Dismal finances

[singinjeannie]

Hi, I'm new and have some questions. My husband and I have a dismal financial situation. He lost a really good job 2.5 years ago due to downsizing. We were paying the bills with that job. Since then we've had 2 more kids (totaling 4) and he's taken 2 huge paycuts due to the job he's had to take just to be employed.

We are currently bringing home about $1200 less per month than we were 3 years ago. We depleated our savings while he was unemployed and we've gone further and further into debt because we just can't make point A meet point B. When an occasional expense comes up (car repair or dental bill...) we have no savings to cover it and on the credit card it goes. We're so far in over our heads, how the heck do we get out?

With 2 little kids, working full-time is out of the question for me, as more than 1/2 of what I'll make will go to child-care, and most of the rest will go to taxes, as we'll be in a higher tax bracket -- and we make just a bit over where we'd need to be to get any government help with child care (or any other assistance).

We have a retirement account from the "good" job worth about $30,000. My husband says we need to get the money out of there to pay off some of our current debt in order to get us to a better place. Mind you, even by paying off $30,000 in debt, we wouldn't have enough money left over to put money away for those strange expenses.

We tried to start a home-based-business, but did terribly at it. We're not good sales people. Thus, we are now $7,000 further in debt.

Any advice, people? I really don't want to go bankrupt and lose everything. 'm dying here.

Thanks!
Jean

[lieweheksie]

Hi
I am sorry to hear you are in such dire straits. Just some thoughts on your questions
Before you take any money from your retirement account, get some professional advice- my gut says to leave it there bit get some one to run the numbers for you
Have you thought about running a day care from home- there are so many home businesses you could do that have nothing to do with selling (I used to be in sales and the desperate people were the worst salespeople- it comes over to the cutomer)
Be honest with your kids, yourselves and your family and friends about your finances- if you can’t afford to do/ buy something say so. Explain you’re having a hard time and people are often surprisingly understanding
Challenge everything you spend your money on- go through your budget and question everything – you’ll be surprised at what you can do without
Keep asking for advice- search the Web (my other fave sites are the Dollar stretcher- www. stretcher.com and frugallivng.about.com) – there are so many more,
Check out books from the library- Tightwad gazette, Miserly moms etc
Remember to work on your relationship with our husband- work as a team and keep talking and remember this too shall pass
Hope this helps and good luck

[terry1156]

Jean -

It's never fun to be in a position like that although some of us here have and can tell you that it is possible to get out although you will have to make some changes to get there. Getting some financial advice is a first step. I would not touch your retirement savings at this point until you have a workable plan to get out of debt. If you don't have a workable plan, that will just disappear and without addressing the fundementals to change the current situation.

I agree you need to challenge everything at this point. When we were going through a similar situation, we ended up selling our house and purchasing a smaller one and giving up a car. Both of those were extremely difficult for us to do, but we were in over our heads with the mortgage payment at the time (we had just bought more than we could afford and when our salary situation changed, it was taking everything we had).

Although our pride was hurt a bit at having to scale down, it was the best thing we ever did and we came to know that a lot of material things that we thought we had to have were just window dressings. Take a critical look at all your expenses and make changes where you can.

Also, challenge all the expenses that you have to have. Although we did through out a lot of things (a membership to a local fitness club, cabel TV, and a bunch of subscription services), if we had just stopped there, I'm not sure we would have gotten out. The house was a perfect example. If we had only said, "Yes, we need our house" and left it like that, we would still be in financial trouble today. You need a place to live. How can you reduce that cost? The same with a car...you need transportation, but can you trade in a fancy car for a dependable family car?

In the same light, challenge all the fees and bills you pay. Can you get a better insurance rate on your car and home insurance. You can find out in a few minutes with an Internet search.

I know the situation is not easy and giving you a lot of daily stress. Get some financial help and work out a plan. Once you have a plan in place that you can work from, things will get a lot better.

[DivaJen]

I agree with both of the previous posters. Using that retrirement money wthout a plan is just a band-aid, and before too long you'll be right back where you're at, minus that $30K.

Look for the big ways you can reduce your expenses - the house, the car(s). Consider selling if need be, refinancing. Find ways to lower your insurance premiums. And then take a good hard look at what you can do without, and get rid of it. If that's not enough, there needs to be a way to bring in some extra income somehow. Money in has got to be greater than money out.

Good luck. I can only imagine how expensive it must be to raise four children - our one alone is not cheap.

[2moretrees]

Another thing, if you don't know, ask. I'm always amazed at what I learn in these forums when people ask basic questions. So many people have great ideas and had to cut expenses for a number of reasons and are a wealth of knowledge.

Try not to do everything at once. That has always been my problem. Focus on one area first and when finished, move onto another. Trying to reduce everywhere all at once just gets overwhelming. I guess that is part of making a plan.

Good luck and I hope that you can get the finances under control.

[singinjeannie]

Quick question:

A large part of current financial problem is that DH current employer takes out $771 a month toward family health insurance. I just found out that we are in the lower income bracket (with a 6 person family) and we could've gotten the kids health insurance for FREE!!! But now we can't change his benefits at work for another year!!! This would likely be a savings of about $500 a month. Do you have any idea how we can get around this and find a way to change his insurance now instead of in one year?

Thanks!
Jean

[terry1156]

Before you make the change in insurance, take the time to carefully compare the two being offered. If they cover the same things, then you should procede to try and get it changed, but company health insurance is often better that private or state insurance.

If you still want to make the change, the best plan is to have your husband go to the company's personnel department and just not take "no" for an answer. If he comes back enough times and there is a way for them to change it, they will figure it out.

[singinjeannie]

I will certainly try to figure out the differences before I move forward. If I can get my kids basic health care, immunizations, etc. and not have to pay through the nose with state health care, then I'm going for it. I don't need fancy coverage, just enough to make sure that if my kids are hurt or get sick, I have coverage. $771 a month is just astonomical for healthcare (at least with my income.)

Here's hoping. This will do a lot to get us closer to where we need to be. Of course, I still have to make other major changes in our spending habbits and in our communication.

I really appreciate the input. I'll take all the advice I can get.

[Tree0164]

Hi Jeanne,
Welcome! I 100% agree do not touch that 401k money.

Can you get a part time job on the weekends while your DH is home. You somehow need to make up that $1200 is short.

Also double check on the health insurance, really compare.

Some things that you need to do-go through your house and find everything that is not nailed down and sell it via a yard sale, ebay etc.

Get a mini emergency fund of atleast $1000.

Then let's look at your credit card-how much do you owe. Try to get the interest rates lowered. You want to do the snowball method that is on this site.

Also join the daily money saving challenge which can save you money on a lot of little things.

Have a heart to heart with your dh about the finances. Cut out what you can't afford like cable, extra cell phones. Any extras.

Keep us updated on your progress because I know you will have some!!

[Tree0164]

Also Jeannie, check out the earning extra income boards there are a few legit companies that hire from home.

[miclason]

I know that my supermarket bill goes up at least 30% every time I take my daughter with me (and that is just one child!, and, she knows she cannot ask for toys, clothes or shoes!!...but, she has fancy tastes in food!...so, I shop without her and, generally, buy just 1 "treat" food per week!)...Also, we stay away from the malls!! (it is much easier for her not to ask for things if she doesn't see them....same for me!)
I am in a somewhat similar situation....I los my job last year and took a 30% paycut at the new job...and I was paying bills with the last one...and there was a "situation" with my parents, and my sister and I had to support them (no insurance, no medicare, no nothing, those things don't exist here!) for +/- 2 years....it takes about $1500 a month to take care of two elderly people (very basics, no frills..just for THEM, not counting our own families and needs!)...and we both have children, and between the 2 of us we make about $1900 a month....before taxes, pension fund, social security, etc...so make that about $1300 net per month....but, I have hope!!! We can get out of this!!

[singinjeannie]

That is so true about the kids in the grocery store. They beg for stuff and it's so annoying that even if you don't agree to most of their requests, you end up saying yes to one or two, just to not be the big meannie!!

Our grocery store has a "kids area" that I take advantage of. It's free and she loves it. Keeps her out of my hair while I shop. Now, for the 11 month old, I have to take her, most days, and it makes shopping for bargains hard, because I have very little time to look over things and make decisions before she's had all the shopping she can take. Kids are not only expensive to raise, they make raising them on a budget very, very hard.

Just today, my two boys were arguing over using a "free trial" game on the computer. They started saying, "You can buy a membership for us, Mom. It's only $79 a year!" They haven't a clue how bad our finances are right now. My DH let them know in no uncertain terms that we weren't spending ANYTHING on a dumb video game.

I too have hope, it's just hard to look at the two ends of the rope so far apart and wonder how you're going to make all this turn out right...

-Jean

[Tree0164]

I try to go shopping by myself as well. I don't bring hubby either-he is worse than the kids.

Jean it sounds like you are taking the steps to get that rope together

Miclason- that is a tough situation. Hearing things like that makes me glad that my folks got their act together plus I am hoping that I am there myself in 30 to 40 years.

[rabbitfoot]

I think that I'm the problem when it comes to shopping. It would be much better if I stayed at home...lol.

[2moretrees]

I found that it was cheaper for me to hire a babysitter than to bring my kids along shopping when they were young. When they started going to school, I did the shopping while they were away.

[singinjeannie]

Well, for so many of you who've been following my progress, I need to let you know a few things:

1) I have a second interview this afternoon for a job I really want and despirately need. Any prayers would be appreciated for those of you who pray!

2) I know in another thread I discussed the Christmas issue my husband and I were having. Well, that's gone from bad to worse. I tried to bring up the subject again, via a letter (this is a form of communication advocated in Marriage Encounter which my DH and I have been using successfully for years.) I explained I would get the money to buy Christmas gifts for my girls via my ebay selling and I wasn't planning on spending more than $20 a kid. This is such a minor amount, and once again, I just can't imagine telling my 3-year old that there is no Santa.

Well, he went ballistic saying I was going to take us into ruination. I've been a mess all week, crying non-stop, falling into a deep funk, since this and he and I are hardly talking. He said the financial problem is mine now, since I don't want to do things his way and I can just figure it all out. This is not good and I really don't know where to go from here.

There's no way one person can get a couple out of major debt and resolve these issues without a concerted, joint effort and cooperation/compromise.

Pray for us, too.

Thanks.

Jeannie

[terry1156]

1) Prayers are with you and I hope the second interview goes well.

2) What a terrible position to be in. Money stresses tend to make people over react and I'm sure he is feeling as much stress as you are. My suggestion would be to write another letter asking him if it would be possible to reach a compromise amount and see if he soften his stance from there. I have my prayers with you here too that a happy resolution can be foound.

[crosses]

I have my prayers going out to you with the interview. I am heartbroken to hear about how your husband reacted to your Christmas plan. What do you think he would say if you could get the gifts for free? You could make requests on the freecycle site and maybe get the gifts for free. Do you think that might be a possibility?

[singinjeannie]

What is the "freecycle" site?

[Tree0164]

www.freecycle.org

There are local groups that you can recycle your stuff and also get some other stuff from there.

On my local groups this week was some furniture, clothing, toys.