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I was discussing this situation in another thread on another board, but didn't want the discussion in that thread to focus on me, so I'm posting this here. Here's a breakdown of the situation.
Background: I currently make $60,000 in Indianapolis. 30 and single with no kids. No student loans. Current employment situation is tentative - it isn't going as well as I hoped after four months into it, but no PIP/imminent threat of firing, etc. Indiana certainly isn't my ideal location, but I don't hate it and it's cheap to live here. Ideally want to either move back to Tennessee (Nashville on east) or Florida to drop state income tax, or the Carolinas, and for personal reasons. Last month's FICO was 775, which really proves that it's an "I LOVE DEBT!" score. No late payments of any kind, but my "utilization percentage of revolving credit" is too high I am trying to stay as liquid as I can under the circumstances in the event I lose my job.
I graduated college in 2010 and didn't make more than $30,000 gross in any full year until the middle of 2014. I moved from TN (commute in TN was 100 miles a day) to IA in 2012 sight unseen for a job offer. I bought the second car before moving to IA (no plans of moving then), taking on a payment, then moved a few months later. I had virtually no furniture or anything to start out with, so that went on the cards and with the car payment, I fell behind every month. Some relatives died and I had to make short notice flights back to Tennessee, all on the cards. Hated Iowa and moved back to Tennessee - made at most $13/hr in 2013 while being mostly unemployed during that summer, and then got a $50,000 offer in Indiana in early 2014. Made $52,000 last year and went to $60,000 at my current job, but with a biweekly instead of semi-monthly pay schedule, county taxes paid upfront, and more expensive health insurance, I'm actually clearing less per pay period than at the prior job, but with an additional check (went to paying the cards) in April and one in September.
I've been behind the eight ball virtually the whole way. Combine the years of low income (have been in debt of some type since I graduated) with all the moving/associated expenses (furniture, trucks, fuel, deposits, incidentals, have easily been $5,000 or more - I sold virtually everything when I left IA then repurchased items when I moved to IN), as well as my own poor spending habits, and you have where I am now.
Take home: $3,008/month after FICA/federal withholding/Medicare, state/county income taxes, medical/dental/vision coverage, ADD/$50,000 life insurance policy, and a 6% employer matched 401k contribution. I'm not eligible for overtime, nor can I really take on a defined hours second job as I'm technically on call 24 x 7 x 365.
Rent/power/water/sewer/cable/internet: ~$1,025 on an average power month - will be more in the summer due to poor HVAC. Power usage in July is almost double that of January. Have tried to get the landlord to correct, but they say there is no problem with the air conditioning so I am basically stuck with high summer power bills, even though it takes four hours to drop a 900 sq ft unit four degrees.
Rent alone is $820/month for a 2BR in a comfortable suburb - current lessees actually pay more for the 1BR units. Rent has gone up $100/month since 2014. Lease is locked in through next March. I tried to get a shorter lease term, but the LL would not hear it and any other complex also wanted a year's lease,, or was even more expensive.
Dropping cable would be about a $40 savings off the Comcast bill. Taking on a roommate with my employment situation up in the air doesn't seem practical. All of these utilities are separate bills (other than water/sewer) and nothing is paid by the apartment except trash removal.
I've decided that if I'm still in Indiana by the first of the year - I'm going to try to get a cheap condo or SFH in the $50k - $70k range. This would protect me from future rent increases, give me some cash flow, and allow me to control my living situation better.
Car Payment: 2013 Hyundai Elantra - $489/month Remaining balance: $17,080 Valued about $11k in a private sale. Negative equity is $6,000-$7,000. Payoff date 6/2019. Originally had an old car, traded that for a slightly newer used model and was underwater on that. The second used car cost me several thousand dollars in repairs over a year, which basically went on the cards due to my low income at the time. It kept giving problems and I rolled negative equity from the prior loans into this one. The car was purchased in 2013.
I drive about 20,000 miles a year, so I don't think a lease would work. Being underwater, not sure how that would even work. If I lived in Tennessee or the Carolinas, it would be a much shorter drive to see family.
What are my options here? I could try to refinance it (currently at 4% APR - unlikely to reduce) to buy myself some cash flow. If I sell it and buy a cheaper car, I am going to be paying a higher interest rate for an older, less reliable vehicle, and will still have a deficiency on the current loan.
I'm thinking of just waiting it out until the negative equity clears itself up. I'm halfway through the payment schedule by now. I don't see any good options here.
Car Insurance/Registration: ~$88/month. Insurance was $415/six months through State Farm and last year's registration was $266. Registration should drop nominally this year. Bodily injury/uninsured motorist is at $100k/$300k coverage, property at $50k. This seems wasteful as the only claim I've ever had was for about $1,000 on a bumper five years ago. Registration is unavoidable.
Personal loan: $23,000 balance @ ~12% APR. $517/month. A personal loan at either $10,000 or $15,000 was taken out with Prosper to consolidate existing CC debt back in the summer of 2014. I took out a ~$25,000 line with Lending Club to pay that loan off and most of my other cards in December 2015. I've been hit double on the funding fee.
AMEX/Discover: ~$125 minimum - $4,600 on AMEX, about $1,700 on Discover. I have two other Visa cards, but those are now paid off.
Verizon: $55 - can't really cut this as it is my only phone and having text and mobile email is mandatory for my job. I do not get any stipend for having to use my personal phone/plan for work. Parents and I share a 12GB data plan with unlimited talk/text. Bill is split three ways.
Gym: $55 - I am looking at going back to the YMCA which is about $25 cheaper. I'm a Lifetime Fitness member, but it's extremely crowded in the evening and expensive.
Gas: $100-$125 - unavoidable.
Food: $150-$200/month in what I eat at home. I dine out/drink out at least a few times a week. I'm going to cut most of that out.
Haircut: $20
Using the high end of those amounts, that comes to roughly $2,600, leaving me less than $100/week. I'm probably underestimating the food/household items ("Walmart") bill. I'm locked into the apartment lease for another nine months. Count other household items, clothing, a doctor's visit, or any unexpected expenses, and I'm definitely going in the red each month.
I've already canceled Netflix and a couple other subscription services I had, totaling about $45/month, but that's really negligible compared to the hole I'm in.
With the way the debt it is now, I can't even reliably pay for necessities like food or rent in cash. This month's rent went on the Discover card to pay for the car payment and personal loan with what cash I do have. This is just adding to the pile every month. If something unusual happens (had a staph infection in my arm last month which was cut out - no idea what the urgent care bill will run me), it keeps adding to the pile. If I have to pay for anything unexpected in cash, someone is not getting paid.
So far, I've been able to juggle the balls well enough to keep everything current, but I don't have a lot of faith that will continue. What would you do in this situation?
I was discussing this situation in another thread on another board, but didn't want the discussion in that thread to focus on me, so I'm posting this here. Here's a breakdown of the situation.
Background: I currently make $60,000 in Indianapolis. 30 and single with no kids. No student loans. Current employment situation is tentative - it isn't going as well as I hoped after four months into it, but no PIP/imminent threat of firing, etc. Indiana certainly isn't my ideal location, but I don't hate it and it's cheap to live here. Ideally want to either move back to Tennessee (Nashville on east) or Florida to drop state income tax, or the Carolinas, and for personal reasons. Last month's FICO was 775, which really proves that it's an "I LOVE DEBT!" score. No late payments of any kind, but my "utilization percentage of revolving credit" is too high I am trying to stay as liquid as I can under the circumstances in the event I lose my job.
I graduated college in 2010 and didn't make more than $30,000 gross in any full year until the middle of 2014. I moved from TN (commute in TN was 100 miles a day) to IA in 2012 sight unseen for a job offer. I bought the second car before moving to IA (no plans of moving then), taking on a payment, then moved a few months later. I had virtually no furniture or anything to start out with, so that went on the cards and with the car payment, I fell behind every month. Some relatives died and I had to make short notice flights back to Tennessee, all on the cards. Hated Iowa and moved back to Tennessee - made at most $13/hr in 2013 while being mostly unemployed during that summer, and then got a $50,000 offer in Indiana in early 2014. Made $52,000 last year and went to $60,000 at my current job, but with a biweekly instead of semi-monthly pay schedule, county taxes paid upfront, and more expensive health insurance, I'm actually clearing less per pay period than at the prior job, but with an additional check (went to paying the cards) in April and one in September.
I've been behind the eight ball virtually the whole way. Combine the years of low income (have been in debt of some type since I graduated) with all the moving/associated expenses (furniture, trucks, fuel, deposits, incidentals, have easily been $5,000 or more - I sold virtually everything when I left IA then repurchased items when I moved to IN), as well as my own poor spending habits, and you have where I am now.
Take home: $3,008/month after FICA/federal withholding/Medicare, state/county income taxes, medical/dental/vision coverage, ADD/$50,000 life insurance policy, and a 6% employer matched 401k contribution. I'm not eligible for overtime, nor can I really take on a defined hours second job as I'm technically on call 24 x 7 x 365.
Rent/power/water/sewer/cable/internet: ~$1,025 on an average power month - will be more in the summer due to poor HVAC. Power usage in July is almost double that of January. Have tried to get the landlord to correct, but they say there is no problem with the air conditioning so I am basically stuck with high summer power bills, even though it takes four hours to drop a 900 sq ft unit four degrees.
Rent alone is $820/month for a 2BR in a comfortable suburb - current lessees actually pay more for the 1BR units. Rent has gone up $100/month since 2014. Lease is locked in through next March. I tried to get a shorter lease term, but the LL would not hear it and any other complex also wanted a year's lease,, or was even more expensive.
Dropping cable would be about a $40 savings off the Comcast bill. Taking on a roommate with my employment situation up in the air doesn't seem practical. All of these utilities are separate bills (other than water/sewer) and nothing is paid by the apartment except trash removal.
I've decided that if I'm still in Indiana by the first of the year - I'm going to try to get a cheap condo or SFH in the $50k - $70k range. This would protect me from future rent increases, give me some cash flow, and allow me to control my living situation better.
Car Payment: 2013 Hyundai Elantra - $489/month Remaining balance: $17,080 Valued about $11k in a private sale. Negative equity is $6,000-$7,000. Payoff date 6/2019. Originally had an old car, traded that for a slightly newer used model and was underwater on that. The second used car cost me several thousand dollars in repairs over a year, which basically went on the cards due to my low income at the time. It kept giving problems and I rolled negative equity from the prior loans into this one. The car was purchased in 2013.
I drive about 20,000 miles a year, so I don't think a lease would work. Being underwater, not sure how that would even work. If I lived in Tennessee or the Carolinas, it would be a much shorter drive to see family.
What are my options here? I could try to refinance it (currently at 4% APR - unlikely to reduce) to buy myself some cash flow. If I sell it and buy a cheaper car, I am going to be paying a higher interest rate for an older, less reliable vehicle, and will still have a deficiency on the current loan.
I'm thinking of just waiting it out until the negative equity clears itself up. I'm halfway through the payment schedule by now. I don't see any good options here.
Car Insurance/Registration: ~$88/month. Insurance was $415/six months through State Farm and last year's registration was $266. Registration should drop nominally this year. Bodily injury/uninsured motorist is at $100k/$300k coverage, property at $50k. This seems wasteful as the only claim I've ever had was for about $1,000 on a bumper five years ago. Registration is unavoidable.
Personal loan: $23,000 balance @ ~12% APR. $517/month. A personal loan at either $10,000 or $15,000 was taken out with Prosper to consolidate existing CC debt back in the summer of 2014. I took out a ~$25,000 line with Lending Club to pay that loan off and most of my other cards in December 2015. I've been hit double on the funding fee.
AMEX/Discover: ~$125 minimum - $4,600 on AMEX, about $1,700 on Discover. I have two other Visa cards, but those are now paid off.
Verizon: $55 - can't really cut this as it is my only phone and having text and mobile email is mandatory for my job. I do not get any stipend for having to use my personal phone/plan for work. Parents and I share a 12GB data plan with unlimited talk/text. Bill is split three ways.
Gym: $55 - I am looking at going back to the YMCA which is about $25 cheaper. I'm a Lifetime Fitness member, but it's extremely crowded in the evening and expensive.
Gas: $100-$125 - unavoidable.
Food: $150-$200/month in what I eat at home. I dine out/drink out at least a few times a week. I'm going to cut most of that out.
Haircut: $20
Using the high end of those amounts, that comes to roughly $2,600, leaving me less than $100/week. I'm probably underestimating the food/household items ("Walmart") bill. I'm locked into the apartment lease for another nine months. Count other household items, clothing, a doctor's visit, or any unexpected expenses, and I'm definitely going in the red each month.
I've already canceled Netflix and a couple other subscription services I had, totaling about $45/month, but that's really negligible compared to the hole I'm in.
With the way the debt it is now, I can't even reliably pay for necessities like food or rent in cash. This month's rent went on the Discover card to pay for the car payment and personal loan with what cash I do have. This is just adding to the pile every month. If something unusual happens (had a staph infection in my arm last month which was cut out - no idea what the urgent care bill will run me), it keeps adding to the pile. If I have to pay for anything unexpected in cash, someone is not getting paid.
So far, I've been able to juggle the balls well enough to keep everything current, but I don't have a lot of faith that will continue. What would you do in this situation?
You need to rent a room. I realize you may want your own place, but you've basically just told us that you can't afford it. And yes, get rid of the cable and other stuff.
How many miles are on the car? Can you make it to the end of the loan before it gets to the point of needing lots of big repairs?
~62,000. Bulk of the driving was actually in 2014. I've driven at least 2,000 miles in the last five weeks, but that's going to be slowing down.
I think it could get to 120k without major problems.
Ok, I think you will be fine if you either cut back on housing (rent a room) or figure out what all the leaks are and seal them off (you don't give us a complete budget here....where is the rest of your money going?)
Honestly, you should not plan on buying any sort of condo or SFH. You are broke.
This budget, using the high amounts for food/gas and whatnot, leaves you with only approx $310-ish. Your minimum payments are killing you. I don't see many options here. You need an increase in income.
Do you have anything in savings currently? I would sell anything that isn't nailed down in your house.
The car situation is crappy. Your options are slim. But here is one: You're $6K underwater. In order to offload the car, you need to be able to pay off the loan. So you could get a personal loan for $6K, use those proceeds to pay off the car. Now sell it private party. Buy a junker car. You can't afford anything new. You need a $1000-$2000 car.
Your minimum payments are going to drown you if you don't do something drastic, like working two or three jobs, like trying to get rid of that car payment.
Honestly, you should not plan on buying any sort of condo or SFH. You are broke.
This budget, using the high amounts for food/gas and whatnot, leaves you with only approx $310-ish. Your minimum payments are killing you. I don't see many options here. You need an increase an income.
Do you have anything in savings currently? I would sell anything that isn't nailed down in your house.
The car situation is crappy. Your options are slim. But here is one: You're $6K underwater. In order to offload the car, you need to be able to pay off the loan. So you could get a personal loan for $6K, use those proceeds to pay off the car. Now sell it private party. Buy a junker car. You can't afford anything new. You need a $1000-$2000 car.
Your minimum payments are going to drown you if you don't do something drastic, like working two or three jobs, like trying to get rid of that car payment.
I'm willing to guess that OP has a fairly long commute given the annual mileage figure, and thus a $1k - $2k car is too big of a risk. OP's only option may be either a side job or really cutting back on the shopping (to the point that it hurts!) until the lease ends and then move closer to work.
ETA: If OP has excess personal belongings, jewelry, etc. that can be sold, it might be enough to get by until this lease ends. It's really a housing and transportation issue. Ideally take on roommates and move much closer to work but barring that a second job can help too.
I'm willing to guess that OP has a fairly long commute given the annual mileage figure, and thus a $1k - $2k car is too big of a risk. OP's only option may be either a side job or really cutting back on the shopping (to the point that it hurts!) until the lease ends and then move closer to work.
My husband drives a 2001 Cadillac Seville. Only 98K miles. Worth about $1800, runs just fine and we've had to do very minimal maintenance on it in the 8 years we've owned it. Maybe OP could find a gently used, older car. Like a grandma/grandpa car that's been sitting in the parking lot of a retirement home for awhile.
My husband drives a 2001 Cadillac Seville. Only 98K miles. Worth about $1800, runs just fine and we've had to do very minimal maintenance on it in the 8 years we've owned it. Maybe OP could find a gently used, older car. Like a grandma/grandpa car that's been sitting in the parking lot of a retirement home for awhile.
That's one idea I suppose, though OP may have a tough time getting a personal loan for the negative equity....who's going to lend to someone who is clearly in over their head?
That's one idea I suppose, though OP may have a tough time getting a personal loan for the negative equity....who's going to lend to someone who is clearly in over their head?
I agree, but apparently OP thought he was going to buy a condo/SFH... so... maybe he could get the personal loan?
It's just a really tricky situation. The payments are killing OP, the big personal loan AND the car are outrageous, IMO. If OP can't get rid of the car, then major lifestyle changes like taking a roommate, eating a beans and rice or ramen-style diet to keep grocery costs down, taking on additional part-time work, no shopping, no drinks with friends, no gym, no cable, etc. It will be miserable.
You can do it though, OP!
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I am trying to stay as liquid as I can under the circumstances in the event I lose my job. 
