Living on a Budget, Saving Money/Credit and Saving


Hello Tim

Ok, I lost my job back in June and my wife later left her job to attend school full time. Before the job loss we grossed about $80,000 combined last year and put $5000 down on a used suburban. Our payment is $500 a month at 11%. We recently moved in with my dad so we don't have to worry about rent and utilities. I just landed a job and It does not pay well. My wife is actually looking for work as we speak. We have 4 boys and 1 source of income. I know it's just a matter of time before my wife gets work. Here's my question. We still have the truck and are 3 payments behind. We had a repo several years ago and now I feel that we should give this vehicle back as well. My wife is concerned that our credit will take another blow if we give the car back. Initially our plan was to wait until we get our income tax check and then make the back payments. The problem is that we owe our insurance company and we owe on our personal loan. All together is about $2500. I feel like we should use the tax check to purchase a gas efficient car and just give the truck back. That will free up $6000 a year (not including the savings on insurance bill) and we can use that to pay off personal loan which is about $2500. What would you advise? We are really struggling to get back on our feet and I see the truck as a money pit. We just can't afford it. I am 41 and my wife is 39. We used up all of our retirement after I loss my job so I think that since we live with my dad, we should be radical with our saving and have as little debt as possible. Thanks in advance

Thanks for the question Scott.  Since you are already three months behind they will probably come get the car soon.  As far as your credit is concerned it is taking a good hit with the late payments. Since I don't know how much you are bringing in and your other debts so its hard to see where the money is going. Assuming you do not have the money left over for a 500.00 car payment after you pay your necessities I would let it go back to the bank because you don't have a choice since you cannot pay for it.  When the bank does get it they will sell it for whatever they can get for it and you will be liable for whatever you owe minus what it brings .  You may need some of your income tax money to help with what you owe on the car also. (occasionally they do not pursue but its not likely they will forget.) Make sure you create a budget that tells every dollar you make where to go before you get the money. If not you will wonder where it went when you need it. Also track the money you spend in each category so you don't overspend.

Once your wife becomes employed take advantage of not having a rent payment.  Make your first goal 1000.00 in a mini emergency fund.  Once you get that attack all of your debts smallest to largest by amount owed and throw everything you can at the smallest one while making the minimum payments on the rest until you get to them.  Once you get your debts done start saving for a full emergency fund of 3-6 months living expenses, or a down payment for a home if you want to buy, at least 20% of the purchase price.  You may find you want to move before you can save up down payment so I would suggest renting for a while until you can buy so you don't have all of the expenses of owning a home, replacing appliances, roofs, etc.  Do all you can to make extra money and clean up your debts and pay cash for purchases and use the emergency fund for emergencies and not wants.  I hope this helps.  

Living on a Budget, Saving Money

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Tim West


Budgeting, credit, collections, basic insurance and investing. Small business budgeting basic will and estate planning.


Financial coach since 2009. Help coach people in personal and small business financces.

Head of financial ministries at Grace Fellowship of Augusta,Dave Ramsey Certified financial counselor and 20 years of doing it my self.

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