DH got pay-cut and now we are living outside of our means. I could use some advice.

[herbmama3-7]

Hello might mama's!
Here is the ugly truth about my family that I am standing up to take charge of and change today!
I am the money handler in our family, DH is the earner. We purchased our first home 1 year ago and shortly after DH got a 15% paycut. We were actually anticipating a pay increase and were pushing it with our mrgt. payment as it was before the pay cut. We have a car payment, and CC debt as well as student loan debt. I do not have my degree yet, and have recently been waitressing to get us by. It seems I have to keep pushing my schooling aside just to buy groceries.
All that aside, we have a budget, but not a workable one in my op. We do not have health insurance, but unfortunately DH makes too much to qualify for medicade or food stamps etc. We are in that aweful place of "middle class" where we make just enough to not qualify. I would rather not qualify and learn how to manage our $$ and be good stewards.
My husband hasn't balanced the accounts,it sends him into an anxious fit. I haven't pushed it because frankly I love my DH and the $$ fights are the worst. I am now going to step up, and start the budget, I discussed this with DH and he agrees that it is better if I can do the bulk of it and fill him in when I know. I know it sounds crazy, but our household is going to opperate better this way.
Now where do I start? DH has the budget set up in Xcel, and I hate it, I really do. Does anyone have any fool proof budgeting programs to suggest?

I need to work on getting us to a manageable lifestyle, put a little bit of savings away, etc.

We are upside down on our car, is there a way to get out of that or fix it?

I have worked hard on our grocery $$, yet we live in Boulder CO and it is.as pricey as LA or NY, so living expenses are as low as I can get them We have no tv, no land line, no extras. Just a lot of crappy debt.
Plus we have no stocks or anything at all to tap into! I feel a little hopeless, please help, where do I start?

FYI I do garden and make my own household cleaners, shop for kids clothes at yard sales and thrift stores. I am thrifty, it is our debt and bills that are killing us.

[mamaofprincesses]

It's hard to give advice without seeing a budget, and the exact shortfall. Are you really short, as in you need to consider moving or getting rid of a car? Or are you a little short each month, where some creativity and good management will get you by?

Be brave and lay it all out there!

[herbmama3-7]

Here You go, I totally get it. Thank you!
I would like to considder getting out of the car payment, yet we are upside down and I don't know a way out.
Also we can't move for 2 years because we got the tax initiative for 1st time home buyers. We used that $$ to pay down debt. Yet we are required to live in the home for 3 yrs, or we have to pay it back.

Planned Expenses for August
Monthly Expenses category to spend
in August
car gas $60.00

car insurance $85.00

car payment $313.70

cell phone $150.00

dining out $70.00

Discover card $30.00

donations/Lemonaide international $35.00

electric bill $130.00

entertainment/netflix $18.28

groceries $500.00

household products $80.00

internet $25.00

life insurance $20.70

mortgage $1389.46

bank loan $89.00

Overdraft/convenient $25.00

Peak platinum Elevations CC $116.00

school loans $220.93

tithe $100.00

water bill $75.00

YMCA $35.00

TOTAL $3,568.07

Monthly income = $3,578.50
Which leaves a remainder of $10.43

Note I am making minimum payments on Credit cards-uuuggh!
Also I can't remember the last time we dined out, so the $70 is steep.

Lay it on me, I must look like a fool

[dachshundqueen]

If it came down to me not having groceries or worrying about losing my home, I'd drop the eating out, netflix, donations and tithe (I've discussed tithing with the priest before and groceries and a roof come first per the priest). I understand that you're in a high COL area, but what is your "eating path" per say (veg/tf/conventional/all organic/etc.)?

Your budget is truly too tight for those things.

What are "household products"? What about home maintenance or car maintenance?

Also, if you're not bound by a cell contract or if you are, can you do the math and move to something like a flat rate low cost local provider (here it's MetroPCS)? That's a lot of money for cell phones.

Can you possibly defer your school loans short term?

Liz

[2xy]

Do you use electric for heat? Is your electric bill at a fixed rate each month or will it go up in the winter? Also, do you pay a water bill every month? Most places I've lived charge you once every three months or so.

[macandcheese]

Originally Posted by herbmama3-7

I know it sounds crazy, but our household is going to opperate better this way.

Not crazy at all. Far better for you to deal with the money if you can stay objective about it. No sense for your DH to be overly involved if it just makes him stressed out.

Can you look into a student loan deferment or an income-based repayment plan? This isn't the best long-term option for getting rid of debt, but that extra $220 a month could make a big difference in the short term. You could save up that payment for an emergency fund, or put it towards another debt if you have some savings.

What do you owe on the car? Would it make sense to sell and buy something cheaper? Are there any other transportation options near you? $450 a month for a vehicle (payment, insurance, gas) is a lot when money is tight.

Good luck, mama!

[its_betty]

I live in Boulder, too (hello!).

Little things: drop the Y for now or talk to the YMCA to see if you can get a "full scholarship" for a while. (They were very good to us about after school care when my dh lost his job.)

Save gas money: don't drive: especially if dh works in town, he could be riding a bike to work. Even in winter: they plow the bike paths before the roads. If you and dh can commit to not driving, you might be able to take your car off the road for a few months and save money on insurance, gas, oil changes etc.

Reduce your tithe and donations, just until you are in a safer place financially. Donate your time instead of your money if you can.

Never pay a convenience charge or overdraft fee. Commit to planning ahead and keeping your checkbook balanced.

Sign up for the freecycle list: it's amazing the things people give away, including cleaning supplies and body care products that they decided they don't like. http://www.freecycle.org/

You've got $570 listed for food (groceries and eating out). Could you reduce that to $450? $400? My dh and I use the envelope method for food money: it really helps to see that there is no money left for the week, so we'd better scrounge for dinner in the cupboard.

Good luck!

[CherryBomb]

Well, if you drop dining out, donations, tithe, entertainment/netflix, and the YMCA, you can save $258.28 Have you applied for income based repayment for your student loans? You might be able to get that significantly reduced. I'd try to reduce the grocery budget, too.

Good luck!!

[simple life]

I second what everyone else has said. I would also think about ways to reduce how much you spend on food. We currently lost our food stamps and then hubby's work cut overtime, so we are VERY, VERY strapped for food. Sometimes you have to eat the cruddy processed boxed food or live on ramen noodles and rice for a little bit. Reducing the tithe/donations and cutting down the netflixs, also, your cell phone bill is somewhat high, do you have the internet on your phones? Maybe you could cut that out and just keep the net at home?

You need to call the student loan place. There are income contengient plans as well as deferrments. If I recall, they didn't even ask my hubby's income, just mine (which is 0 since I stay home). That would save you a LOT of money each month.

[herbmama3-7]

Thank you everyone, for taking a look at my life. I do appreciate the time and advice. I am going to take action on a few of the things listed.
I will talk to DH about the Netflix account, and I have already illiminated the eating out.
I am definately going to look into the income based student loan repayment plan, and got my gas and
electric set at a fixed rate. My grocery bill is a little high, but bear with me, I study holistic nutrition and herbology, health starts with the food you consume and I just can't buy the crappy junk, I just can't. I think I can feed us on $100 a week. It is pushing it though in this town. Not to mention I make a lot from scratch.
DH bikes and busses to work, we keep the car because of needing to see family a couple hours away and for little day trips to the mtns. For sanity sake.

I am praying for my Dh to be able to find a new job, until then I am going to get very diciplined and do my best.

Thanks again, keep the info coming if you have any!

[2cutiekitties]

Just wanted to mention Blockbuster has a cheaper alternative. Maybe netflix has it to......

BLOCKBUSTER By Mail $4.99 / month (plus taxes)
1 at-a-time, 2/mo.

[confustication]

You can loosen up about $600/month cutting non-essentials, and FOR NOW, I think you should. I also include school loans here, because I think you can probably be able to defer or substantial reduce what you are paying atm.




cell phone $150.00

dining out $70.00

donations/Lemonaide international $35.00

entertainment/netflix $18.28

school loans $220.93

tithe $100.00

YMCA $35.00

Total = $629.21 without altering the school loans that is still $408.28 you have freed up.

[SuzyLee]

No idea if all Y's do this, but a friend of mine works at the Y childcare (gets paid and can bring her kids) and gets 1/2 off her Y membership too. She only works once or twice a week for a few hours.

I would seriously consider dumping the cell phones. At 150 a month it is probably worth paying the cancellation fees. At the very least get rid of data plans, texting, and drop to the lowest number of minutes.

I know how you feel mama. We have a very similar income and mortgage. It is tight.

We spend about 400/month on groceries and eat very little processed and mostly organic. I buy my rice, beans, and flour in bulk and we eat little meat. I have a huge garden (plant your fall greens now!) and that helps a lot- for example we never have to buy tomatos, dark leafy greens, or pickles bc I grow all we need for the year and preserve them.

[Nemesis]

Also, you can keep Netflix but just watch online or get one at a time. I think it's $10 to have one disc at a time, and unlimited instant viewing.

[sunnysandiegan]

First of all, you do not look like a fool. Asking for help is admirable!

Next, I would suggest separating your bills into "variable" and "fixed" columns. Give each line item serious consideration as you decide which column it belongs in. Perhaps you want a third column for transition items that you'd like to eliminate in the next few months. With the "variable" column, watch your total each month at several key points (paychecks or weekly or 10th/20th/30th or whatever). Whenever you have a surplus, mentally set it aside to go towards something else later that month.

Several things jump out at me.... (no need to answer, just food for thought)
~ What is the Overdraft/convenient $25? If this is a form of savings, then by all means keep it. If it is what it sounds like, which is a fee of some sort, please find a way to ditch that.

~ cell phone $150... What is really important to you and DH on that plan? Call up and ask questions. Can you get what you want and lower the bill? Can you lower your features/usage and lower the bill? How much longer for your contract? Can you ditch it altogether and get a pay-as-you-go plan for short-term?

~ I think donating to charity (any kind you believe in) is really good. In times like you are describing, I would cut back to bare minimum short-term ($5 each or 1% or something scaled way back). It is short-term.

~ I read that your electric bill and water bills are leveled out. I would encourage your family to lower the usage of both as much as possible. Not for the immediate reward of lower monthly payments in the next few months, but for lower monthly payments when your term comes back up (and perhaps a rebate of some kind). You need a way to increase your bottom-line for a year or two, so every little bit counts.

~ Regarding your car... How much do you owe? How much will a dealer give you for it? How much does your car go for on private listings in your area? How long would it take to to recoup the loss considering the absence of pmt, gas, and insurance? If it were me and the timeframe was roughly six months or less, then I would do it in a heartbeat. Family would have to come to me for awhile. Desperate times call for desperate measures. You can pick up a different car when your circumstances change.

~ YMCA.... How often do you go? Is it really important to your family? It is a low enough expense that I wouldn't worry much about it, but every dollar counts. A part-time job there could work well, depending on the circumstances. My friend teaches one class a week a our local Y (4 hours a month) and gets her family membership free. There are some odd restrictions, but they make it work in their family.

~ All loans.... What is the balance on each? What is the APR on each? There are many schools of thought on this. Follow what suits you. My rule of thumb is if there is one balance that is significantly lower than the others, then I recommend focusing on that until it is paid off because it frees up that monthly payment forever. If there is one APR that is significantly higher than the others, then I focus on that loan next because that is money spent just to have a loan. Work it out however you want, but you need to start paying more than the minimum payment on at least one loan. You find the money by lowering your monthly expenses as much as possible and put every dime you can towards that first loan to be paid off (where the variable column comes into play). Then, once one is paid off, you add that monthly amount to the minimum payment of the next loan and get that one paid off. Throw every spare cent at one loan at a time while paying the minimum amount on the others.

~ Specifically, your student loan.... I would defer it if possible in order to use that monthly amount to pay off one of your other loans ASAP.

Lastly, you didn't mention any cash savings. You'll need to build up some cash in order to prevent adding to your credit cards because your monthly expenses are too close to your monthly income (as you already seem to know... just putting it out there in black and white)....

I think you are brave and will come through this just fine!

[lach]

I would cut out all of the donations and tithing, and put that money towards credit cards.

The trick to paying off your credit cards is to start paying the one with the highest APR off first. Call each credit card and ask them what your APR is and if they'll lower it for you. They may, they may not. It's not a big deal to call (it's worth calling every 6 months and asking, btw) and the worst that will happen is they'll say no. Then put as much money as you can to the card with the highest APR, and pay the minimum on the others. The minimum usually covers interest and nothing more, so if you're just paying the minimum you're not really paying off the card: you're just paying their fees which will never go down. Once that card is paid off, move to the one with the next highest APR.

Groceries are, ime, the most flexible way to save money. Really work on a weekly meal plan and a shopping list. Go through your pantry and make a list of what you already have and try to use it up. Make larger batches of inexpensive food and freeze: that way you also won't be tempted to eat out on those days when you're particularly busy or particularly lazy. Soups are really good for that. Depending on how big your family is, I bet you can shave $200 off your food budget and still buy high quality foods.

It might be worth it to defer your student loans, at least until your credit cards are paid off and you have a thousand or so dollars in savings. But you are only allowed a limited number of months total that you can defer, so you might want to save it just in case the situation gets worse (DH loses his job entirely, for example). Not to scare you... it's just an option but I think that if you trim in other places you don't have to defer it.

Depending on how often you use the YMCA, I would keep it. It's not very much money, and if you spend a lot of time there it's worth it. LOL you can save money by showering there every day: think of how much water you'll save! And if they have a nice daycare, $35 a month is a really cheap way to entertain your kids.

Good luck!

[Juvysen]

~ YMCA.... How often do you go? Is it really important to your family? It is a low enough expense that I wouldn't worry much about it, but every dollar counts. A part-time job there could work well, depending on the circumstances. My friend teaches one class a week a our local Y (4 hours a month) and gets her family membership free. There are some odd restrictions, but they make it work in their family.

this is an excellent point. when I worked there in college, as long as you worked one hour every other month, you get a free family membership (um, and you get paid for your work time). May be worth considering. You may even be able to work at times that your kids are busy with activities... Our Y has "summer in the city" and afterschool care and things like that, so you may be able to work out childcare accomodations. Beyond that, our Y offers suspension of your membership on a month by month basis for situations like this so you don't get stuck paying the start-up fee again if you need to drop your membership for a month or two. I think it's $10/month for that at ours, instead of the normal $60/month ...

They're also really good about working with people that are in a bind.

[mnnice]

I think I would think about getting rid of your car. Based on you posts and gas budget you aren't using it much anyway. If you want to visit family, go camping, make a run to the city for cheaper groceries you should be able to get a weekend car rental once or twice a month and still come out ahead.

You live in an expensive place, but the much more liveable without a car than most places in the US.

[Denvergirlie]

Like the others, you need to see where you can shave a few bucks off hear and there.

Cell phone - needs to be lowered
Netfliks - Can you drop down to the 9.10 plan? 1 DVD out at a time and online watch instantly?

grocery shopping - have you gone to Sunflower market?
Can you coupon for any of your items?
I'm up in Evergreen, things are expensive, but I never spend more than $300 a month in groceries unless we have some big party or gathering that I need to spend a bit more on. I even take trips to Denver for grocery shopping every 2 months or so, I can cut my costs, even thou I have to drive further. Also, you can check out Smart Co, new cash and carry store in Denver, but the locations stink so far, but it can still be worth it if you are going to town already.

Water and electric - can you cut consumption? Put things on power stirps, unplug items not in use? We unplug all the lights, alarm clocks in guest room, unplug most kitchen items, unplug the electronics, have seen our costs drop this summer which is good as they go up in winter due to the blower on the fireplace.

Sometimes you also have to look at more income. Job at the Y would be great, to lower your costs and increase income even if it's enough to pay for Netfliks each month or whatever.

Is there any part timr/ one off gigs you or DH can do to increase income?

Student loans - can you defer for a bit until you can pay down some of your other debts?

if you could get crazy serious for a year or 2 and attack the debt and get rid of the credit cards and car, you would be in a much better place finance wise.

best of luck!

[laohaire]

Whether you decide to sign on with his plan, read Dave Ramsey's Total Money Makeover because it is very MOTIVATING. Follow his plan exactly or adjust the way you want it, either way it's a great way to get you pumped up.

The water bill seems EXTREMELY high to me. Ours is like $200 a year, and my husband is a huge water waster (drives me nuts). Of course it could just be a location thing; water might just plain be expensive in your area if you're in a dry place. (We're not).

A PP mentioned to pay off the credit cards in order of the highest APR. That's one method, and another method (Dave Ramsey's) is to pay off the smallest balance first. You decide which works for you. The benefits of paying off the smallest balance is motivation. Let's say you owe less than $1000 on one of your cards; you could pay it off in a few months if you throw every dime you have at it - and you'll feel GREAT and keep going. Dave argues that the difference in interest is fairly small, and I've done the math on my own stuff before (I think I found that by doing it his way, we'd pay $35 extra on interest at the end of the game; I thought $35 was well worth it in motivation). Also, another thing I like is, when you have fewer payments you have more options. So if you've freed up a few little payments, even though you apply the freed-up payments to the next debt, if there's another paycut you have more options than if you're only 50% of the way through paying down a big high interest loan and still have to pay the minimum on the other little loans. But the point is, you decide based on what works for you guys. Honestly if I had 3 loans and 2 were at 4.5% and one was at 25% I would have a hard time putting any money toward anything other than the 25% loan. If my loans were all in the 4-10% range, I wouldn't sweat it though.

You can do it!