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Budget Help - Trying to help my mom save money and get out of debt *Update*
Hi Guys,
Sorry this this is long. I’m working with my mom to help her
clear up her debt but it’s hard and a I'm a bit overwhelmed and want to provide as much info as possible. My mother has always struggled
with saving. She tends to spend any “leftover money” instead of saving it and
when she does manage to save a little bit she ends up having to dip into
savings to pay for something (like last month her house needed new toilets). when
I suggest cutting back on certain things she says that she lived in poverty for
most of her life and at her age she deserves to splurge every once in a while,
especially since my dad doesn’t have to work within such a tight budget (They are essentially separated, not legally though, and my dad gets all of his expenses covered through work including hotel, meals, etc.) Mom has given
me permission to post her info here and I’m hoping you guys might be able to offer some advice.
Mom has been a SAHM
since I was a baby, so she’s been out of the workforce for 25 years. Things
have been rough in my parent’s marriage (to the point that they are pretty much living in separate countries). My mom is
thinking about getting a divorce after my brother graduates high school, but
she wants to have some money tucked away since she's not optimistic about getting a job at the moment. Now for the numbers!
Total Monthly Income $12,367 (This is take-home pay, so after taxes. Medical Insurance gets taken out directly also. They get 2 paychecks received on the 1st and 15th of every month)
1st Mortgage -$5282
2nd Mortgage -$585
HOA - $125
Car #1 - $635
Car #2 - $521
Car #3 - $425 (will be paid off next month)
Car Insurance $390
Gas - $300 or so
CC #1 – min. payment $615 (balance is $15,381; int. rate
18.9%. In both parents’ names)
CC #2 –min. payment $346 (balance is $8,652; int. rate 21.9%. In both parents’
names)
CC#3 –min. payment $25, (balance is $600; int. rate 11%. In mom’s name only,
she usually pays it off in full but needed some extra funds last month)
CC #4 –min. payment $1,117 (balance is $27,942; int. rate 14.6%. In Dad’s name
only)
Care Credit – $312 (for dog’s surgery and cancer treatment few years ago)
Cell Phone -$80
Cable/Home Phone/Internet -- $180
Brother’s Sports Lessons -- $195
Utilities (Electric, Water, Trash, Gas) - $275-$320
Groceries -$350 or so
Dog Food & Pet Insurance - $120
Eating Out $190
Medication $50
This should all leave her with a little over $500 to put
toward savings, but inevitably something always comes up and she is unable to
put that into savings or pay down their debt (ie. paying for my brother's entry into a competition, last month she needed an MRI that insurance wouldn't cover, etc. etc.) . I’m really at a loss as to how to
help her and would appreciate any advice you guys may have. She is so stressed about everything right now and I hate to see her like this.
Thanks!
Re: Budget Help - Trying to help my mom save money and get out of debt *Update*
12 THOUSAND dollars a month? And she can't save $500 a month? I take home $1875 and manage to save over $300 a month.
Why does she have 3 cars? 3 EXPENSIVE cars?
She doesn't work, yet spends $300 in gas a month? Is she driving all 3 cars simultaneously?
CC #4 –min. payment $1,117 (balance is $27,942; int. rate 14.6%. In Dad’s name only)
Why is your mom paying a dime on a credit card that doesn't have her name on it??
My dad makes about $250K a year, not including bonuses. They have some stock options through work, but I think that's about it. I'm pretty sure he isn't contributing to a 401k or anything. They did have a College Savings for my brother but it went bankrupt a few years ago and they basically had to start over (I think there's maybe $3,000 there)
Some background on my parents. Dad works for a large international company and handles all of their company contracts for Latin America. Both of my parents grew up there (in different countries) and moved to the US when they were 18-20. When they moved here neither one of them had a dime to their names and barely spoke any English. To give you an idea, when I was little my parents couldn't afford a car (we walked and took the bus everywhere) and we pretty much lived on rice and beans, lol. We lived in a 3 bedroom condo with my Grandparents and uncles. When I was about 10 dad was offered a job that paid a ton of money so we moved and I think that's when things started to get crazy. I remember my dad telling me that if you were going to buy something, you had to buy the best because it showed the world what type of person you were (Why wear Levis when you can wear Gucci?).
The mortgages they have are on the same home. I can't remember how much they paid for it years ago, but they are severely underwater on the house. In 2005 (?) my dad lost his job, which is when they took out the second mortgage. Supposedly my mom told him they should only take out about half of that, but that's a moot point now.
To be honest, most of the credit card debt is from my dad (he became this person that just had to have the newest gadget/best wardrobe/etc.) although I know my mom isn't entirely blameless either. After talking to them both I've been able to gleam that the only reason my mom is even on most of their cards is because my dad has shitty credit and they needed someone with a better credit score on there as well. Even if they got divorced, they would still both be responsible for all this debt, correct? If so, then I'm assuming it would be split 50/50 in which case it would be unfair to my mother because she would be getting much less in alimony than my dad gets from his paycheck, right? Or is my thinking totally off on this one?
Same thing goes for the cars. My mom and dad are both named on the car loans and my dad refuses to get rid of any of them. The most expensive one is that high because my dad had decided to buy a Range Rover on a whim, which turned out to be a craptastic car, so even though he still owed a ton of money on it, 6 months late he rolled it into a new car loan for an SUV. DH and I are flying out for Christmas and have been talking to my mom about buying one of the cars from them (we have the money saved up), so I'm hoping that might help them at least a little bit. Oh and get this, my brother doesn't drive yet! In fact he's not interested at all in driving. Apparently when he was 14 my dad decided to try to teach him how to drive (in the middle of winter, with ice on the road), and the car skidded on the ice, my dad yelled at my brother until he was in tears and from that moment on, the kid refuses to get behind the wheel of a car. Let's just say Dad isn't about to get any father of the year awards for his past behavior.
Oh and I have no idea how she spends so much on gas. She has developed some medical problems which cause her to go into town to see the doctor, a few times a week and when her SUVs only get 10-15 MPG I guess that's where it all goes? I honestly have no clue. She doesn't have any friends or family nearby (been trying for years to get her to take a class or join a club but no luck there) so I know she goes out to the mall and various shops around town just to kill time while little brother is in school, so that could contribute some too I guess.
@hoffse, when you said you wonder where the money will come from for all that, you hit the nail on the head there. That is the exact reason my mom has not filed for divorce yet. She's talked to a few lawyers and was considering getting a job just so she'd have some more money to save, but in her state the courts apparently can count that against you when they're considering alimony.
The Pet Insurance is the stuff through PetsMart, that's like $30 a month or something and covers all the vaccines, check-ups, etc. They have a huge dog like mine (St. Bernard mix--my dad spontaneously got him for my brother on one of his random trips to visit them) and that dog eats about $80-100 worth of food a month.
Eating Out money comes from after school stops to Chick-filla mostly I think. Little Brother usually doesn't eat lunch at school so when mom picks him up from school they usually stop and grab a bite to eat. Mom initially told me they don't eat out "all that much" but when I showed her the bank statements she was a bit dumbfounded and didn't think a few dollars here and there would add up so much. (this was the point where I started banging my head against the wall).
About her feeling like she deserves nice things, I understand where she's coming from (sort of. I don't necessarily agree, but I can understand her feelings). She had a tough life early on, she supported my dad until they got on their feet and made the American Dream come true. But then dad left a few years ago and every month she gets these credit card statements saying that he spent $200 on flowers for his mistress, or that he bought tickets to Spain, etc. but she never got to enjoy those types of things. She sees all this "stuff" that my dad is "buying" (and being reimbursed for, he has total say on his expense reports and no oversight so he can pretty much put down whatever he wants on there) and she thinks she deserves some of it too. Like I said, I don't think it's right, but I can see why she's pissed about the situation.
The thing that drives me nuts is that she's always been the first person that people come to when they need help. Her sister takes care of 4 of her grandchildren, and she barely makes min. wage so my mom will usually try and send her a little bit of money when she can. She used to do the same thing with my grandparents too, so she has a good heart. It just sucks that I can't figure out what would be the best way to help them out of this. I've suggested a financial advisor, but that would require both of them to be together which probably won't be happening anytime soon since she rarely even knows where my dad is or how to contact him.
I guess this turned into a bit of a vent but I'm just so lost on this whole thing!
No one "deserves" lavish things. Everyone deserves enough food, safe shelter, basic hygene etc. Anything beyond that should be what you can AFFORD, and they have WAY more than they can afford. If anything, that makes them LESS deserving in my book; they are lucky to have so much income, but are selfish enough to think they are deserving of so much more.
She's been telling me that she wants a smaller place, a smaller car and just to not have to worry about all this. I just can't figure out how to help her and I'm ready to pull my hair out. I just can't figure how we went from barely having enough to eat to all this craziness.
*hope this posts ok, I'm using my phone...
To be honest the point you bring up about the IRS has been weighing in the back of my mind lately. I think they do file everything jointly, and I have a feeling that something fishy might be going on there. My hunch is mostly based off of the fact that I can't get the numbers to add up and I'm fairly certain my dad is abusing the fact that he can approve any and all of his expenses for whatever he desires without penalty. I really hope that's not the case though. I'll do a bit of digging on some attorneys in her area that might be able to help her (and that she can hopefully afford when the time comes).
Anyone have any ideas on where she might look for work? I've suggested looking at places like schools (admin/clerical work), libraries, hospitals (she used to be in medical billing) etc. but it's hard thinking of places that would be willing to take a chance on someone who has been out of work for so long. I told her she should look into babysitting or something (my BIL needs a babysitter twice a week, and she loves the kids, but says she doesn't feel right taking money from family but she's happy to watch the kids for free!). I just need a way to help shake her out of this groove of feeling hopeless and unable to change her situation.
She might want to meet with a divorce lawyer just for advice on her rights and responsibilities in a divorce and how she best could protect herself for that possibility.
Life is going to change for her, but how much will depend on how willing she is willing to change as well with her handling of finances.
She might want to meet with a divorce lawyer just for advice on her rights and responsibilities in a divorce and how she best could protect herself for that possibility.
Life is going to change for her, but how much will depend on how willing she is willing to change as well with her handling of finances.
So my mom met with an attorney today for a consult and apparently in her state divorce laws are in the process of shifting. Before apparently it was widely up to the judge to determine maintenece payments, and so there was no real standard by which to gauge what a spouse might receive or have to pay. With the new law, they said they look at the main breadwinner's salary and take 40% of that, then they take 50% of the lower-earner's income and subtract that, and whatever is left is what is supposed to go to the spouse. Apparently a lot of people are unsure about how it's all going to play out in the courts and the new guidelines are a bit confusing. I think for now my mom is going to just watch and see what happens in the next year or so.
She has spoken to a few lawyers now within the past year or so to get some different POVs and they all recommend that she not start working now. I suggested that she start looking at volunteer positions someplace so that she can start building a network of friends and professional acquaintances since she doesn't have a church or any sort of group to help her network.
As for the money, my brother said he is willing to give up his fencing lessons if it will help out, but we didn't think that'd be fair to him (it's his only activity he does outside of school and the only time he actually sees his friends) so DH and I spoke to my mom and have decided that we will pay for his lessons and competitions, and instead of spending that money my mom is going to transfer it to me so that it will go straight into savings. We're thinking of giving her the last bit of money to help pay off her Care Credit loan as a Christmas gift, and then do the same thing with that, that "extra" money will go into a Savings Account, so that she will be able to start putting together a small cushion. We'll see what happens.