Financially Fucked

So, remember how I said it was going to be tight for a little while? Well, it turns out that it’s going to be more than tight.

We are kind of financially fucked.

The good news is, the really dire stretch is relatively short term. We have some small raises coming to us next summer, and that will give us a few hundred a month extra to work with. The other good news is that I seem more aware of just how fucked we are and how drastic our response (re: spending) has to be, and I’m making the necessary changes. (Even better, my husband seems to as well! (See below))

The other good news is that we haven’t been paying for childcare for three months and I didn’t spend all that money on dumb shit! Hurrah! So we have an extra few thousand to fall back on before we start dipping into our real “in case of emergency” reserves.

And, if I could find a tutoring gig or two I could be bringing in some significant under-the-table cash to take some of the pressure off. This will take work and a significant amount of ingenuity, but if I can find tutoring I should be able to pay for my daughter’s vision therapy without going into debt.

The final silver lining is that this is going to force us to get on the same page about spending, because there just isn’t any room for our old habits. 

The bad news is those raises aren’t much, which means this is our financial reality for the next 3-4 years. It’s going to be REALLY tight for a while.

The other bad news is that if something big breaks on our car or at our house, we’re totally fucked.

{I bet you’re all thinking, I told you so, about raising the rent. And fair enough. You did. And you were right. But what’s done is done, and we’re helping someone who cares for the physically disabled stay in the city, so I feel pretty fucking good about that.}

How did this happen, you ask? Well a couple of shitty things happened to put a crimp in our finances this past month. Our tenant left, which means we lost a month of rent, and then her toilet was flowing/leaking like crazy while she was gone for two weeks (before she moved out) and we got stuck with two water bills equalling $1200. (Yes, we had someone come out and yes we fixed the leak and yes we’re petitioning for a leak credit.) We’ll get some of that back, but I’m guessing it won’t be much. These are obviously one-time, short term obstacles, but they put us in a less-than-ideal position as we enter into this tight period.

Most importantly, our childcare bill is just a lot bigger than we’re used to. So we need to absorb that extra $600 a month (and no, there are no cheaper options for child care, we already send them to the cheapest options that we feel comfortable with).

Then there was my daughter’s eye exam and the subsequent vision therapy that is required. Our vision policy specifically says “vision therapy not covered,” so I’m not expecting they’ll be reimbursing us, even partially, for the appointments (though I’m still going to try). This is only for 12 weeks, so even if we go into debt, it’s not a long term monthly cost.

One good thing is that in December I’ll have $3K in my 125 tax-sheltered childcare account to claim, and if I put that toward my student loans, that is $350 a month I don’t have to pay. And if things are looking REALLY bad in January when I get the money, I can keep that $3K in my checking for when we’re not able to make ends meet and still not pay my student loans for a while, because I’ve been over-paying them for so long that I’m not required to make another payment until 2018. Of course in that scenario I’m paying 6% interest on that money, but 6% on $3K is probably better than 20% on some amount we may need to put on a credit card. (If you want to weigh in on this in the comments, please do, I’m not quite sure how I should proceed with the student loan/$3K coming to me situation).

And we have other things going for us, like the fact that my son has enough hand-me-down clothes and shoes to last until Kindergarten (except for some pairs of khaki pants because that he needs to wear for “school” (yes they wear a uniform in preschool/daycare) and we weren’t handed down any of those). My daughter is taken care of until she grows out of the 6/6x/7 size–which probably gives me a year. Both sets of grandparents are very helpful and would totally get either of them a jacket or shoes if we really needed them too. They will also get them so much for Christmas that we could really get away with getting them almost nothing, which is currently my plan.

We haven’t promised to see anyone for the holidays so we don’t have to budget in expensive plane tickets or even gas to travel. The few things we really should fix on the house can wait–we lived without heat last winter and we can do it again. I guess the biggest thing is that my husband seems to understand how tight things are and has made changes without me prodding him; he asked me to get him a box of small chip bags at Costco which means he’s packing his lunch for work at least some days. And he hasn’t asked if he should pick up burritos for a month. We didn’t even order a pizza last Friday. (I know, we’re ridiculous but it really is a CHEAP pizza). We should be able to make this work. It’s going to be a challenge, but I think we can manage it. Right now I’m just taking it one day at a time, while I run the math on my budget to make sure I’m accounting for all expenditures. Hopefully in a few months, after I see that I can keep expenditures in the very narrow margin of what’s left after paying the necessities, I’ll feel a little better about the whole thing.

 So yes, it feels like we’re financially fucked, but I’m hopeful that we’ll be alright. 

20 Comments

  1. You will be okay. It’ll be rought, but you will be okay. I am always telling my husband “I know we’ll be okay in the long run. I just need to figure out how we’re going to get through the next two weeks.” The biggest thing is being on the same page, and I’m glad that you guys are right now.

    Hugs, though. Finances are so stressful!

    1. I’m definitely starting to get into the, “okay, how do I make this situation work for us,” head space, which actually helps me to step away from the panic that sometimes bubbles up when I start to see the months stacked in front of us in perpetuity. Taking it one day or week at a time definitely helps.

  2. I’m glad you’re on the same page – that is so important. Financial transparency with your spouse is a must, in my opinion. It sounds like there are some things working in your favor which is great.

    I don’t have much to offer… I HATE the stress of feeling strapped for cash. It just is with you all the time and I had that for several years in my 20’s. I’m sorry you’re having this stress.

    1. We are definitely moving toward financial transparency, and it’s not like anyone is purposefully withholding anything right now, we just aren’t using our joint accounts yet. But we’re going to start soon. I’m scheduled to meet with my HR later this week to get my auto-deposit sent there. That will force me to start using it.

  3. You both understand the situation. That is a win.
    I remember the year in my house when all Santa brought was new underwear, and the “tree” was a hand-me-down from a friend who had put one up and then had to leave town on December 22. And the year we had a ‘Christmas Branch’ from a neighbor’s tree. And we still had Christmas with love, laughter and joy. Note: my children grew up into wonderful adults anyway.
    Keep going and you will come out at the other end.

    1. Thank you for sharing some of your memories. It really helps. And just to be clear, I don’t worry at all about my kids and their memories. In fact I think they will grow up better people for experiencing this stuff.

    1. I think I can do this too, which is a weird feeling. I keep waiting for the resentment to set in, but it just hasn’t yet. I’m just buckling down and doing what I need to do without having a personal crisis about it, which is not like me AT ALL. I think that is fodder for another post.

  4. FWIW I think you are right not to pay the student loans– actually I would stop paying them now and pay for the vision therapy instead. You are so close to the edge, it just doesn’t make sense to pay anything you don’t truly have to pay. And you are totally right about the interest rate vs. credit card interest. So I would say definitely pause payments on the student loan and reevaluate in January.

    Maybe some other families at the daycare could hand down pants to your son. If you have any nicer clothes that you or your kids don’t need, you could try to sell them. I have used ThredUp and you don’t get much money but it’s very easy to do. Books and kitchen items I have sold on Amazon. It’s usually pretty quick to determine if the books are of any value and create the listing.

    1. I need to do a few more calculations and see where we are with some stuff before I pay down the loans. I could also wait until we get our tax return, which is usually pretty substantial.

  5. I didn’t notice this, “I’ve been over-paying them for so long that I’m not required to make another payment until 2018”

    By doing this instead of putting the money towards principal, that means you have been paying and will be paying the same amount of interest that you would have paid without making pre-payments (which, at 6% is not negligible). There’s not much point in pre-paying loans in this manner (except if you’re worried that if you have the money you will waste it on things you don’t need and won’t have it to actually make payments later, in which case it would still be better to set up a Christmas account at your bank because at least you’d be getting some interest on that). If you do pay off your loans, make sure you pay off the principal and not just future payments, or there’s really no point. Does your loan servicer not allow you to pay down the principal? Is there some kind of pre-payment penalty?

    I am actually in favor of blitzing through the entire loan if you can (Dave Ramsey style) to free up the extra money each month, but ONLY if that means you keep from paying interest. Pretty much any other safe place to put additional money is better than paying months ahead on a loan. That just locks up money without earning you anything or saving you anything on interest.

    In fact, if I were in your situation, I would probably call the loan servicer and tell them I made a mistake and I need those 2-3 years of pre-payments applied to principal stat.

    1. I have been paying down the principal. I wasn’t supposed to be done paying my loans for a few more years but I only have $3K left so it’s definitely been paying down the principal. I swear it said my next payment was due in 2018 though, but I’ll double check. Is it not possible that I’ve been paying down the principal faster AND don’t have to pay until 2018? This is my first time with student loans so I’m not very well versed.

      1. It’s not possible. *Either* you’ve been paying down the principal *or* you’ve been paying future payments and don’t have to pay until 2018.

        Unscrupulous companies will put any pre-payments towards the future rather than the principal because they’d rather take your money and they prey on unsuspecting people who just assume the company has been doing the right thing. (This is one reason I like Wells Fargo for our mortgage– it has lines where you specify exactly where extra money goes, so you know if you’re doing a double payment or if you’re paying down principal or escrow.) I know a lot of people had been having trouble when their loans switched to Mohela.

        Another possibility if you’re worried about being able to make the payment in the future is to keep the prepayments through 2018 but continue to make your regular payment making full 100% sure that it is applied to principal, not to future payments. This way you won’t be completely and totally screwed over when it’s time to start making payments again and you suddenly have to come up with a big hunk of money you’d gotten used to not paying and you’ll be getting rid of the loan faster. But in that situation you’ll still be losing the interest on the amount you’ve pre-paid already, which will be 2-3 years payments at ~6% (which may or may not be substantial depending on how much that amounts to). This calculator might be helpful: http://www.bankrate.com/calculators/college-planning/loan-calculator.aspx

        1. I checked again and I have been paying down the principal (and that is what their payment page says would happen if I paid more than what was required), and it shows how much I’ve overpaid and says that I don’t need to make a payment next month. So… ?

          1. You may to need to call them to clarify what is going on. The balance will get smaller if they’re applying extra money to future payments but you’re still paying interest on those payments. I guess it’s possible that they could let you put off future payments and charge you the interest later if you don’t make those future payments but that seems unusual. It is more usual for your regular monthly payment to go down when you prepay a student loan (unlike a mortgage loan where you pay the same amount each month– student loans function more like credit cards).

            What company are you using?

            1. I have Nelnet & when I pay extra it goes toward the principal but also makes them say I don’t have to pay anything but interest until some far-off future date as I’ve “paid in advance”.

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