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Originally posted by blair0708
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The car and trailer payments are what are crushing you. Not the mortgage. I'd sell the trailer. You can't afford it right now. The cars I'd get paid off and drive them for 10 more years. I agree that the lawncare needs to go. Unless you are allergic, you need to cut your own grass.Brian -
Your house payment is 41.5% of income. It shouldn't be more than 28%, so that's one big problem. Refinancing will help obviously if you lower your interest rate 3 points.
Your car payments are 15% of income. They should be more than 10%, so that's another problem.
Fortunately, one car will be paid off in 2 months and that ratio will drop to under 8% which is more reasonable.
The main issue is that you decided to drop one income without doing anything to change your expenses to match the lower income. Is there anything you can do to bring in money? Could you work part time or do something from home? Maybe you could babysit for another kid or two. How about any craft that you could make and sell? My 17-year-old daughter makes $100/month babysitting one night per week. If you could find one person interested in having you watch her child during the work day, you could make way more than that.
I agree with mowing your own lawn, too. You can buy a used mower on craigslist for $30 or $40 and you'll be all set.
How old is your child that needs the gym membership?Last edited by disneysteve; 08-12-2013, 06:45 AM.Steve
* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
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Well knowing where your money is going is the first step. I would encourage you to break out your everyday living expenses because $1000 isn't chump change and theres a good chance you could have some slack there.Originally posted by blair0708 View Post
The housing is definitely high for your income but again, I don't think upgrading is the answer.
If you weren't so close to paying off the cars and trailer I would definitely say to sell one or both... those are big payments and a big hunk of your budget HOWEVER given the end is so close, I would really encourage you to look for work, even PT nights or weekends if you can, so you can get out from under those payments. Pay off the Oct loans and then work to pay off the second car ASAP. I think that will give you a lot more breathing room and then you can start to think about and make steps toward what comes next re housing. You have a good income and you can work through this without any extremes.
You should cut the cable, cut the lawncare. With one parent home at least one of you should be able to find time to cut the grass. Can you scale back phone plans? When was the last time you shopped for auto insurance? Every little bit helps.
Don't think its worth selling when it will be paid off in 2 months unless you don't use it and its just taking up space. Do consider looking through your home and selling things you don't use though. Every little bit helps.Originally posted by bjl584 View PostComment
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Camping isn't cheap. First you have to tow the trailer someplace. That means that you will get about 8mpg while you tow it. Then there is renting a space to camp. Then there is food and supplies for the weekend. Selling the trailer would save a huge amount of money above and beyond the payment on it.Originally posted by riverwed070707 View PostBrianComment
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Hm guess I didn't pick up that it was necessarily a camper. Could be a number of things, even a flatbed trailer thats maybe used for income.Originally posted by bjl584 View PostComment
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OP
When you say housing expenses = $1800 a month is that the mortgage alone or is that the mortgage, taxes, and insurance?BrianComment
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Stick it out.
Where I live, most people bought *way* over their heads. So, if you were some insane impossible situation, I would absolutely advise you to walk away and start over. (Though I'd advise buying something similar or more modest, so that you don't find yourself in the same situation again. Buying up achieves nothing but more financial problems. What is more important, a bigger house OR staying home with your child??? IF its the bigger house, something has to give). BUT... Since your house payment is not like 100%+ of your income, not even 50%+, you are not in the impossible type situation I am thinking of.
I'd personally start babysitting, doing the lawn work yourself, and once the cars are paid off, put 100% of those payments towards getting into a better equity position. (Probably saving in cash, until you can refinance).Comment
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Thanks, all!! You have been so extremely helpful and I'm looking forward to sharing all of it with my husband. I'm much more hopeful that we can make things work while staying put in our house.
DisneySteve, I am currently looking to do some babysitting
I think that's a great idea.
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I wasn't sure what "trailer" meant. If it is a camper, then I might agree if owning it carries other expenses.Originally posted by bjl584 View Post
I also agree that you need a more detailed budget. Saying "Amt for Groceries, gas, everyday living 917" isn't good enough. It also means you are spending every penny that is coming in. I don't see any savings in your budget. Do you have an emergency fund? How much is going into your retirement plans?Steve
* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.Comment
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Also, you might want to consider the refinance. Even though you would have to put money down, you say you have the money to do it. Cutting your interest rate by 3% will save quite a bit over time. Down the road when you do decide to sell, you will have that much more equity.
How much is owed on the current mortgage? What interest rate has the lender quoted?
How much do you have in liquid savings? Is the 40k the entire amount?
Do you and your husband have any retirement savings? Is that being neglected?Comment
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You're correct. We aren't saving a penny. I guess I feel like we use all of that. Groceries are the biggest. I do make all of our dinners and I make things that are not costly, and yes meatless. I think the biggest expense is that I do buy lots of organic, especially fruit and vegetables, as I do not want my daughter exposed to the chemicals. I have considered growing our own, but I haven't followed through and it would only work in the summertime.Originally posted by disneysteve View Post
By trailer, it is not a camper. It is just used to tow occasionally, in the summer. My husband has an expensive hobby of racing shifter carts, basically supped up go-carts. He has cut back on the number of races he has gone to this summer, but I would feel guilty saying he can't do it at all anymore...Comment
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Hmmm. I don't recall seeing that listed on the budget. How much does this "expensive" hobby cost him even with him cutting back the number of races he attends?Originally posted by blair0708 View Post
What else isn't listed on your posted budget?
There is nothing wrong with having cable TV, belonging to a gym, buying a new car, or racing go-carts IF YOU CAN AFFORD IT. From what you've posted, you guys simply can't. You are living beyond your means spending a lot of money on wants and luxuries that you just can't afford right now.Steve
* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.Comment
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Please don't take this offensively.
I cannot believe you are thinking about a bigger, more expensive home when you cannot afford the home you are currently in.
It's great you will pay off trailer and car in October. I would try and sell some things to make those payments now and get it out of the budget.
I would also really break out every expense and not lump them altogether.
Your income is pretty low, your mortage is ridiculous and you aren't saving a thing. Now is NOT the time to buy more stuff, like a new home. When the car and trailer go away, consider saving some of that.
How old are you and how much do you have in retirement savings? I hope your husband is at least getting the match from his employer, if available.
Throw what you can at the mortgage to try and refinance. If the appraisal was unfairly low, consider a new appraisal and putting some cash down to refinance. I know it's a lot to spend, but it will save you so much in the long run.
Good luck to youComment
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Look a small ranch is very doable with 2 kids. It's 3 bd? Then you are set to go. Don't move up in house just because the interest rate is high. Refinance the house and make it affordable. Then you can use the freed up cash to pay off bills and save. A bigger house on the same income is a bad idea. It'll encourage more spending to keep up with people who are living in those bigger houses with money you don't have. FWIW I have 2 kids in a 3 bd townhouse. Ideal? No, but bearable. And I'm contemplating a 3rd in the townhouse. It just makes more financial sense.
How much do you spend on the go cart racing hobby? I hate to point this out but I doubt it's an affordable hobby if you aren't saving for retirement. It can come before college but not before car loans and retirements. You should earmark that money for other things. If you want a bigger house use that money to save for a bigger down payment.
Does the $900 cover everything else? Do you have life insurance? Gifts? Health care? Kids classes? Home repair fund or car repair fund?Comment
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Haven't seen someone do this yet, so here...Originally posted by blair0708 View Post
Cut the lawn care immediately. Cut the cable immediately. Cut the gym immediately (she can go outside in the real world...). This would give you $300 a month. Use $50 to get internet only. Use the other $250 for RothIRA for you.
In October, once paid off, you'll have an extra $737 - $50 (internet) = $687 per month.
Your new Budget for Nov.
Monthly Expenses
Housing $1,827.00
Electricity 135
Water 75
Internet 50
Phones 147
Car Insurance 142
Car Payment (thru May 2014) 344
RothIRA for SAHM: $250
RothIRA for Dad: $250
Car Gas for Dad: $150
Car Gas for SAHM: $150
Groceries for family: $400 (this DOES include household items)
Total Expenses 3920
Amt for hobbies, clothing, hair cuts, daughter fun, parents fun, extra savings: $480
Personally, I'd also back off to $400 for the "other stuff" and put that $80 towards the car, paying it down faster...
Once the car is paid off next May, that $344 (or $344+80) needs to go into a CAR fund, to start saving to pay the next car off with cash.
Good luck and once you feel comfortable with this, THEN consider the housing situation!Comment
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