Author Topic: Case Study - Complete Newb  (Read 3914 times)

AJ16

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Case Study - Complete Newb
« on: March 09, 2016, 11:48:40 AM »
I'm not going to have all the necessary info, but I'll give you what I have and I hope some direction can be given.

My husband and I have been married for 6 years, we're 26 and 27, we have two toddlers and I'm pregnant. He racked up some nice credit card debt which is around 20,000 right now. And without asking/before he turned our finances over to me, he signed on with Cambridge Credit Counseling. We've been with them for maybe a year and a half and have paid off 10,000. We pay them about $700/mo. And $800 in other bills. He also has student loans being paid off, but it's insignificant and I forget the exact amount.

We've never owned a home and are currently renting an apartment for $1100/mo. His salary is around $66/yr.
We have one vehicle, which my parents helped us pay for as a gift. Husband often works from home, but his office is 5 minutes away anyway.
No cable, no Netflix, but we do have an Amazon prime subscription.
We both have iPhones
When I'm doing well, we can make it off of around $150-200 per month for groceries. The key phrase being "when I'm doing well."
He gets his haircut once a month or so-$50
Other than drs appointments, I can't think of regular expenses I have.
Eating out and coffee are the obvious pitfalls. And the phone. We are out with people pretty often-we get invited out at least once a week. And when I'm not keeping up with cooking, food expenses are a disaster.
We don't do preschool or pay for babysitting.
He tends to buy what he wants, when he wants it. Luckily the many books he spends on are reimbursed by his work.
We have basically no real savings.
He has to set aside his own money for taxes-I've never been involved with that, so I don't know how it works.


Our biggest issue is lack of self-control and preferring convenience above all else. Our little expenses add up. He knows he has a big problem with materialism and consumerism, which is the source of a lot of marital grief. He's allergic to handy work and truthfully, with my own off-and-on depression and ADHD, I'm not one to trust to get anything done, either. We are DIY-handicapped. But I am good at not spending money mindlessly. Unfortunately, when I go through periods of depression, I give up the financial responsibility to him and we end up taking more steps back for several months.

I'm a stay-at-home mom  and I occasionally do oil painting commission work  on the side, but it isn't regular or a reliable source of income.

Basically, I want to be out of debt yesterday, actually save money, and we also can't buy a house until we do so, but I don't really know how to speed up the process.

ooeei

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Re: Case Study - Complete Newb
« Reply #1 on: March 09, 2016, 12:10:23 PM »
You need to get a realistic picture of what your actual expenses are, not what you think they are, or what they are when you're doing well.

slappy

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Re: Case Study - Complete Newb
« Reply #2 on: March 09, 2016, 01:16:37 PM »
$50 a month for a man's haircut is very high. Why does he get it cut every month and why does it cost so much?

former player

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Re: Case Study - Complete Newb
« Reply #3 on: March 09, 2016, 01:31:37 PM »
Some couples here have done well on sorting out finances by having a regular "finance date night" at which the two of them together go over recent and expected future spending.  I think that could work for you and your husband: neither splitting the responsibility nor putting it all on one or other of you doesn't seem to have worked so far and there is no indication from your post that it would work in the future either.   So I think the two of you need to agree on a regular meeting at a quiet time (eg. after the kids have gone to bed but before you are too tired, or at the weekend while the kids are playing quietly) to discuss financial issues.  Your job at the first meeting will be to disclose all your finances to each other: income, debts, spending.   Then, as ooeei suggests, do your best to work out together what your actual recent monthly expenses have been.  That will give you the information you need to set a way forward.

Three babies under school age is a lot to deal with: I hope you will stop at three, at least until they are all started at school and you have had some space to breathe.

Given your debts, a single income, three children to look after and a complete lack of interest in DIY, my strong advice is that home ownership is not for you at the moment.  Please don't get sucked into the idea that you have to own a house: you are much better off leaving the responsibilities of mortgage debt and maintenance to your landlord.

Good luck.

MDM

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Re: Case Study - Complete Newb
« Reply #4 on: March 09, 2016, 01:56:24 PM »
$50 a month for a man's haircut is very high. Why does he get it cut every month and why does it cost so much?
+1

See http://www.amazon.com/Wahl-Chrome-Pro-Haircut-79524-2501/dp/B0026IBSVE (or similar).  Would pay for itself the first time it is used.  Works for us.

Simply827

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Re: Case Study - Complete Newb
« Reply #5 on: March 09, 2016, 01:57:04 PM »
I also think you two need to get on the same page and work together as a unit. I see a lot of "him", and "me", with not much talk of "we." You two should have a sit down talk and lay everything out on the table. Don't place any blame. Take note of where you are today and make a plan to get out of the mess.

Find out the real numbers and post a case study here. That will allow us to better give you suggestions.
« Last Edit: March 09, 2016, 01:59:07 PM by Simply827 »

honeybbq

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Re: Case Study - Complete Newb
« Reply #6 on: March 09, 2016, 02:00:02 PM »



When I'm doing well, we can make it off of around $150-200 per month for groceries. The key phrase being "when I'm doing well."

You can feed 4 people for $150/month??? Are you sure?

Do you have a budget?

MDM

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Re: Case Study - Complete Newb
« Reply #7 on: March 09, 2016, 02:06:02 PM »
You need to get a realistic picture of what your actual expenses are, not what you think they are, or what they are when you're doing well.
+1

Invest in a copy of Quicken, or use Mint or YNAB or whatever, but start tracking where the money goes.  You can do well with a $66K income.

Below is a short version of the "usual advice", current as of the posting date.  Given the CC debt, that is probably as far down the list as you will go for now.

See the 'Investment Order' tab in the http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-%27case-study%27-topic/msg274228/#msg274228 for the latest version.   The Calculations tab on that spreadsheet is where you could enter your expenses, once you know them, along with income to start getting a good overall picture of what you could do.  It's ok to have some "miscellaneous" spending, but that should be only ~2-3%.

Current 10-year Treasury note yield is ~1.9%.
   
You may not be throwing away as much on rent as you might think.  See   
   http://jlcollinsnh.com/2012/02/23/rent-v-owning-your-home-opportunity-cost-and-running-some-numbers/ for some thoughts.
   
WHAT   
0. Establish an emergency fund to your satisfaction   
1. Contribute to 401k up to any company match   
2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.   
   
WHY   
0. Give yourself at least enough buffer to avoid worries about bouncing checks   
1. Company match rates are likely the highest percent return you can get on your money   
2. When the guaranteed return is this high, take it.   
   
The emergency fund is your "no risk" money.  You might consider one of these online banks: http://www.magnifymoney.com/blog/earning-interest/best-online-savings-accounts275921001   

Mother Fussbudget

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Re: Case Study - Complete Newb
« Reply #8 on: March 09, 2016, 03:08:26 PM »
Others have already said it, but this needs to be a joint effort on your parts.  Since you're both readers, you might start by having a 'couples book club' reading of "Your Money or Your Life" (library).   You might also look over the post:
http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-convert-your-so-to-mmm-in-50-awesome-steps/

Or turn him on to MMM, and start reading from the 'Start Here' link.

Bottom line:  you have to pull the oars in the same direction if you want your financial ship to move. 

Your iPhone habit is probably costing $150/month or more - if they're paid off, consider moving to AirVoice for $10/month per phone pay-as-you-go.  Wean yourself from internet over cellular by focusing ALWAYS using wifi - experiment NOW by turning cellular data OFF (Settings) and see for yourself how much you can get done over wifi at home/office/coffee bar/library.

little_brown_dog

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Re: Case Study - Complete Newb
« Reply #9 on: March 09, 2016, 03:32:09 PM »
+1 to getting on the same page as your husband. Things won’t get better if he continues to spend while you try to save small amounts off already modest budget areas. The things you really need to do (create an emergency fund, pay off the cc debt) most likely cannot be done without his assistance.

If you really can’t rely on him to help, I would focus on shaving off money from the budget areas you can control (ex: your own spending habits) and then stashing those funds in a high interest savings account. $25 here and there can build up to be a decent little emergency fund. An efund is critical since you are pregnant and could easily get socked with unexpected doctor’s visits or other medical bills.

Since you know depression can waylay you at any time, try to use some of your good days to prep food for bad days. Make extras and freeze them, grab a few extra boxes of pasta, etc. Then you can rely on those to reduce the hit when you can’t work up the energy to cook. Make a list of "bad day" meals, and when those days come, hopefully you can just point your husband in the direction of the list and he can reheat the stuff you already prepared/planned.

You sound like you are in a very precarious situation – 2 babies, another on the way, poor finances, and an ongoing battle with depression. Please make sure you are keeping your midwife/ob informed of your struggles with depression, as you are at serious risk for it worsening once the baby arrives. I don't know if this 3rd baby was planned, but obviously one of the most important decisions you can make is to stop all babymaking after this until you get in a better place financially and mentally.
« Last Edit: March 09, 2016, 03:33:58 PM by little_brown_dog »

Josiecat

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Re: Case Study - Complete Newb
« Reply #10 on: March 10, 2016, 07:02:20 PM »
Recommend you and your husband take Dave Ramsey' Financial Peace University together.  There is a home study kit or you can attend classes.

Retire in CO

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Re: Case Study - Complete Newb
« Reply #11 on: March 10, 2016, 08:37:24 PM »
I agree with Josiecat. Financial Peace University would probably be a good place to start. Dave Ramsey also has free resources like podcasts and a free app where you can watch/listen to his show daily and free budget software. He has many callers that have situations similar to yours.