Barely hanging in there and strugling...

[Vodka]

Hello all, I am new

A little over two years ago, I bought my first home (condo). I was renting an apartment with two other people for about 6 years. Costs were dirt cheap split three ways, and thats how I saved for the down pay on my house. Many told me this was the best decision you could make.

At the time I was doing fine. I also purchased a newer vehicle as well.

Last year, my company stopped profit sharing which was about 200-400 a month. I would not have purchased a vehicle had I known it would stop.

My heat pump outside also died. So during the last winter, my heat was running on emergency coils downstairs, and cost me about 350 a month in electric bills. I got behind, and one month I had two electric bills for about 700 total.

I have been making less money in general this last year, as work is slowed. Random events such as a car accident (600 bucks) and things like replacement tires (350 bucks) misuse of a cell phone (lol 300 verizon bill how fun) and general struggles of life which I skated by using the credit card. Sigh

All kinds of bad things and each month it got worse and worse and worse.

I called the credit card; I had to arrange to close the card and make monthly payments on.

So now.

ATM now I bring home about 2100 a month after taxes.

839 Mortgage payment, includes taxes etc
275 Maintenance fee with association
281 Auto payment
150 Electric bill, on a forgiving month, all electric home
90 Cable, internet, so forth
85 Insurance payment
120 In food costs, give or take
100 in misc expenses
150 or so in credit card payments each month as arranged.

160 remains, which isnt much to do anything, and usually "disappears" on its own, to some random expense. Whether its vehicle registrations that needed renewed, a flat tire that needed replaced, and so forth. Life never lays off. I recently quit smoking, as it was 5.50 a pack and thats a huge monthly saving (but boy did that suck).

This is a tight budget to begin with. Plus work being slow all together, -everything- is late all the time for the last 6 months or so.

I thought to trade my vehicle in (281 a month) for a lesser expensive vehicle. Multiple problems with that

I paid 17.5K for it.
I put 5K down when I bought it.
I paid into it for one year.

Today, blue book trade in says its worth about 13K. I still owe 12K on the loan.

So even putting 5K down and paying into it for a year, I would get $1000 back.

Thats not enough to get a different vehicle with.
Cant get a "new auto loan" on a less expensive vehicle, because of credit score.
Can't flat out "sell" the car because I have to drive to work.

I looked into a REFI on the house; new loan with better interest rate, cash back to take care of the credit cards, etc. Was turned down because of credit score (610) which is because everything is always late. Cant help it =(

Im in a real jam. I need to free up about $200 a month to pay for the heat pump / AC replacement. Otherwise, the electric bill this winter will put me under worse than last year.

I dont know if I could live without cable/net/phone and it wouldn't help much anyway

Im not very happy with any of this. To top it off, I dont have dental. I havn't for about 8 years. And if I dont get a couple teeth fixed soon, I stand to lose them. But I dont have a thousand bucks to throw at it. I dont have -any- money to throw at it. Any dentist I inquire about wants hundreds just to LOOK at you and requires a "consultation" involving xrays and time just to tell you how much it MIGHT cost to fix your teeth.

I really not liking the association fee every month either; but I AM getting all new siding on the condo as I type this.... and they do everything outside, landscaping, winter care etc. Considering the time spent, and that I dont have any of the tools to do that, or a lawnmower... can I really complain?

I dont wanna give up yet on the house. But I tell myself things like "Other people have it worse right now" and "at least your still employed in this economy" and "As long as I dont lose the house, it will be ok"

I've been looking into the idea of a roomate - having someone even helping with 300-400 a month would be a huge "raise" for me, but all I hear is horror stories and I dont even know where to get a roomate. It wouldnt be anyone I know. And I think our association has in their by-laws that your not allowed to 'officially' rent out the condo.

Argh!

edit - And as a side note, Im really ashamed of my situation too. =(

edit2 - I forgot to mention, when your late all the time, everyone charges 25-35$ fees for it; being hit with multiple fees is a monthly payment on its OWN to the tune of 35 to 120$, which is just horrible. This is the reason, I called the CC company and surrendered, and got on their debt payment plan

[minnie1928]

The simple answer is to cut your expenses and/or increase your income. So, let's look at what you got:
1. Cancel the cable, pare the phone bill down to the minimum (drop call waiting, caller id, etc.)...better yet, if you don't make many calls see if you can get a plan that charges per call. Keep your internet and use it for hulu and other free entertainment.
2. Can you do budget billing for the electric? Doesn't save you money per se, but it might help you manage your expenses better.
3. How about carpooling for work? Anyone that you could meet somewhere to split the costs of the commute?
4. The roommate option would be good...my SIL does it and it helps her tremendously.
5. Dental-have you looked into a dental clinic in the area? Or perhaps a dental school? One of my best friends volunteered on his days off to perform dental work at the local clinic.
6. Look into some online survey companies to make a few dollars here and there. I use SurveySavvy, others have good luck with Pinecone (they don't like me for some reason ). Mypoints.com is a pay for click sight that pays in gift cards. It's not a lot of money, but it's better than nothing.
7. Get a part time job. Babysit, deliver newspapers, shovel sidewalks, whatever! Are there elderly in your condo units? If so, maybe they need help with groceries, etc.

You're in the right place for some great advice, but I think you're going to have to get creative to get yourself out of this hole.

[maat55]

Your housing costs are more than 50% of your take home pay, it is way too high. You have to get a renter or sell. You are not leaving yourself any chance for growth. Advertise on craigslist for a renter, be choosey.

I personally, would sell the car and find a 1k car. I would save your current car payment for upkeep and to move up later.

You should get an additional part-time job as quickly as possible.

I would get rid of the cable and any cell phone until you get your income up.

Your auto insurance should drop some if you get a 1k beater with liability only.

[myc2004]

Vodka,

If you're thinking about renting out a room, your going to love me. I started to rent out my spare room in my townhouse five years ago and gained financial relief. In fact, I've made enough money to pay your car loan several times over.

I recently started to blog about renting out my spare rooms, the blog can be found at:
r-e-n-t-i-n-g-o-u-t-r-o-o-m-s dot com. If you have any questions please e-mail me there or send me a PM.

I was in your situation where my budget was tight and I didn't have any wiggle room. I can't imagine what my life would be like if I didn't have the financial freedom I gained from renting out my rooms.

[littleroc02us]

My question would be, "How is this house a blessing?" You make $2100 a month and your housing expenses are over $1100 a month. Just think how much of your income your putting into an asset that is eating you up. Imagine if you didn't have this house payment, you sold your car and bought a $3000 used car? You would have breathing room and less worries. Not having a house isn't a big deal. There's one on every block. Sacrifice now so that you can win later.

[Vodka]

Wow. Thank you all for the insites.

In regards to the house, I really do not want to return to the past - paying monthly for 7 years on an apartment with no investment on ownership. Yes, It is true I can always do a house "later". A 1 bedroom is 700ish in this area. 2/800ish and 3/900+. Even a single is only slightly less than a mortgage payment. The big difference was, I had roomates. That was far cheaper, it was a 3 way split (about 450-500 a month total, for everything even utils. So easy!)

If I fell out on the home, I would have to return to apartment life (which isnt much cheaper in perspective) Im 31 which isnt old, but its too old to ask mom and dad if you can live with them.

Now I live alone - is a lot harder to pay EVERYTHING by yourself than I first anticipated.

I think two avenues I should look into, given all the above information

Roomate. I can do this, deal with this. I have before for many years. A house is a lot of space for 1 person. Someone contributing 400.. even 300 a month is a huge income gain for me. Even if I wasn't in debt, I could save the money instead or put it toward principle. Living alone is just so nice though =( and no "people hassle". This would mean keeping cable though. Thats an okay trade off. It would mean I have to clean, organize, declutter, prepare for a house mate (and paint.) It also means, heat/ac needs fixed - NOW.

Auto. If I was to reduce 281 a month, to even 150 a month I could breath easier. Changing this though is really difficult with a poor credit score (at the moment anyway) more thoughts later maybe. Ill do some brainstorming. End of winter is a terrible time to try to sell a performance car. And if I flat out sold it, without working with a dealership, I would have a gap of "no vehicle" time ugh

Second job - Ugh. That thought is sad, being in aerospace / mech engineering / CAD and having to get a second job =( But with no more profit sharing, hours now skimpy due to lack of work, and no overtime possibilities anymore due to lack of work. We'll try the other two avanues first and formost though.

I often think... what happens if I lose my job... things are tough already. Your supposed to have 6 months of income in savings... thats like, impossible for me right now

[littleroc02us]

Originally Posted by Vodka

Wow. Thank you all for the insites.

In regards to the house, I really do not want to return to the past - paying monthly for 7 years on an apartment with no investment on ownership. Yes, It is true I can always do a house "later". A 1 bedroom is 700ish in this area. 2/800ish and 3/900+. Even a single is only slightly less than a mortgage payment. The big difference was, I had roomates. That was far cheaper, it was a 3 way split (about 450-500 a month total, for everything even utils. So easy!)

If you do the math on whether or not to sell the house, try it out. According to the numbers you gave us: Mortgage (Taxes, etc.) + Association fees=Total Housing cost. That amount comes to $1114.00 a month. Above you stated that a 2 bedroom apartment would cost around $800.00. Well that comes out to $314 savings a month. For a years time that comes to: $3768.00.

[skydivingchic]

You listed a 1 bedroom apartment rent at ~$700. That is a savings of over $400/month. You can't look at just the mortgage amount. The association fees are also a required part of your monthly budget. If you did not live in that condo, you would not have to pay that money each month. So, apartment rent is nowhere near what your current housing cost is.

When people apply for a mortgage, the lender will look at several ratios. The general rule is that housing costs (principal, interest, tax, insurance, HOA, etc) should be no more than ~33% of your income and total debt payments should be no more than ~40% of your income. Even those numbers are a bit high in my opinion. You would be unlikely to get approved for this loan today based on ratios alone, nevermind a damaged credit score.

Right now your housing costs are 53% of your take home pay and your total debt is a whooping 73.5% of your take home! That is quite simply unsustainable. If you were to get a 1 bedroom apartment for $700/month you would be at 33% housing and 53% total debt repayment. Get a 2 bedroom with a roommate and you have 19% housing and 40% total debt. Those are much more realistic, sustainable numbers.

You mentioned a roommate at $300-$400/month rent. At $400/month, you would be at 34% housing and 55% total debt. Still not great, but certainly better than where you are at. Why would you have to keep cable if you take on a renter? I haven't had cable in 14+ years and I am far from alone on this forum.

I understand that these are not fun options and you don't like to feel like you are going backwards. But you seriously need to take an objective look at your situation and figure out how to fix it. If you make good decisions now you can set yourself up for a much better, financially stable future. Keep going on your current path and things will only continue to get worse.

[jpg7n16]

Originally Posted by Vodka

I thought to trade my vehicle in (281 a month) for a lesser expensive vehicle. Multiple problems with that

I paid 17.5K for it.
I put 5K down when I bought it.
I paid into it for one year.

Today, blue book trade in says its worth about 13K. I still owe 12K on the loan.

So even putting 5K down and paying into it for a year, I would get $1000 back.

Thats not enough to get a different vehicle with.
Cant get a "new auto loan" on a less expensive vehicle, because of credit score.
Can't flat out "sell" the car because I have to drive to work.

So let me ask you a question, would you get your $5k back if you held onto the car for another year or two? Are you ever going to get your money back?? nope.

The money you invested in this car is gone, so however much you put into it, it doesn't matter anymore. This is why we suggest buying a used car - let someone else take this depreciation hit.

And $1000 may not be enough to get the car of your dreams, but it is enough to get a different vehicle, that you can use temporarily while you save up for a better one, to use while you save up for a better one, etc.

I looked into a REFI on the house; new loan with better interest rate, cash back to take care of the credit cards, etc. Was turned down because of credit score (610) which is because everything is always late. Cant help it =(

Don't bother with refi - sell the home, and rent.


You have tons of troubles caused by your cashflow situation. As pointed out above, your housing costs are too high as a percentage of your income. And then your car payment just makes it worse. If you sold the house and rented, you'd free up $300-400/month, and if you sold this car and bought a $1k beater, you'd free up another $280. (or a $3k car with a $2k loan would still free up $180-230ish)

Take BOTH of those steps and you can easily afford dental coverage, and will be able to save up quickly for a better car.


As far as what to do for the gap between sale of car and purchase of new one:
Borrow a friend's car for a day or two, take the bus that day, or use a sick day and go buy the different car. I'm sure you can think of another way to get to work if you absolutely HAD to.


These measures are temporary. Don't let your mind trick you into thinking they'll last forever. They won't.

[disneysteve]

Originally Posted by Vodka

blue book trade in says its worth about 13K. I still owe 12K on the loan.

Also, if you are looking at trade in value, that isn't what you want. You want private sale value. You are not going to let a dealer steal this from you so he can turn around and resell it at a profit. You are going to sell it yourself with an ad on Craigslist, your local paper, AutoTrader, etc. If a dealer will pay 13K, a private party may pay 14K or 15K. Do a search online to see what the same make and model is selling for in your area. If you could walk away with $2,000 above what you owe instead of $1,000, you'd be in a lot better shape to replace it.

[snshijuptr]

Sorry to disagree with others, but I don't think selling your house is an option right now. Here is my recommendation:

1. Cut cable! Learn to use hulu.com, netflix, etc. Pay for internet only. Debate cutting the phone and using Skype
2. Get a renter. Post on Craigslist and interview everyone who calls. Find someone who is livable and charge them 1st & last months rent immediately. Put the rent in a separate account.
3. You now have your extra $200 in your new account. Fix the energy sucker immediately. You now have a lower electricity bill. Send the difference to a separate account
4. Sell the car on craigslist. Put the money in the new account. Use all the money in this account to buy a another car (around $1500). Transfer your old car payment to the new account.
5. Discuss with roommate sharing food (your current bill seems high) or begin to cook a week at a time to reduce cost. Track spending and put any money under $120 into the new account.

By this point you are transferring around $750 (400 + 50 + 281 + 20) into a separate account every month. If you keep your miscellaneous expenses under control, then this should pay for your teeth in about 2 months. Six months from now, you can buy a better car with around $4000 (or wait a year and have more security).

Using this extra cash flow, you can actually turn things around in about a year. Hopefully in that time your company will be doing better, or you can find a better job. Even if not, you will be in a much better place financially and mentally.

[maat55]

Originally Posted by Vodka

Wow. Thank you all for the insites.

In regards to the house, I really do not want to return to the past - paying monthly for 7 years on an apartment with no investment on ownership. Yes, It is true I can always do a house "later". A 1 bedroom is 700ish in this area. 2/800ish and 3/900+. Even a single is only slightly less than a mortgage payment. The big difference was, I had roomates. That was far cheaper, it was a 3 way split (about 450-500 a month total, for everything even utils. So easy!)

If I fell out on the home, I would have to return to apartment life (which isnt much cheaper in perspective) Im 31 which isnt old, but its too old to ask mom and dad if you can live with them.

Now I live alone - is a lot harder to pay EVERYTHING by yourself than I first anticipated.

I think two avenues I should look into, given all the above information

Roomate. I can do this, deal with this. I have before for many years. A house is a lot of space for 1 person. Someone contributing 400.. even 300 a month is a huge income gain for me. Even if I wasn't in debt, I could save the money instead or put it toward principle. Living alone is just so nice though =( and no "people hassle". This would mean keeping cable though. Thats an okay trade off. It would mean I have to clean, organize, declutter, prepare for a house mate (and paint.) It also means, heat/ac needs fixed - NOW.

Auto. If I was to reduce 281 a month, to even 150 a month I could breath easier. Changing this though is really difficult with a poor credit score (at the moment anyway) more thoughts later maybe. Ill do some brainstorming. End of winter is a terrible time to try to sell a performance car. And if I flat out sold it, without working with a dealership, I would have a gap of "no vehicle" time ugh

Second job - Ugh. That thought is sad, being in aerospace / mech engineering / CAD and having to get a second job =( But with no more profit sharing, hours now skimpy due to lack of work, and no overtime possibilities anymore due to lack of work. We'll try the other two avanues first and formost though.

I often think... what happens if I lose my job... things are tough already. Your supposed to have 6 months of income in savings... thats like, impossible for me right now

Your Condo is neither an investment or a blessing, it is a place to live. It is robbing you of your peace and any real investment opportunities.

You are young, suck it up and get a side job, I did it for many years.

[jpg7n16]

Originally Posted by Vodka

In regards to the house, I really do not want to return to the past - paying monthly for 7 years on an apartment with no investment on ownership.

Oh by the way, you may want to reexamine this idea.

In the past - you had low expenses, were able to save money and didn't worry about not having enough from month to month.

Now, you are so stressed about your finances because you think it's a failure to rent. (which it's not) You barely make it month to month, and your money is all sucked out to pay for this house which you think is a mark of progress. (which it's not)


So you don't want to return to a past where money wasn't so tight, and you could afford to breathe??


Plus, I can virtually guarantee that if you compare the rent that you would pay to a landlord, and the interest you are paying to the bank, you are losing money by owning the home - "Interest paid" > "Rent you could have paid". And $0 of that interest goes toward your ownership of an asset (in this case real estate), so you're not even acheiving that goal either. So would you rather:

A) pay mortgage and have $1000 go to interest and $100 go towards real estate principal (if that much) - or
B) rent for $700 and have $400 to go towards other investments?

[graceful]

If you could find roommates to live with while you were renting, you can find a renter in your house.

While selling your house maybe have the best numbers on paper, it may not be the easiest option in this market. Getting a renter may be a LOT quicker and less stressful for you now. Although, I wouldn't totally give up that option if it is in your best interest. Maybe set a goal of getting the house ready for sale in about a year - decluttering and doing minor repairs so that the house shows better. Even if things turn around and you don't have to sell, you will live in a much better home and it will also attract better renters or more rent.

Be up front with your renter - that you "may" be looking to sell in the long-term but won't be doing so during the term of his/her lease (whatever you both decide on) but will instead be fixing it up to show better in the meantime. And if your living arrangements work out for the both of you, you are both happy being roommates, it can became a longer term arrangement and you may not need to sell at all.

In the short-term, I know you NEED your cable but it has got to go. Keep the internet and get TV programming through that. If need be, even streaming through Netflix for $9/month is cheaper. You can think about getting cable again AFTER you get a roommate/tenant and you have more financial breathing room. Every DOLLAR counts at this point. AND there may be special pricing offers to get you back to cable after you cancel it for a few months.

Good luck.

[snafu]

Check with the local International schools like GEOS, IPSA as their students are pre screened, and students are rotated all year. You will learn more from these internationals than you teach them, they are from wealthy families, polite and once established with a network of friends...are hardly every at home. They pay a higher rate than local renters

[ea1776]

congratulations on quitting smoking!

i would definitely cancel the cable and find other ways (internet, books, walk in the park, etc) to be entertained. Sounds tough, but it's quite easy to get used to.

if i were in your shoes, I'd look at making some serious (temporary) sacrifices. this will be painful and will likely require a huge change in your mindset.

also, is it possible for you to shop around for another job where you could possibly make more cash?

can you have a garage sale to raise cash?

[doxie]

Originally Posted by snshijuptr

5. Discuss with roommate sharing food (your current bill seems high) or begin to cook a week at a time to reduce cost. Track spending and put any money under $120 into the new account.

I'm just curious, what do you think is a reasonable amount to spend on food? $120 a month is only $27 a week. Doesn't seem to me like the place he needs to be cutting down.

[cypher1]

Adding a renter (+300 to 400) and selling the car (+281+lowering insurance) for a beater, plus lowering cable package, and cell is what I'd focus on first. You could potentially free up 800+ a month to tackle debt/repairs down the road. With this market, selling your place may cost even more for moving, let alone finding a buyer. So given your house costs is costing 50% of monthly net income, renter/car factors are your best bet, other than a part time job.
PS congrats on quiting smoking

[Hector]

I am sorry that you are going through this.
Finding a room-mate, getting basic cable, converting to lowest cell-phone plan, and looking for new and/or second job might be a good start.

Also, you are planning to pay 12k more towards car. Why not sell it and buy a used car worth 5k or so? It should cut your monthly payments to less than half. In addition to that you will have 1k as an your emergency fund.

Its good that you are a mechanical engineer, but nothing is wrong in getting a part-time job. I personally know people who have more than an engineering degree. For sure, they didn't feel small in doing labor gigs when needed.

[nick__45]

Keep your car and take care of it. I can't tell which gender you're but if you're a guy than learn how to take care of it yourself. You can do so if you're a girl but that is where making sure you date someone is isn't stupid come in. The book may say your car is worth 13k but the dealer will only give you 10 for it. Then he'll be glad to sell you a 5k car for 7k and arrange a low monthly payment for the next 5 years. Keep your car, treat it well and it will treat you well. Plus, you do deserve this nice car since you work hard. And keep it for the next 10 years minimum.

I would do something about that condo fee if I can. The people who rent with before, can you bring them in to share rent this place. I can see bringing one person and get 300 cash for it. Utility may go up for 50-75 bucks but we guys could do a half utility deal so everyone is conversing. I know it's hard to conserve because we're not taught to do so from the young age but it's your money, you can be dirt cheap with the lights and heat and everything you want. Find someone with Costco membership and get those efficiency bulbs and watch your utility bills goes down by 40 dollars each month.

If I may recommend, you need to eat more. Unless you're eating out a lot and only counting your grocery bill, you are barely putting nutrient in your body with 120 a month. We spend about 500 in food each month for 2 people. Food is the only thing we don't skimp on. No we're not fat slob or even big bone. We value eating healthy and eating right. We do shop at places like BJ and Costco as well as small markets.