Should we sell our house to get out of debt?

amother

Thu, Nov 16 2006, 11:15 pm

We are in debt. Our mortgage payments recently went up and we are refinancing, which will help a little but not that much. We already have a second mortgage, which will be rolled in with the first when we refinance. But every month is stressful, and although we usually scrape by, this past month we didn't and we are very late paying. It was a hard month, with medical and dental expenses, etc., on top of the usual tuition, etc. that are stressful enough. We are self-employed and our income fluctuates.

Now we are thinking of doing something radical to improve our financial future, because at this rate it looks bleak unless one of us has a drastic increase in income very soon. Our house is small but we've been here several years and are fond of it, used to it, etc. We put a lot of work into it. Made the kitchen and bathrooms nice, etc. (It was a fixer-upper, which was how we were able to afford living in this town in the first place.) We want to live in this town. We like our house and the location, our neighbors, etc. We just can't get above water financially. So........ we are thinking of selling the house and renting an apartment in town if that will save us enough money per month so we can start saving. Then in a few years we would hopefully move into another house. We have actually outgrown our current house anyway and have no idea where our baby will sleep when she gets a little older!!! So we would need to add on to this house anyway, or else move, pretty soon. And we can't afford to add on!! Help

Has anyone ever been in a similar situation? I know people move all the time, and we have too, but I really don't WANT to move and our kids like our yard, our privacy, little things like where they play and hide, etc. Should we make a radical change? Will renting a cheapish apartment for a while (assuming we can find one) even help, if most of the selling price of the house would go to the bank anyway? Will we ever get on solid financial footing without a huge change in our income? (Tune in next week, for the next episode of "All My Kinderlach.")

Oh, and we never go out to eat, we never take vacations, we drive old cars, we buy thrifty clothes, and we already homeschool some of our kids!!!!!!!!!! What

queen

Thu, Nov 16 2006, 11:28 pm

we've got to all brainstorm to find ways for you to come up with the extra money, however I'd highly recommend NOT selling your house in order to rent. Rent is throwing out $$$ each month, which you are not in the position to do. Selling in order to buy something smaller- maybe, yet I'd leave that as a last resort.

Sounds as if you have lovely memories at your present location and I'd hate to think of you leaving.

Ladies... how can we help this woman save in other areas, in order to stay in the house. anyone?

Tefila

Thu, Nov 16 2006, 11:36 pm

1)Is there no way you amother could go out to work as opposed to be self employed?
2)Could you or your husband work shift work like in the day you r home with the kids at night he is or vise versa.
Imo though if you correct your financial now and find something small to buy rather then rent. Then you might be eligible for bigger loans in future and help in future.
And perhaps if you look outside the home you might find better money opportunities maybe your husband should. I have just thrown out a couple of suggestions hope you can think about atleast one Wink

amother

Thu, Nov 16 2006, 11:47 pm

queen wrote:

Queen, thank you for this sensitive reply!! I am touched and I look forward to everyone's suggestions. Salut

amother

Thu, Nov 16 2006, 11:54 pm

Tefila wrote:

Thank you for the ideas, Tefila. My husband is actively looking for a full-time salaried job, but the search is very frustrating!!! Exploding anger

He has many talents but no "credentials." His business has always been his thing, and that goes up and down and right now isn't enough.

Re: shift work. Like what kind of work? He is a rabbi but is willing to swallow his pride for honest pay at honest work somewhere. He is trying to be open-minded. But he is not a night person at all!! And I am already working around the clock to run my business. But I can only do so much, because we do have a bunch of kinderlach. Lady

As for buying a smaller place...... our house is very small, maybe the smallest in town. That's how we can live here at all. We are already bursting at the seams. Any smaller and we will go absolutely Shaking

amother

Thu, Nov 16 2006, 11:58 pm

Piper wrote:

Homeschool all the children. that is what my Rabbi does.

Ah, now this we seriously consider every couple of days..... Financially it would help somewhat, but not a huge amount because of how things are arranged. Also for our children who are in school, it's a good thing for them right now. How far can/should we shake up our kids' lives for the sake of money???? What

But since I know a lot of people who homeschool around here, it is also always an option. Life wouldn't come to an end. But would it be fair to the kids? What

amother

Fri, Nov 17 2006, 12:01 am

Tefila wrote:

1)Is there no way you amother could go out to work as opposed to be self employed?

Oops, I forgot to answer this one, sorry. I am very employable and probably could get a great job! I have a friend whose husband stays home w/kiddies and she works, and that works well for them. But I have a baby, plus with the homeschooling, it gets complicated. I am entertaining all options, however, no matter how radical. Exploding anger

amother

Fri, Nov 17 2006, 12:11 am

lubcoralsprings wrote:

NO WAY! A house is something that offers a lot of stability and you'll definetly be sorry down the road.

I agree completely Yes

but won't we also be sorry if we can't afford to pay our bills, have no savings, have no ability to help our children, pay for our retirement, etc.? What

At what point do we sacrifice that (feeling of) stability for the sake of a chance at healthier finances? And don't most people move several times? And what about planning to buy a house a few years down the road once we are on more solid footing, can get a better interest rate, can do it without a second mortgage, etc.??? Isn't this a toughie??????? And we are college educated people with skills..... and it's so hard, it makes me want to Crying

and it's stressing us out. Shaking

leomom

Fri, Nov 17 2006, 12:17 am

I think homeschooling is a great step. It can be even more fun with more kids (if they get along), but if they are happy in school, it's a big thing to pull them out -- and then you can end up with behavior problems, etc. Maybe ask the kids what they think of homeschooling too, and see what kind of reaction you get?

Another idea: Can you take in a boarder? I know your house is small, but do you have a room in the basement, perhaps, that could be rented? This would assume that you are in an area where out-of-town high school students board with families.

How much money per month are you short? It might make the most sense to look for all ways to increase your income, and keep looking for ways to reduce expenses. (It sounds like you are living pretty frugally already, but there's always something!)

amother

Fri, Nov 17 2006, 12:24 am

yy wrote:

Not sure if all the kids would get along at home all day..... shock

but I will give it more thought and talk to my husband. He doesn't think it's the best thing to do at this point, but we are getting desperate.

We don't have room for a boarder, unfortunately. Creative idea, though! Salut

I don't want to give exact numbers, but let's just say that to comfortably get on top of our bills and debt, we would need to bring in at least another $3000 a month!!!!! That is major. When I say we scrape by, I mean we scraaaaaape by. With occasional bail-outs from our parents for surprise expenses, like medical things. They help in other ways, too. I don't think we would even scraaaaaaaape by without their help. Pale

But it's getting embarrassing to ask. embarrassed

amother

Fri, Nov 17 2006, 1:18 am

Piper wrote:

$3,000. Wow. That is a lot.

It is a lot, thanks!!!! Rolling Eyes

When I say $3000, I am talking about what it would take for us to COMFORTABLY pay our mortgage and all bills (including tuition) each month, plus not need help from our parents. That means covering all of our medical expenses, dental, etc., which some months send us scrambling. To just scrape by more reliably, we would need about $2000 a month more.

It ain't easy no matter how you slice it!!!!!! That's for sure. The only good thing is that our house has appreciated enough that there is still a little wiggle room there if we do sell it (I.e., we won't end up owing the bank), even taking into consideration the second mortgage. But...... the housing market is slow, so the real price we could get would be....???? Who knows!!! Did I mention that this is very stressful? Shaking

Somehow we were able to manage pretty well for a few years, before our payments went up and my husband's business slowed down a little. Now I feel like we are going to hit serious rock bottom unless we get radical!!! 8) 8) 8) 8)

TzenaRena

Fri, Nov 17 2006, 1:26 am

amother wrote:

lubcoralsprings wrote:

NO WAY! A house is something that offers a lot of stability and you'll definetly be sorry down the road.

I agree completely Yes

but won't we also be sorry if we can't afford to pay our bills, have no savings, have no ability to help our children, pay for our retirement, etc.? What

and it's stressing us out. Shaking

We are also scraping by, barely, miracles each month Very Happy

we do not have any savings, including retirement savings. we are relying on Hashem who always helps, and He will in the future too. We would not think of selling the house. It's an asset, and better than savings. the value goes up, and if you sell, chances are that you may not even be able to afford a home a few years later if prices rise drastically, which is what happened in our area. Many who put it off, can no longer afford to buy.

I'm a little nervous about homeschooling, not everyone can give the children a well rounded limudei kodesh education, there is much that a teacher imparts beyond the pessukim or mishnayos he/she teaches. It's like an entire sefer written between the lines encompassing the entire extensive Torah background of the teacher. and the social aspect of school is also very important. I believe in supplementing the school education, it's the best of both worlds.

sorry I don't have any advice as of now. I'll think about it though, because whatever I can think of could help us too!

leomom

Fri, Nov 17 2006, 1:54 am

SaraYehudis wrote:

We are also scraping by, barely, miracles each month Very Happy

I agree about taking a big chance with housing prices going up, even though right now they are going down. But maybe with the current market, you CAN find a good deal on another house (maybe a comparable size but less money) and move ASAP?

And about homeschooling... it depends very much on the particular child (and parents). For some kids, the "social" aspect of school is a good thing, while for others, it's (let me find a good emoticon here -- ah) Banging head

mimsy7420

Fri, Nov 17 2006, 9:35 am

I don't think selling your house would do the trick. Instead of paying your mortgage you would be paying rent. I'm sure it would increase your cash flow, but no where near the to the $3000 you need.
You need to stick it out in the house while times are tough, and when you are ready to retire - well then you can sell the house and live off that money. The market is going to go up and down so much, the best thing is to stay put and ride it out. Even if you squished yourself into an apartment for a few years - the market might have shot up by then and you will be stuck. And your lovely house's value would have shot up also!

But right now you need to find somewhere to increase your cash flow. Could you juggle the kids around a little to make room for a boarder? That is a nice source of income. Can you make your basement into an apartment and rent it out?

shoy18

Fri, Nov 17 2006, 10:03 am

Selling your house should be last last resort. Homeschooling well if you can stomach it kol hakovod.

Can your dh get a job at a day school or something along those lines?

Another thing to consider is your mortgage rate maybe you can refinance and lower your rate. their are many things you can do to lower your payments, you might also think about talking to a personal financial planner who might be able to give you some ideas that we would never think of.

mimsy7420

Fri, Nov 17 2006, 10:21 am

chocolate moose wrote:

I don't know about the long run, but the short run, it's cheaper to rent than to buy...you don't pay heat or repairs and if you live in a little basement or a building, you can save even more on rent.

But we usually live with the long run in mind, not the short run.

Unless you are saving a ton by renting - in the long run you are not helping yourself because you are just throwing the money out to the wind.