Author Topic: Reader Case Study: where to put the money?  (Read 7261 times)

Ticopowell

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Reader Case Study: where to put the money?
« on: March 02, 2014, 03:42:58 AM »
Hey all,
I am wondering what to do with my tax refund, and deployment money that will both be coming in march/april. I am going to post my budget as best I can, feel free to face-punch away but out spending adds up to something like $1500 a month, the rest is going towards debt. I would sell a vehicle but we are upside down on most of them (bad past decisions), and we have a little bit of credit card debt.  I am military, so my paycheck is nice and steady(for now... damn cutbacks) and my wife doesn't have a job at all, and we have 2 dogs and no kids. Let me know what you all would do, Ill post specific questions/options after the budget. Thanks for the enlightenment.
Income:
Base pay - $3812.10
BAH(housing) - $1776.00
BAS(food) - $246.24
Flight pay - $125.00
Until april deployment pay - $375
Total normal pay - $5959.34
While deployed - $6334.34
Yearly before taxes, not deployed - $71,512.08

Pre Paycheck Expenses:
Federal Taxes - $358 (not paid while deployed)
FICA SS - $234.01
FICA MEdicare - $54.73
SGLI - $29.50 (only pay 2.50 while deployed)
Dental - $10.66
Total - $686.90 ($301.90 while deployed)

Living expenses:
Mortgage - $1221.31 P+I is $925.31
Insurance - $183.00 (1 new vic, 1 used, 1 motorcycle)
Electricity/Gas - $164.43 (max, usually less but I can't control any of it right now)
Water/Sewer - $71.30 (max, usually less as well, closer to $50 lately)
Trash - $32.00
Pest control - $30
Food - $200? (just a guess, helps that I am not at home)
Gas - $200 (includes 10 hour driving to utah every month or two)
Vehicle payments:
Car - $577.77 (paying $600)
Truck - $341.82
Motorcycle - $254.6 (paying $600)
Total vic - $1541.82
Netflix - $8.19
Internet - $48.68
Cell Phone - $139.47 (Currently thinking of getting republic)
Pet expenses - $56 ($34 food, rest is heartworm meds)
Life Insurance - $27.07
Credit Report - $13.02
Career starter loan - $594.70
Credit card payments - $450
Savings - $254.21 (getting an emergency fund setup, once we have $1000 the rest will go to the credit cards)

Total spent - $5283.10

Assets:
House - $205-230000 no official appraisal yet, but the same house in the same neighborhood brand new would be $235000
Car - $22-26000 depending on who appraises it. 2013 Ford Mustang GT(punch away)
Truck - $12-15000 2006 Ford F-150 (Yes it is a gas hog, yes I love it still)
Motorcycle - $8-9000 2011 Harley Sportster 1200
Roth IRA - $7000
Emer savings - $700
Other savings - $115
Cash on hand - $3000 (Just got paid, and wife is traveling, so this will pay off the monthly payments and the rest will bet put on the credit cards.

Debts:
House - $203000 3.49% interest
Car - $30500 3.15%
Truck - $14750 3.5%
Motorcycle - $12500 10%
Career starter loan - $17,725 0.5% (Think of it as a student loan for my college path)
Credit card 1 - $1680 4% interest until april
Credit card 2 - $2600 6% interest until april
Line of credit 1 - $650 8%
Line of Credit 2 - $875 6% interest until april

Questions!
I am getting about $2200 in my tax refund as soon as the govt decides to part with the money (should be in the next few weeks) and $2000 in Family separation pay after I get back to the states.
I am not worried about the house currently, I am going to be moving and selling it within a year (I love when the military changes their minds on how long I am going to be somewhere).
I am planning on selling the mustang as soon as I can, but it is a fun car, and my wife loves it, so that might take a few months before I can convince her to let it go. We would either get a small efficient SUV or a Sedan to replace it, but I have to still convince the wife that we don't need an SUV and a Truck.  I am planning on refinancing the motorcycle (price is so high because of a face-punching warranty and maintenance plan we got with it), I can't refi until we don't owe more than what it is worth.
My question is which option from the list below would you recommend, and why.

Option 1: Pay off all credit card debt by May (when rates go back up, 9% on one, 15% on the larger one), then use that money to pay down the car and motorcycle to sell and refinance. Very tempting because then we won't have credit card debt hanging over us.

Option 2: Put all money to the car and sell as soon as we can find a buyer, worry about paying off the rest of the cards/loans as soon as we can.

Option 3: Put enough money towards the Motorcycle to get it refinanced at a much lower rate, I can get somewhere between 5 and 8 % depending on where I get the loan. I would put the rest towards either the car or the credit cards, probably cards, then worry about the rest as soon as we can.

Option 4: Tell me what you think would work best!

I also see trading in the car for a cheaper car ($5-10000) at a stealership, I would roll the excess debt onto the small car's short loan (3 years or less), and pay it off ASAP, at least the same money that is going to the current car. That seems like it would get us out from upside-down on the vehicles a lot sooner.

On our spending front, except for the phones, utilities maybe, and gas, we don't have much where we can cut back. according to my excel spreadsheet if I take out all the debt payments and the savings we are  only spending about $1220 a month. Which in my mind is pretty good, beats MMM last I checked. This is with living with a wife that only started budgeting 6 months ago just before I left (hence the credit card debt). my math also says that if we saved the roughly $4000 a month we would have a 70% savings rate, which would be freaking awesome! that means FI would be here in 7-8 years... again on my bad math abilities. Also I am getting a pay raise of about $600 at the end of may, another one next may, then every 2 years after that until I either leave or retire from the military... plus the whole 1% pay raises every year(unless congress deems them unnecessary of course...)

Let me know what you all think I should do with the $4200 I am getting, and what else I can do to smartly get rid of all my debt. and if I were going for FI how soon do you think I could reach it?
Thanks!

Weedy Acres

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Re: Reader Case Study: where to put the money?
« Reply #1 on: March 02, 2014, 10:38:00 AM »
First of all, you need a face punch on much more than the Mustang.  Your debt is outrageous!  You don't get to compare your spending to MMMs, because in fact, with your debt payments, mortgage and otherwise, your expenses are 4 times the $1200 baseline you're looking at.  $2400/month on non-mortgage debt is hair on fire time, baby.

You seem to be in love with things, vehicles in particular, which are going to seriously hamper any probability of FI until you come to grips with it.

Here's what I'd do:
1. Use your upcoming cash to knock out the CCs.  I'm with Dave Ramsey on this one for you.  They're all small, they're financial clutter, and it will help immensely on the psychological front to get them out of your life.
2.  Put all your extra cash towards the Harley and sell it.  It's an unnecessary toy and your hair is on fire.  Plus you're deployed, so it's sitting in the garage costing interest and insurance and depreciating.
3.  Snowball on to the truck, pay it down and then sell it, and buy a $2000 beater.  Or don't replace it.  If you live so close to work you can bike when you're home, and share a car with your wife as needed.
4.  Yep, time for the mustang.  I think it'll go a long way with your wife if you sell your 2 vehicles first to show you're willing to sacrifice.   

On the rest of your expenses, I'd find cheaper cell phones and drop the monthly credit report service.  I don't see any value in that.

How quickly you can get to FI depends on how willing you are to sacrifice as outlined above. :-)
 

CrochetStache

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Re: Reader Case Study: where to put the money?
« Reply #2 on: March 02, 2014, 05:22:04 PM »
For Deployment money, this is what I'd normally suggest:

Savings Deposit Program: http://www.dfas.mil/militarymembers/payentitlements/sdp.html

Servicemembers on deployment can deposit a big chunk of their pay, up to $10,000 into this program and EARN 10% on that money sitting in savings!!

Yup, 10%!! But guess what? You have waaaay too much debt at 10% or more to benefit from this program.
Next time, right?

In the meantime, since it sounds like you are away on deployment right now, tell your fellow service members about this program and maybe they can take advantage of the 10% on their savings!

What are these expenses:
"Life Insurance - $27.07 - Is this separate from what your beneficiary will get from the military? Since you don't have kids, how much will they really need?
Credit Report - $13.02" - Credit reports are provided free once/year.

I'm sure your spouse has done more than just watch netflix the whole time you've been gone so you will need to get a much more detailed accounting of the money goes once you return.

Is anything going to the TSP?

The first steps are often the hardest but can lead to the most rewards.

« Last Edit: March 03, 2014, 04:58:33 PM by CrochetStache »

Ticopowell

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Re: Reader Case Study: where to put the money?
« Reply #3 on: March 04, 2014, 12:11:50 PM »
Thank's for the... Face punching!
I just started reading MMM about 2 weeks ago, maybe less (time flies out here), and I am all the way caught up to today's post. I have read 1 of Ramsey's books, and I have tried to get my wife on board as well.
My wife has done a lot of driving back and forth from Utah, spending at least $100 on food each time, plus the cost of gas. She also rides the bike so it hasn't been just sitting since I left, so that has saved some money. She has done a few yoga classes, bought groceries, and hung out with friends, other than that I don't have a clue what she does all day besides sleep and Netflix. And she sleeps at least 12 hours a day. Once I am home I will take your advice and do my best to figure out what she has been doing.
Like your advice crochet, I would do SDP but I figured I should pay off debt before I save money for anything else. And we have a few briefings on the SDP when get out here, so I think most know about it if they paid attention... so like 25% know about it haha.
I got the life insurance because my wife doesn't have a job and I thought it would be nice of me to not make her have to work for a while if I die. Yes that is on top of the SGLI coverage. I also was told by the bank that if I get life insurance while I am still healthy I will keep the lower rates for life... or something like that. The more I think about it (especially after reading MMM) I realize that yes I am on average more dangerous of a person (I ride motorcycles and fly planes) than average, I am probably wasting my money right now.
I got the credit report service because I thought I could afford it (I have had it for years), and with all the dumb loans I got I figured that it would be good to monitor for identity theft.
Currently nothing is going into the TSP, I was planning on it but ended up getting married right after I commissioned, and had too many loans to worry about it, same reason I didn't do the SDP.
I agree completely that I am in too much debt. That is why I am asking questions.
I live 15 minutes from work taking the fastest route, that is by car or motorcycle, Speed limit is between 35-55 depending on the road, and the roads aren't wide enough to bike safetly IMO. Every time I pass a bike on any of those roads I have to go into the other lane to not hit them. so going to work isn't feasible on a bike for me. That is why we got the motorcycle, 45-50 mpg's is a lot better than my trucks 15 or the car's 20. We did the math on how much gas money we were spending on the truck and it was over $400, while the bike, with insurance and gas, is only about $300-$350 a month depending on how much we drive.

Any thoughts on the trade-in idea? I know it is bad to get another loan, but if I get a $5000 car with the about $5000 upside-down value it makes a $10000 loan. With a low enough rate and loan length (bank just offered about 2%, I would expect to get about 4% on my good but not excellent credit) and if I keep my payments at $600 where it's at I would have equity in the car in 2 years or less, instead of the 4 more years it will take right now.

Yes I love my vehicles, and I have found them useful since I bought them, but I also know that they are mostly a waste of money. I haven't always realized this, but I do now.

Feel free to keep face punching me, I know that I deserve it.

Also I mentioned in another post that I am going to to be selling my house, we might have some positive equity by now depending on the appraisal (bad decision to buy, I know that and I regret it, I wished I knew a year ago that the AF was going to move us after a year or so of living there) I figure that if we can sell it and get something positive out of it I will also put that towards debt, paying off enough to be able to sell all the vehicles, then doing just that.
My next place I plan on renting, and probably will rent until I am out of the AF, by then I should have enough money saved up for a house.
Let me know what you all think of my possible future plans.
Thanks again!

Chris86

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Re: Reader Case Study: where to put the money?
« Reply #4 on: March 05, 2014, 08:23:46 AM »
I'm military and have been deployed, I can relate to some of what you're going through. Over the time I've been in, I've noticed such a strong (scary) consumer-based mentality.

That is why we got the motorcycle, 45-50 mpg's is a lot better than my trucks 15 or the car's 20. We did the math on how much gas money we were spending on the truck and it was over $400, while the bike, with insurance and gas, is only about $300-$350 a month depending on how much we drive.

No it's not. If the main concern was to save on gas, you would have simply gotten rid of the truck. Now you have a 10% interest loan, complete with payments and full coverage insurance. Also, how much gas will you save when you eventually PCS to another state and can't ride it 4-5 months out of the year? I've been through the same thing - I had a 5.4 F150 and justified a motorcycle purchase because of it. Getting rid of the toys was hard, but needed to be done.

The neat thing is that your wife is at home with what sounds like plenty of free time. Since you have two vehicles at the moment - have her put one on the lemon lot and see if you can at least get what you owe on it. Since she doesn't work, having one car will not be difficult. Heck, if she wants to fill her free time, I've known many spouses to get a job on post/base at the Commissary, PX, etc., to which she could ride the bicycle.

Those two things would be the main focus: The motorcycle and having only one vehicle.

Other things you should consider: USERRA has a cap on interest rates for active military. It's 6%. This only applies to charges before you enlist. So if you had the 10% motorcycle loan before you signed up, you can legally get the interest reduced. You need to also consider doing a balance transfer on your existing credit card balances as soon as possible. You can usually do a 0% interest rate transfer easily which will help you keep more of your money.

Hope that helps!

SunshineGirl

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Re: Reader Case Study: where to put the money?
« Reply #5 on: March 05, 2014, 10:10:25 AM »
Hi and welcome!

The two things I'd focus on most:

1. Paying off the cc with the money you're about to get. Just get them gone and never let them run up again.
2. Convince your wife to get a job - better yet, a career.

You'll be hearing a lot about the cars, so I'll skip it. I'll also say I agree with you not to buy another house - you can get something really nice for the amount of your hosuing allowance, or bank a lot if you use less than that. 

Unique User

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Re: Reader Case Study: where to put the money?
« Reply #6 on: March 05, 2014, 10:59:04 AM »
Why doesn't your wife have a job?  With your debt, any income she could bring in would help. 

GregO

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Re: Reader Case Study: where to put the money?
« Reply #7 on: March 05, 2014, 11:47:47 AM »
Any thoughts on the trade-in idea? I know it is bad to get another loan, but if I get a $5000 car with the about $5000 upside-down value it makes a $10000 loan. With a low enough rate and loan length (bank just offered about 2%, I would expect to get about 4% on my good but not excellent credit) and if I keep my payments at $600 where it's at I would have equity in the car in 2 years or less, instead of the 4 more years it will take right now.

The problem with trading in the car is that you get so much less for it than selling it outright.  You'd probably get $3k-$5k less than you could get selling it yourself.  Right now you're at negative $3k-4k on your loan and (at a 3% loan on $30,000) paying $75-80 a month on interest.  If you traded it in, you'd be negative $5k-6k on the loan and (4% loan on $10,000) paying $35 per month in interest.  So you're only saving yourself $40 per month and increasing your debt by another $2k minimum.  You're not doing yourself any favors that way, you're just shifting your debt around. 

No, you need to just start finding ways to save when you get back and selling those vehicles as soon as you can when you can cover the balance of the loans.  And that crazy motorcycle loan is the first one that you need to get rid of.  And while refinancing may help a little, you really just need to get rid of the motorcycle altogether!

To answer your original questions, I typically would suggest paying credit cards first.  But that money you're getting has to go to covering the difference on your motorcycle loan.  That loan is crazy high and has to be the first to go.  BUT, I would suggest that those credit cards need to be cut up immediately and not have another thing charged to them until ALL of your debt is gone.

GregO

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Re: Reader Case Study: where to put the money?
« Reply #8 on: March 05, 2014, 12:36:31 PM »
So I thought a little bit more about it and decided I'd put together a quick spreadsheet.  I took all the values you gave in your OP (I used the higher rate for the CCs since April is not far away) and made a little Return on Investment calculation:

Car       15%
Truck   41%
Motorcycle 31%
CC 1            9%
CC 2          15%
LOC 1   8%
LOC 2   6%

The best things to pay off first are pretty clearly your truck and motorcycle (This is not paying the loans off in full.  It's accumulating the money to cover the difference between the loan balance and their current value when you sell them).  The reason those are so much higher ROI is because it only takes a few thousand dollars to be able to get to a place where you can get rid of big loans ($12k and $15k).  Now, this does assume that you won't buy more vehicles to replace them!*  So it looks like you get to lead the way for your wife in your new lifestyle by getting rid of your toys first.

Also, I said this last time, but it's worth repeating.  Even if those credit cards aren't the first things paid off, you should not put anything else on them!  They should be cut up and the balances should be steadily declining as you pay them off.

I attached the spreadsheet if you want to follow (and check) my math.  All of the green cells can be changed if you want to run other scenarios, like changing the values of your vehicles.


*I added a section to the spreadsheet to show what would happen if you replaced one loan with another.  For example, if you added a $5000 loan to replace the car, you'd lower your ROI on that loan to 12%.
« Last Edit: March 05, 2014, 12:40:22 PM by GregO »

FrugalSpendthrift

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Re: Reader Case Study: where to put the money?
« Reply #9 on: March 05, 2014, 01:51:50 PM »
On our spending front, except for the phones, utilities maybe, and gas, we don't have much where we can cut back. according to my excel spreadsheet if I take out all the debt payments and the savings we are  only spending about $1220 a month. Which in my mind is pretty good, beats MMM last I checked.
It's funny that you don't count your vehicles in your spending, when they total up to about 150% of your monthly mortgage payment.  You can think up all kinds of excuses why you need them, but if you really want to get in a better financial place, then you would consider cutting back on these expensive toys.

I had a pick up truck for a few years, but it was rarely used to actually haul shit.  Sure it was fun, but completely unnecessary.  And now that I don't have one anymore, I don't have to worry about friends and family asking to borrow it.

Maybe you can use any equity left over from selling the house to get the vehicles above water, so that you can sell them.

Ticopowell

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Re: Reader Case Study: where to put the money?
« Reply #10 on: March 05, 2014, 03:57:27 PM »
Wow! You guys put in a lot of work and thought into helping. Thanks!

I love the spreadsheet, It does help me see things better from an economical standpoint vs an emotional one. Thanks for the help, I do have a question though, what does the ROI actually mean? I know it helps decide what I would benefit from most by paying the loan difference based off of interest payments. but what is  the return? just interest not paid? or what am I missing?

At minimum I will be able to refi the bike, but convincing my wife to sell it is going to be really tough, especially since she wants to ride it as much, or more, than I do. I think if she had a job it would make more sense, but she doesn't so why do we have 3 vehicles? (we are stupid, that's why)

I do see one very reasonable future use of the truck. When we sell the house it will make me money by carrying stuff to wherever I go next. The military pays me by the pound for everything they don't have to move for me. Last move I rented a 26' truck (we have lot of junk that I am also trying to get rid of.) and after gas and rental cost I made about $4000. If we get rid of a lot of stuff I might get away with just renting a trailer, I wont make as much as last time but it is better than not making anything at all.
Using the truck to move is much better than the few trips I did with it after I got the bike... pick up free pianos for my wife. She didn't realize that they weren't free if we had to go pick them up, and deal with them, and then do something with them... we got 3 different "free" pianos that were anywhere from 30-80 miles away... pissed me off but I had to make her happy. 1 we gave away, the other 2 are still in our house, sitting next to our electric keyboard I got her for her birthday a few years ago(paid cash, I haven't always made bad decisions).

What ideas does anyone have to help me convince my wife that we suck financially and we need to change, by selling the bike for starters? I try and push as hard as I can for my wife to get a job, but she doesn't want one, and it doesn't look like she will get one no matter what I do. She wants kids, but I haven't felt financially comfortable having them yet, and yet we bought more crap, so I guess she didn't want them as bad as she thought either.

I don't use the credit cards at all, just debit or checks, so the balances aren't rising from purchases, just interest.

Sorry for writing so much, and thanks again for all the replies. I do appreciate it, but it is hard to change my thought process so quickly so thanks for the help on that too!

GregO

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Re: Reader Case Study: where to put the money?
« Reply #11 on: March 05, 2014, 05:21:27 PM »
I do have a question though, what does the ROI actually mean? I know it helps decide what I would benefit from most by paying the loan difference based off of interest payments. but what is  the return? just interest not paid? or what am I missing?

ROI means Return on Investment.  I don't know if that is even the right term to use in this situation.  But yes, the idea is that it's the amount of interest you won't have to pay every month if you pay off the loan.  So if you pay $1250 to wipe out the loan on your truck, you will have $43 every month that you no longer have to pay in interest on that loan.

And as for the future use for your truck.  I doubt the money you will save in one move will cover the costs of owning it.  Basically, you would be saving the difference between what it costs you to drive your truck (and pay for a trailer?) vs. what it would cost to rent a moving truck.  So probably a couple hundred dollars of savings vs. loan interest, depreciation, maintenance, insurance, higher gas bills...?  I don't think that makes much of a case to keep it, sorry.

(paid cash, I haven't always made bad decisions).

I'm sure you've made a lot of great choices.  It's just the bad ones that you dwell on / fix.  It's part of being human.

What ideas does anyone have to help me convince my wife that we suck financially and we need to change, by selling the bike for starters? I try and push as hard as I can for my wife to get a job, but she doesn't want one, and it doesn't look like she will get one no matter what I do. She wants kids, but I haven't felt financially comfortable having them yet, and yet we bought more crap, so I guess she didn't want them as bad as she thought either.

And it sounds like you just stated the best case to be made.  Have you told her why you hesitate to have kids?  That seems like pretty good motivation to get the finances straight.  And it helps to lay out a path, "If we get rid of my truck, we're saving $342 a month.  If we can save another $600 a month by selling the motorcycle, we would have almost $1000 every month in savings!  We could pay off all our credit cards in 3 months and start saving for children.  Shoot, if we're saving that much we could save $9000 during your pregnancy, which would be more than cover the initial costs of having a baby." 

Other than that, I think you have to lead by example.  Selling the truck, biking to work, finding ways to save money, etc...  If you have goals and lead by example, I'm sure things will improve.  My one word of advice though is to work on changing yourself, not changing her.  Trying to change someone else usually results in conflict and everyone digging in their heals.  But this is a financial forum, so that's the end of my relationship advice.
« Last Edit: March 05, 2014, 05:25:02 PM by GregO »

G-dog

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Re: Reader Case Study: where to put the money?
« Reply #12 on: March 05, 2014, 06:15:58 PM »
Convincing wife:
I think the spreadsheet Grego was kind enough to make is a place to start, it sounds like you have made at least one expense tracking sheet yourself. When she sees the numbers, the un-fun rational decisions will be clearer.  You need to prioritize how you spend your money.
I cannot imagine me not working and not contributing some $ to our expenses - so I cannot understand her unwllingness to work for pay (ever?). If she doesn't want to commit to a full-time job due to starting a family soon, then she could still hook up with a temp agency or do some part-time work to start tackling your (plural) debt. She can certainly work on reducing spending (trips/spend going to Utah?)
And, I am an a-hole about this sort of stuff, but if I am the only one bringing in money to pay for things - YOU don't get a vote on the buy/sell decisions. So I wouldn't be trying to convince her to sell the car and/or motorcycle, I'd be doing it (after a discussion, but if we cannot afford it, we cannot keep it if that is the best long- term decision).
And if you think the cars are expensive -- what do you think it is like to have kids.  In an ideal world, you'll get a better plan and get into a better financial state before you start a family.  If not, you'll figure it out along the way, but it will likely be tougher.

CrochetStache

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Re: Reader Case Study: where to put the money?
« Reply #13 on: March 06, 2014, 05:34:24 AM »
I agree with the others that to get your wife on board is to bring her plan to have kids on the same page as your financial plan.

Have a quantifiable goal that you can both work towards as to when the kid plan goes into action such as when both the house and truck are sold...or when you reach a specific net worth.

Be careful you don't jump down her throat about her spending all of a sudden. A spouse that does a 180 on spending attitudes coming home from deployment can add even more stress to this time. Look forward to what you two will pay off/purchase from now on. What you have both spent already is a done deal.

Definitely put in a small mad money budget for each of you. You can each spend this amount no questions asked. This will reduce the feeling of being micromanaged.

Her "job" could easily be reducing grocery expenses, cutting extra services, selling stuff on ebay, etc.
She could volunteer with Air Force Aid and learn a LOT about budgeting, the average cost of various things and other's financial difficulties and learn how to avoid them and recover from them. The military/gov't pay system is not easy to figure out so a lot of mistakes are made and it is the servicemembers who are stuck with nothing sometimes until it gets straightened out. You do still need a fairly large emergency fund.

You want to keep your truck for a DITY move? This is just not a viable reason to keep it. Paying insurance, maintenance, etc for a year before you do move? Sell it yourself, don't trade it in as a previous poster mentioned.

This hole the both of you have dug for yourselves did not happen overnight and it will take some time to get out from but persistence will pay off big.


cynthia1848

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Re: Reader Case Study: where to put the money?
« Reply #14 on: March 06, 2014, 08:21:57 AM »
It looks from your posts that your wife sleeps a lot and doesn't want to get a job.  Have you thought about whether she may be depressed?  Especially when you are deployed, she may be feeling lonely and down and then depression can creep in from there.

Just a thought.  It may be worth going to the dr with her to get checked out.

Ticopowell

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Re: Reader Case Study: where to put the money?
« Reply #15 on: March 19, 2014, 11:53:09 AM »
Sorry for the 2 week gap in the reply.
Yes my wife is depressed, and she has anxiety issues, and she is seeing doctors for it to help. Thank you for your concern. She has been fairly steady since we got married, and in the past few weeks to months she has started "improving" by realizing that she is her own person and she can make her own life decisions. But that has also caused monetary and relationship problems... we are working  on those now. She has been seeing counselors/psychiatrists for a few years, and I have gone to multiple sessions with her, including a video chat or two while out here.
I have been talking about spending less for months now, and I may be more adamant now, but we had already cut our non-debt paying expenses down quite a bit (the $1220 I referred to earlier)
A few changes in my current situation:
I don't know who, but someone paid $1575 to my bike loan. I imagine that it was a mistake and the money will be taken out again at some point, or that I will be required to pay it at some point, but I am happy it is there.  With that and upping my payments to $600 a month it is now at about $10500.
My credit card 2 and line of credit 2 have both been paid off fully, from about $1000 this month from my paychecks and taxes. Those were from the same bank so now I don't have to worry about that bank anymore.
I have the $1000 emergency fund set, now I need to not touch it unless it is an emergency.
Everything else has gone down by the monthly payments, and as soon as I get back I will probably sell the truck, and the house shortly thereafter.
Thanks again for all the comments and advice.

Ticopowell

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Re: Reader Case Study: where to put the money?
« Reply #16 on: September 02, 2014, 12:59:32 PM »
It has been a while, and I'm sure most people don't care, but I thought I would update my situation.
My wife and I decided that it wasn't working out between us, so we are getting divorced.
Because of this my financial situation has actually improved slightly.
She took the truck and sold it, and I got a 3% loan on the car now that i had her name taken off. I have 2 cards that are being paid off, the 4% card was maxed out by my wife before she left, but it is staying at 4% until October because USAA is awesome like that, and the other car is getting $400 a month, and will get more once everything stabilizes after the divorce. The motorcycle is for sale, and has been for months, but I did refinance it in may and it is now a 5.5% interest and roughly $200 a month. the balance is at about $8000 now.
I have $2200 in savings, and I add $300 automatically, then usually another $200 that is left at the end of the month.
I am also paying $400 to my ex-wife in military mandated support (I am trying to figure out how to get out of this while the divorce is still processing, but no luck so far).
As of right now the main expenses are:
House, $1222 a month
Car, $600 a month
Motorcycle, $200 a month
Wife, $400 a month
Student loan, $600 a month
Credit card 1, $100 a month
Credit card 2, $400 a month
Savings, $300 a month minimum

I also have gotten a raise since my last post, but I am no longer deployed so I am not receiving most of the bonuses and I am paying taxes again.
my base pay is $4390 now.
I also no longer have my dogs, so that expense is gone.
I am feeling much more financially secure, but I know I still have a ways to go before I am in a good position. Most of the savings will probably end up paying a lawyer soon because I did receive orders and am leaving the area within a month.

Once the cards are paid off I am going to put all that money towards the car, the motorcycle is for sale and hopefully it sells soon, I have it priced high enough that with negotiation it will sell for what I owe.

Also I tried to sell the house, but no luck because of a number of factors. I am looking for a property manager right now so I can rent it out, so if anyone has any recommendations please let me know. I am located about 45 minutes north of Sacramento.
Thanks!

Lkxe

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Re: Reader Case Study: where to put the money?
« Reply #17 on: September 02, 2014, 03:49:09 PM »
Just a note to say we care. Sorry about the divorce. Good luck with the motorcycle and the house.  And the money you are making right now is very close to your pension if you stay in twenty. So pay your debt and never spend more and you're set. From the other side. We're Navy 23 years.

brooklynmoney

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Re: Reader Case Study: where to put the money?
« Reply #18 on: September 03, 2014, 08:41:42 PM »
I just read this whole thread tonight and wanted to say thank you for your service and also while I can't imagine having all that $ tied up in vehicles (i have never owned  a car) it sounds like you have your head on your shoulders about your finances and are on a really good path and making nice progress.

Nords

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Re: Reader Case Study: where to put the money?
« Reply #19 on: September 06, 2014, 11:37:32 PM »
I am also paying $400 to my ex-wife in military mandated support (I am trying to figure out how to get out of this while the divorce is still processing, but no luck so far).
From an outsider's perspective, I doubt that's going to happen.  The support that you're being directed to provide is mandated out of the DoD rulebook.  If by some chance you do manage to have it reduced or eliminated, then you'll be portrayed to the judge as the evil rich military servicemember who's cold-heartedly neglecting his spousal support and cutting her off from her hard-earned privileges. 

It's probably less time (and certainly less hassle) to conclude the divorce as professionally and as quickly as possible.  If you're approaching a significant marriage milestone (like 10 years of marriage or a 20-year military retirement) then you don't want to cross those dates without a settlement.

Ticopowell

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Re: Reader Case Study: where to put the money?
« Reply #20 on: July 19, 2015, 06:34:43 AM »
Thank you for the responses.

another little update:
I currently have 0 credit card debt, the motorcycle is paid off (and for sale but I have had very little interest), so all I have to pay are the student loan and the car. By my math both will be paid off in around a year, I am putting about $2k on the car loan and $600 on the other debt and will add what I can to paying off the car with any extra.

After almost a year the ex wife finally agreed to some type of settlement, that happened in February this year so the judge finally signed the paperwork in March. I am still paying $400 a month and will be for 2 more months. once that is over all that will be going towards debt. I will end up "giving" my ex almost $9000 between moving her to Utah and the monthly payments. I never hired a lawyer to represent me, but I did pay one to cover some paperwork, totaled about $500. The house is now solely in my name as well.

Thanks for all the responses and advice.

G-dog

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Re: Reader Case Study: where to put the money?
« Reply #21 on: July 19, 2015, 06:57:55 AM »
Thank you for the responses.

another little update:
I currently have 0 credit card debt, the motorcycle is paid off (and for sale but I have had very little interest), so all I have to pay are the student loan and the car. By my math both will be paid off in around a year, I am putting about $2k on the car loan and $600 on the other debt and will add what I can to paying off the car with any extra.

After almost a year the ex wife finally agreed to some type of settlement, that happened in February this year so the judge finally signed the paperwork in March. I am still paying $400 a month and will be for 2 more months. once that is over all that will be going towards debt. I will end up "giving" my ex almost $9000 between moving her to Utah and the monthly payments. I never hired a lawyer to represent me, but I did pay one to cover some paperwork, totaled about $500. The house is now solely in my name as well.

Thanks for all the responses and advice.

Good luck. It is hard to stick to any plan during a tough emotional situation, so big kudos for what you've accomplished so far. I hope things will get easier for you from now on, and that you are well on your way to execute on your financial, personal, and professional plans.

davef

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Re: Reader Case Study: where to put the money?
« Reply #22 on: July 23, 2015, 02:59:21 PM »
First of all, you need a face punch on much more than the Mustang.  Your debt is outrageous!  You don't get to compare your spending to MMMs, because in fact, with your debt payments, mortgage and otherwise, your expenses are 4 times the $1200 baseline you're looking at.  $2400/month on non-mortgage debt is hair on fire time, baby.

You seem to be in love with things, vehicles in particular, which are going to seriously hamper any probability of FI until you come to grips with it.

Here's what I'd do:
1. Use your upcoming cash to knock out the CCs.  I'm with Dave Ramsey on this one for you.  They're all small, they're financial clutter, and it will help immensely on the psychological front to get them out of your life.
2.  Put all your extra cash towards the Harley and sell it.  It's an unnecessary toy and your hair is on fire.  Plus you're deployed, so it's sitting in the garage costing interest and insurance and depreciating.
3.  Snowball on to the truck, pay it down and then sell it, and buy a $2000 beater.  Or don't replace it.  If you live so close to work you can bike when you're home, and share a car with your wife as needed.
4.  Yep, time for the mustang.  I think it'll go a long way with your wife if you sell your 2 vehicles first to show you're willing to sacrifice.   

On the rest of your expenses, I'd find cheaper cell phones and drop the monthly credit report service.  I don't see any value in that.

How quickly you can get to FI depends on how willing you are to sacrifice as outlined above. :-)

ditto. Weedy is spot on.