New to budgeting and managing finances.... Advice?

[jonathon087]

Just to make things quick and not run this on longer than necessary; I'm currently twenty-five and have a wife that's twenty-two. We don't have children and my wife is a full-time college student who won't be working this last year while she finishes her degree (education). I'm prior military and currently in between jobs, which I'll hopefully be getting one with General Dynamics here in a few weeks.

Last year we made roughly 25k together, so we didn't make very much. What I'm trying to do now is get a better grip on our finances so we're prepared for what comes next in life. I.E., house, children, emergency funds... the whole nine yards.

I have okay credit that's slowly getting better and my wife has good credit with little history.

We currently owe 7300 on an '09 Escape and have paid off my previous vehicle which we plan on selling eventually. If and when I get this job I will be moving to Virginia by myself while my wife stays in our current city to finish school. I'll be handling all the finances with what I make at my job. So with that said...

1. I would pay 600 for the place I would move into in Virginia and 580 for the place we live now. They're both rental properties.

2. We pay roughly 110 dollars for electric, 80 for gas, 60 for water, 165 for AT&T phone service and 20 for AT&T DSL.

3. We still owe 7500 on the vehicle which comes to around 335 a month, but we had been paying the loan off in lump sums with our tuition we received.

4. We pay 116 a month for auto insurance on the two vehicles, full coverage for the Escape and just the bare minimum for the Altima. We also pay for the insurance in bulk every six months with our refund checks. We just started the new premium, so the rest will be paid with the refund check if we have enough

5. Rent for the house is also taken care of with the refund check.

I have a little under 20k in student loans that will eventually come into effect and I'll have to start paying them, roughly five months from now. My wife has around 40k in student loans and doesn't have to pay them yet.

I make roughly 650 every two weeks with my current hourly job, but will be making 20-25 an hour at the job I'm being offered now.

My wife makes roughly 550 every two weeks, but like I said - she'll stop working near the beginning of September.

We have no savings and no emergency funds. My two credit cards that went to collections have been paid off about two years ago.

What I'm trying to get at is that I'm very new with managing our finances and we've generally lived paycheck to paycheck. I've known all along that there's no reason we wouldn't be able to save money, but we would always buy clothes for my wife or video games or something for me. Now I'm trying to budget ourselves and we haven't been buying anything unnecessary as much anymore.

What would be a good starting point? What would be a good plan for me to follow? Like I said, I'm really new to this. And I'm also very sorry for the long post.

[bjl584]

You are paying rent and auto loans with refund checks from tuition? Can you elaborate on this? I don't quite understand what that means. I hope it's not what I think it is, i.e. unused studend loan money that was left over after the tuition was paid for. If that's the case, then you are using debt to pay off debt. If that is the case, stop immediately. If not, please explain what you mean.

[riverwed070707]

Ditto BJ. If I'm understanding correctly you're basically financing your auto insurance, rent, etc. You are setting yourself up for a really rough time once you are both out of school and having to repay those loans. Two incomes or not, $60k in student loans is a burden -- I'd seriously rethink further increasing that. There's no reason she can't work PT while getting her bachelors. At least enough to cover basic living expenses rather than borrowing them. I'd also reconsider moving for a job until she's out of school. Doesn't sound to me like the pay increase is going to cover managing two households, not to mention travel expenses for seeing each other on the weekends, etc. Stay put. Pick up a second job. Live within your means.

[jpg7n16]

What would be a good starting point? What would be a good plan for me to follow? Like I said, I'm really new to this. And I'm also very sorry for the long post.

A good starting point is to start tracking all your expenses. Whether you use pen and paper, MS Excel, or a budget software like YouNeedABudget or www.mint.com -- the method doesn't matter as much as that you do it.


Right now you're in between a lot of things, you're in between jobs, she's in between school and work. You don't have a consistent income, or a high income.

So the best step you guys can take would be to build the habit/discipline of tracking where your money is going. That habit will serve you very well when things become more consistent.

[MonkeyMama]

A good starting point is to start tracking all your expenses. Whether you use pen and paper, MS Excel, or a budget software like YouNeedABudget or www.mint.com -- the method doesn't matter as much as that you do it.


Right now you're in between a lot of things, you're in between jobs, she's in between school and work. You don't have a consistent income, or a high income.

So the best step you guys can take would be to build the habit/discipline of tracking where your money is going. That habit will serve you very well when things become more consistent.

Agreed.

At your age, my #1 goal was to "stay out of debt." I know it's too late for that, but the best thing you can do while so young and in school, etc., is to accumulate as little debt as possible. I think anything beyond that is a low priority until you can land a better paying job. For reference, I think making 20-25 per hour is GREAT! If you get that job I would focus on building up emergency funds and paying off debt. Consider putting away 10% to retirement (make this a priority now and for the rest of your life. OF course you will add more to this with time, but 10% at age 25 is a GREAT start as long as you consistently stick with it).

Unless the interest on the car loan is high, I am not sure how much of a priorty I would make paying off the car loan. Keeping the cars as long as possible will free up cash flow for debt payoff and savings. Don't get into the trap of buying up every few years.

I also wonder why wife will not be working? But fair enough if this will help her to finish school and find a higher paying job in the long run. The is tempered with the fact I sure would be hustling and working as much as possible, regardless (even if it is very part-time or just in summer). Just something else to keep in mind - maybe what she has been doing as you say she is working now and it is summer.

[jonathon087]

Yeah, you're right about the refund check. You have no idea how many times I've attempted to place the refund in savings or just put it back in my loan, but my wife and her mother both have it in their heads that we wouldn't manage life without the help of our financial aid. And I am going to go ahead and accept this job, it's just too good not to do so. I'm currently trying to persuade my wife to stay with friends this last year, as they have already offered to let her live there. We would still be able to manage the bills and everything else if she didn't stay there, but I'd really like her to move in with them.

To be honest, and it's not just her that is at fault, we always used the money we left over month to month on things that weren't necessary. I just got into reading about money management and have come to realize we've dug ourselves too deep to turn it around right away.

My wife doesn't think she can manage her school work and a part time job these next two semesters because it'll be too much. She will have roughly ninety hours of student teaching along with her fifteen credit hours.

She also has been complaining about having a wedding ceremony next summer and taking out a loan for it. I told her that I don't want another loan for something as trivial as that. By the way, we had a small gathering of some family and had a pastor marry us in a rented building - her mother paid for it. I've told her that we will eventually have it, but moreso as a renewing of the vows. I refuse to take a loan out for this, but she seems to think it'll happen regardless because 'people just don't have that kind of money lying around.'

I've tried discussing finances with her and showing her what we have been doing wrong, but she seems to think that we don't waste our money and that budgeting would be a waste when we're still college students.

I've been working with mint.com and yodlee.com and trying the free trial of YNAB. I'm pretty much trying to see what the best approach would be. I've also tried excel, but that seems like an unclimbable hill because we never keep track of our financances except to look at our online banking to make sure we have money in the account.

[riverwed070707]

Yeah, you're right about the refund check. You have no idea how many times I've attempted to place the refund in savings or just put it back in my loan, but my wife and her mother both have it in their heads that we wouldn't manage life without the help of our financial aid. And I am going to go ahead and accept this job, it's just too good not to do so. I'm currently trying to persuade my wife to stay with friends this last year, as they have already offered to let her live there. We would still be able to manage the bills and everything else if she didn't stay there, but I'd really like her to move in with them.

To be honest, and it's not just her that is at fault, we always used the money we left over month to month on things that weren't necessary. I just got into reading about money management and have come to realize we've dug ourselves too deep to turn it around right away.

My wife doesn't think she can manage her school work and a part time job these next two semesters because it'll be too much. She will have roughly ninety hours of student teaching along with her fifteen credit hours.

She also has been complaining about having a wedding ceremony next summer and taking out a loan for it. I told her that I don't want another loan for something as trivial as that. By the way, we had a small gathering of some family and had a pastor marry us in a rented building - her mother paid for it. I've told her that we will eventually have it, but moreso as a renewing of the vows. I refuse to take a loan out for this, but she seems to think it'll happen regardless because 'people just don't have that kind of money lying around.'

I've tried discussing finances with her and showing her what we have been doing wrong, but she seems to think that we don't waste our money and that budgeting would be a waste when we're still college students.

I've been working with mint.com and yodlee.com and trying the free trial of YNAB. I'm pretty much trying to see what the best approach would be. I've also tried excel, but that seems like an unclimbable hill because we never keep track of our financances except to look at our online banking to make sure we have money in the account.

Well at this point your problems are bigger than money. You need to be on the same page. At the same time, from some of the things you're saying I don't see her as the only one who needs to change their mindset -- being in a lot of debt doesn't mean its too late to turn things around, it means the sooner you take control of your finances and stop overspending the sooner you'll have the problem fixed.

If that doesn't get through to her, have you tried looking at what your payments are going to look like when you begin paying on both of your loans?? With your current $60k, I'd be willing to bet your payments are a touch over $700/month. If you tack on another $10k from her last year I'd guess closer to $850. That's double my *house* payment. In student loans. Further, as a teacher in a clenched economy her earning potential is pretty low. How does she expect to repay them? Does she think she's going to make $70k as a teacher or is she just hoping you're going to make enough to repay both of your debt?

This kind of mindset infuriates me because the people who rack up this kind of debt are the same ones preaching about how they can't make ends meet because college cost too much. Being a college student doesn't exempt you from being responsible. Yes college should be an option for everyone who wants to attend, yes we need to have options to help fund it but that doesn't mean its smart to take out the max allowable and hope everything works itself out. You can't change the past but you can decide not to make another mistake going forward. You two need a new plan asap.

[MonkeyMama]

I refuse to take a loan out for this, but she seems to think it'll happen regardless because 'people just don't have that kind of money lying around.'

Yes, most people choose a wedding far beyond their means and are indebted for that *one night of fun* for many years or decades. She'd be wise to wake up and start thinking about how to live within her means. Today it's an extravagant wedding (because let's face it - whatever she is thinking of beyond the first ceremony you had is an extravagance. Maybe by not today's societal standard, but by any measure of common sense). Tomorrow it will be newer cars and a bigger home to live in. & on and on and on...

But she's right - people don't have that kind of money!

[riverwed070707]

Yes, most people choose a wedding far beyond their means and are indebted for that *one night of fun* for many years or decades. She'd be wise to wake up and start thinking about how to live within her means. Today it's an extravagant wedding (because let's face it - whatever she is thinking of beyond the first ceremony you had is an extravagance. Maybe by not today's societal standard, but by any measure of common sense). Tomorrow it will be newer cars and a bigger home to live in. & on and on and on...

But she's right - people don't have that kind of money!

Or at least people with $60k in student loans don't have that kind of money. Plenty of people save up to pay for their wedding outright, but not those who choose to see debt as "something everyone has" rather than a burden that should be used sparingly and wisely.

[jonathon087]

Yeah, that's pretty much our predicament now. My wife gets frustrated because I've been on this money management hike for the past month and she doesn't like having our finances restricted in such a way. She wants to take out approximately ten thousand to cover for the wedding... and then to fly to Hawaii. She thinks extravagent, that's no lie and I can't fault her for that. I'm realizing now that we've done a lot of fincially immature acts that will scare us in the long run.

Just from what I've said and from what everybody here has said and come to the conclusion on, what would be some wise moves to make?

[disneysteve]

She wants to take out approximately ten thousand to cover for the wedding... and then to fly to Hawaii. She thinks extravagent, that's no lie and I can't fault her for that.

You guys are buried in debt and she wants to borrow another 10K for a party and a vacation. You say you can't fault her for that. Why not? She's living in a fantasy that bears no relationship at all to your reality.

I'd suggest finding out where the two of you together can attend Dave Ramsey's Financial Peace University course. You've got to do it together, though. It can't be just you dictating how things are going to be. She needs to be an equal partner in the process.

[LivingAlmostLarge]

What is the minimum amount of money you need? I would show her the real budget of $20/hr. What it means you can really spend living together. $10k for a wedding is out of your reach with $60k in debt.

Reality is $60k in student loans is a lot. Show her on paper the reality. I think we spent $10k on our wedding for everything in hawaii. But I'm from hawaii and we didn't have any debt to afford $10k. Plus we did make a good salary of 6 figures at the time.

[jonathon087]

I meant I can't fault her for it as in we rushed into marriage and had a small ceremony that didn't fit the bill for her dream wedding. Everybody wants something like that in their life and I took it from her. We have discussed renewing our vows sometime in the future, but I'm under the impression that right now isn't that time. And it's hard to get her to discuss finances with me because she thinks we only make enough to pay for what's due now and that we can only live paycheck to paycheck. I've shown her where we can save and how we can save, but she's just being stubborn. I really want to get us on the right track for a happy future when we get older and start a family and even further into the future when we finally retire.

[Aatami Sotkea]

I meant I can't fault her for it as in we rushed into marriage and had a small ceremony that didn't fit the bill for her dream wedding. Everybody wants something like that in their life and I took it from her.

You "took" nothing from her so stop apologizing for it.
You both entered into it as willing adults.
You're already married- you certainly don't need to do it again just as an excuse for a vacation and a party.

The way you get out of the hole is to speak to each other frankly about your goals and decide together on how best to accomplish them. You and your wife are a team who each support each others roles and you simply must be on the same page.

And one thing you don't do is borrow money for frivolous wants when you are facing a year of maintaining two households.

Using misappropriated loan money for basic expenses like rent, insurance, etc. has left you sorely lacking any understanding of how much it actually takes for you to live.
Go back as far as you can and account for every penny you have spent- you must have a clear picture of how much it takes for you to live.
If your expenses exceed your income- your true income, not the money you sideswiped as part of a student loan- then the only remedy there is is to decrease your spending.
Money out cannot exceed money in- and that's that.

You've got some cipherin' to do.

[sblatner]

Maybe you need to start small. Put $25 per month in a savings account and don't touch it.

Put everything down on paper and lay it out for her. Not sure how you are going to manage to pay your student loans when payment is required in five months.

Watch Suze Orman on Saturday nights or download for free on iTunes. I know people don't agree with everything she says but if you and your wife watch her, you will see other people in better shape than you and Suze tells them they can't afford things they want to buy. There is no way she would approve a $10k wedding and Hawaii for you.

You need to keep track of everything you spend. You need to see where the money is going.

I'm a woman and I just don't understand how women can be in denial about their finances.