Desperate! Advice Please!

kev_dogg · #1 (**permalink**) 06-11-2010, 10:53 PM

Hi,

My situation is pretty stressful, here's some background... My family and I recently moved in with my brother to help him pay his rent after he got laid off, and the landlord doesn't think the septic can accomodate so many people... So we need to move. My fiancee works a part time job [24 hours a week] and I am the only person in the household who works full time. I barely make over 1k/month, unemployment barely covers my brother's car payment and other bills. We have a 3 month old infant. We can't borrow from friends/family, my credit isn't so great [score is about 600]. I've never taken a loan, i do not own anything of value, I'm only 24... We have not qualified in the past for financial help, even with the new addition to our family.

I have about 1k in assets avaliable in my checking account, and we cannot get enough money together to get into a new rental. Basically we need 2500 to get into a new place [first months rent plus deposits], so close but so far!

I was considering a "pay day loan", but after reading I don't think it would be wise; I just don't think I'd ever catch up if I took out a loan at those high rates...

Do I have any options to get a small loan or some kind of help in a situation like this? HUD has a 1year waiting list, and thankfully the landlord where we live currently has been lenient with us. No eviction notices have been served, but we need to move. Is a payday loan my only option at this point, just suck it up, pay the minimum and eat the interest?

Any advice is greatly appriciated!

kev_dogg · #2 (**permalink**) 06-12-2010, 01:53 AM

Also, I do have a 401k, would a loan from that be a wiser choice?

Thanks in advance.

littleroc02us · #3 (**permalink**) 06-14-2010, 11:33 AM

I strongly believe that you both need to find as much employment as possible. Whatever it takes to make it happen. I would also advise finding the cheapest rental. YOur problem seems to be income related.

sapphirecapital · #4 (**permalink**) 06-14-2010, 04:26 PM

short of another employment your credit will not allow anything but accessing the 401k, since your income is so low,the tax penalty will not kill you and you can rebuild it if you have the patience and follow throu it requires, I do not like that however, I suggest you find out what the septic situation is, if it really does not support the current situation. If it does may be border line than find out what the service record is, if the situation can be helped with one more service offer to the landlord to pay that to make sure the septic is fine if he lets you stay till you have a job but a minimum of 12 month, that may work if you otherwise pay the rent, by the way do you get help to have the kid insured?

kev_dogg · #5 (**permalink**) 06-16-2010, 09:21 AM

We do have medical insurance for our child for the time being.

Rentals here are not cheap. A 2 bed/1 bath apartment can go for as high as $800 a month, lowest I've seen here is $650. Not to mention deposits, and we have dogs which eliminate 80% of the listings. Most listings for 3 bed/2 bath right now are hanging at about $1,100-$1,300 + $1,500 in deposits, but there are two listed currently at $950-$975, that allow pets with deposit, which is where my estimate of $2,500 comes from.

Jobs aren't so easy to find either. I work at a casino and my fiancee just got a very slightly higher paying job at Safeway. My brother is looking but its the summer and positions have been filled at most places.

I have attempted to contact the HR department at my place of employment but so far no response to emails, definitely going to have to pay a personal visit without appointment today.

Taking the 401k loan seems to be my best option, where we are living now really isn't accommodating for the amount of bodies living there, and the original plan was to live there temporarily until 1) my brother finds a new job 2) we could afford a bigger place. Just seems that our plans are being forced a bit early.

Thanks for the advice

rockstar1 · #6 (**permalink**) 06-19-2010, 01:41 PM

yes it would be wiser...

DavidBibby · #7 (**permalink**) 06-25-2010, 09:21 PM

Quote:

Originally Posted by kev_dogg

We do have medical insurance for our child for the time being.

Rentals here are not cheap. A 2 bed/1 bath apartment can go for as high as $800 a month, lowest I've seen here is $650. Not to mention deposits, and we have dogs which eliminate 80% of the listings. Most listings for 3 bed/2 bath right now are hanging at about $1,100-$1,300 + $1,500 in deposits, but there are two listed currently at $950-$975, that allow pets with deposit, which is where my estimate of $2,500 comes from.

Jobs aren't so easy to find either. I work at a casino and my fiancee just got a very slightly higher paying job at Safeway. My brother is looking but its the summer and positions have been filled at most places.

I have attempted to contact the HR department at my place of employment but so far no response to emails, definitely going to have to pay a personal visit without appointment today.

Taking the 401k loan seems to be my best option, where we are living now really isn't accommodating for the amount of bodies living there, and the original plan was to live there temporarily until 1) my brother finds a new job 2) we could afford a bigger place. Just seems that our plans are being forced a bit early.

Thanks for the advice

Kev_dogg,

Borrowing from your 401k is a good option.. they allow you to pay it back over the next 1 to 5 years.. then they will take the repayments out of your paycheck, so paying back the loan is pretty easy as long as you remain employed. If you quit your job, you'll have 90 days to pay it back, or will you will incur a withdrawal and tax penalty (not quite a bad as it sounds).

Once you're making loan repayments to your 401k, you CAN lower your regular contribution so that it minimizes the difference in your current paycheck.

I know this might sound heartless.. but from a complete numbers perspective, it seems like you're going to spend an extra $300 a month to find a place that will take dogs. Would it be possible to find a good home for them. I only throw this out there to consider if your situation is desperate.

While you might be an avid dog lover.. you have a 3 month old baby to consider. You would want to find the BEST place, at the best price, and if they take dogs that's a bonus.

Good luck on your move!

rahulsaad · #8 (**permalink**) 07-03-2010, 07:46 AM

I think its not good for you.

Eric80 · #9 (**permalink**) 07-06-2010, 05:28 AM

Quote:

Originally Posted by rahulsaad

I think its not good for you.

yea you got to becareful when doing something like that and dont borrow from other savings

DavidBibby · #10 (**permalink**) 07-06-2010, 09:01 AM

What's the downside to borrowing from your 401(k)? It's no so bad.. and here's why:

Lets say that you have $5000 in your 401(k) right now, and you have your money spread among different mutual funds.
Each of the funds can likened to a Roller Coaster ride. It's goes UP and it goes DOWN. They are subject to current market conditions which are unpredictable.

When you borrow money from your 401(k), you can take up to half of your balance and take if off of the Roller Coaster and you put it on a Carousel instead. You have to pay yourself back WITH Interest over the next 1-5 years. But here's the thing.. the interest you pay goes into your 401(k) also! Usually the interest rate is set around 7%, and it is guaranteed.

If that money stayed on the Roller Coaster (in the mutual funds) is there any guarantee that you'd make 7% return in 1 to 5 years? You MIGHT make more... or you MIGHT make less. You can't predict how much you might gain or lose by borrowing from your 401(k) and paying it back.

Now the question before us by kev_dogg was: Do I borrow from my 401(k) or do I get a payday loan?

The choice is between borrowing his OWN money and paying HIMSELF back the interest... or borrowing from a legal loan shark and paying 300+% interest on a REALLY SHORT TERM LOAN.

C'mon... the payday loan people will eat him alive.

Borrowing from your 401(k) is a good option where you're left with no other options.

stuart45 · #11 (**permalink**) 08-20-2010, 08:28 AM

I disagree. I believe the majority of people who use same day payday loans do it time after time after time. They are not always in urgent financial need, but they tell themselves they are. Urgent need is like when the car breaks down and you can't get to work, not when you spent too much on cable movies or your cell phone and now you don't have money to go eat out. It is a lifestyle some people allow themselves to get into. Unfortunately it is a little like gambling; the house always wins.

alfredjony · #12 (**permalink**) 09-05-2010, 04:14 AM

Go for the 401(k).
pay day loan can also be a good offer if you swear that you will not for it ever again in your life

lighthouse · #13 (**permalink**) 09-07-2010, 11:49 AM

Kev,

reading over this forum I have some thoughts..

1. Loaning you 401 might be your only option though something that I would never recommend but if you come to this conclusion yourself then go with what you think is best. However a payday loan is a big NO. This will only sink you further down, trust me I have seen it to often. Also if you are bringing home 1K a month from working full time i find it hard to imagine with the way the market has been performing that you have much money in this account. So this will go quick if you borrow it.

2. My opinion you your best plan is to find a job/career. I here people tell me all the time that it is hard but it is a lot easier to find a job then to owe people money for the rest of your life. You just need direction and a plan to attack the job search. Remember that this is America and you can do what you dream. So discover your passion in life and go for it. Not that you should quit your job but you should start living a plan. Your current income is not going to get you out of any situation soon. if you are series about getting out of your current situation track my email down and I will send you a book "48 Days to the Work you Love" This book changed my life by helping me get on a plan

In the words of the great John Wooden "Failure is not fatal, but failure to change might be"

Lighthouse

rice8702 · #14 (**permalink**) 09-07-2010, 06:05 PM

that is good advise. I had to borrow from my 401 k a long time ago and was able to get back up on the feet with no problems. Sometimes you have to do what you have to. Take David's advise and get as much work as possible and have everyone pitch in to get by this situation and you will be ok.

DavidBeairsto · #15 (**permalink**) 09-07-2010, 09:11 PM

At 24 you're in good shape if you have a 401k with a decent balance... I've used 401k loans many times... also at 24 you need to stop thinking in terms of being 'DESPERATE'... the key is to make sure your budget holds up (as tight as it is) when you get into the new place... the next step is to increase your cash flow or the cash flow within the household... keep in mind the budget can include the income potential multiplied by however many able bodies reside in your new place.

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