Any ideas?
Hi Readers...
I recently got this email and I'm sure you can come up with some good ideas for them.
Simply respond to this post and I'll see that they get your ideas.
Thanks!
Leo
My situation is pretty desperate right now.
I recently got this email and I'm sure you can come up with some good ideas for them.
Simply respond to this post and I'll see that they get your ideas.
Thanks!
Leo
My situation is pretty desperate right now.
My husband is a mortgage lender, and works on commission. Right not, because the housing market is so depressed here, he is not making much commission at all. We are not making enough money to pay our monthly bills, much less any extra for groceries. We have been living a nice lifestyle for several years, but unfortunately not saving any money. That is no one's fault but our own.
We have used all the equity in our home (probably more than it is worth, because values have gone down here). We have a hefty first and second mortgage. We recently got a no-cost consolidation loan to pay off our $45,000.00 in credit card debt. The loan repayment will save us about $400.00 on what used to be our minimum payments on those credit cards. We have not cut them up, but put them in our safety deposit box. Our next step is to contact the credit card companies and ask them to drastically reduce the credit limits on the cards for us. Even with the $400 a month savings, our adjustable rate mortgage is increasing about that much in October and will probably wipe out the difference in savings.
I am looking for a better paying job, but so far am having not much luck. My husband wants to try and sell our house, but I don't want to do that. We most likely wouldn't be able to sell it anyway, because there is a huge amount of houses on the market in this area and nothing is selling. If we were able to sell, we would not be able to get enough money to be out from under that debt, and would still owe on the mortgage. Then we would also have to find a new place to live that would be affordable.
Both are cars are paid for, but they are older (mine is a 1991 and his is a 1998). We don't have anything major that we can sell to raise money. We do have a good credit score up to this point. I have already taken $10,000.00 out of my IRA this year just to help in paying monthly bills, but it is now gone, and we will have to face the tax consequences for that next year. We do not know which way to turn. We have no one to blame but ourselves for the situation we are in right now.
I'm wondering if you have any advice to offer. I would appreciate any suggestions you might have.
Sincerely,
C.M.
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posted by Leo Quinn @ 9:37 AM
24 Comments
24 Comments:
You can try to get a fixed rate mortgage. If your credit score is still high, this shouldn't be a problem.
You can look for ways to make extra money on the side.
You can try to barter for things you need, any talents?
More credit is never the answer, only less credit. I took Leo's advice over a year ago, and things are much better now. I'm down to only one credit card balance instead of 4. If you haven't read his book, make it a priority.
Get creative. Go through your house and see what you have that hasn't been used in forever and post it online or have a garage sale. Friends have made $500-$1000 just doing that alone. Your junk is another's treasure. Can you guys survive on one car and get rid of the other? I budget online through mvelopes.com. You can track everything and find places where you don't want to spend your money anymore, but most of all, I have not had a late bill since I started with them because I pay everything online. Good luck! There is always a way! Lucy
You MUST put your house up for sale IMMEDIATELY. Call your bank and ask them about approving a short-sale. Home take a long time to sell in your area - that means you'll have to list it several months before you need to sell it.
Imagine buying a house that costs half of what your current home does! What would you do with all the extra money??
You are in a very desparate situation which is only going to get worse once the adjustable mortgage goes up, your cars break down, and your tax bill comes due (only a few months away!). How do you propose to pay the IRS in April?
Selling the house is your best option. Start fresh with a cheaper house and things will get better.
Jim
My first suggestion would be to cut up the credit cards. Even low limit cards can get you into trouble.
Secondly, not all mortgage lenders work strictly on commission. Your husband may be able to find another job at a lending institution that pays much better. Don't rule out moving to another part of the country where pay is better unless you have major ties, such as family, to the place you live now.
Lastly, keep in mind that if you were to sell the house and you still owed money after the sale, you would have to find another form of financing to pay for the remaining balance as the loans you currently have on the house would HAVE to be paid in full. If your credit it good, as you stated, you may be able to find a loan at a better and fixed rate. Also, remember that renting can actually help you get your feet back on the ground if you are not having to pay the homeowner's insurance as well as the taxes on the home.
First of all, although you are in a desperate financial situation, there is always a way out - may take longer than you think BUT there's always a way out. #1.I am surprised that you didn't cut up the credit cards now that they are paid off. I can see keeping 1 for a "dire emergency" but keeping the rest of them available and ready to use will lead to further debt if you start using them again. #2. Since your husband is not doing well in his "commission" only job, he might want to find a job that has a steady income so that you know what's coming in each month. IF, for reasons unknown, he has to stay in this job, then what about a second job? I've heard of people getting jobs delivering pizza that brought in over $1000 a month. #3.Have you looked into getting a "fixed" mortgage for this adjustable one that you have (you said it would increase again in October).#4. Sell one of your cars, you will have some extra money and will save on car insurance each month. #5. Sell, no matter how small, on Craigslist or ebay - it will bring on some additional money. #6. If time permits, there are work at home jobs that might help. This one was featured on OPRAH and verified that it is NOT A SCAM. http://www.liveops.com/liveops_agents.html Good Luck and think positive thoughts, especially now, so that you will attract positive things in your life.
Hi, I found by using online services I could cut my car insurance by about $300 a year (insweb.com, 4freequotes etc). This year I am doing the same with homeowners insurance so far my quotes save $100-175$ a year. The key is that you still have good credit, good insurance rates depend on good credit. So try this for a small savings.
Refinancing to a fixed rate mortgage would at least stabilize your mortgage payment.
V.K. Jones
I'm no wiz when it comes to financial matters, but it sounds to me that you and your husband have lived above your means for some time. You are taking good steps now (not using your credit cards) but you will have to do more to keep your house. You don't say whether you have children, so I'm going to assume you don't, since you didn't mention day care or camps or anything like that. I think the best thing you both can do right now is to each get a second job. Yes, it's going to be a pain in the neck, but even if you only work two nights a week in retail, you will have some extra cash coming in, which you should put toward your bills and groceries. You need also to drive a hard line on your bills. Get rid of anything extra or a "luxury" that you can -- cell phones, cable TV, newspaper home delivery, lawn service, pest control services, security system monitoring, any type of nail/spa treatments, magazine subscriptions, dining out and/or take-out/Starbucks every day -- you get the picture -- all these little things really do add up!! You probably need both cars to commute to work, but I would even say if one of you can take public transportation, maybe you should look at doing that b/c gas is so expensive right now. This will be difficult, but I would NOT take anything from my 401K b/c of the tax consequences, plus you're going to need that later to retire. I wish you the best of luck!
Since the market is depressed in your area, consider doing what your ancestors did when they chose to leave their home country and come to America. Their situations were probably desperate too, and maybe that's the only thing that would have motivated them to try some place new. And maybe it turned out to be the best thing that could have happened to them. In other words, your crisis may also be a great opportunity knocking.
You could try renting your house to someone, then moving to another part of the country where the market is not depressed, then later on you could return if conditions improve. What do you have to lose by trying?
Hello. I think you are on the right track-- if you KNOW that you've been living beyond your means, then you have the ability to stop. There are few things that will help you through life better than a budget. Be honest, be frugal, and you'll work through it. People only 'can't' when they say it. You know better than us what is possible for you. Two cars/extra job... what about cook at home, go to the library, there are a million frugal websites out there, with TONS of great ideas that help lower your actual costs. The thing is, you will make time to do the things that are most imortant to you. If keeping your house is more important than maintaing your lifestyle, you'll make it happen. If you're more intereseted in right now than the long run, well, it'll show. No one is stuck, and change is usually a good thing. Good luck!
Hi there, I completely understand your situation. My husband is a heavy equipment operator -- when he works, the money is great, when he doesn't (rain, snow, equipment issues), we starve. And, we pay a large monthly payment to his ex-wife for child support. Unfortunately, if he doesn't get his hours in, we may not have enough to go around -- and then comes along more debt. But, we're positive we can get out of this situation. First, I apply Leo's strategy of how to pay off debt whenever we do have the extra money. 2.) I sell stuff on ebay & on Craiglist. As another commented, one man's junk is another's treasure. It's amazing that in this world of commerce, there are many people in the world who live in areas where they can't get the things they want and will PAY to have you sell it and ship it to them. 3.) Don't sell your house right now, but it may be an option in the future. If you sell your house, the money you get will first go to pay off the 1st & 2nd mortgages. You will probably be left with very little, if any. And, if you don't benefit from the sale, where would you get the deposit for the new house? 4) Shop around with various mortgage lenders. There are so many options out there now and I'm betting there is one that will be right for your situation. But, definitely get everything refinanced before the ARM increases your monthly payment. 5) Look again at your expenses to see if there is anything you can cut out -- cable? cell phone plans? home phone plans? Internet? Insurance premiums on your cars (we increased our deductible for a lower monthly payment)? 6) Both you & your husband need to look for better or 2nd jobs. Be sure to check out craigslist for job opportunities and post your resumes on the internet on sites such as Monster. 7) Best of luck to you!
Can one borrow against IRA's instead of cashing them out?
If one has cashed them out is it reversible? Perhaps this is late for you, now.
You need to step outside the present terror and look for/at new ideas for accessing income, so that you turn this around to a positive,,,a birth passage to the enlightened financial good life.
I understand the situation that you both are in.
Your Husband is a Mortgage Broker and like the rest of the Mortgage Brokers there is no distinction of
of standing out within his business.
In every field/business/career/opportunity it's those whom choose to stand out that have money flocking towards them if they set up the perameters objectively to create wealth be it $1.00 to infinity.
It's perhaps time to ask the following:
1/ What am I doing/have done within my field that is different service wise that set me apart?
2/ Can I capitalize on this?
3/ How can I apply this immediately?
4/ Is there something within this Mortagage field that I can turn arround and use it as a consulting firm for those seeking
specialized help?
5/ Could I hitch my services with
some other type of business bringing needed information to those who are in need of it.
I could go on and on.
I do know that by changing my thinking from woe is me to how I can help has helped me to overcome and bless others.
I have been broke and have gone through proposal of bankrupty and it is difficult.
It took me awhile to learn to bless other that has and is making the difference in my life.
May the questions and your search lead you a way out and ahead of the pack.
With Blessings
Maggie in Beautiful BC Canada
sorry to learn of you financial issues...
I'm a volunteer firefighter and as such there is at least one association that is there to lend (or give) money (and support) - I don't know much about how it operates (and hope not to), but it can be something to look into - professional associations, fraternities, etc. Although most people are saying get a 2nd job, sometimes volunteering can open a door to more income as well (you never know who you meet). Wishing you lots of luck and the emotional strength to get through this dip in life's road.
One thing I've recently heard about which might be available in other states is subsitute teaching. One of the requirements to become a teacher, generally, having some sort of degree, usually Bachelor's or higher. In Florida, such a degree is not required to be a substitute teacher. Pay is based on the degree but my Associate's is worth $75 per day. I think you ought to check on requirements in your state. I'm not sure if I'm going to go further because, in my current job, I make $50 a day for being available -- I work as a "stringer" for a local newspaper and need to be available for assignments. I also am unsure as to my abilities to put up with children of any age -- My wife of 44 years and I have six children, 10 grandchildren and 5 great grandchildren. Hopefully, you won't have that problem. If you're interested in photography or journalism, you might also check with your local newspapers and tv stations.
One thing I've recently heard about which might be available in other states is subsitute teaching. One of the requirements to become a teacher, generally, having some sort of degree, usually Bachelor's or higher. In Florida, such a degree is not required to be a substitute teacher. Pay is based on the degree but my Associate's is worth $75 per day. I think you ought to check on requirements in your state. I'm not sure if I'm going to go further because, in my current job, I make $50 a day for being available -- I work as a "stringer" for a local newspaper and need to be available for assignments. I also am unsure as to my abilities to put up with children of any age -- My wife of 44 years and I have six children, 10 grandchildren and 5 great grandchildren. Hopefully, you won't have that problem. If you're interested in photography or journalism, you might also check with your local newspapers and tv stations.
I really feel bad for you. I've never been in that bad of shape, but I can certainly empathize with you.
1st, stay away from "helpful" people that are offering you ideas to get out of debit by going further into debit to purchase their product or join their website!!!
2nd, I know it will be hard, but I say sell the house - It is killing you! Even if you don't make all the money you owe....you need to get something very cheap, maybe even an apartment until you can get your debt under control and paid way down.
3rd, make sure you know exactly what got you to this place so you don't do it again.
My biggest mistake was getting a home equity loan to pay off my credit card debit and purchase a car and then I ran my credit cards back up again and had double trouble. Then played the 0% interest game bouncing balances from one card to another while adding to different cards and adding to my balances. You have to learn what you are doing wrong and just stop it.
4th, you should both get a job in the evening. There are plenty of jobs out there. Don't be proud. I worked a few nights a week as a waitress to help pay on a home addition we had done. You can stock shelves at the local grocery store, work at a retail store, anything to bring in some extra cash for a while.
Lastly, cut out all that you don't need: cable, cell phones, manicures, fast food, movies, Starbucks, etc. Treat yourselves once in a while, but nothing will bring greater satisfaction as getting rid of that debt - It will take a huge burden of your shoulders.
Good luck and best wishes on your bright debt free future!
Been there, done that. The first thing you have to do is ask for help. And I don't necessarily mean financial help. Ask friends and family for their understanding - it's tough when you think you have to keep up appearances. Ask them too, if they have any good suggestions for you, or if they hear of any financial opportunities to be sure to let you know. When I was 46 and stuggling through a divorce, I had an army of friends who were always directing me to odd jobs they'd heard about - $25 here, $50 there - it all added up to help me get by.
There have already been some good suggestions but I would like to give my support to a few of them. Second jobs are the quickest and surest solution - even if it's only a few extra hours a week. One person mentioned pizza delivery. Any food service job would be good because tips often add up to more than your hourly wage at the full time jobs (if considering delivery - don't forget that you pay for your own gas).
I dug our family out of credit card debt 15 years ago by waitressing. The idea terrified me at first - who knew I was so suited to the profession - I ended up as a professional cook before I gave it up due to joint problems. Also, if you work at a restaurant that includes a meal per shift, it saves on your grocery bills.
Speaking of groceries, check with your local service agencencies to find out if there are food buying clubs in your area (a group purchases in bulk for savings then splits the groceries)- if there isn't one, maybe you should think of starting it. I think we all know that eating at home is much cheaper than eating out, but watch what you spend on convenience, pre-packaged selections in your grocery store. It is almost always cheaper to prepare from scratch.
Definitely explore refinancing at fixed rate. Talk with your lender - or find a new lender - who understands your situation and may be able to help.
What extras can you give up for now? Make two lists - necessities and luxuries. If it isn't absolutely essential to your health and well being - consider giving it up until you are back on your feet.
Somebody also mentioned trying to get by with one car if possible. You don't necessarily have to sell one, but how much would you save insuring only one vehicle? The other could be garaged until you can insure it again.
You mention that you have been living a certain lifestyle, not saving anything for emergency. What have you accquired with your spending that you can sell for a profit? Look for resale and consignment stores in your area - women's clothing in good condition often sells at prices worth the effort and sacrifice.
Another great money maker is offering day care in your home. Or, if little ones aren't your cup of tea, could you offer tutoring in Math or English - two huge areas of need. if tutoring seems beyond your skill set, how about offering help with after school homework for elementary students. I worked in after school tutoring for a semester and found that many working parents were more than happy to pay good fees for the homework service, but also - were relieved knowing their child(ren) had some after -school supervision and direction.
Another list to make - what talents/skills do the two of you have that are saleable. Are you an accomplished baker - make posters to do other's holiday baking. Do you have a flair for decorating and interior design? Again, the holidays offer great opportunity to sell decorating service to businesses and individuals. Gardening? Oil changes? Lawn service? Running errands for busy professionals? - use your imagination, the sky is the limit. If you decide to sell services, do your research KNOW WHAT THEY ARE WORTH and don't undersell yourself (for instance, in my area, homebaked cookies go at $6 a dozen) Also, find out if there is are required permits or licensing (again, any food products offered for sale have to be prepared in a commercial kitchen with current health inspection on record. Churhes, fraternal clubs and the like often have these facilities and will let member use or lease them).
Face your fear of the absolute worst scenario - what would you do? What changes would it mean? Answering these questions may help you move beyond the paralyzing fear and open the way for creative solutions that you can put to work now.
1.Gratitude.
Be grateful for having all the things that you still have.eg: all your faculties, spouse, home, education, work. Gratitude is the first step.
It will take you away from 'lacking' to 'having'.
2. Now that you have all those things, realise that not everybody has so many blessings like you and your husband. Live with that realisation.
3. What all should you be able to do with the assets you possess!! Think!!
4. What are you crying about - a home loan? credit card debt? Not enough income? Look at all those living in Poor african, asian and latin american countries. it is crying I donot have footwear, when so many donot even have feet.
5. Get off feeling sorry for yourself, and start thinking 'how can I help all those people who are in real trouble?
Your problems will disappear.
Live in faith!!!
You can get through this- develop a positive attitude. Look at what you have not what you don't have. I agree with refinancing your home if you absolutely do not want to sell it. Get a fixed, lower interest rate and use the money you saved on the mortgage payment to pay down your debt. Take a serious look at your budget and for now, eliminate all the extras. You can live without cable tv and cell phones and internet. Go back to the basics. Maybe investigate a part time job. I lost my job and was out of work for 8 months- found a job that paid much less than I had been making. I learned to live on my salary- in order to send my youngest to school I work a second job part time- it provides enough to cover that bill and my budget isn't stretched. Hold your head up - there's a way out of this.
For the credit cards, get in touch with the local Consumer Credit Counslers, or another NON-PROFIT organization to put you on a program to reduce your credit card interest. Sometimes they won't take you if you are over-extended, but they do try hard to put you on the program. Basically, they can significantly reduce your interest rates (if that's a problem). Then, you end up putting more money towards principle, rather than interest.
I agree with Jim. You need to sell the house and buy a cheaper one. I know that you don't want to, but your husband may be able to find work in another area. I know that's not ideal, but you need to do something.
You could also move in with another family, or other relatives. Just make sure that you are up front with them about your situation. Offer to pay them rent, but it won't be as much as you're paying now.
Other option (I've done this) - get roommates. Get someone else to pay your mortgage for you. Rent out part of your house. You'll pay less in monthly expenses.
1. Do what Dave Ramsey calls a plastectomy. Cut up ALL credit cards immediately and without fail. They are causing a hemorrhage in your budget and you must stop the bleeding. Selling the house may also be an option.
2. Make a list of everything you spend money on - food, clothing, phone bills, automotive, insurance, internet, mortgage, credit cards. Include how much you pay for each and when the bills are due. Call to find out if you can get cheaper rates on anything. Cancel non-essential services (maid servie, lawn service, etc.) With the exception of medical and child care expenses, very few things are completely non-negotiable. As far as transportation goes, figure out if there is a cheaper way to get around - bicycle, bus, walking, etc.
3. Figure out how much to pay towards your debt each month. Pick a debt to pay off first while still paying minimums on the rest. There are differing opinions, like beginning with a small one so you can see a difference quickly or the one with the biggest rate. Once the first debt is paid, snowball your original amount to the next debt. You may need to contact the creditors to make sure you come up with something they can live with.
4. You also need to set up a small short term savings to accommodate emergencies that come up. Dave Ramsey says $1,000 is a good start, but anything is better than nothing.
5. Keep a positive outlook during this time and don't beat yourself up. You definitely made some mistakes, but you are owning up to them. I went through a Chapter 13 bankruptcy which ended in July 2004. Chapter 13 is different from Chapter 7, which just wipes out all debt, because in a Chapter 13, you have to pay a sizeable portion of the debt back. The court basically decides based on income and living expenses, that you pay a certain amount towards the debt each month, which is very hard. I have had some rough spots since, but it has been mostly good.
Thank you to ALL of you for making suggestions for my situation. I can't tell you how much it means to know there are other folks out there that have been where I am now and would like to offer help and hope. Here is where things stand so far:
We have eliminated many extras in our life. No long distance or any extra services on our home telephone. If we need to make a long distance call we use our cell phone....we have a very good plan with free nationwide calling. We have eliminated most of our cable service and given the cable company our DVR box back. We have eliminated our lawn service. I have started buying household and grocery items in bulk. I have been ACTIVELY looking for a better paying job. I have applied for 2 different jobs that pay 50% more than what I am making now. (please wish me luck!) If I don't find something within the next few weeks, I'll pick up a 2nd job in the evenings or weekends. My husband cannot get a 2nd job because of his contract, but he has contacted 2 banks that are new to our area and will interview with them about jobs with a possible salary instead of commission. We are not able to use one car because there is no public transportation in our town (except for taxis).....it's a town of only 10,000. We ARE comparing rates to change our car/home owners insurance and will increase our deductibles. We have eliminated eating out, except on special occasions. We are looking for some alternative financing for our house and hope to find something before the ARM increases....the problem is that we have no equity in the house (used it all) and no money to put down. We have talked about moving to another area of the country and will investigate jobs/housing in a couple areas we are interested in. We have not cut up our credit cards because of Leo's advice on ratios (available credit vs current debt) but have vowed not to use them unless there is a dire emergency....that is why they are in our safety deposit box. I will begin my mission on selling anything that we can.....garage sale, Craigslist and Ebay. Most importantly......I am counting my blessings every day and trying to remain positive. We both have good health, family, faith and each other. And that's what's most important. Thank you again for all your wonderful suggestions, you have truely touched my heart.
CM,
It sounds like you're doing many things to improve your situation. Way to go!
However, I want to make a comment about your not wanting to cut up your credit cards because of "Leo's advice on ratios (available credit vs current debt)". I say, CUT THEM UP!! Just don't tell the creditor you did it. They won't know, and you'll still have the available credit line that you now have.
Cut up all but 2 of your credit cards (make a copy of the front and back of the cards you will cut up first, then place the copies in your safety deposit box.) Then, you can truly cancel the cards after your financial situation gets better.
Cutting them up will (hopefully) also make it easier for you to truly cancel the cards and not want to use them again (and rack up the debt again) after everything works out.
Good luck!
I was in such a "bad" state as you are. What was helping me was I quit my Commodities Brokers job and opened up a Futures Analysis job at home. Now I see my family but I no longer pay NYC tax, NY state tax and local and state NJ tax. Plus the monthly train fare and eating lunch and dinner out 6 days a week. I did what Leo suggested and couldn't believe the figures I came up with! Plus we sold the car I drove to the train station everyday. Your husband might find a shift in jobs which he is qualified for. My lady friend made $100K last year as a Loan Approver for Wells Fargo. Nothing ventured? I dropped 2 cell phones (my wifes,and my own) I kept 1 for business and personal. Keep at it,I was working 90-100 hours a week and commuting 20. My business is doing OK and I have a lot of more free hours. Time to sell on ebay. Do what comes best for you and things seem to work out easier. Good Luck!
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