A real financial puzzle -- help

[AdamL]

I was chatting with the security guard in my building here and he was asking me for financial advice. After hearing his story, I confessed I couldn't figure anything out and told him I'd ask my friends online who know far more than me, and see what they think. So your help is much appreciated, if you think you have something constructive to offer.

He is in automechanics by trade but has all his experience from Tanzania and the Canadian auto industry requires you to become an apprentice and really work your way up a ladder within the shop. No matter how much experience you have, you're expected to take this route. (And he has plenty of experience already). He can't do this, because the pay wouldn't cover his existing bills. He's living on a shoestring already.

Ok, so his wife works and makes about 30k/yr (CDN) and he makes 22k/yr CDN. They have a house and about 100k in equity. Their credit cards are, I assumed, maxed out. (He said his CC debt is high) He has two daughters, one still living at home at 14 and the other is 20 or so and attending University. She's at home some significant part of the time. He said he absolutely needs 3 bedrooms wherever he is living.

His current house is a semi-detached small home. He owns a car, in good shape, and uses it a lot.

Now, he's spending basically his entire life day in and out working as a security guard. He hasn't got time for his kids and because their fincances are so tight, he is always worrying about it.

He needs to get out of this pattern. What should he do? What can he do?

[Skjonne]

Become an on-line poker pro?

[DavidC]

1) Stop tithing.

Muslims have a fund administered by their mosque to help fellow muslims in need. With his previous worth, I'm sure he's contributed enough to this fund that he doesn't have to feel too bad about drawing from it.

That being said, since his mosque is newly established they may not have the funds required just yet to help him out, but I'm sure they'll look the other way and exempt him from tithing at least, for a while.

2) Sell the house and rent an apartment, use the equity to finance his apprenticeship. Hopefully pay off the credit card while he's at it, but doesn't need to necessarily.

3) 14 year old gets a job and gives the money to the family.

4) University kid gets a job and uses the money to help fund the education. If your wife did it, so can this kid. Also, get OSAP. It may be necessary to put off the university education for this one for a little while too, if something better can't be arranged. An alternative to this is making sure that the university kid is going into a profession that will pay, and that they will contribute to the father's apprenticeship when their degree is complete.

5) While working as an apprentice, work a little as a security guard also. Because he'll enjoy working as the apprentice, this won't be too hard; he'll just miss his family.

It's not much of a puzzle: it's a matter of will, although I do care about this guy.

Edit: And Skjonne can blow me.

Re-Edit: Okay, it's not so ridiculous... it's good money, BUT it takes a long time to learn and it's only really valid for people that already have enough money to break into 3/6. Also, learning isn't cheap and you shouldn't play on a scared roll. In summary: Skjonne can blow me.

Last note: Anyone with any ideas to offer other than mine, please respond to AdamL.

[DWarrior]

Apart from part-time male prostitution, all the other reasonable advices have been suggested.

[admo415]

If he has a house with equity, he should refinance, take that money and pay off all credit card debts ASAP. It makes more sense to be paying a lower percentage on a margage that one can use to build up equity again rather than paying extremely high interest rates on credit cards.

Second reason for doing this is that you can get a tax break on the Interest part of your morgage, so if he refinances, not only will he not be paying high credit card interest rates, but he will also get a tax break from the morgage.

That is the first step. How much does the beginning of the ladder pay for a mechanic, I cant image it would be MUCH less than the 22k/year he makes at the moment.

That is what I got from the information you provided: Use hoouse equity to pay off credit debt, get tax relief from new morgage, use the extra money that will come from paying lower rates on morgage and the tax breaks and that should cover the amount less he will earn the first year or two as a mechanic.

Adam

[Glenn]

He needs to make more than 22k Canadian/year. That's it. No one who has any skill whatsoever and puts in effort makes that little.

[parttimepro]

This sounds like a really difficult situation. Bottom line, he needs to make more money and spend less. It sounds like the best way for him to make money would be to get a job as a mechanic. The barrier to this is the apprenticeship required. I have a couple thoughts about this. First, this may not be inappropriate, as there are probably significant differences between cars in Tanzania and in Canada. Maybe I'm totally off base, but I would guess that most Tanzanian cars would be older models that are generally easier to service (i.e. mechanical rather than computer-controlled, they have carburetors, etc.) So it might be incorrect to think this is just a bureaucratic barrier.

Secondly, and more importantly, apprentices must get paid at least as well as security guards. $22K canadian is what, $15K US? That's got to be minimum wage. Getting an apprenticeship is at worst a lateral move, pay-wise.

Can't give specifics about controlling spending. Others have noted that refinancing his house will let him pay off his credit card debt and save on interest payments that way. Depending on where he lives and how much his daughter's tuition is, it should be possible to get by on $52K/year. I have plenty of grad student friends living on less than half that (no kids, of course, which makes things a lot easier).

I'm glad you're talking to people like the security guard at your building. There are a whole bunch of people, a lot of them immigrants, who are working hard and playing by the rules, trying to make a better life for their children.

[GeorgeF]

Sell home. Pocket equity. Go back to Tanzania. Open auto shop with home equity. Blow off CC debt.

[DavidC]

Admo, AdamL should have stated that we're Canadian, and thus, I don't believe that we get tax benefits from the interest paid on our mortgage, unless we're using the home for a home-business / home office.

There also might be a fee for closing the mortgage / selling the house or whatnot. I'm not sure the exact details, as I'm a 23 year old kid who's never owned a house, but you would have to evaluate these exact costs to figure out what your +/- EV was for all this. /images/graemlins/smile.gif

[DavidC]

[ QUOTE ]
Sell home. Pocket equity. Go back to Tanzania.

[/ QUOTE ]

It's not possible due to the political situation back home.

[admo415]

Ahhh good point, I am 21, never owned a house either. I just remember that it came up that in the US you can get a tax break from the interest part of a morgage.

But, since you guys are in Canada, I guess that does not apply /images/graemlins/smile.gif