I spoke with my sister the other day about her finances. She's a SAHM with two kids under 3 years old. Her husband works 45-50 hours a week just to make ends meet but they are barely getting by. He brings home NET around $420 a week or about $1,600 a month. Ok, do the math here... their house payment is $600 and their car payment is $650 each month. Yes, I wrote that correctly - $650 for one car payment!!! Her van broke down in the middle of the interstate while she had the two kids with her and her husband swore that she would never be stranded like that again... so he goes off and buys her a brand new van costing around $35,000!
nyway, that's $1,250 right off the bat just for house and car payment. Then add in about $400 in utilities, cell phones, cable, etc. There is absolutely no money left for food, gas, savings, emergencies, diapers (yes, the kids are still wearing diapers!). I don't know how much they have in credit card debt but I'm sure it's a scary number. Oh, and I didn't mention how far behind they are on all their bills so they spend probably a good $200 on late fees alone each month.
I asked my sister how they manage each month and she said that they just pay whatever is being in jeopardy of being turned off that month. So this month, it was the power bill. Next month it will be to pay on the van some. The next month, who knows?
It's a very sad situation. They are good people and aren't lazy by any means. However, they are stretched way too far and it's hard for them to catch up to even see where the break even point might be each month. My sis can't work right now as they can't afford child care, especially with her husband working very long hours. He has a good job but it takes him away from home quite a bit for days at a time. She did have a 401K and an IRA from when she did work but they cashed all that in about 4 years ago to avoid bankruptcy. He has no retirement savings at all. He is about 42 and she is 38.
I see the toll this takes on my sis and it bothers me not to be able to really help them. I give her a few hundred dollars here and there when I can but it hardly makes a dent into anything for them.
My sister's financial mess
July 22nd, 2009 at 01:56 pm
July 22nd, 2009 at 02:02 pm 1248271360
July 22nd, 2009 at 02:46 pm 1248273977
There are only 2 variables in the equation: reduce expenses and increase income. I think they need to do both. They need to shed that van and get a reliable used van (better to owe 8k then 35k), and start making a budget. Anything that is not a need is gone – cable – gone, only a land line or cell not both, no vacations, no eating out, birthday parties, etc.
The good news is he's only working 45-50 hours a week. He should try to find something for nights and weekends. Maybe UPS for 10-15 per hour. The point is not to look at this as this is the rest of your life. The point is that this is the next 6-12 months and where they will be at the end of this.
Also, look for a higher paying job, because I don't think he is making any money.
July 22nd, 2009 at 02:56 pm 1248274618
The husband works in the technical field installing sound systems and stuff. They have A LOT of cool gadgets like flat screen TVs, computer equipment, receivers, etc. He claims that he gets these things at little or no cost. I've suggested that he sell everything on eBay but all he does on eBay is buy more stuff to go along with all these gadgets. It really is a no win situation when they don't want to make the needed lifestyle changes. My sis is as "plain Jane" as they come. She never buys anything for herself... ever! The debt all is because of the husband, but again, it's not because he's a bad person... just a person that doesn't know how to be fiscally responsible. So, unfortunately, my sis is caught in a very rough spot and can't do anything but manage as best she can with what he brings in.
July 22nd, 2009 at 03:19 pm 1248275956
July 22nd, 2009 at 03:38 pm 1248277127
Sorry to break the news to the guy - but $35k vehicles break down all the time too, in the middle of the interstate.
July 22nd, 2009 at 04:04 pm 1248278660
July 22nd, 2009 at 04:06 pm 1248278819
Seriously, there's no sense for you to give them money. Not only will it not make a dent, but they may become "addicted" to your contributions. And then how will they learn to get out of this mess?
Because that's the problem. Yes, I understand that they are decent people that are just doing what they can to get by, but... they still have to learn to be fiscally responsible if they are to have any hope of salvation.
For example, I understand her anxiety and frustration about breaking down on the road, but a brand new, $35k van with $650 a month in payment is NOT the solution. And I think it also points to a deeper issue of money management... or the lack of.
July 22nd, 2009 at 04:08 pm 1248278928
July 22nd, 2009 at 04:11 pm 1248279100
July 22nd, 2009 at 04:28 pm 1248280128
July 22nd, 2009 at 04:28 pm 1248280130
July 22nd, 2009 at 04:51 pm 1248281490
As for not helping, well, I guess it helps if you're kind of a jerk like me and can say, "No way!"
July 22nd, 2009 at 06:39 pm 1248287996
The BIL's pride is only hurting his family.
July 22nd, 2009 at 06:49 pm 1248288549
Again, be a listening ear for your sister. Give ideas for change when appropriate. Give them hugs and love, for they know not what they do.
July 22nd, 2009 at 09:33 pm 1248298431
July 23rd, 2009 at 08:38 am 1248338281
i do agree that by giving them money, you are only allowing themselves to wade in muddy water for a little longer. its hard, but if they're unwilling to change anything about their lifestyle, you're all going to have to let them sink.
July 23rd, 2009 at 02:50 pm 1248360651
July 23rd, 2009 at 05:49 pm 1248371373
July 24th, 2009 at 03:14 am 1248405276
If I remember right, my car cost me $750 at an auction. That's a little more than her monthly payment. It did have engine troubles after 6-9 months, so then it sat for a year. We then came up with another $1000 for a used motor & labor to install it, and it's been wonderful ever since. That's less than 3 months of her payments total. Now I might not take that much of a risk with an older car if I had 2 small children, but the point is that they really need to face the facts of their situation.
Another odd thing is that he's too proud to sign up for the insurance, but not too proud to trash their credit with late fees.
August 21st, 2009 at 08:17 pm 1250885837
Jerry
November 27th, 2009 at 08:14 am 1259309679