I dont know what to do with my debts.

[CCFREEDOM]

I am trying to get back on track and have learned from my mistakes and trying to live within my means...but have my past to deal with and its so hard to pay off and live a stress free live. I am ashamed to even admit how much I owe.

I am self employed..I own 3 houses and all 3 houses have equity lines of credit.

I have 2 rentals that are paying themselves..but I do owe a lot of money on them. One I owe $180,000 plus $248,000 equity line of credit(took out money to buy my present home) the rental is $2200.00 which is enough to pay both loans and save some for the property taxes. Payment on the first loan is $1175.00 and the 2nd loan is $843.00.

I also own another property that I owe about $180,000 and the payment is $985.00 and the rental is $1050.00..and I pay the property management company $75.00 per month.

I have my present home that I owe $740,000.00, the loan was modified to 1% interest for the next 5 years, $2071.00 per month and most of it is going towards the principal ($1700.00 of it), so I would hate to give that up.

I am self employed and make around $10,000 to $11,000 per month. I have credit card bills for my business that I have used when my cash flow is low..but that was in the past..I am really tryng to get ahead and pay off my bills so that I can be ahead...Except the high mortgages will never be paid off unless I sell those properties. Right now if I sold I would be losing a lot of money and they would not sell for what I owe.

I have a boyfriend who is very responsible and debt free, no mortgage and a million dollars in savings...I am so embarrased to even admit as to how much I owe and this is ruining our relationship. I dont want to lose him..but he will probably not want to get married to someone who has been so irresponsible with her finances. We have been together for over a year and we get along great except for the fact that I dont talk about my finances.

I do make enough to pay my bills, but seems like all earnings goes towards bills.

I would appreciate your advise.

Thanks

[Seeker]

Without a complete budget, we cannot advise you.

If your rentals pay their own way, then it's probably not a good idea to do anything at this point in time with them.

If all or most of your income is going toward all your bills however, then there's a problem in that regard. We'd need to see what your income is, and where it goes each month... breakdowns (not only the housing portion of it).

Why is BF saving "ruining" your relationship? You know that you have not saved and you want to change.... those are both positives in my eyes.

[paymydebt]

From what you have indicated, it doesn't look to be you are in that bad of a position. Because basically the rental properties you own are paying for themself and real estate is still a good investment...you just have to wait until prices go up again before you sell. And seems you have enough income to cover your own mortgage and I am gathering your other expenses. I can't see why your BF would think bad of you for investing in real estate, which in a hot market can pay off big time. It's not like you went on a big shopping spree and had nothing to show for it.

Most people take a long time before they are mortgage-free and don't always use their own money for investment purposes either. I would just say hang in there, wait for market conditions to improve and then you will be saying the opposite.

[CCFREEDOM]

thank you for your advise....I feel very uncomfortable with my boyfriend because he has done things so different from me...like the opposite. I have taken risks and he hasnt so he has paid off his mortgage and has a good retirement.

We are both in our mid-50's and I keep thinking that by the time real estate goes up again..it'll be a long time so I am stuck with these houses. I have regrets over that selling when the market was good or when I bought my present home 4 years ago..I could have sold my other house for about $600-650,000. Now its barely worth about $350,000 or $400,000. barely what I owe. I dont know if real estate will ever get that high again.

I will look into my other debts and list them here. Some I am not paying any interest on and have used for business only when my business is slow and I need to pay something major. I am trying very hard to pay off, but this year both my houses were vacant for a couple of months and one tenant nearly destroyed my house and I had to make major repair.

Will come back later...thank you so much for your encouragement.

[CCFREEDOM]

sorry...regrets over NOT SELLING when the market was good.

[wincrasher]

Wow. I'm amazed that you got such a work-out considering you otherwise wouldn't have qualified under any means testing scenario.

I don't think that your income properties will ever give you a return on your investment. With the interest you are paying, even with a run-up in the value and yearly increases in rent, you will cover all your costs.

You should make sure your tax situation is straight on these. You should be able to depreciate these assets and deduct all your costs to offset any income, plus some income from your business. All your rebuilding costs from your tenant could also be deductable expense.

[buildmybudget]

I think you may be putting too much pressure on yourself. You have an excellent income which can go a long way towards helping you improve your financial situation. You need a cash forecast so you can see exactly where all of your money is going and when you are required to spend it each month. That way you can see where you might run into cash flow problems, or find extra cash you can put towards your debt. This is the only way to see how much extra you have each month...and if you're not satisfied with the number you can start cutting expenses.

[ceejay74]

I agree with what's been said. Take the mortgages out of the equation for now; your two rentals are covering themselves, so just let them ride and don't worry about them. Your current home has a big mortgage but a fantastic interest rate for the next few years, and $1700 is a really reasonable housing payment for someone with your level of income, so nothing to worry about or be ashamed of there.

You reference some other debts, so I would focus in on those. Try to reduce some of your discretionary spending so you can eliminate whatever other debts you have, and when you are debt-free except your mortgages, start socking away retirement money and other savings. You should be able to build up a nice nest egg with the amount of income you have coming in, once you don't have any debt payments besides your mortgage.

Good luck!

[CCFREEDOM]

wincrasher...I did get a really good work out on my mortgage loan. I didnt even have to apply. I got this letter from WAMU telling me I could apply for this..that I was one the the 15,000 customers they chose to do this for. I thought they were kidding me and that there was a catch..but nope..Payments are $2079 and about $1753.00 goes towards principal.

Ok..I will work on the numbers for my other balances and post them.

[lovcom]

CCFreedom, I was once in your situation. With working lots of overtime and staying on a budget, and bringing in roommates to offset part of my mortgage monthly payment, I got on track and things got better. I know, you hate the thought of roommates...me too, but there was a time bringing in three others into my 4 bedroom home paid off.

Perhaps you can rent out your house and move in with the BF or cheapo studio for a few years?

Aggressively save, save, save....things will get better...sound like your BF is a luck guy, BUT most successful men will never marry a woman with messy finances...and the GOOD NEWS is that your case is a lot better then others, so it's not terrible....it's a little mess not a big one....

I was dating a physician who brought in $14,000 net a month, but her financial life was ten times worse then yours, and the short story is that I left her because she had 6 figure credit card debt, 6 figure student loans, and she was severely upside down on 7 rentals in Florida, only 3 having tenents....she is now in bankruptcy....I have no regrets for leaving her...but your situation is not as bad as you might think...you have a lot of hope!!!

[CCFREEDOM]

Thank you Lovcom.

I got to work today and set up 2 budgets..one for home and one for business.

My business expenses are roughly $2500.00 (that is including $800.00 savings.

I want to start paying myself $5,000 per month for my salary..and that is being discipline in paying each week so that I have a flow of money in my checking account for my personal expenses. So if I make about $10,000 per month, have $2500 in business expenses, and $5,000 in salary to myself, I have $2500.00 left over to pay credit cards.

Here are my credit cards.

Balances Interest Payments
Chase $ 14,215 6% $433
Discover 4545 20% 111
Bof A 8111 4.75 200
US Bank 2956 25% 94
CHASE car payment 9474 8% 361
Ciitibusiness 10586 0% 125
Wells Fargo 4985 17.25% 79
Wamu 960 18% 50


The Discovery & US bank accounts are fairly..its what I used to cover the expenses to fix the rental. I was on track in paying off Wells Fargo and went from $10,000 the begining of the year to now.

The WAMU is my overdraft account which I pay monthly on my personal account.

So I guess I would have to concentrate on paying off Discovery and US Bank and getting rid of those cards. But now I have property taxes coming up so wont be able to pay much on anything.

Please tell me what you suggest I do. I cant move in with the boyfriend at all for religious reasons...and I tried renting to roomate before and it was a disaster.. If my boyfriend accepts me the way things are right now..we may get married next year....but would he want all these responsibilities if he has already paid off his mortgage and had planned his life a certain way? We get along well otherwise except when the conversation is about finances..then I get scared.

[CCFREEDOM]

This is probably better to understand.


Balances/ Interest/ Payments

Chase $ 14,215/ 6% /$433
Discover $ 4545/ 20%/$111
Bof A $8111/ 4.75%/$200
US Bank $2956/ 25%/ $94
CHASE car payment $9474/ 8% /$361
Ciitibusiness $10586/ 0%/$125
Wells Fargo $4985/ 17.25% /$79
Wamu $960/ 18% /$50 (pay off each month)

[buildmybudget]

At a glance this looks to be about 60-70k and at approximately 5k/mth you can pay this off in a relatively short year to year and a half. This situation is very doable if toucan stick to your budget and manage your cash flow. Take the Dave Ramsey approach and start paying off your cc's lowest to highest. You'll gain momentum and before you know it will be out of debt. You can do it!!

[Seeker]

Originally Posted by lovcom

CCFreedom, I was once in your situation. With working lots of overtime and staying on a budget, and bringing in roommates to offset part of my mortgage monthly payment, I got on track and things got better. I know, you hate the thought of roommates...me too, but there was a time bringing in three others into my 4 bedroom home paid off.

Perhaps you can rent out your house and move in with the BF or cheapo studio for a few years?

Aggressively save, save, save....things will get better...sound like your BF is a luck guy, BUT most successful men will never marry a woman with messy finances...and the GOOD NEWS is that your case is a lot better then others, so it's not terrible....it's a little mess not a big one....

I was dating a physician who brought in $14,000 net a month, but her financial life was ten times worse then yours, and the short story is that I left her because she had 6 figure credit card debt, 6 figure student loans, and she was severely upside down on 7 rentals in Florida, only 3 having tenents....she is now in bankruptcy....I have no regrets for leaving her...but your situation is not as bad as you might think...you have a lot of hope!!!

CC Freedom.... I'd have to disagree with the above. I was in my 40's, when I happily married a man whom had no money, had been through a BK, and had education debts on top of a "leased" car (because no one would give him a loan) and no way to pay any of it. No assets of his own because of a totalled auto and lost work, jobs, and outsourcing.

Love can conquer everything if you're both 100% honest and open with each other. NOBODY else can speak for your relationship with your BF; I seriously suggest talking with him about your finances (be 100% truthful), and seeing for yourself if it's truely "you" he loves or the "money" he's saved.

If your financial situation "diminishes" your relationship, you need to find out now before investing any more time with him.

[wincrasher]

All relationships are based on trust. Hiding things about yourself is creating a weak foundation for a long term relationship. If your relationship is based on more than just a facade, then he should be understanding of your situation.

Generally speaking, people's finances are largely indicative of their personalities. So it may not be the big surprise to tell him that you think.

[ktmarvels]

Originally Posted by CCFREEDOM

Balances/ Interest/ Payments

Chase $ 14,215/ 6% /$433
Discover $ 4545/ 20%/$111
Bof A $8111/ 4.75%/$200
US Bank $2956/ 25%/ $94
CHASE car payment $9474/ 8% /$361
Ciitibusiness $10586/ 0%/$125
Wells Fargo $4985/ 17.25% /$79
Wamu $960/ 18% /$50 (pay off each month)

The way to pay these off in the least expensive manner is to do it by interest rate. So US Bank, Discover, Wells Fargo, Chase Car, Chase CC, B of A, Citi Business. However, if you feel you need an added push. Start with the lowest balance and work up. Whichever method you choose, remember to make the minimum on all others then throw any and all extra money on that chosen card.

Also, if you want help finding areas to slash further, post your household budget. There may be things that you can cut or reduce that you haven't thought of yet.

Good Luck!

[LuxLiving]

Along with sticking to your new pay schedule and proposed CC payments, you seriously need to stop debting. Build up some cash reserves in an emergency fund.

Unless you are engaged to said boyfriend I wouldn't divulge the gory details of my financial life. I would however, when the subject comes up, tell him the basic outline. "I've got some serious debt and I've got a plan and am working out a quick repayment plan that I'm serious about sticking with." That ought to be enough unless as I said you guys are more serious. If so, confess your problems, tell him what your plan is, and ask for some help. If he's got his financial life in order, likely he can help you with yours.

Regardless of what someone stated above, I do think you have a huge risk here. I don't think it's a 'little thing'. What happens if you can't keep earning what you're bringing in now? The real estate investments that you've made, unless they were done in a legal way to hold you personally harmless, could force you into bankruptcy and into possible homelessness.

Stop debting.
No more real estate for a good long while.
Establish a BIG emergency fund while paying down that debt. In your situation I'd probably go half to EF and half to debt reduction till I had at least a $50 thousand EF.
What can you sell to raise cash to boost both EF & paydown?
Can you work extra to make more for same purposes? Do you have any passive streams of income?

As ktmarvels suggested, posting a household budget might allow us to point out some other areas you could cut back on.

I, too, wish you good luck! Stay here on SA dot com. There's a good knowledge bank here of helpful folks.

edited to add: You might try finding a good tracking software for your new spending plans. I like & use You Need A Budget dot com.

[CCFREEDOM]

Thank you Seeker.

I really dont know how my boyfriend will react but he does have some idea of my financial situation. I dont know that I want to tell him the truth about my financial situation. He is very conservative and saves everything he has to the point of not enjoying life cause he lives on needs only. I get a bit jeolous sometimes because he has no money worries...but he doesnt do much for entertainment. So I dont know if this is how I want to live and would rather wait until I know that we have something definite. Now that I am on a budget I dont know how I will explain to him that I can no longer contribute to our meals together since I usually offer (and he expects me to). A bit complicated. He is wonderful man and we get along great..but sometimes wonder if we have a future together.

Anyway, I have created both budgets for home and business. My business expenses are $2300.00 which includes a savings account for $800 per month. The credit cards are about $1400 all together and I am planning on paying and additional $1400 each month. I will pay myself $4000 per month for my home expenses and dont plan to buy much until I get my cards paid.

Problem is that right now I dont have much money until I get that Budget flow that I had once. I am really behind as far as having money to fund the budget..just have to hope that my business does very well this week.

I will also have to pay property taxes coming up and its pretty high and I dont have the money either. I took a lot of my savings out to repair one of my rentals and to pay the mortgages while it was empty.

Anyway...I know that once I get the budget going it will all work out...just getting there is difficult right now.

Thank you all for your wonderful advice.

[Seeker]

Originally Posted by CCFREEDOM

Thank you Seeker.

I really dont know how my boyfriend will react but he does have some idea of my financial situation. I dont know that I want to tell him the truth about my financial situation. He is very conservative and saves everything he has to the point of not enjoying life cause he lives on needs only. I get a bit jeolous sometimes because he has no money worries...but he doesnt do much for entertainment. So I dont know if this is how I want to live and would rather wait until I know that we have something definite. Now that I am on a budget I dont know how I will explain to him that I can no longer contribute to our meals together since I usually offer (and he expects me to). A bit complicated. He is wonderful man and we get along great..but sometimes wonder if we have a future together.

Unfortunately "time" will only make things worse. If he's "miserly" now, as he ages he will get more so. Many people do become more of what they are now, at least in my experience; change is difficult. And what's happening in the economy now sort of supports a conservative financial livestyle too -- in all honesty, I cannot say I blame him.

You mentioned possibly marrying him in a year in your previous posts. That worries me. You shouldn't really marry a person without his full understanding of the ramifications of what that means from your side. That's not honest and he will wonder what else you've not been forthright with; he may even feel somewhat resentful that both of you have been together for that length of time and suddenly he's finding out all this new stuff.

To a certain extent he knows.... if you two are really on the same page, you can bet he knows more than you think. Especially if you become quiet as he talks about future plans, or you back away from it. He may want you to talk about what your future plans are.... and what possibly you'd want to do differently.

The real problem is that the more you put this off, the more both of you are disfunctional. Changing mid-stream is bad enough, but you need to explain what you are currently doing to resolve these issues. It's not his problem and you don't want to make it his problem.... but you need some time financially to repair these issues. And it's not going to happen if he's not helping you to change. And by "help" -- I don't mean money help. There are many ways of being supportive.

Instead of going to that dinner and paying half the price; maybe you want rent a movie and watch that together. Or talk a walk in a park. Or just cook something up togther in your kitchen. Or read a book aloud to each other and take turns. I'm sure you and he can come up with things you both like to do once he understands why you're trying to save some money.

If you are not 100% truthful of your financial situation and continue to put on this facade, when do you suddenly explain your behaviorial change? How do you go from paying half the dinner bill, to suddenly explaining that you need to save, pay off some of your debts, and plan for your future. Mid-50's does not leave a lot of time for you either. You're not helping hime to understand that he can help you "save your money" by doing different things together.

Anyway, I have created both budgets for home and business. My business expenses are $2300.00 which includes a savings account for $800 per month. The credit cards are about $1400 all together and I am planning on paying and additional $1400 each month. I will pay myself $4000 per month for my home expenses and dont plan to buy much until I get my cards paid.

Problem is that right now I dont have much money until I get that Budget flow that I had once. I am really behind as far as having money to fund the budget..just have to hope that my business does very well this week.

I will also have to pay property taxes coming up and its pretty high and I dont have the money either. I took a lot of my savings out to repair one of my rentals and to pay the mortgages while it was empty.

Anyway...I know that once I get the budget going it will all work out...just getting there is difficult right now.

Thank you all for your wonderful advice.

You have a lot of choices in the sense that you run your own business. Following a plan tends to help a lot and I think that ultimately you'll be fine.

In spite of California's housing situation right now, no one honestly knows where property values will be 5 years from now, or even 10 years. One thing I can say is that California is popular (for various reasons), and when you have a populous state, you still have demand for housing. And in reality, there's no longer a lot of available land to build on.

I don't know how long it'll take for housing to return to it's peak; maybe not in 5 or 10 years.... but IMO it will at some point in time.

[lovcom]

Originally Posted by Seeker

CC Freedom.... I'd have to disagree with the above. I was in my 40's, when I happily married a man whom had no money, had been through a BK, and had education debts on top of a "leased" car (because no one would give him a loan) and no way to pay any of it. No assets of his own because of a totalled auto and lost work, jobs, and outsourcing.

Love can conquer everything if you're both 100% honest and open with each other. NOBODY else can speak for your relationship with your BF; I seriously suggest talking with him about your finances (be 100% truthful), and seeing for yourself if it's truely "you" he loves or the "money" he's saved.

If your financial situation "diminishes" your relationship, you need to find out now before investing any more time with him.

If only it were true that love conquers all. It does't and not even close. There are millions of marriages that end each year, and most of them did not lack love; no shortage of love.

They ended because of many reasons, one of the biggest being financial incompatability.

Leave the romantization, the idealization of love to the dreamers, the Beatles, because in real life, love is hopelessly not enough...and you will not find one psychologist, or phsyciatrist that agree with this "love conquers all" dillusion. Don't take it from me...ask Dr. Laura, and any shrink, and family/marriage counselor....they all will tell you that there are many relationships that strain and break under the burden of financial hardships and indescritions, and most of these relationships had oodles of love!!!

What makes strong loving healthy relationships are sound financially compatabilities, because one's financial health is in fact a reflection of one's character, values, and maturity.

This does not mean that all poor folks have bad character. This means that poor folks that live within their means, and are responsible have great character.

Conversely, what I write does not mean that all rich folks have good character...they could have built up their wealth by cheating others.

You will find examples were a couple where one of them is a financial wreck a relationship that works, and they do exist, but this is the EXCEPTION and not the rul!

The good news is that someone that has a financial mess on their hands can renovate, rejuvenate, change and in the end be health, wealthy and wise....

And lets never blame a man or woman for not wanting to marry someone because of that person's financial mess....to do so is often a really bad thing to do.

CCFreedom, the good news is that you can earn your BF's desire to marry if you continue to get your finances in order, and it looks like you are and you will succeed...I just hope you don't blame him for holding off until you get your act together...