Let me know what to do. I have no idea!

HouseOfGreen · October 2013

My husband and I just bought a house. He is the only one working and we have 3 kids.

So our debt

Mortgage: 1050 a month (owe 148,000)

Car 6,000 (100 a month) we will be paying 2,000 on this a month (VA benefits)

monthly

Hulu and Netflix (14.00)

HOA (354)

Cable (107.00) no contract

Groceries (300)

electric (we don't know, this is our second week being in the home)

My husband works full time and goes to school, I go to school and watch the boys. We can't afford a sitter as of now. The first thing we are going to do is pay off the car. It will be paid off by January 1st. We are also putting a little bit in savings. Not much because we are focusing on paying off the car. Then all we will have is a mortgage. BUT!!! I need to get life insurance, I want to start a college fund for my three boys, and put more money into my savings. I feel like I need to do so much, and I don't know where to start or what to do. I was in a lot of debt when I was younger, so I hate debt more then anything. That is why I am focusing on paying off the car first. I figure I can save more once that is done. Help me please!

HouseOfGreen · October 2013

I forgot to ass a few things

Cell phone (200.00) my husband is ahead on his bill by 400.00

Life insurance DH (35.00)

Medical Insurance (65.00)

Car, and household insurance (250)

Take home pay (700-900 a week) so at the least 2,800

hoffse · October 2013

A few places you can cut back:

First, small correction, but huluplus and netflix together is $16/month. Double check your other numbers and make sure they are correct. I have found that hulu and netflix together gives me more tv-watching ability than I'll ever be able to use, so we don't have cable. That will save you more than $100/month if you cut that back.

I'm curious about the car - are you paying $2,000 this month or $200? If it's the former, that's going to speed up the car pay-off date significantly. If it's the later, it puts you one month ahead.

I don't think it's a good idea to get ahead on utilities unless you're pretty sure you're going to get behind. Reason? $200/month for cell phones is pretty high. I have unlimited talk, text, and 2 gigs/month of data for $55. I think walmart has an even cheaper version. Once your husband's cell phone bill is used up, think about switching. There, now you've saved another $100 each month.

I don't see gas on here - how much is that? You have $325/month left under the budget you gave us above. And if you make those couple of changes I suggested you'll have $525/month leftover.

Future considerations: a mortgage is not a bad debt to have, generally, though I think it's absurd to be paying an HOA fee that's 1/3 of your mortgage. In the future, you might want to think about that when buying.... whatever you do, do NOT default on your HOA fee. Some states let HOAs foreclose on homes if you default payment to them. It's ridiculous, but it's true (my state permits this). Treat the HOA like a bank and make sure you stay current with them - but in the future, I would seek out a house that doesn't have an HOA attached to it.

brij2006 · October 2013

Am I understanding correctly that you will be receiving VA benefits on a monthly basis?

Also, what is spent each month on car gas and home gas? Do you have any expenses for trash and water?

HouseOfGreen · October 2013

My husband and I are both getting VA benefits while we are in school. We will be in school until August. We will be putting 2,000 (two thousand) on a car a month beginning November first. As far as our cell phones, we will just have to wait until our contract is up. Water is included in our HOA, as far as gas only our stove is gas. Our heating is electric. I am not sure how much this will be yet since we haven't even been in our home a month yet. We haven't had cable in years so I decided as a treat to have cable. And in turn we will no longer be eating out. For a family of five it can cost 50 plus dollars! So I figure with what we save we can have cable. But thinking about it....I may get rid of it to save money. As far as gas, I go to school 30 min away, and my husband works and goes to school an hour away. So we spend a lot on gas. my car is 40 to fill and my DH's car costs 55 to fill.

So, my question is: After we pay off our car should we strictly work on our savings? My oldest is seven I should have already started a college fund. We have a 30 year mortgage, I'd like to pay off our home as early as possible.

MrsAshleyH10 · October 2013

Do you currently have anything in savings? I think a good place to start would be to have an efund of at least $5k because of the house...

HouseOfGreen · October 2013

we only have 1,000. We really do need to work on our savings. I am hoping to have 5,000 in savings by March. Savings will be my main priority. I am excited I have some sort of plan! YAY!

vlagrl29 · October 2013

I think your HOA is ridic! Is that a month! we pay $100/year. Also cut down on your cell phone plan. we just cut back ours with tmobile. We were paying $100 for the two of us, now its $80 for 2 lines a month. Next - you have to have an efund even if its just $1,000. $6,000 is my comfort zone so we are building that right now. Finally - do you guys have retirement going? Don't fund your kids college unless you can contribute the right amount each month (10% at least).

Make a financial priority list so you don't feel overwhelmed. I find if I make lists I get more focused. Take it one step at a time.

hoffse · October 2013

I would probably work on savings instead of paying down the house early. Priorities:

1) A basic e-fund that will cover most major repairs and health insurance deductibles (for us this is about $3,000-$5,000... though we keep $10K in our account "just because")

2) Then work on getting your retirement contributions up. If you don't have retirement, START. There was a rather - ahem - contentious thread about this just a few posts down if you want to learn some basics. You really should be contributing at least 15% of your gross income, though if you are in your 30's and haven't begun, it might need to be higher than this.

3) Then work on getting your e-fund up to 6 months of EXPENSES. This covers you in case your H loses your job.

4) Then your children's college. I am very much on team "parents help with college," but truly this is the fourth priority in your savings world. Why? Your child can get a loan for college if it comes down to it. You can't get a loan for retirement.

5) Then the house.

Re: college - because I can tell this is important to you.

The best thing you can do for college is make your child's #1 job be school and college admissions. Start young - reward good grades and punish bad ones. Harsh? Maybe. But does it pay out? Absolutely. Your child learns that school comes first. And then you eventually have a college student who can actually do his or her own work without having to cheat or get mom/dad to do it for them (I know waaaay too many people who flunked out of college because their parents were no longer able to bail them out).

Also check out any scholarship programs your state offers. In a lot of states these days, every high school graduate has tuition covered by the state if s/he graduated from high school with a B average and s/he goes to a public college and maintained that B average through college. Maintaining a B average is easier said than done in college, but if you ingrain good study habits into your children at an early age they will be able to do it.

Another point of debate - making your 16 year old get a job. A lot of parents are on team "work for your gas money." I think there's something to be said for that, for sure. However, be careful with this, because school, clubs, volunteering, and "leadership" really needs to come first if you child wants to be competitive for a scholarship. Your kid doesn't need to be bagging groceries if it means s/he is going to get a B in history instead of an A. The amount of money s/he might get in scholarships by working on that resume from the first day of high school can be ridiculous... as long as s/he is doing something that college admission people consider to be worthwhile. And sadly, so many kids bag groceries that it doesn't stand out on a high school resume.

I hate to say it, but you can work the college admissions system. You just have to know what to do. I worked it pretty well for college. But then I blew it out of the water for law school because I really figured out the system. I made sure H blew it out of the water for law school as well. Do we still have a lot of student loan debt? Sure. We choice to go to private schools, and they weren't free. But we have less than half the debt of what our other lawyer friends have, because we were really strategic about the things we signed up for.

So do try to save for college eventually - but know that there are ways you can work around this if you're unable to contribute. Your own savings comes first.

HouseOfGreen · October 2013

Going over our budget I would like to have 5,000 in an efund. So I need 4,000 more. I also believe that I need to wait on my boys college fund. My husband has a retirement fund. We would like to contribute more. Yeah the HOA is a lot. But there is nothing we can do about that unfortunately. I will work on my priority list. I just can't wait till I am done with school and working. I've also been thinking about a weekend job.

hoffse · October 2013

Nothing wrong with a weekend job! You could dedicate all that money to savings and get your e-fund up.

Sisugal · October 2013

I would split that 2K VA benefit 1K to car and 1K to emergency fund. The car will still be paid off quickly AND you will have some savings.
Term Life Insurance
Retirement
Then kids college.

anssett · October 2013

If you're not working I don't think you need life insurance. The purpose is to support dependents once your income is gone.

Ducktale · October 2013

anssett said:

If you're not working I don't think you need life insurance. The purpose is to support dependents once your income is gone.

Except who would care for the children if she passed away? Even as a SAHM you need life insurance that could cover childcare/other services if she died.

Mom987 · October 2013

anssett said:
If you're not working I don't think you need life insurance. The purpose is to support dependents once your income is gone.

Totally disagree. Mainly because what kind of parent/spouse is going to jump right back into work the week their spouse dies? Also wondering how old the kids are. Nobody can get off work at 2pm to get them from school. Most people can't live off one income. I'm just rambling by now.

hoffse · October 2013

Ducktale said:

anssett said:

If you're not working I don't think you need life insurance. The purpose is to support dependents once your income is gone.

Except who would care for the children if she passed away? Even as a SAHM you need life insurance that could cover childcare/other services if she died.

Exactly. Childcare is very very expensive, and SAHM's provide all sorts of things for their families that would cost a lot of money to lose. During our life, H and I have had periods where one of us has worked and the other hasn't. Frankly, when we're both working we spend more to cut corners on things that take a long time - dinner, laundry, even cleaning (I'm ashamed to admit that my H even sends clean clothes to the drycleaners once in awhile just so somebody will iron his shirts... because when both of us are working, we just don't do it). When one of us stays at home, we end up spending less money overall. So SAHM's need to be covered as well, above and beyond the exact cost of daycare.

And don't forget - it costs about $10K-$20K to bury somebody. Could you imagine having to take out a loan for something like that? Completely awful. I think burial expenses and several months of expenses for bereavement need to be included as well.

MommyLiberty5013 · October 2013

anssett said:

If you're not working I don't think you need life insurance. The purpose is to support dependents once your income is gone.

This makes sense if the family in question is wealthy enough and can cover a funeral and burial very easily and can easily adjust to the cost of child care if the SAH spouse were not covered by life insurance. For most families, this isn't the case. So it makes sense to cover a SAH spouse for a term while the children are minors and cannot care for themselves. Once children grow up enough perhaps coverage can be reduced, if that family wants to, to just cover funeral/burial expenses.

vlagrl29 · October 2013

Mom987 said:

If you're not working I don't think you need life insurance. The purpose is to support dependents once your income is gone.
Totally disagree. Mainly because what kind of parent/spouse is going to jump right back into work the week their spouse dies? Also wondering how old the kids are. Nobody can get off work at 2pm to get them from school. Most people can't live off one income. I'm just rambling by now.

I was lucky to get a week off work and then I had to be back in the office and was a walking zombie for quite some time after that. I think a SAHM needs life insurance on herself just as much as the dad does. Childcare, cleaning, and all the other things that mom's do the dad would need help with.

ta78 · October 2013

You need to figure out what you spend on gas if it is that much, because from what you've posted without figuring in gas and electric you are cutting it really close based on your lowest checks. It would probably be worth it to cut cable if you have both netflix and huluplus.

If you are getting $2000 a month until August, I would pay off the car and put it all away. Towards your e-fund, retirement, general savings. You do not need to be worrying about your kids college right now or paying off your home early. I would also make sure if you are getting more than 2800 a month to be putting that money towards your savings also.

Just keep watching your budget and you will find room to adjust things.

Let me know what to do. I have no idea!

Re: Let me know what to do. I have no idea!

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