Where To Start

oceanbabyFebruary 21, 2009

I'm writing for my niece and her husband who have two children (one first grade, the other pre-school 3 days a week in the a.m.)They live in cental New Jersey. Husband is a driver for Federal Express - wife has a small part time job when boys are in school. They live in a very small "affordable housing" condo which they bought about 5 years ago for $125,000. Total salary between $40,000 and $45,000 depending upon over time, etc. Mortgage $830. a month, quarterly association dues $150. sewer $100. a year. Total per month for electricity, heat, phone, cable and water is: $445. Both in their late 30's, excellent credit rating, never missed a payment on anything. Unable to re-finance as their rate is in the high 5's.

They are STRUGGLING each month to keep up. Savings about $2,000.

What I am asking does anyone have any suggestions on where I can go or where I can start to try and get them some assistance or advice to keep them a little more above water? It's a very anxious existence for them trying to live from day to day as they are a family trying to do everything right and I'm afraid they are falling through the cracks.

I just need some direction. Thank you.

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"excellent credit rating"
"Unable to re-finance as their rate is in the high 5's."
Which one is it?

Can they reduce their phone and cable bills?

    Bookmark   February 21, 2009 at 6:59PM
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With the the cost of cable these days, they will see a substantial savings by either getting basic cable or eliminating it altogether and using rabbit ears, until things improve. The same with phone, the basics. I'm certain they can reduce their electric bills too. I remember those kind of situations when I first started out and was trying to support my family. It's not fun but it is do-able.

    Bookmark   February 21, 2009 at 8:41PM
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They either have to seriously reduce expenses or earn more money. They are in a very precarious and marginal situation where one big or a few small problems are going to tip them over the edge. It's hard to see how they could reduce their greatest cost, housing, as I would imagine an apartment would cost them just as much if not more.

It's a situation where the greatest impact would be if they had access to good childcare at a reasonable price (barter, perhaps?) because the most obvious solution is for the wife to go back to work full-time. But if her salary is eaten up by childcare expenses, that won't be of much help.

I wish you and them the best of luck, because I think they will need it in the coming years.

    Bookmark   February 21, 2009 at 11:10PM
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Seriously--they are doing fine. IF there is anyone in their world who could "gift" them some $$ and bring it up to a little more savings--that would be super. But at $45000--what more can u ask for? Also--They (we just learned for us) can refinance at 4.75 for a 30yrs--which, if they are planning on staying there, could be worth it.

    Bookmark   February 21, 2009 at 11:52PM
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I think the wife is probably going to need to work more too.

I'm making an assumption that school is free for the first grader and the family is paying for pre-school. If so, I'd check to see if the younger one can find a free preschool. One option would be something like Headstart. Another option would be to see if the local public schools have a free 4 yo program (if that is the approprate age of the child.) Sign ups should be coming up soon. I'd do everything in my power to get my child in that free class if offered. Some of the public schools around here offer it. Some parents opt to get in line at night or extremely early in the morning like 1 am to make sure they have a place in line when sign ups begin in the morning because the spots are filled before the doors even open.

Another option would be for mom to work nights or weekends when dad is home to help with the kids. It may not be the most desirable option, but hopefully, it'd only be for a year or so until the second child goes to school full time. Even working fast food or pizza joints can have its advantages. I used to be able to bring home leftover pizzas where I worked. It's food and would reduce costs a little. I didn't have dependents then, but my teenage brothers sure enjoyed the treat.

I guess the other option would be for mom to find a work at home solution. That depends on moms education and skills. I know someone who is cleaning houses during the day because it allows her to be with her 2 yo and take him along on jobs while the older one is in school.

I'd check into buying reduced cost food. Around here we have something called "Angel Food" where people can buy food on a monthly basis at reduced costs. I've never tried it, but the school has been advertising it in their weekly newsletter because so many families are having more need.

Good luck.

Here is a link that might be useful: Angel Food

    Bookmark   February 21, 2009 at 11:53PM
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I donÂt know what state they are in but here in California they would qualify as low income. That would give them a 20% reduction with most utilities and possibly food stamp along with subsidized child care. They should check with whatever social services are available in their location. They may not have thought about it because they are working and trying to be responsible.

    Bookmark   February 22, 2009 at 12:02AM
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Some localities have a program to reduce real estate taxes for low income households. That might be worth checking into.

It's entirely possible that they have an excellent credit rating but can't qualify to refinance due to low equity, no equity or being upside down on their mortgage.

    Bookmark   February 22, 2009 at 8:28AM
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Total per month for electricity, heat, phone, cable and water is: $445

This seems awfully high to me, especially for a condo....My costs are less for a 3200 sq ft home. (I pay 112/mo for elect,42/mo water, 87/mo for satelite TV (have some premiums)28/mo phones and 65/mo for propane)

Are they paying for cell phones, high speed internet, premium cable?

If they could break this out (how much exactly for elec, how much for phone, cable, etc) it might show ways to cut that expense.

My son in in very similar circumstances. He's supported a family of 5 on less than they make. His house payment is about the same. He does live in a lower cost of living area. But he pays $12/mo for the basic cable service and $15/mo for his phone (no whistles & bells, just dialtone) and he uses netzero (at$9.95/mo) for dialup internet access.

It is doable, but very tight, and a major financial setback could put them over the edge.

How much are they spending on food, clothing, healthcare?

Unable to re-finance as their rate is in the high 5's.

I don't understand this. Is their mortgage rate in the high 5%? If local rates are lower and they have good credit and enough equity, then they should be able to refi. I would hope, however, that they avoid the temptation to take any cash out, and only refi the mortgage balance.

Are they good budgeteers? I'd suggest checking out "The Tightwad Gazette" by Amy Dacyczyn from the library (or you could give it to them as a gift). She and her husband had a large family and supported them on something like $27K/year (and they acquired a net worth of over a million in the process). The Tightwad Gazette was a series of newsletters on the topic of frugal living. Some of her ideas are a little "out there", but there's a lot of practical stuff and it's entertaining reading. She made me realize that being frugal is actually a good thing.
Here's a link to something she wrote.

Here is a link that might be useful: They Call Me The Frugal Zealot by Amy Dacyzcyn

    Bookmark   February 22, 2009 at 8:43AM
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I just thought of something else. Does the state of New Jersey offer a state sponsored healthcare for kids? The states I lived in have. I believe it is based on income and there may be variable levels. It would be worth looking in to. Even if the kids aren't sick a lot, they still need a minimum level of care. It might take a little bit of the burden off of the parents.

    Bookmark   February 22, 2009 at 10:12AM
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I think the program that adellabedella is referring to is the SCHIP program. It provides health care insurance for children of families who make too much to qualify for medicaid, but are low income. Based on what I read at the link, it sounds like this family would probably qualify.

Definitely worth looking at if the children don't have healthcare...

Along the same line, my son (referred to in a previous post) and his wife go to a dental college for their dental work. It's a long drive and takes longer, but their dental care costs a fraction of what a regular dentist would charge. The work is done under the supervision of a professor and my son is very happy with the results.

Here is a link that might be useful: New Jersey SCHIP

    Bookmark   February 22, 2009 at 4:14PM
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Chemocurl zn5b/6a Indiana

How many dependents are they claiming on their paychecks? 0, 1, 2, 3 or 4, or do you know? If they are claiming 4 so they will get a bigger 'return' at tax time, they might want to rethink that. It sounds like they could definitely be using that extra money throughout the year instead of a lump at tax time.

Total per month for electricity, heat, phone, cable and water is: $445.
I agree, that sounds awfully high, and that chances are there could be some cuts made to some of the items.


    Bookmark   February 22, 2009 at 7:10PM
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