Lost and Delirious

[jamesw71]

Hello,

This is my first time on these forums, was hoping to find a way out of my current predicament, reduce the stress of finances.

I am retired from the Air Force, lost a good paying job a year ago and now making a lot less than we were used to. Wife and "adult" child are both disabled, unable to work, and living with me in an apartment.

My history with budgeting has been hit or miss, I would generally live paycheck to paycheck when I was in the military and did not save money until after I retired. When I retired I was making approximately $70k per year, was married with 2 kids living at home at the time.

That was 6 years ago. Now it is just me, the wife, one disabled child and our dog. Since being married my finances have gone thru several phases of one disaster or another, numerous hospital visits, legal bills from custody cases etc.

After retiring I got a decent job working operations in a chemical plant, making approx $50k per year plus about $20k per year in retirement income and $10k in disability income for my family. I was then progressively promoted until I was a supervisor at the plant and making $80k per year, $20k in retirement income, $12k in disability for me and $10k for my family.

Now after losing my job a year ago I make $29k per year at my new job, $20k in retirement, $12k disability for me, and $10k for my family. So my annual pay is down to approximately $72k per year before taxes.

We have a ton of outstanding bills including:
College Loan: $13,000
Lawyer 1: $900
Lawyer 2: $650
Lawyer 3: $3,000
Lawyer 4: Paid up but wants $100 a week to build up for future costs of litigation.
Timeshare: $1,500 plus $35 per month maintenance fees
Home loan: $185,000....which is in foreclosure, attempting a short sale.
Credit Card 1: $800 which is in the process of being written off
Credit Card 2: $500 same as #1
Credit Card 3: $400 same as #1
Money owed on repossessed vehicle: $6,000
Florist: $100
Vet: $500
Old Utilities which are past due: $1,000
Furniture loan: Approximately $5,000
Medical bills: Approximately $25,000
Past due taxes: Approximately $18,000


Current Budget:
USAF RETIREE $1,850.00
VA DISABILITY $976.00
WIFE SSI $686.00
DAUGHTER SSI $429.00
PEAK WORKFORCE $2,100.00
TOTAL TAKE HOME PER MONTH $6,041.00

(RENT) $1,746.90
DUKE ENERGY PROGRESS $148.15
AT&T UVERSE $92.00
USAA INSURANCE (AUTO) $62.00
ERENTERPLAN (RENTERS INS) $14.33
PROGRESSIVE (BIG LOTS LEASE) $298.26
BADCOCK (FURNITURE LEASE) $210.00
VERIZON (CELLPHONE) $265.72
METLIFE INSURANCE (LIFE) $123.51
BLIZZARD ENTERTAINMENT $16.00
HULU $11.99
COMED OLD HOME (ELECTRICITY) $18.50
TOTAL $3,007.36

We are stuck 4 months into a 15 month lease on our apartment, costs $500 to move to another if we decided to downgrade from 3 bedroom to 2 bedroom.

I drive 10 miles each way to work, so a tank of gas lasts me 2-3 weeks if we are not going out driving. We spend our time at the apartment pool, clubhouse doing stuff with friends or watching Hulu and/or playing on our computers at home.

My wife has been going thru a bad spot and has responded by spending way too much money on stuff we don't need or having parties at the clubhouse with friends. I need to find a way to keep her involved in the finances so as she says, she has a feeling of control, but at the same time ensures our monthly bills are taken care of and we have enough to live off of while hopefully paying down some of the older bills so things can be less stressful on me.

Everything goes into the same bank account, we have a 2nd account for my daughter's disability, right now we don't charge her for rent but have been told it would make sense to charge her something as our current rent is not calculated into her disability payments of approximately $429 per month. We also have a savings account but it isn't used as we spend everything we make in a month....plus more.

Because of the addition of my retirement income and higher pay from the old job my taxes got messed up for several years and I am being told I need to pay approximately anywhere from $10,000 to $18,000 to catch up.

Would love to know of a way to approach my wife with separating these finances and living off of a budget for awhile.

I was also considering using my GI bill to go back to school, the options would give me anywhere from $900 to $1,400 per month in non-taxed money from the VA as well as since my schooling would be paid for if I wanted to add to my student loan I could borrow $4,000 to $5,000 per year without having to apply for a loan.

My credit ranking is absolutely crap right now, approximately 450ish to low 500ish. No one will give me a loan for obvious reasons with the pre-foreclosure going on and repossession of my last vehicle....luckily I had just paid off my 2nd vehicle so still have one to live off of. Yet my wife still needs a car for emergencies and not sure how to pay for that, or what would be a good deal to get one for her.

We have no savings, I depleted $20k from my 401k which I had built up while working at the previous company.

Any suggestions and ideas would be welcome, I'm not to the point of pushing for bankruptcy but I need a good plan to present to my wife which still allows for her to have her fun and maintain some control over finances.

Thanks

[HundredK]

Welcome to the board, you are in good hands here. I'm sure you'll get lots of feedback as people digest things. But I just wanted to say that you're not alone, there are others on here (me included) who are knee deep in debt, and I think this board is great at helping to identify paths to freedom.

[HundredK]

You might want to call Social Security and ask them whether your daughter would get more income if you were charging her rent. From the website for SSI: "In-kind support and maintenance is food or shelter that somebody else provides for you. We count in-kind support and maintenance as income when we figure the amount of your SSI benefits. For example, if someone helps pay for your rent, mortgage, food, or utilities, we reduce the amount of your SSI benefits. Receiving in-kind support and maintenance can reduce your monthly SSI benefits as much as $264.33, depending on the value of the help you receive."

It looks like there is an additional $3k of income that is not accounted for in your budget. Groceries must be a part of it. I'm also guessing that amount has been going to put out whatever fire is flaring up at the moment? Having a plan for where that extra cash will go would be a good first step.

I am also curious, you mention that there will be ongoing litigation costs and more legal fees down the road. Is this because lawyers are helping you litigate something that may bring you additional income later, or is it some other situation?

The furniture leases you mention seem a bit pricey, is there any chance of getting out of those and grabbing some furniture at the goodwill or something?

Having both AT&T and Verizon is probably costing you more than necessary. You can usually get a better deal if you bundle services through one provider.

Honestly though, I think figuring out where you want the remaining $3k to go would be a pretty good first step.

Maybe you could give your wife some sort of a small amount each month to go and have fun with? Truth is, if she isn't on board with any of this and your finances are shared, this is going to be a huge struggle.

[Jluke]

can you get out of the cell phone plan?

There are cheaper plans out there with other companies - i.e. Cricket (AT&T) , Virgin Mobile/Boost Mobile (Sprint) and I think Verizon has a cheaper version too.

You could be looking at $35x3 phones (assumption on # of phones).

Are blizzard entertainment and hulu in addition to cable or in place of cable/satellite?

With 3k surplus each month, a well designed strategy for helping with the outstanding payments/debt will go a long way.

Getting your wife on board is probably step #1 though.

You may want to tackle the low hanging debt that could be easy (e.g. florist, vet) and can be wiped out entirely. Focus next on the ones with the greatest "penalty"... the back taxes stands out to me.

I'll stop there; pending better advice from others.

[GoodSteward]

Welcome to the forums, and great job listing everything out. Most don't do that, so the fact that you have this much together is a great first step to this.

Let's address a few things. Remember, you didn't get here overnight, and you won't get out overnight. It's ok, one step at a time to beat this into your past and create a real future.

1. Priorities - You and your wife must sit down and recognize the situation so she will be on board for major life changes. I know you've been through a lot with losing your home, job loss, and all the legal battles, but letting your money go to help your family "not feel so stressed" actually creates more stress. That's the lie that not needing a budget creates. You think you are living free, but really you are enslaved by your money. Making a budget takes control of your finances and creates a feeling of security, which brings peace. Right now I think that would be a valuable feeling, so you need a budget. You need to start with only the requirements to make it day to day. Food, power, gas, rent, etc. Don't nickel and dime yourself to death taking away everything that you have, but if you don't need it right now it needs to be addressed. The last thing you need to do right now is try to fix everything at once. That will only overwhelm you, and it won't work. It's ok.

2. Debt - Don't keep digging any more holes. Pick the things you are current with and pay the minimums to help as much as you can with credit. Due to everything going on you can't get new credit, but if you can make everything you have current you'll start to build it back slowly. Don't let those three credit cards get written off if you can help it. That's small amounts of money and you can leave them on a good note, which will help a lot for future credit. Like others have mentioned take what is left and try to knock some small stuff off the list. Small wins will create a big boost to you and your wife. List it all out, and mark it off as you go so you can watch the progress. Becoming current on as much as possible will also be a huge stress relief. I don't think your upside down monthly, your just not organized with a budget. If you were upside down(more expenses than money) this would be a different conversation.

3. Emergency Fund - If you want to avoid any more stressful situations you need a buffer, or EF. 1000$ minimum. After budgeting normal monthly expenses and paying minimums on items not behind take everything that is left and save until you hit at least 1000$. You can't get anything on credit, so you must give yourself a fall back asap. Once you have this you can chunk everything left towards debts. If you are trying to salvage credit I would work with anything that is steadily reporting late payments.

4. If you havn't already, I would call everybody you are behind with and let them know you are going through some hardships, but you know you owe them and you will be payiang. One step at a time.

I have some questions and comments about what you listed.

1. Why do you have so much furniture in loans? Did you have to fully furnish your rental? You really need out of any of that asap.
2. Dump the timeshare asap. Right now you need to free yourself of any unneeded burdens.
3. What is your Verizon bill, and what would it take to get out of it?
4. What kind of life insurance do you have?

You are not as bad off as it seems. The problem is it appears you don't live on a budget. I mean, you have a decent income but you owe someone 100$? Getting on a budget with a plan is going to feel like a huge burden is lifted. I suggest starting to use a financial program to help with this like Ynab, everydollar, mint, etc. I personally recommend Ynab. I think that's enough for now. lol

This is fixable. You got this!

[GoodSteward]

I would like to see how big of a shovel you really have. Take your bring home and minus your monthly expenses, minimum payments you are paying right now, guess at your gas/food/household items, etc and tell me what you have left over. This is going to tell us your available cash flow to fix this, and this is the number that will really tell us where you stand on the dangerOmeter. Your cash flow is your life blood of finances, and this is why you need to free up as much as possible by reducing unneeded bills and payments. The lower this number gets the more serious your immediate situation is, and the longer it will take to fix things. This will help us to know how fast you can overcome everything.

[james.hendrickson]

James,

Welcome to the forums.

You are totally in the right place. When I started my own personal finance journey I was digging myself out of $40,000 worth of student loans and credit card debt.

Here are my thoughts;

First, its got to be super depressing to have the level of indebtedness that you do. There is nothing like looking at a lot of red ink to lower your testosterone and limit your mojo.

Second, this situation is manageable. People pay off large amounts of debt all the time. So can you if you keep your motivation and discipline high.

Third, I agree with the other posters on the forums, consider paying off some of the smaller debts first. This will give you an early win and keep you motivated.

Fourth, consider doing something like setting weekly meetings with your spouse to go over money. This will help with communication and keeping you guys both on track. A lot of successful financial planners have this as part of their practice.

Fifth, I think your credit score will improve as you pay off debt, so you probably don't need to focus on that as a separate issue. You'll address it as you eliminate the bad debts.

Feel free to stay motivated and don't forget to post all your financial wins here in the forums so you can get support.

[jamesw71]

You might want to call Social Security and ask them whether your daughter would get more income if you were charging her rent. From the website for SSI: "In-kind support and maintenance is food or shelter that somebody else provides for you. We count in-kind support and maintenance as income when we figure the amount of your SSI benefits. For example, if someone helps pay for your rent, mortgage, food, or utilities, we reduce the amount of your SSI benefits. Receiving in-kind support and maintenance can reduce your monthly SSI benefits as much as $264.33, depending on the value of the help you receive."
Thank you for the reply...this was something we were considering

It looks like there is an additional $3k of income that is not accounted for in your budget. Groceries must be a part of it. I'm also guessing that amount has been going to put out whatever fire is flaring up at the moment? Having a plan for where that extra cash will go would be a good first step.
Our grocery bill is approximately $800 thiws includes cleaning supplies and pet supplies....but does not always include any parties my wife decides to "help" throw at the clubhouse

I am also curious, you mention that there will be ongoing litigation costs and more legal fees down the road. Is this because lawyers are helping you litigate something that may bring you additional income later, or is it some other situation? This is for a lawyer for a wrongful termination lawsuit currently pending in federal court, he wanted $3k up front and now wants to build up for further costs down the road...hoping for a settlement but trying not to put all of my eggs into one basket

The furniture leases you mention seem a bit pricey, is there any chance of getting out of those and grabbing some furniture at the goodwill or something? This is something my wife did, we owe several thousand on it right now

Having both AT&T and Verizon is probably costing you more than necessary. You can usually get a better deal if you bundle services through one provider.AT&T is internet, we dont have cable...Verizon is cellphone

Honestly though, I think figuring out where you want the remaining $3k to go would be a pretty good first step. That is the million dollar question....how best to use this $3k and set it up so our bills get paid first and then have some spending money for each and pay down some other bills

Maybe you could give your wife some sort of a small amount each month to go and have fun with? Truth is, if she isn't on board with any of this and your finances are shared, this is going to be a huge struggle.

I've tried this in the past, she feels not having access to money is me controlling the relationship and she has been told in the past that it is abuse....personally I feel it is reverse abuse if she spends so much we don't have enough for bills

[DaveInPgh]

There are a lot of smart members here that can give you great advice on your finances. However, none of it is going to matter unless you get your wife on board. Sounds like she is adamant about having a lifestyle that you can not afford. Getting her to change her spending habits has to be your number #1 priority.

If she continues to resist, I would suggest marriage counseling or consulting a divorce lawyer.

[jamesw71]

James,

Welcome to the forums.

You are totally in the right place. When I started my own personal finance journey I was digging myself out of $40,000 worth of student loans and credit card debt.

Here are my thoughts;

First, its got to be super depressing to have the level of indebtedness that you do. There is nothing like looking at a lot of red ink to lower your testosterone and limit your mojo.

Second, this situation is manageable. People pay off large amounts of debt all the time. So can you if you keep your motivation and discipline high.

Third, I agree with the other posters on the forums, consider paying off some of the smaller debts first. This will give you an early win and keep you motivated.

Fourth, consider doing something like setting weekly meetings with your spouse to go over money. This will help with communication and keeping you guys both on track. A lot of successful financial planners have this as part of their practice.

Fifth, I think your credit score will improve as you pay off debt, so you probably don't need to focus on that as a separate issue. You'll address it as you eliminate the bad debts.

Feel free to stay motivated and don't forget to post all your financial wins here in the forums so you can get support.

If i had to guess I would say $1500 to $2000 available after food/gas/household

[jamesw71]

There are a lot of smart members here that can give you great advice on your finances. However, none of it is going to matter unless you get your wife on board. Sounds like she is adamant about having a lifestyle that you can not afford. Getting her to change her spending habits has to be your number #1 priority.

If she continues to resist, I would suggest marriage counseling or consulting a divorce lawyer.

This would help alot

[jamesw71]

I have some questions and comments about what you listed.

1. Why do you have so much furniture in loans? Did you have to fully furnish your rental? You really need out of any of that asap.This was done right after our move here, wife was trying to rebuild her credit and our old furniture from the house was stolen by renters and family which led to further depression and bad spending
2. Dump the timeshare asap. Right now you need to free yourself of any unneeded burdens.I'd love to sell it...not paying on it at the moment because hey the credit is already screwed up why give away what I might get some cash for? Not sure...I hate to throw anything away
3. What is your Verizon bill, and what would it take to get out of it?Wife got us into a new 2 year contract which is 6 months old now...3 phones 24gb of data because she uses it alot and I dont want to pay overages....plus fitbit, kids watch for daughter to track her gps location, and a car engine monitor device
4. What kind of life insurance do you have?$500,000 life insurance policy from Metlife

Thank you for the responses!!

[scfr]

Is your wife receiving treatment for her depression?
Without knowing you guys, just from what you have posted I am getting the sense that nothing else you do is going to make much difference until that (the depression) is being managed.

Welcome to the SA boards, and good luck.

[GoodSteward]

For the life insurance 500k sounds like a term policy so good choice.

Have you ever listened to Dave Ramsey? I suggest trying to get her involved with his books and radio show. He has a very persuasive way of helping people recognize their choices are self-destructive.

It's not abuse to control your money together. Give and take. I know people like this and it is hard. I think your first course of action is to address your marriage and relationship with counseling like Dave mentioned. If she is unwilling to do anything I don't recommend a divorce, but I do recommend separating money. I am avidly against this personally, but I have learned in situations like this it actually might work best. Tell her it is fine if she doesn't want to budget with you, you will let her do what she wants with her money giving her a few of the bills she insists on having(cell phone) and you do what you need to with the rest. She needs to recognize she is destroying the families future.

My mother racked up 60k in credit card debt without my dad knowing, and to this day he is paying it off (10 yrs later). They have nearly no retirement now because they are in their 50s and will be paying this off into their 60s. She still won't work with him and is similar to your wife spending as she wants. Having separate accounts is the only thing that has kept my parents from bankruptcy I think, because if she had normal access to it all she would spend them into oblivion.

[snafu]

Welcome to SA. I suggest giving every dollar a job and since your wife feels you are exerting control through money, since needs to be involved. 1st I hope wife and yourself will work together to wrestle control of the money so that the money isn't controlling you both! The easiest to to write cash flow! You both need to understand and agree where every dollar goes.