I already know the answer, but there is a chance someone will have a different perspective and it will give me new insight.
A dear friend called me up, desperate for additional income or a huge lump sum to tide them over until her husband got another job. (He is being let go next month. His income is 50% of their social security. He's only been working for the last year. It nicely supplemented their income.)
I made some suggestions -
* change cell phones or drop cell phone (they hardly use it)
Response - No way - I would have to pay a fee! [they have had the phone and service forever...I doubt they would need to pay a fee]
* change cable, internet, and phone package
Response - Hell no! You know how much of a rebate I get becuase I bundle everything together?? [nope - no clue - but listen to yourself!!] It's HUGE! I can't let that go!
* sell one of the two vehicles (both are paid for, one is a 2000 and one is a 2010)
Response - Not a chance! We will NOT go down to a one family car! [Uh, only two people drive and no one has a job...]
* refinance the house
Response - Nope. I'd only walk away with a few thousands dollars and I *NEED* more than that. Besides, it's a temporary fix. And you have to remember, it's not like the old days where I could get like 70-90k out each time I refinanced.
Their house topped (in value) 144k. They refinanced a few years ago becuase they were petrified of the ARM loan they had. (Seriously, if they had kept the darn thing, they would still be paying a low amount.) I don't see how they could possibly be maxed out, even with the market dive. But ok, whatever.
Their montlhy take home income (social security) is $3800 a month. They live "bare bones" and can't possible drop anything else.
By now, I am banging my head up against a wall. I don't know how else to help them. I can't stream them several thousand a month. They have NO debt other than the house and there is no way that their house consumes their entire ss check! Electric is about 50-100 a month, depending on weather. No gas. No water. I have no clue where their money goes.
I did ask if they could live off of their ss. The response, "it will be too tight to do".
Any ideas on what I can do to help them?
I had thoughts of buying their house from them at the end of this year, beginning of next year, and they could pay me token rent. (They turned down this offer 6.5 yrs ago when they had money problems - they want to leave the house to their kids. Their kids are not going to be helping them out at all. The house is not special. They bought it 7 yrs ago.) They are older and in relatively good health.
You're very nice to try to help them. But they don't sound willing to help themselves.
They get $3,800 in social security and they can't live on that? Oh my, I just wish I had an income that high. I'd feel rich.
I know, right? I am sitting here, thinking, I will be negative each payday when the pay cut goes into effect. (This is because I made a bold move and put my mortgage on my cc [zero interest rate until 01/2014 & no transaction fees] and am being VERY disciplined in paying off the cc's as fast as possible. Literally, every dollar I can spare goes on the cc! And I have a set amount from each paycheck I pay on it. Ok, so for a few months, I will be feeling the deep pain of a paycut, but my cd's will be maturing (one every two weeks or more often) plus my savings will get me through. After that pain has passed, my budget will be about $200 for food and for gas, feeding 2+ people.
I have no idea where they spend their money. Their mortgage payment is $800 a month. They do not go out to eat and they don't have food delivered. They buy the cheapest of the cheapy food. They buy their clothes at the flea market. When the weather is cool, they open up windows so they don't have to run the a/c. They don't gamble, travel, buy things online, induldge in much of anything...they have two dogs.
I had suggested last year that my son set up a garden for them so they could grow their own veggies. They said no, didn't feel like it.
I hate to see them fail. They are wonderful, generous people. I want to help them, but I do not know how to. Short of buying their house, is there anything else I can do? They do not qualify for public assistance with their high income. They get a break on their property taxes (senior citizens, vet).
Gunnar419 - hang in there. It's not what you make, it's what you keep. They have that kind of income (and were at $5800/6k take home a month) and were barely getting by. Save a little each paycheck. I did the CD bingo and it's coming back to bless me! It's a major reason I am going to get through this paycut & furlough ok.
Sorry but this just doesn't seem like a situation where you can really help. If they were at least willing to cut back, things would be easier.
IOBA, the more I read, the more you seem like an extremely kind, generous person. I'm blessed to have a friend like you; she'll extend her big heart and helpful hands to anyone, even those that others would warn against helping. In fact, one of the people she helps sounds a lot like your friends. It's an excercise in futility, yet she does it to be true to her own values.
Even offering to set up a garden for them! So much giving.
It seems as though your friends are going to have to learn on their own if they're going to learn at all. But perhaps you could refer them to some frugalista/financial management websites where they can read and learn. I'm thinking of sites like:
http://zenhabits.net -- especially essays like http://zenhabits.net/the-cheapskate-guide-50-tips-for-frugal-living/
And thank you for your good wishes for me. Don't worry; I am hangin' in there. In fact, I live very well on something like half the money your friends get via ss -- and although I don't have a lot, I enjoy the adventure of bargain hunting, living simply, and discovering simple pleasures.
Maybe -- depending on how close you are to these people -- you could sit down with them and help them to work out a budget. You say you don't know where their money's going; I'll bet they don't know, either. Tracking spending might be a real eye opener and life changer for them.
If they realize how much money they're blowing away, they might get caught up in the challenge of changing their lifestyle and find that they like the changes.
Good luck to you -- and them!
They sound like my parents. So many "needed" bills. Giving them money was like throwing money into a black hole; it never made the situation better.
To be honest, if they aren't willing to make sacrfices themselves, you don't need to be giving them money. You were a good little ant and had a backup plan for the winter, you don't need to save the grasshoppers.
Yeah, I know, no money! I am going to take them some food next month. I hope they like beans! On my budget, I eat rice and beans almost every day.
I hope that when I see them, I can get some more specific information.
Thank you for the websites - I will send those to her.
Sounds like they do not want to help themselves. If there is not enough money you make cuts but I do not see how 3800 is not enough . That is more than what I make and I still have money to eat out a few times a month and pay all the bills. Maybe you should help them realize sometimes you have to go with out things you do not need like cable , cell phones and such. When I was in my financial mess I cut everything out internet , cable , cell phones anything I could live without was gone so I could just worry about rent , utilities , and making sure my kids had what they needed.
Like everyone has said do not loan them money give them some advice and what they do with it is up to them.
I agree. By choice, I don't have cable. I have a very basic cell phone plan (so tight I worry about minutes, but I refuse to pay for the next tier up on minutes and not internet on my phone). Bare bones (dail up people!) internet becuase that is the cheapest I can get.
It's been that way for years. It's the choices I make.
I still enjoy life. I still have fun! I still take great vacations! And there's lots of laugher in our household.
It may always be this way, but I hope not. Money buys choices. Being debt free means freedom of choice.