Wanting Financial Freedom, but A New Car Is My Current Goal

[chasesfish]

Thank you all for the advice and kind words. I am too sleepy right now to reply individually, but I will try to tomorrow. For now I will just say that I have a lot to think about and a lot of work to do. Biggest lesson I have learned from this: don't buy a new car right now. Reducing/eliminating my debt is the priority. I will use my tax refund to pay down my car bill, while putting some in savings. I'll be back tomorrow.... Thanks so much everyone!

I wanted to compliment you as well for staying around here and taking some tough advice. Many of us have been in bad financial situations, I remember graduating college and having that "new car", then realizing between student loans and the car plus no savings that I was in a $15,000 hole and my starting salary after taxes didn't cover what I thought it would all while in school.

The first thing I'd do is stick the $4,000 in the bank and swear that you'll never pay a bill late ever again. You can see by the car loan that a high interest rate is a painful cost and burden that comes with poor credit. Paying down the car loan may save some money short term, but good credit for a lifetime is far more valuable.

Then you probably need to go and formally file for child support. You may or may not consistently get money, but it's formalizing the obligation the father has and it will hopefully improve the monthly finances. A large portion of your budget goes to your child and you should be able to effectively communicate that to the father when he gets upset about you making his obligation formal and legal.

After those two things, you may want to get a copy of your credit report and score and try to delay the newer car until you can get prime financing in that 2-5% range these days. I would normally say go shop used, but financially all cars are expensive right now and the cost of ownership is about the same.

I hope we will see some updates about your progress soon.

 

[Milton]

... when you are in school for 10+ years (not unusual for MA+PhD programs in some fields) ...

Read Wilfred Cude's book, The Ph.D. Trap Revisited (2000).

 

[Texas Proud]

I truly do what early retirement; always have. I just have no idea how to dig myself out of this hole I am in. I made a lot of bad financial decisions a few years ago, and I am still paying for them. Trust me, I desperately want to turn this situation around, get out of debt, and live a happy life with my children.

My priorities: survive and give my kids a good life. I just need to get to that point. I feel like this car is choking the life out of me. The car is the big issue on my credit report, the car payment is too much, the fact that I still owe so much is too much... I think if I just get this car paid off I can FINALLY start improving things (along with moving my daughter to that cheaper school I previously mentioned).

Edit to add... posted this before reading all the replies.... seems like a lot of others said the same thing..... I will leave my post as is... just pointing this out to others...


If you REALLY want to get out of your hole, then why do you want to saddle yourself with a NEW car payment

And this will sound like a moral judgement, but why are you having a second child It is what it is now, but that was not a smart decision...

And why are you not fighting for EVERY CENT you should be getting from the father (or fathers since you have not said)...



Your main problem today is your car... there is nothing you can do about it... (well, you could stop making payments and have it repoed, but this is just digging you deeper)... You owe $8K with a $3K asset.... this means there is nothing you can do except pay it off as fast as you can... once you do that, then start SAVING....


I do not remember your degree choice.... but it seems like you are going to be in a bigger hole once you stop college... you will have a big debt that you will have to pay off... will your new job make you enough to pay it Will getting an advanced degree pay enough to pay off the higher loan amounts IOW, if you were a teacher a masters degree in Houston will only get you about $1,000 a year... so if it cost you $20K to get a masters, it is not worth it....

Good luck in your future... but it will take awhile to get where you want to go... it will not be easy and you have a lot to do.... (hint, start getting child support NOW and try for back support.... and take NO excuses... be a hard ass... it is for the benefit of your child)....

 

[sheehs1]

In order to respond further and appropriately, we need information regarding your relationship with the father of these children. I see that as the "elephant in the room" and child support as the number one priority, now that you have made your decision regarding a new car.

I no longer know what the minimums are but I dare say you are giving up over $7,000 plus a year for the 3 year old and when the second is born, well over $12,000 or more. Of course this also depends on his salary, what he does and what he can afford. There are minimum calculations. This is a huge amount of money in light of your circumstances. A phone call to Social Services or the Child Support Enforcement division for your city/state may tell you what the minimums are.

Care to share more about this relationship? Is it on? Is it off? His parents in the picture?
Any way to get him to sign a written agreement regarding his support for these children? Consider it "documentation" if you go to court in the future.

Perhaps a free legal clinic visit is a possibility so a lawyer can advise you of the possible approaches...IF ..this father is still in the picture. If he is not, well then, as you said, there is no reason not to pursue this in a court proceeding.

Do you risk a custody battle.? Maybe. But in light of what you have told us thus far, I see this as a remote possibility. You are the best judge of whether or not this may happen. Do you think it might?

 

[Live And Learn]

I would like to compliment you and say that you have a good character. You have accepted some pretty realistic information here. Not everyone could. You also are clearly intelligent and you write well. These are all big plusses.

Ha

I wanted to echo this also. You are obviously bright, strong and determined. Keep up that attitude and work towards your financial goals. The longest journey starts with a single step.

I'm so glad you didn't run away from us when we started with the "tough love" speaches !

 

[jon-nyc]

I am normally a proponent of emergency funds but frankly that 22% car loan on which you pay 300+ in interest a month with $20 going to principle qualifies as a house-on-fire emergency as far as I'm concerned.

I would pay the entire 4k toward it, keep the Kia (of course!) and put every spare dollar you can toward that car payment until its gone. Then drive the Kia in to the ground.

 

[ERD50]

I am normally a proponent of emergent funds but frankly that 22% car loan on which you pay 300+ in interest a month with $20 going to principle qualifies as a house-on-fire emergency as far as I'm concerned. ...

I agree, but I wonder about the 'mechanics' (no pun intended) of that car loan pay-off.

She has an $8,800 balance. If she sinks $4,000 into it, she will still have the same payments (but for a shorter time), right? I wonder if she might be better off getting the whole amount saved up, then pay it off and lose the payments altogether? I suppose there is a balance there - if it takes her a very long time to raise the full amount (likely), I guess she could hit the end of the loan first by paying off the $4,000 now. It just concerns me that she loses the $4,000 in liquidity, but is still making those payment each month for a while. There is no short-term benefit, and she is in a crunch.

But 22% is a monster, no doubt.

If the dad (small 'd') is forced to start making payments, that car can be paid off sooner. That's a big piece of this puzzle.

Secondary Q: A 2007 car with 120,000 miles? That's about 2x the average miles/year. Why so many miles - you said you bought in 2007 (I assume new)?

-ERD50

 

[kaharris05]

I wanted to echo this also. You are obviously bright, strong and determined. Keep up that attitude and work towards your financial goals. The longest journey starts with a single step.

I'm so glad you didn't run away from us when we started with the "tough love" speaches !

Thanks everyone! I'm trying to catch up on replies now. I will definitely not run away from tough love. I asked for it, and definitely needed it. When I get off work tonight I will start researching the earning potential for a counselor, and how my student loans may affect me in the long run. I'll be back to share more and hopefully answer some of the questions posed to me.

 

[kaharris05]

I agree, but I wonder about the 'mechanics' (no pun intended) of that car loan pay-off.

She has an $8,800 balance. If she sinks $4,000 into it, she will still have the same payments (but for a shorter time), right? I wonder if she might be better off getting the whole amount saved up, then pay it off and lose the payments altogether? I suppose there is a balance there - if it takes her a very long time to raise the full amount (likely), I guess she could hit the end of the loan first by paying off the $4,000 now. It just concerns me that she loses the $4,000 in liquidity, but is still making those payment each month for a while. There is no short-term benefit, and she is in a crunch.

But 22% is a monster, no doubt.

If the dad (small 'd') is forced to start making payments, that car can be paid off sooner. That's a big piece of this puzzle.

Secondary Q: A 2007 car with 120,000 miles? That's about 2x the average miles/year. Why so many miles - you said you bought in 2007 (I assume new)?

-ERD50

That's a good point about the car. More research needed...

As for the miles, the first two years I had the car I did a lot of cross-state trips. May not have been a big difference if I did one or two, but I did it about twice a month for that two years. I also lived 30 miles (one way) from my job during that two years. Yes, I bought the car new...

 

[Sarah S]

Hi
Late to this thread. I agree that you are an intelligent and motivated woman.

If you can see a way that you can pay your bills during the next year or so then I vote for the paying down the loan ASAP. I ran the difference between paying off 8800 and 4800. 33 payments versus 16 AND over 2000 difference is interest paid

Good luck and take care of yourself and your 1.5 children!

 

[Animorph]

Congratulations on hanging in there with our advice! That's a good start.

I haven't seen anyone mention the 6 weeks off without pay you're going to have to finance, though maybe I missed it. You definitely need a plan for that. At least some of that $4000 will disappear during that time I would assume. Absolutely pay as much as you can on the loan principal, but not to the point of missing paying bills again. So be careful balancing the bills and the loan. And leave a little margin just in case that 6 weeks doesn't work out completely as expected. That may mean paying off just $500 now and waiting until after the new baby has arrived before paying any more towards the loan.

 

[Keim]

I'd hold off on paying off on the loan until after the birth. God forbid, but cash may come in handy-and it is not very far off.

 

[Badger]

That's a good point about the car. More research needed...

As for the miles, the first two years I had the car I did a lot of cross-state trips. May not have been a big difference if I did one or two, but I did it about twice a month for that two years. I also lived 30 miles (one way) from my job during that two years. Yes, I bought the car new...

A little good news is the miles are mostly highway miles and not constant hard wearing "stop and go" in traffic.

Cheers!

 

[Walt34]

I'd hold off on paying off on the loan until after the birth. God forbid, but cash may come in handy-and it is not very far off.

That is my suggestion too. Without the baby on the way I'd say split the difference and keep $2k in cash, pay off $2k of the loan to at least minimize some of the interest expense on it.

But with all the unknowns with the baby I'm in your camp. Maybe wait another year until things are stable with that issue, then be more aggressive about paying down the loan.

 

[kaharris05]

So many choices!!! Keep the $4,000 for the baby, send the $4,000 to my lender, or send $2,000 to my lender and keep the other $2,000. This is a really tough choice!! I am leaning toward sending them $2,000, and saving the rest for the baby since I don't have any savings right now.

I just got some depressing information from salary.com. In my state, with a Masters in Counseling I can expect to make between $13 and $21 per hour. I make more than that minimum now! I always expected a bigger pay increase with each new degree. I'm not even using my education now for the jobs I have. I think I might wait for graduate school, at least until I figure out a graduate degree program that will allow me to make more money, but still be something I am interested in. The graduate debt just doesn't seem worth a possible pay decrease to $13 per hour.

 

[KB]

You have gotten quite a bit of great feedback, but I want to comment on the child support issue from a personal viewpoint.

The father of my children decided he didn't want to pay anything to help me raise them. He would say he was going to help with daycare, but then would tell me didn't have the money when it was time to pay the daycare provider....leaving me hanging.

So, I went to the county and through their District Attorney child support program they took him to court and got a child support judgement. At not cost to me. That is a county service.

Then they proceeded to try and pry money from him for his child support payments. It was out of my hands and when he did pay, he paid directly to them and they paid me. That kept the accounting out of my hands and they applied the pressure, not me.

He still did not pay and at one point they found a bank account he had and they confiscated it and paid me.

So, even though he may seem that he will help now, things change and his priorities may not lie with your kids as time goes on. Especially when he gets a new girlfriend.

While I never could rely on regular child support checks, I did get some help here and there. But only because I had a court order for child support.

 

[Badger]

So many choices!!! Keep the $4,000 for the baby, send the $4,000 to my lender, or send $2,000 to my lender and keep the other $2,000. This is a really tough choice!! I am leaning toward sending them $2,000, and saving the rest for the baby since I don't have any savings right now.

I just got some depressing information from salary.com. In my state, with a Masters in Counseling I can expect to make between $13 and $21 per hour. I make more than that minimum now! I always expected a bigger pay increase with each new degree. I'm not even using my education now for the jobs I have. I think I might wait for graduate school, at least until I figure out a graduate degree program that will allow me to make more money, but still be something I am interested in. The graduate debt just doesn't seem worth a possible pay decrease to $13 per hour.

Glad to see you are doing the extra research. I had to make some similar decisions. In my case I decided not go for a terminal degree since the break even point would have been about 25+ years. Fortunately, over the course of 20 years working at jobs that I liked but were not what I really wanted(coupled with determination, hard work, and a little luck) I was able to land my desired career without the degree. You just never know. The next 20 years were great.

It's all been a big adventure and I wouldn't have changed a thing. Even the few bumps in the road along the way. Now I'm looking toward the next 20 years.

Cheers!

 

[Milton]

I just got some depressing information from salary.com. In my state, with a Masters in Counseling I can expect to make between $13 and $21 per hour. I make more than that minimum now!

Yes, that's pretty much as I expected. I don't know much about psychotherapy (presumably that's what you have in mind?), but I do know that there is not exactly a shortage of practitioners.

I'm not even using my education now for the jobs I have.... I always expected a bigger pay increase with each new degree.

If I may say this without sounding condescending - which is not my intent - I have difficulty understanding why you waited until this point before conducting very basic research (salary.com!) and performing a costs/benefits analysis of your past and (potential) future education. It is well known that both undergraduate and graduate degrees are very expensive and in many fields of study provide extremely limited economic advantages.

 

[daylatedollarshort]

I just got some depressing information from salary.com. In my state, with a Masters in Counseling I can expect to make between $13 and $21 per hour. I make more than that minimum now! I always expected a bigger pay increase with each new degree. I'm not even using my education now for the jobs I have. I think I might wait for graduate school, at least until I figure out a graduate degree program that will allow me to make more money, but still be something I am interested in. The graduate debt just doesn't seem worth a possible pay decrease to $13 per hour.

Be glad you found out this information now. Many AA degrees have a great time and cost to salary payback. With two little ones to support, if I was in your shoes I would look for a career with excellent job prospects, a salary that could support a family and minimal additional schooling for now.

 

[haha]

Be glad you found out this information now. Many AA degrees have a great time and cost to salary payback. With two little ones to support, if I was in your shoes I would look for a career with excellent job prospects, a salary that could support a family and minimal additional schooling for now.

She is already a senior in a 4 year college. If I were her, I would finish this, then decide what is next.

Ha

 

[ShortInSeattle]

If I may say this without sounding condescending - which is not my intent - I have difficulty understanding why you waited until this point before conducting very basic research (salary.com!) and performing a costs/benefits analysis of your past and (potential) future education. It is well known that both undergraduate and graduate degrees are very expensive and in many fields of study provide extremely limited economic advantages.

Unfortunately many college students are presented with the idea that college is a golden ticket. When I was in my BA program I wasn't thinking about ROI either! What sounds like common knowledge isn't so common to uneducated investors, which is what most students are.

I teach freshman courses and we go through this exercise together. (Compare college costs against expected salaries, and discuss demand for jobs.) Always eye opening.

SIS

 

[Spooky]

Kaharris,

Sounds like you are taking all this advice well. It is not always easy to hear. What sort of jobs would you be looking at with your bachelor's degree?

I'm sure it must seem like everyone else has a new car, so why don't you? Remember that they are likely no better off, just with a slightly better credit score. Speaking of, if you can improve your credit score (without spending more money) it might help your car insurance rates which seem high. The other thing is turning 25. So definitely shop around after your birthday if not before.

Have you checked out mrmoneymustache.com? You might get a lot out of that as well.

Best wishes!

 

[lhamo]

What was attractive to you about counselling? If it was the "helping people" aspect of things, maybe you can get that through another profession -- like physical therapy, or speech therapy, or autism support, or even being a CPA or a plumber! Keep your mind and your eyes open for careers that will allow you to do what you think is meaningful while making a good salary. I'm not really sure what any of the above pay, but might be worth looking into. The book "Do What You Are" is an interesting resource that uses the Meyers Briggs typology to try to lay out what kinds of careers you might be well suited for -- might be worth getting at the library or your school's career center if you know your MBTI type.

Also, don't overlook the earning potential of what you are currently doing, even if it doesn't seem like your dream job. What kind of work are you doing? Maybe there are ways to find new positions in management or higher level work in the same industry that will build on your existing experience. Even something like restaurant work can be very lucrative if you are in the right position (manager of an upscale restaurant, for example, or even shift leader on the waitstaff -- I had a friend who paid for most of grad school by waitressing at an upscale steak house. Made several hundred dollars a night working on the weekends).

 

[Badger]

What was attractive to you about counselling? If it was the "helping people" aspect of things, maybe you can get that through another profession -- like physical therapy, or speech therapy, or autism support, or even being a CPA or a plumber! Keep your mind and your eyes open for careers that will allow you to do what you think is meaningful while making a good salary. I'm not really sure what any of the above pay, but might be worth looking into. The book "Do What You Are" is an interesting resource that uses the Meyers Briggs typology to try to lay out what kinds of careers you might be well suited for -- might be worth getting at the library or your school's career center if you know your MBTI type.

+1
I regularly recommend my students take this test. It's a short and fun test and worth considering. I would think the college you are presently attending would offer this to students at no charge. Check with your Guidance Dept. for this and for other information on career paths in which you may find an interest. You are a student there. It should all be free. Take advantage.

Cheers!

 

[kaharris05]

Yes, that's pretty much as I expected. I don't know much about psychotherapy (presumably that's what you have in mind?), but I do know that there is not exactly a shortage of practitioners.


If I may say this without sounding condescending - which is not my intent - I have difficulty understanding why you waited until this point before conducting very basic research (salary.com!) and performing a costs/benefits analysis of your past and (potential) future education. It is well known that both undergraduate and graduate degrees are very expensive and in many fields of study provide extremely limited economic advantages.

What was attractive to you about counselling? If it was the "helping people" aspect of things, maybe you can get that through another profession -- like physical therapy, or speech therapy, or autism support, or even being a CPA or a plumber! Keep your mind and your eyes open for careers that will allow you to do what you think is meaningful while making a good salary. I'm not really sure what any of the above pay, but might be worth looking into. The book "Do What You Are" is an interesting resource that uses the Meyers Briggs typology to try to lay out what kinds of careers you might be well suited for -- might be worth getting at the library or your school's career center if you know your MBTI type.

Also, don't overlook the earning potential of what you are currently doing, even if it doesn't seem like your dream job. What kind of work are you doing? Maybe there are ways to find new positions in management or higher level work in the same industry that will build on your existing experience. Even something like restaurant work can be very lucrative if you are in the right position (manager of an upscale restaurant, for example, or even shift leader on the waitstaff -- I had a friend who paid for most of grad school by waitressing at an upscale steak house. Made several hundred dollars a night working on the weekends).

Unfortunately (or fortunately, depending on how you choose to look at it), when I was trying to decide what to do with my life money was not a factor. I chose counseling/psychology because I want to help people and do therapy. I knew the earning potential once I earned my PhD was high, but I never thought about earning potential along the way. Additionally, when I chose my field I did not have a child, so my only financial concern was taking care of myself (much easier than supporting myself and 2 children will be). Yes, I should have done the research sooner, but I didn't. I can't change that now. I will focus on the future though and how I can make things better. I will definitely find the book mentioned above and see what else I can do. I don't want to give up on getting a PhD in Psychology, but until I get there, I need to do something that provides more income.