if you were me you woud....what? (long )
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| Sun, 06-04-2006 - 1:20am |
I am a single mom, 40, one DD age 8. No child support. (Long story but the short version is I haven't spoken to him since we broke up when I was 3 months pg and he is in another state.) Bought my $140K house 3 years ago (April 03). Less than 60 days after I closed, my boss quit, and while I still stayed with the company my income decreased significantly. The rest of 2003, all of 2004, and the first 6 months of 2005 sucked. I got way behind in those 24 months, meaning I was using credit cards for stuff like groceries and necessary clothes. In June 2005 I tranferred into another department and got back up to where my salary was when I bought this house. My credit score is great. I have transferred balances and robbed Peter to pay Paul more times than you can count, so all of the payments look good on paper. If you were my neighbor you would think I was fine and never stressing about money. Nice house, by all means still needs a lot of work because it is 100 (not a typo) years old. Nice car. Mediocre clothes, but if you spent ten minutes talking to me you'd figure out that is not a financial issue, it is more than I was born totally lacking any kind of fashion sense.
So two months ago I got Dave Ramsey's TMMO book and decided I need to get my act together. I made up a budget and am doing pretty well sticking to it. I'm starting to realize where I spent money and why. I've started talking to my best friends who I have know for more than 20 yrs about money.
Now I think I'm starting to get that "gazelle" intensity that Dave talks about. And so here are my "excuses" of why I don't want to do some things I know damn well I should.
1. Sell the car. I have a 2005 Hyundai Tuscon that I bought 8/1/05. I didn't even want a new car. I was happy driving my eight year old Saturn. With the job change in June of 05 came a drive of about 55 miles round trip vs. 3. My mother kept insisting that I get a new car because she didn't want me driving that far in an old vehicle and so she gave me, not loaned me, $5K to put down on the car. She made it sound so sensible at the time, I was getting a raise, she was putting down the down payment. Even with that, including depreciation, I am about even on my loan as far as I figure. Car loan balance is about $15,500. Pymts are $338 per month for five years. If I sold this car my mother would flip.
2. Sell the house. I've thought about this a lot. I can't. I love this house. I love my neighbors. Even Dave Ramsey would say my house payment is manageable. I am seriously considering moving out and renting it out while I rent something else. I could rent it for at least my mortgage payment, and then move back in when I got more stable. This is exactly the point where my friends and family would think I have lossed my mind.
3. Sell some stuff. I seriously don't know what to sell. I've looked over the past few years of cc statements and there isn't anything anyone would want. How can you get yourself in this hole and have nothing to show for it? I just reread a post of Lindsey's tonight where she mentioned selling CD's. Maybe that I could do. The most valuable thing I own is an antique table that was my greatgrandparents. The thought of selling it makes me want to throw up on my keyboard. I do have an ok dining room set in the garage, a perfectly new toilet, and a perfectly new pedastal sink. Not a fortune to be had, but it would at least be something. The toilet and sink are still in their boxes. I did major remodeling when I first bought the house and due to logistics they didn't fit and I am one of those idiots who never returns anything. Ever. Not even a toilet that wouldn't fit in my house, of all things.
4. Increase your income, get another job. I am already away from my DD about 55 hours per week when you take into account travel time. I can't see leaving for more hours during her formative years. So I would need something I could do from home. My primary job is doing marketing for a commercial real estate company. The only thing I can think of is to maybe talk to residential firms and see if they need somone to design flyers for homes for sale or something.
I have about $9K in my DD's college fund. Just this week, after being with the same company for 10 yrs I decided to start putting 3% of my income in a 401K, otherwise I have nothing as far as retirement. They don't have guaranteed match, which is pretty much why I never bothered, but now I can't see not putting in anything at all.
My salary is a crapshoot. I make just under $50K per year and then get a bonus in December depending on how the year was. Ranges anywhere from $0-25K. In December of 2005 I got $8 take home. Half went to cc and half I just pretty much pissed away. I'm trying to just live off the $50K, keep all payments current, and then whatever I get in December will all go to cc debt.
CC debt is about $13K, car of about $15.5K, no student loans or anything.
What would you do if you were me? Being single kind of sucks in the sense that I don't have the DH to dicuss such items with, so you girls need to be my feedback. Sorry so long, but I wanted you all to have as much info as possible to base your decisions on.
Heather

what does your budget look like?
It doesn't really sound like you want to part with your house or car (and if you did, they would have to be replaced anyway), so maybe cutting back in some other ares of spending would yield the same results. I agree with you when you think you are out of the house enough already.
Your debt is not that bad when you take your income into account. Are you feeling a pinch somewhere, or is it that you just don't want this hanging over your head? I don't know, I would just keep plugging away at it. If you can put a thousand towards your cards per month, then you will be out of this mess in a little over a year...after tge cc debt is gone, you could snowball to the car loan.
Sorry I don't have any good ideas for you,
Heather
What I would do...maybe not the most popular thing....sell the car(especially if you are right side up) and take 6k out of dd college fund and buy something brand new. If you really want to pay for her college you can always take out plus loans or help her pay her student loans later IF you have to. We own a 98 honda accord that is worth 5k that I would drive without hesitation across the country. You could get an even better deal if you looked at Corollas. They are smaller and with on DD it should be fine. You could even turn around and start putting $200 of the car payment BACK into her college fund, though if you are working the plan you will pay off all your debt first.
I just listened to Dave last night and he had "car hour" and he told SO many people to sell the car. FYI-you are in the OK range if you decide to keep it. He says 50% of your income in car value BUT he would say our car payment is too high for your income.
I have 3 girls and my oldest is almost 8(where does time go?) and I agree, the best thing you can give her right now is your time. We have cut out all extra curriculur activities for the time being and we eat out once in a blue moon and no one(except Mama) seems to mind.
Professional financial people will tell you that the best thing you can do for your children is take care of yourself..now and later in life. If you look at DR steps funding college is a ways down the road. If you paid off all your debt(incl the house) you could easily bankroll DDs college when she is there...or get creative. We are planning on one of us going to work at a college that children go free...we will have 3 in at once;-)
Heather,
Thanks for sharing all of that! I can definitely relate to the single gal situation and not really having someone to bounce ideas off of. So here's my take:
1. Car- It does seem to be the most logical place to make a significant change in your finances but I know how moms can be. Mine would flip too especially if she paid the down. Do you think there's any chance you can talk to her about how much this is strapping you and come to some sort of compromise about what you could do? Maybe look at something slightly used that still has a payment but one that is maybe 1/2 to 2/3 of the one you have now? Is the 55 miles in remote lands or are you on an interstate? Do you have a cell phone? To my way of thinking, breaking down is only really bad news if you are truly stranded which these days is pretty tough considering cell service, etc.
2. I would not disrupt you and your daughter's life to make the small amount of difference that renting a cheaper place would buy you because the risk of renters would leave you at risk for losing money. A 2-3 month vacancy would undo any progress you'd be making. The house is the right investment and you didn't buy a McMansion. Also, many many people I know that have tried it have told me never to rent a home you want to move back into. Renters do not take care of things the way a homeowner does.
3. Your situation is not so dire, IMHO, that you need to sell cherished family heirlooms. That kind of Gazelle Intensity is foolish to me. The bathroom stuff, the CD's, absolutely but I would NOT sell that table if it means that much to you. Sell the other one.
4. The additional income idea sounds reasonable if you think you could pick up some residential work without too much headache or financial risk. I rented a room in my home out to pick up some additional money. Any chance of that? I've also thought about renting out my garage for storage since I just put my car in the carport.
5. I agree that saving for DD's education is one area that you might be able to back off a bit on. I don't know what kind of account that is in but 10 more years should give her a nice base amount for a community or state school and as the PP mentioned, she and you will have lots of options to pay for school and even more if you've gotten the debt cleaned up. The retirement saving is important and I encourage you to keep that up and try to increase it ASAP. There aren't any alternative funding options for that. ;)
6. I would be taking a hard look at the budget and I totally agree that you need to live on the $50k and then the bonus is truly extra money you can use accordingly. I found a lot of wiggle room in my budget when I finally sat down and paid attention to what I was doing. Do you think you have any wiggle left in there? It's not like you are living high on the hog at a $50k salary w/one kiddo but maybe there is something in there. I do find that this stuff seems to feed on itself once I get rolling (money seems to turn up).
Hope that is helpful. I think you have clean credit and a reasonable amount of debt that you are looking at so it is not at all hopeless. Hang in there and look for those babysteps. :)
Hugs,
Peg
Hi there,
I don't have any solid advice for you (sorry!) but something that worked for me might help you depending on your spending habits. For years I haven't been a big spender but I am paying for old mistakes so I always feel like the money is tight. I realized I am a "little" spender though. I finally changed the way I thought - it used to be "oh, that is only $1 dollar more" or "thats only $2" and now its "those $1 dollars all add up to alot!". I've tried to cut back here and there because it really does add up. Here is what I've cut out of my budget and although its only a few dollars here and there, for me its added up to almost $100 a month!
My "No's"
No gum/candy/etc at the grocery checkout
No magazines
No buying of books over $3. Library or used bookstores only
Rent movies 2 times/month only
No lunches at work of over $5 and bring items when possible
When I do eat out, I get water and one of the cheapest items on the menu. You might alreday be doing this, but for me, it took AWHILE to figure out! I put the $100 dollars toward bills and now I really feel like I am getting out of debt faster and can then start saving.
Thank you all so much for your feedback. I went to church on Sunday and I was walking down the hall and on the bulletin board there was some stuff posted, and one of the things on there that totally jumped out at me was the question "What does your life revolve around?", because the first thing that popped into my head was "money" rather than something that it should have been such as God or my family. Funny how things come to you like that.
I think I was very frustrated the other night when I originally posted because I am only a couple of months into this and while I am making progress, I am so impatient that it is hard comprehending that this whole process may take 2 years to do. It's been 2 months? Why isn't it done? That kind of thing.
I have always been one to buy DD gum/mints at the grocery store, and those little things do add up. I have never had her on an allowance, so this weekend we started that. She was grounded on Saturday anyway, so we cleaned the heck out of the house all day. Her room is spotless. If she keeps it up she will get $5 per week. If she doesn't keep it up that week, no allowance. She does not earn an allowance for doing stuff she normally should do such as putting her dishes in the sink, changing loads of laundry when I ask, or making sure trash gets in the can. She can earn additional money by helping me with other special projects. Any gum or mints or bubbles or frivolous stuff she wants comes out of HER money, not mine.
The budget is kind of tight, but all of the payments are being made and I'm just going to have to accept the idea that this getting out of debt thing is not going to be an overnight thing. While I still know that selling the car would be beneficial, I think it would cause more personal problems with my mom, and because she picks up DD from daycare every evening and I see her every evening, that's not a mess I'm willing to take on. Hopefully I will have a decent year end bonus and can get a large chunk of the cc debt knocked off then. After that I will hit the car payments hard. And I will never, ever, ever, again get a new car. Lesson learned.
By the way, DD's college fund is in a 529 account. I put $5K into that a couple of years ago (gift from my grandfather before he died) and it has grown to about $9K now. I have only added about $500 to it since that original investment. I don't think I could withdraw that money without incurring major penalities if it was not for educational purposes. I will go back to adding to it once I get the other baby steps out of the way in order.
I'm definitely going to have a garage sale. I need to clean out my basement and garage first. Most of the stuff in both places, aside from Chistmas decorations, hasn't been touched since I moved in 3 yrs ago.
Anyway, thanks again for all of your support. It is so helpful. And all of you keep posting your milestones. I love to see when people reach those!
Heather
Heather, I am so glad you are finding a new focus for your life!
DD turned 8 in February. The allowance thing is something I probably should have started a long time ago, but better late than never.
My car ins deductible is at $500 right now. That is a good idea - I should call them and ask about upping it a bit.
Heather
I agree about keeping the vehicle. Some things are just not worth rocking the boat about and that might not be "good" on the budget but its great real world realistic thinking.
I have been on this board here and there since 2000. If I had stuck around the entire 6 years without dropping off the board for awhile here and there I'd be debt free but I just wasn't willing to really give it 100%. I've since made major changes, made a major move for a better job and just really buckled down and its FINALLY HAPPENING. I'm paying off the same stupid debt from over six years ago when I first came here! I've "failed out" of CCCS two times before trying again. And this time its working! Because I'm sticking to it. And so far 3 of the 6 debts are paid off since just 6 months ago. I am all about instant gratification with getting out of debt and before when I didn't see a light at the end of the tunnel I gave up but now...I see it and I am finally running toward it. You can do it with a bit of patience and also being gentle on yourself too. :) Welcome!!!