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My sister didn't work while they lived in their home (3 children) and my bro-i-law never discussed their financial situation with my sister (who shops WAY too much). My sister continued to spend like they had a forest of money trees. The forest burned down and when the two of realized the situation they were in it was too late.
My BF and his ex-to-be separated at the beginning of this year; she had been in charge of the finances throughout their marriage and like a fool, he trusted her. She blazed through every penny he made, including money put aside to pay the income taxes. Now they're facing a tax bill of about $25k (he owned his own business) and he's barely able to make the bills because she let accounts fall into arrears over several months and even allowed her car to be repossessed, of course blaming him the entire time even though she was getting the bills at an address he no longer lived at and had threatened to have him arrested if he showed up, and she was supposed to be writing the checks for the bills. He has now has all of those bills sent to another address and deposits his paycheck in an account she does not have access to so he can try to keep his head above water, and she gets a small amount each month to cover groceries and a few misc. expenses. That's all he can afford. I actually went through his incomings/outgoings with him and his finances are a complete disaster. His ex-to-be is a woman who thought nothing of spending $10,000 in a single day on three items: a mattress, a treadmill, and a set of kitchen knives. They have no savings whatsoever, and he's living paycheck to paycheck. If he didn't make as much as he did, they would be completely screwed. As it stands, they're ALMOST screwed. If they can't sell their house as part of the divorce settlement within a few months, the big B word will probably come up for him, but of course not for HER.
She now wants 60% of his monthly income so she can maintain the "lifestyle" she has become accustomed to. She refuses to work. He told her to pound sand. I don't see how their divorce will stay out of court.
It's slightly off-topic, but it speaks to how finances can spin out of control even in relatively affluent families (he makes over $100k per year), how people live very very far beyond their means trying to keep up with the luxurious lifestyle that they think they deserve, and how one partner should never, ever, EVER trust the other to be 100% in charge of the finances, particularly when they're supposed to be writing checks to service debt in the other partner's name.
I'm not trying to be mean. But I am trying to scare you into action a little.
The solution, as Bob pointed out, is quite simple, and at the same time quite difficult - increase income as much as possible and curb spending in every area you can. There really is no easy answer. Short sales are hard to get, and I believe, WILL affect your credit as the mortgage company won't really give you a free pass.
From what you said, your husbands business expenses are around $2500 a month, is that correct? You also described his income as $2500 - is that OFF season income? During the other 6-8 months you can anticipate his income closer to $12,000 a month - did I understand that accurately? That does at least paint a slightly better picture. It would make his average salary around $8,000 a month minus $2500 operating expenses, for $5500 gross a month. Self employed taxes are high but I assume you write off whatever you can. Presumably you need to cover the half of your lifestyle expenses that his income doesn't cover. Firstly, what exactly does your husband do, is he in building or a housing related business that might be affected by the slowdown? Also, what options does he have for an additional job, part time or otherwise, during this time which could boost his income.
I know it is scary to return to work, but you don't know what happens until you try. That is first and foremost what you need to do, especially as in retail during the holiday season there is lots of temporary work available which would get you back in the door. And you certainly shouldn't feel guilty about taking a temp job.
As to the move - what would happen to your husbands business? Is it transferrable? What prospects do you have in the place you plan to move to? Mortgage companies aren't handing out loans without provable income and down payments in the way they were a year or so again. I think the advice to hold off on buying another home is sound. Get to where you are going, rent, save and get your ducks in a row to ensure you don't end up in trouble.
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Tough as it is to be without savings, I would pay off as much CC debt as possible. That $850 a month is mostly interest - money that is thrown away every month rather than doing something usefull for you. I seriously doubt your cash reserves garner nearly as much interest, so pay off whatever you can and dump those credit cards immediately. It is all too easy to use them.
THANKS SO MUCH!!!! I am in need of REAL instruction - the step by step thing is helping A LOT!!!
Honestly, I haven't viewed the responses as mean, but just not the help I was looking for : I already knew I was in deep kimchee, but need help to wade out, rather than give up!
Hubby is an AC contractor/owner. Housing market DOES effect his income, as well as the season. Fortunately for us, EVERYONE needs AC 8-9 months of the year in FLORIDA!
As for me, let's just say I was in the 'big machine' industry - a tough one for women in this "good ol' boy" region - and did pretty darn good in it. it will be hard to get back in with honest explanations of why I left. It can be done, however, and I am up to it. I can steel myself for the inevitable ridicule, but I need money, so what the hay. That fear has kept me stagnant for too long....
BIG QUESTION OF THE DAY, HOWEVER: (I think this is practical, considering the monetary hole we are already in): Does it make sense to "hang on" to this house if the market is going to continue to decline??? Should I continue to throw $$$ at a losing proposition if I can use the "system" to stop the bleeding (short-sell, forclosure, BK, throw up my hands in surrender) NOW, rather than later?
Call your mortgage lender and talk with them. Then go out and get some kind of sale work. So what if you took 8 months off. You needed the time to re-energize yourself. No one needs to know you're moving out of state. Sadly the projects need to stop immediately. If you are planning on moving out of state then maybe you should close up your hubby's shop now and he can get work at a company. you're planning on moving so the clients may not follow. I don't know what kind of work he does (maybe they will follow). Stop focusing on hubby's income tripling in March (you still have dec, jan and feb to get through). If his income does triple put it away, don't spend it on projects. The only thing I can say is really, really look at your expenses. Can you cut out cable? Can you trim your food bill? Do you buy coffee in the morning, stop. Do you have any help (landscaping, housekeeper) get rid of them. Do you (or hubby) have any toys? Jet ski, boat, etc. sell it.
I have cut back on most everything, but not water softener (keeps the chrome pretty for showings) or the cable ($180 to cancel contract) or the internet (primary source of info). We also halved our food bills over the last 2 months. We have no toys to sell, but I could clear out alot of "stuff" and bring some cash in with a (hopefully successful) garage sale.
Especially THANKS for the confidence boost re the sales industry. I know you're right, I hired lots of people with gaps myself if I thought they'd make us money. I know better than to be afraid - just thought I'd confess it.
It's slightly off-topic, but it speaks to how finances can spin out of control even in relatively affluent families (he makes over $100k per year), how people live very very far beyond their means trying to keep up with the luxurious lifestyle that they think they deserve, and how one partner should never, ever, EVER trust the other to be 100% in charge of the finances, particularly when they're supposed to be writing checks to service debt in the other partner's name.
Altho we trust one another, I am having to face, as the "financier" of our marriage that I am the one who mishandled our finances. I am the one who "missed it". Turns my stomach inside out.
It is humbling to face how blindly I led myself (and us) down this awful path.....
Hats off to you for looking for ways to get out of this mess. There's always a way out but none of them are going to be what you want to hear. You are going to have to work 4 times as hard to get out from under. There is no EASY button.
Here's what I would do:
1) forget about moving right now. I can't afford it.
2) if I have kids they will be having jobs after school to add to the family income.
3) continue to pay for everything on time.
4) extreme costcutting measures go into place right now. No more phones, cable, movies, eating out, clothes, or anything else. If there is something I must have, I will shop at the thrift store. Don't use AC or heat or lights that aren't necessary. At the store, you buy rice and beans and that's what you eat.
5) sell everything I have that's worth something.
6) I and my SO will both work a minimum of 2 jobs full time. Even if one of them is a McJob, I need the money.
7) concentrate on keeping the house I have because I can't sell for enough to dig me out. And I have too much debt to even think about being able to buy another house somewhere else.
8) pay off all debts as soon as possible. Make the biggest payments possible and pay off the highest interest debts first.
9) admit my failure and ask family for help. Even a low interest loan would be great. Better to pay a relative 5% than 30% to a credit card company.
I could be wrong but I get the impression you have never been poor. It's not easy. If your mortgage is 3K, you need to do whatever you can to get those total expenses down drastically. You are paying 1K in credit card payments as well. Where is the rest of the money going to add up to 8.5K per month? Get rid of those expenses. All of them. You will be miserable for quite a long time. This will have a huge impact on your family. This is the honorable thing to do and you will be OK in the end. You will probably be stuck where you are for at least 5 years. That's how long it will take for the housing market to improve anyway. Say goodbye to fun times and instant gratification.
I also suggest you get some expert help from a financial/legal viewpoint. Honorable aside, it may be better to take another course of action that will sacrifice your credit rating. In the long run, you need to do what's best for you. Good luck!
I know you are scared, but you do have hope. I am not a financial counselor, but I sympathise with your situation, but unfortunately it seems you have been living out of your means, atleast for the last 8 months. I can recommend you a wonderful spirtually guided financial advisor. His name is Dave Ramsey.
<self-deprecating, sad chuckle> I DO listen to Dave. Foolishly, I just KEPT BELIEVING I had a handle on it all. (isn't that what ALL the FOOLS do???)
I have considered calling his show, but don't think I am up to the lashing - altho it is certainly well-deserved. I can just imagine it: "WHAT? You didn't WORK when you still have all that DEBT????"
Duh. (directed at myself, not you great people) That little realization is smacking me all over the place right now.
Thanks, sincerely, for the sympathetic words and advice. Even though it is painfully obvious, it is clear to me now that I need to keep hearing it to get me to DO SOMETHING ABOUT IT.
As for me, let's just say I was in the 'big machine' industry - a tough one for women in this "good ol' boy" region - and did pretty darn good in it. it will be hard to get back in with honest explanations of why I left. It can be done, however, and I am up to it. I can steel myself for the inevitable ridicule, but I need money, so what the hay. That fear has kept me stagnant for too long....
BIG QUESTION OF THE DAY, HOWEVER: (I think this is practical, considering the monetary hole we are already in): Does it make sense to "hang on" to this house if the market is going to continue to decline??? Should I continue to throw $$$ at a losing proposition if I can use the "system" to stop the bleeding (short-sell, forclosure, BK, throw up my hands in surrender) NOW, rather than later?
Having worked in sales, it is my experience that women in mostly male industries frequently do the best and have the most loyal customer base. Milk it. I'm sure you have contacts, network for all you are worth. And in the meantime, take a McJob, any McJob to stem the flow. And make your husband do the same. If AC is slow at this time of year, he can get a job and subcontract for times he is not available (but how many AC emergencies happen in the winter?). It sucks to be the one who has to tell him, I know, but hopefully you two can do this as a team.
I wouldn't go for the BK/Forclosure/Short option yet.
Why? Because none of them is really a simple answer, none of them a quick fix. You will be paying the price for years both fiscally and in terms of bad credit. I might say otherwise if you both worked two jobs and were still underwater, but you have not come close to maximising your earning potential.
Unfortunately you are holding on to a depreciating asset. Still try to sell. Slash the price as much as possible. Focus on short sell as POSSIBLE option but not as the action of first resort. Renting sounds like a useless proposition as there is no pay-off.
There will probably be a trade-off of pain - work to pay for a depreciating asset, or take a big hit on your credit which will effect you down the line.
At that point I think you really need to talk to a professional in order to try to work out all your options.
One other thought - if you are planning on moving out of state, what is the possibility for selling your husbands business as a going concern? That would raise a large sum of much needed cash, cut expenses and he could go to work somewhere full time NOW to increase income?
Where exactly are you moving and why if you don't mind me asking?
Altho we trust one another, I am having to face, as the "financier" of our marriage that I am the one who mishandled our finances. I am the one who "missed it". Turns my stomach inside out.
It is humbling to face how blindly I led myself (and us) down this awful path.....
At least you recognize it, though. That's a good thing. Sure, you screwed up...but you're trying to take steps now to dig yourself out of the hole and that's important. Far too many people just ignore the problem and hope it goes away until it gets too bad to fix without severe consequences.
I don't have any advice on a short sell but if I were you I'd try to maximize the amount coming in and minimize the amount going out...cut off any service you don't absolutely need (like cable), stop eating out, cut out that morning trip to Starbucks, etc. and get a job. I wish you the best of luck and I'm not being sarcastic or ugly at all; I really do hope you guys land on your feet.
I could be wrong but I get the impression you have never been poor.
Oh, No. I have been quite poor. I've made one chicken last for 5 days before!
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It's not easy. If your mortgage is 3K, you need to do whatever you can to get those total expenses down drastically. You are paying 1K in credit card payments as well. Where is the rest of the money going to add up to 8.5K per month?
IRS 2005 loan $220/mo 2 car payments ($400 each one is a lease that will end in May) on vehicles that are each about $5k upside down. Car insurance is $400 a month. Business liability insurance about $100/mo. Business cell phones are $250/mo, Sat TV, $100, Internet $42, Home phone $69, Business phone, $47, Business credit expense, $200/mo, Water softener, $45/mo, Water $60+mo, Elec avg $350/mo, business gas $600 mo, private auto fuel $100 mo (that will increase with jobs) and $1600 aprx each month to feed us all. Adult kids' is $800 each month
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Get rid of those expenses. All of them. You will be miserable for quite a long time. This will have a huge impact on your family. This is the honorable thing to do and you will be OK in the end. You will probably be stuck where you are for at least 5 years. That's how long it will take for the housing market to improve anyway. Say goodbye to fun times and instant gratification.
I'd hoped that selling and moving away and renting and paying debts off would facilitate this... ie, WE assume control of our debts in just that way, and it would "force" my children to rely on themselves (they are 21 and 23)
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I also suggest you get some expert help from a financial/legal viewpoint. Honorable aside, it may be better to take another course of action that will sacrifice your credit rating. In the long run, you need to do what's best for you. Good luck!
Adult kids' is $800 each month
I'd hoped that selling and moving away and renting and paying debts off would facilitate this... ie, WE assume control of our debts in just that way, and it would "force" my children to rely on themselves (they are 21 and 23)
I have serious considered BK.
I would seriously make those kids get jobs and pay their own way. They could pay you rent. My sister and I helped our folks out as yound adults when my father unexpectedly lost his job.
Your husbands business is a money pit. Sounds like there is room to cut there.
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