Need advice on personal finance

[autoxer]

Originally Posted by amberbamber

Dh gets a bonus every year and it generally is 35,000 (after taxes) He does bring home 1200 every other week. That is our income. Honestly. I am not making it up.

Okay, so you use the bonus money to cover the monthly shortage until the next bonus? You've listed $4435 in monthly expenses, but only receive $2600 in income each month, so the difference of $1800 comes out of the bonus savings? How is the bonus money handled? Are you expecting another bonus in december?

[Saving in So Cal]

I can't add anything to the whole life advice. I agree with what's been said and you've already taken steps to get out of the policies. My husband had a whole life policy since he was in his early 20's. Although it was costing us a $100 a month, both the face value and the cash value was pitiful. Still, he wasn't ready to part with it since we could afford the premiums and he had other insurance through work.

When he started his own business, he finally decided to check into term life. We found that the same $100 would buy us a policy with 5X as much coverage (more than enough to keep my daughter and I going should something happen to him). The rate is good until he is 65. By then we won't need the policy any more because our daughter will be out of college, our house will be paid off, and we will be retired.

BTW, we used the cash value payout to pay the first year premiums and then put the rest into the business. Maybe you can use your cash value payout to do something similar with your CC debt.

[safari]

This is what I call living dangerously. The bonus money is not guaranteed. What happens if his next bonus is $30K or $25K? You would default on your mortgage payment. I think selling your house now is the best option. You need to build the emergency fund ASAP.

[amberbamber]

Originally Posted by autoxer

Okay, so you use the bonus money to cover the monthly shortage until the next bonus? You've listed $4435 in monthly expenses, but only receive $2600 in income each month, so the difference of $1800 comes out of the bonus savings? How is the bonus money handled? Are you expecting another bonus in december?

Yes, it comes out of the bonus savings. The bonus money is given in a lump sum and then used through out the year to pay on bills. I am very structured that we do not touch that bonus money, except each month to pay the bills. Yes, we are expecting another bonus in january.

[amberbamber]

Originally Posted by safari

This is what I call living dangerously. The bonus money is not guaranteed. What happens if his next bonus is $30K or $25K? You would default on your mortgage payment. I think selling your house now is the best option. You need to build the emergency fund ASAP.

We do have an emergency fund, just not 6-8 months yet. And to be honest I'm not sure what we'd do if his bonus went down.

I admit it, we are living way above our means. Never in a million years would I have thought I would be in this situation. But I am...I will not be made to feel guilty. I am an intelligent person and we as a family have made some bad decisions. We are working on them right now. I am not complaining, I simply came here for advice to remedy my situation. We are not bad people, we have just made some bad decisions. I am sure we are not the only ones.

I have taken most everyone's advice, and I will continue to do so, when my Dh and I talk about it and research it. Things will get better, we are determined to get to that place where we are not charging anything. We have a positive attitude about it and look forward to that day.

[disneysteve]

Originally Posted by amberbamber

True and yes...Red flags waving here also. And yes, we do rely on his bonuses and if they would happen to stop coming in, then yes, we would be in big trouble!
I am trying to prepare for the worst case and get the debt paid off and save, save, save!

Not only do you need to get the debt paid off, but you need to lower your regular living expenses to match his base pay, NOT including any bonuses.

You are already on your way. Between the life insurance, the 529, and the cable tv, you will have cut spending by $180. In 5 months, the medical bill will be gone and reduce your costs by another $60. CC#3 will be gone in December to free up another $270. That's already $450/month less you will be spending by January. That will at least give you some breathing room if DH's bonus happens to be smaller this year. And assuming the bonus is the same, then the money can be poured into further debt reduction which ultimately lowers your monthly costs more.

The big problem is the need to live within the base pay.

I think you are on the right track.

[amberbamber]

When I do get the cash payouts from all of the policies, what do you advise we do with it?

Put some in savings, and the rest on the CC's?

[disneysteve]

Originally Posted by amberbamber

When I do get the cash payouts from all of the policies, what do you advise we do with it?

Put some in savings, and the rest on the CC's?

I'd put it all toward debt reduction. You need to get rid of those credit cards.

[amberbamber]

The CC's are from this house. It was a repo when we bought it. We've put almost $30,000. into it. Stupid, but again, a bad decision.

[amberbamber]

Originally Posted by disneysteve

I'd put it all toward debt reduction. You need to get rid of those credit cards.

Will do!

[greedy4chips]

I also question how you got a mortgage based on $1200 biweekly take home checks. My bank would not consider bonuses as income, hence the term "bonus".

You have $45,000 in vehicle debt...that is insane too, but you already know that. Whatever you can do to get out of that lease HAS to be done. Your hubby could try to refinance his truck also to lower the monthly payment. This is only advisable if you understand that you must repay your loan asap after other debts are paid off, otherwise you end up paying so much extra in interest.

You and your hubby want a stable/reliable vehicle and a cell phone in case of emergencies. These feelings are quite understandable. However, you do not have the same level of stability with regard to your budget. A bonus is just as secure as a used vehicle in that it could be useless tomorrow.

Does your hubby read these postings?

1. [x] Drop whole life
2. [ ] Sell house
3. [ ] Get out of van lease
4. [ ] Pay off/transfer CC#2
5. [ ] Pay off DH's truck
6. [ ] Pay off 8.8% student loan
7. [ ] Pay off other CCs and transferring balances to 0% before promotional periods end

Sale of the house will net you 15k max after realtor fees and paying off mortgage. Cashing out whole life policies will net ???. Bonus will net you 35k if/when you get it...exactly when do you hope to get the bonus??? Total net possible = $50 - $52k

You have $68000 in debt if you can replace the van with a $3000 vehicle and a $5000 loan...consider another 0% CC for the $5k loan. The 68k comes from all debt minus the van plus a different vehicle loan.

So you are really only $13k short. Very doable in the next year (after the sale of the house) if you have a rock solid budget!!!

I figure $680 for monthly bills you have listed minus the whole life policies and 529 + $800 rent + $400 food + $250 gas = $2130 in payments.

Income is $1200 biweekly (does this mean 26 paychecks per year or does he get paid twice a month on the 1st and 15th, which is only 24 paychecks per year and $2400 less/yr)

I am going to assume he gets paid every other friday. This means you get 1 extra paycheck per month 4 times per year an additional $400/ month if properly budgeted. So your hubby brings home $2800/month in this scenario...$1200 + $1200 + $400.

$2800 - $2130 (payments) = $670/month for debt repayment.

Could you increase your income by doing daycare/babysitting for friends. I know you have 3 kids under 4 but 1 additional kid for 8 hrs a day ($100/wk) would be a great extra to help your budget.

My personal favorite...donate/sell plasma. Deliver pizzas on the weekend when the DH can watch the kids.

I think you will be debt free within 1 yr of selling your house if you stick to a plan!

[greedy4chips]

Originally Posted by amberbamber

I will not be made to feel guilty.

Don't feel guilty! You haven't done anything that a hundred million others haven't done or will do in the next couple years.

Many here have been in worse situations financially. We all want the best and believe it will work out in the end, but bad things do happen and realizing your mistakes and FIXING them is what is key.

You should only feel proud of yourself at this point, since you are obviously making the effort to get things figured out and headed in the right direction.

[Ima saver]

So you really only have $600 a week to live on, that is tough for a family of 5. It is impossible to have a $30,000 plus price car, on only $600 a week. You must learn to live on $31,000 a year, not $95,000! When you get your bonus, you need to pay off as much debt as you can. What does he do to get a $35,000 bonus! Plus, that is still only $66,000 a year in earned income.

[greedy4chips]

Originally Posted by Ima saver

So you really only have $600 a week to live on, that is tough for a family of 5. It is impossible to have a $30,000 plus price car, on only $600 a week. You must learn to live on $31,000 a year, not $95,000! When you get your bonus, you need to pay off as much debt as you can. What does he do to get a $35,000 bonus! Plus, that is still only $66,000 a year in earned income.

That is all after taxes, which I am sure the bonus gets killed by the taxman. That is why I think they need to look at the income tax refund for additional income.

[amberbamber]

I also question how you got a mortgage based on $1200 biweekly take home checks. My bank would not consider bonuses as income, hence the term "bonus".

We did have good FICO scores before the house. Around 745. And it's Bank of America...????

You have $45,000 in vehicle debt...that is insane too, but you already know that. Whatever you can do to get out of that lease HAS to be done. Your hubby could try to refinance his truck also to lower the monthly payment. This is only advisable if you understand that you must repay your loan asap after other debts are paid off, otherwise you end up paying so much extra in interest.

I agree it is insane...my husband's truck payment is $100 a month. When we lived in Indiana we took a HELOC out on our house there and paid half of his truck off...which in turn made our next payment due in December of 2008. So, right now we do not HAVE to pay any payment, but I always send in $100 a month to keep paying it off.

Does your hubby read these postings?

1. [x] Drop whole life
2. [ ] Sell house
3. [ ] Get out of van lease
4. [ ] Pay off/transfer CC#2
5. [ ] Pay off DH's truck
6. [ ] Pay off 8.8% student loan
7. [ ] Pay off other CCs and transferring balances to 0% before promotional periods end

No, but I tell him about all of them!!!!!

Sale of the house will net you 15k max after realtor fees and paying off mortgage. Cashing out whole life policies will net ???. Bonus will net you 35k if/when you get it...exactly when do you hope to get the bonus??? Total net possible = $50 - $52k

Cashing out the policies will get us almost $3000. Bonus will arrive in Jan.

My personal favorite...donate/sell plasma. Deliver pizzas on the weekend when the DH can watch the kids.

I am selling books, taking on kids after school, selling our gently used kids clothes, having yard sales, hubby is getting extra jobs on the side, we are going to start recycling aluminum cans for money. I will see about selling plasma in our city! Thanks!

[amberbamber]

Originally Posted by greedy4chips

Don't feel guilty! You haven't done anything that a hundred million others haven't done or will do in the next couple years.

Many here have been in worse situations financially. We all want the best and believe it will work out in the end, but bad things do happen and realizing your mistakes and FIXING them is what is key.

You should only feel proud of yourself at this point, since you are obviously making the effort to get things figured out and headed in the right direction.

THANK YOU!

[disneysteve]

Amber - Can you clarify the van lease? Do you actually still have $30,847.80 in payments remaining, or is that just the original purchase price on which the lease payments were based? If your monthly payment is $435, you would be paying for nearly 6 more years for payments to total that much. That doesn't sound right to me.

How many actual payments remain in the lease term?

Speaking of the lease, I don't know the details but I know I've read about companies that will buy out your lease or find a new owner to take over the lease for you. You might want to look into that route as a way to get out.

[creditcardfree]

You stated you don't have to make a payment on your DH truck until 2008. I think I would use that $100 to put in my snowball on debts. I would list the debts smallest to largest and just snowball it. I think you said you were putting $270...why not make it $370? Obviously, the return of your whole life premiums will put a big dent in things in those debts!!

I would be careful about using another company to take over my lease...so many things could go wrong...since the original contract would still be in effect. That needs to be terminated to be free of any obligation.

Just my thoughts.

[amberbamber]

[quote=disneysteve]

Amber - Can you clarify the van lease? Do you actually still have $30,847.80 in payments remaining, or is that just the original purchase price on which the lease payments were based? If your monthly payment is $435, you would be paying for nearly 6 more years for payments to total that much. That doesn't sound right to me.

That is correct, it's the original purchase price on which the lease payments were based.

How many actual payments remain in the lease term?

60 more payments. We leased it for 72 months. And we've had it for exactly one year.

In going over all this with my Dh last night. He is unwilling to turn in the van for a used vehicle under 10,000. Not sure if that would really save us much to pay $5000 and then another $10,000 on a loan for a car. He would rather lease the van and save to pay cash when we go get our next vehicle in 5 years. This is going to have to be our compromise because he is not willing to get rid of the van.

His reasons are somewhat valid. He wants me to be safe driving with our three young children. He isn't always available say if something were to break down on the side of the road, he couldn't rush to us and help me. So I'd be stuck with 3 children. Plus we take trips back home almost every 3 months (to Indiana from North Carolina) so we need a reliable vehicle to get us back and forth.

I guess I need to save for the over mileage and other things regarding the vehicles.

[amberbamber]

[quote=creditcardfree]

You stated you don't have to make a payment on your DH truck until 2008. I think I would use that $100 to put in my snowball on debts. I would list the debts smallest to largest and just snowball it. I think you said you were putting $270...why not make it $370?

Normally his payments are around 569.00...this way if I can keep ahead of it then this won't bite me in the butt when it comes around due. We're still paying 5% interest on this...so I kinda feel like I'm paying this down too, even though it's little by little.

Obviously, the return of your whole life premiums will put a big dent in things in those debts!!

Hopefully we'll have at least $3000 to put towards the debt. Meaning that CC#3 will be almost paid off!