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Maxed Out: Quitting More Than 50 Jobs Lends Itself to Debt

SavvySugar — Tue, 27 Jan 2009 11:30:16 -0800

This episode of Maxed Out is about Ron and Jennifer, a couple living on a single income and unsure of how they'll pay next month's mortgage. Ron has been unemployed for three months due to injury, but their financial problems began 10 years ago, mainly because of his inability to retain a job - Ron admits that he has quit between 50 and 100 jobs in just one decade. They have six credit cards, two mortgages, and an emergency line of credit they used to pay the past month's mortgage. Find out more about their situation when you read more.

Financial guru Allison Griffiths says their finances are about as bad as it gets. Ron has thrown a lot of money toward trying to become a self-employed supplement salesman and personal trainer, but without success. Both Ron and Jennifer habitually buy lottery tickets in hopes they will be able to pay their bills with the winnings. But there is no lucky pot in their foreseeable future, and Allison informs them that they have a monthly shortfall of $5,507!

A whopping 96.5 percent of Jennifer's monthly take-home pay goes to their first and second mortgage payments, leaving them only $127 for the remainder of the month. Their total debt, not counting their first mortgage, is $113,000, and at the rate they are going they'll owe $256,000 in just two years.

Allison gives them tools to form better financial habits, but this couple's situation is beyond her usual advice. She gives them an ultimatum: Ron must find a job with steady income, or they must sell their home. With such limited time, they make the decision to sell their house and use the money to pay down their debt.

Ask Savvy: Should I Split the Mortgage With My Boyfriend Who Earns More?

SavvySugar — Mon, 01 Dec 2008 13:00:54 -0800

Dear Savvy,

My boyfriend and I are looking to buy our first home together. He makes about $25,000 more than me per year and we both have similar expenses when it comes to our loans (I make about $56k and he makes about $81k). We're very realistic that relationships don't always work out in the end, but right now, we're very happy and believe we will get married and have children in the future.

Because I cannot afford as much of a monthly payment on a mortgage as he can, he has told me he wouldn't mind paying more than me. I told him that, realistically, the smart way to think about this is as a business transaction, and in the end, if we do split up, I will still get 50 percent of our house, but he will have paid more into it. He really appreciated my honesty on this point, but hadn't thought about it himself.

He then said he could pay the bills or food or something else to ensure I wasn't broke at the end of every month, if we did choose to buy a nicer house than we could if using only my salary. What's your opinion on this? Do you think we should split the mortgage payment in half no matter what? When you add our salaries together, we are doing pretty well, but I alone couldn't get my own mortgage. Please give me as much advice as you can before I buy my first home!

To see my answer, read more.

Savvy says: It's awesome that you and your boyfriend communicate so well and that is certainly one big key to a lasting, successful relationship. You both understand that right now doesn't always translate into forever, and that's so important when making big decisions like buying a home together.

Whether you are splitting the mortgage down the middle and your boyfriend is paying more toward other bills, or he's paying more of the mortgage while the rest of the bills are split down the middle, your boyfriend is still paying more than you are in total. Either way you cut it, it's all about whether or not you are comfortable with him contributing more than you to your household expenses.

Your boyfriend seems totally content paying a larger share, and I know many couples who divide most of their bills including rent (in your case a mortgage payment) as a percentage of how much they each bring home. It's all about what makes you feel comfortable - the last thing you want is for money issues to come between you two.

Savvy gals, how would you handle this situation?

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Money Magazine Offers Helpful New Money Rules

SavvySugar — Thu, 26 Mar 2009 13:30:39 -0700

The April issue of Money offers a guide to playing by the "New Money Rules," in the wake of plunging stock prices, rock bottom home values, and soaring unemployment. While traditional advice may have dictated you should buy a house ASAP or hop from position to position, that advice doesn't have the same relevance it used to. What are some of the new rules?

Buy that house - if you plan to stay. In the long run, housing prices should keep just slightly ahead of inflation; in the short run, they may drop even more. Moving in less than five years? Maybe you should keep renting - you may not make enough on a home sale to cover your broker's fees and other costs.

Save for a hefty down payment. If you are ready to buy, you'll need to put down at least 20 percent to make a deal. More money down, along with a 720-plus credit score, will help you nab the best mortgage rate.

Try lowering the odds you'll get the ax. Take courses to keep your career skills current. You'll be less vulnerable in the next round of cuts and more competitive in the job market if you do get whacked. And make sure you have an emergency fund that can cover your living expenses for six months to a year.

Give the boss a reason to love you. Just because you need to keep working doesn't mean your employer will accommodate you. Make yourself vital: know the latest technology and gain a rep as a problem solver. Plan B: go part-time, which works almost as well for preserving your nest egg as a full-time gig.

You Asked: Should I Move in With My Boyfriend?

DearSugar — Fri, 16 Jan 2009 09:00:00 -0800

Dear Sugar,

My boyfriend of six months recently asked me to move in with him. We're together every night and he first suggested I move in to his place, but he changed his mind when he found a house he wanted to buy. The deal he proposed was that he'd pay the mortgage and the house would be in his name, and I'd help out with the bills and groceries as best I can (I'm currently trying to pay off my student loans). While living together sounds great, I'm worried that if something should happen down the road, I could end up homeless and left with nothing. Is this a common fear when cohabiting? Do you have any advice? - Decision-Making Time Tanya

To see DearSugar's answer, read more.

Dear Decision-Making Time Tanya,

Moving in together is a huge step in a relationship, so being 100 percent ready is crucial. With that said, you can never be prepared for the unexpected, and fights and struggles will definitely ensue, so be aware that communication will be key.

Money is obviously a big part of cohabitation, but if you split the mortgage or just pay the bills, you'd still be in the same boat if things were to go south later on down the road - if the house is in his name, you'd be the one to move out. While I'm a big advocate of living together before marriage, doing it prematurely could wreak havoc on an otherwise good relationship. Weigh your options together and if you're willing to take a chance, I say go for - it could end up being the best thing for your relationship. Good luck!

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Maxed Out: Couple Finances Down Payment With Credit Cards

SavvySugar — Fri, 07 Nov 2008 13:00:19 -0800

"I do something I want even if I know I don't have the money. I don't see why I shouldn't buy a sweater or go out with friends." That's 23-year old Crystal talking, and she and her 25-year old husband Jeremy are $25,000 in debt. This episode of Maxed Out is about this young married couple who is living on one income: Jeremy makes about $40,000 a year and Crystal stays at home with their one-year old son. They are carrying way too much debt for how much income is brought in, and their cash flow could never support their future plans for Crystal to continue staying at home. Find out more about their finances when you read more.

Besides having a new family, Crystal and Jeremy have a new house with a new mortgage. They financed their $10,000 down payment with credit cards and bought the house because Crystal got pregnant and they figured it would be easier to buy before the baby came into the picture. They have three maxed-out credit cards and are basically paying interest only every month, so their debts just keep rising. Financial guru Allison Griffiths says that if they don't get things under control immediately, they are in danger of defaulting on their credit cards and mortgage.

Even after Allison breaks the news that they are spending a monthly average of $1,140 in department stores, Crystal accuses her of exaggerating their financial situation. They succumb to Allison's advice to cut down spending by at least $400 a month and track every penny. Allison says one of them needs to make more money and bring in an additional $1,500 to $2,000 every month in order for them to get ahead. Crystal doesn't think a 9-5 job would be worth it because of daycare costs and decides to pursue a new career as a personal trainer. At the end of the episode, the couple is spending less than they used to and Crystal is taking classes to hopefully become a personal trainer.

Source

How Much You Need in Your Emergency Fund

SavvySugar — Fri, 08 Aug 2008 12:30:08 -0700

More than half of you are still building up savings for a rainy day or haven't been able to save anything just yet. In order to be sure you're on track or to set a goal in the first place, you need to determine how much you'll need if emergency strikes. The biggest case for an emergency fund is job loss - if you lose your job or temporarily lose your ability to work then you'll need to rely on the money you've saved to get by.

Standard advice says that a solid emergency fund has three to six months of living expenses. Determining our individual (or family) living expenses is necessary to know if we're on track to support ourselves without income for a few months. CNN Money recommends reviewing the past three months of bills and expenses to figure out a monthly average. They remind us to include certain expenses in our calculations. Check out its must-include expenses when you read more.

Mortgage (or rent)
Utilities, including bills for cable, Internet, landline, and cell-phone service.
Groceries.
Insurance premiums, including home, auto, and life. Add in at least $400 for individual health insurance - 1,000 for a family - in case the partner whose work provides it is the one to get laid off.
Other car expenses including gas and loan payments.
Property tax (if not included in the mortgage payment)
Discretionary spending. Be realistic! Certain things may be easy to cut, but don't delude yourself into thinking you can suddenly make a drastic change.

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Tip No. 4 For Avoiding a Holiday Sex Slump

DearSugar — Thu, 04 Dec 2008 07:30:00 -0800

Patty Brisben is back to offer up another tip on how to avoid a sex slump this holiday! Check out her advice below:

Engage in a childlike or lighthearted activity - like building a snowman, going sledding, or even going to an indoor (or outdoor, climate providing) ice rink. It will take you back to playful, more carefree times where you weren’t as bogged down with the mortgage and the daily grind. Many cities also offer romantic horse-driven carriage rides where you can look at the city lights and not be bothered with the outside world.

To learn more about Patty, click here and to visit PureRomance.com, click here. To see her previous tips, click here!

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Maxed Out: Clean Slate Wedding

SavvySugar — Tue, 27 May 2008 13:09:40 -0700

This episode of Maxed Out features Tabetha and Greg, a couple in their mid-twenties planning to get married in exactly 14 months. The only problem is that the two of them together equal one big financial mess. Tabetha has a growing pile of debt that is currently at $34,000 on top of her mortgage, while Greg can't offer any advice because he knows absolutely nothing about managing money. He's a debt-free student living at home and gets an allowance from his parents, and he and Tabetha hadn't ever talked about money until recently. They don't want to start their lives together with old financial baggage, so in order to have a clean slate wedding they call in Allison Griffiths to work her magic. Find out how she helps the pair when you read more.

Tabetha admits that if she has money she spends it and is teetering on the edge of not being able to pay for anything anymore, but with this knowledge she still contributes $300 each month to a vacation timeshare. Allison takes a look at Tabetha's big money picture and concludes that she's spending 60 percent of her income on housing between her mortgage and timeshare, when the maximum that should be allotted to housing is 30 percent.

Allison also discovers that between the current $34,000 debt, the estimated $15,000 cost of their wedding, and the amount of debt plus interest they'll accrue during the 14 months until their planned wedding date, Tabetha and Greg will start their new marriage off with $67,500 in debt. She instructs Tabetha to get organized so that she never misses a payment, tells Greg to cut financial ties with his parents and get a $500 limit credit card to establish some credit, and encourages them to sell the timeshare so their debt would instantly be cut in half.

Tabetha and Greg are on their way to a clean-slate marriage and have a much better understanding of what life together will entail. They were lucky to get their reality check before the wedding instead of entering their new lives together with almost $70,000 in debt.

Wecome to the Real World, Class of 2008

SavvySugar — Mon, 19 May 2008 13:41:30 -0700

While my alma mater won't be handing out diplomas for another few weeks, many colleges have already celebrated the class of 2008 and sent them off with motivational words from someone accomplished. I'm not being called upon any day soon to make one of those parting speeches, but I do have some advice for new grads who are headed into their new exciting chapter that's also fondly known as the real world. To see what I think is important to keep in mind as a degree-holding new grad just read more.

Whether you decide to travel after college or move home for a couple months while deciding where you'd like to pursue your first job, keep your goals in mind. It's easy to get sidetracked by other people and their ambitions, or lack thereof. Keep yourself on track by writing down your present and future goals.
Live within your means, seriously. Now is the time for you to build a good credit history, so that when you're ready to buy a home in a handful of years you'll have the credit you need to get a good interest rate on your mortgage. I know, I know, mortgage is hardly a word on your mind right now. But the future should always be something you're keeping in mind.
Perform an exhaustingly thorough job search. You want to get a job as soon as possible so you can bring in enough income to pay the rent on your new apartment, and sending out a résumé here and there isn't going to be enough. If you can't live off the savings you've established from working during college, do something to bring in some money while you're searching for that first job. I had friends who worked at a department store makeup counter in order to sustain themselves.
Once you've been offered a position that you can picture yourself doing every day and will allow you to learn important skills to develop your résumé, make sure you research how much you should be paid for the job. I know that when you're offered that first job you think they'll retract their offer if you negotiate. The worst that can happen is they'll say no.
Embrace your independence. Live off the money that you earn and try not to think of your parents as a fall-back option to bail you out. Remember the sense of freedom you felt when you first moved away to college? You get the same rush when you graduate and establish a new life for yourself.

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Ask E. Jean for DearSugar: Why Hasn't He Called?

E Jean Carroll — Thu, 15 Nov 2007 10:00:00 -0800

Dear E. Jean and DearSugar,

Six months ago I left my fiancé of six years. Although he was/is a fantastic man, it was the absolute best decision of my 32 years thus far. Since then, I've been dating regularly and it's been wonderful!

I've met plenty of wonderful men, been happily promiscuous, but haven't met anyone I wanted exclusivity with because I've been loving the randomness and spontaneity of my life. Until now.

Holy crap! I met a man three weeks ago who makes me giddy and stupid. He's 31, has his career in order, has a mortgage, and understands my wit and engages in clever banter. Plus he's hot! The thing is, during the first week and a half that we met, we saw each other four times. During the last week and a half, I haven't heard from him. My cell phone "lost" his number (I kid you not) and although I know where he lives, I'm hesitant to just stop by because he lives an hour away and I'm afraid he'd think I was stalking him.

He told me once that a “huge turn off is a needy girl,” and I loathe to appear that way. I'm just perplexed as to why he hasn't called me in nearly two weeks - not even a text message! I swear to you E, I'm a very easygoing girl who doesn't get hung up on men. I just can't seem to stop thinking about the silence and what it means. If he isn't into me, that's fine as long as I know. But this is the first time in an awfully long time that I have no idea where I stand with a guy. And really, it's the not knowing that sucks. What to do, what to do? - Devastated and Crazed

To see Dear Sugar's answer read more

Miss Devastated, my daffodil,

Here’s the Rule: When a guy’s interested, he calls. When a guy’s not interested, he doesn’t call. And here’s how to ignore that rule: Pick up the phone, call 411, get his office number, or his home number, write the number on a large piece of white paper, and call the bastard.

Don’t wimp out on me now.

And for god's sakes, when you speak to him, don’t ask him “where you stand.” (Of the 11 best ways to kill a chap’s interest, the seventh best way is to ask him “where you stand.”) Keep the conversation light, keep it bright . . . and then if he says he’s been “so busy he just didn’t have time to reach you,” that's when you say goodbye, rip the number to shreds, board an elevator to the top of the tallest building in town, and hurl the pieces out the window. Hurl them. Whhhhheeeeee! And that’s how you deal with a man who hasn’t called.

To see more advice from E. Jean visit Elle Magazine and AskEJean.com