Should we take the money??

[scaredyclassic]

[quote=svelte][quote=flu]I really look forward to lpjohnso and her family turning this around. It’s encouraging to hear there people doing things to get out of the financial predicament they are in.[/quote]

Me too. Please do keep us posted lpj.

My wife and I have gotten ourselves into jams too so don’t feel like you’re the only one. 🙂

We struggled for awhile but analyzed the situation (like you’re doing) and righted our boat…there is no reason I can see that things won’t turn out just as well for you.[/quote]

we had 20k in credit card debt about 15 years ago we paid off pretty fast.

[Coronita]

[quote=FlyerInHi]Come to think of it, managing your financial affairs well is one thing. But don’t go out with friends and be cheap. That’s very bad. Stay home if you don’t want to spend money.[/quote]

There’s a difference when you are a bachelor that can afford to take risk and live more on the edge versus when you have a family of 5 to worry about, fighting to financially survive.

The last thing lpjohnso needs to worry about is what others think of her. People care way too much about what other people think. As a result, people end up doing a lot to prop up appearances.

People just need to be reasonable presentable, reasonably well mannered in public, and reasonably approachable.

As far as money matters is concern, the question someone should be asking oneself in this situation is “is spending X to prop up appearances really worth potentially losing my home?” Because that’s what it boils down to.

If you’re surrounded by friends that spend like a fiend and you can’t/don’t want to, or friends that make you feel bad because and compels you to spend above your means to keep up, you need to either work on your self esteem and/or ditch your “friends”, because they’re getting in your way of financial freedom.

[FlyerInHi]

[quote=CA renter]

California is filled with great places to hike. Just drive the beater car a few miles and you’re there. Pack some apples, maybe a couple of (cheap) granola bars, some water, and that’s all you need. Easy peasy.[/quote]

Yes, we are lucky in California. I think the survey was for the country as a whole. In San Diego, you can easily do Torrey Pines, Penasquitos Canyon, hike down to Black’s Beach, etc…

I don’t like beater cars. Cheap but well maintained and clean, respectable looking is good. With AC. A car without AC is painful to drive.

[spdrun]

See, I don’t know. In other parts of the country, lower middle-class people hike and camp as well. They just call it “hunting”, bringing guns and beer along and forgetting the granola bars.

[scaredyclassic]

[quote=spdrun]See, I don’t know. In other parts of the country, lower middle-class people hike and camp as well. They just call it “hunting”, bringing guns and beer along and forgetting the granola bars.[/quote]

For the intelligentsia a book on the art of walking. A slender volume, it changed the way I saunter.

[Seems2Me]

This is a long post, but it’s not an off-the cuff response. You didn’t say how much non-housing debs you have, but I think you have 2 decent options:

1. If you really like your home and neighborhood, and don’t want to move, look into refinancing out of that FHA loan. You are probably paying about $1430 principle and interest, and $350 in FHA mortgage insurance, $1780/mo. If you have decent credit and your home will appraise for around $500,000, you should be able to find a 30 year fixed conventional loan in the high 3% range. At 3.875%, the PI on a $375,000 loan is $1764/mo. This should pay the refi closing costs and net you about $20K to pay off debts. And, it will relieve you of $500 (fill in the correct number) in monthly debt payments.

You have lowered your monthly nut and increased your mortgage balance. Depending on your discipline and financial/market outlook, you could take some or all of the monthly savings and pay extra towards you principle balance. For some people, investing and compounding your monthly savings will work out even better than principle reduction in the long run.

2. Sell the house and buy a smaller, less expensive one. Use a discount broker – get recommendations and check them. If the market in SD is hot (new bubble?), it will sell if priced right. Then, pay off your other debts.

You could rent, but if rents are really high, think about buying either smaller, less expensive home, or a home with a rental unit or a garage which could be converted into one.

The smaller home: Get a mortgage with a payment of, say $1200/mo plus tax and ins. Live here, save ALL the difference between your old house and paid debt payment. When you have another down payment saved, buy another home, move in, and rent out your previous home. Try to have housing debt (PITI) well below what you can afford. This will work well when prices go down again, and they will. You can repeat this process as it suits you. Some will say that this sounds like a damn fool scheme. However, I have done it, and am heading into retirement with more than a couple of paid-off rentals to augment Social Security.

The home with the rental unit or garage granny: Basically the same plan, except you have rent coming in right away. This means your first rental will be a 2-unit. My wife started with a dumpy house in Sonoma County, traded to decent place with 2 rental units, and then a larger 2-unit property. Her tenants paid more than half her housing debt, and she lived simply. We were a perfect match!

We sold it late in 2005, moved to the East Coast, and bought 3 rentals, including a real nice place in Asheville with no loan.

Last year we sold a rental SFR in Sonoma county for about what we could have gotten in 2006, and exchanged into 2 other newer rentals, increasing our net rent by about $900/mo.

We made it work thru the ups and downs. I am telling you this not to toot my horn, but to inspire you to look for the opportunities around you, and make the most of what your situation offers. Can YOU do the same thing? That’s up to you.

I wish you the best of luck and the will to WORK!

[FlyerInHi]

[quote=scaredyclassic]
For the intelligentsia a book on the art of walking. A slender volume, it changed the way I saunter.

[/quote]

I have been sauntering for a while now.

How do you find the time to read so many books? Blogging online, taking care of family, gardening, krav maga….. you’re a super human! Un homme fantastique.

[scaredyclassic]

I don’t read that much. I just name drop every book I read.

Also I start but don’t finish many many books. Read 20 pps. A bit in the middle and the end…

Your house was strange in my dream

[Coronita]

[quote=lpjohnso]
We cut out cable last year, but unfortunately we are under contract on our phones.
[/quote]

Bump…. Maybe you aren’t trapped afterall…… I’d give them a call to find out the details…

“T-Mobile will pay $650 for you to switch”
http://money.cnn.com/2015/03/18/smallbusiness/tmobile-uncarrier/index.html?iid=HP_LN

http://www.t-mobile.com/offer/switch-carriers-no-early-termination-fee.html

Available March 22
We’ll cover every penny of your old device payment plans.
Want to switch to T-Mobile, but you’re trapped because you owe money on your old phones? Not anymore. Starting March 22, T-Mobile will pay off your remaining phone payments from your old carrier. Just trade in your devices and we’ll cover your remaining phone payments—as much as $650 per line with a trade-in credit and Visa® Prepaid Card when you switch to the Un-carrier.

Everyone gets unlimited talk, text, and data on the Data Strong™ network for just $50. Add a second line for $30. Every line after that is just $10 more. All with up to 1GB 4G LTE. Add as much high-speed data as you need. Plain and simple—no annual service contracts, no hidden fees, and no domestic overages.

[an]

So, get some cheap go phone on your current carrier, switch to T-mobile to get out of your contract, then switch back to your current carrier and get your new phone for free and sell your old phone, which would allow you to make some $ from this deal. I’m seriously considering doing this.

[moneymaker]

I’d say the biggest unknown is job loss. Some on this board have experienced it and it is probably right up there with losing a home as far as mental anguish (ok losing a home might be harder) also the hardest thing to plan for. I would bet most people don’t have a plan B for job loss which eventually leads to home loss. A friend of mine was seriously hurt, out of work for almost a year, with all the medical bills and lower income finally lost his house, on the bright side he is still employed at the same place and now barely making ends meet as a renter. I’m always coming up with great ideas but never act on them, hence I’m working for “The Man”, comfortably however.

[all]

[quote=lpjohnso]
The kids already have enough toys to last until they are grown. Has any one wrapped up toys that your kids already had, gave it to them as a present and try to pass it off as new?? Oh yeah, we’ll go there. Especially with the baby.
[/quote]

There are two flavors of ‘new’ for our younger boy:
1. New from his brother (hand-me-down), and
2. New from the store (most likely shoes)

If there was a birthday party and the kid got a dozen of gifts (s)he gets to pick 2-3 to open. They get to open another one every couple of months, usually tied to academic of athletic performance.

They get one or two longer-lasting toys for Christmas (bike, scooter, craigslisted skis, tennis racquet), clothes and the unopened birthday gifts.

If you plan on kids doing any competitive sports or play an instrument be ready to pay up. Club soccer season for an 8 year old costs $2K. Private lessons are ~$1/minute.

[spdrun]

$2000? I know people in NJ were screaming when some schools imposed $150 per sport fees in 2009-2010. Ouch.

[all]

[quote=spdrun]$2000? I know people in NJ were screaming when some schools imposed $150 per sport fees in 2009-2010. Ouch.[/quote]
Club soccer. The club takes $1000 – $1,500. Team expenses not covered by the club are another $200-400/player. And then you have incidentals like the team being good enough to qualify for the second round of the state cup and having to spend a weekend in Lancaster.

[bearishgurl]

I just have a couple of comments on this thread. The first one (now water under the bridge), is that the OP absolutely could have bought a 1700-2200 sf home in SD County in 2011 for the price they paid for a 1300 sf home in SEH ($330K). Sure, it would have been older and most likely needed cosmetic upgrades but they spent that money anyway on the smaller, newer home they bought. And it would have been without MR and HOA dues, (which could now have proven to be a financial thorn in the OP’s side).

I DO FEEL 1300 sf is a bit small for a family of five with 3 growing boys and 3 dogs (size of dogs unk?). However, it is doable if it isn’t too crowded with “stuff.”

The second thing is that Piggs counseled the OP in error re: priority of unsecured debt, i.e. consumer/credit-card debt.

CC companies and their collectors have fleets of local attorneys on staff or retainer expressly for the purpose of obtaining (usually default) judgments for delinquent consumer debt for their Big Bank clients. These firms typically file a dozen or more cases in one transaction and if requested by the court for a date for a “prove-up” hg or other motion, schedule several cases in one courthouse in the same day.

In 2010 alone, Chase obtained approx 55,000 default judgments against its delinquent debtors (in civil, limited civil and small claims actions) in a 5-county SoCal region. Post judgment, they typically seek writs of execution or attachment and then lien the individual/couple who will not be able to sell or buy RE without dealing with them (at 10% per annum post-judgment). They don’t often foreclose their liens, unless the debtor’s property and its encumbrances warrant such an action (rare). However, the 10% per annum compounds on itself and these firms have ticklers to refile the liens in a timely manner.

I feel it was not wise to tell this OP that there would be no consequences to ignoring consumer debt.

Consumer debt collection is BIG business in the USA and especially in CA, where RE tends to be worth more.

[Author]

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