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Budget woes and it'll be worse soon...
Hi,
I just got engaged in Sept.. We live together, and are splitting the bills for the house. I work part time as a server and am a part time student. I only have 5 classes left until i get my Bachelors, then student loan payments kick in. I owe almost 70K in SLs.. Federal Subsized, unsubsidized, and 2 personal loans so far. I have no idea the interest on my federals, but i know my personal are both around 11-12%. those together are 14k. I don't even know where to start with our monthly stuff..
rent 575
my honda 231
his truck 390
internet 50 (im in school so cant cut it)
cc pmt 35
car ins 230
sallie mae 100
utilites 200
netflix 8.
I dunno what else to do.. he's workin 3 part time jobs just to try and keep us ahead. Any advice? projected grad: 2014.
Re: Budget woes and it'll be worse soon...
Sell his truck and get something cheaper! Or better yet use the money from the sale and pay cash for a beater for the time being. A $400 truck payment is crazy if you are just scrapping by.
You are spending $1819 a month with these bills which doesn't include groceries or gas. Do you have any idea how much you make monthly? That information would be helpful.
what is your combined current income? What is your potential income after you graduate? Can you work more than part time right now?
Internet: this may be a luxury depending upon how tight your budget is- especially since you don't have groceries listed. Go to the school and use their computer lab.
I would definitely consider selling your fiances truck and your car and getting 2 reliable beaters you can pay cash for- getting rid of those 2 payments would open up a lot of your budget it sounds like.
I think we need some more information here.
If you make (on the low end) $1500/month and your fiance makes $1700, that is a combined monthly income of $3200. Based on the information you just gave us you should have roughtly $1380 left over each month ($3200-$1819 = $1381).
So where is all this extra money going? That is quite a big chunk of money leftover at the end of each month for you to be scrapping by. I'd seriously sit down and do some financial figuring to see where all of your money is truly going.
Your list of expenses is incomplete - you do eat, right? You do put gas in the vehicles, right? Have oil changes, etc.
TRACK your spending - EVERY DOLLAR and you will see where your money is going. Then look at seeing if you can get necessities for less, and cut or reduce non essentials.
Do NOT get married until your DH has shown he is financially responsible (cleans up his credit). He could start by selling the truck and buying something more affordable.
What is the reason for the personal loans?
Read Total Money Makeover by Dave Ramsey (for getting out of debt)
Read Smart Couples Finish Rich by David Bach (for working as a couple with their finances )
Is your FI a student also?
ETA: WHY will this soon be worse?
Do NOT finance your life on credit cards and definitely do NOT finance your wedding on credit!
When my husband and I first moved in together we were just going along and had no idea where our money was going. We set up an excel spread sheet and now we know exactly how much we spend, what paycheck it comes out of, how much we will have left. We also live well below our means and our priority has been paying off debt. The highest interest gets paid first and most.
You might want to meet with a financial advisor to help you figure out how to make this all work. Good Luck!
How long have you been in your serving position? Is there potential to move up into management there? Technically, you do not need a degree become a restaurant manager, although it does help. My husband worked at a popular casual dining restaurant as a food runner, then server, then bartender while he got his BA and eventually MA in Art History.
When he finished with his Master's in Art History, not surprisingly, there were no jobs. He decided to take a big pay cut from his Bartending job to become a shift supervisor at the restaurant he worked for. After about 9 months making $14 an hour, he became a server manager, then bar manager, then kitchen manager, and now has his own store as a general manager.
The moral of the story is: tell your job that you are very interested in going into management. Ask if they can help you gain experience, etc.
How much extra would you make if you worked another shift or two a week? It may be more than the value of the food stamps- especially if you are in food services- you get tips and that very well may be more than the $200 from food stamps. (working 4 more 8 hour shifts during a month would mean you only need to average 6.25/hour to come out even. Any more than that- you would be ahead. So what do you average per hour with your tips. Don't stay on food stamps if you can be better off without them!
Also, I know a lot of federal student loans give you a 6 month period after you graduate before you have to start repayments. The private loans would probably start coming due immediately- but it may not be that bad if you do get your manager position before that 6 month time period is up.
Your husband can build his credit by making monthly payments on anything- it can be a low balance credit card- does not need to be an expensive truck payment. If that is his reason for keeping it, that really doesn't make sense. Just some more things to think about!
I wasn't suggesting not to finish your degree; I absolutely agree that you should finish! I was suggesting that you tell your employer that you'd like to move into management and see what happens. If they can give you a Key shift once a week or once every other week then you can at least put that on your resume when you move elsewhere. How long have you been a server at this restaurant?
I agree with the PP who offered the idea of picking up extra shifts to earn more income. Yes, the food stamps may disappear, but you'd be making way more money anyway to justify that change.
Also, the PP who mentioned your DH's truck is correct. He can build credit on a small credit card - it doesn't need to be a big truck payment.
If you sell the truck it will eliminate the big payment, which could go toward your other debt. With the proceeds from the sale you could by a cheapo car to get you by on and then also use the proceeds to put toward savings or to the debts also.
I might consider an older model Honda or Toyota as even those brand's older vehicles work exceptionally well and have few issues aside from routine maintenance.
You say you'll be fine if you get a job making 22k a year. That's only ~1800/month, before taxes. Aren't you making that now, around 1500/month? Plus food stamps?
Where are you going to school? Obviously it's too late to change, but a community college to state school would have saved that for you. You can go on a more delayed payment schedule at first, but I caution you not to do that for too long. I snowballed my debt using whatsthecost.com, and now I only have my SLs and a 1.9% car loan that I'm not paying off early. I expect that if you snowball your debt and stay committed to it, you can at least get the personals paid off. I would wait to get married too, because what's the rush anyway, and you'll qualify for more tax breaks on your income alone.
Is your FI in school? What are his prospects for the future?
And don't cut netflix. I assume that's your only entertainment. If you have nothing to do at home, you'll gorge outside the home which will be more expensive than the $96/year you're spending to stream Netflix.
Consider getting rid of the cars and buying cars with cheaper payments and lower insurance. Other than that, you have to focus on maximizing income not reducing bills. For a part time job servers can make pretty good money but you may need to up your hours or look for something else entirely. What about your fiance, does he bring in much?
Federal loans are probably around 4% for subsidized and 6.5% for unsub. 70K is a lot in loans but you knew that so I'm not going to get into it. My best guess is your repayment will be around $1000 and that kicks in 6 months post graduation. I really hope your degree is in Engineering or Business or you know someone who is willing to give you a foot in the door. Servers learn a lot about customer service but I have friends who have had a lot of trouble being seen for anything other than working in a restaurant environment. Start working with a career coach now and start planning your career post graduation. That is when it gets diffcult.
Just read the other responses. I think the best advice I could give is to clear these things up before getting married regardless of how much you love each other. His bad credit will keep you from getting a house and is making your finances pretty sticky.
If your goal is to make 22K a year, that is extremely easy to make happen. I find it strange that with working 30 hours a week you are not making that. You could find work as a secretary and make at least 30K off the bat. Full time servers in nice restaurants in my low cost of living area pull 30-40K a year.
I've heard the argument before that people just had to get a nice car through carmax to build their credit. Bull crap. You go to a bank and get a loan for a $5K reliable but scratched up car that costs about $35 a month to insure. You make it work. He should also run a credit report and make sure whoever he has his car from is actually reporting regularly. Usually they don't and the difference in credit is negligible. He needs to get actual credit counseling and resolve bad accounts.
I have to comment that based on your budget it is immoral for you to be accepting public assistance. If the two of your can afford $400 a month for a truck and another $250 for car insurance, you can afford to pay for food. If you can't I don't know how you are affording a wedding. Obviously you are using your waitress W2s which do not include tips to qualify and that is immoral and illegal to not report tips. I am in a better situation so I hate to judge, but seriously, you need to consider some of these things.
There has been lots of good and serious advice on here (even marriage advice), but you may have found it overwhelming, I did.
Just to start I would really put all your info into a tracking program like Mint.com and really watch your spending for 1 month. You listed all your fixed expense because those are the easily to remember I assume. There might be a lot more money floating around in your life that goes to discretionary thing and your not even really aware of it. Knowledge is power, start with tracking and instantly you'll know way more.
You can make a LOT more there than at a place where your crowd is family centric, and often offers coupons. I was making $150-200 a night (Thurs & Fri) working there. And that's with me arriving there after 6:30 PM, because I could only get there after my day job ended.
One January, I earned more there, working 9 or 10 days, than at my full time job!