Financial advice needed.

**Petunia 100** · 07-23-2015, 12:35 PM

Originally posted by josh89 View Post

Hi, I have a few questions about my financial situation and would really like some advice. Here is my situation. I bought a house as a rental two years ago for around $60,000. I moved away and am trying to sell it because the rent isn't even covering the mortgage (very small town, no jobs etc.). So i am losing a lot there every month and am looking at losing money in the sale, if it ever sells.

Second, my job requires driving 500-1500 miles a month so I needed a reliable car. I found an ok deal and long story short I have 110k miles on it and it is very upside down. Same story on a pickup I bought. I know..hindsight.

Third, I have $13,000 in student loans.

Finally I have around $8,000 in credit card debt.

I am trying to turn my financial life around and don't know where to start. My goal is to quit my current job that I hate (although i'm making around $50k/year) and start a new career. What do you advise on a home that wont sell and I am losing money on? How about two car loans that are very upside down? I'm not as worried about the student loans and every spare penny I have is going towards knocking down the high interest credit cards. Any insight is greatly appreciated!!

Hi Josh89, welcome.

You start with assessing where you are right now. You've listed your debts, but that is not the entire picture. How much is coming in each month, how much do you have in savings, how much are you spending on living expenses? If you don't know where ALL of your money is going, look back through bank statements, credit card statements, etc. and see. Try to come up with at least some ballpark numbers.

Once you determine where you are and where you want to be, the best path to get there often becomes much more clear.

**disneysteve** · 07-23-2015, 01:59 PM

I agree with Petunia. You need a more comprehensive assessment.

If you'd like help from the community here, list your income, your monthly expenses, your savings (if any), and each of your debts with the balance, interest rate, and minimum monthly payment. For the vehicles, also list their fair market value.

How much are you losing each month on the rental property?

**josh89** · 07-23-2015, 04:24 PM

Thanks for the replies. I agree that a good budget helps a lot. I have organized all of my bills and cut my spending down quite a bit. I feel like I am doing great with the finances that I can control but am losing so much on the cars and house and have no control over it.

After all of the required bills are payed, I usually have about $1000/month left over. This is what I have been putting towards getting rid of the credit cards. The part that I am having a hard time wrapping my mind around is what (if anything) I should do about the cars and my rental. I am 25 and fairly new to these things and obviously didn't think some things through.

On my car I owe $13,000 with a 5.29% apr and $330 payments. Just today I was quoted around $7000 at a dealer and bluebook puts it around $9000. My pickup I owe $17,000, 6.79%, $400 payment and is worth about $12000. Because my job takes me around the country, I have put around 110k miles on both vehicles in under 3 years. I now only need one of them but I think I'm stuck just paying them off.

My house is renting at $500/month with 10% going to the property manager. The property manager said I would be lucky to get $400/month for it so I listed it low until it sells. My mortgage payments are $563/month. It has been on the market for about 4 months and nobody has been interested. It is a nice place but the market is terrible in the area. I didn't realize this when I "invested" in a rental.

Anyway my main concerns are should I get rid of these holes that I'm throwing money into at any cost or should I just work at making payments until everything is payed off? I have read about taking out a loan to cover the amount that I am upside down on the vehicles and then I will have less to pay down. Maybe I should just keep the vehicles and hope they run long enough to get payed off. I'm at a total loss at what to do about the house. Maybe that will just take time in a bad market. I hope everything makes sense an I appreciate the comments!

**Jsteinkruger** · 07-23-2015, 05:44 PM

Currently you are only losing approx ~$120 on the house a month? If that is true, put it at the bottom of your list. In my honest opinion what I would do is save up the $1000/month so you can sell one of the cars and be able to pay what owe after the sale. This way you knock out a vehicle payment and would have extra to pay down the credit cars. You are probably losing more in interest right now than you are losing on the house. Make sure you have an emergency fund though, you never know.

My Priorities would be
1. Save cash for when you can sell a car without taking out a new loan
2. Sell the Car
3. Pay off the debt with the extra cash after the car is paid off
4. House

If your CC bill is more expensive than one of the cars I would flop #1 & #2 with #3

**Weird Tolkienish Figure** · 07-24-2015, 06:40 AM

Originally posted by josh89 View Post

Hi, I have a few questions about my financial situation and would really like some advice. Here is my situation. I bought a house as a rental two years ago for around $60,000. I moved away and am trying to sell it because the rent isn't even covering the mortgage (very small town, no jobs etc.). So i am losing a lot there every month and am looking at losing money in the sale, if it ever sells.

Second, my job requires driving 500-1500 miles a month so I needed a reliable car. I found an ok deal and long story short I have 110k miles on it and it is very upside down. Same story on a pickup I bought. I know..hindsight.

Third, I have $13,000 in student loans.

Finally I have around $8,000 in credit card debt.

I am trying to turn my financial life around and don't know where to start. My goal is to quit my current job that I hate (although i'm making around $50k/year) and start a new career. What do you advise on a home that wont sell and I am losing money on? How about two car loans that are very upside down? I'm not as worried about the student loans and every spare penny I have is going towards knocking down the high interest credit cards. Any insight is greatly appreciated!!

$13000 in student loans is nothing, but $8000 in CC debt is a lot.

First, establish an emergency fund of... $1000 to $2000 dollars.

Second, I would keep working where you are until you pay off the debt. The CC loans and the car loans.

Third... how much are the upside down car loans?

**disneysteve** · 07-24-2015, 08:01 AM

Originally posted by josh89 View Post

I am 25 and fairly new to these things and obviously didn't think some things through.

Plus you got screwed by the banks, which isn't entirely your fault. There's no way someone making 50K/year should have been able to buy a 60K rental property and 2 vehicles totaling over 30K while already having 18K in student loans and also racking up 8K of credit card debt. The banks lend money to anyone with a pulse with no regard to their ability to repay it. It really is "buyer beware" when it comes to borrowing money but many people don't have the knowledge to determine how much they can realistically afford.

You clearly don't need and can't afford to own 2 vehicles. You're upside down about $5,000 on each. I would stop the extra CC payments temporarily. Save up that $1,000/month extra for 5-6 months and then sell the pickup, using the savings to cover the difference between the sale price and the loan balance. Then go back to erasing the credit card debt. So about 1 year from today, you'll have no credit card debt and only one car payment. Instead of an extra $1,000/month, you'll have more like $1,600/month free at that point.

The other thing you really need to look at is your budget. Is there anything else you can cut, even temporarily, to boost the monthly surplus to accelerate the debt repayment? If you post your budget I bet we can point out some areas where you could trim spending even more.

**josh89** · 07-24-2015, 10:08 AM

Thanks for the great advice everyone. I will start saving some of the card payments to put toward getting rid of a vehicle. That should help out a lot. I will get my budget together and post it soon.

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**Jsteinkruger** · 08-05-2015, 04:15 PM

Josh89

Did you ever get a chance to make your budget and decide how you were going to start your payoffs? would be interesting to see your progress.

Financial advice needed.