Where Do I Even Start?

[KTP]

Originally Posted by EEinNJ

I agree with the other advice you've already got- though the family planning advice was rather presumptuous and doesn't help your immediate situation.

Presumptuous would be saying that couples should not have kids until they are financially stable, but I don't dare say that because it is not an opinion that society supports today.

But sure, it is not a helpful thing to say in this situation because they already have the kids and need help getting back on their feet. So I withdraw my earlier comment and will try and think of anything else they might do to help their situation. I still think some sort of additional deferment of the student loans would be a good thing to try.

[buildmybudget]

Wouldn't short selling hurt your credit, potentially hurting your ability to refinance other loans, etc? Is good credit important to you?

[LuxLiving]

Start tracking every penny in and out. Read "Your Money or Your Life" by Joe Dominquez, (out of date some) but still highly applicable to getting a grip on yourself.

[tripods68]

Short sale does hurt credit score and ability to buy another house for 3 years. The question is now, which is more important, the house or family? My think is not everyone should own a home just because.

Given their "debt" circumstances, it will take at least 5 years to pay CCs and student loans, at minimum or even longer. While renting lowers the total household expenses (no property tax, home repairs, cheaper energy/rent cost etc...) significantly, the second they have extra money (after establishing EF and retirement contributions) left over $$ should be focus retiring their debt completely while maintaining "sound" family budgeting. At that point, credit scores should improved.

[Joan.of.the.Arch]

I don' think you should short sale the house when you have enough money to pay all the bills.

TOTAL MONTLHY INCOME (TAKE-HOME) = $5,200
TOTAL MONTHLY EXPENSES (not incl. food, gas, etc.) = $4621.04
LEFT OVER AMOUNT EACH MONTH FOR food, house items, misc. = $578.96

You accounts for the bills, some of which are luxuries, and have ~$579 left for food and other necessaries. Cut out some unnecessaries and you will have more for the necessaries if you think that $579 is not enough. I think you even should be able to build up savings with that income if you are willing to sacrifice some luxuries. Your spending may have gotten a little bit ahead of what it should be, but it doesn't seem too serious. I think you can turn it around with some motivation. Maybe some of that motivating reading others have suggested.

In this and some of the duplicate threads you have some suggestions for cutting back that would help. I don't know if anyone has suggested that you could find new homes for the pets, but I know pets can be expensive. I think this might be an area for trimming.

What would you personally say would be the top four easiest items for you to reduce, and how much would that save per month?

[disneysteve]

Originally Posted by Joan.of.the.Arch

I don' think you should short sale the house when you have enough money to pay all the bills.

I agree. I'm not sure why the idea of a short sale entered into this thread. If OP has a surplus of income each month and a number of luxuries in the budget that can easily be eliminated to increase the surplus, why sell the house?

[snafu]

There is no 'instant' fix to reverse those old mistakes. DH needs any part time or flexible hours job he can find to bring in more income while his photography business income is insufficient to meet family needs. [Frankly, he needs to do a needs assessment to determine the viability of this business decision. Given the popularity and flexibility of digital cameras, many well established professional photographers are transferring their skill sets to other occupations].

Your FICO score was fried when TCA took over old debts and you must research your options. Have you tried to re-negotiate those high interest loans? Have you applied for a 2nd deferment of student loans? Have you looked at the new Bankruptcy laws? Have you read Amy Dacyczyn's Tightwad Gazette [available @ Library]

What actions are you willing to take to reduce operating expense to their lowest possible amount? What contracts will you cancel before Nov. 1st? or December? Will you let Christmas focus on goodwill and religious aspects rather than gifting?

[poohstixx]

I would like to thank everyone for taking the time to respond to my post and give me some much needed financial advice! Two things I was able to get out of this experience: 1- A huge amount of great suggestions and 2-Hope that we can get out of this hole we have dug. I appreciate all of the positive and helpful feedback. I posted on several sites to get the most information I could.

I thought that I would share our plan developed from all of the wonderful suggestions I received:

Storage:
- Move everything out of storage and into the house, asap.
- Begin selling all unused/unneeded items in the house.

Phone/TV/Internet:
- We need to continue our internet service as we need this for my husbands photography.
- We will be dropping our landline phone and Direct TV.

Mortgage and HEL:
- I have looked into refinancing with our current lender and have been told that there is not enough of a difference in current rates (home is at 5.25% and HEL is at 11.25%) for it to be beneficial. Note: our current HEL rate is 10.66%.
- We may still consider a short sale down the road, but only after we have made other adjustments...I think this can be avoided and we can hold out until the market improves.

Cars:
- We have inquired with our lender about refinancing, however the lowest rate they offer is 7.696%, so it is unlikely we will be successful with this.
- We will inquire about rates/refi options with other lenders.
- We plan to either trade them in for cars less than $2,500
or
- sell the cars and buy cars less than $2,500 (however, I am not sure if we can get an unsecured loan to cover the difference).

Insurance:
- We currently have our life, home and vehicle insurance through State Farm.
- We plan to talk with them to inquire about a lower rate for our vehicles.
- We also plan to call around to other insurance companies to check rates.
- We will also add a gap policy on the home and vehicles because we are upside down on those loans. I understand this is a small cost (only a few $'s per month).

Student Loans:
- We will request another deferral.

Tax Withholding:
- We have adjusted this in the past and currently get a small amount back and I don't feel comfortable cutting this anymore to avoid the possibility of having to pay in.

Groceries:
- We plan to utilize Angel Ministries (there is a location nearby) where we can purchase groceries for $30/week.
- I also plan to utilize coupons more and shop for cleaning supplies, etc. at our local dollar store. It is an extra trip, but will save money.

Day Care:
In our area having two children in day care would cost WELL over $200 a week. We live in a smaller town in Wisconsin, I'm sure day care costs are much more in other areas and I'm surprised at the criticism I've received about the costs we pay for day care. I would challenge anyone to beat it. We are paying my mom $150 per week (or $30 a day) for one full-time and one part-time child. We are already saving a large amount of money on our day care. I can talk with her about lowering this, however we recently lowered what we paid her by $100 a month (we were paying her $35 a day, but since my son is in kindergarten, we reduced this) and she partially relies on this income as she retired early to do us a favor and watch our kids. There are many benefits to her watching our children: she is their grandma, she takes care of light cooking, laundry, etc. while she is home, we don't have to take the kids out to a day care center, we don't have to miss work if the kids are sick, we don't have to stress or rush home if we're running late at work to avoid late fees, and the list goes on and on.

Second Jobs:
My husband receives regular business doing photography, mostly through friends and co-workers. This comes at little to no cost to us, except his time which is by no means a lot. I received some criticism about this, but so far there have been very few negatives and financial cost to us as his business is becoming well established and he has several repeat customers.

Pets:
We have two dogs (one is 12 yrs old) and one cat. Our pet expenses are food, litter and yearly exams (we rarely have to pay above standard yearly exam fees...our pets have been very healthy). Our children are very attached to our pets and we are not willing to find other homes for them.

Children:
To those criticizing the number of children we have: We have two kids we are very attached to and not willing to find other homes for. There is one on the way that we cannot do anything about now and are not willing to put up for adoption. I understand people have their opinions, but for future reference when responding to posts about families who are struggling, the feeback regarding our family was at times judgemental and not helpful to our situation at all. If it's any consolation, we do not plan to have any more children.

Overall, the feedback was very non-judgemental and helpful. I can't thank everyone enough for their advice!

[Joan.of.the.Arch]

I congratulate you on having worked out that super situation for childcare. It is far less than many people pay for two children, plus they get the devotion of someone who loves them. I can see tons of advantages to having them cared for at home like that, besides the financial advantage. I was a little surprised to see that some seemed to suggest that grandmother should be willing to work for less. If grandma were on this forum asking for financial advice, we might actually be telling her she has got to charge more, that $3.75 an hour is not a good enough wage. Things like TV and storage units should be ditched before short-changing grandma.

By the way, do you know how much you spend on gasoline? And is it possible to have only one family car?

[poohstixx]

Thanks for the support Joan! I meant to touch on the vehicle situation in my update and forgot:
My husband and I can usually coordinate our schedules and ride to work together most days. When we do we take our car (instead of the van) to save on fuel costs. However, we live in a village outside of the city we work in and cannot utilize bus, ride bikes, etc. otherwise we definately would!

[disneysteve]

Originally Posted by poohstixx

Mortgage and HEL:
- I have looked into refinancing with our current lender and have been told that there is not enough of a difference in current rates (home is at 5.25% and HEL is at 11.25%) for it to be beneficial. Note: our current HEL rate is 10.66%.

I can't believe you can't do better than almost 11% on your HEL, but I guess it depends on your credit score.

Day Care:
I'm surprised at the criticism I've received about the costs we pay for day care.

If the person providing your day care was professional hired help, that would be one thing, but I think the reason so many of us commented on this is because it is your mother you are paying. My mother took care of my daughter plenty when she was younger and would never even dream of accepting payment for caring for her own granddaughter. Maybe gas money or bridge tolls but nothing more than that (and I know my mother wouldn't even have accepted that).

The fact that she retired to provide your day care does change the story a bit since she is dependent on that income. That makes negotiating kind of awkward, but if she knows you guys are having financial issues, perhaps she'd be willing to accept a bit less. Even $50/month less would help out.

Congrats on taking on this situation so quickly. I think you'll be fine.

[poohstixx]

Please note...my mom retired EARLY to help us with childcare. She made a large sacrifice for us and we made an agreement on what she would be paid as she still needs some income. She LIVES with us 5-days a week...that's 5 days a week she could be living care free, but has taken on the responsibility of caring for my children because she loves us. I don't have to get up early to get my kids ready for day care, don't have to bundle them up to take them out in the middle of winter at 7am so I can drop them off to go to work, they don't have to stay with a "stranger" all day, they don't get exposed to hundreds of illnesses in a day care, I never have to take off work or leave early if a child is sick (although I do sometimes for personal reasons), she makes meals for us, she does some laundry, she takes my kids to playgroups, she gives them love and care that is absolutely priceless...I think it is reasonable to give her a measly $3.33 an hour (we leave by 7:30am and return by 5pm) to give my children care no one else could possibly provide while my husband and I work. She is extremely flexible and will accept less from time to time if we're in a bind, she will buy groceries and never expects a dime in return. So as you can see, I'm not paying her $30/day JUST for day care.

I really don't mind the suggestions to explore the possiblity of paying my mom more, what I do mind is the judgement attached to the fact that I am paying her at all. Taking care of a 6 and 3 year old boys 9 hours a day is a ton of work. I don't pay her because she makes me or asks me. I pay her because I told her I would, because she has already made many sacrifices for me.

[disneysteve]

poohstixx, I totally agree now that we know the situation. Your first post didn't mention that she left her job in order to provide your daycare. That's a totally different situation than what some of us probably envisioned (that's what happens when you assume). Basically, you hired a live-in nanny who just happened to be your mother in a situation that is beneficial to everyone involved: you and your spouse, the kids and your mother. Nothing wrong with that.

[KTP]

Does your mom have her own house? If she really is spending that much time with your kids and enjoys it then it could make financial sense for you to move in with her and increase her payment by some amount and set the rest aside for a future larger home when your kids are all old enough to be in school all day (and not need daycare).

In this case it could be reasonable to short sale your house if you can get out of it debt free. Then you could live with her, have her readily available to take care of the kids, and all of you would have more money.

[ceejay74]

Sounds like you have a really great plan and should be able to clear up enough room in your budget for accelerated debt repayment or savings. Congratulations for taking the useful stuff on board and not getting scared away by some of the judgmental stuff. It happens when you open up to strangers (has happened to me here), but if you can tune it out there's lots of useful info to be had. (And as DS said, most were not trying to be judgmental but just making assumptions based on the info at hand.)

Good luck to you! Oh, and might I put in a plug for starting a blog here? It's been instrumental in helping me pay down debt and get on track.

[lovcom]

So if a poster disagrees with your set up, they're being "judgemental"?

Look, you came here and asked for responses, and you need to expect that not all responses will agree with what you're doing. To complain about "judgemental" posters is most peculiar, to be sure. Did you really think we all would agree with the way you're handling your situation?

I think you need to grow a thicker skin, and try to see the point certain "judgemental" people are making, because there might be a point you might need to consider.

As to your mom, it seems like you're providing her food, shelter, and the company of her grandkids, so she should not be accepting any payment from you, or at least should stop accepting when she sees that you're in a bind. My 78 year old mother would never accept a dime from us if she was in the situation your dear mother is in.

Also, I would suggest that after the baby is born, to implement a good and dependable contraceptive program, as you can't afford another mouth to feed.

Does your mom have her own house? If so perhaps she can rent it out and get income that way, or sell it.

One more thing: How come your mom gets the boys ready for school in the morning? Aren't you still home at the time, and if so, you should be doing this. Weekends, does your mother get Saturday & Sunday off? I ask these because I'd hate to hear that the primary "mother" of your kids are her and not you.

Best of luck!

[graceful]

To the OP,

Kudos to your Mom in making the sacrifice in retiring early and losing her primary income in order to do her best to help YOU and your family. And kudos to you for not taking her and her sacrifice for granted.

I think that if she was ALREADY retired and was doing this as a "favor" then money would be "extra." But it sounds like she GAVE up income in order to do you this favor and needs the money to maintain her own household.

I actually have friends that do this. They pick up the wife's Mom from LI every week and she stays with them during the week in NJ to provide childcare for them. Grandma goes home every weekend because Grandpa is still there and so is the wife's younger siblings. She has her own household to take care of as well. I don't know what their financial set up is.

Sometimes, it is difficult to "merge" households. Totally different states and school districts, etc. But if the situation was soooooo severe, it certainly is the best option. But it doesn't look like it is necessary in this case... yet.

Best of luck in trimming all the fat in your budget, living within your means, and achieving financial freedom but above all wishing you continued health and a loving family.

[poohstixx]

Originally Posted by lovcom

So if a poster disagrees with your set up, they're being "judgemental"?

Look, you came here and asked for responses, and you need to expect that not all responses will agree with what you're doing. To complain about "judgemental" posters is most peculiar, to be sure. Did you really think we all would agree with the way you're handling your situation?

I think you need to grow a thicker skin, and try to see the point certain "judgemental" people are making, because there might be a point you might need to consider.

As to your mom, it seems like you're providing her food, shelter, and the company of her grandkids, so she should not be accepting any payment from you, or at least should stop accepting when she sees that you're in a bind. My 78 year old mother would never accept a dime from us if she was in the situation your dear mother is in.

Also, I would suggest that after the baby is born, to implement a good and dependable contraceptive program, as you can't afford another mouth to feed.

Does your mom have her own house? If so perhaps she can rent it out and get income that way, or sell it.

One more thing: How come your mom gets the boys ready for school in the morning? Aren't you still home at the time, and if so, you should be doing this. Weekends, does your mother get Saturday & Sunday off? I ask these because I'd hate to hear that the primary "mother" of your kids are her and not you.

Best of luck!

I came here for advice about personal finances, not people's personal opinions of my family. One of us must be in the wrong place. A totally uncalled for post.

[Snodog]

I have nothing to add more than what some of the others have said. Just wanted to wish you good luck! It can be tough out there for young folks but you will make it.

You will find that over the years if you do well at your jobs your salaries will increase and things will get easier.

[buildmybudget]

Pooh, honestly you need a budget that will:

1) show you where you are heading financially
2) how you can save and the impact each decision to cut costs will have on your budget and the speed with which you can pay off your debts
3) how to manage your cash flow so that you can juggle all of these expenses without overdrafting your account
4) help you build the discipline to stick to your budget

All of this advice is worthless if you fail to make necessary changes and if you can't find a system that works for you.