Ask the Dollar Diva By Dorothy Rosen • Bankrate.com

Christmas is about children and love -- not expensive gifts

Dear Dollar Diva,
My husband and I are very young and have 2 children. We recently purchased our first house, and we can't afford it now. I am a stay-at-home mother because I can't find a job that will pay enough to pay daycare and transportation to get back and forth to work. Also, I have no one to bring my son back and forth to kindergarten.

My husband brings home around $850 every other week and our house payment alone is $830 a month! What are we going to do? I am trying to look for work on the computer, and I can't find a thing that I can get into without spending money on it first. Here it is right around Christmas, and we have no presents. My mother-in-law is going nuts because we can't buy everyone presents. I would like to catch our bills up before we buy presents, but I don't know how. I need help on budgeting and I need it fast! My husband and I fight all the time about money, and I don't think I can take it much longer. If you know of any jobs that I can do at home on my PC, a few hours a day, or night I would be very interested in them. Also, if you have any ideas about how we can budget our money please send them.

Thank you.

Lisa

Let's take this one step at a time:

Your mother-in-law

You can't be worrying about buying gifts this year, and your husband has to tell his mother that you are experiencing a temporary financial setback and that she needs to back off. Your mother-in-law should be grateful for what she has -- two wonderful grandchildren, and a daughter-in-law who is at home taking care of her son and his children.

You need to tell everyone else that as much as you love them, you will not be able to exchange gifts this year. Or, if you can afford to buy the ingredients to make Christmas cookies or candy, or even something that your especially good at, such as homemade salad dressing or salsa, tell them of your plan to give small, homemade gifts. If it means you have to miss some of the family festivities because you can't participate in the gift exchange, so be it. You and your husband may be young, but you have grown-up responsibilities now!

It sounds like your children are young -- five and under -- and will be happy if Santa leaves them a few used books and toys from your local Goodwill. Kids that age love doing things with mom and dad, and that doesn't have to cost a dime. Take them to see the lights in the city; to the library to look at picture books; to the zoo or botanical garden if they're free; make some yeast bread dough for them to play with; bake cookies together; build a snowman.

If the children ask for an expensive toy that you can't afford, ask grandma to get it. You also could explain that you'd like them to have what they want, but it is simply not possible this year. Spending is a relative thing. Regardless of how much you can afford, children often ask for more since they don't understand money. You can help them through this by helping them write a letter to Santa telling him that they understand if he gives them what they want he will not have enough presents for all the poor children and will be grateful for whatever they get. It takes time and love to make very young kids happy, not money. They get joy from putting cookies out for Santa and carrots out for his reindeer on Christmas Eve. It gives them even more joy when they see the bites taken out of their offering on Christmas morning. They get joy from seeing mom and dad smiling at each other and at them.

Your Home

It is simply more than you can afford. Your housing costs, including mortgage, insurance, utilities, furniture, repairs and maintenance should not be more than 35 percent of your net income. Thirty-five percent of your husband's current take-home pay is $645.

Your mortgage payment alone is more than 45 percent of your net income. If you add another $100 a month for utilities, furniture, repairs and maintenance, your total housing costs become $930 -- more than 50 percent of your take home pay.

Your current take-home pay will have to increase by $815 a month for your current housing expenses to be 35 percent.

If bringing in that much additional take-home pay does not sound possible, you have no choice but to sell your home and find a place that will put your housing costs in the area of 35 percent of your current take-home pay. You can listen to the advice of your family, but the ultimate decision is yours. 

Finding a job online

It is very difficult for a young woman with little experience to find a job that will bring in enough to pay for the child care, transportation, wardrobe and convenience foods and services needed. You are very smart to recognize this and not try to do the impossible.

The Diva thinks that staying at home to take care of your husband and very young children is admirable, and your husband needs to respect the contribution you are making to your family. However, this is a good time to start preparing for when you will go to work in the future. 

You sound like a bright woman -- do you have a college degree? If not, start working on one. A course or two a semester is just fine. Many local and community colleges have day care centers, so if there's public transportation available, you can go while your husband is at work. Or you can go when your husband isn't working, so you can use the car while he watches the kids. Perhaps grandma could watch them. Visit the financial aid office of the schools in your area. Ask about scholarships and grants earmarked for women.

Budgeting your money

Your biggest expense is your housing, and the Diva has already addressed that.

You need to know what comes in and what goes out every month. Many computers come with personal finance programs such as Quicken or Microsoft Money. Shareware financial programs can be downloaded from the net for free. Learn how to use one, so you can keep on top of your cash flow.

If your debts are eating up what's left of your income, consider Consumer Credit Counseling Services. An initial consultation is free, and they can help you manage your debt and find more affordable housing.

DOROTHY ROSEN has a master's degree in finance, with a specialization in accounting, from the Kellogg Graduate School at Northwestern University in Evanston, Ill. Rosen has more than 15 years of experience in the financial arena, serving in Illinois and Florida as a certified public accountant, financial consultant, expert witness and educator. She is owner of Dorothy Rosen, CPA, a public accounting firm that serves individuals and small businesses.