Buried Beyond Belief! (credit, pay off, financing, companies)

[darstar]

Originally Posted by Sgoldie

Here's a sample budget (copy it down) -

Income $7,000 mo: Use half to live on, and half to pay down credit card (est payoff time 3 1/2 yrs w/o addl interest)

$2,000 Rent: means moving elsewhere (rent a Uhaul), ok since you work from home anyway
580 Health Ins: too risky to lose, mail it in every month (Cut up all credit cards)
100 Auto Ins: get down to one vehicle, kids pay their own, cell phone, college too.
200 Food: money saved by scratch cooking, shopping food sales, and one less car = wife can
stay home to maintain budget if she isn't going to make more than $12,000 yr
20 Ip phone: only one phone for personal/business
200 Utilities: water/electric in cheaper place
100 Gas:
51 800#: justified business expense
100 cable/isp

This leaves $150 a month for misc unforseen, birthday presents, repairs, etal. Many people live on much less. You can get out of trouble if strictly adhered to and it won't take forever but everyone has to be onboard with the plan.

You need to remember that this guy is self employed. There is no guarantee of monthly income. He needs to be more liquid , for your plan to work in todays environment.With a family ,kids , and wife , in Ca. , and not knowing if his business will continue at the present level , I don't see how they can survive on the budget you propose. He would need to go underground , to do it........

[FarNorthDallas]

So, the $7,000/month is now $4,000/month due to that lost client?

I don't know how you can sustain this for very much longer. Maybe you should hoard money by not making any more payments on anything and then foreclosure/file bankruptcy at the last possible minute and then live in the house for free until the last possible minute, while continuing to save every last penny. Sell everything you can. Save the money. Once you get the boot, downsize big time and start a'new.

It will be a shock to the system to change your lifestyle so drastically and the family might get really mad. In the long run it will be a great lesson for all.

[Sgoldie]

$42,000 is all I'm proposing for living expenses. Between two plus adults in the family they should be able to come up with that amount of income per year.

The addl $42,000 I've noted, or whatever significant amount above and beyond, whatever it is even if fluctuating should be applied to a debt payoff schedule.

(I must have missed the lost client income decrease)

[darstar]

Originally Posted by FarNorthDallas

So, the $7,000/month is now $4,000/month due to that lost client?

I don't know how you can sustain this for very much longer. Maybe you should hoard money by not making any more payments on anything and then foreclosure/file bankruptcy at the last possible minute and then live in the house for free until the last possible minute, while continuing to save every last penny. Sell everything you can. Save the money. Once you get the boot, downsize big time and start a'new.

It will be a shock to the system to change your lifestyle so drastically and the family might get really mad. In the long run it will be a great lesson for all.

This is what i have said mostly , he needs more liquidity. The problem is , I don't know the CA. laws on , what you can keep if you file BK.? In most states , he makes way too much to file Chapter 13 , and have it wipe out all debt. In any case , he has to be careful about the planing. Hording monies with the intent of filing BK later , can come back to bite you, if you are not careful. he needs to incorporate now , for business reasons.......... do you know about any tax debt here ?......thats a bigger issue.

[Humanoid]

People are beating up the OP because he is being a girly man. He isn't doing what he needs to do to fix things, he wants to keep his life style and wiggle his way out of his debt. Unfortunately this is rather common here in California. I have a sibling that is going to be in the same position.

$1,000/month on utilities? That is utterly absurd. 4 cars? Multiple cash out refis? This situation is so bad it makes a good case for debtor prisons!

Anyhow, to the OP:

Sell everything, move into a 2-3 bedroom rental. Pay off your debt to the best of your ability. If you need to file for BK do it, although no way they are going to discharge all your debt.

Originally Posted by Sgoldie

200 Food: money saved by scratch cooking, shopping food sales, and one less car = wife can
stay home to maintain budget if she isn't going to make more than $12,000 yr
20 Ip phone: only one phone for personal/business
200 Utilities: water/electric in cheaper place
100 Gas:
51 800#: justified business expense
100 cable/isp

You won't need $200 in Utilities in CA in a small place. Me and my wife pay $80 for electric and water, would be less if we didn't use the AC. Most rentals don't charge Gas, everything is electric. Even if it did it would be around $20 a month on average. $200 on food on the other is not realistic unless you're eating very poorly.

[dramamama6685]

Originally Posted by HappyTexan

Wow..where to start.

-Get rid of all the cellphones. Keep 1 for business and that's it.
-Tell the kids to get jobs and start contributing to the household. Gas their own vehicles and pay for insurance, registration, inspections, etc.
-Kids go to community college for 2 years..transfer to University
-Get rid of all cable except for 1 TV and only get basic
-Get used to hamburger meat and macaroni and cheese
-Grow veggies in the back yard and learn to bake bread and make jerky
-Shop at Goodwill and the cheaper stores for clothes

You are going to be in a heap of trouble if you don't cut back big time and reign in your finances.
At least you acknowledged it and that is the first step. The rest are hard but having no debts and money in the bank is heaven

This is some good advice and I believe a lot of people are in this situation due to the extragance/ keeping up with the Jones' mentality mentioned in earlier posts.

Would it be a conflict of interest with companies in your area, if you went back to work as an evening manger in IT? Just another thought I had and again, good luck.

[GregW]

I am very sympathetic for the OP. He only did what the unspoken rules of the society told him to do. The primary one being not to worry because the house will appreciate in value faster than you can spend the money. Like a lot of Americans he got to where he is by buying stuff he didn't need, but his family wanted (36k coming out party!) with money they did not have.

My suggestions are: get a bankruptcy lawyer and pay him for an initial consultation. Bring whatever financial files you have. Take his and several posters, advice and cut way back on everything except getting more business. Maybe hiring that spendthrift daughter to make sales calls?

If nothing else works pay the health insurance, the mortgage and the business phone. Let the rest die. If you follow the last suggestion you will not have to ever worry about credit card debt because nobody will give you credit again. Ever.

There, but for some common sense and a hard learned frugality, go I.

[darstar]

To the OP ; Most of the advice you are getting is worth what you are paying for it..........until you walk in the shoes of someone who has been through it , you don't know jack.
Credit card debt , is the next hurdle now , after the Housing problems . You have both , not uncommon as they are interconnected. Look for some help from the Feds coming soon, you are not alone out there.

[darstar]

Originally Posted by GregW

I am very sympathetic for the OP. He only did what the unspoken rules of the society told him to do. The primary one being not to worry because the house will appreciate in value faster than you can spend the money. Like a lot of Americans he got to where he is by buying stuff he didn't need, but his family wanted (36k coming out party!) with money they did not have.

My suggestions are: get a bankruptcy lawyer and pay him for an initial consultation. Bring whatever financial files you have. Take his and several posters, advice and cut way back on everything except getting more business. Maybe hiring that spendthrift daughter to make sales calls?

If nothing else works pay the health insurance, the mortgage and the business phone. Let the rest die. If you follow the last suggestion you will not have to ever worry about credit card debt because nobody will give you credit again. Ever.

There, but for some common sense and a hard learned frugality, go I.

Your comment about credit cards , is not necessarily true . The industry is a very greedy lot , and , they have made billions and billions on people with " bad credit "........5 years can work wonders on your credit rating.
Can you imagine the run on the legal community these days , for advice ?

[Lulu101]

I thought that with weekly "rolling blackouts" utility costs would be cheap out there.

Originally Posted by czubmeister

I do have two kids. I live in california. My daughter just started University of Arizona but only lasted one semester and is coming home in December to go to school locally. (That whole moving to a dorm thing was a huge expense as well) Probably spent over 700.00 in one semester flying her home 3 times.
My son is a couple of years away from starting college so I have to deal with that one as well.

As for the utilities,
$149.00 Cable (includes house ip phone thorugh Time Warner and a bunch of cable boxes that I'm returning today.
91.00 gas company
$275.00 Cell Phones including a internet connect card for my pc (business expense)
$500.00 Department of Water and Power. Bill is starting go to down a bit due to the cooler weather.
$176.00 Office phone. (I work out of the house doing sales calls)
$51.00 800 Line
.. Actually 1,241 in utilities

My wife works as a mommy and me teacher at 3 locations but only brings in about 12,000 per year.
My house is upside down. I bought it for 285,000 14 years ago (2200 sq ft) and now owe over 750,000 due to refinancing every few years. (another stupid mistake)

I have about $18,000 left between our two retirement accounts and not sure what to do with that money. Cash it all out and pay off some debt... or keep the cash in case we need it for something.