WWYD with this tax return? - Page 3

[waiting2bemommy]

I still have to finish it. I'm hoping to stay under that limit, right now I only owe a couple thousand.

As far as the car note, it's not even that great of a car. It's a 2001 Impala. We still owe like 2.5 yrs. We got it because at the time our car went kaput and we needed something immediately for trade in only, we had no cash to put down. So we had to go to one of those shady dealers. Hoenstly it has been a PITA since day 1.

I looked up my credit report, to see exactly how bad it was. It is pretty bad. There is almost `no `positive credit on there because I have never had any credit. There are 26 negative things on there. Two of them are really old library fines/missing books that I plan to pay off with this return. They are fairly small debts, I think altogether between me and the kids' cards like $125. The others are ALL, every single one, a medical bill. I was thinking about trying to get that stuff cleaned up.  Probably half of those bills should have been covered by medicaid so with some effort I could get them resolved. The other half were bills incurred when we were in TX and GA and had no insurance (and were not doing too well) so I would think I could call those hospitals and see if they can work with me through their charity program. If I could eliminate the medical bills and library fees that would be all the negative things on my credit. 

What would that do for me? Anything? I still wouldn't have any positive credit, but maybe I would qualify for a credit card with a VERY low limit, that we could use to pay the bills each month and then pay off automatically out of a bank account. I just want to establish enough credit that I can get an apt without having to pay half a year's rent upfront (I'm exaggerating, but still)

Originally Posted by MyTwoAs 

Your forgiveness is capped at $5,000 unless you are a "highly qualified" special education teacher, in a qualified school district - definitely check out the link DMCG posted. I'm sorry if I missed it but do you already have your bachelor's degree or do you still need to finish it?

With regards to the tax refund, you have received great advice here - pay what you need to get into your new place, sell the car, and stash the rest for savings. Honestly, and I know you didn't ask this specifically, but a $340 car payment is just nowhere near realistic with your budget. I'm not trying to be negative but that is a huge payment and just not sustainable in the long run. How much is left on the note (time, that is)?

[mar123]

If you are teaching, you will have a hard time getting a hardship deferment. I just don't want you to be counting on that. The income limits for that are very low. My dh has been unemployed for 6 months; he was 60% of our income, we have 3 kids,  and we still don't qualify for any type of deferment. You usually have a standard waiting period of 6 months once you graduate before you have to start paying on them.

Also, make sure you don't consolidate your loans with a spouse. Then you can't get the loan forgivenes amount.

[chely7425]

Originally Posted by mar123 

If you are teaching, you will have a hard time getting a hardship deferment. I just don't want you to be counting on that. The income limits for that are very low. My dh has been unemployed for 6 months; he was 60% of our income, we have 3 kids,  and we still don't qualify for any type of deferment. You usually have a standard waiting period of 6 months once you graduate before you have to start paying on them.

Also, make sure you don't consolidate your loans with a spouse. Then you can't get the loan forgivenes amount.

This must depend on the kinds of loans... I had no trouble deferring my loans.

[dustylane]

I agree with a lot of the other suggestions, mostly stash away any of the extra for an emergency.   That's a lot of money that can do some serious good in your situation.  I really think you need to look at the heart of your problem and that would be a budget.  You're obviously spending more than you make seeing all the late bills.  So planning out a budget would be a major consideration before you spend any of that money.  Sit down with DP and write down how much you each bring in.  Then list each and every expense you have.  See where that leaves you and what you need to cut out and change.  And make a budget that you can both stick to.   This is called zero-based budgeting and has worked wonders for our family.  Check out daveramsey.com for some more great suggestions on budgeting.  Then see where you really need tax return money to make it through another year.  I agree everyone needs some blow money but in your situation $500 each is way too much.  

Another thing that hasn't been mentioned that I think is a biggie is finding ways to increase your income.  I think it's great that you're pursuing your degree.  You say your DP works 35 hours a week, I know it's tough with kids but is there a way he could get a second job?  I'm a big Dave Ramsey fan and I know this is probably the first thing he would say. 

Anyway good luck.  I know it's tough, but if you really want to change you need to make some goals.

[savithny]

Originally Posted by waiting2bemommy 

As far as the car note, it's not even that great of a car. It's a 2001 Impala. We still owe like 2.5 yrs. We got it because at the time our car went kaput and we needed something immediately for trade in only, we had no cash to put down. So we had to go to one of those shady dealers. Hoenstly it has been a PITA since day 1.

I looked up my credit report, to see exactly how bad it was. It is pretty bad. There is almost `no `positive credit on there because I have never had any credit. There are 26 negative things on there. Two of them are really old library fines/missing books that I plan to pay off with this return. They are fairly small debts, I think altogether between me and the kids' cards like $125. The others are ALL, every single one, a medical bill. I was thinking about trying to get that stuff cleaned up.  Probably half of those bills should have been covered by medicaid so with some effort I could get them resolved. The other half were bills incurred when we were in TX and GA and had no insurance (and were not doing too well) so I would think I could call those hospitals and see if they can work with me through their charity program. If I could eliminate the medical bills and library fees that would be all the negative things on my credit. 

Does that car note include rolling in a previous car loan?    By my calculations, with 2.5 years to go, you're looking at paying another $10,200 before you're odne -- for a car that is worth *maybe* a third of that.  Even if you got an absolutely usurious (and criminal) interest rate, it still seems like you got taken on the price of the car itself.   

As long as you're this close to the edge, any cleaning up of yoru credit you do is going to be cancelled by new late payments on things.   If you don't put some of the cash into an emergency fund, the first time an unexpected expense hits, you're going to start racking up negative credit -- and these ones will be newer and take longer to drop off.  

You really need not just a plan for this cash, but a real sense of where your money goes and how much you need each month AND what an "emergency" really is.   There are almost certainly things you should be able to see coming at you on the horizon, and know you have to be ready for.  Many car repairs aren't really "emergencies," for example -- you can pretty safely predict things like needing new tires, needing brake jobs, needing mufflers.  Those things are going to happen and happen at fairly regular intervals.  So you need to have money put aside for them, or put aside money regularly to cover them when they happen.

[Sharon, RN]

Sent you a pm, but I think you are getting some good advice here.  :-)  

[phathui5]

"DP makes $9.50/hr, 35 hrs a week and I just got hired at a new job for $7.25/hr, 25 hrs/wk. We have to pay $100/wk for childcare because sometimes our shifts overlap at night and we need a sitter for those times. So it would make our lives much less stressful. what do you think? Good idea? Bad idea?"

At 7.25/hr, you would have to work 13 1/2 hours to pay your baby sitter that $100/week. So you would be working 25 hours a week to make just under $83, which puts you at bringing home $3.32 an hour before taxes.

[savithny]

Originally Posted by phathui5 

"DP makes $9.50/hr, 35 hrs a week and I just got hired at a new job for $7.25/hr, 25 hrs/wk. We have to pay $100/wk for childcare because sometimes our shifts overlap at night and we need a sitter for those times. So it would make our lives much less stressful. what do you think? Good idea? Bad idea?"

At 7.25/hr, you would have to work 13 1/2 hours to pay your baby sitter that $100/week. So you would be working 25 hours a week to make just under $83, which puts you at bringing home $3.32 an hour before taxes.

But when you are in her shoes:

1) that $83 a week can make the difference between making a bill and letting it default.  

2) You need to have *some*  income to apply for the Earned Income Credit

3) Childcare isn't forever, and working those hours aren't forever.  In my experience, a short time of working for just a little (because of childcare costs) more than paid off, because I built work history in one place, I got longevity raises, I got seniority (which can bring better hours).  And when my kids went to school, I didn't have to pay as much in childcare.

In balancing childcare vs. wages, you've got to look at the longer term, sometimes.

[Sharlla]

Originally Posted by crunchy_mommy 


The other thing I think is CRUCIAL here is readusting your tax withholding. Maybe there are factors of your tax status that I'm not aware of/thinking of, but IMO if you are getting more than $500-1000 back, you are having WAY too much withheld. You need that money for your day-to-day living expenses, not sitting there interest-free waiting for you to file once a year! If you reduce your withholding, you could have several hundred dollars extra a month, and still get a small refund next year. You'll save on late fees and not have to worry about your electricity getting shut off.

I did adjust my withholding.  I paid less than $300 to federal and we still got back $6700.

[waiting2bemommy]

Well, good news. Small good news, but nonetheless: I'm scheduled for 18 hrs of work next week, and all of them are first shift!!! So we won't need any childcare next week unless I get called in for extra hours.

Savithny, in this case, the job is not one I plan to stay at terribly long term (it's 7-11 and I HATE it) but it works for the forseeable future because it's close to where we are, and my friend is a manager there so I was pretty much a shoo in. I'm hoping that with her being promoted soon it will help her to get me the hours I want, lol! So it's not a career path for me, but you are right on about that $83 being desperately needed.

I would much rather babysit from home or do something else, but it makes DP feel more supported and more secure when I bring home an actual reliable paycheck vs waitressing for tips (which can be unpredictable) or doing off the books childcare which can also be unpredictable (and people don't always pay up). In his defense, we did try both of those things and host of other money making schemes and he finally put his foot down and insisted I get a "regular" job because he just can't deal with not knowing how much money we have to work with.

I'm currently on the hunt for a good high school sitter who won't be depending on my money to pay bills or feed kids, so that I can pay by the day rather than by the week and not feel guilty about it! I just can't pay another SAHM or any adult with responsibilities $35/day and have her not even knowing how many days or hours she'll be needed. How could she plan HER life, yk?