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    What a mess..not sure where to start

    I am 55 my wife is 52 - total income of 105K - Home value $150K owe $214K
    401K $25K - misc debt $10K
    We are currently commuting together 100 miles a day to work and it is draining us..
    We are so unsure of what to do.. Rent our house out and rent something closer to work..Short sale the house..walk away?? At our age time is not on our side..and we need to start socking away serious cash into 401K.
    We live in a suburb of Chicago and the market is terrible..on the plus side we have a great house..close to family..
    So torn.. any and all advice welcome. Thanks

    #2
    Originally posted by sammy1113 View Post
    I am 55 my wife is 52 - total income of 105K - Home value $150K owe $214K
    401K $25K - misc debt $10K
    We are currently commuting together 100 miles a day to work and it is draining us..
    We are so unsure of what to do.. Rent our house out and rent something closer to work..Short sale the house..walk away?? At our age time is not on our side..and we need to start socking away serious cash into 401K.
    We live in a suburb of Chicago and the market is terrible..on the plus side we have a great house..close to family..
    So torn.. any and all advice welcome. Thanks
    Hi Sammy. There are a lot of moving parts in your post.

    I'm 45 and also very upside down in my home. I considered walking. I approached it as a business decision, which choice was going to be best for my bottom line? The most significant factor for me was that I would pay at least as much in rent (to rent a similar home) as I was paying on the mortgage. After considering each factor, I decided to stay put.

    I agree that you and dw need to get serious about saving/investing for retirement. With an income of 105k, I suspect you have the ability to do just that.

    Do you know where all of your money is going each month? If not, it is time to start tracking it. Where is your money "leaking" away?

    What are you and dw contributing to your retirement accounts right now? If it isn't much, then bump up those contributions immediately. Adjust to your lower take home pay and continue to monitor your spending. Then, bump up your contributions some more.

    Can you post your monthly budget?

    Comment


      #3
      I think posting your budget is critical to helping you.

      I also think the current value of your home is irrelevant. You should have no trouble supporting a 214K mortgage on a 105K income. If you think you can rent the place for at least enough to break even and rent something to live in for less than you're spending now, that might be worth considering if you want to become a landlord.

      Post the numbers and we'll help wherever we can.
      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.

      Comment


        #4
        I agree with Steve you should be able to afford that house-it is not a loss unless you sell the house. Also being a landlord isn't fun-they very well may ruin the house etc

        What is your budget?

        Comment


          #5
          Originally posted by sammy1113 View Post
          I am 55 my wife is 52 - total income of 105K - Home value $150K owe $214K
          401K $25K - misc debt $10K
          We are currently commuting together 100 miles a day to work and it is draining us..
          We are so unsure of what to do.. Rent our house out and rent something closer to work..Short sale the house..walk away?? At our age time is not on our side..and we need to start socking away serious cash into 401K.
          We live in a suburb of Chicago and the market is terrible..on the plus side we have a great house..close to family..
          So torn.. any and all advice welcome. Thanks
          What field of employment are you and your wife in? Are there any jobs closer to where you live?

          I agree that you should be able to support your mortgage on your income. What does the rest of your budget look like? Do you have any other debts?
          Brian

          Comment


            #6
            When similar situations are aired on the Suzy Orman show, she usually finds excess spending. Review your budget and cut out the non-essentials.

            Comment


              #7
              I agree with others that you need to post monthly expenditures to find the funds you need to fund retirement for you and wife. How long have you been in this house? Had you added debt to the mortgage when house prices were escalating? If the house meets your needs you're stressing about loss of value that would only be monetized if you sold.

              How many years have you both been commuting? Is this a recent change? Can the work be done from home from time-to-time? Can you take public transportation like an express bus from suburb to city? Do you have a relative in the city who would benefit by renting you a room for nights when weather or exhaustion makes staying in the city preferable?

              Would renting your house cover the all the costs associated with the house? Would you be happier in an inexpensive apartment? Are you prepared for the time and work involved in being a landlord? Moving is a tremendous amount of work and I believe number 5 of the most traumatic of life's events. These are not decisions to be taken without considerable planning.

              Comment


                #8
                Sammy,

                There is good advice in this thread and I am sure listening to some of all of it will help you enjoy your retirement days without debt.

                I think the main issue here is the physical and emotional stress your adding to the equation. If you lay everything out on paper you are doing much better than 90% of America as far as income and probably better in regards to debt. 10k debt is not that much when you factor in that most families have more than that in a car payment.

                Your mortgage note is a major player in this I am sure. You and your wife look at it like you are throwing money away and got ripped off and want to start over. You had this great investment and now its worthless and why keep paying for it... I can tell you that thinking about your mortgage vs home value in that light will get anyone depressed.. quick. The fact of the matter is you bought a home at a time when it was worth 214k+ the demand and market value was there, sure from an inflated demand from mortgage backed securities, sub-prime and predatory lending blah blah - whole other topic. Anyway it might take a while but may people believe those home values will eventually return and in all reality doesn't matter if you plan to retire in that house. You will have some worth from that house someday. Renting vs your situation is certainly throwing money away not to mention the ding on your credit due to a short sale and coupled with the tax on the debt forgiveness. The ripple effects are quite broad compared to the benefit, if any.

                Here is what I would do.
                1. Get rid of the 10k misc debt ASAP. This will make you debt free except for the house which is a HUGE step.
                2. Sit down with a financial planner and take a look at your budget and retirement goals. You are too close to retirement rely on 100% of the advice from an internet forum. There are a lot of details and moving parts you should have a professional look at as well. This thread is a step in the right direction.
                3. Take a look at refinancing your home loan. If you are that upside down you are probably in the high 4.5-5% range on your note. Hopefully you qualify for the HARP program. Google the word "HARP"

                I can't post links yet. I forgot my old username and password and now that email is no longer accessible so I had to start over. O well.

                Good luck.

                Comment


                  #9
                  Is $214 mortgage? If not, debt settlement may be an option. Also, you could speak to an attorney about possible solutions including debt negotiation/reduction while also saving your house. My prayers are with you. I know this hurts.

                  Comment


                    #10
                    I know budgeting is really hard but I think you have to review your expenses so that you don't have to worry about everything. Do whatever you can to earn more and just live if possible below your means so you can pay that mortgage off. You are both working so I think you can do it, just needs a matter of planning. You can share everything here and see what advice will really suit your situation.

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