Looking for some insight on my current situation

[crose90]

Hi everyone, I [32M] would appreciate some advice on my current financial situation. I’m a freelance designer and web developer living in Los Angeles. I’ve been trying to ride out this economic downturn, but I would like to take more deliberate action to improve my situation. I’m including a list of my bills if it helps. Here goes:

• I’m making $2K per month with 1 design client (cut down from $4K per month last fall)
• My living expenses are about $3250 (this includes rent, bills, food and debt payments)
• I’m supporting my finance [32F] who is in school getting her PhD, and our 2 year old daughter. My fiancé makes her own money here and there but not consistently
• I’m about $20K in debt, $12K of which is student loans, the rest is debt that’s been accumulated over the past year since my income fell below my expenses.
  

Here is my non student loan debt breakdown:

• Capital One Card 1: $5050, maxed out at 27%
• Capital One Card 2: $300, maxed out at 28%
• $3K Personal Loan: < $1800 left on the loan at 429% (I know, I know), and I pay $83 every other week
• $1500 owed to a family member at 0%

The expense sheet I included are really just my basics and doesn’t include that I should be spending money on as well. Here are some examples:

• Spending money for myself
• Saving/Investing money for myself
• Contributions to my daughters investment account
• Life insurance
• A car (I don’t have one. I don’t necessarily need one but something A to B would be nice to have sometimes)
• Childcare and other activities for my daughter

I know I obviously need to be making a lot more money. In 2020-2021, I was making about $75K a year. My biggest challenge is as my daughter gets older and more active, and my fiancé gets closer to finishing her PhD program, the (hands on) support they need from me has only intensified (not that I didn’t expect this) making it all the more difficult to find the physical energy and mental capacity to invest in my career and money making activities. I guess I’m not quite sure how to be a financial support system and a stay at home dad simultaneously.

Thanks for reading. I’m more than open to suggestions, critique and words of encouragement.

 

[makrina]

@crose90 The only deliberate action that can be taken is to make more money. 2k/month is way, way, way too low

 

[resjudicata]

@crose90 How are you making 2k a month in LOS ANGELES?!? And with those living expenses? How much does your fiancé make?

I would immediately try to find a better job if I were you.

 

[abanister]

@crose90 you need to make more money, how are you marketing your services? any way you can spread a wider net to get more clients?

 

[resjudicata]

@crose90 Sounds like you have a serious income problem.

 

[rgroves]

@crose90 Try to transfer the credit card balances to one’s with zero interest for some introductory length of time. Also maybe try to consolidate that debt into a personal loan with a reasonable rate. Your dept is not actually that much, the crushing aspect is the rates you are paying. You can look around online for a loan with better rates that you can use to pay off your credit cards and that predatory personal loan.

 

[crose90]

@rgroves Agreed my friend. When I see what other people’s debt load looks like it reminds me that $20K is chump change and I stop stressing about it. But yeah these rates? Not ok. Definitely need to do some restructuring. Thanks. If you have any tips on a route to consolidation that’s not scammy I would appreciate it. Thanks for the reply. Cheers.

 

[michielles]

@crose90 No my friend, your debt level at your current income is an existential threat! You immediately need to act. Restructuring debt will NOT solve your problem at all. Work on an actual way out of that situation.

 

[hotboi2]

@michielles I agree that restructuring will not solve the problem, but it will definitely buy some time. That doesn't give OP a pass to take on any more debt or to not aggressively work to increase income. What it does do though, is prevent OP from paying ridiculous interest rates and bleeding money OP doesn't have.

 

[michielles]

@hotboi2 Op is going into denial of his situation. If he restructures, he opens another credit line and will continue to spend money he doesn’t have. He should be “stressing out”, because his situation is an existential threat. Not saying that restructuring cannot be part of the journey, but it is for sure not the first step.

 

[stacyv]

@crose90 You were never making enough money to be a freelancer in LA. I’d say $10k a month minimum would be what you need - until then have a full time job that pays well and freelance on the side nights and weekends.

 

[resjudicata]

@crose90 Use your fiance's student loans to pay off your debt. You are supporting her so it seems like a reasonable ask. You may have to wait until next semester. Student loans can be used to cover living expenses. Pay off family member too. They will loan again if needed, best to keep the trust and relationship intact.

Get a new job.

 

[joy2theworldx]

@crose90 As you’re aware, and others have mentioned, your expenses are greater than your income, which is not great.

First and foremost, have a budget, and keep it updated as you go through the following activities. As your situation gets better, you can start to allocate additional funds to the wants in your life (spending money, savings account, daughters account etc). I’d be willing to help you make something on Google Sheets if you’d like.

Areas to focus on in order between yourself and your partner:
1. How can you reduce your expenses? IMO for you, your fiancé, and your daughter in LA, $3250/mo seems very low so I’m not sure what wiggle room you have here. Reducing your expenses is something completely in your control, and can be done today to improve your situation.
2. How can your household income increase? Can you get more work with this client? Can you gain other clients? Are you able to pick up another job? Can you talk to your fiancé and put some more pressure on her to work while she finishes her degree? Someone else mentioned being a TA, typically that comes with a monthly stipend (paycheck).

Once your household income exceeds your household expenses…
1. Payoff highest interest debt first
2. If you can consolidate your debt into one loan with a better rate/longer time period, so that (assuming your fiancé will graduate soon and get a job to make money)
3. Any money you pay towards your loan(s) beyond the monthly payment goes directly off the principal of the loan. If you can pay an extra 10% even if your monthly payment every month, that will help pay down these debts even faster

Desperation plays that I can think of in your situation that could help stop the bleeding
1. Is there someone you trust that could take care of your daughter for a little bit (friends, family, combination)? Not having to directly take care of your daughter for a little bit could offer you and your fiancé more time to work on money making ventures. It sucks to be away from your daughter though.
2. Are there any things you have of value you could sell? Often times you’d probably end up selling these for less than you’d want, and they’re only one-time injections to your bank account so it only helps once vs every month like other things.

Good luck, wishing you the best. Keep your head up and don’t forget to take time to yourself to keep you from losing your mind.

 

[karamel7]

@crose90

1. Get another client and/or another job
2. Where's your fiance doing her PhD? Do you need to live in LA?
3. Your fiance should be doing either RA or TA, that should be at least $2k a month. Is she at the beginning of her program? What's she doing the PhD in? Have you had a conversation to see if it's worth doing it? As a PhD myself, I know very few cases where it was actually worth doing the PhD (my husband is one of them but I definitely regret doing mine).

 

[furen]

@crose90 Good luck! Look at some government programs in your area to help, and the usual pay off the highest interest debt first before proceeding with your usual investing/saving.

Also maybe look for childcare programs (cheap, or non-profit) as you do need to focus more on money making activities to stay afloat.

 

[resjudicata]

@crose90 Start doordashing to earn extra 2k a month working weekends

 

[argonath]

@crose90 Having one client is not going to work, if they decide to cut you out altogether then you are now making no money. You need to either find a more traditional in-house design job, a job with a year or six month contract, or find several other clients. You might consider doing a lot more self-promotion on Facebook and LinkedIn. Maybe you could do some looking around at local businesses and see if any of them have shitty websites or menus and offer to do some design and dev work. If they don’t want to pay you, you could offer to do some trade work perhaps. Maybe focusing on services that you actually need for your family.

 

[hotboi2]

@crose90 You need to increase your/your family income. Point blank. This is a must do.

Your statement about not being sure how to be a financial support system & a stay at home dad simultaneously is very telling. This is the crux of the matter. You can't. Not in your situation. Why are you trying? Not only is it not working financially for your family, I highly suspect it's taking a mental toll on you as well. The best thing you can do for your kid is to take care of yourself & your relationships. At the end of the day, you and your fiance are far far more valuable to your daughter, both now and scientifically proven for the rest of her life, than any activity you could put her in.

1. Why can't your finance take on a side job? Even 10hr/week would help the family finances. 20hr/wk would be better. While I applaud you wanting to help her out, and perhaps that was even the agreement when she started the PhD, your family's financial situation has changed since even last year. That means how you approach living used to change as well. Can she go 'part time' on the PhD? What other creative solutions can you think of?
2. You need to increase your income. Get a regular 9-5, even if you hate that grind. Maybe you just need to do it while she finishes her PhD? Lots of places still hiring remote, even if there is lots of competition right now. Can you keep your client at the same time? Else find more clients ASAP or take on additional income in an unrelated field: grocery store, bar, restaurant, bank, whatever it takes.
3. Have you exhausted governmental support? Energy assistance, CalFresh/SNAP, WIC, daycare support, etc? What about food shelves? Churches?
4. You might save a bit here and there in decreasing some expenses, but not nearly enough to offset the income gap. Doesn't mean you shouldn't do it, but it's not the biggest concern in this story.
5. Don't beat yourself up about not being able to make other savings goals right now. I hope this PhD program is worth it financially and your family will soon be on a track to significantly more income. You're also obviously in a good field, even if this downturn doesn't make it feel that way.

However you swing it, you are hopefully at the low right now. It may mean you and your fiance don't see each other much. Maybe the schedule is you work and fiance takes care of kid. You get home and immediately take on kid duties while your fiance does her PhD program. You'll figure it out. Don't be afraid to voice your concerns. Both of you will need to make sacrifices. But, chin up. You seem like a very capable and motivated individual. You've got this!

 

[crose90]

@hotboi2 Thanks so much for this comment. This was the clarity I was looking for. I’m already feeling more optimistic while putting some new plans in motion to help our situation. I will continue to reference this comment and a few others to help see us through. Thank you stranger

 

[trumpetplayer090]

@crose90 You need two jobs