Author Topic: Budgeting Assistance Needed before bankruptcy  (Read 11214 times)

djulian529

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Budgeting Assistance Needed before bankruptcy
« on: September 22, 2013, 10:30:03 AM »
Hi All! 

I am in need of some major budgeting assistance, as I apparently have been living way above my means for many years and never realized it. 

Here's the info:

37 y/o in a domestic partnership.  Partner is 30 y/o and is currently unemployed.  I lost my job in June of 2012, and then only had a commission based sales job Sept. 2012-June 2013.  I was re-employed in a salaried position in June.  I am currently out on a medical leave, and awaiting disability payments.  I will hopefully only be out another 2 weeks. 

Income (monthly):
$2476 Full time job
$400 Part time job

Expenses (monthly):
Mortgage (Taxes and insurance) $1046 {there is not enough equity in home at this point for a home equity loan}
Car: $203.10
Truck: $498.63 (I am contacting the bank to come and pick-up)
Cell: $105
Electric $276 (budget plan)
Life Insurance: $14.20
Fuel: $250
Food: $300
Car Insurance: $165 (Feb-Oct, but will be less when truck is gone)
Quarterly Expenses:
Life Insurance: $835 (combined for both of us)
Home Internet: $57.54

Unpaid Expenses:
Credit Card Debt: Totaling $42K

I have already started meeting with bankruptcy attorneys to evaluate that option.  I met with one who already told me that I am a great candidate for chapter 7, however, I can't afford the fees to go bankrupt....feeling like a failure. 

chasesfish

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #1 on: September 22, 2013, 10:38:28 AM »
You'll get a lot of questions on this forum, but I'm going to poke at the two things that stick out at me.  Your situation isn't as dire as you might believe, your credit card debt is only thirteen and a half months of existing pay.

Is the Salary a take-home number or pre-tax?

Truck:  What's the make/model/loan balance and what will CarMax offer you to purchase it?  Why do you have both a car and a truck loan?

What is the life insurance situation, $3200/year seems like a lot.  Can you give a lot more details here? Is there a reason you wouldn't qualify for term life insurance now?

What is the partner's employment situation? What is being done on their side to bring in income?

SnackDog

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #2 on: September 22, 2013, 10:54:59 AM »
Sort yourself out, ditch the truck, trim the budget, and start paying off the credit card.  You have no business declaring bankruptcy as you owe money which you can afford to repay, given enough time to do so as well as a bit of financial discipline.  Tell the partner that a "General Emergency" has been declared regarding finances and a job will be required.  Pay off the cc in a year or two and move on.

djulian529

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #3 on: September 22, 2013, 11:30:26 AM »
Salary is take home.

Never heard of Carmax...will look into that option.

Had both a car and the truck based on a former income when things did not seem bleak. 

The life insurance is a combination of terms and a whole life.  My partner is a higher payer due to smoking.  There is now an un-insurale situation there as well, so we need to keep these policies.

Partner is currently seeking employment.  Was doing laborer work, was injured at home and out on a medical.  The job now ended, and is waiting for another location to start, but that was delayed until the new year, so is now seeking work

djulian529

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #4 on: September 22, 2013, 11:33:17 AM »
Trust me, I don't want to declare bankruptcy.  However, I am not sure how to not do it.  When I pay just the minimal required bills (mortgage and utilities, and just the one car payment) I am still so short.  How do you even begin to tackle which CC bill to pay and which to continue not paying?

Self-employed-swami

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #5 on: September 22, 2013, 11:48:32 AM »
Income (monthly): $2876


Expenses (monthly):
Mortgage (Taxes and insurance) $1046 Can't change that
Car: $203.10 Sell it, return it back to the company you bought it from, do whatever you can to get rid of it.  If you have any 'equity' in it, buy a cheap used car for now, or ride your bike/take transit.  New Monthly Cost: $0
Truck: $498.63 Sell it, return it, just some-how get rid of it.  You don't need a truck. New Monthly Cost: $0
Cell: $105 If you are in the US, check out the communications superguide. New Monthly Cost: $40
Electric $276 Can you start reading some of the wonderful electricity-saving threads, and see what you can implement
Life Insurance: $14.20
Fuel: $250 No truck, means no giant gas bills.  If you get a new cheap ride, you can gas it for less, or you'll buy a transit pass. New Monthly Cost: $100
Food: $300 Seems decent to me
Car Insurance: $165 New Monthly Cost: $80
Quarterly Expenses:
Life Insurance: $835 New Monthly Cost: $279
Home Internet: $57.54 New Monthly Cost: $20

New Total Expenses: $2155.20.

So, your extra cash for debt repayment is $720.  You NEED to get your income up as well, this is a freaking emergency!


Useful links mentioned above:
Car buying: http://www.mrmoneymustache.com/2011/04/19/how-to-come-out-way-ahead-when-buying-a-used-car/
http://www.mrmoneymustache.com/2012/03/19/top-10-cars-for-smart-people/
Get Rich with Bikes: http://www.mrmoneymustache.com/2011/04/18/get-rich-with-bikes/
The Communications Superguide: http://www.mrmoneymustache.com/forum/share-your-badassity/communications-tech-isps-voip-cell/
Electricity Info: http://www.mrmoneymustache.com/forum/share-your-badassity/why-do-you-use-so-much-electricity!!
« Last Edit: September 22, 2013, 11:54:48 AM by Self-employed-swami »

Jack

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #6 on: September 22, 2013, 02:04:53 PM »
You don't seem to have kids and your partner is capable of working, so why do you need life insurance at all?

Christof

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #7 on: September 22, 2013, 02:14:35 PM »
The $835 ist that really Life insurance as in getting paid when one of you dies? Or did you mean to write Health insurance?

djulian529

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #8 on: September 22, 2013, 02:18:04 PM »
No that is life insurance.  It is 3 different policies.  It is a term on me, and a term and whole life on my partner.  We can not cancel the policies on my partner, as there is now an issue of non-insruability in the future.  We make those payments quarterly as it is cheaper than the monthly payments that way

katheh

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #9 on: September 22, 2013, 02:30:13 PM »
Well, you CAN cancel the policies, you just don't want to.

My husband is also "uninsurable" for life insurance. That said, when we married, we cancelled his whole life and kept the term. We got some cash from the whole life policy. We have 3 kids, 1 in college & 2 still in high school. The term policy we have for him is $50k, renewable, price is reasonable.

I am trying to say nicely and failing, how much insurance money will you actually need if/when your partner dies? We looked at it and figured for him as the primary wage-earner (10 years ago), that number was $50k. Now he is the secondary wage earner, I am primary, and that seems like a good choice looking back.

If you get your bills in order and get more income into your household, ad get some retirement savings, life insurance will be an unnecessary expense.

djulian529

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #10 on: September 22, 2013, 02:44:46 PM »
Having been in insurance sales, I have a really good understanding of our life policies.  There is no cash build up in the whole life policy as of yet, so cancelling it would result in us just having thrown money away for the past year. 

matchewed

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #11 on: September 22, 2013, 02:48:49 PM »
Having been in insurance sales, I have a really good understanding of our life policies.  There is no cash build up in the whole life policy as of yet, so cancelling it would result in us just having thrown money away for the past year. 

And keeping it is just throwing more money away now and in the future. Sunk cost fallacy and all that jazz.

Christof

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #12 on: September 22, 2013, 03:01:27 PM »
I'd seriously think about these life insurance contracts, you are paying almost one third of your take home pay to cover the risk of one of you dying. The amount is more than most people pay for rent or food.

Maybe it  completely different in the US, but term insurance here in Germany is meant to cover the loss of income for several months to years if the breadwinner unexpectedly dies. I realize it's not politically correct, but I fail to see how life insurance would do this for you. Both of you seem to seek work so there is no situation of one partner staying at home for decades. You haven't mentioned kids. You also haven't mentioned how long your partner is unemployed, but right now he or she isn't working, so there is no loss. A common cause for having life insurance is to be able to pay off the house. But you are considering bankruptcy which most likely means foreclosing, anyway.

So why do you pay so much for life insurance other than the fear of not getting a new contract?

djulian529

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #13 on: September 22, 2013, 03:02:29 PM »
Based on the fact that it has investments inside it that we control and in the future can take out a cash value and have more than we paid into it, I really don't see it was a waste to keep it.  I guess it all depends on your understanding of the life insurance policies and the way the investments inside them work.  Prior to being in the field and have my securities license, I never did, but have a lot better understanding of them now.

djulian529

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #14 on: September 22, 2013, 03:06:27 PM »
No, if I filed bankruptcy, I would be reaffirming my mortgage to secure the home stays with us.  The life insurance is in place to protect the future, as we don't know what will happen.  Yes, it is meant to replace an income, which I am hoping will be needed again when my partner is working.  Life insurance is cheaper the younger we are.  So that being said, it costs us less now then it will in the future for the same level of coverage.  The problem with straight term insurance is that there is no cash value for when the term ends.  When the terms end, the renewal is not all that cost efficient.  That being said, I feel that keeping the insurance and building the cash value, is actually a prudent measure at this point for us.

Christof

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #15 on: September 22, 2013, 03:15:43 PM »
Seriously, that sound like justifying these contracts. I've worked fpr insurances, too, several actually...

Insurance companies have higher costs then specialized investment companies. They only ever come out ahead if a country's tax code heavily favors them. That was the case in Germany, but even here things are changing now. If you think that paying $835 that you don't have to an insurance company every month while at the same time paying interest for $42K in credit card debt and having an underwater mortage is a sound investment strategy...  well, I am at a loss f words.

chasesfish

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #16 on: September 22, 2013, 03:21:27 PM »
Okay, we will stop picking at the insurance, it's just standing out and I'm not sure if you get to keep the cash value if you BK.

When your partner is working, what type of income can he/she bring in?  Is he/she currently receiving payments that make any W-2 income not worth it?  It sounds like your mortgage is supporting two people and one income.

There's a great thread about how to bring up income on the side floating around.  The other poster who started working on expenses has a good start. $700/mo is a solid start to paying these debts down.

Any chance your partner is going to give up smoking?  Nobody has to tell you about the horrible financial effects of that.

djulian529

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #17 on: September 22, 2013, 03:28:32 PM »
I have been on my partner's case to stop the smoking as it is costing money, when he is not bringing in any! 

When he was working, he was bringing in about $1000 a month/net.  The mortgage payment is definitely supporting two people and is being funded by only 1 income at this time.  Something that we wrangle with on a daily basis.  He knows he has to get back to work and is hoping that now that the holiday season is approaching, maybe he will find something to replace the laborer position he had. 

The $835 is not a monthly cost, but a quarterly cost.  When someone has become not insurable, how do can I justify getting rid of a policy?  My concern with that is needing it in the future, and then not having it

katheh

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #18 on: September 22, 2013, 03:32:14 PM »
the bk court will not allow you to keep he whole life, nor the mortgage if you dont have the income to support it. in addition, if you wrote the policy, it is going to be highly questionable regarding your license.

pay your bills, increase income, and save for retirement.

do the commissions from this policy comprise part of your income?

Christof

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #19 on: September 22, 2013, 03:35:26 PM »
Okay, not picking insurances... With house, insurance, food and electricity you have less money left than you owe in interest on the credit card every month, unless it's an extraordinarily cheap one. That means either you cut expenses dramatically, you increase income or you file bankruptcy.

Looking at option 1... Can you rent out your house and rent a smaller and cheaper place?

if you need a cell phone for work let work pay it. You can't afford over $100 a month while your expenses exceed your income.

Villanelle

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #20 on: September 22, 2013, 03:44:52 PM »
I have been on my partner's case to stop the smoking as it is costing money, when he is not bringing in any! 

When he was working, he was bringing in about $1000 a month/net.  The mortgage payment is definitely supporting two people and is being funded by only 1 income at this time.  Something that we wrangle with on a daily basis.  He knows he has to get back to work and is hoping that now that the holiday season is approaching, maybe he will find something to replace the laborer position he had. 

The $835 is not a monthly cost, but a quarterly cost. When someone has become not insurable, how do can I justify getting rid of a policy? My concern with that is needing it in the future, and then not having it

You justify it because you can't afford it and don't need it.  I'd keep the term policy and ditch the whole life.  Sure, you may not be able to get it again later, but so what?  He'll still have the term policy, which will likely be more than enough to cover funeral costs. 

You are allowing your ship to sink so that you can hold onto something that may prevent your ship from sinking down the road.  How does that make sense?  How can you justify *that*?

Also, surely you can do better than that on electricity.  Turn off all temperature control.  Put on some socks and a robe it if it cold, and run a fan in the room you are in if it is hot.  Don't turn on lights during the day.  Unplug everything in the house that doesn't have a clock and isn't a refrigerator and only plug it in when you are using it. 

djulian529

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #21 on: September 22, 2013, 03:47:26 PM »
the bk court will not allow you to keep he whole life, nor the mortgage if you dont have the income to support it. in addition, if you wrote the policy, it is going to be highly questionable regarding your license.

pay your bills, increase income, and save for retirement.

do the commissions from this policy comprise part of your income?

No, I am receiving no income from when I was doing insurance sales.  I left that line of work in June.  I am the only one filing the bankruptcy as everything is in my name.  The policy is in his name, not owned by me, therefore protected.  I have the income to support the mortgage, so that is secure as well.  My income can support everything minus the truck and the CC debts that we incurred prior to my job loss and subsequent slide downwards

Christof

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #22 on: September 22, 2013, 04:08:08 PM »
So what are you expecting from us? It does sound like you have made up your mind to return the truck and file bankruptcy.

You credit card debt is 15 times your income,  your expenses exceed your income. It is definitly possible to get out of that hole, but that requires some serious changes and still will take a few years...

djulian529

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #23 on: September 22, 2013, 04:13:23 PM »
So what are you expecting from us? It does sound like you have made up your mind to return the truck and file bankruptcy.

You credit card debt is 15 times your income,  your expenses exceed your income. It is definitly possible to get out of that hole, but that requires some serious changes and still will take a few years...

If I could avoid the bankruptcy I would like to, as I feel that I need to own my errors financially.  However, I am trying my best to determine a course of action.  Yes, the truck is a goner.  However, how do I go about getting the debt paid down?  I have not paid CC since March....every month I get interest and late fees of course, how can I even begin to battle them down? 

katheh

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #24 on: September 22, 2013, 04:15:11 PM »
your income does not show you can afford the mortgage. it has to be less than 30 pct of your income.

if you bought the policy and pay the premiums with your income, the court will require its surrender especially if you are the beneficiary.

Deano

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #25 on: September 22, 2013, 04:17:51 PM »
The husband must work. "Hoping" to find work now that the holiday season is approaching is not a sound plan. He has none in all likelihood and you're enabling him to be an amoeba instead of a partner. An amoeba that smokes your hard-earned money.

Christof

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #26 on: September 22, 2013, 04:25:58 PM »
It would help to have feedback on our suggestions: Get rid of cars and phones, reduce electricity, get any job for your partner, rent your house...

It would also help to fill in the missing parts of your budget. How much interest are you paying on your credit card every month? Does the food budget include cigarettes and other household items. how comes you have 42k in credit card debt, but no misc expenses? Are property taxes included in the $1000 mortage and insurance or deducted from your take home pay? What about health insurance, is there never a co-pay and your employer covers everything? Don't you buy clothes, have car repairs? No cable?

djulian529

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #27 on: September 22, 2013, 04:26:06 PM »
your income does not show you can afford the mortgage. it has to be less than 30 pct of your income.

if you bought the policy and pay the premiums with your income, the court will require its surrender especially if you are the beneficiary.

The mortgage is only $1046.  When I run my income v expenses based on no truck and no cc, I am covering it all.  I have remained current on the mortgage, and have not even had a late payment in months!  In fact, I have been current on everything, with the exception of the CC bills.  The bills are getting tougher and tougher to remain current and balance, which is why I am planning on dumping the truck, that frees up $498, but the CC are so big, that I am not sure that I can really make a difference with that money a month going towards the debt. 

I spoke with Credit Guard of America to see about consolidation, and they told me I would need $1037 a month to make payments, which as we see, we don't have.

matchewed

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #28 on: September 22, 2013, 04:27:17 PM »
So what are you expecting from us? It does sound like you have made up your mind to return the truck and file bankruptcy.

You credit card debt is 15 times your income,  your expenses exceed your income. It is definitly possible to get out of that hole, but that requires some serious changes and still will take a few years...

If I could avoid the bankruptcy I would like to, as I feel that I need to own my errors financially.  However, I am trying my best to determine a course of action.  Yes, the truck is a goner.  However, how do I go about getting the debt paid down?  I have not paid CC since March....every month I get interest and late fees of course, how can I even begin to battle them down?

By making the cuts you need to and contacting the CC company to negotiate a payment plan ASAP. It is in both of your interests for you to start making payments.

djulian529

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #29 on: September 22, 2013, 04:30:30 PM »
It would help to have feedback on our suggestions: Get rid of cars and phones, reduce electricity, get any job for your partner, rent your house...

It would also help to fill in the missing parts of your budget. How much interest are you paying on your credit card every month? Does the food budget include cigarettes and other household items. how comes you have 42k in credit card debt, but no misc expenses? Are property taxes included in the $1000 mortage and insurance or deducted from your take home pay? What about health insurance, is there never a co-pay and your employer covers everything? Don't you buy clothes, have car repairs? No cable?

Mortgage payment covers home insurance and taxes.  The health insurance is deducted right from my pay check so included in my net pay.  No the food budget only includes the food for us and the dogs.  I will get my interest rates together for the CC.  The 42K includes previous bills when I was making more and feeling more secure.  It then includes items I needed while I was working in the insurance sales and needed to spend in order to try and make. 

We have no cable.  We only have internet.  We got rid of cable when I lost my job in 2012, but kept cable to be able to job search.  We have honestly not bought new clothes since before I lost the job.  We ask for items for holidays and are making do with what we have in the way of clothes.

chasesfish

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #30 on: September 22, 2013, 04:33:12 PM »
I have a couple of direct questions:

Is there any income at coming in from your partner?  Where do you live that there is absolutely no job potential?  Have you or him checked taskrabbit.com or other ways to earn a side income?

I didn't see cable in there, so no pay TV at home, correct?

Who pays for the cigarettes?

Christof

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #31 on: September 22, 2013, 04:49:01 PM »
Thank you, having more information helps...

if you haven't come across this thread I'd highly recommend it. Similar situation with justifying expenses initially but now making great progress. Please note that the thread title was her choice, not mine.

http://www.mrmoneymustache.com/forum/journals/tales-of-a-money-idiot

Is the $1037 just unterest, or does it include paying pack debt? My own estimate would have been between 400 and 1000 just for interest.

Assuming that you are serious about paying back your debt and avoiding bankruptcy, you should take this number seriously. Any plan should incolve paying at least that much to the credit card company. Everything else would be secondary.

First obtain information about your credit score. In the US there are two major scores: FICO and vantage. There are companies that get you these information for free if you sign up for a trial and cancel in time.

If your score is good enough, apply for a credit card with the lowest interest possible. Keep in mind that every application will decrease your score, so call credit card companies up first, if you are not sure you are accepted. Otherwise apply for a credit with a lower interest rate, such as lending club. You have to reduce interest payments, otherwise they will kill you.

Then start thinking about our suggestions to reduce expenses.

Another Reader

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #32 on: September 22, 2013, 05:33:21 PM »
Retain a bankruptcy attorney that will not only represent you in a filing, but help you avoid the filing.  When the credit card companies call, give them the attorney's name and number and instruct them to call the attorney.  This usually stops them from going for a judgement, because they know you will file the minute they do that.  Tell them in writing they must stop contacting you if they keep bothering you.  Then take a deep breath and move on.  In all likelihood, you are not going to pay this huge amount of money.  After awhile, they will settle for a fraction of what you owe.  Don't accept any payment plans, ignore them until you are back on your feet.  After all, you have no money to make payments today.  If they go to court, set the attorney on them.  If they go through with it, you file and you are done.

Continue to pay the mortgage.  Try to do the equivalent of short selling the truck.  Contact the lender and ask them if they will allow you to sell the truck and take a note for the difference.  Tell them the other option is to file bankruptcy, but you would rather they get the most money back on the loan.  I know someone that is doing this on a trailer she and her husband purchased before he unexpectedly passed away.  If you can't negotiate, deliver the truck ASAP.  No sense in pouring money down that rat hole. 

Why do you "need" the insurance policy?  If your partner dies, there is no income to replace.  That's almost $280 per month that could go elsewhere. 

The Credit Guard people work for your creditors, not you.  If that's the best deal they can negotiate, forget about working with them.  Do this yourself, with the attorney.

Your partner should not be taking your money for cigarettes.  Want to smoke?  Get a job. Your partner should be out pounding the pavement looking for a job every day anyway.

You are the perfect candidate for the Dave Ramsey approach.  I don't like his religious fervor and he is totally wrong about investing, but he understands how to solve this problem, because he did the same thing himself.  I believe he still does a radio program every day and talks to folks on air in situations similar to yours.  A few times listening to his approach to creditors when there is a financial emergency will probably be of help to you.  Dealing with creditors may be covered in his books - check your local library.

With one car, a mortgage, and no credit card payments, you can survive until you get back on your feet.  Then you can begin the process of paying and/or settling the unsecured debt.

chasesfish

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #33 on: September 22, 2013, 06:10:02 PM »
djulian529 - I know you came here looking for advice on a budget after bankruptcy, but its my opinion (and a lot of others on this board) that your bankruptcy can be avoided and you can honor your debts with some strict budgeting and some introspection on income generation and expenses.  You're currently earning somewhere around twice the poverty level in this county.

I keep reading the life insurance justification and I think its garbage, you don't have any kids and the excuse of "the whole life policy is in his name" is merely trying to game the bankruptcy system instead of honoring your debts, which you do have the capacity to pay if you choose.

I know this is tough advice you're getting from people responding on a screen, but I know you're going through a stressful situation.  You're supporting a second person in your household who is either by (or not by choice) not generating any income to support the household, and is a net negative due to a personal addiction (cigarettes).  You're 37 and have to decide if you're willing to support a 30 year old male to the detriment of your financial well-being.  Filing bankruptcy doesn't solve your budget issues, you'll may be right back in this situation.  I would strongly recommend thinking if you're with the right domestic partner, or deciding if that domestic partner needs better motivation than you can provide would be a good start. 

I am a male in my 30's and have strong opinions on this, unless your partner has a physical or mental disability completely preventing him from working, there may be issues here you just can't overcome. 


katheh

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #34 on: September 22, 2013, 06:13:47 PM »
it doesnt matter that you are now current or making the payments, if it is in excess of 30 pct of your income, the court will not reaffirm the mortgage. the end.

there has been lots of good advice in this thread and on this forum, keep an open mind. in your situation, you have to challenge all of your decisions, your assumptions, and the difference between have to and want to.

there is no budget that can cure more being spent than is being earned.

Jack

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #35 on: September 22, 2013, 06:52:56 PM »
Okay, now it's face punching time...

The $835 is not a monthly cost, but a quarterly cost.  When someone has become not insurable, how do can I justify getting rid of a policy?  My concern with that is needing it in the future, and then not having it

It doesn't matter whether your partner is uninsurable or not, because you don't need the insurance in the first place!

Life insurance is good for two things:
  • Paying funeral expenses
  • Providing for dependents by replacing lost income

Do you expect your partner to die any time real soon? No? Good, then you can save up for the funeral expenses. Scratch that justification off the list.

Are you his dependent? (You're working, he's not, so no.) Is he your dependent? (He's at least supposed to have a job, so no.) Do you have any kids? (No.) Does he have any income for the insurance to replace?! (NO!) So scratch the second justification off the list, too.

Furthermore...

Based on the fact that it has investments inside it that we control and in the future can take out a cash value and have more than we paid into it, I really don't see it was a waste to keep it.  I guess it all depends on your understanding of the life insurance policies and the way the investments inside them work.  Prior to being in the field and have my securities license, I never did, but have a lot better understanding of them now.

I don't care what kind of "investments" are inside the insurance, the expenses are guaranteed to be so damn high that you'll never come out ahead compared to using a real investment account (e.g. Vanguard) instead. It absolutely is a waste, period.

Ditch the life insurance -- ALL OF IT -- because it is killing your finances and harming you far more than it ever has the possibility to help!
« Last Edit: September 22, 2013, 08:57:32 PM by Jack »

Left

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #36 on: September 22, 2013, 08:26:20 PM »
um... it doesn't seem to have been brought up but why keep the house? If you can rent cheaper somewhere. How much do you owe on the house? You mentioned you are current on the mortgage, are you underwater on it? If not, could you sell the house to pay down the CC debt? Sure losing the house is rough, so is bankruptcy... but you can recover from losing a house easier IMO. Without that mark against you, you'd be able to get another mortgage in the future or other types of loans if needed.

I also don't understand the life insurance, you said you could borrow against it later, you could do the same with a roth IRA as well. This sounds horrible and I by no means really mean it, but unless your partner is dying in the near future, you probably won't likely see any returns on it. If you keep paying it, you'll run out of money and he won't be able to pay it either. In that case you'll lose it anyways.

If you file bankruptcy, and think you're okay without truck/CC debt, sorry but you aren't making enough to be "okay". You would be scraping by, netting anywhere from $10-200 a month. That's not enough to cover any type of emergency. Winter is coming up, a bad storm where your house is damaged, you or your partner gets injured, then you'd be back to using the CC again. And even if he does find "holiday" work, that's seasonal, it wouldn't be long term so you can't rely on it.

I hate to bring this up but if you are out on disability currently but hope to be back in 2 weeks. You may or may not have a job to go back to, depending on the industry you work in. I've known people that had to take disability/worker's comp and they generally were the first ones to be let go if the company was cutting back. Why? Because an injured person is more likely to cost the company in medical expenses/re-injure themselves. Old wounds don't ever "go away" even if it is healed, IE: broken hips are still weaker than if it had never broken... Employers look at this when looking for people to cut since it'll be either you or them, and they look out for themselves first.

I'm sure all of this feels like we are ganging up on you/scaring you but well... it is scarey to be so close to the proverbial cliff and watching someone not move away from it.

edit: it was mentioned in passing above, but to restate it, you may not be off the hook for the truck even if you give it back. You'd still be responsible for the loan that you took out for it. You didn't borrow the truck from the bank, you borrowed the money for the truck. The bank will want the money back, and if they can't sell the truck for all of that, they will still hold you accountable for it. If you're plan was to get around this with bankruptcy as well, why return the truck so early?

edit: re-read my post, and noticed I didn't really offer much of a solution :S Aside from cutting a lot of your costs down to what you need to what you eat/where you sleep/how to get to work, you don't really need the rest of it. You mentioned you know you are living outside your means when you talked about the CC debt. But it still applies even now. The insurance aside, you could cut phone/internet/electricity costs. For example, the phone sounds expensive, is it a smart phone? Sell it, sure I.P Daley's guide lets people cut phone costs down but get rid of the smart phone so you aren't tempted by data usage. A strictly emergency call/texting phone and for work (partner needs phone for interviews or to set them up). Use the internet for all things you would do on the phone. Or if you are on a contract for the phone with unlimited data, get rid of internet and tether computer to phone.

Also you should talk to partner on how you two will work out getting to both jobs (once he gets one) or how he gets to the interviews once you are back working. With only a single car between the two of you, one of you will be walking/taking transit unless one of you works an off shift. But if both are using the car, you'll be running up gas bill for it. Just something to consider.
« Last Edit: September 22, 2013, 08:44:02 PM by eyem »

Peony

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #37 on: September 22, 2013, 08:48:01 PM »
Do you have a spare room in your house that would allow you to take on a temporary roommate?

Simple Abundant Living

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Re: Budgeting Assistance Needed before bankruptcy
« Reply #38 on: September 22, 2013, 09:36:30 PM »
I have been on my partner's case to stop the smoking as it is costing money, when he is not bringing in any! 

When he was working, he was bringing in about $1000 a month/net.  The mortgage payment is definitely supporting two people and is being funded by only 1 income at this time.  Something that we wrangle with on a daily basis.  He knows he has to get back to work and is hoping that now that the holiday season is approaching, maybe he will find something to replace the laborer position he had. 

The $835 is not a monthly cost, but a quarterly cost.  When someone has become not insurable, how do can I justify getting rid of a policy?  My concern with that is needing it in the future, and then not having it

I'm wondering what kind of laborer work nets $1000/mo full-time?  I am a medical assistant (technically a cna, which you can become in a couple weeks for about $300) and I work two days a week.  I net about $1000/month for those two days. If I didn't have kids, I could easily double or triple my hours.  Your partner needs to be taking any job-McDonald's or whatever to help out.  If he can find a course, male CNAs are in high demand at care facilities.

I'll join the chorus on the life insurance. Dump it. Ditto to everything else that's been said here. Your situation isn't impossible. But you need a perspective shift. A big one.