Need help with a budget - single mom

[Reggie]

Sell one of them. It's a completely unnecessary expense.

Would it help to pay off the old car loan? I was hesitant because of my low savings amount and the 0% interest rate. I can take $3000 in September and $1000 from my savings to pay it off. And then I would simply have one loan.

I owe $16k on the new car. It's actually a 2013 certified used car versus a brand new car, so I could get really close to what I paid for it less the taxes. But, I love the new car and it's my only debt if I pay off the old car. I know that's not the most frugal thing to do.

[riverwed070707]

I don't have any other debt. I had a great deal of savings before the divorce and the purchase of the car. I purchased the car on a whim and probably to just do something for myself during the divorce. Not the best decision, I realize that. The old car is worth $16k but my daughter has to ride in the backseat in a booster seat, so I can't really sell it. I know. It was a mistake and I just need to work on paying it off.

My goal is to build up an emergency fund and feel a lot more secure.

OK well I think this is great news. You have a great income, you're fully funding retirement, you're contributing to college, for the most part your expenses are reasonable and you still have a good chunk of money left at the end of each paycheck. Even though the car was a frivilous purchase, its at 0% so I would just sock away that $3k each month until you hit 6 months expenses. Then I would shift that money toward paying down the car. No need to take out a second job. I'm sure the drastic decrease in savings feels like a blow but its not something you can't rebound from.

[disneysteve]

The old car is worth $16k but my daughter has to ride in the backseat in a booster seat, so I can't really sell it.

Sure you can. You can sell it for 16K.

Then figure out how much of a loss you'll take selling the new car. Use the money from the sale of car #1 to fill the gap between what the new car is worth and what you owe on it. Then take what's left and buy a replacement car.

So let's say you get 16K for car #1.
On car #2 you owe 8K more than it's worth. Sell it and use the money from car #1 to pay the balance of the loan.
Then buy another car with the remaining 8K.

[riverwed070707]

One more thought. Where do you live? Is your house paid off? You have no housing expenses listed.

[Reggie]

I really like riverwed's ideas! haha.

Let me think about the car situation some more. I would lose around $2500-3000 selling the new car. Potentially even less than that. I got a really great deal on the car. I even flew to Atlanta to pick it up and drove it back to Ohio. It was the best deal I could find in this country for the exact car that I wanted. I would hate to give it up.

Yes, home is paid off. Another option is to sell the home and downsize. I just can't fathom that being worth it. I could buy a home significantly cheaper in price, but moving a child that just went through a mess is not my idea of a good time. I have that in the back of my mind though.

I just need a few months of getting back on track and figuring out what my financial situation is going to be going forward on my own.

[riverwed070707]

Sure you can. You can sell it for 16K.

Then figure out how much of a loss you'll take selling the new car. Use the money from the sale of car #1 to fill the gap between what the new car is worth and what you owe on it. Then take what's left and buy a replacement car.

So let's say you get 16K for car #1.
On car #2 you owe 8K more than it's worth. Sell it and use the money from car #1 to pay the balance of the loan.
Then buy another car with the remaining 8K.

I'm so confused here. If she were going to sell the sports car, why wouldn't she just keep car 2? Given the income and small amount of debt, I don't really see why everyone is up in arms about the second car

[riverwed070707]

I really like riverwed's ideas! haha.

Let me think about the car situation some more. I would lose around $2500-3000 selling the new car. Potentially even less than that. I got a really great deal on the car. I even flew to Atlanta to pick it up and drove it back to Ohio. It was the best deal I could find in this country for the exact car that I wanted. I would hate to give it up.

Yes, home is paid off. Another option is to sell the home and downsize. I just can't fathom that being worth it. I could buy a home significantly cheaper in price, but moving a child that just went through a mess is not my idea of a good time. I have that in the back of my mind though.

I just need a few months of getting back on track and figuring out what my financial situation is going to be going forward on my own.

You didn't say how recent your divorce was, but it sounds as if it wasn't too long ago. I think the most important thing right now is to not make any large decisions (like buying a sports car! Or selling your home). Be smart about your spending and allow some time for the dust to settle before making a long term financial plan. My advice woudl be different if you were struggling to make ends meet but you're not. I definitely agree with your origianal post that you should be on a budget, you should be thinking about how to get out of debt and you should be thinking about how to allocate your savings long-term but I don't think throwing the last of your savings at a small balance loan payment or any other rash decisions is going to benefit you enough to be worth it at this point. Take some time to heal and to focus on family. The rest can come later.

[Reggie]

The divorce is recent. The ink isn't even dried. I will take all of September and write down every expense that I have. The 19 year old did just recently get her first job. So, she will not be asking for gas money or spending money anymore. I've also started to coupon and I'm doing some swagbucks to earn Amazon gift cards for Christmas shopping. I'm not sure if couponing is really worth it. I'm only finding deals on food that we don't buy. But, I am stockpiling toothpaste, mouthwash, feminine supplies and household things like cleaners.

I've also increased the thermostat for the rest of summer and will call the cable company and cell phone companies.

[Reggie]

OH, also if my ex decides to pay his support, that is an extra $300 per month. WOOHOO. NOT. Seems so incredibly unfair.

[ironicone]

I am probably going to give advice contrary to many others here. However, since your expenses are so low in relation to your income, I would recommend that you keep things the way they are (i.e. both cars, saving, etc) for a few months. After that, I would evaluate the need to keep the sports car and the second car, and move. In a few mths, you may decide to keep both cars, trade them both in for a different model (perhaps a "sporty sedan"), and/or move. However, I would suggest splitting the excess funds (3,000) and saving 50% and using the other 50% to pay off your car. That will allow you to retire the debt on both vehicles in less than 18 months while also rebuilding your savings.
Best of luck!

[Reggie]

Thanks everyone. I'm just a little nervous and thinking about everything right now. I need a monthly budget, I need to review my life insurance and then sit down and go over retirement and what I need to be doing for that. Everything financial has changed has far as the future, so everything needs reviewed now.

Feeling better after all of your replies. i think I can get a handle on this.

Thanks again!

[MonkeyMama]

I think the simple answer is to hoard up some cash and not make any big decisions for about 6 months (just general rule of thumb for big life changes). I think you are in great shape, and will be fine. "Save up the cash and then pay off the car(s)" buys more flexibility, unless you are just more motivated to chip at it. You can afford to chip away at it while saving up some cash reserves.

A car is a large expense to maintain, and the questions were originally answered in a, "I know it was a dumb decision" vein. OF course the obvious solution is to sell the car. You might lose some cash up front, but will erase all the ongoing license fees, insurance and maintenance. Not to mention the loan payments. But I think it's okay to put it in the "think about it again in 6 months" category. You can figure out what is sensible at that time.

[tulog]

I get child support but it's such a small amount that I feel like telling the ex to just shove it up his ^*#. He moved 1000 miles away and apparently it's my responsibility to pay everything since I make more money than he does. The child support doesn't even cover her day care expense.

What state and you in and what if anything does your decree say about child care expenses?

[Reggie]

I'm in Ohio and he just moved to Florida. Regarding child support, he screwed me over big time. He quit his job before the divorce was final and then in Florida he suddenly transferred to the local office in the same job he did in Ohio, right after the papers were signed. What a lucky coincidence! arsehole. I could take him back to court but then I would have to pay the attorney again and maybe it just isn't worth it in the long run. He will get what is coming to him. And maybe what is coming, is no relationship at all with his daughter. And what a costly thing that is going to be.

There is no mention of day care in the settlement.

I am hoping he gets eaten by a shark or perhaps a hungry alligator.

[tulog]

File in the court where you and your child live to modify child support to the husband's current income. Properly serve the husband. Request and collect back child support for all the periods where his income was sufficient to pay child support.

There is a lot of money on the table here. File this now; with or without a lawyer, it needs to be done. The paperwork required is not difficult. The right to these monies belongs to the child, and you need to enforce her rights.

When you have an updated order, enforce it through sister-state processes. You can collect his wages directly from his employer for current support payments. After you have requested payment, you can levy his bank accounts or have a sheriff collect his automobile for back child support amounts. You can collect legal interest and costs of collection of the debt.