Stuck in Financial Survival Mode

0:00Welcome to the Jill on Money Show. It's Thursday, September 3rd, and we are here providing unconventional and hopefully entertaining insights on your money and your life. If you have something that is bothering you or maybe you've got a question, you've got a decision to make and it has to do with money, get in touch with us. All you need to do is go to JillOnMoney.com, click the contact us button, write us a note, and if you would like to join us on the air live, just check the box, Mark will do everything else. Now, when you see the box and check Mark is there, it says audio or video. The video is for our other show called Money Moves. And we are so psyched, the show is really just so much fun. It's a little different format. I encourage you to listen to that show, but you can also watch it by going to YouTube and subscribe to it. And you'll see we've got a little different vibe going on in that show. And guess what? Mark co-hosts, so you get to see Mark every time you tune in to Money Moves.

1:01So do check that out. Okay, today we are talking to Kim, who joins us from New Jersey. I have had a very fulfilling life in nonprofit, but been in financial survival mode. And we just got the kids to college, so there's time to think and plan. And we think we finally have a little extra money to invest. We've probably got about a 30 grand in credit card debt. And so I have a real estate side hustle that I think is going to get us some extra money. And we don't even know where to start. Wow, wait a second. I got a lot going on here when you got a lot going on. So let's talk about this. So Kim, how old are you? 47. And you mentioned a wee, so who's the wee? My wife who is a teacher and she has a 401, she has a pension. And she can retire in five years. She's 50, hold on a second. She's a teacher, she has a pension. She also has a 403B, but we're going to talk about that as a how old are the kids that

2:02are in college? We're just past our first year, so they just started. Oh twins. Yep. Oh, brother. How are you paying for college? Cash. Wow. A little bit and a little bit of $5.99. All right, so you'll end up depleting that $5.29 plan. Yeah. Okay. For sure. Okay, so your wife, she's 50. How much does she earn right now as a teacher? 100. Okay. And you have a non-profit survivor. How much are you earning right now? Keep the side hustle on the side. So how much do you earn in your real job? 55. 55. And it's a non-increase for 10 years. Oh brother, I know and you're passionate and you're wonderful and we appreciate that. But that is like honestly, so much my sister and I were just talking about this because she is a very good friend who like jumped the shark and left non-profit world. Her income quite droopled. She's like, I got to put these kids through college and that was it.

3:02She's like, I probably won't be as fulfilled, but I will not be broke either. So there's that. All right. So 100 for your wife, you 55, the credit card debt. How did that accumulate? What was the what's the genesis of that? An event or just like you're spending more than you make. An event. Okay. How much do you think you're going to make on this real estate side hustle? I'm going to say eight to be conservative. Okay. And are you making minimum payments on the credit card debt? Yes. Well, yes, I'm trying to do better than that, but yes. All right. I can. And do you guys own a home or do you rent? We own. Okay. Tell me about the house. How much do you figure it's worth? It's worth 400. Okay. Do you have a mortgage outstanding on it? Yes. It went up 100,000 during COVID. Oh, the value of the house. We refinanced, yeah. Okay. That's awesome. How much is the mortgage, the outstanding balance on the mortgage? I'd say 260. What was the interest rate that you refied to?

4:05Four. This is a 30 year fixed. Yes. Besides that credit card debt, car loans? Yes. Mm-hmm. I knew you were going to tell me that. How much and what's the rate? I would say 45 total for two. The interest rate? I'd say seven. And I'd say probably redoing everything with cars in like three years, getting the credit score up. Woof. Okay. Now, let's talk about assets. We've talked to any other debt. We got the car loans. We got the credit card debt. We got the mortgage. Any other debt? No. Okay. Good. That's good. Forgetting about that credit card debt right this second. If you're making 155 together, how is your cash flow? Like you pay for your house, you pay for the car loans, you live your life. Can you live on that 155? Yeah. For sure. And if we got rid of credit card debt, that's like half our income. That's like half our situation. Right. It's so annoying, right? You kill yourself for this.

5:06And let's talk about money that you guys have saved. She has a 403B. 401K, I think, or a pension. But she is also money in this retirement account, not the pension, like in addition to the pension. Small, yes. I don't think so. She said small, I don't know the amount. What do you think, small? Give me an idea. I have no idea, honestly. Small 10, we got to find out. Okay. So we're going to find out what's in there. Okay. Any other money, money in the bank, anything? No. Okay. And no old retirement account for you. Tiny union account, but probably not, probably a hundred a month when it gets cash. Okay. All right. So here you are. It's like you're 47 and 50 and oh, do you have any school loans in your own names? Yes. No. And you're not assuming any school loans for these kids? No. How much are they paying? How are you paying out of cash flow for college? 16 on our side, I think. Can we have these kids take some loans? Like you could use that 16 grand. No, they are. All right. Mark, I need help because I'm about to like drop the hammer on poor Kim and her wife.

6:11So right now, if we had to come up with a way, if you had to look at your spend, you are only able to make, well, you have only been making minimum payments. I'm sort of halfway thinking about, I want to know how much money is in her retirement account at work. But there's not like a great way to solve this problem. I mean, the easiest way to solve the problem is to tell the kids, we need like, we'll see you senior year. You're going to take out more loans for sophomore and junior year. And we need this money to pay down our credit card debt. There's like all the like, what ifs? Like what if you had refinanced and we got some money out? Like that would have been good. But we don't have that. So I mean, the best way to deal with this is to go through your budget with a fine tooth comb, work as much as you can with the side hustle, pay down more on your highest interest credit card debt, work your way down. But there's not like a silver bullet here. No. But at the point, I think it's really about scouring through this money you spend finding

7:13ways for you to direct more money towards the credit card debt, working your way down. Now if you have like a bananza year in real estate, right, then you can start whatever you make that's extra, make sure you just pop it down on your credit card debt. Then you would focus on the carlons. You said something funny about like in three years. What is that? What was that about? Like you're in three years. Aren't you going to own these cars outright in three years? We just got them. But I think that the credit score situation would be bad. It's not going to be like a bananza, but I think that the interest rate is not a carloan. These are leases. No, they're carlons. I just think I would, you turn in the car, you get a better deal. Not necessarily. I'm going to drive these cars into the ground. Own them outright and do not do this ever again. Do not like do not pay interest if possible, right? If you are a side hustle starts to rock, if you start making a little bit of money, it would be ideal. If in three years you could be dumb of the carlons and be dumb of your credit card debt. We'll see.

8:14Now, your wife is 50. Her pension is available at 55. Chances are 55 is not in her future. 60 is more like in her future. Is she okay with that? Yes, or she would get another job? Yes. One thing to consider is something called an installment or a personal loan. What does that mean? They'll extend to you some money which they will make it an installment loan for a period of time. It's like a term loan. You sit. You say, okay, we have $30,000 of credit card debt. We would like to borrow and you have $45,000 in carlons. You'd say to them, what we're really trying to do is replace credit card debt with more efficient debt, lower interest debt. Even if it were 10% as a personal loan, you can show income. You both work and they may extend to you a loan that would force you to pay this debt down over the course of 10 years and probably at a lower interest rate. The difference is you have to make these payments.

9:17There's no messing around. The credit card does probably what, 20% loan? Some a little higher, but yes. You'd have to see if your cash flow can afford this. I would check that out. Even if you got a portion of it done, that might be worthwhile to consider. This is a debt problem and there's only so much you can control. I don't know how you feel about talking to the kids and saying, we need to get bigger loans and if we can dig ourselves out of our own hole, then we'll help you later pay them back, but we cannot pay 16 grand a year. You really can't. Business and grants were created for people in your situation. Do you like this house? Do you want to stay in the house? No, I want to sell the house very much. As someone who lives in the real estate market and just experience the rocket ship of value, yes, I would very much like to sell this house. Could you? Yes, it needs a little love. It needs to some things. Okay, wait. If that's the case, if you're really going to sell it, can you give the love yourself?

10:18Do you have to spend money on it? Do you have to spend, I would say, 25. On what? Kitchen bathroom. No, you don't. I don't agree with that. Sell it out of this. Absolutely. Forget it. If it's worth 400 and you're like, oh, maybe it's 380. Let's just say it's worth 380. You pay off your 260. Now I'm now we're cooking, Mark. Now I'm ready to move. We have 120 grand left, right? From that 120, you pay off your credit card debt. Okay, so you got 90 grand in cash at that point. Now you're going to rent and you're not going to buy anything and you're going to chill out and you're going to get these goddamn kids through college. You're going to build up your practice and you'll see whether or not you want to buy eventually and get out of this debt spiral. Get out of it. If you do this and you end up with 90 grand in cash, then we're talking about like what do we do with that? I'm not going to even going to tell you you and I are going to stay in touch because

11:19then you're going to come back on the air and tell us what like you've actually done at her. Absolutely. But I think that is the best scenario. Would your wife agree to that, you think? I think so. I've been a year or two, any year maybe, but I'll talk to her. I tell her I have it on good authority. Do you guys have estate documents? Yes. What about insurance? What about life insurance on her? Life insurance, disability insurance, all the things. I feel like you could do it. If you're willing to sell the house, I think you can do it. You're going to feel so much better and you'll really be in, I think you'll be very excited to feel that like unburdened sort of atmosphere and you really will have, it gives you a lot of ability to move forward. Look, maybe you're going to turn your, you're like sort of say like, oh, well, my main gig is actually real estate and I have this other side hustle, which is like a little job over here for 55 grand. That could be kind of a fun thing to see how your side hustle develops.

12:21It could become your main deal. No, I've been doing it seven years. I just, the doing it full time, the volatility just wasn't tolerable. I feel comfortable. I feel good about it. If you feel good about it, sell the house, keep in touch with us, okay? I feel great about it. If you've got a financial question, if you are wrestling with an issue, get in touch with us, go to JillOnMoney.com, click the contact us button, write us a note and if you'd like to join us live, check the box, mark what we'll do, everything else. Hey, while you're on the website, don't forget to sign up for the free weekly newsletter, comes out every single Friday. You can subscribe to us on the Odyssey app or wherever you find your favorite podcasts. We ask that you leave us a rating and review wherever you listen. Try to do something nice for someone else today. Change your work, change your wealth, change your life. Thank you for listening and we'll talk to you tomorrow. On Reddit, true crime doesn't come from journalists.

13:22It comes from the victims, the witnesses, and sometimes the suspects themselves. Every Tuesday on Crimes of Reddit, we read these posts out loud. I'm Sabrina Deanna Roga and I'm Alexis Linkletter. One of us brings the story, the other goes in blind, reacting in real time, just like you. New episodes drop every Tuesday. Listen to and follow Crimes of Reddit, available now wherever you get your podcasts.