Pretty Sure We’re Never Retiring...Need Advice

[ckelly78z]

It appears that you are living the "American Dream" by being able to purchase everything you want, when you want. Many other folks in your situation never do come to the day of reckoning like it appears that you have (not sure about your DH), that it will all have to be paid off to be able to retire comfortably

Kudos to you for laying it all out here, but your FIRST order of business, is to get your husband on the same page financially. Follow the DAVE RAMSEY logic of baby steps, and paying off one debt, to be able to pile $$ on the next debt.....Good Luck !

 

[mystang52]

Many great replies here. I'll offer one more tough-love suggestion regarding that 45,000 windfall: Pay off IRS immediately. I'm not an attorney but I believe IRS debts cannot be forgiven in event of Bankruptcy. The spending habits exhibited by OP and DH certainly point to Bankruptcy as a possible future event. At least pay off, now, that IRS debt.
I'd vote to use remainder to pay off the credit card debt, but any use of the remainder - other than buying another toy - would help.

 

[Gumby]

Many great replies here. I'll offer one more tough-love suggestion regarding that 45,000 windfall: Pay off IRS immediately. I'm not an attorney but I believe IRS debts cannot be forgiven in event of Bankruptcy. The spending habits exhibited by OP and DH certainly point to Bankruptcy as a possible future event. At least pay off, now, that IRS debt.
I'd vote to use remainder to pay off the credit card debt, but any use of the remainder - other than buying another toy - would help.

You'd need to look more carefully at the Bankruptcy Code to see precisely which tax claims cannot be discharged. It depends on the tax year to which they relate. The relevant sections are 11 U.S.C. 523(a)(1) and 11 U.S.C. 507(a)(8). Here is a useful link to the statute https://www.law.cornell.edu/uscode/text/11/523

 

[pacergal]

OP--lots of good advice here. I hope you come back and let us know how things are going.

You do not say if your husbands income currently covers your monthly bills, or if you are continuing to use your credit card to pay some bills each month.
My advice-- You and DH must come together and review bills and current spending. Look at where your money is going, where you can cut back and what are absolute necessities.Your family must start LBYM (living below your means, which to me means always putting something in your savings and using the rest for necessary living expenses.) Having some money at the end of the month is always a plus!
Regarding the inheritance: I would pay off the $11K credit card and cut up or put in freezer all cc. Do not keep adding to this! Pay off the $12K personal loan and the $22K appliance loan. Three Big monthly payments gone right there. Then all of the money you were using to make those three payments, apply to your next loan and so on...(the debt snowball repayment).
You can do this! But you can't do it alone. Your husband needs to be on board, and somewhat your kids, as they are surely feeling some stress in the family. It doesn't hurt to have them a part of why you are unable to buy things the way you used too.

Retirement is as much about knowing your spending as it is saving to get there.

 

[Cassius King]

It's not as dire as you think. Fortunately, you and your husband have had good income history.

I would focus on getting a job that replaces as much of your former income as possible. I would put the inheritance in a savings account until that is done. You may need the cash if it is a prolonged process.
Once you land a job, try living off one income and using the entire other to pay down debt. As fast as you accumulated this debt, you can pay it off. But you both have to change your mindset. As much as you both enjoyed purchasing these things, you both have to have the same energy and mindset to pay them off.

Best of luck to you and your family.

With a change in mindset, this can be done. Most people on this board, in this situation, could turn it around successfully.

 

[tulak]

I would keep the inheritance in your name only. Open a high yield savings account (synchrony bank is good) and put the money there. Then forget about it.

Next, I’d work with DH to get a handle on your spending and come up with a debt reduction plan.

Once you are making progress on your finances, paying things down, spending is in control, then I would consider using part of the inheritance towards paying off debt. I’d consider this after a year or two.

Otherwise, you’re likely to blow thorough you inheritance with nothing to show for it. Plus, it gives you some protection if DH is unwilling to change.

Also, 4.75% is high for a 30 year mortgage. You may benefit from refinancing. Even though that may be difficult with the amount of debt you have.

Good luck!

 

[ivinsfan]

Oh dear, you don't want to "squash his dreams".. is he ten years old?

Not sure what's going on but you seem to be laying the blame for all this at your DH's feet.

Literally the only thing the 2 of you have done right is your 401 and you messed that up by borrowing 100K from it, not for a flat out emergency but a "dream house" that you couldn't afford. From what you say taking that as income plus the EW penalty cost you around 20K tax plus the 25K you own IRS. How is it you wouldn't check the tax cost before you made this decision?

Right now I'm with the crowd that says open a separate account in your name only, because I'd say there is a darn good chance you and your DH will crash and burn over this issue..BTW he'll get half your 401 balance in a divorce. Debts will generally be split in half in a divorce situation so I would not use your money to pay off debt.

Not only is your retirement in jeopardy but you are only one unfortunate episode away from bankruptcy. Right now you are not managing your money at all, your money is managing you.

As CA says it's not as easy as following a piece of advice. I'm pulling for you to unite with your DH conquer this and move on. However since I quote my Mom often here she said it's easier for a saver to become a spender then is for a spender to become a saver. Likely that's what's going on with the two of you.

 

[ivinsfan]

I kind of doubt that us telling you how to use that inheritance to pay down debt will help much in the long-term. You need a complete change of habits.

Google "Dave Ramsey". I think you need to take a course like his to learn to change your mindset and get out of debt.

Most of us are savers or married to savers. You guys are both spenders. You need some external help to address that, in my opinion.

The problem is that the OP seems to think they are NOT a spender. Apparently its mostly the DH's fault. So the OP is either a spender or an enabler and until that's dealt with nothing will change.

 

[Persn]

I would keep the inheritance in your name only. Open a high yield savings account (synchrony bank is good) and put the money there. Then forget about it.

Next, I’d work with DH to get a handle on your spending and come up with a debt reduction plan.

Once you are making progress on your finances, paying things down, spending is in control, then I would consider using part of the inheritance towards paying off debt. I’d consider this after a year or two.

Otherwise, you’re likely to blow thorough you inheritance with nothing to show for it. Plus, it gives you some protection if DH is unwilling to change.

Also, 4.75% is high for a 30 year mortgage. You may benefit from refinancing. Even though that may be difficult with the amount of debt you have.

Good luck!

I think this is the best answer. You need to keep the inheritance in your name only. Depending on the state you live in, this is the only way to keep it legally as separate property.

Paying down debt before you and DH change your spending habits sounds like a trap to me. You can control your own habits, but not his. This inheritance may be your only lifeline if your debt continues to spiral. DH should understand this. If he doesn’t, that ‘s a red flag to me.

It sounds like you have a lovely home. If DH can be persuaded that your current spending and debt jeopardize your ability to stay in the house long term, that could be motivation for him to change, too.

View the inheritance as an opportunity to protect yourself. I hope you get a good job soon, and good luck to both of you.

 

[Nature Lover]

It's not as dire as you think. Fortunately, you and your husband have had good income history.

I would focus on getting a job that replaces as much of your former income as possible. I would put the inheritance in a savings account until that is done. You may need the cash if it is a prolonged process.
Once you land a job, try living off one income and using the entire other to pay down debt. As fast as you accumulated this debt, you can pay it off. But you both have to change your mindset. As much as you both enjoyed purchasing these things, you both have to have the same energy and mindset to pay them off.

Best of luck to you and your family.

With a change in mindset, this can be done. Most people on this board, in this situation, could turn it around successfully.

Step 1: This ^^^, and don't be too picky about making the same amount you made before. Lots of people have to take a step back before moving ahead again, and as someone mentioned before, it's easier to find something new/better, when you're working and successful (as it sounds like you were). Furthermore, using the second income to pay off the debts will feel wonderful!

Step 2: I would also sit down with your husband and discuss planning to continue living on only one income (and investing the rest for your future retirement) after the debts are paid off. Note that having a mortgage is fine, as long as you can handle it on the one income. Refinancing to a lower rate after you're better positioned financially (both of you working and with the overall debt lower) could save some $$, so if you have an emergency fund already, and agreement on a more financially balanced lifestyle, I'd use the inheritance to pay down the highest interest debts to accelerate the process (both reducing the debt and positioning for a successful refi).

By the way, getting to the point you can live comfortably on one income after paying off the debts also reduces the impacts if one of you loses your job again...helping to reduce the "we're one step away from a crisis" feeling... and living comfortably on one income while piling the rest into an investment account will feel incredibly satisfying!

Lastly, I noticed in your profile that you're career is in technology sales.... Since mindset is important here, I suggest you prepare a spreadsheet or some analysis to view your future financial picture (lifestyle, kids college, and retirement) under at least the current and one or more proposed plans so that you and your husband can visually see and discuss the features/benefits of each. In the end, what you choose together is important, and having a plan you agree to follow together will be necessary for the best results.

Keep us updated on your progress!

 

[jollystomper]

OP, not only should you read the great advice you are getting here, but you should print this thread out and show it to your husband.

It is tough for me to discern this type of situation as the information is only coming from one party. But I agree with the sentiment is that the most important thing that needs to be done is a change of your financial habits. But is has to be done for BOTH of you.

It is clear that you see this as a problem, but perhaps your husband does not. So the question (rhetorical) is... what will it take for your husband to also see this as a problem?

 

[Vacation4us]

Likely few people on this board have been in debt to the IRS. I have via my ex husband. They made our lives hell for 5 plus years. 20 years ago they charged 9% interest and added 20k plus penalties on to his debt. In the end they said he owed 200k.

My advise take the inheritance and pay off the IRS ASAP. Then put the rest in an emergency fund. You may need it to keep from drowning while you are unemployed.

What Vacation Club did you buy and when? You are likely paying 14% interest on this loan. Although Disney does holds some value most if not all others have little to no return on the price you payed. Check out Timeshare Users Group or tug2.net for more complete information.

The first step in fixing a problem is knowing you have one. Welcome to step 1. You have come to a place with a wealth of information and posters willing to help.

Good luck.

 

[pdxgal]

Idea of a financial counselor is good but you may both need a marriage counselor or therapist to change your relationship with money and spending.

+1. Unless you understand the reasons you're overspending in the first place you won't be able to change. There's some deep psychological hole you're trying to fill with all the stuff. Some people eat too much, some use drugs, others buy too much. It's often a form of self-medication. You need to discover what's driving your behavior and deal with it in other ways. No doubt it will be emotionally painful, but necessary if you really want to change.

 

[mystang52]

OP: Here's another mind-game tip, akin to Dave Ramsey, that may help you psychologically as you pay down debt: Not counting mortgage, you currently have 6 outstanding loans. If you decide ti use the inheritance to pay off some debt, you can be down to 5, 4, 3 loans depending how you allocate. That mindset alone may make the debt monster look a lot more manageable.

 

[Sunny]

Your Money or Your Life by Vicki Robin and Joe Dominguez

The Millionaire Next Door by Thomas J. Stanley and William D. Danko


Those are the essentials

Although The Millionaire Next Door didn't do much for me, it did for my wife. And I completely agree Your Money or Your Life is an eye-opener for a lot of people. It brings an entire change in your mindset.

Although many people see it as a dirty word (maybe not on these forums) you need a budget. Not one that feels restrictive but one that sets you free.

YNAB is actually a good system and by freeing I mean you look at your categories not as restrictions, but a "wow, I can buy that XYZ item" because you have allocated money beforehand and know that is is reserved for that.

As others have stated reduce your debt first, but do so by making some lifestyle choices....just look at those choices as opportunities and not punishments. It becomes enlightening to be more frugal and/or step out of the typical consumerist rat race so many people are in.

 

[klondike8]

OP needs to fix their spending problems. Quit spending is harder than quit smoking. There is no point even considering debt problems if one can't fix spending problem.

 

[dvalley]

I'm curious to know what you and your husband do for a living? Those are great salaries (with a ton of potential for savings) especially if you live in a low cost of living state.

 

[ut2sua]

OP, on the positive side, you are happy with your husband and your family. Also, your husband is still working, and you will land a new job at some point in the near future. For most other family, if the starting point is today, things are not too bad (could even call it good given you both have good paying careers). You both should be able to put away quite a bit of money into 401K using catch-up $, and the saving could grow significantly in the next 10-15 years.
The biggest problem for you both is your spending habit. It will take a 180 degree turn-around in spending habit to make things right again. For most folks in this forum, the freedom of not having loans (credit cards, car payments, even mortgage) brings far more happiness and satisfaction than many other things (getting expensive car, airplane, vacation etc.). Once you get to a stage in life when you could get many material things if you want at any time because you have the mean to do so is the extra bonus (similar to the satisfaction your DH will get if he gets his airplane built). Both types of accomplishments are feeling equally good, but your kids are left out of the equation in your DH's plan. What if he will lose his job next year? How are you going to pay for their college? Forget about college, how are you going to pay for their food? The interest you are paying on these loans are eating into your net worth. Starting from a negative NW is easily fixable, but if you keep on acquiring new loans along the way, things will be unfix-able going forward. You have had your first step in the right direction by recognizing the problem and asking for advice. The difficult task will be to get your DH to be on the same page. Until you solve this fundamental spending habit issue, anything else won't matter IMHO. Wishing you luck

 

[Time2]

OP needs to fix their spending problems. Quit spending is harder than quit smoking. There is no point even considering debt problems if one can't fix spending problem.

^

+1


I would also look at that 4.75% mortgage, if you can get a 3% loan that saves you $400 a month.
But really, stop spending! Many/some/me of us here live without any debt other than a mortgage, and on 1/3 of your income.

 

[HI Bill]

You have a spending problem. Until you get that under control, nothing else matters. $45K won't get you far. Learn what LBYMs means. Embrace the concept. Pay off the highest interest rate debt first, along with the IRS. Sell all unneeded assets. Ditch all monthly recurring costs (memberships, magazines, vacation clubs, etc.). Get real. If you don't, you'll never retire, and you'll never be out of debt. But it's not irreversable. But I see a long-term pattern of bad financial behavior that will be very, very difficult to turn around. But many here have done it, so it is possible. It's all about priorities.

 

[daylatedollarshort]

I second the good advice posted so far especially on developing a budget, Dave Ramsey (at least the getting out of debt parts), The Millionaire Next Door, Your Money or Your Life, and keeping your inheritance in your name. I find it useful marriage-wise to have a budget. Then there isn't any you're spending too much on clothes or you're spending too much on sports equipment kinds of issues the other 364 days of the year. As long as you are each keeping your spending within your agreed budget you only really have to have a major spending discussion once a year or so, unless some big out of plan issues crop up during the year.

The Ted Talks on happiness are interesting to watch. Recent research does seem to support the idea that many of the best things in life really are free or cheap, like making more friends, exercising, listening to music, going to museums and getting out in nature. I'm sure a pilot's license is good fun if you have extra money, but you guys need to pay off debts, fund college and retirement first. In the mean time look for something cheaper if your SO is bored, like taking dancing lessons, joining a hiking club or joining a volunteer search and rescue group.

A good video on why we people tend to spend above their means is the Juliet Schor video (she has a book on the subject, too) called The Overspent American. Watching that together might help you both to see some of the ways you have fell into living above your means despite good incomes and the long term harm it is doing to your emergency, college and retirement savings. The video is online and free -

 

[WyomingLife]

I second the good advice posted so far especially on developing a budget, Dave Ramsey (at least the getting out of debt parts), The Millionaire Next Door, Your Money or Your Life, and keeping your inheritance in your name. I find it useful marriage-wise to have a budget. Then there isn't any you're spending too much on clothes or you're spending too much on sports equipment kinds of issues the other 364 days of the year. As long as you are each keeping your spending within your agreed budget you only really have to have a major spending discussion once a year or so, unless some big out of plan issues crop up during the year.

The Ted Talks on happiness are interesting to watch. Recent research does seem to support the idea that many of the best things in life really are free or cheap, like making more friends, exercising, listening to music, going to museums and getting out in nature. I'm sure a pilot's license is good fun if you have extra money, but you guys need to pay off debts, fund college and retirement first. In the mean time look for something cheaper if your SO is bored, like taking dancing lessons, joining a hiking club or joining a volunteer search and rescue group.

A good video on why we people tend to spend above their means is the Juliet Schor video (she has a book on the subject, too) called The Overspent American. Watching that together might help you both to see some of the ways you have fell into living above your means despite good incomes and the long term harm it is doing to your emergency, college and retirement savings. The video is online and free -

+1

Thanks for those comments, plus the video.

Harari, Y. "Sapiens: A Brief History of Humankind" also does a great job of putting modern consumer society into perspective from an anthropological perspective (with which one may or may not agree). Harari raises the provocative possibility, for example, that hunter-gathers "worked less" than we do today. One effective and successful hunt 12,000 years ago, for example, might have fed the clan for a month or more.

In contrast, the notion of working by the hour to put bread on the table, day by day, is a very recent phenomenon.

 

[SnowBound]

Supermint: Wow! There are a lot of ideas here. What about taking some time to develop a really close relationship with the children. Like board games, doing a causal sport together (running, biking, tennis), watching high school sports and planning a BIG stay-cation? Or study what they are studying in school (online course). Just saying there are a lot of things to spend money on, why not spend time with our most valued treasure? I have no idea what my parents SPENT money on, but I can tell you what they SPENT their time on.

 

[kgtest]

"I will never retire" sounds like something a child would say. I'm sorry, but take some accountability. You said you are like 50 or something? I am 38 and have far more saved than you do. Where did you go wrong? You NEED to absolutely cut your expenses...$hit maybe even by half, I hate to be brutally honest here but you need some help.

Tell the husband he be lucky if he ever see's coach again...LOL and he is talking about private pilot licenses...if he doesn't compromise and drop that plan, I would be serious...he never seeing coach again.

 

[kgtest]

I had to google Duncan, apparently it is in Oklahoma. AND it looks like almost 2hours outside of Oklahoma City. Will you EVER find another 150k a year job living in a city of 25k, 2hours away from those high paying jobs?

-1. Ditch that ridiculous time share
0. Sell the tractor.
1. Get a new job
2. Stop spending like a drunken sailor
3. Payoff IRS before they try and arrest you
4. Payoff that ridiculous "personal loan" Personal loan to me = Personal Problem...one of many it sounds like
5. Payoff your credit cards, or consolidate them with that ridiculous personal loan somehow maybe with a refi on your home to a lower APR...
6. Refi that ridiculous mortgage rate from 4.75% to something lower
7. take an arithmetic class, followed by a budgeting class
8. NEVER, and I mean NEVER talk to another representative from a bank, especially the kind trying to give you money.