Author Topic: The beatles Case Study  (Read 184325 times)

The beatles

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The beatles Case Study
« on: January 07, 2017, 02:30:22 PM »
// UPDATE //

Blog: Frugal living blog

// TABLE OF CONTENTS //

Pages 1-2: Case Study Talk
Pages 3-5:Grocery budget, Recipes, and coworker lunches
Pages 6-9: Rental home roof, couches, and TV's
Pages 9-11: Income talk and The need for a budget
Page 12:Mrs. Beatles grocery win
Pages 13-14: Beatles buys a TV
Page 15: Paying off credit cards
Page 16-17: Should Beatles sell the rental?
Page 18: Beatles sets up a property tax payment plan
Pages 19-21: Rental home #2 is added to the mix
Page 21-22: Mrs. Beatles joins the conversation

------------------


Life Situation: Married, 30, 2 Kids

Gross Salary/Wages: $5128.12 / month

Pre-tax deductions: $634.46 / month

$81.90 - Dental
$87.50 - HSA
$346.70 - Health
$25.64 - 401k
$25.64 - Roth 401k
$67.08 - 401k Repayment on loan


Rental Income, Actual Expenses, and Depreciation:  $595 NET ($1,100 rent - $130 HELOC - $375 taxes)


Adjusted Gross Income: $5088.52 / month


Taxes: $619.93 / month

$116.60 - Federal
$285.95 - Social Security
$66.88 - Medicare
$147.90 - NYS
$2.60 - NY SDI

Expenses:

 
ITEMMONTHLY| TOTAL |INTEREST RATE
GARBAGE36
CALE/INTERNET114
WATER50
GEICO AUTO135
MASSAGE70
AUTO LOAN39335916.54%
MORTGAGE1761164,7175.125%
FUEL200
GAS/ELECTRIC150
GROCERIES1100
EATING OUT600
CAMERAS25
PARENTS030,K
CC119485625.24%
CC2134449524.49
CC32550523.24%
CC42545210.23%
CC52069218.49%
CC67579724.15
CC7 (STORE CARDS)100202025.24
Furniture Loan276195025.00
TOTAL547246,405

Breakdown of mortgage payment:

Principal and interest   $908.86
Property insurance   $72.42
Mortgage insurance premium (MIP)   $115.44
City tax   $167.57
Other tax   $458.52
Late charges   $38.66
Total    $1,761.47


Assets:

Primary home Owe $164,717, worth $175k
Rental Owe $25k HELOC + $9k taxes, worth $70k to $80k
Car Owe $4,500, worth $15k to $17k
Cash - $850
401k - $5,000

Liabilities:

Income tax - $40k
Property tax on rental - $9k
« Last Edit: January 17, 2017, 04:43:56 PM by The beatles »

Bracken_Joy

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Re: The beatles Case Study
« Reply #1 on: January 07, 2017, 02:39:30 PM »
What are the interest rates on your loans? You also mentioned in your first thread you owed money to your parents, and to the IRS. List these as well.

swick

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Re: The beatles Case Study
« Reply #2 on: January 07, 2017, 02:41:10 PM »
This is a good start, I'm glad you are sticking it out :)

You should include all of your liabilities as well - the 40,000 Tax bill, owed property taxes, everything. You won't be able to get a totally clear picture unless it is all included.

RetiredAt63

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Re: The beatles Case Study
« Reply #3 on: January 07, 2017, 02:45:07 PM »
Questions  Mostly from discussion in your other thread

Age of kids - how long before they are in preschool?
Federal tax owed is not showing
Pre-tax deductions mentions everything but taxes, are your taxes being deducted and are they the proper amount?
Cable/internet - how much of that is cable and how much internet?  What would it be if will it be when you cut cable?  Time to make a phone call.

Interest rates?  on mortages?  Credit cards?  This information matters.

Don't be surprised if you get lots of questions/comments, most posters end up revising their initial budget several times because it is easy to overlook things.

The beatles

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Re: The beatles Case Study
« Reply #4 on: January 07, 2017, 02:45:14 PM »
This is a good start, I'm glad you are sticking it out :)

You should include all of your liabilities as well - the 40,000 Tax bill, owed property taxes, everything. You won't be able to get a totally clear picture unless it is all included.

Thanks!

Added those!

Bracken_Joy

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Re: The beatles Case Study
« Reply #5 on: January 07, 2017, 02:46:31 PM »
This is a good start, I'm glad you are sticking it out :)

You should include all of your liabilities as well - the 40,000 Tax bill, owed property taxes, everything. You won't be able to get a totally clear picture unless it is all included.

Thanks!

Added those!

There still aren't interest rates listed on anything. Especially on the CCs, you need to know what those are.

RetiredAt63

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Re: The beatles Case Study
« Reply #6 on: January 07, 2017, 02:50:47 PM »
Also, look at this: http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/ - most people post the case studies on the Ask A Mustachian forum (http://forum.mrmoneymustache.com/ask-a-mustachian/), not here.  You will get a lot more feedback there.  A mod can move this thread over if you ask, or just start another one and direct people here to it.

I posted this ^ on your original thread as well.

swick

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Re: The beatles Case Study
« Reply #7 on: January 07, 2017, 02:55:08 PM »
Mod Note: I'll move it for you :) Thanks Retired, I missed which forum it's in.

former player

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Re: The beatles Case Study
« Reply #8 on: January 07, 2017, 02:56:19 PM »
You and your spouse have had hobbies that revolved around spending money on your house, on consumer goods, and eating out.  That has stopped today, and your new hobby is saving money and paying off debt.

CheapScholar

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Re: The beatles Case Study
« Reply #9 on: January 07, 2017, 03:03:42 PM »
The question above about cutting the cable is a good one.  Find out what a decent internet package would cost without cable.  That's a call you could probably make now.  Like, right now.  Is your local library decent?  Usually plenty of great movies and tv shows on dvd are available. 

I disagree with what someone else said about possibly selling your primary residence.  The value of your home is not excessive, and you need a place to live.  Apartment living can suck, especially with kids. After you get out of IRS trouble and CC debt, get at least 20% equity in your home pronto.  Not sure how long you've owned your home, but maybe contesting your home value for property taxes is worth a trip to your city hall/county headquarters. 

The beatles

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Re: The beatles Case Study
« Reply #10 on: January 07, 2017, 03:10:18 PM »
Also, look at this: http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/ - most people post the case studies on the Ask A Mustachian forum (http://forum.mrmoneymustache.com/ask-a-mustachian/), not here.  You will get a lot more feedback there.  A mod can move this thread over if you ask, or just start another one and direct people here to it.

I posted this ^ on your original thread as well.

Yes, I saw it!

I followed the instructions.

I didn't see it say anwhere that it has to be posted anyplace particular, sorry if I missed that!

Yonco

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Re: The beatles Case Study
« Reply #11 on: January 07, 2017, 03:10:51 PM »
Gas and electric total 1500/month!!!? That's 2 years worth for me(1500$), can you elaborate more on these bills! With that list of debt, start the dave ramsey plan and get a snowball rolling and knock a few small debts off the list quick!

The beatles

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Re: The beatles Case Study
« Reply #12 on: January 07, 2017, 03:12:30 PM »
This is a good start, I'm glad you are sticking it out :)

You should include all of your liabilities as well - the 40,000 Tax bill, owed property taxes, everything. You won't be able to get a totally clear picture unless it is all included.

Thanks!

Added those!

There still aren't interest rates listed on anything. Especially on the CCs, you need to know what those are.

I dont have the statements on me anymore, but I beleive they are all between 20% and 25%.

The beatles

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Re: The beatles Case Study
« Reply #13 on: January 07, 2017, 03:34:33 PM »
Questions  Mostly from discussion in your other thread

Age of kids - how long before they are in preschool?
Federal tax owed is not showing
Pre-tax deductions mentions everything but taxes, are your taxes being deducted and are they the proper amount?
Cable/internet - how much of that is cable and how much internet?  What would it be if will it be when you cut cable?  Time to make a phone call.

Interest rates?  on mortages?  Credit cards?  This information matters.

Don't be surprised if you get lots of questions/comments, most posters end up revising their initial budget several times because it is easy to overlook things.

One is preschool age. The other is a little one.

Fed tax is right under Gross Income (above). Taxes: $615 / month

Cable and Internet is an even split with my company. Well, almost. About a $5 difference.

RetiredAt63

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Re: The beatles Case Study
« Reply #14 on: January 07, 2017, 03:40:26 PM »
Also, look at this: http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-'case-study'-topic/ - most people post the case studies on the Ask A Mustachian forum (http://forum.mrmoneymustache.com/ask-a-mustachian/), not here.  You will get a lot more feedback there.  A mod can move this thread over if you ask, or just start another one and direct people here to it.

I posted this ^ on your original thread as well.

Yes, I saw it!

I followed the instructions.

I didn't see it say anywhere that it has to be posted anyplace particular, sorry if I missed that!

It doesn't HAVE to be here, but it is the best place for it.

MDM

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Re: The beatles Case Study
« Reply #15 on: January 07, 2017, 03:41:36 PM »
Pre-tax deductions: $806 / month (health, dental, vision, 401k, 401k loan, HSA)
This is a good start, I'm glad you are sticking it out :)

beatles: please give individual amounts for your pre-tax deductions.

swick: please insert "Individual amounts for" before 401k in the "Pre-tax deductions: 401k, HSA, FSA, IRA, insurance, etc. - whatever you have" line in How To: Write a "Case Study" Topic.  OP is not the only one to interpret this as a request for a lump sum amount, so we should make it clearer.  Thanks.

ltt

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Re: The beatles Case Study
« Reply #16 on: January 07, 2017, 03:47:36 PM »
Gas/electric is very high--$1500 per month?

LadyStache in Baja

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Re: The beatles Case Study
« Reply #17 on: January 07, 2017, 03:57:37 PM »
Sell car.  Pay off loan.  Buy a $7000 car (or less), and then you can pay off C1, C3, C4, C5, and C6.  How awesome is that?!

Or maybe you should use it to pay your rental tax bill so it doesn't get taken away from you.  That $500/month is going to come in handy for paying off your debts.

Thanks for the merchant spending post in your other thread.  A lot of them I don't know what they are, but it definitely looks like you're spending a lot on Target all of which is unnecessary.  I'm sure the others are similar.  Agree with other poster that said your hobbies (or your wife's) are shopping and decorating.  No more.

When going without new cars and fancy clothes and crown molding, I like to remind myself that while we can see our neighbor's fancy cars, we can't see their bank statements.  Put your effort into building your net worth, not your outer appearance. 

The Millionaire Next Door is a great book to help change your mindset on real wealth vs the appearance of wealth.

Bee21

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Re: The beatles Case Study
« Reply #18 on: January 07, 2017, 03:58:09 PM »
Kudos on hanging on and ready to face this. I stayed away from the other thread because i suspected trolling, but if you are real and ready, this is my 2 cents.
1. Face the biggest problem,  procrastination and make those phonecalls, send those emails. Call the IRS tomorrow and ask them what you can do to fix your tax situation. Knowing what you have to do about this will affect your next move, selling the rental. IF your tax and credit card debts are accumulating at a scary level due to the accrued interest, there is no point in holding on to it, you will have to sell it and clear most of those debts. Call a few real estate agents and discuss selling it. Also, send an email to your coworkers tomorrow, saying that new year, new rules, due to the change of your circumstances you are no longer able to pay for those office lunches. No further details are necessary. They were lucky to have those free lunches, no the gravy train stops.
2. It is great that your wife is on board. She should be able to rein in the grocery spending, the clothes, the activities etc. Who is the big spender in the relationship?  That person should be in charge of paying bills and tracking spending yo face the reality.
3. Groceries and eating out. Cut eating out. 160 a week should be plenty for a fam of 4 (i am spending 170 and we have a high combined income and eat a lot). Totally doable. Do a stocktake and have a week of fridge/freeze meals. This should save you a pile and can be the start of your emergency fund. Make a list of the meals you like eating and cost them. This will help you, if you know there is 50 dollars left for food, you should be able to come up with a few 5 dollar meals.Also cost the food you are throwing away every week (i suspect there is a lot of waste with that spending. It is like throwing money away ). Plan your menus and buy the ingredients only. This should save you at least 20%, without making any drastic changes. There us no need to live on rice and beans if you plan your meals wisely. Don't buy any prepackaged stuff, bake some treats, eat fruits and vegies. I personally don't like Aldi, because the layout of the shop makes shopping with kids a nightmare (snack aisle at the entrance, pure hell with kids).but i shop in 3 stores, the closer supermarket for generics, the fancy one for the discou ted meat and the indian veggie shop. Your wife should totally take responsibilty for this and solve your grocery expenses problem.
4. The sad truth is, your income does not support your level of spending. Sure, we deserve the best of everything, but we can't afford it. You definitely can't afford your lifestyle, so set up a more realistic spending plan. Forget Hawai. Find sime cheap/free entertainment locally.
5. Increase your income. Can you/your wife take a weekend job until you clear out the debt?
6. There is plenty of free information around. Books, blogs websites inspiring you to spend less and sort out your finances. I recommend the frugalwoods (they are doing a january challenge right now), and the frugal queen, she is uk based, older than you, different lifestyle, but has been blogging for years and has some great tips about food and will help you reset your spending mindset. You and your wife willl need that.
7. Also work on your willpower, stop procrastination and get better organized. You need focus and determination to fix this.

Let us know how you go.people around here can be a bit rough, but they are helpful.

RetiredAt63

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Re: The beatles Case Study
« Reply #19 on: January 07, 2017, 03:59:03 PM »
Questions  Mostly from discussion in your other thread

Age of kids - how long before they are in preschool?
Federal tax owed is not showing
Pre-tax deductions mentions everything but taxes, are your taxes being deducted and are they the proper amount?
Cable/internet - how much of that is cable and how much internet?  What would it be if will it be when you cut cable?  Time to make a phone call.

Interest rates?  on mortages?  Credit cards?  This information matters.

Don't be surprised if you get lots of questions/comments, most posters end up revising their initial budget several times because it is easy to overlook things.

One is preschool age. The other is a little one.

Fed tax is right under Gross Income (above). Taxes: $615 / month

Cable and Internet is an even split with my company. Well, almost. About a $5 difference.

Getting solid information from you is like pulling teeth   ;-) 

Taxes - label them - federal taxes.  Do you have a state income tax?  Is it part of the $615?  Homework for you, are taxes being deducted properly?  You don't want to owe the IRA more for 2016 and 2017.

Kids - I am guessing 4 and 1-2?  While your wife is home with them could she also do daycare for another kid?  One the oldest starts pre-school would daycare for the younger one be affordable for her to go back to work?  It isn't just salary, she is accumulating side benefits, paying into SS, etc.  Balanced against that is increased costs for working. 

Go dig out CC statements and find interest rates.  Same for mortgages.

Cost of internet only?

Home phone (landline)?

"GAS/ELECTRIC   1500"  - is this for your house (I am assuming your renters pay their utilities?)  Again break it down, how much is gas, how much is electricity.   Gas is for heating?  Electricity runs what?  Do you have time of use pricing? Hot water is gas or electric?  We can't help if we don't know.


Can you and your wife sit down together (this is always a joint exercise, you both need to know where you are) and look at this budget and start identifying areas to cut?  And then post a third column beside your categories with revised (lower) values.

And start running mint or YNAB or set up an Excel spreadsheet or something, so you can identify spending more exactly.  "Groceries" for example, often include everything that was bought at a grocery store, which can also include necessary non-food things like TP and cleaners, and non-necessary things like magazines.  Not that I am against reading, but your reading should be at the library.

Homework for your wife:  she is now CEO and CFO of your family business, Beatles Inc.  She needs to do a total analysis of cost/benefit of everything being bought.  There is masses of information both on the forums and on the net in general on how to cut costs.  People post all the time here on how they cut their insurance, their food expenses, their everything, without losing any quality of life.  And I second the idea of signing up for the Frugalwoods super frugal January.  And really, read their whole blog, it is also full of wonderful ideas.

LadyMuMu

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Re: The beatles Case Study
« Reply #20 on: January 07, 2017, 04:10:57 PM »
Good news. Your kids are really little so changes to your habits and diets will be much easier than if they were preteens or up.

One big question. You mentioned you were self-employed and that you bought lunch for the office. Are you a business owner of a place with employees? Or are you something like a realtor who works in an office with others? Either way, do you have an accountant doing your books? Are your business books sufficiently separated from your personal finances? Your income tax bill makes me a bit nervous you may have been ignoring other business financial things that could eventually impact your family budget.

Quidnon?

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Re: The beatles Case Study
« Reply #21 on: January 07, 2017, 04:38:27 PM »
Questions  Mostly from discussion in your other thread

Age of kids - how long before they are in preschool?
Federal tax owed is not showing
Pre-tax deductions mentions everything but taxes, are your taxes being deducted and are they the proper amount?
Cable/internet - how much of that is cable and how much internet?  What would it be if will it be when you cut cable?  Time to make a phone call.

Interest rates?  on mortages?  Credit cards?  This information matters.

Don't be surprised if you get lots of questions/comments, most posters end up revising their initial budget several times because it is easy to overlook things.

One is preschool age. The other is a little one.


Perfect.  I think you should sell the house, and move into your rental as soon as the current lease is up.  By then, perhaps you can afford a bunk bed set from Craigslist and a pair of new mattresses.  If not, they are small enough they could share one twin sized mattress for a little while.  They just need to sleep with their heads near opposite ends of the bed, so their feet are close but not touching.  Yes, I have done this; and it works fine till their feet start tangling together at night.  It can work longer if they are close siblings.  I had a set of twin boys, and they did this for many years afterwards by choice, staggering their legs while sleeping at a slight angle in the bed.  Or they were spooning. I can't tell you how disturbing it is, as a father of boys, to find them spooning at night.  I had to start forcing them to sleep in their own bunks, twins are very close. 

Then you will have several years you can save up for a new down payment, so you can own a house for real next time; but only after these other debts are paid off.  In this way, you can keep the rental and it will be paid for by the time you move back out, and it will be all profit at that point.  You can do all this so you can move back out in 5 years, or even before your oldest enters 1st grade if you buckle down and really attack it.

Additional question, does your wife have some kind of physical impairment that would prevent her from cooking in a regular kitchen on a daily basis?

Iplawyer

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Re: The beatles Case Study
« Reply #22 on: January 07, 2017, 04:43:26 PM »
Where are things like car insurance on your list? Are you keeping up with Federal taxes now?  Your list needs a whole lot more information on it.   

In any case.

1.) Get the rental on the market so that you can pay off the property tax and the IRS.  Failing to settle either could mean you lose the rental anyway. 

2.) Before paying off the IRS  - work with them - with an attorney if you want - to set up an offer in compromise.  You'll be able to make a lump sum once the house sells.  That will be a good way to get them to remove the penalties from what you owe.

3.) Don't go grocery shopping again until you have a plan to cut your bill in half or by 2/3.  Really.

4.) You and your wife need to read, read, read, and read more.  Get yourself educated and get your credit cards paid off. 

You are living it looks like 2 times beyond your means.  It hurts - but you have to cut back a lot.

CheapScholar

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Re: The beatles Case Study
« Reply #23 on: January 07, 2017, 04:49:34 PM »
Hmm, I respectfully disagree about selling your house.  Sell the rental and hustle and do what you need to do to build up your home equity.  If you currently lived in a McMansion, I would say sell.  But after realtor expenses and the hassle of moving I'm not sure it's a sound idea.  Your mortgage payment seems high for the home value, is it a 15 year mortgage?

Txtriathlete

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Re: The beatles Case Study
« Reply #24 on: January 07, 2017, 05:19:55 PM »
What you are getting from this group is a very focused, very detailed action plan. They expect you to be as detailed and as focused as they are.  This is not liberal arts where something might be "about" two feet more or less. This is math class - exactly 2.634567 feet is the correct answer.

I just went through a similar drill with my two adult children and their spouses. They all struggled at first with being precise. It is hugely and critically important. "About" $10 may cause you to overdraft a checking account. "Around the 12th" may cause you to pay hundreds in late fees and interest payments.

Baby steps:

Write down exactly how much money comes into and goes out of your house.  Exactly and precisely - not "$10" - rather $9.78. Record every single transaction. This is a discipline exercise, you will struggle to capture everything, I suspect there is a lot of financial "leakage" in your day to day. Your monthly budget is going to come down to couch change before your situation gets better - get used to very fine granular accounting. "Beans" and "Wheat Thins" are not "groceries" - they are individual categories one of which is essential, and the other discretionary.

Challenge yourself and your spouse to a "zero spend day". Spend absolutely nothing. See how many you can string together in a row. See how many "stupid SUV people" you can count going into shopping centers and fast food restaurants - be condescending and patronizing - you need to change your worldview to one where "cheap" "frugal" and "free" are high compliments and "brand name" "full price" and "payments" are the worst insults. I'm not kidding. You've got 30 years of retail conditioning to overcome.


Your house is on fire. Your babies are burning. You should consider reading the posts about eating from dumpsters - I am not kidding. There are posts here about getting free food from grocery store dumpsters. If you stay on your current path and you won't have a choice in about a year.

I am a former spendaholic (spendypants) who made over $70,000 a year and at my worst had less than $40 disposable income in a month, the rest went for CC and other payments. I feel your pain. It's real, it is fixable but it ain't easy.

The beatles

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Re: The beatles Case Study
« Reply #25 on: January 07, 2017, 05:28:47 PM »
Gas and electric total 1500/month!!!? That's 2 years worth for me(1500$), can you elaborate more on these bills! With that list of debt, start the dave ramsey plan and get a snowball rolling and knock a few small debts off the list quick!

Typo!

Its 150 per month.

1967mama

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Re: The beatles Case Study
« Reply #26 on: January 07, 2017, 05:36:15 PM »
Welcome here, Beatles! There is soooo much good information here! You will be amazed as you slash your spending!

I have to second getting hold of a copy of The Tightwad Gazette by Amy Dacyczyn, preferably from the library or a used copy from Amazon. This book was my first exposure to living a frugal life, back in the 1990's when it was published. I reread it about once a year to tighten up my skills!

I come at frugality from a homemaker's point of view, and have raised a large family as a stay at home mom. As I learned in the TWG, I can earn more OR spend less. So I choose to look at all of my homecooking and free activities as a family as my way of contributing to the family balance sheet.

All the best to you and your wife as you pick up the pieces and rebuild your lives! Following with interest! Keep posting! Keep reading!

The beatles

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Re: The beatles Case Study
« Reply #27 on: January 07, 2017, 05:38:26 PM »
So, parents offered to pay the IRS debt a while back.

Said no for a couple reasons, but mainly because I didn't want to give the IRS the extra fees and penalties they tacked on and also because it gIves the parents the ability to have a say in what we spend money on.

Should I revisit having them pay it?

Bracken_Joy

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Re: The beatles Case Study
« Reply #28 on: January 07, 2017, 05:44:07 PM »
So, parents offered to pay the IRS debt a while back.

Said no for a couple reasons, but mainly because I didn't want to give the IRS the extra fees and penalties they tacked on and also because it gIves the parents the ability to have a say in what we spend money on.

Should I revisit having them pay it?

Face punches incoming:
You OWE those fees and penalties. You did not pay your taxes. This is the punishment. That's how it works.

Sorry for the bad news, but it is time to grow up and stop blaming anyone else- YOU did this. YOU are in this mess. You did not get your identity stolen, or a bad creditor after a medical debt. No. You spent foolishly. You will get a LOT of harsh criticism if you keep trying to place external blame for YOUR bad choices.

How would you feel if your 4 year old cried because they were cold because they refused their mittens? Currently how we are feeling about your tax situation. TAKE RESPONSIBILITY.

Now, that being said, talk to the IRS and see if you can get those reduced and a payment plan in place. Like other have referenced, a non profit that helps with debt negotiation could be a good idea. (Caveat: making sure they're legit)

RetiredAt63

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Re: The beatles Case Study
« Reply #29 on: January 07, 2017, 05:47:01 PM »
And for side reading, look at the threads where adult children are worrying about their parents' finances, and parents are worrying about their adult children's expenses.  Your parents need to prioritize their own finances, not yours, and you need to get out of this situation on your own.  Your parents already paid your CCs and you racked up another chunk on them.  Do it yourselves this time.

The beatles

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Re: The beatles Case Study
« Reply #30 on: January 07, 2017, 05:49:16 PM »
So, parents offered to pay the IRS debt a while back.

Said no for a couple reasons, but mainly because I didn't want to give the IRS the extra fees and penalties they tacked on and also because it gIves the parents the ability to have a say in what we spend money on.

Should I revisit having them pay it?

Face punches incoming:
You OWE those fees and penalties. You did not pay your taxes. This is the punishment. That's how it works.

Sorry for the bad news, but it is time to grow up and stop blaming anyone else- YOU did this. YOU are in this mess. You did not get your identity stolen, or a bad creditor after a medical debt. No. You spent foolishly. You will get a LOT of harsh criticism if you keep trying to place external blame for YOUR bad choices.

How would you feel if your 4 year old cried because they were cold because they refused their mittens? Currently how we are feeling about your tax situation. TAKE RESPONSIBILITY.

Now, that being said, talk to the IRS and see if you can get those reduced and a payment plan in place. Like other have referenced, a non profit that helps with debt negotiation could be a good idea. (Caveat: making sure they're legit)

I understand.

I was just explaining why I said no at the time (almost a year ago).

Quidnon?

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Re: The beatles Case Study
« Reply #31 on: January 07, 2017, 05:59:10 PM »
Hmm, I respectfully disagree about selling your house.  Sell the rental and hustle and do what you need to do to build up your home equity.  If you currently lived in a McMansion, I would say sell.  But after realtor expenses and the hassle of moving I'm not sure it's a sound idea.  Your mortgage payment seems high for the home value, is it a 15 year mortgage?

Actually, the answer here would matter to my suggestion, since it is based somewhat on the monthly payment.  If it is a 15 year, don't move & don't refinance it, either.  Sell the rental.  If it is a 30 year mortgage with a terrible rate, sell the house and move into the rental.  Based upon your debt load, if it is a 30 year mortgage currently, you have zero prospects of refinancing it into a lower interest rate anyway; and you have much more equity and a much lower payment on the rental; so you would recover much quicker and come out the other side with real equity in a home, even if it wasn't the one you preferred to live in.

Allie

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Re: The beatles Case Study
« Reply #32 on: January 07, 2017, 06:10:11 PM »
I'm looking at your numbers and on one hand think, this is doable, because you have a ton of fat to cut.  Massages and cameras and name brand snacks for a preschooler.  I chuckled because I have a couple preschoolers and know that they are completely at my mercy for all of their needs.  They maybe get to choose if they eat the apple or the banana.  Maybe.  If they want something else they will have to wait until they can go out and buy it themselves.  Since I'm mom and know that healthy foods and a solid financial plan for our future are more important than their desire for Doritos or whatever, I get to make the decisions.  :-)

On the other hand, I can't help but wonder what else you are spending on.  Do you also get haircuts, nails, buy makeup, get clothes, go to sporting events, do you take trips?  Do your kids play sports or go to lessons or activities?  Does your wife take them to the zoo, museum, or gym?  I can't help but think this isn't the full picture.  If you have mint, do a look back for the last 60-90 days, year is better, and see what it looks like.  Things like regular car maintenance, registration, annual fees, etc. can derail a budget pretty quickly.

I agree with everyone here.  Stop spending on everything today.  Cut cable, sell the rental, sell your car and get an older one, see if you can get a second job or if your wife can pick up a weekend gig or swing shift, eat beans and rice, etc.  Its going to feel painful for a moment, but that is a short term pain for a long term gain.

I can't wait to see how you are doing in a few months!

The beatles

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Re: The beatles Case Study
« Reply #33 on: January 07, 2017, 06:43:47 PM »
// UPDATED THE POST //

I added a lot more details, and dug down to get the exact amounts as requested.

The beatles

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Re: The beatles Case Study
« Reply #34 on: January 07, 2017, 06:46:05 PM »
Hmm, I respectfully disagree about selling your house.  Sell the rental and hustle and do what you need to do to build up your home equity.  If you currently lived in a McMansion, I would say sell.  But after realtor expenses and the hassle of moving I'm not sure it's a sound idea.  Your mortgage payment seems high for the home value, is it a 15 year mortgage?

30 year fixed.

Bracken_Joy

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Re: The beatles Case Study
« Reply #35 on: January 07, 2017, 06:47:20 PM »
Well done! Thank you for adding the interest rate. A couple things stand out right away: that car loan has GOT to go. It's easy to get rid of- sell the car and buy something cheaper. And of course those credit cards are eating you alive!

Bracken_Joy

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Re: The beatles Case Study
« Reply #36 on: January 07, 2017, 06:49:23 PM »
Another easy win: that car insurance seems high. When was the last time you compared rates? It'll take you an hour tops, and you could be saving up to $60/month - that's a pretty incredible hourly rate of return right there!

You have a ton of fat to trim. What is your game plan with expenses? There are still a lot of questions you haven't addressed, like whether you or your wife are the big spender, etc.

The beatles

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Re: The beatles Case Study
« Reply #37 on: January 07, 2017, 06:50:31 PM »
Well done! Thank you for adding the interest rate. A couple things stand out right away: that car loan has GOT to go. It's easy to get rid of- sell the car and buy something cheaper. And of course those credit cards are eating you alive!

I was pleasantly surprised when I saw my car loan balance.

I thought it was 4500 but its down to almost 3500 now.

It'll be paid off in 9 months.

Do you still think I should sell it?

Misstachian

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Re: The beatles Case Study
« Reply #38 on: January 07, 2017, 06:51:06 PM »

 
ITEM|MONTHLY| TOTAL |INTEREST RATE
GARBAGE36
CALE/INTERNET114
WATER50
GEICO AUTO135
MASSAGE70
AUTO LOAN39335916.54%
MORTGAGE1761164,7175.125%
FUEL200
GAS/ELECTRIC150
GROCERIES1100
EATING OUT600
CAMERAS25
PARENTS030,K
CC119485625.24%
CC2134449524.49
CC32550523.24%
CC42545210.23%
CC52069218.49%
CC67579724.15
CC7 (STORE CARDS)100202025.24
TOTAL519644,455


This is exciting stuff! Look: if you don't eat out or get a massage in January, you've knocked out CC4 and CC3 is down to $335. If you don't eat out or get a massage in February + CC4's $25 payment, then in March you can get rid of CC3 and knock CC5 down to $332. By April, with just those two changes, you can totally get rid of 3 of those credit cards that have been hanging over your head.

This is just an illustration, since in your case it might make sense to first pay down some of the tax & mortgage debt, and wiser heads than I can advise you there. But give yourself a few minutes to dream about how amazing it could be to knock down one of these debts every month. Think of how much faster the above will be if you also cancel cable & cameras & cut $400 of your groceries. If you are willing to make some hard changes, this is so, so doable! But it means really making those hard changes and making them right now. Every month you delay pushes later the moment you won't have that horrible feeling in the pit of your stomach!

Tell us tomorrow that you have cancelled cable, massages, and cameras and you will get a lot of high fives.[/td][/tr][/table]

Quidnon?

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Re: The beatles Case Study
« Reply #39 on: January 07, 2017, 06:53:18 PM »
Well done! Thank you for adding the interest rate. A couple things stand out right away: that car loan has GOT to go. It's easy to get rid of- sell the car and buy something cheaper. And of course those credit cards are eating you alive!

I was pleasantly surprised when I saw my car loan balance.

I thought it was 4500 but its down to almost 3500 now.

It'll be paid off in 9 months.

Do you still think I should sell it?

Probably, as long as you aren't upside down in it.  Use whatever equity you can get out of it to buy a cheaper vehicle cash & drive.  Do not finance!

EDIT: Definitely sell the car.
« Last Edit: January 07, 2017, 06:57:07 PM by Quidnon? »

The beatles

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Re: The beatles Case Study
« Reply #40 on: January 07, 2017, 06:53:21 PM »
Another easy win: that car insurance seems high. When was the last time you compared rates? It'll take you an hour tops, and you could be saving up to $60/month - that's a pretty incredible hourly rate of return right there!

You have a ton of fat to trim. What is your game plan with expenses? There are still a lot of questions you haven't addressed, like whether you or your wife are the big spender, etc.

We both are, in different ways.

For example, I can go a long time without buying anything. But then i'll get a hankering for something; Like our 90 inch flatscreen TV with the amoled LED backlit display that beams so beautifuly against my wall, and the wireless SONOS speakers that complete the home theater. So I can go a while, but then I'll spend $3,000 in one day.

My wife on the other hand never buys big things, but will buy a $10 makeup kit, and then a $25 pair of plates, then a $5 new snowglobe ... And so forth.


The beatles

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Re: The beatles Case Study
« Reply #41 on: January 07, 2017, 06:56:19 PM »


Probably, as long as you aren't upside down in it.  Use whatever equity you can get out of it to buy a cheaper vehicle cash & drive.  Do not finance!

I blue booked it and its worth $13k from a private owner and $15k from a dealer. Supposedly.
« Last Edit: January 07, 2017, 06:58:02 PM by The beatles »

pbkmaine

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Re: The beatles Case Study
« Reply #42 on: January 07, 2017, 06:57:16 PM »
Another easy win: that car insurance seems high. When was the last time you compared rates? It'll take you an hour tops, and you could be saving up to $60/month - that's a pretty incredible hourly rate of return right there!

You have a ton of fat to trim. What is your game plan with expenses? There are still a lot of questions you haven't addressed, like whether you or your wife are the big spender, etc.

We both are, in different ways.

For example, I can go a long time without buying anything. But then i'll get a hankering for something; Like our 90 inch flatscreen TV with the amoled LED backlit display that beams so beautifuly against my wall, and the wireless SONOS speakers that complete the home theater. So I can go a while, but then I'll spend $3,000 in one day.

My wife on the other hand never buys big things, but will buy a $10 makeup kit, and then a $25 pair of plates, then a $5 new snowglobe ... And so forth.

Are you willing to change?

The beatles

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Re: The beatles Case Study
« Reply #43 on: January 07, 2017, 06:58:15 PM »
Another easy win: that car insurance seems high. When was the last time you compared rates? It'll take you an hour tops, and you could be saving up to $60/month - that's a pretty incredible hourly rate of return right there!

You have a ton of fat to trim. What is your game plan with expenses? There are still a lot of questions you haven't addressed, like whether you or your wife are the big spender, etc.

We both are, in different ways.

For example, I can go a long time without buying anything. But then i'll get a hankering for something; Like our 90 inch flatscreen TV with the amoled LED backlit display that beams so beautifuly against my wall, and the wireless SONOS speakers that complete the home theater. So I can go a while, but then I'll spend $3,000 in one day.

My wife on the other hand never buys big things, but will buy a $10 makeup kit, and then a $25 pair of plates, then a $5 new snowglobe ... And so forth.

Are you willing to change?

I am.

CheapScholar

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Re: The beatles Case Study
« Reply #44 on: January 07, 2017, 06:58:31 PM »
You've accomplished a lot today, Beatles.  You should be proud that you're on the right path.  Just think, you're only 30.  Your income is certainly respectable and you can make progress during your 30s that most Americans don't even think about. 

pbkmaine

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Re: The beatles Case Study
« Reply #45 on: January 07, 2017, 06:58:53 PM »
Excellent.

The beatles

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Re: The beatles Case Study
« Reply #46 on: January 07, 2017, 06:59:02 PM »

 
ITEM|MONTHLY| TOTAL |INTEREST RATE
GARBAGE36
CALE/INTERNET114
WATER50
GEICO AUTO135
MASSAGE70
AUTO LOAN39335916.54%
MORTGAGE1761164,7175.125%
FUEL200
GAS/ELECTRIC150
GROCERIES1100
EATING OUT600
CAMERAS25
PARENTS030,K
CC119485625.24%
CC2134449524.49
CC32550523.24%
CC42545210.23%
CC52069218.49%
CC67579724.15
CC7 (STORE CARDS)100202025.24
TOTAL519644,455


This is exciting stuff! Look: if you don't eat out or get a massage in January, you've knocked out CC4 and CC3 is down to $335. If you don't eat out or get a massage in February + CC4's $25 payment, then in March you can get rid of CC3 and knock CC5 down to $332. By April, with just those two changes, you can totally get rid of 3 of those credit cards that have been hanging over your head.

This is just an illustration, since in your case it might make sense to first pay down some of the tax & mortgage debt, and wiser heads than I can advise you there. But give yourself a few minutes to dream about how amazing it could be to knock down one of these debts every month. Think of how much faster the above will be if you also cancel cable & cameras & cut $400 of your groceries. If you are willing to make some hard changes, this is so, so doable! But it means really making those hard changes and making them right now. Every month you delay pushes later the moment you won't have that horrible feeling in the pit of your stomach!

Tell us tomorrow that you have cancelled cable, massages, and cameras and you will get a lot of high fives.[/td][/tr][/table]

It is exciting!

I'll have to double check if I can get out of the TV contract though.

Signed a 2 year contract in August.

1967mama

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Re: The beatles Case Study
« Reply #47 on: January 07, 2017, 07:01:22 PM »
Make sure you do the math on getting out of your cable contract. When we got out of ours there was a penalty but it was cheaper to pay that penalty than pay the remaining monthly payment on the contract. 

Bracken_Joy

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Re: The beatles Case Study
« Reply #48 on: January 07, 2017, 07:02:07 PM »
You can so do this. But it's like weight loss- this isn't a crash diet, this is a lifestyle change. You've got to be in for the long haul. I'm seriously admiring you right now- you've faced up to some major harshness today, and looked head on at some rough numbers. But you *can* do this.

I highly recommend you sit down with your wife and go over these "goal setting" questions:
http://www.frugalwoods.com/2016/12/19/uber-frugal-month-the-ultimate-guide-to-saving-more-money-than-you-ever-thought-possible/

You guys need to make a game plan *together*. That's the only way you'll succeed- mutual accountability. The fact that you have two different 'types' of spendiness is actually a strength- you can keep each other in check this way if you're a team =)

Make sure you do the math on getting out of your cable contract. When we got out of ours there was a penalty but it was cheaper to pay that penalty than pay the remaining monthly payment on the contract. 

This is virtually always true. I've had this be true with breaking apartment leases even.

The beatles

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Re: The beatles Case Study
« Reply #49 on: January 07, 2017, 07:05:45 PM »
So, parents offered to pay the IRS debt a while back.

Said no for a couple reasons, but mainly because I didn't want to give the IRS the extra fees and penalties they tacked on and also because it gIves the parents the ability to have a say in what we spend money on.

Should I revisit having them pay it?

No one has answered this yet ^^