Author Topic: Reader Case Study...Is it as bleak as it sounds?  (Read 13348 times)

jenpino1189

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Reader Case Study...Is it as bleak as it sounds?
« on: March 04, 2015, 05:49:46 PM »
Hi All!  New to the website, new to the ideas, new to saving! 
Ok...everything is pretty straightforward in my story, so I'll just lay it out.  Basically I'm here for advice and encouragement.  I've already done all the beating up I can do to myself!
For starters...I just went through my bills and pared down to bare minimums.  I've gotten my monthly bills as low as they can go, for now, due to contracts and etc.  I also want to say that I am a single mom of three kids, ages 11, 13, and 14.  I am the sole breadwinner.  I am the bill payer, the mom and the dad, mechanic, gardener, housecleaner, laundress, seamstress, etc.  You get the idea.  I do as much as I possibly can on my own and loathe paying others to do anything.
 
After taxes and insurance, my take home pay is $3000 a month.
 
My rent, utilities, auto and renters insurance, and school loans/other debt comes to $1500 a month.  Food and Gas I can keep down to $500 a month.

I am $21,000 in debt with school loans, credit cards, and a small personal loan.  My goal is to pay off as much debt as I can with my income tax return.   I have approximately $1000 'extra' (after bills) that I plan on using for paying down the rest of the debt as quickly as possible. 

So, here is where I need you wise Mustachians to jump in...21K in debt, not a huge income, and no savings to speak of.  I'm 37 years old.  No windfalls or winnings in sight in the near future...Do I have a snowball's chance in hell of making financial independence a reality? 

GardenFun

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #1 on: March 04, 2015, 05:57:44 PM »
Welcome to the forums!

First, let's start out with some basic questions.  What is your occupation?  What is your education?  Details definitely will help you get additional, constructive feedback. 
« Last Edit: March 04, 2015, 06:26:46 PM by GardenFun »

jenpino1189

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #2 on: March 04, 2015, 06:01:48 PM »
My apologies.  I am a Registered Nurse.  Newly graduated as of last May, with an associates degree.  I live in a semi-small town where there are more nurses than jobs, unfortunately.  Moving is not an option at this point, nor is commuting to a larger city because of the time I would spend away from my kids.  What other information can I give to help out? 

G-dog

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #3 on: March 04, 2015, 06:02:34 PM »
Be ready for a request for more details - many here can help you find more savings (but we need details). Be open to the recommendations, nothing is sacred.

Worst case, someone confirms you've cut everything you can (reassuring). Otherwise you may learn of some other things you hadn't thought of.

Yes, you can get out from under your debt by exercising good choices, diligence, and tenacity.

James

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #4 on: March 04, 2015, 06:04:12 PM »
Sure you do!

You make a good salary, and have a manageable debt to pay off. It won't be easy, but you can get there. Your huge benefit is that you aren't at a high spending rate right now, so that decreases the amount you need to be FI. Obviously much of your current expenses will decrease as your kids grow and move out, so that will help lower your expenses further. Your debt you can pay off over the next couple years or faster if you find ways to cut spending and/or increase income.

You left out a ton of info on expenses, income, and other specifics, so not much specific advice we can give. But I assume there are places you can cut, either now over over time. Right now paying off that loan can be a huge goal to help you cute expenses, every penny you pay off gets you that much closer to getting rid of that big weight around your neck. And as you make cuts to help you pay that off, you are also setting yourself up for the ability to start saving significant money once you pay it off. Just keep living the same way, and instead of paying off debt you save that money and invest. It doesn't seem to add up very fast at first, but over time your money works for you and starts building along with your contributions. With your frugal lifestyle your investments can get you to financial independence before most retire!

Hope you allow us to help with advice. You aren't doing terribly right now, but small changes can make a huge difference over the next 20 years of your life, so it is well worth the time and effort to find and make those changes. With your RN degree you have great long term income potential, so you will certainly be able to grow that income.

jenpino1189

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #5 on: March 04, 2015, 06:13:53 PM »
Rent+Electricity+Gas+Water=$800
Auto/Renters Insurance=$90
Verizon=$100 (ugh...just got into this one with an iPhone and all, on their edge program...I think that's what it's called)
Home phone/Internet=$105 (I feel I need a landline because my kids stay home so much on their own and I refuse to pay for cells for them)
Cable=$10 (in a contract for another 10 months, to drop it is $200, so gonna stick with the $10/mth)
Netflix=$8 (we don't go out to movies, this is my only entertainment expenditure)
Credit Card #1=$35 min payment, $1700 to pay off
Credit Card #2=$35 min payment, $1500 to pay off
Personal Loan=$122, payoff of $2500
School Loans=$180, payoff of $15,000
Food and Gas=$500
Total Bills/Month = $1985


expatartist

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #6 on: March 04, 2015, 06:18:39 PM »
Hi Jen, kudos for posting here! One thing which may help us is to post the interest rates on your debt. This helps to prioritize payoff goals.

Chrissy

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #7 on: March 04, 2015, 06:20:21 PM »
Can you cancel the contract with Verizon?  There's usually a return policy (30-days or something).

Separate out the expenses you grouped together, including insurance.

List the individual interest rates on all your debt, please.

jenpino1189

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #8 on: March 04, 2015, 06:20:44 PM »
Thank you James! 
I did post some more specific financial information for everyone's review.  Hope that helps!  The Verizon thing...not sure if there are options for that, just opened it last month.  The internet and phone...suggestions would be welcome!  As of today I cut $200 worth of excess spending that had gotten out of hand.  That alone made me feel amazing.  But if I can chop more, then I will! 

Paul der Krake

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #9 on: March 04, 2015, 06:22:58 PM »
You're doing great considering that there are 4 people housed, fed, and clothed for $500 per head. You can be completely debt free in just a few years and then get serious about accumulating some wealth.

You don't mention anything about tax advantaged accounts, is this a deliberate choice on your part as you are solely focused on paying down debt for now? With 3 dependents, you really should run the numbers and see if contributing to, say, a traditional IRA, could qualify you for more subsidies. Take home income can be heavily manipulated to one's advantage.

G-dog

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #10 on: March 04, 2015, 06:23:25 PM »
Rent+Electricity+Gas+Water=$800
Auto/Renters Insurance=$90
Verizon=$100 (ugh...just got into this one with an iPhone and all, on their edge program...I think that's what it's called)
Home phone/Internet=$105 (I feel I need a landline because my kids stay home so much on their own and I refuse to pay for cells for them)
Cable=$10 (in a contract for another 10 months, to drop it is $200, so gonna stick with the $10/mth)
Netflix=$8 (we don't go out to movies, this is my only entertainment expenditure)
Credit Card #1=$35 min payment, $1700 to pay off
Credit Card #2=$35 min payment, $1500 to pay off
Personal Loan=$122, payoff of $2500
School Loans=$180, payoff of $15,000
Food and Gas=$500
Total Bills/Month = $1985

Quick targets:
Cell phone
Internet - any cheaper options?
Food (cut down on meat, processed/convenience foods, packaged foods. For example eat oatmeal vs. boxed cereal, rice and beans are your friends, eggs, etc.). Granted, your kids are growing and likely eating a LOT.  These are just suggestions to check against what you are currently doing.
Loans - think about paying off either highest interest first OR smallest loan (fast success). Once one is paid, tackle the next one.
Take advantage of pre-tax deductions, like 401k - get at least the company match if you can afford to, it lowers your taxes.

GardenFun

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #11 on: March 04, 2015, 06:26:13 PM »
You're not in bad shape.  Here's some suggestions:

Home Phone/Internet
- Look at either Ooma or Vonage.  We paid $150 one-time cost for the Ooma device but the on-going costs are $4/month.  Vonage can be found for $10/mo if you are willing to play hardball with them.
- Do you have your own internet modem?  Some places charge $7/mo for modem rental but you can find one for roughly $50 on Amazon.
- Are you locked in to internet?  I lock in for a year at a time and get internet for $35/mo.  Locking in usually knocks $10-15/mo off the bill.
- Check your internet speed.  Unless you are gaming, you don't need anything over the Standard Speed.

Credit Cards/Personal Loans/School Loans
- What are the interest rates on each one?
- Are you adding extra money to the highest interest rate version, or trying to pay off one of the smaller ones as motivation?
- Any potential for getting a 0% CC?

Verizon Cell Phone
- See what the cancellation cost is.  May be worth it in the long run.

Congrats on picking an occupation with good growth potential.  Do you have the ability to pick up extra shifts? 


MsPeacock

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #12 on: March 04, 2015, 06:29:04 PM »
Can you go with wa VOIP phone and drop to just internet? I just switched over and it saves me quite a bit per month ($6 vs. $30 for the old landline).

It may be cheaper to break your Verizon contract and get a new phone and one of the less expensive providers - pay back would possibly only a few months if you can cut your bill from $100 to more like $20 or $30. Even if you have the pay the cancellation penalty it may be worth doing - take a ding up front but come out way way way ahead vs. paying on that contract for 2 years at $100 per month ($2400!!!).

Those are the two things that jump out for me immediately.




jenpino1189

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #13 on: March 04, 2015, 06:34:30 PM »
Ok
Auto Insurance (2 vehicles, 1998 Ford Ranger and 2007 Ford Freestyle) $77
Renters Insurance $13
The Rent/Utilities are lumped together because that is all lumped in with my rent.  I rent from my dad, it is a 1900 sq.ft. 4 bedroom house in a nice neighborhood.  Normally renting a house of this size, in this neighborhood would run $1300 a month, not including utilities.  So I really can't complain about this!
The two credit cards are 22% interest
The personal loan is 16% interest
Student Loans:
Direct Subsidized Stafford Principal Balance $1741.15 Interest Rate 3.4%
Direct Unsubsidized Stafford PB $3257.16 IR 6.8%
Dir Sub Staff PB $3489.81 IR 3.86%
Dir Sub Staff PB $997.09 IR 3.86%
Dir Uunsub Staff PPB $4966.25 IR 3.86%
FFEL Sub Staff PB $1253.24 IR 5.6%
FFEL Unsub Staff PB $66.45 IR 6.8% 

jenpino1189

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #14 on: March 04, 2015, 06:42:03 PM »
You guys have given some great advice so far, keep it coming!  Thank you so much! 
I have done absolutely no saving so far, in fact right now I have $2000 in a savings account and it's more than I've ever had, ever.  It's been a rough start, to say the least.  But I'm on the road, now. 
The reason I went with verizon was because they are the only ones that have even decent coverage in this part of Arizona.  I am limited when it comes to that.  But I'll check into seeing if I can get out of the deal and perhaps find something cheaper. 
My internet is the lowest available speed, and phone is strictly for local calls, we rarely use it.  It is a package deal.  I can, however, look into different options on that front, as well. 

willow

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #15 on: March 04, 2015, 06:47:13 PM »
I'm here for the encouragement part.

You definitely have a chance. You have extra income every month and I've seen people crawl out of deeper debt holes. I say you just focus on paying off all that debt with laser like focus.

Then, you have two more advantages, one being the immediate feeling of happiness you get when you realize you are debt free, and being debt free, is it's own taste of financial independence. That'll also open up more income for saving, etc.

Two, you're a nurse, that has some uphill income potential. Extra hours, grad school for higher paying specialties, and possibly moving to a better income area. I know you said moving is not an option right now, but financial independence is not going to happen "right now" either. It will happen in the future, after some life changes come along and opens up options for you.

Don't lose heart, I think you're in a fine position to turn things around. It's going to feel hard sometimes, but it's so worth it.

jenpino1189

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #16 on: March 04, 2015, 06:48:19 PM »
Oh also...a note on the food...I am averaging $400 a month on food, for 4 people, three of them being VORACIOUS eaters. 
$400/month
$100/mouth
$100/30 days=$3.33/day=$1.11/meal
 

jenpino1189

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #17 on: March 04, 2015, 06:49:46 PM »
Thank you, Willow.  Bless you!

rpr

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #18 on: March 04, 2015, 06:51:29 PM »
You are doing very well. Your take home after taxes is $3000 and your expenses are $1985. Almost a $1000 to throw towards the debt of $21000. In principle, you should be able to payoff in roughly 2+ years.

Q: Why do you have two vehicles?

jenpino1189

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #19 on: March 04, 2015, 06:54:07 PM »
The Ranger I picked up for $500.  It's good to have for trips to the dump, and I love being able to have a four wheel drive so I can go out to the hills and hike without fear of getting stuck somewhere!

G-dog

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #20 on: March 04, 2015, 07:30:59 PM »
When paying off the debt, make sure that they apply any extra against the principal. Sometimes they just apply it to interest and then you don't see the total drop off for quite a while.
Depending on your pay frequency/cash flow - think about making payment biweekly (less interest accumulates).

I'd tackle the two credit cards first, I think you can get those paid off really quickly (keep min payments on the others). Then apply the money to the next, and so on! The student loans are larger, but lower interest rates, may not be worth paying off quicker vs. getting some investing started.

I don't think you've said anything yet about a 401k or similar option at work.

You are doing great - I was glad to see you didn't have 4 cell phones (1 each). Not sure if you can do any gardening to get more low cost food.

jenpino1189

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #21 on: March 04, 2015, 07:40:15 PM »
Thank you for that information!  That's kind of what I was planning on doing, getting the snowball effect going on my debt.  It's good to know that my school loans can maybe ride for a while so that I can start investing.  Bi-weekly payments could be a great option, never even thought about that!! 
I need to look into the 401k option, honestly, I was so anxious to start getting a paycheck that I just wanted as much of it as I could get and didn't really want to worry about investing.  Bad choice, but it's not even been a year yet, so at least I'm not too far behind the 8 ball. 
Gardening...yeah.  We average 19 inches of rain per year here, and since I'm not on a well, it would cost me dearly to have to water a garden.  We do, however, have an awesome farmer's market during the summer which I frequent. 

G-dog

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #22 on: March 04, 2015, 07:49:39 PM »
Thank you for that information!  That's kind of what I was planning on doing, getting the snowball effect going on my debt.  It's good to know that my school loans can maybe ride for a while so that I can start investing.  Bi-weekly payments could be a great option, never even thought about that!! 
I need to look into the 401k option, honestly, I was so anxious to start getting a paycheck that I just wanted as much of it as I could get and didn't really want to worry about investing.  Bad choice, but it's not even been a year yet, so at least I'm not too far behind the 8 ball. 
Gardening...yeah.  We average 19 inches of rain per year here, and since I'm not on a well, it would cost me dearly to have to water a garden.  We do, however, have an awesome farmer's market during the summer which I frequent.

Not necessarily a bad choice with 22% interest on some of the debt!  Folks smarter than I can probably calculate all this!
You are way in front of most because you are making decisions vs. just following what everyone else does. Things change all the time - move forward, adapt, adopt, improve, repeat.

We are all just here to learn more to make better decisions in the future. And I am kicking myself that I wasn't making some of these choices at YOUR age.  Don't sacrifice or diminish your good choices and successes on the altar of your mistakes.

The Beacon

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #23 on: March 04, 2015, 07:50:13 PM »
Rent+Electricity+Gas+Water=$800
Auto/Renters Insurance=$90 
Verizon=$100 (ugh...just got into this one with an iPhone and all, on their edge program...I think that's what it's called)  // Too much here. Move to Republic Wireless or Tracphone  10 dollars a month

Home phone/Internet=$105 (I feel I need a landline because my kids stay home so much on their own and I refuse to pay for cells for them)
//  Get Ooma telo  4 dollars a month +  30 dollars a month basic internet  = 34

Cable=$10 (in a contract for another 10 months, to drop it is $200, so gonna stick with the $10/mth)  why do you need cable if you have netflix?  I bought a a very good antenna on Amazon and I can receive 20 local channels
Netflix=$8 (we don't go out to movies, this is my only entertainment expenditure)
Credit Card #1=$35 min payment, $1700 to pay off
Credit Card #2=$35 min payment, $1500 to pay off
Personal Loan=$122, payoff of $2500
School Loans=$180, payoff of $15,000
Food and Gas=$500
Total Bills/Month = $19850

jenpino1189

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #24 on: March 04, 2015, 07:54:57 PM »
Hi Sharpy!
I will look into those options that you listed for the cellular and internet services - what an amazing reduction that would be!
As far as the cable goes, that was a contract I was tricked into (the salesman lied to me about the contract).  I should never have gotten it in the first place, but now I'm stuck for another 10 months.  Since the fee to get out of the contract is twice what I will be paying to just live out the contract, I'll just have to suck it up and pay out the ten bucks a month.  Sigh. 

Spondulix

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #25 on: March 04, 2015, 08:07:57 PM »
Have you looked into options with your student loan provider (refinancing, income-based payment plan)? Although most of your loans are a pretty good rate (under 4%). Any chance of getting a new credit card with a lower APR? I thought I heard recently about one of the cell phone companies paying your contract fees if you move over to them. Best to get totally out if you still can, but maybe that's an option if it's cheaper service.

Do you have any sort of emergency fund? I know it'd feel productive to get that $1000 towards a loan, but do you have any savings in case a car breaks down, etc?

I know sometimes when you look at the numbers and how tight things are, it just looks impossible. But, what you have to remember is that this process is a curve. You're talking pennies and dollars to start, but next jump you'll be talking about $10, then $100, then $1000. Once you get one loan paid off, your money will go further because it's paying off a lower interest rate. You might find a higher paying job or get a raise. In a couple years, you may have one less mouth in the house to feed, which means more towards savings.

If you are all homebodies (and it sounds like you're good with gardening, sewing, and DIY) could you and your kids do something to make extra cash? For example, my sister-in-law knits hats while watching tv with her kids and makes $20-30 a pop. People pay like $30 for socks with a little lace... stuff that's ridiculously easy to sew.

jenpino1189

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #26 on: March 04, 2015, 08:24:43 PM »
I do have a $2000 emergency fund that I try very hard not to touch.  So there is that, at least. I have actually looked into the school loan options (just today, actually). My first step with that is to get my taxes done so they can have that information to base their answers off of. (I know, I should have had them done weeks ago!)
The other thing is that since I am filing as HOH and have all the kids as dependents, I should be getting a pretty hefty sum back, possibly enough to knock out not only my credit cards, but my personal loan as well. From there I would like to take the monthly savings and throw it into investing...if all goes well!

G-dog

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #27 on: March 04, 2015, 08:32:38 PM »
Taxes- check if the United Way is doing the VITA program in your area.  Free tax prep (fed and state ) and e-filing if your AGI is less than about $50K.
You probably qualify - there may be deductions you don't find, or you don't have to pay a tax preparer.

This is a program done with the IRS - very cool service.
http://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers
« Last Edit: March 04, 2015, 08:34:33 PM by G-dog »

Bstarr

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #28 on: March 04, 2015, 08:34:34 PM »
hey, about the wireless in a less populated area... We bought Straight talk phones and there was a code on the corner of the box. I've since forgotten them, but one corresponds to AT&T's network and one to Verizon's. This can be easily researched online. But if you need to stay on the Verizon network, just pick a phone that corresponds to Verizon's network. This may be a cheaper way to stay on Verizon's network.  I think we pay less than 50 bucks/mo per phone for unlimited everything and I am sure there are cheaper plans.

jenpino1189

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #29 on: March 04, 2015, 08:52:04 PM »
Great ideas, thank you both!

Prairie Stash

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #30 on: March 04, 2015, 09:00:33 PM »
I do have a $2000 emergency fund that I try very hard not to touch.  So there is that, at least. I have actually looked into the school loan options (just today, actually). My first step with that is to get my taxes done so they can have that information to base their answers off of. (I know, I should have had them done weeks ago!)
The other thing is that since I am filing as HOH and have all the kids as dependents, I should be getting a pretty hefty sum back, possibly enough to knock out not only my credit cards, but my personal loan as well. From there I would like to take the monthly savings and throw it into investing...if all goes well!
Use your E-fund of $2000 to pay off a credit card. If you need the money...use the card.

MountainBeard

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #31 on: March 04, 2015, 09:15:34 PM »
+1 for Ooma rather than a standard land line.  We've had ours for 3 years, with a bill of about $4/mo; works great.

N

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #32 on: March 05, 2015, 02:44:12 AM »
I have nettalk for my VOIP (voice over internet phone) and its about 30$ a year. the calls go over the internet. that way, I can live with a 10/mo phone plan (my husbands is even less, like 3-4$/mo).

I have no idea bout gardening in arizona, but the prudent homemaker gardens in vegas and she is crazy inspirational
http://theprudenthomemaker.com/

so, check on your options to cancel phone, do your taxes, investigate what payroll savings you can do with retirement accts (at least get the info), pay off some of those loans, then report back :)

stay positive. consider starting a journal for support and advice in the journal section. get your kids involved, make it a family challenge.

hang in there!

N

YTProphet

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #33 on: March 05, 2015, 06:43:09 AM »
You shouldn't beat yourself up at all. You're doing an incredible job simply by caring for your children and providing as best you can for them. It's hard to see the light at the end of the tunnel right now, but believe me when I say that it's there. You'll be debt free in a few years and it'll feel wonderful. Stay hopefully and keep plugging along.

I'd agree with others as to the two obvious things - your cell phone is way too expensive (Republic/Ting are far cheaper) and your internet is also way too expensive (mine costs $20/month for 15 mbps).

It's a bummer that the one thing that would help you most, moving, is something you can't do. I live in an area that has salaries similar to Arizona and I have a few relatives who are new nurses who make $60k a year. As soon as you're able to increase your salary via a job change, you should do it. Otherwise, keep on keeping on. You can do it!!

jenpino1189

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #34 on: March 05, 2015, 06:49:35 AM »
Thanks to you all!!!! I will implement these changes and see what else I can do...I'll be baaaack!!

GardenFun

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #35 on: March 05, 2015, 07:55:09 AM »
Great idea to use tax refund money to pay off the high interest loans. 

If you do end up getting a large tax return, look at changing your withholdings on your 2015 earnings.  That money can be used to start funding a 401(k) - especially if your employer gives any matching funds.  Another option is to use the extra money to pay off any of the higher-rate student loans.  Personally, I would obtain any 401k matching funds, and use the extra $1000/mo to pay off the student loans.   

jalich

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #36 on: March 05, 2015, 09:10:42 AM »
I need to look into the 401k option, honestly, I was so anxious to start getting a paycheck that I just wanted as much of it as I could get and didn't really want to worry about investing.  Bad choice, but it's not even been a year yet, so at least I'm not too far behind the 8 ball. 

It sounds like you have a ton of good advice here! This may have been your plan already, but I wanted to chime in on the part above in particular...

If you are still carrying debt, some of it at 22% interest rates, every dollar you invest now is essentially being borrowed (at 22% interest!) to invest. It's really tempting to try to get started, but probably not the best use of your money. 22% = hair on fire.

The exception to this is you SHOULD be contributing up to your employer's match, if there is one. Their added contribution is hugely beneficial, probably the best deal you are going to find anywhere!

straycat

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #37 on: March 05, 2015, 09:31:49 AM »
oh my goodness - that 22% credit card rate! I can't believe no one has mentioned this - there are plenty of credit cards out there dying for your business who will offer 0% interest for 6 months to a year, especially if you do a free balance transfer. I would look into that IMMEDIATELY. Transfer the balance to a 0% card and plan on paying it off before the time runs out. Of course this will only work as long as you are adamant about not adding to the CC debt. Once it's paid off, cancel the new card (keep the old one with your credit history, probably).

Chrissy

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #38 on: March 05, 2015, 09:49:12 AM »
oh my goodness - that 22% credit card rate! I can't believe no one has mentioned this - there are plenty of credit cards out there dying for your business who will offer 0% interest for 6 months to a year, especially if you do a free balance transfer. I would look into that IMMEDIATELY. Transfer the balance to a 0% card and plan on paying it off before the time runs out. Of course this will only work as long as you are adamant about not adding to the CC debt. Once it's paid off, cancel the new card (keep the old one with your credit history, probably).

But the balances are low on the cc debt:  $1,700 and $1,500.  Before she pays an additional 3% (or whatever) to move the balances, I would seriously consider putting the $2,000 emergency fund toward it.  I don't usually recommend someone use their EF for non-emergencies, but OP is about to get a good tax refund, so the EF would be replenished shortly.

straycat

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #39 on: March 05, 2015, 10:20:38 AM »
oh my goodness - that 22% credit card rate! I can't believe no one has mentioned this - there are plenty of credit cards out there dying for your business who will offer 0% interest for 6 months to a year, especially if you do a free balance transfer. I would look into that IMMEDIATELY. Transfer the balance to a 0% card and plan on paying it off before the time runs out. Of course this will only work as long as you are adamant about not adding to the CC debt. Once it's paid off, cancel the new card (keep the old one with your credit history, probably).

But the balances are low on the cc debt:  $1,700 and $1,500.  Before she pays an additional 3% (or whatever) to move the balances, I would seriously consider putting the $2,000 emergency fund toward it.  I don't usually recommend someone use their EF for non-emergencies, but OP is about to get a good tax refund, so the EF would be replenished shortly.

Right - I would only do it if the transfer was FREE and if she decided against using the EF to pay down the balance.

Breaker

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #40 on: March 05, 2015, 10:56:13 AM »
Hi,

First let me chime in with the everyone else.  You are doing great.  I don't know why anyone is talking about your grocery bill, I doubt that even the Goblin Chief could do better. 

Gardening:  It is great for some but as you point out the water would probably take up any food savings.  Also I know that gardening takes time and unless one or two of your kids will be the major gardeners I doubt you can fit it into your already over-loaded schedule.

Do a real budget, that includes everything.  Many items are missing from your budget that should be there.  I have a feeling that like most people who are starting on this journey you have very little idea how much cash slips through your fingers on small daily/weekly purchases.  Things like coffee, fast food, school stuff for kids.  I didn't see any budget for clothing.  Just being mindful of small everyday purchases will save a lot and your kids can help you with this project.

Here is how I would go about working my way out of debt and into investing if I were in your position.

1.  Get rid of the CCs and personal loan.  All three are high interest.  I would start with the lowest debt and highest interest and move on from there.

2.  Check with employer and see if they match any retirement funds.  If so, sign up and use your tax refund to pay loans.  Invest as much money as needed for full match.

3.  Once the CCs and personal loan is paid, increase retirement investment.

4.  Pay off any Student loans that have interest rates above 5%. 

Oh, change you withholding so that you receive the money every month instead of the Gov't.  That money can be invested and/or used for an emergency fund.

I think you can have both CCs and the personal loans paid within 6 to 8 months, if you proceed with your plan to use tax refund to pay them off.

Good luck.


Dee18

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #41 on: March 05, 2015, 11:17:04 AM »
First, congratulations on your degree....and on refusing to get your kids cell phones.  You might consider going ahead and telling them that at ___ age they can get one if they have the money for both the phone and the monthly fee.  I did that with my teen and she found a $25 phone and a cheap text only phone plan.  Also, help them figure out how to make money as is age appropriate.  As my teen got older, I often split costs with her.  If she needed boots, I would allocate an amount to pay for a decent pair and give her that, but if she wanted Uggs, she had to come up with the difference. 

Another possible savings area, check with your phone company and see if there is a really cheap landline.  Most companies have this, about $20 a month, if you don't use the home phone much.  You can get internet service separately for about $50/month anywhere.  They try to convince you that "bundling" internet and phone service will be cheaper, but where I live it is way more. (You don't need voice mail or any of that since your phone is for your children to call you or to call in an emergency.)   I kept a home phone as well until my teen had her own cell.

Best of luck to you.  Being  a single mom is a lot of work, but you have established a good career track for yourself and are so smart to be thinking ahead about finances.  Also, if you have time, check ahead for free (or low cost with possible scholarships) summer activities for the teens.  Our local university has a 3 week summer science camp for $300, but with liberal scholarships available.  Now is a good time to look for those summer opportunities...or to help your oldest find a summer job.
« Last Edit: March 05, 2015, 01:45:30 PM by Dee18 »

rmendpara

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #42 on: March 05, 2015, 11:19:36 AM »
Many great ideas already.

I think the biggest and best thing you can do would be to get those credit cards and personal loans refinanced. 22% and 16% interest is hard to get out of.

I'd look at a balance transfer option and maybe even cash advances on some cards to see if you can get those rates down and buy some time. Be careful to consider both the transfer fee as well as the APR together. Chances are it will be lower, but hopefully you use that opportunity to work the balances to zero before the introductory rate is gone and you're paying 20%+ again.

Good luck! Half the battle is deciding you want better for your future self.

jenpino1189

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #43 on: March 05, 2015, 12:48:26 PM »
This has been such an encouraging and supportive group!  Thank you all for the advice!  I am looking into picking up some extra hours, too, and putting 100% of that into an investment fund.  I am excited at all the changes I can still make to better use my money, and with all of your help, I know I can get there!  I would love to start up funds for my kids, too, and get them going on the path to early retirement...the possibilities are endless, especially for them!

Bicycle_B

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #44 on: March 05, 2015, 05:34:02 PM »
+1 to everyone who pointed out how well you're doing!

Food note: $1.10 per meal is about Mr. MM's target; you're doing great there.

Do whatever amount of fine tuning you can do without burning out, then rest and enjoy your kids.  You're on track to succeeding, as long as  you keep going the way you are.  So make sure you can continue, rather than grinding forward without ever stopping.

You've gotten a lot of suggestions about phones and internet.  The cell phone article in MMM Recommends section has good info too, including a link to a post called the Superguide that gives a comprehensive analysis of the options there if you want it.

jmusic

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #45 on: March 05, 2015, 06:15:53 PM »
I agree with the use of the EF to payoff the crazy credit cards.  MMM does too:

http://www.mrmoneymustache.com/2011/04/22/springy-debt-instead-of-a-cash-cushion/

Gerard

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #46 on: March 05, 2015, 07:00:49 PM »
If any of your kids are budding environmentalist types, they might enjoy starting a greywater-watered garden that could produce some stuff that's much better homegrown (herbs, cut-and-come-again mesclun). You wouldn't save much, if anything, but that stuff can be used to flavour up other, cheaper stuff, and there's a nice sense of having more of your life within your control that comes with gardening (rewarding for teens and maybe parents too!).

jeromedawg

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #47 on: March 05, 2015, 07:35:18 PM »
Broken record here but for your phone - too much:

http://www.mrmoneymustache.com/mmm-recommends/
http://forum.mrmoneymustache.com/share-your-badassity/communications-tech-son-of-the-superguide!/

Plenty of options with going cheaper these days.


For internet/landline, way too much. In my area, I'm forced to pay $38~ for 3mbps - it's the biggest scam and rip-off ever but unfortunately the "reliable" provider monopolizes the city we live in. It would be good to know what your speed is or what plan you're on but in general it sounds like you can definitely get on a lesser plan without having to sacrifice much. Additionally, the "phone/internet bundles" tend to be ripoffs. As others have suggested, check out OOMA, Vonage etc. MagicJack is another and my personal favorite would be getting an ObiHai device and using a Google Voice number with it. If your kids have tablets or devices too, you could also have them install Google Hangouts and get in touch with them that way (phone calls over wifi).

For cable, it sounds like you're planning to get rid of it once the contract's up? That definitely would help too.

As far as your debt, I'd especially zero in on paying off those credit cards first and foremost. Then work on the personal and school loans.

BTW: out of all your bills, which is the highest (besides rent) - electric?

Oh and some other suggestions if you haven't already: Mint and or YNAB can help a lot. If you're comfortable with Excel spreadsheets though, I suppose you could do that. YNAB costs some money but many people find extreme value in that it helps them budget super efficiently and helps them to save for goals that they likely would have had trouble saving for to begin with. I haven't found as much use for YNAB as others but that's just me. I find Mint more useful as I'm more into tracking expenses but YNAB is a really great tool for most people I think. And if you ever start getting into investments, Personal Capital, WiseBanyan, and Betterment are all great for starting out. And a lot of people will recommend Vanguard if you're starting a new 401k or IRA as well.
« Last Edit: March 05, 2015, 07:41:00 PM by jplee3 »

aj_yooper

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Re: Reader Case Study...Is it as bleak as it sounds?
« Reply #48 on: March 06, 2015, 03:56:59 AM »
jenpino1189, you can teach us a lot about how to keep a tight budget!  Good job.

As noted, RN degree can be a cash builder.  You are on a good trend.

Your dad sounds like a good guy.  More positives for you and your family.  It also sounds like your kids are with the plan too.

Your attitude and willingness to adapt and consider things is very outstanding.  Stick with it and you will be amazed.  Keep this thread as your journal and see your progress.  Since you are anticipating a large IRS refund, you could look into adjusting your tax withholding at work so you can get the cash right away rather than loan it interest free to the government.  Nail the high interest debt asap and once that is cured you will be feeling a lot stronger. 

Keep breathing and working it.  You are amazing.  Thanks for writing your story.