I got a pretty common (and in depth) email shot my way this week on something most of us are trying to get better at ourselves – having money left over every month. So I thought it was worth sharing today and getting your take on it as well.
My advice to her was pretty much what you’d expect from reading this blog for more than a day (aka hustle hustle hustle!), but hopefully with your fresh perspective/tips it’ll give her an overall better picture of what she needs to do to overcome this phase of her life :)
Here’s her email copied and pasted below, followed by my response to her with thoughts. It’s pretty long, so feel free to read just the first sentence and then advise from there, haha… Thanks guys!
Our dear reader’s email:
Long-story short: I went bankrupt at 28. How can I maximize my money when I still feel like there’s never enough leftover to save?
Long-story Long: I was married from 2006-2009 to a guy I ended up divorcing. To that point, I had good credit. Not great – It was fine. I bought a car here and there but my income was fairly volatile, as a nanny. My credit was GOOD, though.
When I left my ex, I moved back to my hometown and into my childhood home. I had no income and a small amount of debt from student loans (less than three grand) which I was able to defer (and continue to defer with income-based repayment through January 2014).
I consulted with a bankruptcy attorney for advice and decided to move forward after being served by a company with whom I’d supposedly had a credit card. I did some digging and found so many delinquent accounts that I had no idea what was happening. I can only assume that my ex let everything go down the drain when I moved away.
It has been almost two years since my bankruptcy was finalized and since then, I have opened checking and savings accounts with USAA and obtained a secured credit card. I recently became eligible to participate in my company’s retirement savings plan and I invest 10% of my income automatically. I have the small CD attached to my new credit card, but I’m still wondering how to maximize my income when it feels like I never have anything leftover?
I make just over $35,000 a year and remarried last summer.. my husband makes just over $38,000 .. Combined, we look like we make a good amount of money compared to the cost of living. I am trying really hard to educate myself by using all the tools available to me.
We own our house (which he purchased in 2005 for $87k @ 6% .. ew) with a second loan. (approx $20k @ 8.5% with a ten-year balloon payment. EW!) We’re in the process of renovating this 1895 home and our finances. I have $10,000 in student debt; my husband owes approximately $16,000 between his car loan, a line of credit we’ve used to finance house projects, and a couple of credit cards…
We are always spending to zero from week to week, but I can’t really find anywhere to trim our expenses. HELP? We pay all costs related to our restoration with cash unless they’re really high-ticket purchases (like the furnace of 2011). At this rate, our house will never be finished and we’re going to work until we die because we can’t ever save! What do we do!
Thanks – for reading, basically, my entire life story – now I feel like a creep! ha…
My message back to her:
Hey new friend! You’re not a creep – just passionate about figuring out a plan – I dig it :)
It’s hard to advise on a situation without knowing your personality, or all other details outside of what you’ve put here, BUT, from a first glance it looks like the #1 thing either of you can do to speed things up is fairly obvious: earn more money (notice I didn’t say “easy” ;)).
I’m sure we could pick apart your budget and cash flow and come across a few ways to save a few bucks, but that’s really not going to do anything major I feel like in your current situation. Unless there’s a way to combine and refinance your loans at much lower rates without you having to dump a ton of money into it in the process? But I’m guessing/hoping you’ve already looked into that…
So, it’s back to getting higher incomes :) How can you guys bring in more which at this point would all become “extra” that you can apply towards all your goals? Can either of you take on a 2nd job a few hours a week? Can either of you ask for a raise? Can any of your offer any services or build something that someone can pay you money for?
All this money stuff comes down to two things: expenses and income. If you feel you’ve done your best to limit the expenses, then it’s time to focus on the income. Even just hustling to make an extra $200 a month would probably do wonders with your situation :)
That’s really all I have for you to be honest. Again, nothing mind-blowing or new to you I’m sure, but it is the reality of the situation at least from where I’m standing. I will congratulate you on overcoming all that nonsense in the past, though, and also investing so much of your income right now – that’s great. Also with going with USAA too, which I strongly have an attachment to :)
I wish you the best either way. You’ve come really far and you can still keep going!! Just keep in mind that all of this is just a phase, and do your best to hustle hustle hustle.
What do you guys think? Anything I missed and didn’t see? Would you advise differently than just “make more money?” Haha… I tend to always skew that way being biased with it myself (I’m not a big “save every penny and it’ll all add up!” type guy when we’re talking major life changes/needs here), so thoughts from varying experiences/plans from you all will probably help shed more light on her situation.
Again, I think this problem of never having money leftover at the end of every month is pretty damn common in this world of ours today – so your tips may very well help hundreds, if not thousands, of other people reading this too.
So thank you x 100, guys! Or, possibly x 1,000! ;)
Photo cred: aprilskiver
Bonus tip: Find a good "balance transfer" offer to help pay off debt faster!
If you’ve been making payment after payment (on time) and still haven't been able to get your debt under control, snatching up a good balance transfer credit card offer may be the ticket to try. That’s where in order to gain your business - credit card companies will let you transfer your existing debt to a new card and let you pay ZERO PERCENT interest on it. Saving you tons every month!
What's the catch? Usually balance transfer cards charge a fee (around 3% of your debt balance) to let you transfer your balance to their 0% interest offer. But we've found a great credit card that will let you do a balance transfer absolutely free. Click here to learn more and see if you qualify!
PS: If you don't trust yourself with another credit card, ignore this! This strategy is to help you get out of debt quicker, not risk adding more to it.