really need help - long (sorry)

[DancinFool]

I'm pretty new here, lurking a lot. But I joined because my life is a financial train wreck, I have bad habits all my life and now am looking down the bankruptcy barrel again, and need help, don't know where else to turn. (Sound desperate enough!?)

I'm going to write my income and expenses here. But my issues are that I can't seem to save even a dime, when I do, I spend it anyway. I am accumulating debt because we live on one income and I'm using debt as the income my husband doesn't earn (he can't work, or won't, doesn't qualify for any disability or anything). I declared bankruptcy and had a foreclosure about 7 years ago, b/c I lost my job and took 9 mos to find another. I'm a lawyer and there aren't a lot of jobs that would pay much more with my experience (i.e., no management background, no law firm background, older, etc). I'm early 50's and have $35K in a 401K (and of course a $6K loan on that I'm paying back...)

Also - I live in an outer ring suburb of Philly called Montgomery County, one of the most expensive places to live, so please don't compare rents etc. with middle America, even to rent a 3 bedroom 2 bath would cost me about $2,000 and I am looking at that option.

Every time I set up a budget or snowball, something else comes up - clothes for my son, tax bill, something I forgot. This paycheck I have $7 left for groceries until next pay on the 1st, I'm using my Target credit card to buy food so I don't have to go to the food pantry. I feel guilty because I make six figures, but can't live on it for some reason. OK here goes:

income: $121K/yr, which is $3500 on the 1st and 15th, after taxes. Stopped contributing to 401K in August, salary that amt includes health ins, disability, life, etc. My employer matches 100% of first 4% so I hope to get back to that next year. (NOTE: I will get a bonus of about $7 after tax, which will basically disappear into paying debt, plus probably about $3-4K in tax refund for the mortgage. So, by March I will have breathing room - just like every other year, and December will be back to the same thing!)

expenses monthly:
mortgage: $2829 (I pay about $350 in mortgage ins in that amount, taxes are $8K, rate is 4.25, principle $360K, home value maybe $380 on a good day)
tax debts: $400
student loan: $450 (on forbearance until 9/14, I owe about $50K)
one car loan: $410 (a 2011 outback $16K balance, I replaced a camry that was on its way out - we also own a beater worth nothing but it runs for local trips only)
Car ins: $107
fuel and tolls to work: $150
MAth tutor (son has ADD and needs to work with someone) $100
Credit card bills: Min is $600/mo, balances total $18,000 give or take a buck or two, now maxed out
Water-sewer: $180 (water bill is high b/c we have a leak that can't afford to fix, once fixed bill is about $50/mo less))
Electric/gas: $180 now but will shoot up to $350 in cold weather
cable: $189 (cable and internet pacakage - looking into switching)
cell phone: $225 (would cancel but it will cost me $300 a line to do so)
food: $800, includes personal care, dog food/vet, misc household like lightbulbs, hair cuts etc)
medical co pays and hosp bills on repayment plan: $250
beer/wine: $50
Dining out/fast food: $50-75
Were paying landscaper but season is over, last bill this month is $175

So that list totals $7170 or so, and doesn't account for stuff I impulse buy or the debt I rack up - I buy clothes for my son at about $150-300 a month but not every month, just depending on season, I don't buy anything for myself or my husband, including clothing and shoes except a minimum under $50 a month; we don't go on vacations or trips, don't entertain, don't buy jewelry, I don't wear makeup or color my hair or spend hundreds at the salon, he doesn't golf or do any other sports, etc etc etc. My mother even asks where the money goes since we don't have anything, and I owe her about $800 right now too!

Part of the reason this month is so tight is that I fell behind on some bills and had to catch up by paying hundreds in overages and so on, not sure all of it exactly. But I do download into Quicken and categorize my spending! believe it or not. Doesn't help, except to see how much I over spend. It gets so depressing that when it comes to budgets that say not to eat fast food, I can't imagine $50 is going to make any difference - so I just do it anyway.

This financial situation is about to destroy my marriage, he is not willing to do anything to help with the bills other than look over my shoulder. I would leave but I can't afford to - which is why something has to change.

Thanks for reading all this - I'm willing to try something different!

Emily

[ktmarvels]

I have some questions. How old is your son? Can he get a job to help pay for his clothing? Do you shop at thrift stores?
Can your husband work at all or help contribute in some way? Making dinners so your grocery bill is less?
Are you on the absolutely lowest cell plan possible? No extra texting, or data plans? If you save for a couple of months the money that was going to landscaping you can use it to cancel your phone service. There are some extremely cheap plans available. I think Republic wireless is one.
Can you sell your car and get another beater to pay off that loan?
You have to figure out where your priorities are. Are they keeping up with appearances and trying to maintain the status quo or do you truly want to make changes and get ahead?
Quicken may work for you, I currently use Mint which can track and categorize all my spending. Your budget looks better than it actually because you are not including things (like the clothing, gifts, other spending, etc). Mint makes it harder to brush over those things.
Good luck. You can do it!

[rennigade]

Hmmm...right off the bat I would cut the cable and downgrade your internet...I have the economy package through comcast, I think its $30/month...plenty fast. TV...you may need to cancel that outright. You could also look into an economy package...which is also around $30/month. The savings here would be $120ish after taxes/fees.

Cell phone needs to be cut down. You should look into other carriers like straight talk or virgin mobile. Plans are a lot cheaper and they still give you a lot if not unlimited text/talk/data. If you have a newer iphone you could easily sell that for $200+...which would offset the ETF.

Those two things could save you around $200 or so a month.

Also...your food category seems really high. This needs to shrink. Even with all the extras $200/week is too much. Even at $150/week I would have said thats high. YOu said your husband does not work. What do you mean he cant work/wont? It should be one or the other. With him being home he should be cooking all of the meals...will cut down on costs. A $30 baking dish of lasagna will go a couple days between 3 people. Also, with your husband being home, im guessing he has the other cell phone? I would go prepaid on that real quick if so.

I would also look at different car insurance. Thats also too high. I live in DC where its actually normal to get hit by another car once a year...and my insurance isnt even that high. I have geico and its around $800/year. I have a 2009 corolla, so your car is more to insure I get that. You could try adjusting the deductible and see if that helps? I would get some quotes though.

[DancinFool]

My son is turning 15, but he can't get a job, he has ADHD and school is very demanding for him. School is the priority. He wants to work when he's a little older and has some space in his schedule.

I looked at beaters but with only one real car we needed something reliable. I dont like Dave Ramsey's idea to get beater after beater, after 4 cars for $3,000, you'd be better off spending it up front to drive for ten years. I did refi the car loan so my interest is lower and the payment a little lower, but I want to just pay that loan off if I can find savings.

I'm definitely exploring phone plans, but paying $750 to get off Verizon is part of the cost benefit (I'll never get $750 for our three phones, they are smartphones but about $100 each on Ebay). Credo is offering to pay the buyout fee, and we could switch to free phones not on data plans, that's the route I think I'm headed. That would free up about $100 a month, not much.

Cable is a target too for savings, I think I can find $100 there.

The food at $200 includes all personal care -shampoo, soap, razors, etc. - dog food, Frontline, stockings, whatever we buy at CVS AND groceries. We do cook nearly all our food, from scratch. I only do fast food once every other week, occasionally once a week, like a pizza for $20. I don't buy packaged processed food, I mean, we're not eating steak, but we do eat some meat! I make bean chili and that lasts for two meals, mac and cheese, all that kind of stuff, but we don't buy junky food like cheap hamburger, etc. I buy fresh fruit and vegetables, so maybe that's the difference? I will drill down on that. Maybe fixed menus will help, I kind of decide on the fly. Husband does indeed cook some meals, but not all.

[DancinFool]

Also, the insurance is a little high, not by much; no one could quote me a better rate. I changed from State Farm to Liberty Mutual and my homeowners got cut much more than the increase in the car. (I got about $2500 in rebates from escrow.) So, that actually isn't reflected but it's a savings.

[TheKayla]

There's obviously a lot of room for improvement in your budget if you're falling behind:

beer/wine: $50
Dining out/fast food: $50-75
Were paying landscaper but season is over, last bill this month is $175

These three stand out the most -- they're completely unnecessary. There's also a lot of other stuff you can swap out, getting rid of cable, finding a cheaper living situation (I know you mentioned your location as a factor, but fact of the matter is you CAN move to a different neighborhood, downsize, etc. Close to $3000 a lot for a mortgage anywhere, you should be able to find cheaper if you're constantly in debt.) You can downgrade your car, save on groceries, and so much more. The possibilities are endless, it would just take work and some lifestyle changes.

I think that you know what to do, but it's more of the psychology that's stopping you from not doing it. I'd suggest going with Dave Ramsey as well, as his plan focuses primarily on the psychology side of things to get things in order. Even if it's mathematically backwards, this seems like the perfect scenario for it's use. Of course, there is also this community as well to help keep yourself accountable.

I think the first step is to get completely and utterly organized. Organize exactly what you owe, what bills there are, and create a budget. Then start cutting out the unnecessary. As for your son, ADHD isn't that debilitating (it runs in my family, I'm trying not to be insensitive, I just see a lot of parents who do not give enough credit to their children with ADHD), but I understand your concern for his school. Can you have him get a job just on the weekends to start paying for his own stuff? Regardless of his ADHD, he'll need job experience for the real world. At 15, you shouldn't be paying for all of his extras -- put a roof over his head and give him food. Treat him every once in awhile, but he should be in charge of anything extra he wants, like new clothes or entertainment. Can you work with him on your own during the weekdays, educate yourself more on the issues regarding the way he learns, and possibly eventually save on the tutoring cost?

[autoxer]

Water-sewer: $180 (water bill is high b/c we have a leak that can't afford to fix, once fixed bill is about $50/mo less))

You are looking at this the wrong way. You can't afford the leak that is costing you $130 / month.

Cable is a target too for savings, I think I can find $100 there.

I think you can find $189 worth of savings there. Seriously, cable is not a necessity. There is a bunch of transmission towers in manayunk, where they broadcast a few dozen channels over the air, in high definition. (I live in Delco). I use a computer as a DVR, instead of renting one from the cable company.

You also don't need a landscaper. Just have your son mow the lawn a couple times a month.

Regarding the food budget, do you find yourself throwing away leftovers that start growing mold in the fridge?

You need to be a lot more critical about how you are spending money. The stuff you are buying are things you want, not things you need. Try shredding the credit cards, that will help cut down on the impulse buying.

[bigdaddybus]

When I read the OP's post I opened up a spreadsheet and plugged in a few numbers. (sorry I am a technical analyst for a living....and I love to analyze)

1. mortage+taxes+water/sewer+elec/gas+cable+landscaper= $4053 a month in housing related expenses. This is 58% of your income, which is an insane amount of money for your income. You are house poor and should relocate to where your max housing cost is approximately 30% of your income or less. ($2100 max)

2. debt+car+credit card min payment+medical debt = $1710 a month in minimum debt payments. This is 24% of your monthly income. A healthly debt load is 10% or less (so your combined debt payments should only total $700 per month....and this gives you the ability to pay them off)

3. About 12.5% of your income is going away in food (groceries and out to eat) this should be around 7-8% Not terrible, but when you are so out of wack with housing and debt costs this makes food an issue too.

just these three areas are 94% of your pay. No wonder you cant afford the misc expenses of life and arent saving for retirement.

You really have two choices for success IMO.
1. Start bringing in $13,400 a month and you will be able to afford the lifestyle you are living.
2. Downsize your housing to approx $2100 a month in housing expenses so you can pay off debt and start saving for retirement.

If you stay in your current home without adjusting your income, you are very likely to continue to have the same issues year after year.

[asdf]

People have given good advice on how to cut down some expenses, and it should be observed. However, the one figure that sticks out to me like a sore thumb is the mortgage to income ratio. It's at 40%, which is too high. The only ways to lower this are to either downsize to more affordable housing or to find other sources of income to help pay for the existing housing. I'll throw out several thoughts on how this could be accomplished:
--Do you absolutely have to live in Montgomery County, where you said it's expensive to live?
--Do you absolutely need a 3 bed/2 bath as you cited? Would a smaller dwelling suffice and be cheaper?
--Are you sure there's no way your husband can get some work in to bring in more income?
--Is it feasible for you to do any additional work? (I know that lawyer schedules can be crazy.)
--Could you even consider a roommate to split the housing costs with?

There are certainly ways that you can make small chips at costs that should be considered, but until there's a resolution to that 40% number I cited it may be tough sledding ahead for quite some time.

EDIT: bigdaddybus's post came in while I was typing, and I really have to endorse that post, which is a very good mathematical breakdown of the issues that your household has.

[DancinFool]

Wow folks THANK YOU first off for all the feedback.

First off, Ramsey is not an option for me. His "christian" approach is a super turnoff. I have read his books, and taken what I need, I'm kind of in a crisis now so can't do the emergency fund but have a debt snowball app from online I'll use once I get the $1K in the bank.

Yes I am clearly house poor. I'm working on that right now. As for affording the leak - no it's costing me $50 a month, and I don't have $1200 for a plumber right now.

I don't think of buying a pizza or McDonald's or a $10 bottle of wine every now and then as "completely unnecessary". (I mean, really? In my situation I should be putting the wine under teh "medical" column...) I would have to go with Robt Kiyosaki on that one. I will sell something on ebay to pay for a dang pizza before I cut it out altogether.

That said, I *do* have some alternative income ideas, which I'm going to pursue. I found the site Man vs. Debt and he's a big fan of selling all the crap - so I am cleaning out the basement. I can also get a deduction for the stuff I donate but don't sell.

(The husband will not work, I really can't say much more than that, and we won't be married next year as a result, so cajoling or making suggestions are not an option.)

So, here's what I'm putting in my plan:
Reduce the phone and cable
Reduce groceries by $100 a month to start, see how far I can go on this
Find a rental for under $2000, and sell this house
That will theoretically cut out $1200/mo

Make more money $500/mo

Debt snowball.


What would y'all recommend I do with the bonus next year - I am planning to pay the student loan, which is reacking up $300 a month interest while in forebearance which will get added to the principal if I don't pay up before next August. I expect to have emergency fund by then.

[TheKayla]

First off, Ramsey is not an option for me. His "christian" approach is a super turnoff. I have read his books, and taken what I need, I'm kind of in a crisis now so can't do the emergency fund but have a debt snowball app from online I'll use once I get the $1K in the bank.

It is for me as well as I am not christian, but you don't need to follow his religious advice, (most don't, I agree it's pushy) follow his financial get-out-of-debt advice. Just if you follow the baby steps listed out on his website, that should be enough, modify where you don't feel comfortable belief-wise.

I don't think of buying a pizza or McDonald's or a $10 bottle of wine every now and then as "completely unnecessary". (I mean, really? In my situation I should be putting the wine under teh "medical" column...) I would have to go with Robt Kiyosaki on that one. I will sell something on ebay to pay for a dang pizza before I cut it out altogether.

It's not about cutting yourself off completely from any conveniences, but you do need to budget according to your goals. If I were in as much debt as you, I wouldn't be taking advantages of any conveniences until I at least knew I was more stable. If you have to put it on credit and it's a want, don't get it. If you have the cash and all the bills paid, get a pizza. It's as simple as that. Keep in mind $10 is easily a few meals at a grocery store. Make a budget for these things if they fit, and don't go over. If they don't fit right now until you get caught up, you can't indulge. Not unless you want to keep living like this.

(The husband will not work, I really can't say much more than that, and we won't be married next year as a result, so cajoling or making suggestions are not an option.)

Understandable, and hopefully the financial portion of it for you will be much easier resolved as a result.

So, here's what I'm putting in my plan:
Reduce the phone and cable
Reduce groceries by $100 a month to start, see how far I can go on this
Find a rental for under $2000, and sell this house
That will theoretically cut out $1200/mo

Sounds like a great start. Looks like you're willing to make big changes, but also cutting the groceries slowly will help make it habitual. Looks like you're on the right track with all of this!

What would y'all recommend I do with the bonus next year - I am planning to pay the student loan, which is reacking up $300 a month interest while in forebearance which will get added to the principal if I don't pay up before next August. I expect to have emergency fund by then.

Be sure not to 100% count on it or include it in your budget, but if/when you do get it, apply it towards any of your debt -- whichever you feel most comfortable with and need. It may be a larger chunk of a bigger debt to get rid of some of the principle and save interest, or wipe out a few smaller ones to free up more cash.

[MakeAStash]

Needs vs. wants. I see many "wants" in your list, hence overspending. Get the wants when you can afford them, until then stick with the needs.

[JulieAlbright]

You know, it's really easy just to jump on posts like this and start saying ... you need to cut A, B and C and you need to move and you need to do this and then.....

But my suggestion is going to be just to do SOMETHING. And then once you do SOMETHING, do something else. And keep on until you have this under control. As you have said yourself, your problem is not income. You have plenty of income. Your problem is that you spend more than you make. So, you need to spend less. It really is that simple.

I see a whole lot of things in your post that in my opinion are bad decisions and bad choices which are making your life difficult. But, I think a lot of people kind of come to this process ready to just dive in and go hog wild from the beginning and a lot of people just need to kind of ease themselves into the process. You definitely seem like the easing type. You just aren't convinced that some of the things on your list can and should be cut.

Personal finance I think is all about habits. So start with what you think you can and must do and then once you start to see how much better you feel with the successes, keep going and building the good habits and dumping the bad.

[hamchan]

I agree with Julie. It's really hard to cut out everything all at once. Particularly if you feel like those small things are keeping you sane. I cut down gradually as well, and that made it easier. I started with the things that I wouldn't miss like getting rid of cable channels we never watched, or found less expensive replacements for things that I did use.

I also think that things will be easier on you and less expensive without the dead weight of your husband around. Been there, done that, have the T-shirt. Once he was out of my life my financial situation improved greatly. Hopefjllynthe divorce won't cost you too much. The divorce would be a good excuse to cut back on housing as well.

Just start making small changes that feel doable to you right now, and don't feel like a huge sacrifice. Start keeping track of where your money is going and see if there are any easy places to cut back.

[bjl584]

Others have given good advice of areas to cut back. I agree with what others have said in those areas.

I'm curious as to what is going on with your husband. Why won't/can't he work? If he won't/can't work, then can he at least fix the water leak and take care of the landscaping?