Situation: Late 30s, in the middle of a mostly amicable divorce, 2 kids. Likely filing next year as HoH with 1 dependent. I’m living paycheck to paycheck, not able to pay down debt, sometimes whittling away at savings. I realize my hair is on fire and my debt is an emergency, that’s why I’m here. Looking for ideas, help, support in making changes to pay down debt.
Have a well-paying full-time job, also a side business in outdoor group/individual fitness coaching which has good potential but I haven’t been feeding it. It needs marketing most of all, and with focus on divorce I have not prioritized this. I think it could contribute $300-500/mo quickly, and $1000/mo or more within 1 year.
Side Business
Expenses (monthly)
Web hosting $13.75
Insurance $14
Software $45
Income
$35 (one monthly subscription client)
Balance Sheet
Assets
Cash $3100
Savings $3860
Investments
Rollover IRA $112k
Roth IRA $39k
401k $157k (will be divided in divorce)
Liabilities
Loans
Personal Loan $6750, 0%, $100/mo
401k Loan, $22,790, 4.25%, $915/mo (will be divided in divorce)
Credit Cards
Joint Mastercard $25,202, 0% (expires 01/2016), $385/mo (will be divided in divorce)
Joint AMEX $3605, 16.24%, $145/mo (will be divided in divorce)
Personal Mastercard $9,900, 10.90%, $155/mo
Income Statement
Income
Gross Income: $13,200 (all numbers are monthly)
Pretax:
Flex Spending Acct/Dependent Care Spending Acct: $650
Medical Insurance: $550
Life Insurance: $75
Special Accident Insurance: $50 (plan to eliminate at next open enrollment)
Spousal Support: $2011 (temporary so final may be different)
Taxes:
Federal $1447
Medicare $174
SS $744
State $660
State SS $108
After Tax Expenses
Child Support: $2180 (temporary so final may be different)
Debt:
401k Loan: $915 (rolled over credit card debt)
Credit Cards Min Payments: $785
Rent: $1600 (this is a pretty good deal in my town, 1BR places range from $1200-2300)
Electricity: $30 (my only utility)
Internet: $35
Cell: $10 (airvoice)
Daycare: $325 (takes into account benefit of DCSA)
Gas: $175, about 225 mi per month, some is driving to 100mi round trip to airport which is reimbursed at $.47/mi so I’m making money when I do this. I live 3mi from work and I have biked to work a lot in the past, not so much now so that is an opportunity.
Groceries: $150, I’ve been eating out more since becoming single, plan to get back to cooking so this is lower and I expect it to go up to $250-300. Some of the expense is local/organic which is non-negotiable, but there are lots of ways to make this affordable by choosing what to cook, eating seasonally.
Dining Out: $200 some of this is managing workload/stress/overwhelm during divorce, as things settle out I will transition more to cooking since this is what I prefer for health and savings reasons.
Entertainment: $13, Netflix and Pandora. Plan to increase this going to more live shows, dance events, classes, etc. This was sorely missing in my marriage so this is a priority for me. That said, these things don’t need to be expense, choosing an event that is $10 vs. $70 for example.
Clothes/Shoes/Drycleaning/Gifts/Other: $20 quite low, shop at discount stores and thrift stores, dryclean work clothes every 8 weeks, minimal gifts. Will track this to see what is actually happening in the future.
Irregular expenses: $135 car registration, smog, tires, daycare annual fees, Amazon Prime, Carbonite, VPN
Transportation
Car 18mpg about 225mi/wk average, distance to work is 3mi and have biked to work regularly in the past, not in last 3 months, so that is an obvious one to resume.
Specific Questions:
1. Do you agree that paying down debt should be my #1 financial priority?
2. If so, I see a combination of increasing income from the side business and reducing expenses as the way.
3. Looking for face punches in both of these areas, so bring it on.
THANK YOU!
Habilis