lurker, looking for advice!
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  1. #1
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    Default lurker, looking for advice!

    hello fv! i am a long time reader, but infrequent poster. i hope to change that soon. we are dave ramsey'ers and have paid off close to 8,000 dollars, 5,000 of which was medical debt. on less than 35,000 a year for our family of four people/one cat. I am very proud of that!

    anyways, i need a little advice. my husband lost his job at the end of january, and it was a major surprise. we lost about 1000 dollars of income a month! We continue to receive veteran's benefit disability, and will for the forseeable future.

    We slashed expenses to the balls to the wall amount, and not including food and gas, can make all our expenses with his disability pymt with 75 dollars "leftover". We went on WIC to help with formula/food costs, and state run insurance for our children's medical. When you add in our monthly food and gas we come about 400 dollars short a month. Of course there are irregular expenses that arent covered in that amount either. Like a yearly eye exam/teeth cleaning/dr.'s appt's for myself ( I am now uninsured), what have you.

    we make 500 dollars a month under the table from a room we rent out to my parents, they are living here while their home is under construction.

    My husband also recently started working under the table at a friend's business, a few hours a week. I dont cont either of those amounts in my calculations.

    Because we claimed no dependents we are getting a large tax refund. A little over $10,000.

    Our TOTAL debt (minus the house), with medical debts, our car, and a small CC balance is $6,300.

    We could, in theory, pay off the debt, and then we would have enough to cover food and gas each month.

    However my husband is waiting to hear back from the VA about vocational rehab ( a program which helps disabled veterans learn a new job skill, and provides a stipend to live on. So he can stop working at such low paying/high turnover jobs) He is also speaking to unemployment/ a lawyer a friend recommended as he was wrongfully terminated in his opinion.

    I dont know when his vocational rehab will start... or when any or if unemployment is coming. The only consistant source of income is our Veteran's disability benefit payment.

    I have suggested that I go back to work, but my earning potential is low, and would not cover daycare costs/gas/work expenses. My husband would prefer I focus my energy on frugality and being momma to the kiddos.

    So WWYD fv? pay off the debt? or sit on it for a rainier day? the 3,700 Id have left is a pretty small emergency fund, especially with a family, and me being uninsured now. I mean, what if my roof caves in or my water heater explodes or something? Decisions decisions.

  2. #2
    Registered User Frugal Nurse's Avatar
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    Phew! first of all.. I'm terribly sorry that happened to you and your family! seriously so wrong. A veteran should not have to struggle with work or lack there of. Period.

    K. rant over.

    You didn't mention how much interest you are paying on the cc an dcar loan.

    Personally, if it were me - I would sit on the money and keep it to meet monthly expenses. Cash is king.

    If you are paying a high interest on the cc or car loan - pay if off. To me, high is 18% or above. Otherwise, hold onto it for a bit. If it turns out that DH gets the rehab, or a settlement, or UI, or work - then pay off the debts. But right now - you're going to need it.

    Do not pay off the medical expense. there should be no interest on that and they have to accept $5 per month if that's all you can pay. I don't mean don't pay it at all - I just mean with this refund.

    And be careful about revealing working under the table ya never know who lurks here or there.


    Hugs.

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    The card is fairly high interest, the car is not. The medical debts are, as you said, no interest. I want to personally thank you frugal nurse for reading my giant wall'o'text, and providing input! I know it can make the eyes glaze over!

    Oops about talking about UTT income.... Should I edit it out?

    I also make 5 dollars per sale when I hat/hair model. Lol, should I count that as under the table too? LOL

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    Registered User Frugal Nurse's Avatar
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    ok. if the interest is high on the cc.. pay that off with the refund. (I dispise paying interest) I have a zero interest cc right now as I work to pay off the debt by 11/12/13 (challenge)

    You get paid to model hat/hair!? pretty darn cool! nah.. no need to edit. lots do work like that - surveys, etc pay a a little bit to people. No worries.

    So if you've been lurking then you know what being frugal is all about ... you know where to cut back and save.. and you know how to. for the most part.. Right?

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    Oh yeah frugal nurse, I am a frugal person and I am an avid reader of this forum and of personal finance books. I had a list of cuttable stuff before the shiz hit the fan, and I utilized that list as soon as the pink slip came. I enjoy saving money, and am trying to use my skills to the fullest right now!

    Hopefully I can find more places to whittle and cut as I continue to work on it!

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    I agree with FN. I would keep the cash until the work situation is settled. Maybe pay the cc if the balance is not going to eat too much of your money.

    Hope things will work out for you real soon!

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    Tax fraud is a felony and punishable by up to five years in prison. I would not publicly post how you are knowingly committing a criminal act.

    I would strongly encourage you to claim all of that money as income on your taxes. It is not worth going to prison over.

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    Well Giro I didnt realize I was breaking the law..my husband just started working for his friend in the past week.

    I will have to meet with the guy who does my taxes again and make sure I am in the clear.

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    Anyone else have some insight on this?

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    I'm wondering why you don't claim any dependents. It seems to me, if you claimed your children (you mentioned daycare and WIC) as your dependents you'd get an even bigger credit on your tax refund - perhaps even enough to counter-balance the income from your independent businesses. You might even qualify for the earned income credit which could give you an even bigger tax refund.

    Are you afraid that your independent businesses might disqualify you or him for disability, unemployment or state benefits?

    You may also qualify for some food stamp money - not a lot but some. The one issue there might be that you have renters in the form of your parents. Since they are family, I would count the $500 they give you a month as "a gift", not rental income.

    When my husband was suddenly unemployed in 2010, I did go about and pay off a bunch of small debts. This is completely contrary to all good advice - including the advice I'd give person in a similar position. Cash IS King. However, emotionally I couldn't stand the stress of having the bills coming in. I didn't want to see the interest debt add up while my savings went down. It was easier to get them out of my life and free up my cash flow.

    My take on your situation is simple ... if you have to ask what to do, it is possible that you don't have enough information yet to make the decision. Like you said, your husband might (probably) start collecting unemployment soon and might (probably) will qualify for a training program. When you have solid answers on those two variables, you'll have more information with which to make a decision.

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    Registered User Frugal Nurse's Avatar
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    cookie.. I think she meant that up front she claims zero dependents, so that she has max taxes taken out. Then when tax time comes around, she gets a big refund.

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    Well, that is silly since they need the money NOW - not a year and a half later. Never give the government an interest-free loan, especially since it is never guaranteed when (if ever) that they'll give the money back. We're not China - ha, ha - we can't afford to be lending money to any organization that doesn't have a triple-A rating (if we could afford to lend money at all.)

    A refund of over $10,000 is more than $800 a month being taken out in taxes. That $800 a month nearly replaces her husband's lost income and more than makes up for the $400 a month needed for food and gas.

    A tax refund makes for a lousy savings plan.

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    Cookie lee, I agree that claiming zero all year in order to get a refund at the end of the year isn't very wise, and we had planned on changing our w4 to add our children for 2013,but unfortunately he lost his job before that went thru. Our families have always encouraged us to not claim our kids or ourselves so we won't ever owe.

    As for our businesses... We don't have any! I rent to my parents, I get 5 bucks for doing hat/hair modeling, and my husband just started working for a friend. I don't think of those things as income...cuz I can't count on any of them. They are variable amounts. I will count them as income on taxes.

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    Registered User CookieLee's Avatar
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    Oh honey, there are tons of independent business owners out there who can't count on their income either but they most certainly have a "business". I don't know what your hair and hat modeling brings in a year, but if you get paid to do it, you''re in business. You have yet to see what kind of money your husband will bring in by working for a friend but once he gets paid for his work, he'll be an independent contractor and, thus "in business". While being in business brings with it certain requirements like claiming any income and paying sales taxes if you are selling anything, there are certain benefits as well, specifically a myriad of deductions. DO NOT fool yourself into thinking you don't have a business - or more than one business.

    You can change your tax withholding status anytime throughout the year - and as many times as you wish during the year. There is no reason to wait for a new year to file a new W-4.

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    Our families have always encouraged us to not claim our kids or ourselves so we won't ever owe.

    I lurk all the time and rarely make a comment but I felt the need to reply to this statement. Once upon a time, I followed the advice of my parents. I rented an apartment I couldn't afford right out of college, took out a loan for college that I didn't need (went to school free with scholarships and worked two jobs), and bought items on credit to build my credit rating. This is all contrary to what I now know to do.

    All parents do the best they can. I really don't feel that parents have children and wonder how can I screw up their lives. Unfortunately, parents do not have all the answers. Believe it or not, at forty I do not know everything about everything and neither did my parents when they were advising me. The ladies here are right. Giving the government a loan with your money is ridiculous. Do yourself a favor and claim those dependents and take the extra money and set aside an emergency fund. Ten thousand dollars is a lot of money but you would have even more than that if you had saved the $800 and invested it.

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