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Are you saving?

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  • Are you saving?

    So, I'm about 7 months into my Chap 13 and am making things work pretty well. I'm not saving any money, though. I really am just able to get by with my (very small, compared to others) payment to the trustee. I live in a high COL area, single parent, two kids, etc.

    I *am* saving some money into a separate savings account for Christmas and deposit on my child's school trip that I know will be due in December. But, then it'll be gone. So, I'm saving for *upcoming expenses*, not for emergency fund or future savings.

    We're going to have a lean Christmas so I can save my (very small) year-end bonus and tax refund. Anyone else in the same boat?

  • #2
    Mine was similar but I was able to save a little by rethinking food by: not eating out at all (not even once), always preparing meals, shopping with a purpose (coupons, buy one get one!). I also had to rethink other things like clothing, gasoline, and other random spends. It is tough with children but we survived and had decent Christmas as we never really splurge and did anything extravagant (even as a high income earner).

    The bottom line is that belt tightening within the established budget is the only way to get by. Some of my ability to save came from the "standard" expenses. For example, my budget included $489/month for each of two cars, even though their payment was less than $300/month each. That was nearly $400/month there that should go to savings. I also had the car allowance expense which, combined was $362/month. I kept that expense to about $300/month including insurance, gas, registration, etc. I had newer cars which helped tremendously (especially with them still under warranty). Tires were my biggest unanticipated expense. My food/clothing budget was about $1,300 based on the allowed expenses. We spent maybe $100/month on clothing and about $600/month on food by being very careful about prepared meals. That left another $600 on the table (literally).

    It can be done if you create and monitor your budget. I had a spreadsheet and tracked and forecast every single dollar. A Chapter 13 will teach your to budget or you will learn that not budgeting will result in failure.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog


    I am not an attorney. Any advice provided is not legal advice.

    Comment


    • #3
      are you in a 100% payback plan? will your plan go the full 5 years? my advice to you would be to find intangible things that will make your holidays special. these are the things your children will remember over toys that will be broken and gone within the year. we are forced to budget everything dollar for dollar. my savings account is piddly but i'm throwing a little away every paycheck. this bankruptcy has changed me already in that I do not eat outside anymore and I bring my lunch to work. so does hubby. there are no vacations and haven't been this year since filing. but not for nothing, when we went away years prior we were always in a vicious cycle of credit cards so...the future will have its vacations. we just need to build right now our way from here...to there. hang in there.

      Comment


      • #4
        I'm not in a 100% plan and it is a 60 month plan. Five long years. Hey, I'm >10% there! ;-)

        My kids are teens and they know Christmas will be light. I have really trimmed the grocery & restaurant budget (we get take-out 1x/week) and I have 3/4" of gray hair right now, ugh.

        The kids' activities are the biggest expense -- travel tournaments (fees, travel, hotel, food), in-town sports, school sports, etc. Unfortunately, I am unable to cut down much on these. I can't exactly tell my teens they can't play on their competitive teams. So, we cut elsewhere and I've ramped up the hours on my second job.

        I do have a budget and track every dollar. I am borderline obsessive about the budget. I look at it and optimize it every single day. We did go on vacation this summer, but did not use any savings, credit or money earned from my full-time job. I worked extra part-time job hours, picked up odd jobs, and sold random things we didn't need anymore.

        This month, I saved some money, in addition to the Christmas/school trip budget. It's just not a consistent thing.

        Comment


        • #5
          Keeping up with activities, sports, entertainment and other expenses are what tax a Chapter 13 debtor. The fixed costs, mortgage/rent, car payment, trustee payment, etc, are fixed an easier to manage as you know these expenses. I will say that it can be difficult raising children of that age and being in bankruptcy at the same time, especially when it comes to extracurricular activities. I was lucky that my stepchildren were not into any sports and their extracurricular activities was really Minecraft and general computing (including programming). I purchased Disney annual passes for all, but even at what was about $400/year each, we were able to go often enough to get our "entertainment" fix. That Disney pass really helped keep us sane!

          I can tell that your issue is really in that your Chapter 13 does not account for sporting and other children activities; it simply does not. You're going to need to keep up with the obsessive budgeting (I still look at mine, on average, three times a day). You are leveraging the "extra" in one place to put into the activity budget and that's just fine. You just need to be really careful as you really need to build an emergency fund. With a dynamic budget like yours -- and mine -- we need to come up with 12-month budgets and really try to stay on target.

          Life happens.
          Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
          Status: (Auto) Discharged and Closed! 5/10
          Visit My BKForum Blog: justbroke's Blog


          I am not an attorney. Any advice provided is not legal advice.

          Comment


          • #6
            I do have a 12-month budget and it accounts for everything from bi-annual life insurance premiums to leaf disposal in November to kids' haircut to car maintenance... and everything in between. I also have $225/mo budgeted for sports and extracurricular activities. Some months it is zero but other months it is $450. It is very stressful but a lot less stressful than having $80K in credit card debt and not being able to pay my bills.

            Not having an emergency fund is a problem, I agree. I'm one emergency away from a very big problem. I need to triple what I have in savings right now to feel safe and I don't quite see how that's possible, but I'm working on it.

            Comment


            • #7
              One of the (sometimes) fatal flaws with 13s is the lack of reasonable allowance for emergency savings. You can exempt a certain amount of savings at time of filing, but your monthly budget doesn't typically allow any savings without objection. It makes no sense, particularly in light of the required financial counseling that emphasizes having an emergency fund!

              The real icing on the cake is that you can get trustee approval for a loan if you do have a significant emergency. You would think a minimal savings (e.g. 2% of gross) would be preferable to debt during a 13.

              Comment


              • #8
                Originally posted by 159515951 View Post
                One of the (sometimes) fatal flaws with 13s is the lack of reasonable allowance for emergency savings. You can exempt a certain amount of savings at time of filing, but your monthly budget doesn't typically allow any savings without objection. It makes no sense, particularly in light of the required financial counseling that emphasizes having an emergency fund!

                The real icing on the cake is that you can get trustee approval for a loan if you do have a significant emergency. You would think a minimal savings (e.g. 2% of gross) would be preferable to debt during a 13.
                I know. It seems completely counter-intuitive to financial health to require all disposable income to go towards debt repayment. I know the trustee's job is to represent the creditor's interests but they are more likely to get paid if I complete the C13.

                Comment


                • #9
                  Originally posted by newlife13 View Post
                  I know. It seems completely counter-intuitive to financial health to require all disposable income to go towards debt repayment. I know the trustee's job is to represent the creditor's interests but they are more likely to get paid if I complete the C13.
                  It is counter-intuitive because a Chapter 13 is primarily about allowing the debtor to save property, while giving the unsecured creditors every single penny of -- at least according to the IRS Financial Collection Standards -- unnecessary or "disposable" income. That's the trade off.

                  As one of the judges in my District likes to say... "it's pay to play."

                  Please understand that Chapter 13s have mechanisms if you do run into trouble including the ability to miss a few payments (and make them up later... including spreading out the missed payments over the remainder of the Chapter 13 plan period). Think of this as being no different than only having $X to spend monthly and running into a problem because you have no disposable income. That's the actual reality of meany people. The Chapter 13 bankruptcy provides you with protection from your creditors, the ability to cure arrears on your home or car (or other property), and to deal with certain emergencies.

                  It is possible to refinance your home, purchase a new home, purchase a new car, or even deal with certain emergencies in a Chapter 13. The reality is that you have to live on a fixed budget and which will test your resolve to not only budget, but perform additional belt-tightening and to start building and maintaining an emergency fund.

                  Life does happen, and most people don't finish a Chapter 13.
                  Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                  Status: (Auto) Discharged and Closed! 5/10
                  Visit My BKForum Blog: justbroke's Blog


                  I am not an attorney. Any advice provided is not legal advice.

                  Comment


                  • #10
                    Good grief I'm about to enter into Chap 13 hell and even though it's just me and my dog I am not use to budgeting so I'm trying to read everything possible. I read that having a cushion is important as well as having an emergency savings so I just hope I can do this No I don't have kids but I have a dog with lymphoma and housing expenses as well as a SUV that will at some point require maintenance as it is a 2013. Thanks for the info I hope my meeting goes better tomorrow as I waited almost 1 year because I was told I could file a Chap 7 only to have the means test show I cannot. I'm in FL, disabled Veteran.

                    Comment


                    • #11
                      Originally posted by justbroke View Post
                      Life does happen, and most people don't finish a Chapter 13.
                      Oh, I'm finishing it!

                      Comment


                      • #12
                        Originally posted by smithma3 View Post
                        Good grief I'm about to enter into Chap 13 hell and even though it's just me and my dog I am not use to budgeting so I'm trying to read everything possible. I read that having a cushion is important as well as having an emergency savings so I just hope I can do this No I don't have kids but I have a dog with lymphoma and housing expenses as well as a SUV that will at some point require maintenance as it is a 2013. Thanks for the info I hope my meeting goes better tomorrow as I waited almost 1 year because I was told I could file a Chap 7 only to have the means test show I cannot. I'm in FL, disabled Veteran.
                        I'm surprised that your attorney didn't suggest buying a new vehicle prior to filing a Chapter 13. If you're in the 5 year plan, that's a long time for a 2013 vehicle as it will be 9 years old by the time you finish. The good part is that you can, if you can qualify under normal credit rules, replace the vehicle later during the plan. The downside is, that as vehicle age, they tend to require more maintenance.

                        (Were you disqualified for a Chapter 7 because your disability and debt don't qualify under the exception for veterans?)

                        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                        Status: (Auto) Discharged and Closed! 5/10
                        Visit My BKForum Blog: justbroke's Blog


                        I am not an attorney. Any advice provided is not legal advice.

                        Comment


                        • #13
                          Originally posted by newlife13 View Post
                          Oh, I'm finishing it!
                          I know that you have the right attitude (budget minded and determined) to see this to the end.
                          Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                          Status: (Auto) Discharged and Closed! 5/10
                          Visit My BKForum Blog: justbroke's Blog


                          I am not an attorney. Any advice provided is not legal advice.

                          Comment


                          • #14
                            Hi Justbroke,

                            Yes, you are right I didn't qualify because I'm 100% disabled retired military so my income is above the median. I just hate I waited. When I hired my lawyer I had just resigned from my job in Oct 2016 and was not behind on anything. At one point since he said I qualified for Ch 7 I decided I would move and give up the house so he said to stop making the payments. I later decided I didn't want to screw up VA home loan so he said I could just do a modification on the loan. Now I'm stuck with Chap 13 and mortgage arrears as well as IRS owed and the 2013 vehicle. At first I was going to give up the car in Ch 7 but my credit is so shot now there is no way I could get a car without crazy interest. I do know my payments will be crammed down from 582 to 485 monthly but I just feel like I need a less expensive car. Currently owe $32K on 2013 Luxury SUV would rather have 2017 Honda accord. My meeting is tomorrow, not sure what will happen as he said at this point I would have to do a repo so I just decided to keep the car and maybe get another one before the 5 years is up. I do have low miles only 40K and being in a chap 13 it's not like I'll be driving anywhere. So much for the good retirement life. Oh well, this too shall pass. Too late to get another lawyer I just need to get filed and start the countdown.

                            Comment


                            • #15
                              FYI my profile is showing ronism and smithma3 not sure why but I'm guessing its confusing. I guess I have two logins same password. I will try to delete one.

                              Comment

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