We are in trouble- please help us!

[southernmama]

We have been blessed to have a profitable business and no money worries for the last few years- I have pretty much let my dh handle all the money and bills and have spent my time raising the children.
Tonight he shared with me just how bad this year has been and how we really need to tighten up for the forseeable future. It seems that our obligations exceed our cashflow currently.

We have fairly high fixed expenses (mortgage, insurance, school) I need advice on cutting seriously back. Neither dh or I are good with finances so please, please school us- I feel very worried and scared.

[RiverSky]

Can you please list your fixed expenses, plus other stuff you might spend your money on so that we can give specific suggestions? Like, it might be time to get rid of the landline or extra cell phones, or cable/satellite and try out netflix and online video instead. How many cars do you have? Have you shopped around for the lowest car insurance in a while, or have you just stuck with the same policy for a long time? Do your children take any classes, or are they in daycare or anything that can be lessened or dropped?

How much do you spend a month on food? Often, when people are broke, that is one of the first places they start, after getting rid of luxuries.

[zebra15]

If things are 'bad' nothing is fixed. You need to be ready to cut everything, get rid of tuition payments, get rid of the house, get rid of car payments etc...

I also wonder if prior years have been as good as your DH has said they were.

[Rev1053]

Ditto what Zebra said.
Nothing is fixed.
You can sell the cars, house. Loose the tuition. Cut the cell phone.
It can be done! You have to live below your means.

[velochic]

Originally Posted by zebra15

If things are 'bad' nothing is fixed. You need to be ready to cut everything, get rid of tuition payments, get rid of the house, get rid of car payments etc...

I also wonder if prior years have been as good as your DH has said they were.

I agree with this. Have you put anything back in the fat times to prepare for lean times (i.e. emergency fund)? It's hard to even know where to begin "helping" because you haven't really given a very clear picture of what you have done in the past, what you have now, and what you have to deal with in the future. Many people here can certainly help, but you need to give details to get ideas.

Good luck!

[southernmama]

I guess I was unclear... and a little dramatic

To make a long story short, a few years ago my husband's business got very busy and they hired another engineer. It was fine for a while, but this year was very very slow. They still had to pay the guy, so there was no profit sharing between the partners this year and actually their salary draws were in the red. Our savings was used to make the quarterly tax payments.

They let the engineer go this month (should have been sooner) and another estimated tax payment is due in January. This in addition to our health insurance coming due, some dental work my husband had, and our car insurance coming due has put us in the red.

The next year should be better between letting the engineer go and the increase in work, but it will take some time to build our savings up to a comfortable level.

I am so not the kind of woman to not have any idea of what is going on with the family finances- in fact, I am a lawyer who has been staying home the past few years with the kids instead of practicing. I counseled women all the time to know their financial picture and here I am surprised at the mess we are in! I have always lived very frugally before marriage but really the last few years have just let my husband handle the money and it seemed like there was plenty. I guess I just need tips to reduce our spending and start re-saving our savings account.

We are not willing to take the kids out of Montessori school- everything else except internet (needed for work) is fair game. It is amazing the things that I once considered to be luxuries have become a regular part of life so quickly (like the gym, cable/DVR, entertaining)

Food is a great place to start- i am going to challenge myself to use all freezer and pantry items before grocery shopping (other than for fresh items).

[southernmama]

Also- the mortgage pays for our home and the office building on our property where my husband's business is located- so we do not want to sell the home and have only 5 years left to pay off the home and property in full.

We own a double rental that just pays for itself, insurance etc.

We have 2 cars- one paid for- one with one more year on it- we need them both as my kid's school is quite far.

We have about $15 K in credit card debt. ( all acquired in the last two months to keep us afloat)- we have ALWAYS paid our cc in full each month until now

We do not expect to have a profit dispursement until March 2010 (we hope) and that will go to the taxes. So next profit dispursement to start putting to savings (and to save for future taxes) is June 2010- which is also when tuition will come due (10K for both kids).

Is this enough info

[weliveintheforest]

I would look over my bank statement at all the little purchases I put on my cards and see where I could cut back. Stuff like eating out, starbucks, movies, etc would be the first to go, and then maybe work on groceries. There are lots of inspiring threads in this forum about how to make dollars stretch!

[SunshineJ]

Honestly it sounds to me like if you can really tighten things up and weather this next year, you'll be in good shape (provided your husband's business survives). You've laid things out very nicely for success. Is there any possibility of your doing occasional or part time work for a local firm? Maybe some kind of consulting arrangement or teaching a class or two at a local college. It's not immediate wealth but would certainly bring in some extra!

[Free Thinker]

Really, I think you are okay for the long run, just in a cash crunch ATM. If it were ME, I would look at refinancing either the home or business property. You say theya re set to be paid off in 5 years, so taht must mean you have quite a bit of equity in them. While it's not really a good idea to cash out equity, I think in your particular case I would run the numbers and see what you can do. I'd take the amount needed and pay off the CCs, then live on a cash basis until things pick up. I am guessing that the CCs are high interest, which could be wrong of course, but it would be better to take a little longer paying out a mortgage than paying 30+% in CC interest.

[HollyBaby]

Cut all non-necesssary memberships, such as the gym. Cut the landline if you have a cell phone. Cut the cable. Downgrade your internet package.

If the paid-off car has a high value, sell it and buy a cheaper car. Use whatever money is left to pay off the second car. If that pays off the second car, sell it too and buy a cheaper one. Use the remaining money to pay down your credit cards.

Write down all your monthly expenses, from mortgage to what you typically spend on food. Ask yourself if the expense is necessary (mortgage is) or if it's something that's just nice to have, but will not sacrifice health, safety, etc., to do without (cable). Cut everything in the second group. With what's left, ask yourself what can be trimmed (mortgage can't, food can, cell phone package can be downgraded).

[Mama J Rock]

You could also have your DH talk to his CPA because if his income is down that much this year he may not need to make the January tax estimate and still be covered by the first 3 quarterly payments for tax owed. Just an idea to check into anyway.

[redvlagrl]

Hiya, I'm new to this forum but thought I might be able to offer some suggestions. Some of the tips already on this thread are great.

You need to decide what's trimmable (really trimmable) and what's not. To you, your mortgage and tuition aren't. But could you talk to Montessori about your issues and ask if you could have a bursary for this year rather than dropping out (you know you wouldn't do this, but they don't).

Immediately stop buying Starbucks, coffees, lunches etc. That's thousands of dollars down the drain. Get your DH to take all the food he consumes to work - all snacks, drinks, lunches.

Cut down on eating out. You could have a policy of once a fortnight if this is important to you or perhaps make it a breakfast instead of dinner.

Try cooking with cheaper cuts of meat if you are not vegetarian - eg, make casseroles and freeze or use ground beef instead of prime cuts which you would grill (steaks, chicken breast etc).

Nix cable TV, gym (even if there is a small penalty), cell phones. None of these things is necassary even though you might be used to having them. Watch online TV/video (many shows are streaming for free on the cable sites), exercise outdoors. As someone who used to be permanently connected to my cell phone, I happily don't use one now, even though I got a prepaid (keep with me for emergencies). Even cell phones that don't have service get 911 calls - you just keep it charged. IMO, this is really the only *essential* reason to have a cell - and it's free!

Call around and get your car and home insurance re-quoted.

Do you *really* need 2 cars? Could your DH carpool or ride a bike to work? Could you take the kids to school on public transit? Could you sell the car that isn't paid off and use the equity to pay off some CC debt?

Stop buying all processed/convenience foods. Make everything from scratch. If you're not a good cook (yet), invest in the Joy of Cooking and use that. The $$ you spend on the book will be saved in the long run.

Hope this helps!

[Leta]

I have tons and tons of recipes that save money- everything from salad dressing to laundry detergent. If you want them, pm me with your email addy. I literally have 100 pages of recipes, so I can't just post them here.

[GuildJenn]

You've gotten good advice. I would:

- Use a Google Docs or other template (free) to track every penny of spending and income
- Everything you can cancel or take down to a minimum plan, call today/Monday - don't delay.
- $15k in two months sounds really fast and really, really unsustainable. I would want to know what happened with that because that could torpedo your finances pretty badly.
- Do you have space on the property you want to keep that could be rented (garage, part of the office, etc.) to bring in some additional income
- Time to see if you have 'toys' that could be sold (sports equipment you never use, etc.) I know that may sound extreme but it does a few things - it declutters your space so that it's pleasant, and it sounds to me like you're living on credit? Every dollar you spend on credit right now will become $1.25 in interest if it can't be paid off fairly quickly. So if there are things around that can land you some cash, it may be worth seeing if there's a buyer for them - I don't mean some ridiculous price but if you can a reasonable resale price, this may be the time to divest some of those things

In terms of just emotional and family coping I've found the following things help:

- make a list of everyone's favourite meals and see if you can't stock your pantry with inexpensive ingredients for those times you will feel deprived not going out or whatever (for example, homemade nachos - lay in the tortillas to toast, or chips if you prefer, jalapenos, salsa, etc.). Keep the list of what's available inside a cupboard door so when you're tired you won't have to think too hard.

- If you've been in the habit of buying snacks out this is the time to watch sales or make your own granola bars, etc. Make baggies of larger-size mixes rather than buying individual and all that. 15 minutes of planning and scooping into bags can go a long way towards fighting impulse.

- make a similar list of entertainment that's free or really low cost (library/library DVDs; local trails and low-cost sports, festivals coming up, etc.)

- don't go shopping. We save the most money when we just don't go to malls and stores and things.