Author Topic: New to all of this, need advice on finances/budget  (Read 3959 times)

castead

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New to all of this, need advice on finances/budget
« on: September 28, 2013, 08:21:49 PM »
Hello everyone,

I am new to all of this and slowly have been starting to become more frugal and better understand money, but I'm still far far away from where I want to be and sometimes I feel like perhaps I have started too late. But better late than never, right? So my situation...

Im a 29 yearl old SAHM to a one year old boy. My partner is 31 and makes 35K/year. We just bought a $105K house.

Our baby was unplanned so we relocated to another state so we could live with family. Neither one of us had significant savings. After a year and a half we were able to come up with $11K by saving and family contributions. So we went ahead and bought a house, because I felt that later down the road we might not be able to afford it, but also because my partner has to drive over an hour each way to work from where we currently live. (The commute will be reduced to 25-30 min. Not enough, I realize. I did try finding something closer, but it is a small town and housing options where very limited, and practically non-existing within our budget.) Also, on a monthly basis it will be significantly cheaper than renting.

I've been trying to figure out ways to bring in money and still be around to raise my son (childcare, PT jobs on different schedule than my partner) but have been unsuccessful. I never went to college because I've never liked the idea of being in debt and because I could never figure out what I wanted to do.  That has come to bite me in the butt now that no one will hire me, also being out of the work force for a bit hasn't helped. I've been debating going back to school, starting with community college. Now the only thing that I am passionate about as far as something to study/career is environmental science, which I realize might not have the best work prospects. So my question is, is it even worth it in today's economy? Should I go for it? Not only as a way to make money but it would also make me feel better about myself.

On to my budget... I feel like it will be hard to get ahead compared to people with high-incomes but would like some advice anyway.

Income $35K/yr

Mortgage $700 (won't start paying until Dec)
Cell phones $140 (way too much I realize, will be trying out republic soon)
Food $520 (too much as well, will try to cut back here)
Insurance $70
Gas $400-450 (this will significantly be reduced once we move into town)

We own two cars, one with 250K miles and a jeep cherokee with 90K, which I don't need where I live now but had because I lived in an area with heavy snow and got a good deal on.

I am thinking about selling the jeep, which I RARELY drive, but don't know how to go about it. It has been in two accidents (cosmetic stuff only, has been repaired) and it's not that well taken care of on the inside. Also, if I sell it and the other car breaks down we won't have enough $ to buy another one.

So far I have been able to stay out of debt but my partner wasn't as lucky, he racked up 25K on student loans which he hasn't started repaying and dropped out of college when we moved to have our baby.

Like I mentioned, I am new to this being financially responsible and don't know much about anything so I'm trying to educate myself. Any advice will be greatly appreciated. TIA =)

Kira

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Re: New to all of this, need advice on finances/budget
« Reply #1 on: September 28, 2013, 08:51:47 PM »
You should definitely check out this thread for income producing ideas: http://www.mrmoneymustache.com/forum/ask-a-mustachian/who-has-a-side-gigjob-that-brings-in-extra-cash-share-with-us!/ There are TONS of interesting ideas there. And especially on a low income, bringing in even $100 or $200 a month can really move the needle.

One thing you could do if you're home is to watch a few kids before school or after school, that might be easier for you to get going than whole-day childcare. Give 'em a snack and keep them until their parents come to pick them up or the bus comes.

I do also feel envious sometimes of the "problems" that the high earners on this forum have, but the important thing to remember is that even if you aren't doing as well as you would like, you can always do better than you are doing. You do not need to measure your financial accomplishments against someone else's but only against your finances in the past.

I know a lot of other Mustachians would say to sell your second car and have only one car, but I would be nervous having a small child at home and no way to get him anywhere were something to happen while your partner is at work. Do you have family around that could lend you a car or give you a ride now and again if you needed it? If you can depend on them, then getting rid of the second car (even if you don't net much on the sale) will save you money in insurance, upkeep, and repairs.

A few clarification points: Are you actually living in the new state now, or are you moving there in December? I'm confused as to why the mortgage won't be due till December.
What kind of job are you looking to get in environmental science? They do exist but are very location-specific.
What kind of job opportunities are even available to you in the small town you're moving to? It might be more realistic to get an associate's degree in order to get some kind of job, and then focus on getting a better degree and job when your son is in school. Getting more education is almost always worth it as long as you are realistic about the job prospects available to you, and choose your degree path accordingly.

castead

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Re: New to all of this, need advice on finances/budget
« Reply #2 on: September 28, 2013, 09:13:25 PM »
Thank you for replying, I will look at the link for ideas.

I did try getting some children to care for, easier said than done. There is an in-home childcare every block it seems, and having no references hasn't helped. I will continue trying once I move into the new house.

I live in VA but I'm an hour away from the town I bought my house in, living with family. Won't be starting with mortgage payments til Dec because the seller wanted a 60 day closing. Inspection and everything has been done, we are just waiting now.

As far as a career, ideally I would love to work for myself, but working for a company would be okay too. A friend of mine who is a civil engineer and manages larges projects tells me they hire environmental scientists to work on the projects, to protect certain species/environment, before they start building.

I've traveled and lived all over the world, relocating is part of the excitement of life for me. I wouldn't have a problem relocating in the future for job opportunities. This is one of the reasons I kept on putting school off. I never lived in one place for more than 2 years. I figure now that I have a baby I should slow down enough to figure how to make a better living.

Thanks again for your reply!

castead

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Re: New to all of this, need advice on finances/budget
« Reply #3 on: September 29, 2013, 07:25:37 AM »
A friend of mine who is a civil engineer and manages larges projects tells me they hire environmental scientists to work on the projects, to protect certain species/environment, before they start building.

Is this a career path you are considering? How does the demand fare against other fields like nursing, IT, software development, engineering, etc?

Yes, conservation work internationally is also something else that appeals to me. Job outlook for 2010-2020 is 19% compared to 18% for computer and information system managers, 30% for software developers, and 26% for nursing.

Also pays the least at a median income of $61,700 compared to $64,690 for nursing, $115,780 for computer and information system managers, and $90,530 for software developers.

avonlea

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Re: New to all of this, need advice on finances/budget
« Reply #4 on: September 29, 2013, 07:29:57 AM »
castead, I think it would be best if you determined what you really want for your life and for the family.  Once you know what that is, you can make your road map to success. 

I know several families who have the same household income as yours and are successfully raising children with a stay-at-home parent.  Some of them are also able to sock away a nice bit of money.  These families have determined to make it work.

I also know people who successfully went to school during their child's early years.  My sister and her husband did that, but she will be the first to tell you that it was stressful and probably would have been a huge struggle if not for the help of her mother-in-law.  Her MIL watched the baby for them when they really couldn't have afforded to pay for daycare.  A supportive family can be a huge asset.  Do you think yours might be willing to help you out with childcare if you were to return to school?  Your partner  could probably watch the baby if you attend night classes, but you might want to see if taking only night classes is even possible for the degree that you are pursuing.

I also know people that did a combo--stayed at home with the baby until school age and then once the child was in kindergarten, they enrolled in college.

If you want to stay home with your son, it's possible.  If you want to return to school, it's possible. I would just kindly suggest that you not jump into going back to school unless you are certain of the career path that you are taking.  Also, if you do return to school, I would recommend that you not do so until the upcoming fall semester.  Since you are moving in December, starting school in January would probably be too much change too soon.

I am a SAHM and I love it, but I know that there are many ways to have a happy family.  If you do want to continue to stay at home, I'd suggest reading The Tightwad Gazette by Amy Dacyczyn (actually I'd suggest reading it either way).  There is a wealth of information in there.  She and her husband raised a family on $30,000 a year.  This was in the 1990s, so today that would be more like $50,000, but they had six kids.  http://www.amazon.com/The-Complete-Tightwad-Gazette-Dacyczyn/dp/0375752250

Here's part of her intro:

Quote
I am a compulsive tightwad. People who know me believe that I worry too much about money, that I donít spend enough on myself, and that I donít know how to have any fun. Even Depression-era relatives think that I am too thrifty. One Christmas an aunt gave me two boxes of aluminum foil after learning that I reused the stuff. (I made one box last for two years.) And when I was first labeled "The Frugal Zealot" even I had to smile.

But it was not always this way. Before the saving fever gripped me, I had a very normal and healthy love for spending.

The change occurred seven years ago. I got married and began to pursue my dream. I had always wanted a large family and a rural pre-1900 New England farmhouse (with attached barn). I had a crazy notion that I could have both without the two income/daycare frenzy that has become the norm for the modern American family.

Saving money, rather than earning money, became the means to my goal. I became a reuser first of aluminum foil, then of ziplock bags, and now, I publicly confess, I have become a reuser of vacuum cleaner bags. (No Christmas presents please.)

My challenge in life became how low I could get our food budget and still have a varied, healthful diet, or how wonderful I could make a childís birthday with a $25 budget, or how many years I could go without buying wrapping paper.

I made it my personal mission to create ways to reuse plastic milk jugs, bread tabs, brown paper bags, egg cartons and those frozen juice lids.

To fine tune our spending, I became a student of thrift. I routinely calculated such things as the cost of drying a load of laundry, or the cost savings in cloth diapers, or the cost difference of making food from scratch versus buying convenience foods.

When Oprah had a show featuring cheapskates, I didnít laugh. I took notes.

Although I was the chief architect of our family economic plan, my husband became a willing convert. In addition he taught me the ways of scrounging and organized packratting. (A level beyond cheap is to get things for free.)

Over the years our average income has been less than $30,000 (including my husbandís Navy salary and all allowances, plus my spotty freelance income). In less than seven years we saved $49,000, made significant investment purchases (vehicles, appliances, furniture) of $38,000, and were completely debt free! That is an annual savings/investment rate of over $12,500 per year, or 43% of our gross income.

When we got married our joint financial assets barely paid for the budget wedding. We owned almost nothing. In other words, we started from ZERO.

Also, for the car...

Will you be living inside of town or in the countryside?  We have always been a one-car family.  When we lived in our former town, my husband had to drive 20 minutes to work everyday.  I usually didn't need the car in the daytime--ran my errands at night.  But once a week, I attended a playgroup.  On those days, I would drive him to work and come back home with the car.  (I also made sure to invite somebody over to our place at least once a week so I wouldn't get too lonely. ) I had nice neighbors, a few people on my street were retired and a few others were SAHM's themselves.  If I had an emergency, I could have sought their aid or called 911.  If I lived in the countryside without close neighbors, though, I probably would have wanted another vehicle.  If I had attended school at this time, I probably would have wanted another vehicle, too.

People on this forum are mostly hoping to reach early retirement and/or financial independence.  If that's what you and your partner really want, you can figure out ways to do so.  You don't have to go at the same pace as others.  Do what feels best for your family.
« Last Edit: September 29, 2013, 08:55:57 AM by avonlea »

castead

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Re: New to all of this, need advice on finances/budget
« Reply #5 on: September 29, 2013, 08:13:01 AM »
Also, for the car...

Will you be living inside of town or in the countryside?  We have always been a one-car family.  When we lived in our former town, my husband had to drive 20 minutes to work everyday.  I usually didn't need the car in the daytime--ran my errands at night.  But once a week, I attended a playgroup.  On those days, I would drive him to work and come back home with the car.  (I also made sure to invite somebody over to our place at least once a week so I wouldn't get too lonely. ) I had nice neighbors, a few people on my street were retired and a few others were SAHM's themselves.  If I had an emergency, I could have sought their aid or called 911.  If I lived in the countryside without close neighbors, though, I probably would have wanted another vehicle.  If I had attended school at this time, I probably would have wanted another vehicle, too.

People on this forum are mostly hoping to reach early retirement and/or financial independence.  If that's what you and your husband really want, you can figure out ways to do so.  You don't have to go at the same pace as others.  Do what feels best for your family.

Thank you for the book recommendation! As for school, there is a FT Friday option that I'm looking into and won't be starting until fall 2014. I do have an aunt in the area but she is not very patient with my little one. Meaning she cannot keep him for more than an hour at a time and gets fed up. Also, she lives an hour away from town. I'm sure the school thing can be worked out, it is only one day after all.
I've taken 10 years to try and figure out a career path... Always said I'd go back to school once I was convinced about what I wanted to study. Environmental Science is as close as I've gotten intobeing "convinced."

I will be living in town within walking distance to a hospital, so in any emergency 911 would be there right away. Again, my concern with the car is that if I sell the SUV and my partner's car breaks, we won't be able to afford another one, depending on when that is. If we can get at least another year out of the car, I'm sure it would be enough. Also, grandparents live 7 hours away, we usually visit 3-4 times a year, and they help with gas. Having only the very high mileage car, we probably wouldn't be able to make the trips, since it's very hilly driving, the car struggles too much.
« Last Edit: September 29, 2013, 08:24:49 AM by castead »

avonlea

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Re: New to all of this, need advice on finances/budget
« Reply #6 on: September 29, 2013, 08:54:56 AM »
Wow, a one-day-a-week option sounds really great!  I think that finding/paying for childcare looks pretty good under those circumstances.  That's a wonderful option to have!

Sorry about not picking up on the car situation a little better.  I totally glossed over the mileage counts.  I can see how wanting to keep the 90k car would be a good idea.  Could you keep the 250k car until it dies and then maybe switch to a one-car lifestyle?  Since you live in town and near the hospital, would you also be fairly close to the college you hope to attend?  Maybe you could bike there if so. :)

Good luck to you and your family!  I wish you all the very best!

castead

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Re: New to all of this, need advice on finances/budget
« Reply #7 on: September 29, 2013, 10:31:22 AM »
Keeping both cars until one dies makes sense, until we can save enough to buy a used hybrid or one with better fuel economy.

I could probably even WALK to school, I'm guessing it's about 4 miles away from the new house.  Biking, especially sharing the road with cars is a huge fear for me. One I must overcome I realize.

Thank you avonlea!

Spudd

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Re: New to all of this, need advice on finances/budget
« Reply #8 on: September 29, 2013, 11:37:43 AM »
What about selling the old car? How much would that save you on insurance/maintenance, and would it be worth it?