Saving is Impossible

[kacedog51]

I'm 20 years old and I make $22K a year. With a very low income and the amount of bills that I have it is very difficult to save any money let alone pay the bills that I have. I have been trying to figure something out that will let me put something away each month because I have no savings, and to top it all off I don't have health or dental insurance.

My payment break out goes something like this:

Bill type; Minimum Payment; Intrest; Balance

Credit Card 1: $10 25.15%; $140.98

Credit Card 2: $10 25.15%; $448.52

Cell Phone: $50/mo

Student Loan: $200 (not sure what intrest is) balance is about $5,600

Car Insurance: $105/mo

Rent: $305/mo
Utilities: $25-$50/mo


As you can see I don't have a lot of room for spare cash, and this doesn't include gas, groceries or things of that sort. I would like to get my 2 credit cards paid off as quickly as possible as they are at a rediculously high interest rate. Then I would like to pay off my student loan, which would give me a decent amount to put away each month. As it stands right now I have no emergency fund and absolutely no savings. My situation is really bad and I'm desperately looking to improve!

[tripods68]

I feel your pain. Been there than that. Have thought about getting a 2nd job until you pay down your debt? When I was your age, I had 3 jobs. Certainly, pay those CCs with high interest rate.

[kendo26]

Good idea to get those CC's paid off first! I'd also recommend a second job or ot on your current job.

[Seeker]

Another thing you might think about is helping your landlord do something for a little bit of credit against your rent. I don't know your situation... if there's a lawn that you might mow each week, or trees/leaves, or maybe even outside your residence and in other residential areas. Maybe wash cars, or offer to help older folks a trip to the groceries.

If I were you I might even approach family or close friends with a payment plan and ask for a loan at maybe a reasonable 10%. It's not a whole lot of money you have on those CCs; but it IS a ridiculous 25% and you absolutely must pay more than the minimum, or it's just money you're giving to them.

But yes, you need to get more income. Some how.

[TBH]

Are you in school? Seems like increasing your income would help, even if it's a longterm plan. Going to school might improve your chances of doing that.

Maybe you could start putting a very small amount, even $10 per month, in a savings account to start the very beginnings of an emergency fund.

See also Prosper.com if you want to get a lower-interest loan, but the minimum loan is $1000, so you'd be taking on more debt. Maybe you could use the extra $400 to start an emergency fund. I'm not so sure I'd recommend this approach because it would be increasing your debt, but it is one option for lowering your interest rates.

[jIM_Ohio]

Pay off the credit cards and you will have $580/month to save. Put the emphasis on the credit cards right now.

If you can lower the rates on the cards (25% is quite high), you will find that it is easier to pay them off.

[kacedog51]

I currently have a second job that I make more at then I make at my full time job, but the reason I don't work at my second job full time is because they screwed me for over a year. I was making $2 an hour less than I was supposed to be making for over a year, which totals a little over $4,000 that they currently owe me but are not paying me. The only reason I still work there is for the discount, I mean we are talking about Best Buy here, who doesn't love the discount at Best Buy.

Which also brings me to my next question. If a job position has a pay scale based on levels of certification, and I was making less that the pay level I was certified at, is that a grounds for a lawsuit? $4,000 isn't a small chunk of change for a person who makes as little as I do.

[kacedog51]

Also, I want to thank you for the advice, in my situation, any advice is good advice. I thought I could do it on my own, and I have tried for a while, but lack of experience makes it hard to discipline myself to spending habits. I do appreciate all the input and hopefully with these suggestions, I can start down the right path.

[Rick01]

Your CC balances are not that high, so as others have stated, I would try getting a loan from family to pay them off and stop the interest. Every bit counts and you might be able to reduce your car insurance payments by shopping around. I had student loans as well, and $200 a month seems high for that loan amount. There are programs available where you can consolidate the student loans into one smaller payment.

Do you have weekends free? There are a lot of odd jobs (lawncare starting in spring) you could do on the side. The Internet provides a wide range of income opportunities.

You're posting on this forum, so why not get paid to post on others. There are forum owners hiring posters every day over at Digital Point Forums. It's not big money, but it can add up. Just use your imagination.

[NDArmyGrrl]

Originally Posted by kacedog51

I'm 20 years old and I make $22K a year. With a very low income and the amount of bills that I have it is very difficult to save any money let alone pay the bills that I have. .

My payment break out goes something like this:
Bill type; Minimum Payment; Intrest; Balance
Credit Card 1: $10 25.15%; $140.98
Credit Card 2: $10 25.15%; $448.52
Cell Phone: $50/mo
Student Loan: $200 (not sure what intrest is) balance is about $5,600
Car Insurance: $105/mo
Rent: $305/mo
Utilities: $25-$50/mo

Bill total minium $705-$730 per month

22K a year is 1833.33 per month, now is this gross or take home?? Are you salery or does your paycheck vary each month?

if take home:
1833.33 minus 730 is 1103.33 per month left

You need to start recording ALL your expenses so you can see where you are spending money without realizing it. (Could it be the DISCOUNT at Best Buy?)

Also have you asked the student loan lender to defer your payment or asked for a forbearance or to reduce your payment now and have it increase gradually as your income increases.

What are you claiming on your taxes are you going to get a HUGE chunk that you can use to pay off the debts? If you are going to get a huge chunk you should adjust your withholding so you are paying less in taxes so you have more money in your pocket to pay your debts.

As for the pay difference, Can you prove you are being underpaid? Do you have some paper signed by your employer stating you were suppose to be paid X amount starting on such and such a date?

[Ima saver]

quit using your discount and quit buying for a while. Start small, even with just $5 a week, but you must save something and quit charging on those high interest cards.

[NDArmyGrrl]

Originally Posted by kacedog51

Which also brings me to my next question. If a job position has a pay scale based on levels of certification, and I was making less that the pay level I was certified at, is that a grounds for a lawsuit? $4,000 isn't a small chunk of change for a person who makes as little as I do.

The problem may be as simple as they do not have record of your certification.

DEVILS ADVOCATE...Does your employer make you provide proof of your certification and you took the classes but failed to bring in the paper work for a year....You may not be entitled to back pay only pay from the date you provided proof you were entitled to higher pay. Do they have some rule that levels of certifiaction can only be changed at your performance review?

$4,000 may not be a small chunk of change to you, but if you sue and they are not found in the wrong how much will it cost you in lawyers fees. Also if you get a lawyer to work for you with a they only get paid if you win agreement how much would you actually recover once the lawyer got his cut?

I would talk to the payroll depatment and ask what they need from you to fix the mistake, if you show you are willing to help the payroll department anyway you can, you may see results.

[kacedog51]

the 22k is gross, I take home about 1200/week. I am currently claiming 0 and I am anticipating on getting a decent amount back from taxes this year, as I did last year. I will use the tax returns this year to pay the CC off, and then roll those over to the loan.

As for the paper work to state what the pay levels are, I have been trying to get ahold of those for the last 6 months. HR will not respond to any of my questions because they know the situation and that it would be nothing but bad news for them. As for using the discount at best buy, I dont really buy that much stuff there. Maybe a DVD or two a month and not much else. As for about a year ago it was a different story, which is where most of my CC debt has come from.

[kacedog51]

I provided the Certifiate of Certification at the time I was employed, I also have double checked and they assured me that they have it on record.

[jIM_Ohio]

Originally Posted by kacedog51

My payment break out goes something like this:

Bill type; Minimum Payment; Intrest; Balance

Credit Card 1: $10 25.15%; $140.98

Credit Card 2: $10 25.15%; $448.52

Cell Phone: $50/mo

Student Loan: $200 (not sure what intrest is) balance is about $5,600

Car Insurance: $105/mo

Rent: $305/mo
Utilities: $25-$50/mo

A few others have broken this down already. The payments (bills) add up to $1300/month.

**edit- you posted above you take home $1200/month. The budget does not balance, you need to fix this immediately**.

You gross $1833 per month with a tax refund.

First thing I would do is adjust withholdings so you get a smaller refund and more take home money.

Second, this is IMPORTANT- pay off the credit cards and stop spending money on them.

Third, set aside something each month. I suggest 10% of your gross pay. $183 per month. Have this set up to come out of your checking account each month. Move it to a savings account, or invest it in a mutual fund. Continue doing this for the next 20 or 30 years.

At 22k gross pay per year, you have a huge edge with saving for retirement- social security will probably replace 80-100% of your income. Whatever you save in addition to this can be party money.

If you put the $183/month ($2196) into a traditional IRA, you can get a tax credit, I believe, for all $2196 back come tax time. Not just a tax deduction, but a tax credit. If you make more money, that credit won't exist, but not sure what the income cutoff is. Even then the $2196 is tax deductable. This will increase your tax refund.

Assuming you adhere to a budget (spend less than you earn), stay out of debt, and set something aside each month, accumumating money is not difficult.

22k is such a low income, that you should not have any tax liability based on the standard deduction (does anyone claim you as a dependant?).

The rent looks cheap- do you have a roomate?
I would not worry about paying off student loans before investing either (invest and continue to make minimum payments on the loans).

[NDArmyGrrl]

Originally Posted by kacedog51

I currently have a second job that I make more at then I make at my full time job, but the reason I don't work at my second job full time is because they screwed me for over a year. I was making $2 an hour less than I was supposed to be making for over a year, which totals a little over $4,000 that they currently owe me but are not paying me. The only reason I still work there is for the discount.

I hear that you have anger at your employer and that is keeping you from seeking full time employment from them. The only one hurting from the situation is you!! You are punishing yourself by not working full time and taking the benfits for what reason?

If you cant get past the hurt from the underpayment which since you have not proof of because you dont have the documents you may never be able to back up your case if you took it to court. Why dont you start FRESH and get hired somewhere else and work full time to get the medical and dental benefits of full time employment?

Your bills are not out of control, you make enough to pay them you just need to deside if holding onto the feeling of being wronged is worth not having Medical and Dental and whatever other benefits come from Full time employment.

Good Luck

[threebeansalad]

My income is similar to yours (actually, it's a little lower) and my expenses are somewhat similar although they fall in different categories. Check out my blog to see how I've found ways to generate more income this year.

I agree with the other posters who suggest there's a leak in your spending. Start tracking everything you spend and earn. You'll be surprised as to what you find.

Also, you need to get Medical Insurance ASAP. Even if the coverage isn't great, it will be a step in the right direction. The number one reason fro bankruptcy is medical problems. Even if you consider yourself young and healthy something as simple as a broken arm cut cost your $1000's. I am able to purchase medical insurance though my university. Other times I've purchased insurance from a professional society. Start talking to everyone you know in your community about insurance to see what options might exist fro you. I've heard some localities offer it though their Chamber of Commerce?!?

Finally, pay off the credit cards. Your balances aren't that high. Even if you can't commit to another PT job, surely there's some temp work you could squeak in for a few months to pay them off. Try a temp agencies or again, get the word out to friends and family that you have some bills to pay off and are happy to dog walk, leaf rake shovel, babysit, paint etc etc etc

GOOD LUCK and Good for you for being proactive about getting the situation under control.

[disneysteve]

Originally Posted by kacedog51

I'm 20 years old and I make $22K a year.

Cell Phone: $50/mo

The only reason I still work there is for the discount, I mean we are talking about Best Buy here, who doesn't love the discount at Best Buy.

I am currently claiming 0 and I am anticipating on getting a decent amount back from taxes this year, as I did last year. I will use the tax returns this year to pay the CC off, and then roll those over to the loan.

As for using the discount at best buy, I dont really buy that much stuff there. Maybe a DVD or two a month and not much else.

I agree with what has already been posted. Just wanted to put my 2-cents in.

$50/month for a phone is a lot. Contrary to popular belief, a cell phone is not a necessity. In most places, basic landline phone service would run less than $50/month so I'd look into that. There are numerous companies that give unlimited local and long distance for less than that. Another option could be a prepaid phone if you can limit your usage to the bare minimum.

You really need to change your witholding so you don't get that big refund. Why lend the IRS money for free while you are paying 25% on your CCs. Doesn't make any sense and is just costing you a ton of interest. Reduce your withold and use the extra money each check to get out of debt and then start building savings.

As for the Best Buy discount, there is NOTHING in that store that qualifies as a NEED. It is entirely WANTS. I earn 6 times more than you and I don't buy "a DVD or two a month." If there is a DVD you absolutely feel you must have, go to Amazon or Half.com and get it used for a fraction of what Best Buy charges (even with your discount). If that means waiting a month or two to get it, so be it.

[anonymous_saver]

Originally Posted by kacedog51

the 22k is gross, I take home about 1200/week. I am currently claiming 0 and I am anticipating on getting a decent amount back from taxes this year, as I did last year. I will use the tax returns this year to pay the CC off, and then roll those over to the loan.

As for the paper work to state what the pay levels are, I have been trying to get ahold of those for the last 6 months. HR will not respond to any of my questions because they know the situation and that it would be nothing but bad news for them. As for using the discount at best buy, I dont really buy that much stuff there. Maybe a DVD or two a month and not much else. As for about a year ago it was a different story, which is where most of my CC debt has come from.

First, don't claim 0 to get a refund. Getting a refund is not a good idea, that is money that you could have had throughout the year (and you may not have needed to use your credit cards in the first place). Change it to at least 1 allowance, using this calculator is quite helpful as well. IRS Withholding Calculator

Also call HR daily if that's what it takes, $4,000 is a huge deal! Make sure you have all of your paystubs and documentation ready to go, when you do get the attention you deserve. Also, call the Better Business Bureau US National BBB.org: Home and put a report in, and tell HR that you did so, that will likely get their attention.

Also, count all expenses that you have (gas, groceries, random spending, etc.). I know that one year I made $16,000 and was able to put $4,000 into an IRA and pay for a large vet bill of about $1,800. It can be done, you don't have much debt. Stop spending money on everything except bills, groceries, and necessities only for lets say 3 months, and I almost guarantee you that your credit cards will be paid off by then. Especially with the extra cash of your extra job.

By the way do you have a land line and a cell phone, if you do, get rid of one to save money. Also, find out the interest rate on your school loan as soon as possible. Could you sell your car and take public transit? I love taking the bus, it is so cheap! Plus, with a low income like yours, is it really worth it to work, just to have a car?

If at the very minimum you make $1,200 a month, your bills add up to an average of $717.50. That leaves you with $482.50. Lets say you spend $150/month on food, and another $30/month on necessities (shampoo, toilet paper, etc.). Let's also say you spend $120 on gas a month. That adds up to $300 more in expenses. You would be left with $182.50, which would pay off one of your credit cards in one month.

Once you pay off your credit card bill, save up an emergency fund of about $1,000. And then put extra money towards your student loan. Once you are at this place, I would start looking at other ways for you save (for a larger emergency fund, down payment, etc.).

Do you contribute up to the match in any employer retirement plans you have offered to you? This should be the first thing you do, even before paying this debt off.

You can do this! I would love to hear how it turns out for you. I know how hard it can be. To be honest, I still live as if I make $16,000 while I am saving for a downpayment and I am happy as can be!

Again, good luck.

[anonymous_saver]

Also, since your credit cards are at the same rate, pay off the smaller balance first, since that will have a nice psychological effeect.