Ok here we go!

[amberbamber]

My husband was laid off two weeks ago. Fortunately he is able to work until the end of the year and then he will get 11 days of paid vacation.

Here are our bills and what we owe roughly:

Truck 570.00 - owe 6400 (payment not due until 5/09)
Van 475.00 - owe 22000
Student Loan- 200 - owe 19000
CC #1 38 - owe 1500 0% interest
CC#2 17 - owe 1100 0% interest
Rent 800/mth


We have other monthly bills like power/car insurance/life insurance/gas that will not change each month.


We will recieve about $5000 from our tax return- we intend to pay that towards the truck loan.

We just received $1000 from my husband's grandmother's estate settlement. Where would you put that?

Question #2- the extra money that my husband will get from his "paid vacation" settlement will be about $2000- where would you apply that?

Basically I am struggling with the decision of putting this money into savings and holding on to it so we can pay bills each month or applying it to bigger bills as to pay those off sooner, hence getting out of debt quicker and not having to worry about paying the minimum payments on those.

My husband's new job is 2/3 of his last job. He will roughly be bringing home $400 after taxes each week. That won't even pay our rent/car payments/power.

I am searching for an evening job that I can do so we don't have to put our kids into daycare.

Any advice, thoughts, etc?
Thanks!

[kork13]

A layoff is a pretty major event, and you really need to take a hard look at your entire financial situation, trimming it where you can to free up more money each month. Can you post the whole picture, with all income, assets, expenses, and debts (w/ payments)? That would help everyone give more specific advice.

Without that information, I'll say this... depending on what you have in savings (?), you may likely need to keep all of that extra money around to give you some liquidity. Yea, it's great to pay down your debts quickly, but you should only be doing that when you're in a secure financial place... if you won't be making enough each month to just cover your expenses (rent, power, food, etc.), then you can't be throwing extra money to your debts--you need to hold onto it so you don't get yourself into even more debt.

Is your husband's new job a permanent one, or just something to hold you over until he can find a better one? In short, you both do need to get a job(s) that can replace his previous income. Is there family, friends, or neighbors that could help you with your children in the short term?

Some more info can help us give you specific advice for cutting corners and what to do with the money you have/will have...

[minnie1928]

If I were in your shoes, I would put the cash in a high yield savings (think HSBC, ING) to help cover your cash flow needs until things settle down. Once things have calmed down, you can always pay down the debts then.

You mention that your credit cards are at 0%...for how long? That would also play into how fast you should pay things off.

I agree with kork13, if you can give us some more information to work with then we can probably offer up more ideas.

[Ima saver]

I too, would put all cash in the highest yielding savings account.

[disneysteve]

Kind of a tough call without more info.

You've got $8,000 coming in within the next few months. Paying off the truck would instantly lower your monthly expenses by $570 which is certainly significant and could possibly be the way to go.

Something else to look at is the costly van. How much could you get for it if you sold it today? It could make sense to sell it, even at a loss, and use some of that $8,000 to make up the difference. Then go out an buy a much more affordable vehicle, like maybe $10,000-$12,000 range. That would reduce your debt load by $10,000 or so.

What we really need to know is the big picture, though. Do you have an adequate emergency fund to cover your expenses for at least 6 months of underemployment? How are your husband's job prospects? Do you think it will take long for him to find a good-paying job?

Give us all the numbers and let's see what we come up with.

[maat55]

You need to put your SL on deferment.
I would sell the van.
I would not payoff the truck until you both are earning something.
You should cut your budget to the bone.(stop cells cable etc.)
Use the extra funds sparingly as emergency money.

Once your income stables, you can start aggressively paying off debt. Have a garage sell, maybe your husband can deliver pizzia in the evenings aside a day job.

As for next year, you need to change your withholdings to be close to breakeven, this will give you more funds to pay debt as you go.

[Goldy1]

If he is bringing home $400 a week that isn't much more than an unemployment check.
22K for a van? It just sounds expensive to keep.

[amberbamber]

Ok bare with me, I'm going to try and answer everyone's questions.
We have cut every expense that we can. We canceled our Netflix, took our daughter out of preschool, lowered our internet. We do not have any unnecessary items in our budget.
We have $5000 in savings right now.
His new job is just an in between right now. So we can have insurance and at least some income coming in. Yes, unemployment would pay more than he is making at his new job, but we'd be paying more to have insurance (cobra) for our kids.
We have no family around that can watch the children. We have some friends, but they are not capable of watching them only in very dire emergencies.

[amberbamber]

Our CC's are at 0% interest until 10/09.
The van is a moot point. It's not something we can trade-in. We're upside down on it. It's at a very low interest rate of 5%. We've got roughly 3 years left on paying it. It's a Honda and we will drive it into the ground.

We are in a two year contract with our cell phone- with at least 13 months left on that contract. Meaning we'd be charged a end the contract fee of $350. Yes, I've looked at the contract!

We've applied to put the student loan into deferement. Hopefully we'll be given that.

We rent from his parents- they have already told us that we don't have to pay the full $800 a month if we can't afford it.

My husband does handyman side jobs. Lots of them. Probably bringing in an extra $500-1500 each month.

We will be changing our withholdings so that we see more each paycheck.

Income will be: 400 x 4 + average 750=2250
Emergency savings=$5000

There are no other debts other than the ones listed above
Power runs about $350 through the winter and $250 all others
Insurance is 39.95+24.05
Car insurance 115.00
No other bills at all
Groceries run about $400/mth
Gas runs about $350/mth

[maat55]

At the beginning of this year I owed 3k on my truck and had no EF. My business suffered last time we had a recession, so I cut everything to build an EF then get out of debt I had.

Fortunatly, the year has not been that bad, at least not until I had paid off the debt and saved a 6 month EF. Since I was not sure what my income would be in the near future, I prioitized my EF to 3 months then paid the last of my debt. After that I finished the EF and am living still on a sort of tight budget, until this recession ends.

All you can do is guard against the worst and prioritize your necessities. Doing this might take the sting out of the income loss. Do what you can to earn money and spend the least you can. Good luck.

[amberbamber]

My husband's job prospects are ok. He's in construction management and he was building homes. He's been there for 8 1/2 years. He's applied for tons of jobs so things are looking up.

I on the other hand, have been a SAHM for 6 years now. I am hoping to get a 2nd shift job in a lab doing data entry work. But most companies aren't hiring until after the first of the year. That is what we are running into. If we can hold off until then, I think we'll be ok. And we are both willing and able to work our rear ends off to get us where we need to be.

Honestly I feel like if we can take out that truck payment and the CC's then we'll be ok. Well, I'd really like the van payment gone also, but I'm being realistic.

[creditcardfree]

So, if I understand correctly your income is falling by about $800 a month. I would definitely wait to put any additional income towards debt until he starts the job and you know that it will work out. Maybe even wait until you hook up with a part time job. Once the job is going well, you will have $8K plus interest to work towards paying the truck and credit cards.

So, short term...save the cash that comes in the next 2-3 months. Payoff truck and then credit cards. Then focus on other debts as you can.

[cicy33]

If he is bringing home $400 a week that isn't much more than an unemployment check.
22K for a van? It just sounds expensive to keep.

Well, now I feel really poor. My paycheck, my NORMAL paycheck is only 430 a week after taxes. I thought I was doing well making 14.50 an hour but guess not.....

[minnie1928]

Well, now I feel really poor. My paycheck, my NORMAL paycheck is only 430 a week after taxes. I thought I was doing well making 14.50 an hour but guess not.....

I'll help you feel better...my mom makes less than you at a job that she's worked at over 15 years. And she has to pay for parking out of that!

Feel better now?

[kork13]

Well, now I feel really poor. My paycheck, my NORMAL paycheck is only 430 a week after taxes. I thought I was doing well making 14.50 an hour but guess not.....

I'll help you feel better...my mom makes less than you at a job that she's worked at over 15 years. And she has to pay for parking out of that!

Feel better now?

I think it simply goes to show that everyone has a different situation. Some people can get by on alot less than others. Alot of factors go into it--housing, family, habits, local cost-of-living, and so on. I've never believed that you can make a valid comparison between two people based on income....there's too many variables. Tell me I have to live on $400/wk, fine... easy. I'm on my own, and don't have many expenses. Tell my parents to do the same, it would be nearly impossible.