Since I am still short on my budget, I have to prioritize my cash flow at the moment. This is how I’ve been allocated my cash as of late. I will update this as I have more or less cash on hand…
Expenses and Debt Payments Priority List
Higher Priorities
- Payroll (current)
- Mom Payment (current)
- DMP (Debt Management Plan) Payment (due in 5 days)
- 0% Citicard Payments (5 cards) (current)
- Comcast Business Internet (behind)
- Business Advertising Expenses (due periodically)
- Vonage Phone Lines (current)
- Office Lease (paid today….barely enough cash to cover)
- Food Expenses (current…I’m alive)
Lower Priorities (at this critical time)
- WAMU SBA Loan Payments (unable to pay, 2 months behind)
- WellFargo Business Line of Credit Payments (unable to pay, 4 months behind)
- Utility Bills (somewhat behind, need to collect more $ from ex-roomates)
- Payroll Taxes (behind)
- Health Insurance (current)
- Car Payment (arranged 2 months of no-payments)
- Car Insurance (current, $160/month, cheapest plan I could get, dropped older $260/mo business plan)
- Savings (just pulled $500 out of a college savings plan…my last ounce of cash)
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{ 16 comments… read them below or add one }
I’m confused…why haven’t you sold your car and bought a $1000 car that meets your most basic transportation needs? I’d say it’s time to dump assets and debt. Also, I’m confused about why payments to your mom are above your other debt. I know she’s your mom, and you care about her. But, she didn’t technically lend you money – she made the mistake of having you invest it. I agree you should pay her back. But, you should prioritize the actual loans you have from people and businesses who made you loans with the explicit agreement of payments.
My mother needs that $400 a month to survive. If I had not lost the money, she would easily earn that much in dividends or a high-yield savings account. She goes #1, no debate on that.
I did not have the authority to trade my mothers account. She thought it was going in safe mutual funds. Obviously that is not what I did with it. So, yes technically it wasn’t a loan, but that is how I view it, and I think that’s how it should be viewed.
And the car, the car. Read the previous post. If I could sell the car I would!!! If someone would float a 5K note on the difference between what I owe and the worth of the car, of course I would sell it!
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I’m very impressed with how you’ve put a lot of thought into prioritizing your debt. In my opinion your priorities ought to be:
1) All business expenses. Without your business you can’t pay off anything. You have to keep it afloat.
2) The IRS, because they will put you behind bars (which also means you won’t earn money). You should be able to get on some sort of monthly plan (instead of having to pay $12,000 immeadiately):
http://articles.moneycentral.msn.com/Taxes/PreparationTips/WhatIfYouCantPayTheIRS.aspx
http://www.smartmoney.com/tax/advice/index.cfm?story=nopay&hpadref=1
3) Your mom. She “lent” you the money and needs it. WaMu and other creditors expet a certain amount of loss and can survive it. Your mom can’t. More on this in a second.
4) Your other creditors. Even though Wamu expects a certain amount of loss, you still owe it to them to pay back what you borrowed.
As for your mom, Kristina had a point. Since it’s not actually a loan, if a creditor takes you to court, the judge might force you to pay them before paying your mother. If I were you, I’d take a look into the benefits of signing a loan-agreement with your mother right now. Ask the attourney about it, is it legal and would it protect your payments to her?
Continuing to wish you best-of-luck.
I agree with Kristina. Once again, I don’t understand your logic with the car at all! Say you owe $15,000 on your car but it’s only worth $10,000 ($5,000 difference like you said), sell it for $10,000, buy a $1000 car with the proceeds, and owe only $6,000 instead of $15,000. You may like oweing a lot of debt or something but from where I’m sitting, oweing $6,000 and making payments on that is a lot better than oweing $15,000. You’ll get rid of debt quicker – paying off $6,000 over 1 or 2 years is better than paying off $15,000 for 4 to 5 years! If you can see how this doesn’t make sense, then it’s no wonder you’re in debt and blinded by your troubles.
Having been upside down in a car loan, the one thing I do know is that at least in my state, if you owe money and someone has a lien on your vehicle (in DebtKid’s case, Toyota Financial), you can NOT sell the car unless you have enough money to satisfy the lienholder. So he could sell his car for $10K if he found someone to loan him the other $5K to pay off Toyota Financial, and another $1K to buy a beater. I completely agree with Tyler and Kristina, being upside down in a car loan is bad bad bad, but sometimes you have to wait until you are less upside down before you can take care of if.
I personally don’t see what the big deal is with the car. I’ve had experiences before with $1000 cars — not good. I bought a brand new car a few years ago. I bought it to last. I don’t want to have issues with it. I don’t want to wake up every morning wondering if I’ll be able to get to work today. I don’t want to have to spend thousands in maintenance costs because it broke down once again.
Also, if debt kid sold his car, that would be an immediate $5000 loss. Yes, he would have a little bit of extra cash, but suffer a loss in his balance sheet.
It would have been best if debt kid had purchased a $9000 car instead of a $17000 car, but he can’t go back and chagne the past. What’s done is done. Looking forward, I agree with him that the best thing is to keep the car.
Actually, the issue isn’t so much with buying a decent car, is the stupidity of buying a new car as opposed to a two or three year old car with 30K miles on it for a fraction of the new price. The rest of that money is simply pride. It’s OK if you can afford it, but if you can’t that’s not a wise investment.
Realistically, cars last forever these days. My ten year old Land Rover, hardly the bastion of reliability in the public’s mind, has 120K on it and still works fine. A three year old Camry is going to last another 200K.
That said, it looks like debtkid is stuck with the one he has.
Well, you, and a fair coin, have some tough decisions to make. Sell the new car, pay late creditors or Mom. So if you take a loss on the car, that is $4k + $3k junker = $7k, not $17k, so $10k wiped out at once. You should be lucky to have such an option. Now you can easily use the car payment to pay your Mom. The only trouble is coming up with $7k cash.
Yes, coming up with 7K in cash USED to be easy… (when I went on a credit binge and still had a 700+ fico).
Have you talked to anyone about a book deal? If you focused it on just the year or two you spent gambling away all that money by day trading it could be really interesting. Add to that the sad tale of you trading away your mom’s money – it sounds like quite a story.
Might be something to think about.
“Might be something to think about.”
hey, if the Casey “iamfacingforclosureisback.com” serin can get a “book Deal” I bet you could too.
Alexis…lol. I’m just trying to survive ’til the end of the week! I may post more about my trading days sometime, it might be good to process a bit of why I did those things and how it affected me. We’ll see. The thought of writing down some of my experiences there is a bit scary, I’ll be honest. So many lies to friends, family, ect…not a happy time in my life.
I’m in the middle of two new pretty ambitious projects with my business at the moment, so I need to stay focused on those. They could actually pay the bills!
wow..wow. Man oh man. I like your style. Do what you gotta do with those debts man.
When I was being crushed in business, I made similar priority lists. Be ruthless and think hard. Grab your spreadsheet by the neck every day and make it work. Cut your costs ruthlessly. Yep, spending priorities and lists like this will not leave your consciousness for the remainder of your business career. here are some priority lists i maintain:
1) cash sufficient to cover all 0% debt – now short $1.7k
2) medical $3k
3) charity $1k
4) 401(k) $15k
5) roth $4k
6) complete the 15% tax rate
7) go sailing
that’s how priority lists look.