HELP!I'm pouring my heart out here, need advice!*Updated 6/12/07*

[dvcgirl]

The thing is it doesn't sound like a stagnant location.
There is buying and selling activity.

I agree, I'd change something too. I don't know what exactly. (There are times to go down ofcourse.) I'd probably take it off the market for awhile fix it up and try later. Rather than taking a big hit.

I think that the OP said that this house was built in 2002...not exactly a fixer-uper. I don't think that they're selling this house because they need to sell it....they want to sell it....and move up to a bigger house (that they can't afford). I did a quick search on realtor.com for our OP's hometown. I saw an 1,800 sq ft ranch on 12 acres built in 1998 going for $144,000. The OP's house is newer, but smaller...I don't know if she mentioned her acreage. But she's 24K higher... Now, granted I don't know the area, but this house at 144,000 would seem to be in a rural area with 12 acres (and the OP said her house was in a rural area). If I'm buying...would I pay an extra 24K for a smaller house, possibly on less acreage because it's four years younger...no way.

 

[minnie1928]

I am a spender, hence I am bias.
It looks to me that your parents used the house to support their life style for 37 years, not bad though. Risky may be...

Hope that they have enough saving for their retirement.

They have no retirement savings, only pensions and Social Security. Their lifestyle was spend, spend, spend! Definately not the way to go!

 

[OceanAnnie]

I think that the OP said that this house was built in 2002...not exactly a fixer-uper. I don't think that they're selling this house because they need to sell it....they want to sell it....and move up to a bigger house (that they can't afford). I did a quick search on realtor.com for our OP's hometown. I saw an 1,800 sq ft ranch on 12 acres built in 1998 going for $144,000. The OP's house is newer, but smaller...I don't know if she mentioned her acreage. But she's 24K higher... Now, granted I don't know the area, but this house at 144,000 would seem to be in a rural area with 12 acres (and the OP said her house was in a rural area). If I'm buying...would I pay an extra 24K for a smaller house, possibly on less acreage because it's four years younger...no way.

You may be right. But there is still a lot unknown.

There may have been a valid reason why their property was higher. By "fixing up", I meant change some things physically. Spruce up. Doesn't have to be major. Small scale changes can do wonders too.

I think they've decided not to sell after all. (I think it's a good choice for a number of reasons.)

It's all hypothetical now.

 

[tlbwriter]

I think there are two reasons the OP should be leery of a HEL.

1. Their house has been on the market for a year. Either the market is very slow in their area, or the house is overpriced. Getting a HEL based on the inflated value of the home means they're not only borrowing against equity, but they're also taking on more unsecured debt (because if you believe you have $30K in equity, and you borrow that $30K, and then are forced to sell your house for $20K less than you thought it was worth, $20K of that $30K loan is unsecured). I know that in my area, bank officers are very generous when it comes to appraisals for HEL purposes, and owners are often surprised when they put the house up for sale and find it's not "worth" as much as a house as it was for collateral.

2. As others have pointed out, the OPs have been using this money to support a lifestyle, not to pay fixed expenses. They need to make sure they have that habit until control before tying their existing debt to their home equity, or else they might find themselves in twice as much debt.

HELs can be a very good thing. But they have their own risks.

And also... what is a house "worth?" It's worth what someone will pay for it. No more, no less.

 

[tlbwriter]

I think that the OP said that this house was built in 2002...not exactly a fixer-uper. I don't think that they're selling this house because they need to sell it....they want to sell it....and move up to a bigger house (that they can't afford). I did a quick search on realtor.com for our OP's hometown. I saw an 1,800 sq ft ranch on 12 acres built in 1998 going for $144,000. The OP's house is newer, but smaller...I don't know if she mentioned her acreage. But she's 24K higher... Now, granted I don't know the area, but this house at 144,000 would seem to be in a rural area with 12 acres (and the OP said her house was in a rural area). If I'm buying...would I pay an extra 24K for a smaller house, possibly on less acreage because it's four years younger...no way.

But potential buyers are interested in different things. If I were shopping, I'd prefer a smaller house with nicer details to a house on a large acreage that needs more upkeep. I'll take granite countertops and a whirlpool tub over 4 hours of lawn mowing every weekend!

(No, I don't know that the OP's house had more expensive details than the other house. Just saying that age and space are not the only factors.)

 

[Wish I lived in Fl]

This one may seem nutsy, but it was HUGE for us. Pay for your groceries in CASH only! When families cut back on other little luxuries, they still tend to drop a lot of money at the supermarket, buying food that just looks interesting. After all, you're not eating out anymore, right, but you've got to eat? And you stop in to pick up milk and leave with 2 bags? We put the grocery money in a grocery wallet on top of the fridge, and whoever was going to the store took the wallet (there were coupons in it, too, but we didn't use them often, name brands tend to be more pricey than store brands.) The wallet was refilled every payday with the budgeted amount, and once it was gone, it was gone. We cut WAY back on what we spent for groceries every month by using this method.

Thanks for the suggestion. We spent 1000 last month for 4 people.
Dh is price insensitive. He learned about rainchecks only last week.
Groceries are more expensive on Cape Cod than 20 miles away and far more expensive than in Orlando.
This sounds like a great way to rein in our grocery spending.
I remember spending $3.84 for a weeks groceries once in college while waiting for first paycheck. I walked up and down the aisles trying to get the most for my money.
1 pkg hotdogs and loaf of bread was 10 meals!

 

[CarolA]

Just a thought on housing..
Sometimes it's as simple as the way the place looks.

If you have house A and house B for approximately the same place, but house A is uncluttered and clean and house B looks like a storeage bin... Guess which one wins.

When I was looking I walked in some condos with so much junke I could barely walk around. The condo I bought was in the same complex as one of those, but you could figure out how big the rooms were in the one I bought.

 

[jamzots]

I know people that have taken out so many home equity lines of credit that if they were to sell their homes they would still owe money to the bank.

I was talking about a refinance, NOT a home equity loan..... big difference. They would still owe less per month if god forbid one of them did loose their job. If you figure out how much all their credit cards are and how much the refi is, they would actually be saving money each month.

 

[deltabayou]

I just wanted to let you know that living on a budget is possible and it doesn't hurt, LOL. My dh and I got married 12 years ago and basically had nothing. I worked for the first 4 years of our marriage and quit when oldest dd was 15 mos old. Since then we have added two more dc to the family. My dh makes less than $60K a year. We have a van and a truck that we paid cash for. Now, they are not SUV's or fancy vehicles but they get us where we need to go efficiently and safely. We also have a large cushion in the checking account and savings account (we sold our house and the profit is in the bank until we make our next move.). We live more comfortably than most of my friends. Now, we do not go out to eat much, or to the movies, and clothes shopping happens about two or three times a year. We pay off the credit cards at the end of the month. We are very careful with our money and we do not have the stress of juggling bills every month, or wondering if we can afford groceries. It can be done. You just have to have a mindset that says, "I can do this. I can give up things that are not necessities." We are going to Disney and Universal Studios next month and will be able to pay off the credit card charge when it comes in the mail this month. Just don't give up.

I do like the credit card in the freezer idea. But don't tell my dh, LOL!!!!

 

[MAGICX2]

Hello everyone! OP here. Well here is how it went down this weekend.
We we went to tha auction like I mentioned in my OP. The auction was for a 5bdrm/3bath, 2700 sq ft house on 7 acres with barns, another tract of 3.5 acres, a third tract of 7.322 acres (the one we wanted), and a fourth tract of 5.699 acres. We wanted the third tract most of all, but would have liked tract three and four. Well the house and 7 acres went for 210K. We did bid on the 7.322 acre tract. It was selling $ per acre. I went as far as $5,950 per acre. We thought we had it and then at the last second someone bid 6K. And you know what, I was relieved. I thought to my self, "What are you doing?! You can not possibly make this payment. Please Lord in Heaven, someone else bid!" And then he did. It was meant to be this way. And this has just stoked my fire even more to get myself debt free!

My DH and I discussed some things this weekend and figured out that I was incorrect in my OP about our annual income. It is actually about 93K, not the 102K I had origianlly posted. That may make up the math somewhere along the way.

Also, I noticed some posts about the real estate aspect of our house. Let me clear some things up so that the feed back can get more involved. We purchased a 5.10 acre tract in rural southern Ohio in 2001. It was already improved.(water, sewer system, etc.) We paid $32,500 for the land. We took out a construction loan with our first draw being to pay for the land. Our house is custom built. Before DH current job, he built homes for a highly respected and VERY talented home builder who buildes homes (upscale, 3000+ sq ft) for the affulent in our area. Our house is very spacious, 9ft ceilings, lots of windows, custom cabinetry, no tile or hardwood. It is a nice house by our areas standards, but not upscale. When we rolled the construction loan into a standard mortgage in May 2002 we paid nothing down and rolled in our closing costs. Our mortgage at that time was for 158K, 1100 per mo which included PMI, taxes and ins. Then in Oct. 2003 we decided to refinance to roll in our current cc debt. Our house appraised for 195K. Again nothing down, PMI, taxes and ins. This time 176K, 1401 per mo. We would have been perfect if we would have gotten it under control then. Well, we had another baby, furnished the house, went back to college, etc. I could give you every excuse in the book. But like one other poster said, we weren't ready to change our spending habits and we got right back where we were only worse. That is one of the comments that sticks out on this thread for me. Unless I am REALLY ready to change my habits, I can get out of debt but then get right back in again. Our house appraised for 195k, it is currently listed at 179k, soon to be dropped to 174K.(which we will lose money on). We have decided to take the house off the market work, on our debt, and see how we feel about the house next spring.

I have a list of things to put on Ebay and I am going through the bedrooms one at a time starting next weekend.

We looked at our budget and after we make the mortgage payment this coming Fri. I will be able to put about $250 towards our lowest cc. this will only leave a $500 balance!

I would love to stay home, but trust me, we have looked at the numbers before and it just wouldn't work for me to stay home. The biggest factor being that I provide the medical insurance for my family.

Thanks to everyone who has posted so far. And and especially big thank you to those PM's I have gotten. It means so much to DH and I that everyone is rallying behind us. I know we are going to beat this! It is an incentive that I have you all to answer to! I have to stay on track or you will never let me live it down. Keep the posts coming, I will post periodically on my progress. Don't think that if it has been a few days or even a week and I haven't posted that I won't be back. I'll be here, and you better be here too. I can't do this without you! My new moto is "I am going to be debt free and in the DVC! (this is my goal)

 

[tmanaster]

I wish all the luck in the world to you. While our situations are not exact, we have many similarities. I also am in the midst of changing our lifestyle of debt and accumulation. It is so hard to change these habits, but I am confident it can be done! I've found great advice on this thread and I appreciate your courage in posting such private information!

Again, good luck to you.

Tricia
Mom to 4 little ones

 

[Lyn5]

Hooray looks like you are already making progress...good job.

 

[dvcgirl]

I'm happy that you didn't get the land....and I'm still perplexed that you even bid on it when there is no way in the world that you can afford it. Reading your response today...that's even more clear. You definitely have some major *major* changes to make. From May of 2002 to October of 2003 (17 months) you racked up $18,000 in CC debt and refied to get rid of that, which increased your mortgage payment by 300 dollars per month. You were overspending by an amount of $1,058 per month during that period (roughly $1,400 in gross income) And from October of 2003 to October of 2005 (24 months) you've accumulated an additional $30,000 in CC debt and a signature loan (overspending by $1,250 per month which is roughly $1,700 in gross income).

See a pattern? After rolling 18K of cc debt into your mortgage, your spending actually *increased*. And this is also during the period where you said that your husband has seen a big increase in salary. You're not looking at a situation where you need to "change your spending habits". You need to stop spending...period. And really, looking at your scenario, how you think you can afford to head to Disney for a vacation is astounding. Really, even staying at the Roach Hotel on 192...you can't afford it. I know that you say you paid cash for your vacation. How is that possible? You don't have any cash. You have $100 left over each month...maybe a couple of hundred if you get help from parents with daycare. But you left sooooo many things out of your budget that you may actually be in the hole each month. You'll find that out quickly because if you truly don't use a CC for a couple of months it will become clear rather quickly....when a check bounces or there's nothing to eat. Every single thing you buy at Disney is going on a CC...there's no other possible way from what you've shown us here. I mean, unless you or your husband gets a *huge* raise...I don't know how you think it's possible for you to spend *anything*.....let alone a vacation.

I guess I'm just confused. People are saying things like..."way to go, you're on the right track!" Well, if they mean that you've frozen your CC, I get that. But it is so clear to me that you are in a very dire situation. You need to cut everything you can cut....and now. I really wish you all the best, but the more I read the more I think that you don't see what's happening to you...and would *could* happen is not going to be pretty for you or your family...

 

[tar heel]

The OP mentioned that she has an FSA. I'm wondering if she might have a Dependent Care one. If so, the day care cost (or at least some of it) is taken out of her paycheck and she gets reimbursement checks. In any case, she is likely getting reimbursement checks for medical care b/c we know she has that kind of FSA.

 

[tlbwriter]

Every single thing you buy at Disney is going on a CC...there's no other possible way from what you've shown us here. I mean, unless you or your husband gets a *huge* raise...I don't know how you think it's possible for you to spend *anything*.....let alone a vacation.

Of your two trips listed, I assume the "best friends" trip is the one someone else is paying for? When we went to WDW last year, my parents paid for almost everything. We paid for a few meals (very few - my dad is one of those "if you're with me, I'm paying" guys ) and our own souvenirs. And we still spent a LOT of money. Are you going to be able to resist buying anything while you're down there? It's something to think about.

As for the other trip, since it's 7 months away, why are you unable to cancel it for a refund? Or is that the one that someone else is paying for?

 

[CarolA]

I hate to say this, but I don't think OP gets it. They were bidding close to $42K on this land?? Where was this coming from the good fairy? Plus I have this gut feeling you have already overbuilt the market which is why you can't sell the current house.

I don't see any real action here. Spending cuts appear to be limited to cutting out the spending she shouldn't have been doing in the first place not to cutting back to find extra money. And other posters are right. The cost of the vacations is what we refer to in business as a SUNK cost, now the question is can you afford more cost..

For example, a company I worked for spent several million dollars on a new computer system. Did a survey and discovered it would cost a few milllion more to finish Using the OPs logic, we would have spent the rest of the money since "it's already paid for" Of course since we didn't have the few million more we would have borrowed it. However, looking at it from a cash flow system going forward we disregarded the "sunk" costs and looked forward. system was abandoned, vacations can be abandoned.

I am worried that the "best friends" vacation will be bad. Have you admitted to the "best friends" that you can't spend ANY money. So when they go shopping you can't buy. (I can't see OP making that one work!) When they have fancy meals you have to eat at the food court???? Or will you "keep up with the Jones"?

I know I sound mean, but if what you are posting about your finanical situation is real I would be terrified..... Basically you have said that your one major asset the house and land, is actually not worth what you owe. IGNORE THE APPRIASAL... it's worth what someone will PAY for it....Anything else is theoritical!

 

[dvcgirl]

I hate to say this, but I don't think OP gets it. They were bidding close to $42K on this land?? Where was this coming from the good fairy? Plus I have this gut feeling you have already overbuilt the market which is why you can't sell the current house.

I don't see any real action here. Spending cuts appear to be limited to cutting out the spending she shouldn't have been doing in the first place not to cutting back to find extra money. And other posters are right. The cost of the vacations is what we refer to in business as a SUNK cost, now the question is can you afford more cost..

For example, a company I worked for spent several million dollars on a new computer system. Did a survey and discovered it would cost a few milllion more to finish Using the OPs logic, we would have spent the rest of the money since "it's already paid for" Of course since we didn't have the few million more we would have borrowed it. However, looking at it from a cash flow system going forward we disregarded the "sunk" costs and looked forward. system was abandoned, vacations can be abandoned.

I am worried that the "best friends" vacation will be bad. Have you admitted to the "best friends" that you can't spend ANY money. So when they go shopping you can't buy. (I can't see OP making that one work!) When they have fancy meals you have to eat at the food court???? Or will you "keep up with the Jones"?

I know I sound mean, but if what you are posting about your finanical situation is real I would be terrified..... Basically you have said that your one major asset the house and land, is actually not worth what you owe. IGNORE THE APPRIASAL... it's worth what someone will PAY for it....Anything else is theoritical!

There's no doubt in my mind here that the OP and her DH need serious help. There's a whole lot of denial going on here. You are exactly right CarolA, most likely the OP's house is worth less than the mortgage. They put nothing down, rolled in closing costs and an additional 18K into it...in just 17 months. The appriasal is worth the paper it's printed on. And yet, they still went out and bid on another piece of property, possible another piece of real estate that they'd have trouble sellling. The only way that they should have been bidding on that land is if they had secret knowledge of a money tree growing there.

And then overspending their income by roughly $20,000 a year during a time that the OP's DH salary had risen dramatically. And so that old adage...make more money-----spend more money is very true here.

OP, like I said earlier, I think that your budget is probably underestimated by a few hundred a month in essentials. And until you sat down with your DH, you had overestimated your annual income by $9,000. And so, clearly, you're just spending money to beat the band, without any idea what kind of income you have. You guys need to talk to a professional...

 

[VSL]

I hate to say this, but I don't think OP gets it. They were bidding close to $42K on this land?? Where was this coming from the good fairy?

I've followed this thread since the beginning and I can't help but agree with this statement.

I don't think the OP is ready, on a psychological level, to give up the extras (vacations and stuff).

 

[lts862]

There's no doubt in my mind here that the OP and her DH need serious help. There's a whole lot of denial going on here. You are exactly right CarolA, most likely the OP's house is worth less than the mortgage. They put nothing down, rolled in closing costs and an additional 18K into it...in just 17 months. The appriasal is worth the paper it's printed on. And yet, they still went out and bid on another piece of property, possible another piece of real estate that they'd have trouble sellling. The only way that they should have been bidding on that land is if they had secret knowledge of a money tree growing there.

And then overspending their income by roughly $20,000 a year during a time that the OP's DH salary had risen dramatically. And so that old adage...make more money-----spend more money is very true here.

OP, like I said earlier, I think that your budget is probably underestimated by a few hundred a month in essentials. And until you sat down with your DH, you had overestimated your annual income by $9,000. And so, clearly, you're just spending money to beat the band, without any idea what kind of income you have. You guys need to talk to a professional...

Their situation really is scary. I hope that they do talk to a professional and get realistic about those upcoming trips. Couldn't even believe when I read that they bid on the "other" land. Wow!! We will be here for you OP but, will you listen to the advice given?

 

[tlbwriter]

Basically you have said that your one major asset the house and land, is actually not worth what you owe. IGNORE THE APPRIASAL... it's worth what someone will PAY for it....Anything else is theoritical!

That's true. If your house appraised for $195K, but it's been on the market for a year at $179K, then it's not "worth" $195K. It's probably not even "worth" $179K. It doesn't matter how spacious and nicely built it is - the house is only worth what someone will pay for it. And no one seems to be willing to pay $179K, let alone $195K. Refinancing or getting a HEL don't seem to be an option at this point - and even if they were, you shouldn't go there. You're already in the hole on the house.

I hope your last minute epiphany at the auction (had to grin at that one - I've felt the same way, on a much smaller scale, during a few eBay auctions... "Why did I do that? I hope someone else bids!" ) extends to more than just the land purchase. You are on the right track, but as others have said, you still have a long road ahead of you, and while you are taking one step forward, you are also taking one step back with the planned vacations. Can you tell us more about the non-refundable trip? Rather than cancel it, could you postpone it? Even if you had to pay a penalty, it would almost certainly be better than taking it in 2/7 months and adding that much more to your CC balance.