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Discussion Starter · #1 ·
My young neighbor (23) asked me to help him come up with a budget because he is realizing he is in over his head. I want to see what advice you guys can add to his situation.

Here is the info:

Take home pay $1164 a month ($291 a week)

Bills:
-rent 300
-car 100
-cell 90
-medical bills 82 (only owes about $260 total)
-meds 29
-groceries 100 (he and roommate spend $200/month but split the cost)
-car insurance 111.92
gas 100

Here comes the trouble...credit cards:
#1 balance 2245.85
interest rate 29.99%
min payment 139/mo.
**accruing late fees and overlimit fees every month

#2 balance app. 1600
company is taking 50 out of checking every month
acct is closed

#3 balance 1806.94
interest 24.99%
min payment 478.86
**accruing late fees and overlimit fees

#4 balance 3977.21
interest 7.9%
min. payment 190/mo.

What pearls of wisdom do you have for this young man? He's adamant about not getting a second job. He is willing to start selling off some sports memorablia.

What would happen if he closed all of his CC accts?

HELP!!!
 

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Good for him for taking the first step, and good for you for helping out! That's a rotten mess to be in so young - but he can get out of it now, before it gets worse.

Some possibilities:

1) Call the companies, cancel the cards and renegotiate interest rates where possible.
2) $90/month for a phone is ridiculous. Get a cheaper cell plan, and definitely cancel texting and data. Better yet, cancel the phone plan entirely and get a pay-as-you-go phone.
3) sell the car and take public transport or carpool = +$300/month. (less bus pass)
4) Sell stuff
5) Man up and get a second job.

He won't like any of it, but the first thing to do when getting out of a hole you've dug for yourself is to quit digging... all of these are short-term solutions until he's back in the black, and meanwhile he can figure out how to live within his means.

Good luck!
 

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Can he consolidate CC onto the cheaper rate card? The only other item that looks negotiable is the cell phone. He needs to pare this down, get rid of texting, etc. And he is young, so better look into that second job. I held a second job for years; so did Hubby. He'd best do that now before he has a family.
 

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let's see....those all total $912.92. When you add in the $50 out of his checking automatically., it's $962.92. That leaves $201.08 for the month. Not much.

The only flexibility I see is the cell~cancel and get a pay as you go phone.

The car MIGHT be a necessary...to GET to the job.

I would also suggest a 2nd job. ~He's young. If he's that dead-set against it....sell off that sports crap and pay down that debt.

Also....IF he can consolidate his CC's...he's be better off~but that might NOT be possible.

If it were me....I would try to get a loan to consolidate them all~and then cut those cards up~! I wouldn't actually CLOSE the accounts..just pay them off, and never charge again. Obviously...he can't be trusted with charge cards.
 

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Stop using the cards if he has not already. Close #1 and #3.

$100 a month for gas is outrageous! Where is he driving? He also needs to see about cheaper insurance. I don't know where you guys live, but he's paying more than twice what DH and I do. I know he's young, but he should shop around if he has a good record.

He's going to have to get a 2nd job, or move back home. He simply does not have enough income to cover his bills.
 

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Fact is this young man needs a second job period. I don't see how he is living off of that income and the fact that he has so much credit card debt proves he can't live off of that.

It that or gets a room mate or moves back home
 

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Stop using the cards if he has not already. Close #1 and #3.

$100 a month for gas is outrageous! Where is he driving? He also needs to see about cheaper insurance. I don't know where you guys live, but he's paying more than twice what DH and I do. I know he's young, but he should shop around if he has a good record.

He's going to have to get a 2nd job, or move back home. He simply does not have enough income to cover his bills.
$100/mo. for gas isn't that bad depending on where you live. Our gas in CA is up to $2.25/gallon so it takes about $35 to fill up my tank. I need to fill it up at least once a week, and that is just to drive to park at public transportation. So I spend at least $140/mo. on gas, plus usually a bit more if I have any weekend errands or out of town family stuff going on.
 

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i spend 30 bucks a week for gas so it adds up to 120-150 a month.
the cell phne should be about 45, no more
he is in over his head.
 

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I say to start of by selling the sports stuff. That will help but I seriously doubt it is going to be the gold mine he hopes it is. -- Put all of that on the medical and make it history. If there is any left, put it on cc1.

Is the cell phone the only phone? If there is a landline and cell phone, get rid of one. Try to get a cheaper package on the cell (pay as you go and then don't go much).

It sounds like he is single. At this point he really needs to consider a second job and put 100% on those outrageous cc's.
 

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He needs to sell everything he can AND get another job. This isn't a choice anymore. He already made that decision when he spent $10000 that he didn't have. If he refuses to work it off, then he is obviously not serious about fixing his situation and I would suggest you not get too involved.
 

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I think the only thing I can add is take him grocery shopping and look at where he can save there. Teach him how to wisely use coupons with sales and rebates to get the most for his money. Show him how to stockpile, deoderant, shave cream, razors anything to cut the budget.

Cat
 

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A second job sucks. No doubt. But it sucks much less than losingthe financial ground he is every month.

Remind him of three things:

He can get a second job in a different area than where he is working now. If he is at a desk during the day now, look for a more active job. And vice versa, if he is doing manual labor during the day, maybe he can do telemarketing as a second job. I like my second job of working with mentally handicapped adults in their homes because I can cook for people, go to the movies and festivals, and even watch TV and get paid for it. It isn't all fun and games, but it certainly breaks it up.

A second job does not mean another 40 hours a week. It may not even mean another W-2 form. If his sister is willing to pay him $40 a night to stay with her kids so she can work a night shift at her job, it counts.

Overtime at work is better than a second job, because you get overtime. Time and half means more money for less (extra) time.

And ...while some people do it forever, tell him he needs to do it until his budget balances and he has $1000 in an emergency fund.
 

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While some of suggested paying off the medical bill first, or CC #1,I would suggest that he do the following:

1. Call CC #1 and #3 and try to negotiate a lower rate. If not, then look to see if the money can be transfered to one of the other cards with a lower rate, even part of it.

2. Get cheaper cell phone, find out about insurance rates. I live in NJ, I think that a 23 year old single male who still owes money on the car who only pays 112 a month is really, really good. But call around.

3. Sell stuff, and Second job.

4. Get current on CCs. No monthly overages, no late fees.

5. One or two hundred dollars in bank for a cushion, it is a small amount but he is young and his monthly budget isn't balancing.

6. Pay off CC #3. For the amount of money it is, this is SUCKING money out of his bottom line. By the time CC# 3 is paid and things are lining up, the medical bill should have dropped away.

7. He could pay his monthly expenses at this point on his original job, but he needs to save an emergency fund up. $1000.

8. Now he can consider quitting his second job, or he can continue so he can get rid of the other CC's before he is thirty. :sun:
 

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Discussion Starter · #14 ·
I finally broke down and told his mom about it. I would want to know if it was my kid.

She wants me try to convince him to go to her and tell his situation to her. She can't bring it up, because if she does, he will never confide in me again. She's willing to let him live with her rent-free until he gets on his feet again. His grandma will also let him keep the $100 car payment each month (she gave him the $ to buy it and he repays her) until things are settled. His mom will also pay his medical bills with money he received for Easter from his other grandparents. He has an AWESOME family! Now all he has to do is swallow his pride and confess all to his mom.

****side note***His mom wants him to do a debt consolidation for his credit cards. I'm not familiar with that. How does it work?!?
 

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Are you concerned that this is enabling rather than helping? Gift money to med expenses..okay. Putting off the car payment and living rent free seems like a bit much to me. If I was mom, I might say something like: first month is free then $100 a month after that, just so he would not be accustomed to living on me.
And even if he had no rent, car payment, or groceries his budget will still not balance.
I would be very leary about debt consolidation. If he can go through a bank, yes. But the people who advertise on late night TV can be very shady.
 

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I would stay completely out of anyone else's money issues. It wasn't your place to tell his mom....and it's not your place to *make* him tell his mom. He needs to put on his big boy pants and figure things out for himself.
Having his mom and grandma bail him out is not going to solve his problems with money.....
 

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It sounds like his family is very loving and willing to help - which is so much more than some people get! But I agree, it sounds a bit like enabling. This kid needs to man up and accept his responsibilities. My thoughts:

1. $1164/month is WELL below the poverty line. Is he working full time?? In my opinion, this is not a debt issue, this is an income issue. (I know this isn't the Dave Ramsey forum..I just can't help it! :)) If he is so adamant about NOT getting a second job, he needs to find a DIFFERENT job, because whoever is paying him $12k annual salary seriously undervaluing him. Let him know he is worth so much more than that, and he could get it if he'd put in the effort. If he's not working full time, then I've already run out of sympathy for this guy.

2. $10k in debt while making $12k per year is a BIG problem. He's been living far beyond his means. It is fantastic that he asked you for help, but it doesn't sound like he's really ready to take responsibility.

3. In all seriousness, his living expenses are very low. $300 rent and $100 car is incredible. His phone is expensive, but I have a feeling he'll be adamant about "needing" that, too. And really, it doesn't make a big difference. He's already in a great spot with living costs - I don't think I'd make a change there.

I guess I've only got one point: his income needs to go UP. He does not need to lower his living expenses (though he does need to STOP using those cc's). He does not need to move home or stop paying for his car. Rent and car payments are called responsibility, and it sounds like he needs as much practice with that as possible.

Kudos to you for being willing to help him out. I hope things begin to look up for him!
 

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Discussion Starter · #18 ·
Thanks to everyone's responses. Some were great, while some were just kinda mean. Sorry, but they were. Luckily, I have "thick skin" and don't take it personally. I've decided to offer him my advice and then be done with it. It's up to him if he takes it.
 

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unfortunately many many people work for minimum wage he is actually above minimum wage.

The ins is good for a kid that age and public transportation is not available everywhere and at the hours these kids need to work.

Yes he needs to get training or go back to school to make more money... and for now he needs a second job.

moving home will cause a HUGE problem for the room mate Though I bet they could eat on less than 50 a wee for 2 people.

Tell him to go to the library and get on a computer and come here
get a p/t job and start thinking about what he would like to do for his future mimimum wage is not a bright future which he has now found out.
 

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Take home pay $1164 a month ($291 a week)

Bills:
-rent 300

See if he can find a way to subsidize part of this. Even if it's not a regular full-time job, see if the landlord will take something off the rent if he sweeps the halls, rakes, or something once a week or so.

-car 100
-cell 90
-medical bills 82 (only owes about $260 total)
-meds 29

See if he can get generics?

-groceries 100 (he and roommate spend $200/month but split the cost)
-car insurance 111.92

See if he's eligble for a good driver, good student, or nonsmoking discount. Or, if he and his roomie have rent insurance, see if he's eligible for a combined rent/auto discount?

gas 100

Here comes the trouble...credit cards:

See if he can get a cash advance with the low interest card that can kill some of the debt on #1 and #3. Also, do close all of these or pay them off except for the cheap one.

#1 balance 2245.85
interest rate 29.99%
min payment 139/mo.
**accruing late fees and overlimit fees every month

#2 balance app. 1600
company is taking 50 out of checking every month
acct is closed

#3 balance 1806.94
interest 24.99%
min payment 478.86
**accruing late fees and overlimit fees

#4 balance 3977.21
interest 7.9%
min. payment 190/mo.

What pearls of wisdom do you have for this young man? He's adamant about not getting a second job. He is willing to start selling off some sports memorablia.[/quote]

Tell him to start selling the sports stuff, but when you redo the cc's make sure he has some room for ebay fees, etc. so that he can.

My .02!

Judi
 
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