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Should we sell our home to pay off debt?

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    Should we sell our home to pay off debt?

    My husband and I pay around $1400 a month on our house payment. We also have around $550 in minimum payments on credit card. We each make around $40000 per year. We are considering selling our home, we hope to make around $40000, pay off student loans, credit cards, and home equity loans. We thought of a lower priced condo for about 2-3 years. Is this a good idea???

    #2
    Maybe. I used to recommend "consolidation loans" (which is essentially what you are doing...you are selling your house to create the cash to pay off the debts). But what I learned was most people are comfortable with a certain amount of debt, then they sell something, get a big bonus, or take out a loan to pay off / consolidate their credit cards and other loans. However, I found that within 12 months they had their loan balances right back to where they were PLUS the consolidation loan.

    I think you should first figure out why you have the debts you have. Teh credit cards are generally from discretionary spending. Many times, the home equity loans were used to pay off debt or to buy things you couldn't really afford. Assuming this is your case, then I recommend changing the way you handle your finances FIRST. Get yourself living within your income and paying down debt. This is changing your behavior. Once you have proved to yourself that you can do this for several months, then reassess and determine if selling the house is the right thing to do.

    With that said, I would never talk someone out of downsizing to reduce debt, IF that is what you would be doing to buy the condo. Any time you can reduce your cost of living and you are willing to do that, then by all means, reduce your cost of living!!

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      #3
      Originally posted by questions View Post
      My husband and I pay around $1400 a month on our house payment. We also have around $550 in minimum payments on credit card. We each make around $40000 per year. We are considering selling our home, we hope to make around $40000, pay off student loans, credit cards, and home equity loans. We thought of a lower priced condo for about 2-3 years. Is this a good idea???
      There's not enough information here to make a wise recommendation.

      You make 80k a year between you. You owe 1400+550 -- so about 2k a month. So, 24k a year in debts... at minimum payments.

      What do you expect to pay for a condo in your living area?
      How much equity is there in the house? How much longer on the mortgage?
      Total CC debts? Interest rates on those debts? Time remaining?
      Total student debts? Interest rates on those debts? Time remaining?

      Unless you are down-sizing your house for other reasons not mentioned here... I'm not sure what would be in your best interest.

      Too little info.

      Comment


        #4
        Not enough info. What is your total debt, listed by type, amount and rate? You say you pay $550/month on credit cards but then also mention student loans and home equity loans, so we need to know the whole story.

        Making 80K/year, you should have no trouble affording the house and CC payments. When we bought our house, we made about 85K, the mortgage was 113K and I owed 102K in student loans and my wife had a few thousand on a car loan. We managed just fine with about 230K in debt on that 85K income. Tell us the full story and we'll be able to help answer your question.
        Steve

        * Despite the high cost of living, it remains very popular.
        * Why should I pay for my daughter's education when she already knows everything?
        * There are no shortcuts to anywhere worth going.

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          #5
          Not enough information but my husband and I make an annual income about the same and pay $1400 on a mortgage. We don't have any non mortgage debt but have plenty of extra.

          A budget would be good-you are probably living beyond your means if you have a $500 credit card payment.

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