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Silverdome Potentially SOLD!
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Gasoline, food leave Medina couple short on cash
By Betty Lin-Fisher
Beacon Journal business writer
Published on Sunday, Sep 07, 2008
Michael Andrews already was keeping a close eye on his family's monthly expenses when he and his wife MaryBeth signed up through the Beacon Journal's Reclaim the Dream series on personal finances for a ''money makeover'' this summer.
Michael knows exactly where all of the couple's money goes each month.
But his budget was a bit outdated and the couple thinks they're ''cash-poor.'' Michael said he's always playing the balancing game to keep the checkbook ledger from going in the red.
Sometimes it doesn't work. Last month for the first time in years, Michael said he got dinged for overdrawing on the checking account. He used the couple's income tax rebates to get the account back in order.
The couple say they already live conservatively, comparison shop for groceries and gasoline, pack lunches and rarely eat out. Michael also regularly reviews their fixed expenses, such as insurance premiums.
''I don't know where I can squeeze another dime,'' he said before heading to see ''Money Coach'' Carla Davis with the Consumer Credit Counseling Service.
The biggest hits on the couple's monthly budget: gasoline and food costs for themselves and their dog, Charger.
Gas alone costs $650 a month. Michael is a first assistant manager for a fast-food restaurant in Hudson — a 55-mile round trip each day from their Medina home. MaryBeth is a customer service representative for a chemical company in Copley Township. They have no children.
Michael drives a pick-up truck and MaryBeth drives a sedan, but they're unable to switch cars for Michael's long commute since he uses the truck for work.
''Fuel is killing us,'' said Michael.
The couple spends about $360 a month on groceries and another $100 a month on specialty food, biscuits and medicine for their dog. Michael said he's tried to cut costs, but Charger's health has suffered when he's tried other foods and medicines.
Waiting game
Added to the mix for the couple: They've outgrown their house and want to move to a slightly larger house with a basement.
They've had no bites on their two-bedroom, one-bathroom house that has been on the market since January.
They have their sights set on a house in the Medina neighborhood where Michael grew up, among others.
But the couple knows they might not be able to sell the house, which shares a common wall with their neighbor, and can't move until they do. In fact, they plan on taking the house off the market when the contract runs out in a few days and will try again in a few months.
But they're not ready to give up on the move.
The couple has a sizable amount — $40,000 — saved in a money market and IRA, boosted mostly by an inheritance after MaryBeth's mother passed away nearly two years ago. But the couple is insistent they don't touch the savings, of which $30,000 has been earmarked for the house down payment and moving expenses and $10,000 for emergencies.
The inheritance also helped the couple pay off about $15,000 in credit-card and home-equity debt.
Still, the potential move is a drain on their finances. For the last year, they've been paying $78 a month to store inherited furniture that will be used in the new house.
Budget advice
Davis, the money coach, suggested a few budget fixes.
Michael said the couple have cable television and HBO for entertainment, since they rarely go out. Davis suggested they research ways to reduce the bill for cable and cell phones.
The couple added MaryBeth's mother onto their cell phone plan about two years ago, before she got ill. The couple has had to continue to pay the additional $10 per month for the extra line or face the $200 to $300 early cancellation fee.
Michael received a discount on the service through work, but MaryBeth agreed to research whether moving to another company when their current plan is over would save money.
Davis also asked whether they could move away from using their credit cards — they have one card with a $10,000 balance and another used mostly for gasoline purchases and pay it off each month. Davis encouraged them to move toward a cash system, or envelope system, where the cash needed for the monthly expenses are put into various envelopes and used.
''I don't have the cash to set aside for the next month. I'm in the trap, where do I come up with the cash for the next month?'' Michael asked.
Andrews said he knows he could save money by getting ahead. For instance, he pays $5 extra a month to his car insurance to pay monthly instead of a $650 lump sum.
''I'd love to save $60 a year, but I can't do it because I can't come up with the first bill up front and save it,'' he said. ''If I take it out of savings, I'll never get it back.''
MaryBeth said though she's already pretty good about her spending, she is less likely to spend money if she had to charge it.
''If I had money in my pocket, 'Woohoo wee, dollar store, here I come!' '' she said.
MaryBeth said she wants to get to the point where, ''I can go to Kohl's and instead of using my charge and paying it off at the end of the month, I want to be able to take that cash.''
The couple also acknowledged they hadn't put any money in their budget for entertainment.
''We took $60 last week to go to a baseball game. Where does that go?'' Michael asked.
Davis asked whether either would consider a part-time job for extra cash. MaryBeth said she had a part-time job before her mother got ill and was going to look for another one. But she said any money she got from that job would not go toward the budget. It would be ''extra'' money for the couple to use on entertainment and other things that come up, she said.
Michael's work schedule, which can change weekly, wouldn't work for getting a part-time job, though he does work as an election worker twice a year. Michael banks two paychecks a year that are not included in the budget for vacation and Christmas gifts.
Davis also asked whether MaryBeth would consider temporarily reducing the amount she pays into her 401(k) to get ahead on cash flow since she contributed well above her 4 percent match with 11 percent of her income. MaryBeth said she was leery.
''How much would that hurt? I'd rather suffer now than when I'm older and don't have a choice of two jobs,'' she said.
Updates
Since meeting with Davis in July, Michael and MaryBeth have been busy following the advice — and finding some extra money in their budget.
• Michael has worked up a spreadsheet to track expenses.
''This will tell me at the end of the month where I've screwed it up. My father had one of these years ago,'' he said. ''I just wrote checks. But now I'm tracking stuff.''
• For the next six months, Michael got a $60 a month break on the couple's cable service with Armstrong Cable through a special promotional.
''I just called and said how can I lower this bill?'' he said.
• In November when their current contract is done, the couple will switch to a new cell phone provider for two lines. That will save them $50 a month and get them new phones.
• They're working on reducing their grocery bill to $75 a week instead of $90, but are not having success.
MaryBeth said she spent the same amount of money, even using a list, since their purchases are already pretty slim with limited snacks. They will save $10 every three months by buying the dog's medicine online.
• MaryBeth reduced her 401(k) contribution from 11 percent to 8 percent, but she's not too keen on it and might bump it back up. For the time being, it gives them an extra $45 per pay.
• MaryBeth is also looking for a part-time job. But she wants to find one that will still allow her to spend time with Michael.
''That was the problem before. It's a choice of not having a second job and no extra money, or having a second job and not having the time to enjoy it,'' she said.
The Andrews know that while they're cash-strapped, they're in good shape overall.
''My bills are paid for. I might not have $5 in my pocket, but my bills are paid for,'' Michael said. ''I think I'm better off than a lot of Americans.''
Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com.
Michael Andrews already was keeping a close eye on his family's monthly expenses when he and his wife MaryBeth signed up through the Beacon Journal's Reclaim the Dream series on personal finances for a ''money makeover'' this summer.
Get the full article here.
Comments
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Posted 11:44 AM, 09/10/2008
Best of luck to them. But I can't help thinking -- they're having money problems now. Why on earth would they add to them by buying a larger house? A house with 2 bedrooms should be large enough for 2 people. Just my humble opinion.
