maybe you have $1.5 million in coverage, which would be silly. Does your husband work in Boston? If not then there really isn't any "city" in NH. I walk and ride a bike on streets without sidewalks all the time, but being rural you may have several miles to get anywhere. The differences in option of what "rural" are can be pretty wide spread. $200 on kid activities? Have you looked at exactly what those costs are and if they are worth it? I would say move ... out of state even if you have to. If there are such rigid standards as won't move to the city and won't rent then you aren't going to make much progress. Sorry to say it.

Another Reader

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #4 on: December 18, 2013, 06:43:42 PM »
The two things that stick out are the kids activities at $200 a month and only one income.  If that includes diapers and similar items, will the amount decrease with time? As the kids age into school, will you be able to go to work or generate some income from home?  That would go a long way towards getting rid of the $67k in student loans and getting you on track for saving and investing for retirement.  If there is no pension plan at your husband's employer, this will become very important later.  If you do not work the minimum 40 quarters, you will only be eligible for spousal SS benefits.

Term life seems expensive as well.  Is this a policy on your husband?  What's the amount and the reasoning?  Would it be possible to get a less expensive policy?

In general, you are on the right track.  Fine tuning your expenses and looking for ways for you to generate income are what I would do in your shoes.

thepokercab

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #5 on: December 18, 2013, 06:54:14 PM »
Didn't see anything for cell phones, home internet, cable, etc..  Are those places that you might be able to cut as well? 

Earlier in the year, between cell phones, netflix and home internet we were paying about $300 a month.  Then I found MMM..  now we're paying $20-30 bucks a month on our cell phones, dumped Netflix for the library, and just by asking, got a neat little reimbursement from work that now pays for our home internet (i work from home a bit as well..) 

I'll second and third the kids expenses cost- $200 a month seems like a lot.   

Looks like you are spending about $200-300 a month on prescriptions, medical and dental a month.  Do you have access to a Health Savings Account (HSA)?  We have one through our employer, contributions get taken out pre-tax. 

Also second the idea of bringing in some extra income for home.  My SO stays at home with the kids, but to bring in some extra income she does about 10 hours of virtual assistance work a week via Elance. Its a nice little chunk of money each month that we're able to bring in and all of it goes straight into savings.   

Mint Chip

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #6 on: December 18, 2013, 07:06:57 PM »
Thank you all for your help.

Yes, it's Boston. We live in NH where he used to work. Moving to BOS is not an option. I'd gladly sell the house and move closer to public transportation at least. Personally I'm at the point where I'd like to sell the house, pay everything off and start all over and rent for awhile. That way we could go back to having only 1 car, too. Would anyone second that plan of attack?

I will also revisit the life ins. That is for coverage only on him. It may be for too much $. I plan to get a policy for myself soon as we'll (nothing crazy).

The kids' activities are something we will revisit as well.

Oh, and I did leave out phone/ Internet - we pay around $75 per month total for both (no cell phones). No online subscriptions to anything.

I will also look into how I can earn some $ as well. Thanks for the elance idea!

Thanks so much for the honest answers.

Mint Chip

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #7 on: December 18, 2013, 07:21:25 PM »
Oh, and we don't have TV or cable either. :)

Cooperd0g

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #8 on: December 18, 2013, 07:32:19 PM »

Yes, it's Boston. We live in NH where he used to work. Moving to BOS is not an option. I'd gladly sell the house and move closer to public transportation at least. Personally I'm at the point where I'd like to sell the house, pay everything off and start all over and rent for awhile. That way we could go back to having only 1 car, too. Would anyone second that plan of attack?

I emphatically second that plan of attack. Still, almost the entire northeast is pretty expensive cost of living overall. He might be able to earn similar, or even more money, in a cheaper cost of living state.

Mint Chip

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #9 on: December 18, 2013, 08:05:13 PM »
Thanks, CooperDog. We strongly considered leaving the Northeast and he applied to jobs in TX, TN, UT, NC, GA, and I forget the others. But the offer he got was here, so he jumped on it. It should open other doors down the road, too, and there is a chance that he will be able to work from home more a well.

I think that I'll be able to convince him that a commuter-friendly location would be worth the trouble.

I don't know if I'm just impatient and maybe my desire to immediately undo years of screw ups is impractical and unrealistic, but the thought of dragging it out 4 or 5 years is so discouraging.

I will also look into an HSA.

Thanks very much again for the jonety, advice, and suggestions.

Bumfluff

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #10 on: December 18, 2013, 11:10:44 PM »
We sold our home and went back to renting and it was the best thing we could have done. It didn't clear all of our debt but being freed from the mortgage, from maintenance costs, building insurance and rates payments (we are in Australia, not sure if you have something akin to council rates) saved us so much money at a time when I was 100% at home with two little children. We are now renting very close to public transport, in a great area with easy access to the city for work. If you think selling up would clear everything and put you back in a position where you have a clean slate I'd do it in a heartbeat.


scrubbyfish

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #11 on: December 19, 2013, 12:08:10 AM »
We sold our home and went back to renting and it was the best thing we could have done. [...] being freed from the mortgage, from maintenance costs, building insurance and rates payments... If you think selling up would clear everything and put you back in a position where you have a clean slate I'd do it in a heartbeat.

+1.

My experience precisely, one of the happiest (and most financially savvy) things I've ever done!

dadof4

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #12 on: December 19, 2013, 01:36:45 AM »
-Electricity 186 per month (we have no a/c, no microwave, no tv, no dishwasher, but we live in NH where electricity is among the most expensive in the country; we have a 3 br, 1 ba home that is approx 1100 sq feet.)
That does seem pretty high. Are you using really old appliances? With tax credits, replacing them with energy star appliances pays for itself very quickly!

-gas $450 per month
Ok, that's a lot!
Even with an hour long commute each way, this is very high.
You mentioned getting a newer car recently. What kind of gas mileage does it get?

How much of that expense is driving around town in the minivan?

-student loans $250
You didn't mention the interest rate for your student loans, car, credit cards and mortgage. There could be some optimization to be done there.

Mint Chip

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #13 on: December 19, 2013, 04:56:23 AM »
Thanks to all for the encouragement re selling and renting. Hearing your positive experiences is very encouraging. I really believe that this is what we need to do right now. It will also move us both out of our comfort zones and will serve as a much-needed reality check/wake up call.

Yes, the gas cost does reflect driving around town in the minivan - it comes to just under half our monthly gas expense. I want to sell that, too and replace it with something more fuel efficient. The newer car is a used Impreza with low mileage and gets decent gas mileage, but it is an AWD. Ideally, we can set ourselves up so that we have only 1 car.

Interest rate on the mortgage is 3.25, 6.7 on the car and 10k in student loans, 4.65 on the remainder of the loans, and around 20 percent on the remaining 8k credit card, and we're poised to throw around 2k at that this month (we got some cash Christmas gifts).


Thegoblinchief

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #14 on: December 19, 2013, 08:04:15 AM »
Yes, the gas cost does reflect driving around town in the minivan - it comes to just under half our monthly gas expense.

I'm a stay-at-home dad, I've been able to cut using the minivan down to 1 day/week for shopping and errands. I can do this because we homeschool and I try to keep all of our "activities" within biking distance. The days I work on the weekends I bike as well. Even though my wife still commutes by car, our fuel and maintenance bill has gone from $250/month to $125ish a month.

Once some of our more serious debts are securely killed off I'll allow some extra field trips further away, but right now I'm averaging $15/month gas usage in my car.

I agree with all the other posters about selling the house, since the proceeds from that kills a ton of debt straightaway. I'm jealous of a house that's worth more than the mortgage! Still currently $35K underwater on mine....

Mint Chip

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #15 on: December 19, 2013, 08:40:30 AM »
Thanks, Goblinchief. We homeschool as well and don't live near any of the kids' activities, so we need to rework that, too. We may be able to move to a walkable town that is close to public transportation and most of what the kids do (fingers crossed). Our kids are already light years ahead of their parents in terms of personal finance, because we are sharing with them the mistakes we've made and what we've learned and are learning.  They see the changes, help us make entries into ynab, etc., and want us to do our own "debt scream" on the radio. :) So, if what we're going through helps them avoid our mistakes, it will all have been worth it.

Yes, we are lucky regarding the house. It was a short sale and we did many updates ourselves, so we are fortunate to have that in our favor.  Now we just ave to get up the nerve to take advantage of it. I'm already talking up the idea of moving as an adventure, and will try to get everyone excited about it.

Thank you for sharing what has worked and is working for you.

dadof4

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #16 on: December 19, 2013, 11:06:49 AM »
Thanks to all for the encouragement re selling and renting. Hearing your positive experiences is very encouraging. I really believe that this is what we need to do right now. It will also move us both out of our comfort zones and will serve as a much-needed reality check/wake up call.
Yup, a lot of your problems go away in one fell sweep.

Another option, if you must have the "security" of owning your own home, is to rent it out, and rent a place closer to your husband's work.

Yes, the gas cost does reflect driving around town in the minivan - it comes to just under half our monthly gas expense. I want to sell that, too and replace it with something more fuel efficient. The newer car is a used Impreza with low mileage and gets decent gas mileage, but it is an AWD. Ideally, we can set ourselves up so that we have only 1 car.
With a long commute, gas mileage becomes VERY important. While an AWD Subaru is nice, it probably gets you under 25 MPG (even worse if you're using premium gasoline). A corolla or civic will get you 35 MPG, and is more economical to maintain.

Regarding in-town driving - try to group trips together. With 3 kids, you can still manage with a sedan instead of a minivan, so consider making a change there as well.

Interest rate on the mortgage is 3.25, 6.7 on the car and 10k in student loans, 4.65 on the remainder of the loans, and around 20 percent on the remaining 8k credit card, and we're poised to throw around 2k at that this month (we got some cash Christmas gifts).
Talk to your credit union about getting a home equity loan, or a home equity line of credit. You'll probably be able to draw up to 80% - which is around 35k for you.

That CC debt is terrible, and is costing you $130 a month. The Car loan is also pretty unfavorable. Replace them with a ~4% APR loan (which is also tax deductible), and you have some significant savings.

avonlea

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #17 on: December 19, 2013, 01:10:57 PM »
Our kids are already light years ahead of their parents in terms of personal finance, because we are sharing with them the mistakes we've made and what we've learned and are learning.  They see the changes, help us make entries into ynab, etc., and want us to do our own "debt scream" on the radio. :) So, if what we're going through helps them avoid our mistakes, it will all have been worth it.

That is an awesome perspective, Mint Chip. ;)

I have nothing to add to the awesome advice given by others.  Just wanted to say that I enjoyed reading your thread and am looking forward to see what future steps you and the family will take.

Mint Chip

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #18 on: December 19, 2013, 07:44:46 PM »
Thank you all very much. I will let you know how it goes.

ASquared

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Re: Looking for advice, encouragement, or face punch - whatever it takes
« Reply #19 on: December 19, 2013, 10:19:23 PM »
Congrats on your decision to take care of your finances.

Prescriptions $100 - have you looked into generics/alternatives/etc?  When so many rx's are $4/mo or $10/3mo this seems high.  (Respectfully - I know I don't understand everything about your situation!)

Have you considered moving? Are you happy where you are? 1 hour commute seems awful, not only on a financial level but a personal one too.  Not even necessarily moving closer to husbands work, but is there another place that would be a better fit that you would love? Something to think about.....