desperate help needed-suggestions appreciated

[ilovemk76]

I know what a consumer proposal is from watching Gail Vaz-Oxlaid.

Transportation should be no more than 15% of your $5400. Yours is 20.5 %

Housing should 35%. Yours is 43.2%

Life should be 25%. Yours is 35.3%


You are living way above your means.

Gail would have you sell the house, pull the kids sports, have you work 40 hours. You are home when you work and now you will not need totals the kids to all their stuff. This will also bring down your gas needs. Sell a car and reduce your food budget.

 

[tohardtolose]

pigletto, you have hit the nail on the head. We are in one of those cities:-(

Part of the reason we will not rent. I do not want to subject my children to living in that sort of area and I will live like this month to month if that was my only alternative.

I keep wondering how many people do it that make less than we do. Even if you take the sports out, most people will add in 200-300 for clothing, eating out and other things...........so how do people live in cities in Canada manage that are of middle class income? Darn taxes but I am thankful for the health care considering our situation.

Oh well that is the least of my concern right now. Right now, we are going to get this figured out.

 

[WanderLuster]

Firstly, I want to say that you are very brave to put this out there -- it's a scary and emotional thing to realize that you're finances are out of control. But, it's the first step to making changes and getting control.

Secondly, take everything anyone says on this forum (including anything I say) with a grain of salt. We're anonymous people on a random internet message board. We can never know your situation as well as you do and we are all operating on limited information and interpreting things through the lens of our own beliefs and experiences.

That said, I have some tough love for you:
You created this problem by living above your means for a period of time.
That is unsustainable.
The only way to fix it is to adjust your lifestyle.
It's going to be hard - if it was easy, you'd have done it already.
Failing to pay your debts is unethical. It's a matter of personal responsibility and pride. At your income level you DO have the ability to pay - but it's going to require cuts.

I'm reformatted your budget in the style they use over on Dave Ramsey's My Total Money Makeover Forums. They often have a one week free trial period running. If you can get a free trial, I would suggest doing that and posting your budget there. Greater minds than mine will help you work through what is and isn't within your means.

May 2013: Untitled Budget

- Totals --------------------------------------
Income $5,400 (I used the low end of your estimate)
Budgeted $7,850
Shortfall: $2,450

- Housing -------------------------------------
Mortgage $1,600.00
Land Taxes $380.00
Repairs/Maint. $0.00

- Utilities -----------------------------------
Hydro $200.00
Heat $155.00
Landline $65.00
Cable $55.00
Internet: $60.00
Cells: $75.00
Bank Fee: $15.00

- Recreation ----------------------------------
Kids Sports $520.00

- Transportation ------------------------------
Car Insurance $315.00 (also includes house insurance)
Gas $600.00

- Food ----------------------------------------
Grocery $800.00

- Debts ---------------------------------------
Car Payment $510.00
Other Monthly Minimums $2,500.00

 

[Bob NC]

Your kids sports...

I don't know if this is recreation, or club, or school sports, but have you gone to the folks that run these programs and asked if there is any help you could get?

I was a manager of my kids club soccer team for a number of years and I know we had 2 kids that were under a subsidized payment plan, (they were basically having their dues covered by the club.) As I say, I was the manager and I had no idea, and couldn't even have made a guess as to which kids were in this program.

Give it a shot, kids sports are important and I'd hate to see them lose out if they don't have to.

 

[Teresa Pitman]

I live in Canada, too. I am a single parent with an income about half of yours, currently supporting myself and three others.

The problem is you look at your situation and say "well, we can't do anything different" so the debt keeps going up. You can't see anywhere to cut. But you have to recognize that other families are getting along without going into terrible debt, and you have to think out of the box.

You need big changes, not little ones. I would say that you need to move. Do you have some equity in your house? If so, sell the house and use whatever equity you have to pay down the debt. Then rent. Can you move outside of the city where you are living and move to a cheaper area? Move to an apartment rather than living in a house? Take public transportation instead of driving? I know none of these things are fun and you like your comfortable life. But your comfortable life is really an illusion.

Definitely get rid of cable and one of your cell phones.

See if you can get on one of those debt-reduction TV shows (like Til Debt Do Us Part).

What can you do to increase income? After school daycare? Tutoring? Delivering newspapers and flyers? I know it is hard when you have kids but there are things you can do with them. (I know a mom who built up a good part-time income making goody bags for children's parties - her kids helped fill the bags.)

TP

 

[WanderLuster]

Comments in Bold below
May 2013: Untitled Budget

- Totals --------------------------------------
Income $5,400 (I used the low end of your estimate)
Budgeted $7,850
Shortfall: $2,450
So Income - Budget = Savings (Shortfall). It's pretty simple you need to earn more, spend less, or both. But, it's really not simple at all.

- Housing -------------------------------------
Mortgage $1,600.00
Land Taxes $380.00
Repairs/Maint. $0.00
Just mortgage and taxes is almost 37% of your take home. You are house poor - and that doesn't include insurance, maintenance, or utilities. You might want to do a careful analysis of total cost per month of home ownership vs. renting in a reasonable (safe) neighborhood. It may not be ideal, but you really can't afford your current housing situation on your current salary even without other debts it would be a stretch.

- Utilities -----------------------------------
Hydro $200.00
Heat $155.00
Landline $65.00
Cable $55.00
Internet: $60.00
Cells: $75.00
For Cable, Internet, Landline, Cells you may be successful in callinig your providers and negotiating better terms. I'm not sure if this would work in CA, but I know people have been successful doing something similar in the US
Bank Fee: $15.00

- Recreation ----------------------------------
Kids Sports $520.00 I really don't think that you can afford this right now. If you didn't have debts you could, but you gave up that option when you ran up the other debts. Is there any way to cut down some of the fees without totally eliminating the sports? Or if your children are old enough, could they do part-time work and contribute to their sports fees? If they are old enough and talented enough maybe they could find intermittent work as a coach for younger children and/or a referree/official for their sports.

- Transportation ------------------------------
Car Insurance $315.00 (also includes house insurance)
Gas $600.00 This seeme ludicrously high to me - but I live in a large city in the states and don't drive a lot. It is what it is, but try to be efficient when planning routes/running errands/driving to minimize the number of miles

- Food ----------------------------------------
Grocery $800.00 That also seems ludicrous to me, but since it includes a bunch of different categories it's hard to tell. There are a lot of things you didn't include in your budget (clothing, entertainment, eating out, etc) and I'm guessing a lot of the misc. things are ending up in this category. Perhaps the best thing you can do for your situation is, starting today, write down every penny that enters or exits your life. The more data you have, the better informed your decisions can be

- Debts ---------------------------------------
Car Payment $510.00 This is quite high - is it for one car? Two? What kinds of cars? You might be able to save a significant amount by selling your car and buying a beater for cash.
Other Monthly Minimums $2,500.00

You need to list out for yourself each of your debts, the total amount, and the minimum monthly payment. And then work your way down them - you may not be able to pay all of them this month....and the ones you can't pay, you can't pay for now. But, you need to find a way to pay them in the future either through raising your income or lowering your lifestyle and bills.


I apologize if that was too harsh - I know that this is a difficult situation for you and I'm just trying to be a voice of reason. You may need to take a few days, sleep on it, breath a bit, and try to gain a bit of perspective before you are able to calmly assess the situation.

Whatever happens, good luck! With your income level, the good news is that it if you make changes now - you should be able to pay down debt and build wealth relatively quickly.

 

[NaLisa]

pigletto, you have hit the nail on the head. We are in one of those cities:-(

Part of the reason we will not rent. I do not want to subject my children to living in that sort of area and I will live like this month to month if that was my only alternative.

I keep wondering how many people do it that make less than we do. Even if you take the sports out, most people will add in 200-300 for clothing, eating out and other things...........so how do people live in cities in Canada manage that are of middle class income? Darn taxes but I am thankful for the health care considering our situation.

Oh well that is the least of my concern right now. Right now, we are going to get this figured out.

We make about what you do living in the Southeastern US. The cost of living is lower here, but we have to pay for our health insurance (about $5,000/year) plus co-pays, deductibles. Our kids activities cost about $150 per month (music lessons, gymnastics and Scouts) during the school year, and then we spend about $1,000 in the summer for camps.

Our house is 3BR in a great neighborhood in a wonderful public school district, and our monthly payment is $1,200, which includes escrow for property taxes and homeowner's insurance.

We just paid off one vehicle (note was $375/month) and will soon by a new one, priced right for our budget at about $25,000. We'll trade in our current vehicle and our note will be about $400/mo. for four years. We also live in an in-town neighborhood close to work, school and shopping, so we don't put a ton of miles on our cars and we pay less than $300/month in gas.

Our cable, landline phone and internet are bundled and cost less than $100/mo. After an introductory offer, it jumped to twice that and I went to cancel when they offered me this rate for two years.

It sounds like your home is expensive, including for the mortgage, utilities and taxes. I think you really need to cut your housing, transportation and grocery costs. And as much as it might hurt, the sports need to go.

It's not going to be easy for you to get out of debt, but there are lots of things you can do right now to work toward that end.

 

[crashbb]

Combined we do make 115,000. However after taxes (get ready to gasp), pension, union fees, etc we take home on a monthly basis 5400-5600.

Are your deductions such that you get a refund? What is your pension contribution.? Your deductions are 56-58% which is high (even for Canada). Are there other things being deducted? For example, I have my bus pass deducted from my monthly pay cheque.

Monthly
Mortgage: 1600
Land taxes: 380
Heat: 155
Hydro: 200
Landline: 65.00
Cable: 55.00
Internet (need this for work): 60.00
Bank fee: 15.00
Car and house insurance: 315
Cells: 75
Car payment (done next March so 10 months to go): 510
Total: 3430

Variable (some months these go up and down)
Groceries (pet food, personal hygenie, haircuts, etc included): 800
Car gas (gas is more expensive in Canada): 600

Kids sports: 520

Total: 5350

I also live in Canada, so get how expensive things can be. I'd drop cable and reduce the cell phones. Also, can you reduce your driving? Even usnig the highest priced gas I could find in Canada, $600 is about 440 litres per month. If you drop some/all of the sports (which I'd also suggest), I imagine that you'd also reduce how you drive, which would bring down the gas number.

What are the bank fees for? Can you reduce/eliminate them? Check around for other banks (PC Financial has low/no fee accounts that are good).

 

[TLuvsD]

Kudos for asking for help, it's a good first step. Go to the Consumer Panel folks and see what they say. Consider the options offered on this board. The most important item: Change your mind set.

Lower your grocery budget, even it means eating meals that aren't the "favorite".
Look for cheaper alternatives on the landline, cell phone. Get rid of cable, you can't afford it.
Turn off the lights, lower the thermostat, do what you need to do to get utility costs.

Are you SURE (as in you have researched it, visited the programs, etc) that there are no less expensive options for sports?

Good luck, this is a tough situation.

 

[Lolsmum]

I know this sounds terribly obvious, but have you looked at alternative providers for your phone, cell phones, internet, insurance and utilities? And have you actually tried refinancing your home? Shaving just a small amount off of each of those things and lowering your mortgage payment if possible could actually add up to more than you think. Paying off just a bit more each month will reduce the debt, even if it does it slowly.

I recently reduced our spending by about £150 a month just by switching some of our providers. I know here in the UK there are actually websites which give you information comparing the cost of different providers and most insurance companies will provide quotes online. It really is a fairly simple way to lower costs a little bit.

I do think you are likely to have to consider dropping the sports for some time. Whether or not to sell the house will depend on many factors, as would selling the car.

 

[OklahomaTourist]

There's no magic bullet, but it sure seems to me the 800lb gorillas on your list are:

1. $2K/month mortgage+taxes. That's approaching 40% of your net income. What are the terms of that note? How long is left?
2. $500+ "kids sports." With your family in dire financial straits, this has to be discretionary. I know it is a painful thing to do, but if the issues are gas, food, or the kids sports, the latter has to be sacrificed. Heavens, that's a $6K/year item all by itself.
3. $510 car payment (for ten more months). Are you upside down on that car? How old is it? Any hope you have residual value sufficient to sell it and use the proceeds to pay off that note and buy a smaller, cheaper car?

Is all of the $80k debt credit card debt?

Let's be optimistic (even if unrealistic) and say you can deal with #2 and #3 directly. That's >$1K per month that can go to debt service, erasing the $80K in 6 years and 8 months. If you can find any way to refinance that mortgage into a payment about $250/mo less, that's $1,250 to debt service - $80K paid off in 64 months - just over five years.

I realize some or all of these ideas may or may not be at all doable. The point here is to give you some encouragement that there are some options. The situation is not hopeless. Painful for a few years, yes, almost certainly, but please don't despair. Get some kind of plan in place. Act on the plan, and live through it a day at a time, then a week, then a month.

Blessings, folks. No judgment here. I hope you can work your way through the problem.

 

[yoopermom]

As the parent of a teen, I'm going to say to *try* not to totally drop the sports, if you can figure out any way not to. Have you sat the kids down and asked *them* what they think could be done to earn and/or save $$? They might surprise you!

I was laid off when DS was 12, and panicked (although we didn't have the debt you have now). I was totally committed to keeping DS in his activities, though, so we did the following:
1)had him prioritize the importance of his activities to him
2)went to the head of each one and threw ourselves on their mercy
3)DS volunteered for us to sell some of his laying-around-gathering-dust video consoles and games to help pay for his activities (put his own skin in the game)
4)went to DS's grandparents, explained the situation, and they paid for many of his activities the next few years in lieu of birthday and Christmas gifts
5)when old enough, DS did odd jobs to help pay for it all, also

We also sold our beloved farm, and moved into a *tiny* house (that we're still in, aaargh).

I sympathize, truly, and personally would rather have an involved kid than a house I can't afford.

Good luck to you!

Terri

 

[tohardtolose]

crashbb there is pension, union and something else in that pay deductions too so we are lucky that we have guaranteed pension that will certainly help us down the road as we certainly are not saving now.

80,000 is not credit card debt. 65, 000 is credit line (business gone bad plus spending way too much) and 15,000 credit card.

Oklahomatourist, thank you for the thoughts. That is where my mind is going right now.

Think we might be doing some serious spring cleaning over next few weeks and maybe a little bit of paint to see what we can get for appraisal:-( Hate to move but I am thinking it is an option in so many ways that will be better for us.

 

[TheRustyScupper]

. . . You asked for suggestions.
. . . So, easy or not, here they come.

1) Get part-time jobs for both you and hubby.
. . . you each should get a second job
. . . or, even maybe a third job
. . . you need more income
. . . even without the credit card debt
. . . you say no, because you wouldn't see the kids
. . . well, in some cases, you do what you need to do
. . . and in this case, you need more money
2) Dump expenses which are not necessary
. . . kids sports should go ASAP - no excuse for this expense when in debt
. . . cell phones that are not necessary need to go
. . . cable TV should go until you are in better financial shape
3) Sell the house
. . . sell the house, as house expenses are about $2000/month
. . . a rental could save $400-$600 per month
. . . and if landlord pays hydro, you save $600-$800 per month
4) Credit Cards
. . . call and see of the card company will accept lower payments
. . . tell them bankruptcy is the alternative
. . . at lease they would get something if they help you out
5) Credit Counseling
. . . there are credit counseling services that might help

NOTE: In any case, you need to make TOUGH, TOUGH decisions. It
took a while to get into this trouble and will take a while to get out of
it. You need to cut expenses and get more income, even if this means
being away from the kids.

 

[tohardtolose]

Thank you yoopermom. Thinking this is the first route I am taking. I know how much these sports mean to the kids and how dedicated they are to them. They all ready sacrifice to do them. I know they will do what they can to continue to do so. Moving might have to be an option they will consider.

 

[tohardtolose]

Lastly, thank you for the tough love I do it with my kids, and appreciate it. No one can compare to how much I am beating myself up over what we have done the last year.........each night and morning, and all in between. Thanks again.

 

[sweetdana]

Thank you doodlebug for the hug. You don't know how stupid we feel. It is an awful cycle and honestly for anyone starting to think oh, I will just put the small business on credit, and pay for a new fridge with this credit, DON"t do it. You can NOT catch up. Something always comes up. Pay cash for everything. We have learned but now we can't fix the mistake:-( We figured if we qualified for the credit, it must mean they think we can pay it but it does not work like that and don't believe it.

Unfortunately here in Canada we do not have cell phone deals like you all do. Those cell phones only have about 150 minutes on them locally. So if I added long distance (which I would have to to talk to all family) and more local minutes they would cost close to 150-200 per month so might as well keep the landline. Husband needs cell for work but could dump mine and save about 30.00 a month there.


I may have to see what our house would appraise at. Then ask to refinance BUT with all this debt would they even refinance? When we got the mortgage we did not have all this debt. We still have three years before it comes up again for renewal.

So dumping cable and phone would save about 80.00 a month. Not a lot, but certainly a consideration. Dump kids sports and we are at about 600 total a month. That still does not get us where we need to be to even make a dent but I guess it is a small start. This is why we keep going in circles. I know none of you can help. Just wondered if we were missing something...........and if anyone had done a proposal before. JenRmS what you did sounds like what I mean. Basically 5 years of our life to get rid of it by doing settling but after 5 years we should be clear...............the 5 years will be awful but nothing worse then what we live every day now. Then in those 5 years we should have more equity in house and could move and downsize...........and them maybe we might have extra but I doubt it as oldest would be close to going to school and we would have those bills. Just feeling very pessimistic right now.

So sad, and so sick of all this. Please everyone, do not get yourself in this situation. It affects every part of your life.

no feeling stupid allowed. Most peeps do it. some longer than others, some require a BK, some slowly straighten in out. You are making huge strides trying to find a solution..



My best advice is change your life style. Understand a need and a luxury.. you can keep some luxuries, but keeping all will keep you in the same spot. It is so easy to think a Tim Horton's 4$ joe is okay once in a while, or I have to pay 500$ a month for jrs. Hockey. Or I am making standard weekly home made pasta with sausage and meatballs and garlic bread.. It is mind set telling you this is just dinner, or a coffee.. not I could make something for 3$ a person and choose something for 6$ a person.. If you have 2 cars, you may feel you need 2 cars, or kid went to baseball last yr, loves it has to go again is easy to keep you in the same circles. Understanding every penny saved is a penny realizing you cannot have every luxury, but you can have some.. Cutting 60$ here, 80$ there, 200$ there adds up.

I would not take another car on, it sounds like you are ahead of that, but having a car payment is a luxury. ..
Do you have 2 cars, can 1 take a bus, can you make due with 1 car. .. sell the second car, cutting that out now? 1 car is a luxury, 2 cars more so.. could you sell it and buy something significantly cheaper? .. can you car pool or take the bus even 1-2 days a week and save 50$ a month on gas.. these things though you are not looking at them are luxuries. It is easy to say oooh no, we both live to far from work and couldn't pick up drop off, couldn't take bus, ect.. it is much harder to find a way to make it work and giving up some luxuries.. ( believe it or not people do live on 1 car.. or no cars cause they are not in the budget.)

Cut out either home or cell.. you are the only 1 saying this is a need. I understand what you are saying above, but it is still a luxury, if the need is a cell for work.. keep it.. and no do not spend 200$ a month on it.. Stop calling peeps, get phone cards, use VOICP internet phone (I use ooma and an very happy with it. ) IT is not a need, and you can live without a home phone.. you just do not love the idea. I get it..

Cut out cable.. this is not a need.. it is a huge luxury this is a NO BRAINER!

Heating/cooling bring temps up and down a few degrees, winter put on a sweater, summer take off a layer.. keeping inside temp super cool, and comfortable ... is a luxury..

If you have equity, selling your home and buying something smaller is A huge win, but it sounds like you are not opened to this.. but again a bigger home is a luxury. No you do not want to, but this is an option..

Cut out all sports. If Madison wants basketball, take her to the free park in the summer with a ball.. If Joey wants hockey.. take him for outdoor roller hockey at the park.. this is WAY too much money on your budget.. it is okay to say no..
groceries, are often times easy to cut. Coupons, going to 3-4 different stores to buy sale items. Having PB and Js for dinner instead of pot roast.. having a 200$ a week food budget is A LOT.. you do not have to spend this much.. you choose to.

You have 2 choices. Keep doing what you are doing or change it. It is up to you GOOD luck! Please feel free to IM me and I would gladly help best I can.. no flames..

 

[4HppyCamprs]

Without getting into all of what everyone else has said your groceries and haircut (variable accounts) seems high. It is also the easiest place to save. Cost of living is different in various regions but I still think you could do much better in this area.

Our food budget is 500.00 this includes 2 dogs, 2 cats and three children. We have 400.00 a month for gas for vehicles. We add 40.00 as needed for hair cuts (2 boys)

We shop Costco and SAMs for the most expensive food items and buy bulk. We buy produce and small quantity items at the superstore with the best prices (sales).

It seems like you might be able to save if you can bundle Internet, landline and cable. If not I would cut cable and landline(we did when we got in a pickle). I use Netflix and we have amazon prime (mostly for free shipping but also tv shows).

Really your family needs to make some degree of sacrifice to make a budget work. They want sports fine but then there goes the cable. Maybe not having all the trendiest hairstyles. Basic styles can be done at cheaper locations.

Taxes and mortgage you have to pay. Water and electricity need to be conserved. All else you can skimp.

Sent from my iPhone using DISBoards

 

[daughtersrus]

T




So dumping cable and phone would save about 80.00 a month. Not a lot, but certainly a consideration. Dump kids sports and we are at about 600 total a month. That still does not get us where we need to be to even make a dent but I guess it is a small start. .

$600 a month might not sound like a lot but that's $7,200 a year. I would assume that it took a few years for you to accumulate the debt and I would expect it to take twice as long to get rid of it.



I'm not sure about Canada but I know that in the US, many of the credit card banks will work with customers that can't make their payments. Many will lower the rate (most go to 0%) with the condition that you close the account for future purchases. I would call each of them and explain your situation and see what they say. It doesn't hurt to try and you may be surprised that they will help. They would rather get the money that is owed and forget about the interest than to not get anything at all.

 

[Kellydelly]

The problem is you look at your situation and say "well, we can't do anything different" so the debt keeps going up. You can't see anywhere to cut. But you have to recognize that other families are getting along without going into terrible debt, and you have to think out of the box.

You need big changes, not little ones. I would say that you need to move. Do you have some equity in your house? If so, sell the house and use whatever equity you have to pay down the debt. Then rent. Can you move outside of the city where you are living and move to a cheaper area? Move to an apartment rather than living in a house? Take public transportation instead of driving? I know none of these things are fun and you like your comfortable life. But your comfortable life is really an illusion.

Definitely get rid of cable and one of your cell phones.

See if you can get on one of those debt-reduction TV shows (like Til Debt Do Us Part).

What can you do to increase income? After school daycare? Tutoring? Delivering newspapers and flyers? I know it is hard when you have kids but there are things you can do with them. (I know a mom who built up a good part-time income making goody bags for children's parties - her kids helped fill the bags.)

TP

There is no way in heck I would consider bankruptcy in your situation. You could come up with the money to help pay down your debt if you changed your lifestyle. Bankruptcy is for people who are backed into a corner due to catastrophic financial burdens, like medical bills, not for people who just can't say no to their kids. Drop the sports. Drop a phone line. I don't personally see any gain in selling your house, renting seems like a big waste of money if you are already in a mortgage (not familiar with insurance and taxes in Canada but still don't think that will help you much). You need a real budget!

I have a few friends in your situation, and none of them will watch Suze Orman or Till Debt Do Us Part . If you really want help you need to look for solutions, take advice, and change your spending . Good luck!