Homeowner in dire straits

[tinapbeana]

Originally Posted by sre94

I have considered credit counseling as a last option. I just don't like what it will do to my score. I would still rather get a HELOC, and stay in this condo because of all the benefits of home ownership. I bought it back in March, but prices here in San Diego have dropped since then.

If I can't get a HELOC though, I will look at credit counseling, just to get my head above water.

unfortunatley, falling behind on current financial obligations will also negatively affect your score, and probably already has.

[BCHGRL]

Have you considered talking to the HOA? Perhaps they will work with you. $160/month seems excessive for a one bed, one bath condo.

[scfr]

I agree with those who advise you cut your expenses where you can (cable, cell phone, etc) and seriously consider selling your car and even your condo. Sorry.

But first, I would suggest pulling out your condo association rules. Under the rules, is there a limit on the percentage of units that can be rentals? [Many associations have rules about that, precisely to avoid the predicament you are in.] If the current number of units being rented exceeds the limit in the rules, contact your condo association board. Let them know the number of rentals is in violation of the rules, and ask them (firmly but nicely) to take steps to reduce the number of units being rented. Ask them to put their plan in a letter that you can give to your loan officer, explaining that the current high percentage of rentals is an oversight and explaining the timeline for reducing the number of rental units. [You may have to draft the letter yourself and just ask the board to sign it.] Then, present the letter to your loan officer, explain that the number of rental units in the building will be decreased, and ask them to reconsider the loan.

[sre94]

Originally Posted by BCHGRL

Have you considered talking to the HOA? Perhaps they will work with you. $160/month seems excessive for a one bed, one bath condo.

No chance, in fact our property management person has said we're not charging enough. Also, we want to paint the place, and will have to fork over our own money IN ADDITION to the HOA's.

[HalMd]

You mentioned having an "expensive car" that needs repair.

I think I'd sell it at a loss right away and buy something more affordable. For example, if the car is worth $10,000 and needs $1,000 in repairs, then sell it for $9,000 as soon as possible. Take the $9,000 and buy a $6,000 car, then use the difference to pay down the credit card and bills that are overdue.

You might not like taking a hit like that, but chalk it up to experience. You can keep the house and have your sanity back.

[autoxer]

Originally Posted by sre94

... and also I felt I could get rid or my debt later on by getting a home equity loan.

This comment makes me nervous. A home equity loan is DEBT. It doesn't get rid of debt, it just takes the unsecured CC debt and secures it against your home. So if you miss a couple payments after the debt has been moved, then the bank will try to take your home. If you use the HELOC to pay down the CC's, then use the CC's to do car repairs & some other unexpected expenses come up, then you will be worse off then you are now.

Paying balances down gets rid of debt.

I think you need to take a serious look at how much debt you are in and figure out how you got there. The budget would be very manageable w/o the $1100 CC payment. How long would it take to eliminate the CC debt paying $1100 / month if you didn't get a HELOC? Are you still adding debt to the CC's?

[creditcardfree]

Originally Posted by sre94

No chance, in fact our property management person has said we're not charging enough. Also, we want to paint the place, and will have to fork over our own money IN ADDITION to the HOA's.

They probably think they are not charging enough because they haven't sold all the units yet!

How old is this condo unit? I thought it was a new place, so the need to paint seems odd. I may have just been confused.

[Elgin526]

I was able to afford a condo with a payment of half my take home, but ONLY because I had a cheap car payment ($250 a month with only 2 years left) and because I had no credit card debt. I also had low utilities (included just basic cable) and didn't go out much. Later I was able to refinance to a lower interest rate (twice) and cut my payment down to about 1/3 my take home, and once the car was paid off, I really had some descresionary income (then I got married and that went bye-bye but that's a differant story!). It sounds like this is what you intended to do, but it didn't work out that way!

You've got both a high car payment AND credit card debt, plus seamingly high utilites (at least the cable is high). So, here's what I'd do:

First, I'd see about increasing your hours, either at your main job or your second job. Maybe even ask for a raise (at either or both) or start looking for a higher paying job. More income is a fast way to get on top of bills!

Then, I cut the cable. You can go down to a basic plan (just the networks) for less than $20 a month in most areas. If your condo has an ariel antena you can hook up to, you can cut the cable all together and join netflix for $10 a month for movies (man cannot live by network tv alone! ).

Next, find a way to get rid of that car. If the condition it is in will cause you to only break even or even lose money, then that makes it tougher. Can you charge the repairs (shop around to find a cheap mechanic) and then use the proceeds from the sale to pay off the credit cards and buy a beater? Once you're free of the car payment you can begin to save for a car repair/replacement fund so hopefully you won't have to drive the beater long (a year or two).

I'd also look for a roommate. True, you can't charge much if they won't have their own room, but it would be something, at least. Even if you could only get $250 a month, that's $250 a month you didn't have before, right?

Since you have CC debt, I assume you bought stuff. Can you sell any of it? Ebay, Craigslist, a local consignment or pawn shop, or just have a yard sale (if you condo assoc. will let you).

If you can't get a HELOC, can you refinance your loan for a lower rate? This might be hard if your credit score has already taken a hit, but it's worth a shot. I got my condo payment from $1000 a month down to $650 over the course of three years (two re-fi's). But I also had good credit...

Cut your consumable's down as much as you can. Conserve as much gasoline as you can, adjust your thermostat so your heat or A/C run as little as possible. Use as little electricity and natural gas as possible. Cut your groceries. No soda, no bottled water, no chips, no cookies, nothing but the bare minimum. Breakfast-for-Dinner is a real cheap way to eat, and there is always Ramin noodles! Grilled cheese and soup, mac 'n' cheese and hot dogs, there are lot's of cheap meals you can make.

[Fern]

Hey, guys, i have nothing more to add to what's already been said, but high five for all your good advice. All great ideas; let's hope he takes it to heart.

[kimiko]

Yes, ramen is extremely affordable.

$0.10 a bag, throw in an egg ($0.10) and a couple of lettuce and you're all set.