lurker who needs budget help

leah1012

I mostly just lurk on here but I decided to post my budget and see where you think I can cut down/change.  We just had a baby boy and I am dreading going back to work.  If we could cut some out so that I didn't have to work full time without H having to make up all the slack that would be great.  We were on track to be out of debt by the end of next year/beginning of 2017 but have had some setbacks.  We are pretty good at sticking to our budget, if we go over it is in fun money in the summer and groceries in the winter.  Below is our budget, minimum payments, and what is owed on the items.  We both have wages that change seasonally but we average about $4400 split 50/50. 

Mortgage	315	$22100 left at 4.25% on a 15 year loan
Water and Trash	55
Internet	69
Power	200	average
Second Mortgage	68	$1422 left at 5.20% did to avoid pmi
Retirement	150
Life insurance	44
Groceries	250
Truck insurance	55
Car insurance	45
my phone	30
Gas	400
Pets	25
home expenses	120	small improvements or fixes plus paper towels, diapers, etc.
credit card	175	$8000 at 12%
Netflix	17
car payment	440	$6340 left at 2.49% 2012 fusion
fed taxes	315	$13000 at almost 10% this is the bad debt H had back taxes when we met and we are paying them off
health insurance	311
H phone	22
Truck payment	315	$6700 left at 3.49% 2006 F250
Clothing allowance	40
hair care	16
entertainment	80
childcare	400

MommyLiberty5013

What do you and your DH do in the seasonal times when work is slow? Do you work PT elsewhere? If not, I think this could be a great start to helping with debt reduction and savings growth.

Customer service call centers, loading docks, store/shelf restocking, and clothing retailers can all be jobs with flexible hours or hours not at your usual 9-5 that don't require a lot of training or extra schooling. Another idea for a more consistent work schedule would be bank work as a teller.

hoffse

Offhand, you guys are pretty car poor.  I don't have a problem with auto loans, but I think having more than one at a time is an issue.  The truck payment in particular seems steep, given the value of that vehicle.  That seems kind of high for a 2006, but maybe I'm not truck savvy enough.

Gas is an enormous expense for you guys.  My guess is it's the truck.You guys are probably upside down on the track (maybe not on the Fusion - that one seems close), but I would ask yourselves how often do you really use/need a truck?  H and I have had maybe 4 times in the last year where a truck would have been really helpful.  But those rare occasions aren't worth what they cost in insurance and gas.

The tax bill is confusing me a bit - did you guys get a private loan to cover the tax bill?  Or is that your payment plan through the IRS?  Interest rates through the IRS have been closer to 3% for back taxes for the last few years, and I don't think they've been above 5% since the crash in 2008 (don't quote me on that though).  If it's a private loan, then please know that if this ever happens again that you might want to explore your options through the IRS before refinancing through a private lender.  I know the IRS is a pain in the ass to deal with, but they offer very good rates compared to private lenders.  You can also pay your bill over the phone.  If that loan is through the IRS directly, call and see if you can get the rate lowered, because that is way too high.

With your credit card debt and the back taxes, I don't think you can afford to stay home just yet.  There aren't many places to cut on your budget - the things that are draining you are the debts and the cars.  Most everything else looks pretty low to me.  I would focus your energy on paying off that debt and then reassessing to see if you can afford to stay home.

simplyelise

Congrats on the little one!

I agree with @hoffse, your budget looks pretty minimal other than the cars. Are you underwater in those loans? By my count, you've got about $400 extra a month, so you could save up to by a $1500 car in 4 months and sell one of the vehicles (probably the fusion since it's likely worth more and the payment is higher). Then you'd have around $850 a month to put towards extra debt payments.

DH and I follow DR, but all our debt is a student loan at the same interest rate. If I were you guys, because you do seem pretty disciplined and on top of it, I'd do the avalanche debt payoff method.

If you're really set on finding a way to stay home (once you get back on track with paying debt down), is there a career path for your H to get on that would increase his income? Could you put feelers out to see if any friends would pay you to watch their little one while you stayed home with yours? If you could pull in another $100+/week to watch another baby, that would help considerably. 

brij2006

I would personally sell both of the vehicles (get cheap cars for $1,000 each) and work extra jobs so that you can pay the back taxes.  The worst person to owe ever is the IRS.  Get them paid and off your back.  

leah1012

We are basicly even on the car and truck.  H does construction work which is the reason for the truck.  He uses it at his day job too and his company pays for that use.  We also live in a very rural area, which eats up a lot of fuel.  His truck is a diesel.  I 

I know I am going back to work I am just wishing I could cut back sooner.  I work in a commision based job so I put in the same number of hours year round I just get paid better for it some months.  H works in a construction trade so some months work is slow, but all construction trades that he is skilled in are slow at that time.   

The tax bill I have never had any success at talking to the IRS since it was his bill.  I know not all of it is at 10% but some of the fines are close to that.  It is from 2007-2009.  We pay directly to them.  That is my biggest stress bill.  I might try calling them again. I haven't tried in a while.  

hoffse

leah1012 said:

We are basicly even on the car and truck.  H does construction work which is the reason for the truck.  He uses it at his day job too and his company pays for that use.  We also live in a very rural area, which eats up a lot of fuel.  His truck is a diesel.  I 

I know I am going back to work I am just wishing I could cut back sooner.  I work in a commision based job so I put in the same number of hours year round I just get paid better for it some months.  H works in a construction trade so some months work is slow, but all construction trades that he is skilled in are slow at that time.   

The tax bill I have never had any success at talking to the IRS since it was his bill.  I know not all of it is at 10% but some of the fines are close to that.  It is from 2007-2009.  We pay directly to them.  That is my biggest stress bill.  I might try calling them again. I haven't tried in a while.  

There are any number of things that could affect the interest rate, but I would still double check because that just sounds really high to me.  I'm obviously no expert, but an interest rate that high is a red flag for me. Make sure your H isn't doing anything that could cause those kinds of penalties a second time. 

Since the tax bill is his before he was married, the IRS won't talk to you.  Your H needs to be the one calling.

I would also make sure to keep your finances separate until the tax bill is paid off.  You don't want the IRS going after your assets if you H slips up with the payments.

I would still probably pay the CC off first since it's higher interest. But get that tax bill gone, ASAP.  As long as it's out there, you guys are also at a higher risk for audit.  Audits are a pain in the butt and they can be scary.  I just went through one myself.

**None of this is legal advice - just practical advice about how to deal with the IRS.

hoffse

Also, just so you know there's a difference between a penalty and interest in the tax world.  Penalties are usually a percentage of the taxes owed - like 20%.  They are assessed once.  The interest then accrues on the back taxes and any penalties.  But interest is definitely its own thing.

**Again, not legal/tax advice

smerka

Hoffse might have an opinion on this - not officially of course. But you might want to look into filing your taxes as an injured spouse. The IRS is appliying any tax refunds your husband gets to his debt, but if you are filing jointly, they are also applying anything you would get back too. I can not say this will definitely help you, but it might be worth looking into with a tax professional.

short+sassy

Just curious, does that mortgage amount include escrowed insurance and property taxes?  Or are one/both of those yearly expenses something you have to pay for yourself?

It seems like such a low mortgage payment to include everything, but if so, color me super jealous .

leah1012

I make all the payments and handle the bills because H is good at a lot of things but money is not one of them.  This year we filed our taxes together.  I would rather the IRS take my tax return and apply it to his debt to pay it off.  We got more back by not filing married but separate.  We also had an awesome accountant do our taxes because I am afraid we will get audited with his history.  

It includes everything.  We live in a very very small town.  My property taxes are about $450 a year.  Houses just like the one we have are an easy $50- $70,000 more if we move 12 miles and taxes are 3 or 4 times that pretty.