Where Do I Even Start?

[poohstixx]

Does the 50% of debt include your mortgage payment?

[wincrasher]

I think you can assume that using TCA their FICO is totaled. Am assuming they are a debt consolidation service.

[EEinNJ]

How is your tax withholding? Do you usually get a refund, and if so, how big?
You might reduce your withholding so you have more take-home pay for your debt.
It won't save the day, but drive less if you can, turn down the heat, etc. Utility companies will work out an averaged bill so you don't get seasonal spikes, and the phone company often has cheaper plans but you have to ask.

I agree with the other advice you've already got- though the family planning advice was rather presumptuous and doesn't help your immediate situation.

[minnie1928]

I would sell/clean out the contents of the storage unit and get rid of it. Use the funds towards an emergency fund. Drop the cell phone (if you can), get a prepaid for emergencies. If you can't drop the cell, can you drop the landline instead? Drop the Direct TV, call your cable company to get BASIC service. I think DisneySteve has mentioned that this costs less than $20/mth. Go green...start making your own cleaners, use fabric napkins, stop using paper towels, etc. I've saved a ton of money by doing this. If you have a CVS, start using them to get your toiletries (toothpaste, shampoo, etc.). I get all my stuff for free (or almost free) from there. I highly recommend Hot Coupon World, they have a CVS forum that explains how to do it.

$150/week seems high for your daycare costs considering that you are giving her room & board 5 days/week and I'm guessing that it's all "under the table". Can you re-negotiate with your mom to $125/week? Or, utilize her services in the evening and get a part-time job for a few hours during the week.

Can you choose your electric/gas suppliers for utilities? There may be savings to be found there. I'm thinking of changing my gas supplier, savings should be about $40/month in winter.

[tripods68]

Does the 50% of debt include your mortgage payment?

Yes...

[KTP]

I agree with the other advice you've already got- though the family planning advice was rather presumptuous and doesn't help your immediate situation.

Presumptuous would be saying that couples should not have kids until they are financially stable, but I don't dare say that because it is not an opinion that society supports today.

But sure, it is not a helpful thing to say in this situation because they already have the kids and need help getting back on their feet. So I withdraw my earlier comment and will try and think of anything else they might do to help their situation. I still think some sort of additional deferment of the student loans would be a good thing to try.

[buildmybudget]

Wouldn't short selling hurt your credit, potentially hurting your ability to refinance other loans, etc? Is good credit important to you?

[LuxLiving]

Start tracking every penny in and out. Read "Your Money or Your Life" by Joe Dominquez, (out of date some) but still highly applicable to getting a grip on yourself.

[tripods68]

Short sale does hurt credit score and ability to buy another house for 3 years. The question is now, which is more important, the house or family? My think is not everyone should own a home just because.

Given their "debt" circumstances, it will take at least 5 years to pay CCs and student loans, at minimum or even longer. While renting lowers the total household expenses (no property tax, home repairs, cheaper energy/rent cost etc...) significantly, the second they have extra money (after establishing EF and retirement contributions) left over $$ should be focus retiring their debt completely while maintaining "sound" family budgeting. At that point, credit scores should improved.

[Joan.of.the.Arch]

I don' think you should short sale the house when you have enough money to pay all the bills.

TOTAL MONTLHY INCOME (TAKE-HOME) = $5,200
TOTAL MONTHLY EXPENSES (not incl. food, gas, etc.) = $4621.04
LEFT OVER AMOUNT EACH MONTH FOR food, house items, misc. = $578.96

You accounts for the bills, some of which are luxuries, and have ~$579 left for food and other necessaries. Cut out some unnecessaries and you will have more for the necessaries if you think that $579 is not enough. I think you even should be able to build up savings with that income if you are willing to sacrifice some luxuries. Your spending may have gotten a little bit ahead of what it should be, but it doesn't seem too serious. I think you can turn it around with some motivation. Maybe some of that motivating reading others have suggested.

In this and some of the duplicate threads you have some suggestions for cutting back that would help. I don't know if anyone has suggested that you could find new homes for the pets, but I know pets can be expensive. I think this might be an area for trimming.

What would you personally say would be the top four easiest items for you to reduce, and how much would that save per month?

[disneysteve]

I don' think you should short sale the house when you have enough money to pay all the bills.

I agree. I'm not sure why the idea of a short sale entered into this thread. If OP has a surplus of income each month and a number of luxuries in the budget that can easily be eliminated to increase the surplus, why sell the house?

[snafu]

There is no 'instant' fix to reverse those old mistakes. DH needs any part time or flexible hours job he can find to bring in more income while his photography business income is insufficient to meet family needs. [Frankly, he needs to do a needs assessment to determine the viability of this business decision. Given the popularity and flexibility of digital cameras, many well established professional photographers are transferring their skill sets to other occupations].

Your FICO score was fried when TCA took over old debts and you must research your options. Have you tried to re-negotiate those high interest loans? Have you applied for a 2nd deferment of student loans? Have you looked at the new Bankruptcy laws? Have you read Amy Dacyczyn's Tightwad Gazette [available @ Library]

What actions are you willing to take to reduce operating expense to their lowest possible amount? What contracts will you cancel before Nov. 1st? or December? Will you let Christmas focus on goodwill and religious aspects rather than gifting?

[poohstixx]

Thank You Very Much

I would like to thank everyone for taking the time to respond to my post and give me some much needed financial advice! Two things I was able to get out of this experience: 1- A huge amount of great suggestions and 2-Hope that we can get out of this hole we have dug. I appreciate all of the positive and helpful feedback. I posted on several sites to get the most information I could.

I thought that I would share our plan developed from all of the wonderful suggestions I received:

Storage:
- Move everything out of storage and into the house, asap.
- Begin selling all unused/unneeded items in the house.

Phone/TV/Internet:
- We need to continue our internet service as we need this for my husbands photography.
- We will be dropping our landline phone and Direct TV.

Mortgage and HEL:
- I have looked into refinancing with our current lender and have been told that there is not enough of a difference in current rates (home is at 5.25% and HEL is at 11.25%) for it to be beneficial. Note: our current HEL rate is 10.66%.
- We may still consider a short sale down the road, but only after we have made other adjustments...I think this can be avoided and we can hold out until the market improves.

Cars:
- We have inquired with our lender about refinancing, however the lowest rate they offer is 7.696%, so it is unlikely we will be successful with this.
- We will inquire about rates/refi options with other lenders.
- We plan to either trade them in for cars less than $2,500
or
- sell the cars and buy cars less than $2,500 (however, I am not sure if we can get an unsecured loan to cover the difference).

Insurance:
- We currently have our life, home and vehicle insurance through State Farm.
- We plan to talk with them to inquire about a lower rate for our vehicles.
- We also plan to call around to other insurance companies to check rates.
- We will also add a gap policy on the home and vehicles because we are upside down on those loans. I understand this is a small cost (only a few $'s per month).

Student Loans:
- We will request another deferral.

Tax Withholding:
- We have adjusted this in the past and currently get a small amount back and I don't feel comfortable cutting this anymore to avoid the possibility of having to pay in.

Groceries:
- We plan to utilize Angel Ministries (there is a location nearby) where we can purchase groceries for $30/week.
- I also plan to utilize coupons more and shop for cleaning supplies, etc. at our local dollar store. It is an extra trip, but will save money.

Day Care:
In our area having two children in day care would cost WELL over $200 a week. We live in a smaller town in Wisconsin, I'm sure day care costs are much more in other areas and I'm surprised at the criticism I've received about the costs we pay for day care. I would challenge anyone to beat it. We are paying my mom $150 per week (or $30 a day) for one full-time and one part-time child. We are already saving a large amount of money on our day care. I can talk with her about lowering this, however we recently lowered what we paid her by $100 a month (we were paying her $35 a day, but since my son is in kindergarten, we reduced this) and she partially relies on this income as she retired early to do us a favor and watch our kids. There are many benefits to her watching our children: she is their grandma, she takes care of light cooking, laundry, etc. while she is home, we don't have to take the kids out to a day care center, we don't have to miss work if the kids are sick, we don't have to stress or rush home if we're running late at work to avoid late fees, and the list goes on and on.

Second Jobs:
My husband receives regular business doing photography, mostly through friends and co-workers. This comes at little to no cost to us, except his time which is by no means a lot. I received some criticism about this, but so far there have been very few negatives and financial cost to us as his business is becoming well established and he has several repeat customers.

Pets:
We have two dogs (one is 12 yrs old) and one cat. Our pet expenses are food, litter and yearly exams (we rarely have to pay above standard yearly exam fees...our pets have been very healthy). Our children are very attached to our pets and we are not willing to find other homes for them.

Children:
To those criticizing the number of children we have: We have two kids we are very attached to and not willing to find other homes for. There is one on the way that we cannot do anything about now and are not willing to put up for adoption. I understand people have their opinions, but for future reference when responding to posts about families who are struggling, the feeback regarding our family was at times judgemental and not helpful to our situation at all. If it's any consolation, we do not plan to have any more children.

Overall, the feedback was very non-judgemental and helpful. I can't thank everyone enough for their advice!

[Joan.of.the.Arch]

I congratulate you on having worked out that super situation for childcare. It is far less than many people pay for two children, plus they get the devotion of someone who loves them. I can see tons of advantages to having them cared for at home like that, besides the financial advantage. I was a little surprised to see that some seemed to suggest that grandmother should be willing to work for less. If grandma were on this forum asking for financial advice, we might actually be telling her she has got to charge more, that $3.75 an hour is not a good enough wage. Things like TV and storage units should be ditched before short-changing grandma.

By the way, do you know how much you spend on gasoline? And is it possible to have only one family car?

[poohstixx]

Thanks for the support Joan! I meant to touch on the vehicle situation in my update and forgot:
My husband and I can usually coordinate our schedules and ride to work together most days. When we do we take our car (instead of the van) to save on fuel costs. However, we live in a village outside of the city we work in and cannot utilize bus, ride bikes, etc. otherwise we definately would!