Need Help?

[meschar]

Hello!

I don't even know where to start. We are in our mid 30's, going through a chapter 13 right now, and don't have any assets. I stay home with the kids and my husband works, he has 2 401k's. One from his previous employer and one from the current. We don't have much in the accounts 16k in the previous, the rate of return this year is 13%. The current employer 401k has a balance of almost 10k but the rate of return is at 3.38% and the company does not match anything. I'm thinking maybe there is something else we can do instead of this 401k? Should I contact a finance advisor? I am at a lost and have no idea what to do. We are hoping to buy a house again in the next couple years.

Thoughts, advice? Is this the correct forum to post this?

Thanks!

[disneysteve]

Welcome. Back up a little and give us some additional info.

How much do you earn?
Are there any debts not discharged by the bankruptcy that you still need to pay (like student loans)?
What are your monthly expenses?

If his current 401k has not been performing well, you need to reevaluate how that money is invested. If you can post what funds that money is in and what funds are available, we may be able to give some advice about that.

You say you have no assets at this point. Are you at least living on less than you earn so that there is money going to savings to build up an emergency fund?

[meschar]

Our monthly income is about 6500 net, bonuses every quarter ranges from 1200-4500 net
I have student loans but they are deferred now so we put that on the back burner for now. Our main goal right now is savings, house and start good investments. We don't want to be in this situation close to retirement.

We just came up with a budget (we are a family of 5)because our money disappears every month. We have no savings, so with the budget below we plan on putting $500 and any excess leftover in our savings account. We also plan on putting his bonuses away in savings minus our vacation.

Housing Rent $1,550.00
Gas $108.00
Electricity $169.00
Water/Sewer $70.00
Telephone/Cell $200.00

Food Groceries $600.00
Dining Out $150.00

Child Care Activities/Camps/Sports $300.00


Entertainment Cable TV/Internet/Phone/Tivo $120.00
Recreation/Entertainment $150.00
Sports-Gym Membership $96.00

Transportation Auto Payment(s) $398.00
Auto Insurance $125.00
Gas $230.00
Train $65.00

Clothing Family Clothes/Shoes $100.00

Medical Dr. $10.00
Prescriptions $25.00
Yoga $100.00

Other Personal Care $75.00


Savings / Debt Payments
Savings $500.00
Bankruptcy Pymt $858.00

$6500-6031= $439 left (hopefully can go into savings as well)


Here's his current 401k summary I copied. Hope it post good enough to read.

Large U.S. Equity Large U.S. Equity

Delaware Management Company
Delaware Select Growth A Fund (as of 11/23/2012) $1,164.58 12.67% 39.5100000 29.475554905 -0.79%
Edge Asset Management, Inc.
Equity Income Inst Fund (as of 11/23/2012) $1,743.85 18.98% 19.3000000 90.354883944 4.70%
T. Rowe Price/Brown Advisory
LargeCap Growth I Inst Fund (as of 11/23/2012) $1,732.44 18.86% 10.1500000 170.683210543 1.75%

Small/Mid U.S. Equity Small/Mid U.S. Equity

Janus
Perkins Mid Cap Value R Fund (as of 11/23/2012) $1,162.68 12.65% 21.6000000 53.827730076 -0.01%

International Equity International Equity

Invesco
Invesco International Growth Y Fund (as of 11/23/2012) $3,382.22 36.82% 28.3200000 119.428569752 6.23%

Total $9,185.77 100.00% 3.38%


Hope this explains things a bit better.

[BuckyBadger]

Hope this explains things a bit better.

That is a lot of information, but you're leaving out the most important answer -- at least to me. Looks like you gross WELL over $100,000 a year. Yet you have no assets and no savings and are going through chapter 13.

Before anyone make suggestions, I think it's important to know how you got into this situation in the first place. Investing is all well and good, but how do you know that you can follow any sort of budget or savings plan? What is going to keep you from getting right back into this situation? Why couldn't you save before, and what makes you think you're going to be able to save this time?

THAT is the most important thing. How are you going to avoid this situation again?

[meschar]

That is a lot of information, but you're leaving out the most important answer -- at least to me. Looks like you gross WELL over $100,000 a year. Yet you have no assets and no savings and are going through chapter 13.

Before anyone make suggestions, I think it's important to know how you got into this situation in the first place. Investing is all well and good, but how do you know that you can follow any sort of budget or savings plan? What is going to keep you from getting right back into this situation? Why couldn't you save before, and what makes you think you're going to be able to save this time?

THAT is the most important thing. How are you going to avoid this situation again?

Here's a quick version of how we got here. Bought a condo before we were married, racked up some debt from our wedding. Sold our condo paid our debt off and bought a house with zero down. We had a adjustable rate mortgage and our mortgage went up to 2900 a month (at this point in our lives my husband was making about 75 a year. When the interest rate went up, gas prices were up to about $4/gallon. He was commuting about 50 miles each way. We started falling behind on the bills. Having 2 babies at this time and the debt just started piling up. We put our house up for sale, no luck. Withdrew from the 401k to keep up with the mortgage, because they wouldn't help us adjust it. But we were still behind, so we short sold it. Then we moved into out rental and a few months later my husband got laid off. Now we feel like we've been through it all and we want to start the new year off right and get on track. We have know financial/investing knowledge. So I came here first for some advice.

Oh our bankruptcy story.... we consulted with a lawyer because we didn't know what else to do. She advised us to stop paying on our credit cards and we can turn over the house to the bank and file a chapter 7. In the mean time we got an offer on the house (very low)and the lawyer said it wouldn't affect us but it did and we had to end up filing chapter 13. So that's how we have the $900 payment.

Hope that clears up some things?

[Petunia 100]

Here's a quick version of how we got here. Bought a condo before we were married, racked up some debt from our wedding. Sold our condo paid our debt off and bought a house with zero down. We had a adjustable rate mortgage and our mortgage went up to 2900 a month (at this point in our lives my husband was making about 75 a year. When the interest rate went up, gas prices were up to about $4/gallon. He was commuting about 50 miles each way. We started falling behind on the bills. Having 2 babies at this time and the debt just started piling up. We put our house up for sale, no luck. Withdrew from the 401k to keep up with the mortgage, because they wouldn't help us adjust it. But we were still behind, so we short sold it. Then we moved into out rental and a few months later my husband got laid off. Now we feel like we've been through it all and we want to start the new year off right and get on track. We have know financial/investing knowledge. So I came here first for some advice.
Oh our bankruptcy story.... we consulted with a lawyer because we didn't know what else to do. She advised us to stop paying on our credit cards and we can turn over the house to the bank and file a chapter 7. In the mean time we got an offer on the house (very low)and the lawyer said it wouldn't affect us but it did and we had to end up filing chapter 13. So that's how we have the $900 payment.

Hope that clears up some things?

Meschar,

I'd start by tracking every dollar. The budget you have posted seems doable, so try following it. (If you are like me, it is so much easier to say than to do. ) If you find you are spending more than you thought in one area, then you have to decide how and where to cut back.


I see some items which I think could be reduced painlessly, such as that $200 per month phone bill. I see other items which could be reduced but may require some pain. Only you and your family can decide if those reductions are worthwhile.

Your asset allocation plan seems fine to me, though I personally would want to also hold bonds. Do you know how the old 401k is invested? You want to look at them as one big pot of retirement money, even though they are technically two different accounts.

I also suggest you start a "bill book". I keep mine in a composition book. I simply list my monthly obligations on each sheet, one month per page. I include bills as well as budgeted savings/investment deposits. I highlight off each one as I pay it. When bills arrive in the mail, I tuck them into my bill book until I am ready to pay them. This simple organizational tool helps me budget and plan. At a glance, I know what I have already paid and what I still need to pay. I can flip back through and quickly see what I paid last winter for heat, when I last paid my car tags, etc.

Remember: you can do this! Best of luck to you.