Help with my budget

[gallan]

Sorry for the long post. I need some significant help with my budget. I'm so frustrated! I'm not in a bad place financially. I've got no credit card debt, about $1000 in savings, and I take home $2525 each month (not bad for being in my 20's with no college degree). It's just me and my two-year-old son. The only debt I have is a mortgage, a car payment, and a massive student loan. That last one is the reason I'm here. I'm going to have a $200/month student loan payment coming up in about six months, and I don't think I can afford it. That's why I'm so frustrated! I feel like I'm better off than a lot of people in a similar situation, yet I'm living pretty much paycheck-to-paycheck! Here's my budget:

Income:
Paycheck - $2525

Expenses:
$850 - Mortgage
$425 - Daycare
$325 - Car Payment
$250 - Food (groceries, restaurants, etc)
$100 - Electricity (monthly average)
$ 90 - Auto Fuel
$ 85 - Insurance (home, auto, etc)
$ 75 - Phone
$ 75 - Water/Sewer - (monthly average)
$ 45 - Internet
$ 35 - Pet Food
$ 30 - Entertainment
$ 25 - Allowance (deposited into my son's savings account)
$ 20 - Household Supplies (shampoo, paper towels, etc)
$ 20 - Child Expenses (diapers, clothes, toys, etc)
$ 15 - Medication (monthly)
$ 15 - Haircuts (monthly)
Total: $2480

Which means at the end of each month, I've got $45 left over. But it's not like I'm spending a ton of money on junk. I've cut down my spending to the bare minimum! I only eat out maybe once a month, so my food budget is 90% groceries. My "entertainment" budget pays for a $10 Netflix subscription and going out to a movie once a month. I've started riding my bike to work to save on gas. The daycare payment is non-negotiable. I'm stuck with that car payment for another four years, and too upside-down to trade it in for something cheaper (actually, Chrysler dropped my interest rate and extended my loan out another year when my wife died, reducing my payment from over $500).

I'll get a raise in August of about $100 after taxes, which will put me up to $145 in savings at the end of each month. But then I'll still need to find another $55 somewhere to make my student loan payment, and then where do I get any savings?! I guess I just don't understand why this is so hard. I personally know people who make half of what I make and seem like they're much better off than I am! Any help or advice is greatly appreciated.

[NJDebbie]

Can you get a room mate to offset the cost of your mortgage? Of course, you'd have to screen very carefully because of your son. I'm sorry you are going through this situation. Just a thought.

[maat55]

IMO, you have too much car payment. The phone, net, restaurants and pet are luxuries that could go if necessary.

I would look at selling the car and buying down, depending on how much you owe and how long your note is.

[nmboone]

Also can the $25 allowance be taken away for awhile or cut down to like $5? The car payment is the main problem but I can understand keeping it because of the things you mentioned previously. One more thing: Can the student loan be negotiated or deferred for awhile? If the loan is gov. issued this may be easier than a private loan. Let them know that you have been widowed. Then maybe when the car loan is gone you can go back to paying the full minimum.

[disneysteve]

Welcome.

How much is the car currently worth and how much do you owe? Unfortunately, as we see here often, it is often buying a car that they can't afford that gets a lot of people in trouble.

Why is a 2-year-old getting an allowance?

Does "phone" mean cell phone? If so, cancel that (unless you are tied to a contract) and get a land line. That should run you probably $20/month or less. You may be able to bundle phone service with your internet service.

Cancel Netflix. There is plenty of free entertainment online so keep your internet service and use that for entertainment. Instead of going to a movie each month, rent a DVD from Redbox instead. That's $1 instead of $10.

[gallan]

Thanks for the responses so far! I need all the help I can get so I appreciate the suggestions. To answer a couple of questions:

1. I realize the car payment is high, and I wish I could get rid of it. The car was purchased a few years ago when my wife's income added another $2500/month. We only needed one car so we traded in our two cars for one really nice one. I can't afford it on my own, even after the payment was lowered, but I don't know what to do about it. I owe another $15,000 and it bluebooks for around $11,500 private party and $10,000 trade-in. Either way, I'd take a hit of $4-5k and I don't have that much in savings to cover the difference.

2. The phone is a cell phone. I've got another year on the contract, but I can definitely see about lowering my plan and then switch to a land-line when the contract is up.

3. The "allowance" isn't really an allowance. I've got a long-term savings account for my son that I put money into each month. The idea is that he'll have some savings when he turns 18. We used to put about $200 in each month, but I don't have the extra income anymore. I didn't want to stop it completely though, but I guess I might have to...

I can certainly ditch the internet when school is over (my classes are online). I like the room-mate idea! I don't know that it'll work since it's a small house, but until now I had been trying to cut expenses and hadn't considered other sources of income. It's a little tough because getting a second job would be completely off-set by the extra child care payments I'd need to make, but it gets me thinking. Thanks everyone!

[disneysteve]

I can't afford it on my own, even after the payment was lowered, but I don't know what to do about it. I owe another $15,000 and it bluebooks for around $11,500 private party and $10,000 trade-in.

Current loan $15,000
Trade-in value $10,000

Trade the car in and replace it with a $5,000 car.
New loan $10,000: $5,000 for the "new" car and $5,000 rolled over from the current car

That will reduce your overall car debt by $5,000 and lower your payment by about 1/3.

[jIM_Ohio]

Sorry for the long post. I need some significant help with my budget. I'm so frustrated! I'm not in a bad place financially. I've got no credit card debt, about $1000 in savings, and I take home $2525 each month (not bad for being in my 20's with no college degree). It's just me and my two-year-old son. The only debt I have is a mortgage, a car payment, and a massive student loan. That last one is the reason I'm here. I'm going to have a $200/month student loan payment coming up in about six months, and I don't think I can afford it. That's why I'm so frustrated! I feel like I'm better off than a lot of people in a similar situation, yet I'm living pretty much paycheck-to-paycheck! Here's my budget:

Income:
Paycheck - $2525

Expenses:
$850 - Mortgage
$425 - Daycare
$325 - Car Payment
$250 - Food (groceries, restaurants, etc)
$100 - Electricity (monthly average)
$ 90 - Auto Fuel
$ 85 - Insurance (home, auto, etc)
$ 75 - Phone
$ 75 - Water/Sewer - (monthly average)
$ 45 - Internet
$ 35 - Pet Food
$ 30 - Entertainment
$ 25 - Allowance (deposited into my son's savings account)
$ 20 - Household Supplies (shampoo, paper towels, etc)
$ 20 - Child Expenses (diapers, clothes, toys, etc)
$ 15 - Medication (monthly)
$ 15 - Haircuts (monthly)
Total: $2480

Which means at the end of each month, I've got $45 left over. But it's not like I'm spending a ton of money on junk. I've cut down my spending to the bare minimum! I only eat out maybe once a month, so my food budget is 90% groceries. My "entertainment" budget pays for a $10 Netflix subscription and going out to a movie once a month. I've started riding my bike to work to save on gas. The daycare payment is non-negotiable. I'm stuck with that car payment for another four years, and too upside-down to trade it in for something cheaper (actually, Chrysler dropped my interest rate and extended my loan out another year when my wife died, reducing my payment from over $500).

I'll get a raise in August of about $100 after taxes, which will put me up to $145 in savings at the end of each month. But then I'll still need to find another $55 somewhere to make my student loan payment, and then where do I get any savings?! I guess I just don't understand why this is so hard. I personally know people who make half of what I make and seem like they're much better off than I am! Any help or advice is greatly appreciated.

How large is your typical tax return?
Do you itemize and deduct mortgage interest?
Are property taxes included in mortgage payment?
do you get paid 2X a month or every other week?

$20/mo for diapers? why so cheap (we spend $100-$200/mo)
How much is left on the car payment?
who is watching your son (daycare)? I have twin boys and pay $30/day per kid... are you able to claim tax credit for current daycare arrangement or not?

[jpg7n16]

... It's a little tough because getting a second job would be completely off-set by the extra child care payments I'd need to make, but it gets me thinking. Thanks everyone!

unless you got a 2nd job .... at a daycare

Or you could babysit like 3-4 extra kids at night at your place (I don't know how much babysitters cost), but charge the parents like $4/hr per kid. Make 12-16/hr and be home with your kid.

There may be some other home-based business type offers you can take advantage of to both watch your kid and make some extra money.

Your two main issues: a) income is too low, b) car payment is too high

In that order...

[gallan]

Trade the car in and replace it with a $5,000 car.
New loan $10,000: $5,000 for the "new" car and $5,000 rolled over from the current car

I would love to do this and actually tried about a year ago. Problem is, I couldn't find a bank or auto dealer that would loan $10,000 on a $5000 car. Most of them said they couldn't loan over 125% of the value of the car, so for a $5000 car I could borrow, at the most, $6250. Do you know where I can go to get a 200% loan? Because this would solve everything!

Your two main issues: a) income is too low, b) car payment is too high

In that order...

See, this is my main source of frustration. I don't understand how my income can be "too low" and maybe someone here can explain it in a way that makes sense to me. I make $43,000 a year. I'm certainly not getting rich, but that doesn't seem low to me. My brother makes less than $30,000/year and he's raising THREE kids on his own and seems to be doing just fine. I've got friends who make $10/hour and drive nice cars and go out to eat almost every day and have $200/month cable TV packages. My closest friends have a combined income that's about the same as mine. They also have a two-year-old, but their house is much nicer (and bigger) than mine, they have two car payments, and it seems like they're always buying the latest gadgets. People live on minimum wage (my mother did it raising my brother and I), so how could my income be too low at $43,000 per year?

[jIM_Ohio]

I would love to do this and actually tried about a year ago. Problem is, I couldn't find a bank or auto dealer that would loan $10,000 on a $5000 car. Most of them said they couldn't loan over 125% of the value of the car, so for a $5000 car I could borrow, at the most, $6250. Do you know where I can go to get a 200% loan? Because this would solve everything!



See, this is my main source of frustration. I don't understand how my income can be "too low" and maybe someone here can explain it in a way that makes sense to me. I make $43,000 a year. I'm certainly not getting rich, but that doesn't seem low to me. My brother makes less than $30,000/year and he's raising THREE kids on his own and seems to be doing just fine. I've got friends who make $10/hour and drive nice cars and go out to eat almost every day and have $200/month cable TV packages. My closest friends have a combined income that's about the same as mine. They also have a two-year-old, but their house is much nicer (and bigger) than mine, they have two car payments, and it seems like they're always buying the latest gadgets. People live on minimum wage (my mother did it raising my brother and I), so how could my income be too low at $43,000 per year?

Its easy to live if you plan on financing things your whole life.

For example you see a car which costs $350/mo
it really costs $20,000 or $30,000, but some people just see $350/mo

and they cash flow their way to acquiring things.

Your daycare, car and house eat up 50% of your budget. Something needs to give. You can squeeze groceries a little or save on insurance a little, but even saving 25% on those costs would not compare to cutting 10% of the car cost, 10% of the mortgage or 10% of the daycare.

I started out at age 25 earning 39k and now have a house and 6 figure retirement accounts. It's about what you value and making money work for you so you do not work for money all your life.

[bjl584]

What is the student loan from? You stated that you don't have a degree.

[gallan]

What is the student loan from? You stated that you don't have a degree.

I've been working on my degree. I graduate at the end of this month. I only had two terms left when my wife died and I already had a big student loan debt at that point, so after taking some time off I decided to go back and finish.

[bjl584]

I've been working on my degree. I graduate at the end of this month. I only had two terms left when my wife died and I already had a big student loan debt at that point, so after taking some time off I decided to go back and finish.

OK. Well, the only thing that really jumps out at me is your car payment. Steve already addressed this. I agree that the car needs to go and needs to be replaced with a cheaper car.

[gallan]

Thanks everyone for your advice and being patient with me. Jim, what you said makes a lot of sense. I can't get ride of my mortgage or daycare payment, but I can do something about the car, which everyone seems to agree is the biggest thing weighing me down.

Hopefully the degree with mean a promotion soon and I won't be under so much pressure.