Are we beyond help? Trying to make a start but can't see a path.

[Shelley]

My husband and I have made bad financial decisions for a long time. A lot of it was moving interstate (Australia) selling houses each time and paying moving costs and agents fees etc. we have finally managed to buy a house, at land value, $362,000, which was awesome. But have come to this at 46 (him) and 40 (me) with two kids (16 and 12). We also have a caravan (trailer) that we owe money on but will sell next month, coming out with a couple of thousand cash.

Worst of all, we have a stupid ridiculous car lease that we know now was an idiotic thing to do, but that we are stuck with.

Current payout figure is about $10,000 or so more than the value of the car, as you always get stuck paying down interest first. Therefore selling and getting a cheap used car isn't an option. So now we are onto the paying down principal part. Lease ends June next year, and the balloon is $22,000. Hopefully it will still be worth that, but our current thinking is that we should refinance with the lease company to pay off the final balloon and take advantage of the pretax payments as it is salary sacrificed. Then drive the vehicle until the end of its life. If we sell it, we come out with no car and no cash and possibly paying the lease company. We could refinance the mortgage to pay off the lease company, then drive the car into the ground, as we do have some equity there, but need to do the calculations to see which we are better off with, because the car payment is from his pay, before tax.

No other debts, credit card paid off each month.

My husband earns $170,000 before tax, and 9% on top of that is put into a retirement fund by the company.

We have normal expenses, mobile phones are on 24 month plans so I can't change that, I redid all our insurances at the end of last year and got them as low as I could. He has life insurance and employment insurance as I have a neck and back injury so will never be working full time. At the moment I'm a stay at home mum, and am studying part time as I needed to change careers due to my injury.

The only entertainment we have is Netflix. We each buy lunch once a week, no takeaway, no cafes, no haircuts, manicures, massages etc. I don't go to the mall, only clothes are necessities from having to replace something.

Both our girls are in a $5k a year private school, one we are finished paying for, other just started but again a decision we made before we realized we were idiots. Although I might still make this choice to put my daughter in an all girls school considering how distracted she gets by boys already!

So, are we beyond hope? It seems that way to me with the car lease.

Wage after retirement fund paid and after tax

$7518 / month

Savings after all expenses including school fees and saving for books and uniforms, car payments, registration, servicing, automobile club, all insurances, utilities, kids dance and scouts, Netflix, mortgage, land taxes etc,

$2379 / month (this is after we have got rid of the caravan, not right at the moment)

Any advice on where to go from here would be so gratefully appreciated. And we don't need to be told how stupid we were with the car lease and caravan loan. We are fully aware by now.

[marty998]

Hey there.

You've got plenty of scope. It would be a real problem if your household income was $17,000, but geez you guys are very high income earners.

$5k a year private school...sounds like a catholic school? Not the fancy pants Ascham, Loreto, Abbotsleigh type?

None of the items you've listed should be breaking you at your income point, indeed you're saying you still have $25,000 a year left over so there's still quite a buffer.

Questions
- List out your assets and liabilities - house, cars, investments, super and savings on one side, and loans on the other with interest rates and terms (years left, min payments etc)
- $7518 per month sounds low for a gross wage of $170k pre-tax. Your husband wouldn't be able to salary sacrifice too much either because much of the concessional cap would be taken up by the 9.5% super guarantee.
    - Is it because of the lease? Is it part of his salary package?

- What are you doing with the surplus cash?

Answers to the above will inform the next responses :)

[accolay]

What Marty said.

But what exactly is your goal? Beyond help for what?

[Shelley]

Bizarrely just the act of writing this showed me a clearer path than I've seen all along. My husband budgets to the nth degree so in his eyes there is only $707 a month left. That's what the spreadsheet says. But when I add in the little bits per month he has assigned to passports due in eight years, drivers licenses in 5 and so on, I see now we could save enough to pay the balloon next year.

Yes, catholic private school, cheapest we could find for all girls.

We want to pay off the mortgage. Hopefully within ten years. And put a new budget kitchen in.

The car is part of the package apparently.

Thank you both for replying.

[MMMaybe]

Can I suggest that you post a case study with all the numbers? That will help people to see where you could cut back.

[soccerluvof4]

There is nothing to suggest you are "beyond help" and with some better decisions and discipline going forward you can rack up a significant amount a money over the next 10 years. Don't look backward, look forward as to getting a plan in place and execute it.

[Sibley]

So, if your husband budgets to the Nth degree, putting in small amounts for expenses well into the future - that's going to cloud your vision.

Make a copy of those spreadsheets and revise them. Take out ANYTHING that you're not actually paying cash on. You need to know what your actual cash expenses are - not so much that in 5 years you'll have to pay for driver's licenses. Once you have the new, stripped down version, that should help you to get a grasp on your situation.

Then, do a case study so we can poke holes into your budget :)

[aceyou]

So, if your husband budgets to the Nth degree, putting in small amounts for expenses well into the future - that's going to cloud your vision.

Make a copy of those spreadsheets and revise them. Take out ANYTHING that you're not actually paying cash on. You need to know what your actual cash expenses are - not so much that in 5 years you'll have to pay for driver's licenses. Once you have the new, stripped down version, that should help you to get a grasp on your situation.

Then, do a case study so we can poke holes into your budget :)

This. 

With your income you will have room to wiggle with.  Even with some excess spending in minor categories, you will still be able to quickly pay down all non-mortgage debt and then save tons of money each month.  Good luck.

[Shelley]

Thank you, I have posted a case study and look forward to any further advice.