Drowning financially due to debt and job
March 10, 2010 8:01 AM Subscribe
Financial life in chaos. Now what?
Another day of savings/checking down to zero and totally sick of it.
I make close to six figures. However, I also pay 90% of bills from my check (utilities, groceries, doc bills), including $300 min payments on a $15k credit card. Mortgage $1,680 (including taxes). In short, two of the biggest bills.
Spouse makes about $30k with owning their own business but it's not growing. The business has been in maintenance mode or losing money. It's not that they're not trying but it's a discretionary income-reliant business. Clients are slow to pay or are dropping. I rather not outright say the business (search engine possibility) but it's in the animal industry with things that swim (hopefully that's enough info).
We have a child and we were spending $800-1200 on nanny care. No, we don't have family options and day care wasn't in the cards per pediatrician (he was sick a lot and we needed him healthy). So now, spouse stays home 3 days and pays worker to do the job. He then works 2 days so he doesn't have to pay worker. The goal was to save money on the nanny but also give me lump sums so I can pay down my cards. Well 3 months into it, it isn't happening. They're paying off other bills or something comes up so helping me out gets pushed off farther and farther and our debt, bills, bank account to zero is a non stop cycle.
He's been doing this for almost 10 years and has tried all sorts of angles including cutting ties with partners so a 50% profit share and overhead isn't happening anymore.
We're drowning. I think it's time for a part time job. They say no way (thinking nights won't pay enough). Won't do weekends either since they cherish their weekends.
So I said figure out how to keep the business with the worker but it's probably time to reenter the 9-5 work force. No luck. Two resumes went out. Nothing. I can also tell they don't want to "quit' and reenter the work force. All I hear is "this is the economy, even union workers are out of work." Finally, no college degree makes finding a 9-5 job difficult.
I barely see our child during the week due to my hours/commuiting (2 hours tops) and honestly, I feel that this financial burden isn't because of me. I did everything possible to get us out of debt but possibly screwed us into deeper debt and now I can't figure how to get out of it. We cashed out on a refi, I let them pay off all their cards.
I can't save anything from my check. I did an Excel budget to know where things are going. Med bills are coming in from child's hospital stay. I tried debt consolidation--I make too much. I asked about bankrupcy options for the card--again, I make too much.
This is taking a significant toll on my mental health. I wasn't raised to take on debt but ever since I've been married (almost 10 years) now I constantly swim in it. I'm at wits end thinking if this continues, we won't have a retirement, no savings, how the heck am I going to buy another car down the road when this one breaks? I'm putting away 10% of income for 401k, gifts from child's bdays, etc is all I can rely on for a college fund.
I don't know what to do? Divorce? Sell the house ( a complete failure to me and spouse refuses)? In this economy, I can't make any more money. I think they need to pony up and get a second job, new job, something---but they refuse. So what does someone do to get out of this?
Yes, I made mistakes in the past financially but the last 2 years, I've been hard nose to the grindstone on a budget, cutting costs, not spending unless it's necessary. What does someone do?
Another day of savings/checking down to zero and totally sick of it.
I make close to six figures. However, I also pay 90% of bills from my check (utilities, groceries, doc bills), including $300 min payments on a $15k credit card. Mortgage $1,680 (including taxes). In short, two of the biggest bills.
Spouse makes about $30k with owning their own business but it's not growing. The business has been in maintenance mode or losing money. It's not that they're not trying but it's a discretionary income-reliant business. Clients are slow to pay or are dropping. I rather not outright say the business (search engine possibility) but it's in the animal industry with things that swim (hopefully that's enough info).
We have a child and we were spending $800-1200 on nanny care. No, we don't have family options and day care wasn't in the cards per pediatrician (he was sick a lot and we needed him healthy). So now, spouse stays home 3 days and pays worker to do the job. He then works 2 days so he doesn't have to pay worker. The goal was to save money on the nanny but also give me lump sums so I can pay down my cards. Well 3 months into it, it isn't happening. They're paying off other bills or something comes up so helping me out gets pushed off farther and farther and our debt, bills, bank account to zero is a non stop cycle.
He's been doing this for almost 10 years and has tried all sorts of angles including cutting ties with partners so a 50% profit share and overhead isn't happening anymore.
We're drowning. I think it's time for a part time job. They say no way (thinking nights won't pay enough). Won't do weekends either since they cherish their weekends.
So I said figure out how to keep the business with the worker but it's probably time to reenter the 9-5 work force. No luck. Two resumes went out. Nothing. I can also tell they don't want to "quit' and reenter the work force. All I hear is "this is the economy, even union workers are out of work." Finally, no college degree makes finding a 9-5 job difficult.
I barely see our child during the week due to my hours/commuiting (2 hours tops) and honestly, I feel that this financial burden isn't because of me. I did everything possible to get us out of debt but possibly screwed us into deeper debt and now I can't figure how to get out of it. We cashed out on a refi, I let them pay off all their cards.
I can't save anything from my check. I did an Excel budget to know where things are going. Med bills are coming in from child's hospital stay. I tried debt consolidation--I make too much. I asked about bankrupcy options for the card--again, I make too much.
This is taking a significant toll on my mental health. I wasn't raised to take on debt but ever since I've been married (almost 10 years) now I constantly swim in it. I'm at wits end thinking if this continues, we won't have a retirement, no savings, how the heck am I going to buy another car down the road when this one breaks? I'm putting away 10% of income for 401k, gifts from child's bdays, etc is all I can rely on for a college fund.
I don't know what to do? Divorce? Sell the house ( a complete failure to me and spouse refuses)? In this economy, I can't make any more money. I think they need to pony up and get a second job, new job, something---but they refuse. So what does someone do to get out of this?
Yes, I made mistakes in the past financially but the last 2 years, I've been hard nose to the grindstone on a budget, cutting costs, not spending unless it's necessary. What does someone do?
It sounds like this is more of a relationship question than a money question. Have you had the talk where you tell "them" that if you can't reach some compromises on these financial issues (i.e. getting a freaking job, even if it's "beneath" them), you're considering divorce?
I'd rather not work at my current job either, but I don't have a safety net, or the perception of one, to make it feasible to say "no way." Let him know that you both don't have a safety net either--and to the extent that you're it for him/her, you're almost done.
posted by availablelight at 8:15 AM on March 10, 2010 [2 favorites]
I'd rather not work at my current job either, but I don't have a safety net, or the perception of one, to make it feasible to say "no way." Let him know that you both don't have a safety net either--and to the extent that you're it for him/her, you're almost done.
posted by availablelight at 8:15 AM on March 10, 2010 [2 favorites]
First, I think that you're a case for Suze Orman. Or if not a super famous on-TV financial planner, at least a real-life financial planner.
But secondly, it sounds like you need to be making some major changes though. Here are some thoughts.
Money, outside of your spouse:
1. You may be eligible for debt consolidation even though you make a lot. Did you try multiple companies? I use MoneyManagementInternational as per AskMe's recommendation.
2. Are you absolutely sure that your child is "too sick" for daycare? I don't want to get up in your business, but this sounds fishy to me. 2a. Can you nanny share with another family to bring down the cost?
3. Is your house beyond your means? Really figure out if owning your home is the best financial situation for you right now. It may be possible that renting is a better deal for you right now.
4. Don't worry about your kid's college fund. He can take out low interest loans for college. You can't take out loans for your retirement.
5. Only contribute to your 401k as much as your employer matches. The rest should go to paying off your debt.
6. When people say that they are penny pinching, make sure that you really are. Can you go to 1 car? Public transit? Move closer to public transit? Move closer to your work place? Sounds like your commute sucks.
--
Now, dealing with your spouse. I hope that he (she?) is an excellent provider of childcare because otherwise he (she?) is sounding like quite an a-hole right now.
I'd be careful with divorce, at least financially, because it sounds like s/he could collect alimony from you.
Maybe instead of running this fish business, spouse could go back to school? If s/he doesn't have a BA, s/he is certainly eligible for financial aid and loans. Make sure that s/he takes them out in his/her own name. This will also give him/her more options down the line - whether that be for contributing more income for your joint life or his/her solo life. Also, in my experience there are a lot of secondary benefits to being a student. For example, you would be eligible to live in family student housing (this may sound awful, but it is SO CHEAP!), eligible for reduced pay childcare, etc.
If I were in your shoes, I'd really consider sending him/her back to school.
posted by k8t at 8:25 AM on March 10, 2010 [1 favorite]
But secondly, it sounds like you need to be making some major changes though. Here are some thoughts.
Money, outside of your spouse:
1. You may be eligible for debt consolidation even though you make a lot. Did you try multiple companies? I use MoneyManagementInternational as per AskMe's recommendation.
2. Are you absolutely sure that your child is "too sick" for daycare? I don't want to get up in your business, but this sounds fishy to me. 2a. Can you nanny share with another family to bring down the cost?
3. Is your house beyond your means? Really figure out if owning your home is the best financial situation for you right now. It may be possible that renting is a better deal for you right now.
4. Don't worry about your kid's college fund. He can take out low interest loans for college. You can't take out loans for your retirement.
5. Only contribute to your 401k as much as your employer matches. The rest should go to paying off your debt.
6. When people say that they are penny pinching, make sure that you really are. Can you go to 1 car? Public transit? Move closer to public transit? Move closer to your work place? Sounds like your commute sucks.
--
Now, dealing with your spouse. I hope that he (she?) is an excellent provider of childcare because otherwise he (she?) is sounding like quite an a-hole right now.
I'd be careful with divorce, at least financially, because it sounds like s/he could collect alimony from you.
Maybe instead of running this fish business, spouse could go back to school? If s/he doesn't have a BA, s/he is certainly eligible for financial aid and loans. Make sure that s/he takes them out in his/her own name. This will also give him/her more options down the line - whether that be for contributing more income for your joint life or his/her solo life. Also, in my experience there are a lot of secondary benefits to being a student. For example, you would be eligible to live in family student housing (this may sound awful, but it is SO CHEAP!), eligible for reduced pay childcare, etc.
If I were in your shoes, I'd really consider sending him/her back to school.
posted by k8t at 8:25 AM on March 10, 2010 [1 favorite]
Give the partner a copy of all the bills, records etc. and lock them in a room with the open Excel spreadsheet on it. Tell tem they can't come out until they make it balance.
Sometimes, one partner handles most of the finances and the other does not clearly know what's going on. Maybe your partner needs to see it all in black and white to realize what the scope of the problem is?
posted by JoannaC at 8:25 AM on March 10, 2010 [4 favorites]
Sometimes, one partner handles most of the finances and the other does not clearly know what's going on. Maybe your partner needs to see it all in black and white to realize what the scope of the problem is?
posted by JoannaC at 8:25 AM on March 10, 2010 [4 favorites]
You may need a couple of professionals here. I think you need one for finances. Spend the money on a good, recommended financial planner, and I really think you will be surprized at what options you have. Next, find a couple therapy person. It doesn't sound like you are communicating how you feel fully (understandable, and not a dig at you!) and it doesn't sound like your spouse is communicating very well, either. Sick kids are very stressful to any marriage. Please work through that!
posted by kellyblah at 8:43 AM on March 10, 2010 [1 favorite]
posted by kellyblah at 8:43 AM on March 10, 2010 [1 favorite]
What about an au pair instead of a nanny? The au pair lives with you, and in exchange you spend a ton less money. Or what about just a straight barter arrangement of a room for childcare?
posted by Ashley801 at 8:48 AM on March 10, 2010
posted by Ashley801 at 8:48 AM on March 10, 2010
The OP sounds like the wife, and the husband is the one owning the dying business. Take your husband to a financial planner. Put him in charge of figuring out the solution. Consider selling/renting out the house and renting a cheap 2 bedroom for you guys?
posted by anniecat at 8:52 AM on March 10, 2010
posted by anniecat at 8:52 AM on March 10, 2010
For the benefit of people who don't want to do the math, I eyeballed this and came out with:
(Assumed salary of $90,000/yr in takehome pay)
$90,000
-$20,160 mortgage
$69,840
-14,400 max nanny
$55,440
-$3,600 credit card min payment
$51,840
-$12,000 bills, estimate
$39,840
-$6000 misc. expenses
$33,840 TOTAL after expenses, end of year
Your husband's business is sinking, pardon the fish pun, but it's HIS. Don't pony up household money for his business expenses if he isn't paying for household things, just to keep him afloat. Set him free to run or fail his business as he sees fit, extricate your money from it entirely, and now breathe, because you have around $33,840 per year to get you along after you've paid your expenses. Imagine, if you can, that you're a single-income household. It's just you, anonymous. Your paycheck.
Small steps, anonymous. You can do it. Lots of people do. One thing at a time.
Get a handle on the medical bills for your kiddo's hospital stay. Talk to the hospital about working out a payment plan. Pay them a set amount every month, agreed upon, and they'll stop hounding you.
Map out your debt and start snowballing it to pay it off. Google "debt snowball" to give you an idea of how to get started. People pay off immense amounts of debt using this method and additionally, it is very empowering. I think you need that right now.
Look at your employer match on your 401(k), and only contribute as much as your employer matches. The rest should get put into paying down your debt. Think of it this way: what's the use in saving 10% of your income for retirement if you're going to be paying off debt once you're there with those glorious dividends?
It sounds like your (very sick) kiddo is quite young. Not old enough for school yet. Just... hold off on the college savings. I know a lot of people advise to save save save (!) as soon as your dipstick turns blue, but seriously, you can make a choice to let it lie for a couple of years in favor of getting kiddo off to a good financial start in life. Soon enough, he or she will go to school! No more nanny. Now, imagine putting the amount you spend on a nanny away in a college fund for kiddo every month instead. That is a gift to your kiddo, who you love so much.
I can't speak to how to "make" your husband get a new job, or go back to school, or anything. I don't know how to "make" someone do something. So my advice is all for you: put it all on your shoulders, because you can handle it. You are a person who is skilled enough to pull down almost six figures in salary, who is strong enough to endure the illness of a child, who is smart enough to know that she needs some help.
posted by juniperesque at 8:53 AM on March 10, 2010 [5 favorites]
(Assumed salary of $90,000/yr in takehome pay)
$90,000
-$20,160 mortgage
$69,840
-14,400 max nanny
$55,440
-$3,600 credit card min payment
$51,840
-$12,000 bills, estimate
$39,840
-$6000 misc. expenses
$33,840 TOTAL after expenses, end of year
Your husband's business is sinking, pardon the fish pun, but it's HIS. Don't pony up household money for his business expenses if he isn't paying for household things, just to keep him afloat. Set him free to run or fail his business as he sees fit, extricate your money from it entirely, and now breathe, because you have around $33,840 per year to get you along after you've paid your expenses. Imagine, if you can, that you're a single-income household. It's just you, anonymous. Your paycheck.
Small steps, anonymous. You can do it. Lots of people do. One thing at a time.
Get a handle on the medical bills for your kiddo's hospital stay. Talk to the hospital about working out a payment plan. Pay them a set amount every month, agreed upon, and they'll stop hounding you.
Map out your debt and start snowballing it to pay it off. Google "debt snowball" to give you an idea of how to get started. People pay off immense amounts of debt using this method and additionally, it is very empowering. I think you need that right now.
Look at your employer match on your 401(k), and only contribute as much as your employer matches. The rest should get put into paying down your debt. Think of it this way: what's the use in saving 10% of your income for retirement if you're going to be paying off debt once you're there with those glorious dividends?
It sounds like your (very sick) kiddo is quite young. Not old enough for school yet. Just... hold off on the college savings. I know a lot of people advise to save save save (!) as soon as your dipstick turns blue, but seriously, you can make a choice to let it lie for a couple of years in favor of getting kiddo off to a good financial start in life. Soon enough, he or she will go to school! No more nanny. Now, imagine putting the amount you spend on a nanny away in a college fund for kiddo every month instead. That is a gift to your kiddo, who you love so much.
I can't speak to how to "make" your husband get a new job, or go back to school, or anything. I don't know how to "make" someone do something. So my advice is all for you: put it all on your shoulders, because you can handle it. You are a person who is skilled enough to pull down almost six figures in salary, who is strong enough to endure the illness of a child, who is smart enough to know that she needs some help.
posted by juniperesque at 8:53 AM on March 10, 2010 [5 favorites]
I've met two young-ish couples who totally straightened themselves out by taking the Dave Ramsey course. Some Mefis disagree. However, for basic, get-started-today-with-baby-steps financial debt reduction, the Ramsey workshops are a good beginning when you're overwhelmed by debt. Both and and S. Orman do talk about the stress on marriages and families, but you may need more support on that end of things if you can find the time and money for that.
posted by Elsie at 8:55 AM on March 10, 2010
posted by Elsie at 8:55 AM on March 10, 2010
With a combined income of $130K/year and a $1700/mo mortgage, you should be able to make this work. Make sure your spouse understands the budget and knows where the money is going.
Unless your child's medical bills are eating up 100% of your non-bills income, then it doesn't make much sense unless someone is spending money that is not in the budget spreadsheet.
As far as cutting back on spending, the two best things you can do are to stop eating out, and to start using coupons when food shopping.
posted by camworld at 8:59 AM on March 10, 2010
Unless your child's medical bills are eating up 100% of your non-bills income, then it doesn't make much sense unless someone is spending money that is not in the budget spreadsheet.
As far as cutting back on spending, the two best things you can do are to stop eating out, and to start using coupons when food shopping.
posted by camworld at 8:59 AM on March 10, 2010
In addition to the stuff above: call the hospital and ask them about a reduced monthly payment plan for the medical bills.
posted by A Terrible Llama at 9:52 AM on March 10, 2010
posted by A Terrible Llama at 9:52 AM on March 10, 2010
This one really hit me: "Won't do weekends either since they cherish their weekends."
S/He cherishes his weekends, you cherish your health and being free from debt. I think your spouse knows perfectly well what numbers are involved, but right now it's not their problem. You are helping them float, which I know, you feel that you should, you're married and all, but no.
I went through this 20+ years ago. My salary paid for everything while the husband ran his business, and made no money. I couldn't buy a pair of sneakers because all the money had to go into the business. I got a part time job - he couldn't, because "what if clients see me, they'll think the business isn't successful" and I still had no money. he ate lunch out - "i'm busy, i can't waste any time" - while he expected me to brown bag it.
I don't think you need financial counseling right now. I think you need marriage counseling, or someone who s/he will listen to and who is truly NEUTRAL. Because I have a hunch that the suggestion to pay someone for marriage counseling will be met with "we can't afford it" or "i'm not going to discuss my business with a stranger" or "i'm not going to talk about my money problems with someone I don't know". If you have someone s/he respects nearby who will take your side in this and say, 'Listen, dude/ess, awesome that you cherish your weekends. Your family is going to go in the poorhouse. Man/woman up and go get a second job."
Two resumes will NOT find anyone a job. Finding a job has to be at least a part-time job. two resumes is disrespecting you and your family.
I second that you separate your family money from his business and nth that you call the hospital about payments. Tell THEM what you can afford. Tell them that you're drowning in debt caused by a family business and you need to half your payment or you're in danger of not paying it at all.
And nth nth that saving for college can come later.
I don't think you need a financial course. I think you know what needs to be done. I think you are being fought at every juncture. Hence the marriage counseling, or the intervention of a third party.
Good luck.
posted by micawber at 10:26 AM on March 10, 2010 [3 favorites]
S/He cherishes his weekends, you cherish your health and being free from debt. I think your spouse knows perfectly well what numbers are involved, but right now it's not their problem. You are helping them float, which I know, you feel that you should, you're married and all, but no.
I went through this 20+ years ago. My salary paid for everything while the husband ran his business, and made no money. I couldn't buy a pair of sneakers because all the money had to go into the business. I got a part time job - he couldn't, because "what if clients see me, they'll think the business isn't successful" and I still had no money. he ate lunch out - "i'm busy, i can't waste any time" - while he expected me to brown bag it.
I don't think you need financial counseling right now. I think you need marriage counseling, or someone who s/he will listen to and who is truly NEUTRAL. Because I have a hunch that the suggestion to pay someone for marriage counseling will be met with "we can't afford it" or "i'm not going to discuss my business with a stranger" or "i'm not going to talk about my money problems with someone I don't know". If you have someone s/he respects nearby who will take your side in this and say, 'Listen, dude/ess, awesome that you cherish your weekends. Your family is going to go in the poorhouse. Man/woman up and go get a second job."
Two resumes will NOT find anyone a job. Finding a job has to be at least a part-time job. two resumes is disrespecting you and your family.
I second that you separate your family money from his business and nth that you call the hospital about payments. Tell THEM what you can afford. Tell them that you're drowning in debt caused by a family business and you need to half your payment or you're in danger of not paying it at all.
And nth nth that saving for college can come later.
I don't think you need a financial course. I think you know what needs to be done. I think you are being fought at every juncture. Hence the marriage counseling, or the intervention of a third party.
Good luck.
posted by micawber at 10:26 AM on March 10, 2010 [3 favorites]
Spouse needs to close the business and get the best-paying job he can find. Also see a CFP (Certified Financial Planner) and a marriage counselor.
posted by charlesv at 10:27 AM on March 10, 2010 [1 favorite]
posted by charlesv at 10:27 AM on March 10, 2010 [1 favorite]
Working on communications with your spouse is important. I agree that professional help will be worth the expense. One thing that worries me is that you are asking for a change from him (future/present) as payback for things you have done in the past. This is (blanket statement) not fair - it's trying to hold him to a bargain he didn't know he was signing up for. I don't argue that things are fine as they are, or that you're not doing enough for him, but that you need to discuss and compromise, and although you can use "I'll keep doing X" as a compromise token, "I did X, Y, Z for you!!" is not a compromise token. "Pony up and get a job" sounds like a judgement on him, his business, and his future. How about "a job until the credit card is paid off" or "a job that earns enough to pay the daycare and once the kid starts school you can quit". Telling him he's had his fun, but the business is now officially failed, and it's time to admit it and take on (every entrepreneur's worst nightmare) a boss, this is pretty harsh.
Be willing to cut him some slack as necessary. Say he vanished today - how would that help? (gives you sole decision-making power, removes his food bills, allows you to sell the house if you want) how would that hurt? (removes his child-care, removes his house-maintenance contributions, removes his flexibility with a sick child, requires you to handle everything 24/7). Magically transforming the spouse into a person who is happy to work in an office and bring home $50k to hand to you without spending any on (bad habit) is not one of your options - he is who he is. Compromise is the name of the game.
Assuming you're on the same page, though, cutting expenses is important, and is another thing you'll have to agree on. Having a 80-90k job is socially-speaking a high enough income that you may have felt compelled to keep up a particular lifestyle, but keep in mind, the Joneses are full of crap. Be sure your money isn't getting channelled towards too high of a baseline, and you won't have to deny an occasional splurge. It's a difficult thing to do, to decide to scale down, but try very hard to take a step back and think. Have you got an emotional metric to help you evaluate? mine: "my frugal grandmother would roll over in her grave if she knew I was (at the dry cleaners twice a week)!", "did I think ($110/month premium cable) was important when I was in grad school making $20k?"
Good luck with everything!
posted by aimedwander at 10:31 AM on March 10, 2010
Be willing to cut him some slack as necessary. Say he vanished today - how would that help? (gives you sole decision-making power, removes his food bills, allows you to sell the house if you want) how would that hurt? (removes his child-care, removes his house-maintenance contributions, removes his flexibility with a sick child, requires you to handle everything 24/7). Magically transforming the spouse into a person who is happy to work in an office and bring home $50k to hand to you without spending any on (bad habit) is not one of your options - he is who he is. Compromise is the name of the game.
Assuming you're on the same page, though, cutting expenses is important, and is another thing you'll have to agree on. Having a 80-90k job is socially-speaking a high enough income that you may have felt compelled to keep up a particular lifestyle, but keep in mind, the Joneses are full of crap. Be sure your money isn't getting channelled towards too high of a baseline, and you won't have to deny an occasional splurge. It's a difficult thing to do, to decide to scale down, but try very hard to take a step back and think. Have you got an emotional metric to help you evaluate? mine: "my frugal grandmother would roll over in her grave if she knew I was (at the dry cleaners twice a week)!", "did I think ($110/month premium cable) was important when I was in grad school making $20k?"
Good luck with everything!
posted by aimedwander at 10:31 AM on March 10, 2010
I'm loathe to say it, and someone's going to jump on me for it... but does your 401k provider offer loans from your 401k? You wouldn't need to be "approved" to do it since it's your money already, and since you save 10% now you may well be able to cut that back down to contributing only whatever your company matches for the term of the loan -- neatly making "room" for the payback deductions while keeping your monthly contribution "the same", while providing a chance to retire some high-interest debt.
Yes, you do lose out on whatever the difference between the payback interest and 401k growth was by doing this (at least if it's positive); and yes, if you don't pay it back you get hit with tax penalties just as if you took a withdrawal. But in your case... it may tactically be sound, since you'd basically be guaranteeing an excellent "return" on your investment in yourself by paying off those credit cards (I'd negotiate with the hospital).
posted by Pufferish at 10:39 AM on March 10, 2010
Yes, you do lose out on whatever the difference between the payback interest and 401k growth was by doing this (at least if it's positive); and yes, if you don't pay it back you get hit with tax penalties just as if you took a withdrawal. But in your case... it may tactically be sound, since you'd basically be guaranteeing an excellent "return" on your investment in yourself by paying off those credit cards (I'd negotiate with the hospital).
posted by Pufferish at 10:39 AM on March 10, 2010
Something seems fishy here - I earn substantially less than six figures but have similar expenses (minus the hospital bills), and we make ends meet (barely).
posted by KokuRyu at 10:50 AM on March 10, 2010
posted by KokuRyu at 10:50 AM on March 10, 2010
You need Dave Ramsey like immediatly! His message is so simple and straight forward that anyone can understand it ie--you and your husband need to be on the same page, you need to do a budget, you need to get rid of his business, he needs a job that actually pays, and you both need to ratchet back your expenses to nearly nil until your debts are paid off (that is what I have learned from Dave). I was just visiting friends who are in basically the exact situation as you are and was amazed at a bunch of things including #1 how hard the wife works to pull in a huge income while the husband spends like he just won the lottery (his business also doesn't make money), #2 how much junk they buy that they can't afford, #3--how much they eat out, etc.
Sorry puffer, I have to disagree--until the spending is under control and the couple is working together on their debt repayment plan, throwing more money at the situation is just postponing the problem.
Get Dave!
posted by MsKim at 10:55 AM on March 10, 2010
Sorry puffer, I have to disagree--until the spending is under control and the couple is working together on their debt repayment plan, throwing more money at the situation is just postponing the problem.
Get Dave!
posted by MsKim at 10:55 AM on March 10, 2010
Take a serious look at the small business. If it's marginally profitable, okay, but don't put any more capital into it. You have a nice income, and it's reasonable to prioritize spending better. Pay down your credit card 1st, not last. Don't just ask your spouse to pay some bills; explain that you intend to pay down debt, and will be reducing your coverage of household expenses. Spouse can start paying the electric bill, then add the water bill, etc. When I was married, we split which bills we would pay. That way, the electric company had the task of prying money out of him, not me.
Next (biweekly)paycheck, pay at least 100 to the credit card, even before the billing cycle. Then the next month, an extra 200. Your spouse is living a pleasant life because you enable it. Stop enabling it. Being out of consumer debt, and having savings is really, really pleasant.
posted by theora55 at 5:33 PM on March 10, 2010
Next (biweekly)paycheck, pay at least 100 to the credit card, even before the billing cycle. Then the next month, an extra 200. Your spouse is living a pleasant life because you enable it. Stop enabling it. Being out of consumer debt, and having savings is really, really pleasant.
posted by theora55 at 5:33 PM on March 10, 2010
In all honestly, you need to stop the bleeding first. If I'm reading this correctly, you've been working at this for 2 years and him at the business for 10 years.
First off, if you're losing money, just stop. Cut the expenses, whether this is stop giving money to the business or canceling something basic, like cable. If your spouse complains, tell him to pay for it.
Second, stand up for yourself. I don't understand why he gets to pay off all his credit cards but not yours when you're bringing all the money? If the marriage is truly a partnership, then he needs to pull his weight but if he's coming up with excuses or not getting a job, that's not partnership. At the end of the day, he's not putting his weigh in and you need to stop passively supporting this bad habit. It's been going on for years now.
Third, I would seriously consider a divorce to limit any potential financial damages in the future... or ANY other way to limit your liability at this point. I know this may depend on what state you're in but truly, you need to draw the line in the sand and say, this is my share and this is yours. You said you've been in debt since the marriage 10 years ago, what is going to change if you don't take hard, concrete actions?
Right now, you're making over 75% of the household income (over 100% if the $30,000 is revenue only and the business is at a loss). You're working long hours due to commute, you're barely seeing your child, you're making minimum payments on your credit card WHILE he's at home, not working part-time, and he gets to smooch off of you.
I don't want to sound harsh but from your post, it sounds like the true source of why you're in debt (or barely breaking even) despite a close to 6-digit figure salary is because of his business and because of his unwillingness to help out in the household. You can't stop a sinking boat, if more water is coming into the boat than out. Eventually the boat is going to sink.
(And if I'm misreading this, I apologize and would give a different advice.)
posted by vocpanda at 7:05 PM on March 10, 2010
First off, if you're losing money, just stop. Cut the expenses, whether this is stop giving money to the business or canceling something basic, like cable. If your spouse complains, tell him to pay for it.
Second, stand up for yourself. I don't understand why he gets to pay off all his credit cards but not yours when you're bringing all the money? If the marriage is truly a partnership, then he needs to pull his weight but if he's coming up with excuses or not getting a job, that's not partnership. At the end of the day, he's not putting his weigh in and you need to stop passively supporting this bad habit. It's been going on for years now.
Third, I would seriously consider a divorce to limit any potential financial damages in the future... or ANY other way to limit your liability at this point. I know this may depend on what state you're in but truly, you need to draw the line in the sand and say, this is my share and this is yours. You said you've been in debt since the marriage 10 years ago, what is going to change if you don't take hard, concrete actions?
Right now, you're making over 75% of the household income (over 100% if the $30,000 is revenue only and the business is at a loss). You're working long hours due to commute, you're barely seeing your child, you're making minimum payments on your credit card WHILE he's at home, not working part-time, and he gets to smooch off of you.
I don't want to sound harsh but from your post, it sounds like the true source of why you're in debt (or barely breaking even) despite a close to 6-digit figure salary is because of his business and because of his unwillingness to help out in the household. You can't stop a sinking boat, if more water is coming into the boat than out. Eventually the boat is going to sink.
(And if I'm misreading this, I apologize and would give a different advice.)
posted by vocpanda at 7:05 PM on March 10, 2010
What about paying yourself first? It sounds like what is really upsetting you is that you're not paying down your credit cards. What's a realistic monthly payment? The paycheck arrives, $XXXX goes off to the credit card company; and you know you'll be done in YY months. Then, your need for sanity is met, and the rest of it (nanny vs. childcare vs. his company vs. eating out vs. weekends vs. cable vs. one car) can be subject to negotiation. As others have said, it sounds like you must have some options.
Second, it does sound like you need couples counseling. Of course, that costs money. Check your health insurance. But even out of pocket, it's a hell of a lot cheaper than a divorce.
possibly screwed us into deeper debt and now I can't figure how to get out of it
Don't blame yourself. Sometimes, when I'm most mad about a situation (a phone call at work) I realize that the reason I'm SO MAD at them is that I secretly feel like it's my fault, but if THEY WEREN'T SO BAD that one screwup I did wouldn't be causing problems, so I focus on them. If I just forgive myself, I don't hate them for making that thing more visible to me. /overanalyzing
posted by salvia at 8:42 PM on March 10, 2010
Second, it does sound like you need couples counseling. Of course, that costs money. Check your health insurance. But even out of pocket, it's a hell of a lot cheaper than a divorce.
possibly screwed us into deeper debt and now I can't figure how to get out of it
Don't blame yourself. Sometimes, when I'm most mad about a situation (a phone call at work) I realize that the reason I'm SO MAD at them is that I secretly feel like it's my fault, but if THEY WEREN'T SO BAD that one screwup I did wouldn't be causing problems, so I focus on them. If I just forgive myself, I don't hate them for making that thing more visible to me. /overanalyzing
posted by salvia at 8:42 PM on March 10, 2010
follow-up from the OP
Per month bills below. My paycheck per month: 4365.20posted by jessamyn at 8:49 AM on March 11, 2010
Husband's income: totally fluctuates based on clients paying. I have zero clue what he brings in because one check from one client could be $3k. Another time he could run short with only a few hundred here and there. Right now we split bills into 'his' and 'mine'. I am responsible solely for my own credit card and I take care of everything else. He is responsible for his credit card (don't know the balance; might be $5k max), lawn care (seasonal), security alarm, cell phone (business w/ a deal for personal use), nanny care and internet.
Son has viral induced asthma. Get gets a cold, he gets sick and it goes right to his lungs. He's been in the hospital 3xs in one year (severe bronchiolitis, oral steroids, oxygen, breathing treatments. Please don't judge. It was traumatic for me when he was under 6mo). So that's why we didn't do daycare. Ped said day care would result in chronic illness and we felt until he's older, it wasn't worth having him sick all the time. We are reconsidering day care for possibly next year.
The short of it is, yes I pay 90% of the bills, make more, and it's very, very apparent I don't know what the 'f' I'm doing either. I called debt consolidation to help me figure this out and it didn't work. I'm trying Excel sheets to write down everything and still, crap comes up and I wind up with zero. Read Dave Ramsey so principles make sense. How do I apply it. I feel like an idiot.
For his business, I don't pay anything and we keep it separate. I just don't know or rely on his income because we can't.
water 45
gas 75 (on budget plan)
electric 110 (budget plan)
amex 30 min ($1,800 balance 3.9%. I never use this card. Been putting 40-50 down on it)
direct tv 85
groceries 560 (can't get it down past $280 every 2 weeks; use coupons, buy only on sale)
bus pass 24
car gas 50-100 depending on use of car
parking at train 16
earthlink 20 (getting rid of this)
earthlink hosting (25 (getting rid of this)
car insurance 75
life insurance 65
IRA 100 (only i contribute; he can't)
401k 10% of check (only i contribute; he can't)
phone 34
mortgage 1685
chase 350 (50 is over the min)
i don't have a car payment anymore and plan on keeping that baby until it dies (89k, 5 years old. nissan so here's hoping it lasts)
birth control pills 24 (must do brand. generic doesn't work for me)
----------------------------------------------
he's paying out of his checks
nanny 50-80 one day a week (since he's staying home the other days; it fluctuates depending on his need for her)
lawn care 88
comcast 24
brinks security 24
phone--honestly, no idea; assuming 150?
car 300
other bills that come up
pediatrician if we go once a month --20
hospital bill 300
hair cut every 6 months (for me) 60
eyebrow was every 3 months (20)
baby clothes (i buy cheapest, on sale $4 a shirt or pants; he doesn't need until summer)
childrens museum for son $12 a visit (go maybe 2ce a month)
playgroup for him $7 (maybe go 2ce a month if that)
if an obligated party/function comes up we give $50-200 (low end friend bday high end, wedding of someone close). own birthday/anniversary, honestly i don't want anything. husband though wants golf clubs, etc. so usually his gifts are over $100. :(
we go out to eat maybe 2ce a month. maybe buy a bottle of wine or two a month. that's it. we don't go to the movies, etc. husband can get in museums for free so we try to take advantage of that.
Ah, this is fun. Here's what I'd cut:
- lawn care + security + DirectTV $197
- your husband's car $300 (can you bike or walk to the train?)
- try to get monthly groceries down to 460, saving $100
But really, I'd sit down with him and ask what you guys should do.
posted by salvia at 10:33 PM on March 11, 2010
- lawn care + security + DirectTV $197
- your husband's car $300 (can you bike or walk to the train?)
- try to get monthly groceries down to 460, saving $100
But really, I'd sit down with him and ask what you guys should do.
posted by salvia at 10:33 PM on March 11, 2010
This thread is closed to new comments.
A marriage is about compromise and working together. Your marriage sounds like it's got neither of those things right now.
I would suggest speaking with a marriage counselor to understand how to get your marriage to the point where you're on the same page with respect to your finances. It sounds like both partners blame the other for their past/current role in the problem and you need to get past the level of resentment I see in your writing if you have any hope of coming up with a solution that makes you both relatively happy. Good luck!
posted by Hiker at 8:13 AM on March 10, 2010