Question on priorities

[Bob B.]

Long story short - My family (me, wife, 3 kids) moved across the state 2 1/2 years ago. We have been maintaining two houses ever since. We have been holding on by our fingernails financially, but have had a renter move into our old house. She is paying $725 per month in rent. The house is still for sale, but we are upside down on our mortgage by about $20,000.

We have about $24,000 in old, unsecured debt. (we haven't used a credit card in 26 months now) Our monthly payments on these notes is about $1,000 per month. Our house payments total $1,500 per month (mortgage, taxes and insurance).

My take-home net is $3,200 per month. My wife receives some erratic free-lance income. We'll call it an average of $300 per month.

We have no car payments.

We've got some past-due bills to pay (about $1,500). After those are paid off, and we have established a $1,000 emergency fund, my wife an I are at a disagreement as to how to prioritize our $725 rental income. I would prefer to target our unsecured debt first, until it is all paid off. My wife reminds me (and she is right) that the house we are living in needs a new roof ($12,000?) and we each need a new(er) vehicle. Her 2004 van has 180,000+ miles. My 1993 car has 136,000+ miles.

So...I'm asking for some help in prioritization.

Thanks.

[jpg7n16]

Just FYI - I created this thread a while back: http://www.savingadvice.com/forums/p...ght=priorities

This is how I pretty much do things:

1) Meet necessities of life (food, shelter, utilities, necessary clothing, necessary transportation)
2) Take free money (employer match)
3) Eliminate high interest debt (tax adjusted 7% and up)
4) Establish appropriate EF
5) Retirement Savings
6) Eliminate low interest debt (tax adjusted below 7%)
7) Wants of life

Edit: oh and I would say, fixing the roof is a need like you say. But getting new(er) cars is a want, not a need.

[jIM_Ohio]

I would not get new cars until you get rid of the old house.

I think you also need to pay close attention to the numbers on the old house, and realize that cutting losses and moving on is acceptable.


Example- if the old house has a mortgage of $1000/mo and you are getting $725/mo to rent it, you are falling "behind" by about $300/mo.

In one year that is $3600
In 2 years its $7200...

How much have you put into old house (since the move)? 30 months of that $1000/mo mortgage payment is $30,000. I am guessing at the $1000/mo going to old house... but my real point is this

If you are 20,000k under on a sell of the house, you already sunk between 15k-30k of "lost expense" into that house. If you sold house, and put the "underwater" amount on a credit card, that might actually be better for you, short term, than maintaining 2 houses and living month to month with a leaky roof.


Can you itemize the following:

1) Mortgage payment on current house
2) Mortgage payment on hold house
3) rental details on old house (costs vs expenses)

Thx