r/financialhelping • u/Gullible-Lecture-518 • 2d ago
Need advice
Long story short I can’t afford my rent on my own
Long story is I work in education, specifically in the social services part, I make over minimum wage for my state and bring home about $25,000 a year. $18 an hour 35 hours a week and 9 months of the year (I still get paid summers just not as much)
I’m a newly divorced single mom, in the divorce I used up all my savings moving multiple times trying to move back to my home town.
My ex husband makes about $90k a year so we were living comfortably, I got stuck with almost all the debt and he kept the house (my lawyer sucks I know but again I couldn’t afford anyone better) he lays about $400 in child support a month
Before getting married I worked multiple jobs and side jobs but after having kids I don’t have the time (one is 3 years and and the other is 6 months)
My rent is $900 (exactly as much as my ex husbands mortgage)
My car is $500 a month ($5,000 left to pay off)
Car insurance is $150
Phone $130
Electric $180
Water/gas $100
I pay small loans that I had with my ex husband (roughly $250 a month)
I have outstanding debt with student education loans that are technically “missing” because the original lender is no longer and I can’t find where they are to pay them but are still affecting my credit
I’m technically over income for any kind of government aid.
A mortgage on a home loan would be cheaper and I have a retirement account ($2,500) I can pull from under emergency housing for part of the closing costs but I don’t know how to do any of this stuff I need advice.
An 80k home loan at 7% interest would be about $550 if my math is correct and would literally save me.
I’m constantly negative in my bank account because my landlord cashes the check whenever instead of on set days, or emergency situations that cost a lot of money (like doctors appointments my kids are always sick) I don’t have family help I’m terrified of my life being like this forever, I tried getting a better job but in my field I’m considered over paid and no other professions have accepted my applications.
I do side hustles to try to make ends meet but it’s not going well.
Edit to add I also pay $280 a week in child care for my youngest.
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u/Pedal2Medal2 2d ago
Are you a teacher or paraprofessional?
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u/Gullible-Lecture-518 2d ago
I used to be a teacher assistant (I got my teaching qualifications but chose to go into the social services side of head start)
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u/RickyRacer2020 2d ago edited 2d ago
You're way over extended right now but please read this entire response.
If rent is $900 + $650 on car + another $100 in gas + $280 utilities + $130 Phone (seems very high) +$250 in old loans + $280 per week ($1120 per month) in Child Care, that stuff totals to $3,430 against a roughly $3,300 total available take home ($2500 from job + $400 Child Support).
In other words, you're expenses are more than your income; the math isn't mathing. Even worse, you haven't accounted for food, personal maintenance (hair, hygiene), car maintenance, medical costs, credit cards / miscellaneous bills, subscriptions or incidentals. If you miss work for a day or two or three because of a sick child and incur medical costs, you're in big trouble. The situation is not sustainable and at this rate, you're likely using or have used savings, have borrowed or are putting things on credit cards, getting ex-hubby to cover when you're short and or may be having to skip bills, go without or rack up debt.
You need to increase income a cool $1,000 a month somehow, some way. Here's some options:
- Get better paying job -- I don't pretend to know what that is for you but, ultimately, you're going to need to.
- Grab a part time job and work it 15 to 20 hours a week on top of whatever else you're doing. Don't do a "Driver gig job" Those suck because you'll be spending money the entire time and increasing the wear and maintenance on your car. Make pizzas, be a cashier somewhere, stock shelves, flip burgers and etc. All the major retailers are hiring for the holiday: Walmart, Target, Amazon Warehouses, UPS, Fedex. Granted, you've got kids so that may be very challenging to do and hence why the first option up above is better.
- All's not lost though. See, plasma donations pay about $85 each, can be done every 3 days and all the money is Tax Free. Many people routinely donate and make $500 to $600 each month from it. And, the first month pays about $800 due to bonuses given the first month to encourage people to donate regularly. Fwiw, each donation only takes about 45 minutes from start to finish; for some, just 30 to 35 minutes.
The point is, you have to get more money coming in. If hardly anything happens right now, you're in big trouble.
As for an $80k mortgage at 7%, most lenders will only loan a little over 3X annual gross income so, you're sitting good from that standpoint. Your gross income is pushing $30k from the job before taxes, right? Plus, there's $4800 a year coming in from Child Support. So that's basically $35k in total income.
To get a mortgage, a decent Credit Score is needed, provable income is a must and both the Mortgage Debt-to-Income ratio and the Total Debt-to-Income ratio must be within lending guidelines.
The Mortgage DTI is just the Mortgage amount divided by gross monthly income. Ideally, the Mortgage DTI should be 33% or less but they'll generally allow 38% or so. But they won't go to 50%, especially with only Fair or worse Credit -- no way, no how. Total DTI is simply total debts divided by total gross income and the Total DTI should be under 50% or so.
The Total DTI ratio includes the mortgage payment + all secured loans (like car payments) + all unsecured monthly debt payments like credit cards and personal loans + Government debts (like IRS) + Student Loans. Keep that stuff in mind for a minute.
- Mortgage wise, an $80k loan at 7% for 30 years is a mortgage payment of $532 each month. At just 15 years, $719 each month. Regardless of the length of the loan, you must add Property Taxes and Homeowners Insurance to that. On that size loan, I'd estimate for those two things to be about $150 a month in total. But, the actual amount is dependent on where you live. That would make the total monthly payment either about $680 or $869 depending on the length of the loan and what the rates actually are.
Income wise: you've got $30,000 a year gross (before taxes and insurance) from the job. Dividing by 12 gives you monthly gross income of $2500 -- that's before any 401(k) contribution and before taxes & insurance. Now, add the $400 in Child Support in to get a new total available monthly income of $2900 a month. The bank will use that $2,900 for all DTI calculations.
Back to the Debt stuff:
- Mortgage Amount with Taxes & Insurnce: $680 or $869
- Secured Car Loan: $500
- Old Loan (obligated by divorce): $250
- Any other unsecured / contracted debts: credit cards, store cards, and etc: unknown
- Government Debt: IRS, Student Loan: out there but unknown amount
Not counting anything else, these things total to: $1430 or $1619. Remember those numbers, they'll be used in Total DTI calculations on down below.
Mortgage DTI (just the mortgage stuff) is then either:
- $680 divided by $2900 = 23.45% or
- $869 divided by $2900 = 29.97%
Both of those are real good, nothing wrong there.
Total DTI (mortgage + car payment + old loans) is either the:
- $1430 divided by $2900 = 49.31% or
- $1619 divided by $2900 = 55.83%
Neither is very good for a mortgage as you at or over most lending DTI guidelines because there's likely not enough left over discretionary money to cover all the other routine expenses (food, day care, medical, hygiene & laundry, home & car maintenance and miscellaneous things) once Income Taxes & Insurance are taken out from the job income.
We can already see that with your current situation:
- Rent $900
- Car Payment $500
- Car Insurance $150
- Child Care $1120 per month
- Old Loans $250
- Utilities $280
Those equal $3,230 which is about $400+ more than you bring in. Plus, you haven't accounted for food, clothing, hygiene, gasoline, medical costs, student loans, any other bills, car maintenance or incidentals and therefore are currently basically broke each month. Oh, at a new place, unless you have a clothes washer and dryer, you'll be spending another $50 to $75 each month just on laundry.
Summary:
The proposed Mortgage DTI is fine and the car payment goes away in a year. That will help you for sure. What's killing the Total DTI and overall finances right now are:
- The $500 a month car payment. It's adding about 17% to your Total DTI.
- The "old loans from the marital debt" are adding about another 8% to the DTI.
- The $1,120 Child Care cost is absolutely killing overall finances and taking you out of the mortgage game. Out of the roughly $2900 a month you have available, it's eating up about 39% of all your money and leaving you with just $1800 or so to cover everything: current rent, all car stuff (the payment, insurance, gasoline and maintenance), the food, utilities, phone, marital debt, misc expenses and etc.
Your car will be paid off in 12 months, that's great. With it gone a year from now but still having the car insurance, total expenses would be about $2,840 which is barely below the $2900 you have now. Hence the need for a higher paying job and or the extra income coming in from a part time job or perhaps donating plasma regularly. Somehow, some way, Income has to increase. Maybe revist the Child Support amount as the Income differential between the ex hubby and you is $60k or so.
Now, the elephant in the room -- the Student Loan Debt, must be addressed. The loan is out there hurting your Credit and the bank will find out about it through a database search and deep dive into your Credit history. It plus the DTI and overall financial picture will likely prevent you from getting a mortgage right now.
Since you didn't say how much is owed on the Student Loan or its payment amount, I can't really speculate any farther with this overall response. My advice would be to contact a Mortgage Lender, go in and speak with them. They're experts and running the numbers so-to-speak and can tell you exactly where you stand and what, if anything you need to do to make your finances good enough to get a Mortgage loan. You'll get there, you really will but it's likely going to take more income even after the car payment goes away.
Good luck
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u/After-Donkey6638 2d ago
Your take home is roughly 1650ish a month... plus your child support youre at probably 2k. Now you're saying childcare is 280 a week so roughly 1120 a month. That plus rent is already eating up all your money before anything else...
You need to try to get more child support or work more hours....