I Don’t Make Enough Money To Pay My Bills

I Don’t Make Enough Money To Pay My Bills

I Don’t Make Enough Money To Pay My Bills (credit: someecards.com)

I don’t make enough money each month to pay all of my bills. “Then who are you to give us peeps on the internetz financial advice if you can’t even pay your own bills?” Good question. Let me rewind a bit and talk a little about how we got here.

Settings Goals

Ever since my wife was a little girl, when asked what she wanted to be when she grew up, she would always say “I want to be a mom!” She had an AMAZING role model growing up in her mom, so it’s no wonder she dreamt of becoming a great mother like her mom was, and to take on the noble task of raising our children. We were both in complete agreement that no matter what life had for us, when we had a baby, she would be at home. So with this commitment in mind, we started to set goals early in our marriage to achieve this.

When we started thinking about getting pregnant, it really lit a fire under me to start getting my income up. If we wanted to buy a house, have a kid, and go down to one income, I needed to be able to support that. After speaking with my church small group leader several times, I decided to get into taxes. I studied for an entire year, passed three I.R.S. sanctioned exams and became and Enrolled Agent. I started working for my small group leader as a part time tax preparer.

Buying a House

Though we knew we could be pregnant soon, we definitely had set buying a home as our #1 purchasing goal. We actually stopped aggressively paying down the student loan to save for a down-payment.  Now, as I had mentioned in Our Debt Payoff Story, we had received an inheritance. It came in a few installments, and we had one coming up that could pay off the student loan and we could invest the rest. We ended up buying our house before it came, so I figured we would pay off the loans, put some in a Roth IRA for Mrs. iHB and I, and be done with my inheritance money forever.  But then…..

Pregnant

It was the night before our Hawaiian vacation, and we were excited to enjoy that big, yellow blazing ball of warmth that we had heard about, but never actually experienced (we live in the Northwest). My wife had a “feeling” though, and wanted to see if she was pregnant before heading out (Mai Tai or no Mai Tai?). And what do you know….turns out she was! WOOHOO! After a few minutes of the happy dance, we settled into bed and fell asleep, dreaming of the possibilities of a little one.

But now we had some HUGE decisions to make. Knowing that I could not pay for everything on my income alone (even with both jobs), how were we going to stick to our commitment to ensure that Mrs. iHB would be at home with our bundle of joy?! Were we going to have to sell our home, move into a cardboard box (with a cardboard crib for our little sweetie), sell everything we own, and eat the dog?!!!

After a few seconds of freak out, I realized we would just have to shift our plans a bit. We had a little over 6 months’ worth of expenses in our savings account, I was doing taxes and I could start looking at promotional opportunities at work. Our priorities had changed, and instead of paying off our debt, we decided to keep the money in a savings account until my income was enough to cover all the bills. I started applying for promotions at work like crazy. I worked hard to get my resume in shape, kill the interviews and follow up regularly with the hiring managers. Though I was turned down for three positions, I ended up getting a promotion (literally my first day was my wife’s last day at her job)!

Where We Are Currently

As it stands, we are anywhere from $400-$600 short every month, depending on the bills. This is based on a bi-weekly budget, without counting any of my tax income. With my tax income, and the two-3 paycheck months of the year, we amazingly end up at zero for the year. So my original statement may be a slight exaggeration. But we definitely try to live as though we need to make each dollar count. And we have been living this way even before we got pregnant and before buying a house. And when I start making $80,000 a month like a baller, we’re still going to make each dollar count.

Baller Care Bear

Baller! (Photo credit: * OaklandMofo.com *)

Our Future Plans

I plan on still rocking my job like a boss, killin’ it and working my way up. I love what I do and have a passion for it, so that is goal #1. I also plan on steadily growing a good tax clientele. I enjoy helping people get their taxes done and allowing them to only pay the government what they are legally obligated to pay (which usually ends up saving them tons of cash over them doing it themselves or having some kid at Wal-Mart in an H&R block polo take a crack at it). I also plan on creating other income streams as well, online and through any number of ventures that I happen across. I love learning and challenging myself, so I think that comes in handy when some extra income opportunities arise.

Once we can pay the bills and have extra income each month, then it’s Operation: Kill Student Loan. Basically, it’s an all-out raid on our measly student loan debt . It won’t stand a chance. We’ll be throwing cash grenades and bi-monthly online payments to smoke this thing out, and once we’ve got our scope on it, there’s nowhere it can run!

After that, I’ll up my 401k contributions and start putting away a small percentage in our Roth IRA account(s). Then any extra after that will go toward our little one’s college fund. Still not sure about going ESA or just a brokerage account, but we’ll come back to that one later. While we’re investing, I also want to start up Operation: Annihilate Mortgage. I want to start adding $100 a month to our payment, and increase that amount at least every 6 months until we’re doubling our payment. Honestly, my major goal is to be completely debt free (including the mortgage) by age 40. And I’d love to get there sooner, but I am working on the numbers to see what it would take to pay it off in the next 14 years. I may need to start adding a little extra very soon if we are to reach that goal. I’ll write it out for you as soon as I feel like it :)

So, all in all, we’re not in an amazing spot right now, but we also planned ahead. I can say, without a doubt that we would be looking at a short sale and some crazy financial turmoil had I not been in the habit of tracking my money and sticking to a budget. I am thankful that I was able to see the whole picture and not freak out, but instead work on increasing my income and protecting our savings (from myself). I think by this time next year, we should be in a much better spot, ready to rock.

Comments: What do you think? How would you react if you realized you couldn’t cover all of the bills? Would that motivate you, or cause you to give up? Do you think we still have a shot at building a good financial future? Why or why not? And does anyone roll their eyes when they see the Olympics are sponsored by McDonald’s and Coke? That’s like Anheuser-Busch sponsoring A.A. I mean really, is Michael Phelps downing a Double Quarter Pounder and slamming a coke before jumping in the water? If he did, we’d probably witness the most epic side-ache in the history of man.

 

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Comments

  1. I have recently had a sharp decrease in my income-and thinking about it stresses me out. And when I get stressed out, I want to take a nap. I really admire your “take charge” attitude. Congrats on the baby!
    L Bee and the Money Tree recently posted..Your boss just broke a cup in your face….welcome to Workplace Bullying 101. (Part 1 of 2)My Profile

  2. If I knew that I wasn’t going to be able to cover the bills, then back in the day I think it would have paralyzed me as I simply didn’t have the proper knowledge to grasp what to do in that situation. However, these days it would be a totally different scenario. I’d do whatever I needed to do to cover the bills. We don’t have kids yet and I’m not sure if my wife would really want to be a stay-at-home mom, but if she does then I’ll do what’s necessary to make that happen.

    I think you guys will eventually be fine too. You’re plenty young and hopefully you’re income will increase over time. It will just be important to continue to be frugal (as you suggested). So often an increase in pay results in an increased lifestyle instead of saving extra and investing more.
    Jason @ WorkSaveLive recently posted..Stock Portfolio Analysis Service – Chaikin Portfolio Health CheckMy Profile

    • Lifestyle creep is something we are very wary of. We enjoy where we are now, and know that any income increases are going to cover the necessities and pay down debt for now. I’m super blessed to have a wife who is completely on board with our financial plan, so I know we can do it.

  3. I love the proactive approach Jake. I’ve been getting stressed off and on about where my career is headed in the last year or so. There are just so few jobs and the industry keeps evolving. So I’m probably going to do the same as you and go back to school to take charge of things. I’m leaning more towards engineering though. I just want to be in a much more stable position when I find the right woman to marry and have kids. Thanks for the inspiration man.
    Modest Money recently posted..Saving Money By Taking Your Own Lunches To School or WorkMy Profile

    • That is an extremely noble goal, Jeremy. And glad I could inspire you :) Getting in a good financial situation before marriage was a HUGE part of my motivation to pay down debt and start a budget. What kind of engineering are you looking at?

  4. If I couldn’t pay all my bills I would get a second job or work more overtime. The wife and I have talked about her being a stay at home mom, (her mother was for a big part of her childhood) and we are hoping to be able to do that when we have a child. This is part of the reason we are aggresively paying down our debt because we want that option on the table. I don’t think we will be completely debt free by the time we have one, but we will have a significant chunk of it paid off and that will help with our piece of mind. I do think you have a good shot at a good financial future, you have the mindset to make that happen.

    Loved your McDonalds and Budweiser quotes. It’s like a person ordering food at a fast food joint and then they order a large Diet Cola because they are on a diet.
    DebtsnTaxes recently posted..Thank you Health InsuranceMy Profile

    • I think kids are a great motivator to get our butts in gear and clear out the debt to make room for a little one. And if you wife is at home, you won’t regret it for one second, the sacrifices are definitely worth it :)

      I saw an ecard that said “McDonalds being the official restaurant of the Olympics is like smoking being the official medicine of cancer.” LoL.

  5. Does “being at home” preclude your wife from working?

    It sort of seems unbalanced to me that you have multiple jobs outside the home and she is devoting all of her time to parenting and home-making. Couldn’t she have a small work-from-home job to free you up to parent more?
    Emily @ evolvingPF recently posted..Giving Should Exceed Saving?My Profile

    • She works harder than anyone I know, it’s just that she doesn’t get paid for it! Parenting and home-making is far more work than my 2 jobs. We’ve toyed with the idea of her doing something at home to help bring in some cash, but not if it interfered with our priorities, which is parenting and homemaking. Also, we prioritize our time so that I definitely get time to enjoy our son :)

    • It’s worth pointing out that the only “job” Jake has taken on since having our son is this blog, he had already chosen to do taxes, simply because he wanted to. Tax season is only 3 months out of the year, so yes that is a busy time. However, if I were to take on a work from home job at this point, it would either mean I spend less time with my son during the day distracted by something else (that is for sure not as important as him) or I spend less time with my husband AND my son in the evenings when Jake gets home from work.
      I’m not saying I’ll never bring in an income whether it’s from something I do at home or outside the home, but for now, this is my 24/7 job. I think it’s absolutely the most important thing I could be doing with my life. As far as finances go, if you read above, we actually can pay our bills….it’s just tight. That’s a sacrifice we’re willing to make.
      So what do I do all day besides sit around and eat Bon Bons watching Days of our Lives in my pajamas?
      I think this sums it up nicely http://www.passionatehomemaking.com/2012/08/motherhood-a-career.html

  6. Hey that title def through me for a loop. Hey at least you can make it work with all the extra income. Maybe one day the blog will provide you with the amount you are under.
    RichUncle EL recently posted..Time is MoneyMy Profile

    • Yea, I definitely plan on growing this little blog to provide some income, but for now, I’m focusing on promotions at work and more tax clients :)

      And thanks for dropping by!

  7. It’s tough living off of one income. Good luck reaching your goals. I’m sure you’ll reach many of those in no time. P.S. I love the post idea. ;)
    20’s Finances recently posted..How to Save Money: Even Your Milk Money CountsMy Profile

    • Thank you for the inspiration for this post. :) I know my goals are aggressive based on my income and situation, but it’s all about priorities. Whereever our hourney takes us, it’ll be documented here!

  8. I think that the fact that you are aware of your situation is an accomplishment in inself. At least you know where you’ve been, where you are, and where you want to be. Plus, once you get those debts paid off (student loans, etc.) more money will be freed up and you will be able to save a lot!

    Keep your eye on the prize!
    Holly@ClubThrifty recently posted..Save Money by Avoiding TemptationMy Profile

  9. I don’t have a problem with McDonalds nor Coke sponsoring anything. Someone has to pay the bills and it certainly isn’t the IOC. If it wasn’t for corporate sponsorships the majority of the US athletes could not compete in the games.

    Fortunately for me and my wife, we both had excellent role models for staying out of debt. So we have avoided it like the plague (other than my student loan, but that has helped me transition careers). So we are well on track to financial independence.

    I hate to say this about college savings, but you can borrow to go to school, you cannot borrow to retire (unless you count a reverse mortgage). Have you looked into 529 plans? I don’t know about your state, but mine gives me a 20% tax credit that can be up to $1000 a year. So that is a pretty good incentive to invest.

    Also, how hard is the EA exam? I have taken the first two, but haven’t yet taking the third to become an EA. I enjoy doing taxes for people and it is great side income. I found a very reputable tax outfit in town that does great work and would rather turn someone away than cheat on taxes.

    • I get sponsorship, it’s just ironic that companies who provide products that don’t have any health benefit are sponsoring the height of human health and fitness. I do appreciate that the games are funded by them, though :)

      I agree with that, retirement before college savings. We don’t have state taxes, so the only tax benefit would be a deduction. The reason I am hesitant is if my chold doesn’t go to college, or gets a scholarship, or pays their way by working a job, or doesn’t use all the funds, they are locked away for education only and penalized if you withdraw the funds for any use other than college. If I just do a brokerage account, I can use the money if they don’t decide to go, or help them with a down payment if they get a scholarship, etc…the possibilities are endless. I just need to run the numbers to see if the tax benefit over time with compounding interest is worth the risk.

      And Part 3 of the EA exam is the easiest part. I studied after work a few days a week for a month to pass it. I used the Gleim materials, as well as classes on irsexams.com with Tax Mama.

  10. It sounds like you’ve thought everything out pretty thoroughly so I wound’t worry about anything. You made some good choices and seem very prepared :)
    Mo’ Money Mo’ Houses recently posted..I’ve Reached One of My Goals!My Profile

  11. It has definitely been motivating us! It’s really frustrating to look at your budget and realize that we would actually have a really nice cushion every month IF we didn’t have credit card debt! That realization is saddening. If we had been smarter (I don’t even think we were ever that terrible to begin with honestly, but definitely there’s always room for improvement), we would be in a completely different financial state than we are now.
    Michelle recently posted..A Dusty GuitarMy Profile

    • I know the feeling. I blew $100,000 at a really young age. Looking at investment calculators makes me sick to see what it could have looked like. I’d probably be mortgage free!

      But you know what? This is our life story, we’re learning from it and spreading the word. We may never have been able to relate or help others with debt or budgeting had we not made a mess to begin with.

  12. When I didn’t have enough money to pay the bills I was completely motivated. I got a second job delivering papers and a third job as a telemarketer. It was rough, but I learned a TON about discipline and chasing your dream.
    AverageJoe recently posted..Productivity 101: Getting the Ball RollingMy Profile

    • Nice! 3 jobs is no joke! But it really does help you learn some life lessons and stretches your limits beyond what you used to think was possible. I know for me, during tax season, I never imagined I could survive working 80-100 hours a week, but I’ve done it twice now.

  13. Thanks for the honest post – seriously – I love it when PF bloggers can talk about real issues like this. I was verrry close this month to not being able to pay my bills, as it’s the last squeeze before our next loan disbursement, but I was able to move some dates around and fix it up. Still, it’s no fun to have to do that because I want to be as comfortable as one can be in this type of situation, not pushing my payments back a few days until I get my own paycheck. Still all of us do what we can, and it’s obvious you are a great dad who works crazy hard for his family. Oh, and p.s. I really liked that Olympics reference. I have an Olympic related post on the docket tomorrow so stay tuned! P.S.S. Thanks for your post on my blog about finding balance. I couldn’t agree more!
    Cat Alford @ BudgeBlonde.com recently posted..Quarter Life Crisis Or Quarter Life Opportunity?My Profile

    • Thanks for the encouragement! Sorry to hear about the close call this month, but you worked it out, and that’s the best part.

      Sure, things are pretty tight right now, but I have family and friends, and not having enough money doesn’t change that. I know it’ll work out in the end, and I know having a plan has definitely saved us some financial hearache. Now I just need to get my income up!

      Also, saw your Olympic post today. Right on par with something I’m publishing tomorrow.

  14. I think it’s great that you are being honest. I love the fact that your wife can do her dream of staying home and as you said, you have a plan and end up being fine due to taxes and 3 paycheck months. (Which are a great, great thing!) I’d say I became more motivated. I was working a horrible job and hating it so I gave myself one year from my start date there until I could find a new job or a part time job for the side. I ended up leaving that company within 10months. I thought about staying on for a few weeks but just couldn’t make myself do it. The thought of getting debt out of the way is so gratifying that it really helps put extra money towards them. I know if they are gone faster, I can have more money sooner!
    bogofdebt recently posted..Goals for AugustMy Profile

    • I think that’s the most motivating part of paying off debt, is knowing that you can have that money back when the debt is finally gone. I will love having my $217 back after our student loan is dead!

  15. Sounds like you have a great plan in place! Congrats on the little one coming soon!
    Robert @ The College Investor recently posted..5 Ways To Find The Best Deal on Something You WantMy Profile

    • Thanks. Our litle one is actually now 7 months old! (time flies). I think the plan will pan out well once I get my income up. Maybe I should start an “extra income” series….hmmm…

  16. If I couldn’t cover my bills, I think it would light a fire under me and motivate me to “get creative”. I was a poor college student (no job) when my wife and I got married/pregnant. And now we’re more than comfortable. As long as you’ve got the passion for success and don’t F it up with stupid mistakes, then you’ll be just fine to. The fact that you even blogged about a plan shows that you’re giving it thought. Even if the plan changes, you’ve at least got something to work from.
    My Money Design recently posted..How to Retire on 500K with the Greatest PotentialMy Profile

    • No job and pregnant, wow! Well done! I agree that having a written plan is better than “I hope someday I’ll do this” thinking. Though our plan may change, my motivation will hopefully stay at the same level for a while.

  17. I’ve been in that position and it’s awful. I learned from it, and it motivated me to get out of debt and work hard. It also motivated me to start blogging and cut back on my bills (that I couldn’t cover). Good luck – looks like you have a plan so that’s the first step.
    Daisy @ Add Vodka recently posted..Ways We Are Costing Each Other MoneyMy Profile

  18. Thanks for sharing. Not judging, just curious. Why did your wife take on such a large student loan burden if she planned on being a stay-at-home mom? Like I said, not judging. I definitely made mistakes with money in my early twenties.
    Felicity @ Waist & Wallet recently posted..The Budget: August 2012My Profile

    • That’s a great question, and I don’t have enough space to answer it here. Long story short, she had already chosen a college to go to before we had even started talking marriage. But it is an interesting topic to discuss, and I definitely would advise against going into student loan debt, especially if you plan on being at home, but there are many risks with that, such as not having a back-up plan in case the husband dies, leaves, etc…

Trackbacks

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