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Dear Liz: Do you have any advice for a family of six with only $200 a month to spend on food? My wife and I are in dire need of advice, as our bills keep increasing but neither of us has gotten a raise in six years. We have two garnishments on our paychecks that effectively take 50% of what we make. After health insurance and 401(k) loans are deducted, we bring home $2,000 a month. Our rent takes $1,400 of that and utilities take most of the rest. Do you have any miracle advice for us?

Answer: Many families are facing your dilemma: flat incomes with rising costs. But your wage garnishments and 401(k) loans indicate you have a history of mismanaging your money, which has led to even more pain.

You need the advice of an experienced bankruptcy attorney. Wage garnishments by federal law aren’t supposed to exceed 25% of your disposable income, and state laws often provide even lower limits. If you can get your garnishments adjusted or have them wiped out in a bankruptcy filing, you may be able to create more breathing room.

In the meantime, see whether you qualify for the federal government’s Supplemental Nutrition Assistance Program (formerly known as food stamps). If you make too much money or have too much in assets to qualify, you can still visit a food bank to supplement what you’re able to buy.

If you can’t find a way to lower your costs further, the only solution is more income — not an easy prospect given the high unemployment rate, but you may be able to find a job at a competing business that pays more or start a business on the side.

Unfortunately, there are no miracles when it comes to money math. You can’t make two plus two equal five or have outgo that exceeds your income without eventual disaster.

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Categories : Budgeting, Credit & Debt, Q&A

2 Comments

1

I was wondering when they raised the garnishment allowance, because I always thought the maximum for such aciton was 15 percent. Over the past three decades it seems as if most if not all financial laws and decisions have favored big business at the expense of the consumer. How can we get a more even balance. And, as a first-time poster, how do we create a new topic for discussion?

2

Thanks for your comment, Brian. In many states, 15% is the maximum, and a few don’t allow wage garnishments at all. As for creating new topics for discussion, I don’t have a forum set up yet. If you’re on Facebook, you can check out the conversations and discussions on my fan page (www.facebook.com/asklizweston).