WWYD?

[TheValentines]

I’m new here, I’ve been reading MMM for a little while and now I’m at a point where I can’t see which way is up, so I’m asking for advice.
My wife is up for a promotion. She’s been told she has the job, we are waiting for the paperwork to get sorted before she begins. Currently she makes under $20,000 a year as a waitress. This new jobs starts at $42,000.

She is 23 and I am 26.

We are getting $8,800 back from our tax return. (The only time being low income with children has it’s perks)

We pay $766 a month for our car payment and insurance. (HUGE mistake, we just bought the car in October so we still have just under $18,000 on it at about 16% interest. So dumb, dumb, dumb!)

We pay about $400 a month for everything else. We have two roommates. One of which is my ex-husband which is causing the dilemma we are in.

We have about $40,000 in student loans combined.

We have no savings. We have been making some really bad money choices and we are working on fixing that.

Our lease is up in April and we have two options. Option one is to get a bigger house with our two roommates, continue to split the bills and take all the extra money we will have coming in and use it to pay off our car loan within the next year. This is a very attractive option only because our monthly living expenses will be so low thus allowing us to use almost all of her income to pay off debt. This, however, does come with a price and that is living with my ex husband has taken a huge toll on our relationship, as I’m sure anyone with an ex can imagine. He and I don’t really get along well anymore, so there is tension all around. Its not good for anyone, including our kids together.

Option two is for her and I to get our own place. This would leave us about the same amount a month left over that we currently have since our monthly expenses would go up dramatically. We wouldn’t be able to pay down debt as quickly, but we would have our own autonomy as a couple and family unit. Monetarily this option isn’t appealing, but from a quality of life stand point it seems like heaven.
Either way, we will have to get a different place. Our current house isn’t big enough (legally) for the 6 of us to live in. So there will be deposits and what not for that.

I know we are in a weird situation and if it wasn’t my ex-husband we lived with the answer would be obvious. But because it IS my ex-husband it makes it difficult.

[Paulie]

And what about getting a new place and finding one other roommate to replace your ex? If there is a lot of tension which is hard for your kids I think it's unwise to stay living together.

[Kaminoge]

I was going to suggest the same. Although I guess a flatmate willing to live with a couple with kids plus another individual might be hard to come across

But I also wanted to ask about your statement  "Our current house isn’t big enough (legally) for the 6 of us to live in."

There are laws about how many people can live in a house? Or do you just mean because of the lease?

[SwordGuy]

Sell the car and take the loss.  You may have to wait for a couple months to save the money up to cover the loss.  Buy one hell of a lot cheaper used car!  You will come out much better off.

[blackfedora]

Sell the car and take the loss.  You may have to wait for a couple months to save the money up to cover the loss.  Buy one hell of a lot cheaper used car!  You will come out much better off.

This.

However, I might move out and find a place for you and your wife first. It's important to live within your means and plan for the future, but don't even let money get in the way of happiness either. That's not what mustachianism is about. Sometimes you need money in order to make you happier/preserve your happiness, but these are exceedingly rare. Mustachianism is about seeing through the consumer culture so that when those times rear their ugly heads you will have the resources to take the monetary lose and move on with your life. Find a place that you and your wife can afford, bonus points for being close enough to work that at least one of you can bike. Then sell the car and buy a nice, used one bonus points for buying a car with better mileage, bonus multiplier if you buy a very popular car (parts are cheaper for repairs).

Good luck, I'm guessing from the switch from Husband to Wife you've been through quite the ordeal recently. Stay positive and focus on keeping yourself happy. Financial health is just like physical health. If you go from binge eating to starving yourself you just set yourself up for failure. The important thing is teaching yourself to be happy with less and less. Find happiness in your new relationship, in the love of your children, or in a new hobby (knitting and soap making are fun, cheap, and once you hone your skills they make great gifts or you might be able to make a little money on the side). Yes, you need to put out fires like that car loan, but with regards to your living situation you described one option as "cheaper" and the other as "heaven". Think about how you can bring the cost of heaven down. Even if living with your new partner has to be more expensive, I'm sure you have optimizing that you can do elsewhere in your budget to make up for it.

[Numbers Man]

A lot of information is missing here such as how would the kids or ex feel about the proposed move. Are you and your ex civil to each other? I'm personally curious as to how this living arrangement came about.

I would take the $8,800 and pay down the car. Then take your new found income and obliterate the rest of the car loan within six months. Also, you might want to have a financial person help you with the correct withholding on your paychecks so that you'll have even more money to help pay off that car loan. Getting $8,800 back is insane considering what your income was in 2013.

[Catbert]

I can't imagine living with a ex.  But something else you need to consider is your children together: who would have custody and what child support would you have to pay or to receive.  I'm not sure if that makes it worth living with your ex for another year or not. 

[Thegoblinchief]

As soon as your wife's job starts, that obliterates the cost of needing your ex to pay rent. Do that first. Toxicity is good for no one, especially a kid. And I'm guessing (as others have noted) that husband-->wife means there's been a lot of emotional drama.

16% car loan? If you really must THAT car, pay that off next. Otherwise, sell the car, absorb any loss, and get a much cheaper car for CASH.

[TheValentines]

Yes, where I live there are restrictions about how many people that can live in a house. Right now we have 6 people in a 3 bedroom, which isn't illegal, but my 2 kids (both girls) don't have their own room so they share my room or sleep in the living room. Obviously this isn't a good long term solution.

My ex and I have been divorced since 2009. We have custody and child support sorted out legally. We lived apart when we were divorcing and then we all decided to live together once everything was final. We were really young when we got married (I was only 16), I was pregnant and hardly knew my head from my ass at the time. There were some hard feelings when we split, but those have since been resolved and we were good friends for a while. We’ve all lived together for like 4 ish years and we have all really just grown up/apart from each other. We’re civil most days, but it seems we are having more and more issues as time passes.

My kids are fine with it. My wife and I are primary caregivers as their father kind of does what he wants whenever he wants, so we are their stability. As for my ex, he doesn’t want us to. Not because we would be moving out with the girls, but because his bills would go up. If that tells you anything about his character. Either way, we can’t live together forever so even if they had a problem with it, there isn’t much I could do about it.

We don’t HAVE to have that car. Does anyone know what the process of selling the car would be? Do we just go to a dealership and see what they will offer us for it and then pay off the difference of the loan we have?

We got so much back mostly because low income child tax credits. We got married this past year so while she was claiming 0 for exemptions and she claimed 2 dependents plus a spouse on her tax return.

[Evie]

Have you checked with your local credit union regarding auto loan rates?  My credit union was offering 1.99%, and even their higher rate loans for autos seemed to cap out at 8%. If you are using dealer financing and you have a good payment history shop around and refinance if you are not ready to get rid of the car completely.  I know the traditional advice would be to sell and get a cheaper car, but if you are just not willing to do that you might be able to get a better rate. 

I would personally stick with your current rental situation for a few more months if possible, or replace your ex with another roommate.  Moving will set you back a bit with the cost of first and last for the deposit and the expenses for moving, but may be worth it.