downsize home to escape my crises?

[inaterribleplace]

Hello,

I need truthful advice if you have any to spare. My soul is hurting and we need some help.

We had a serious financial setback that is too painful to go over (has to do with health benefits or lack of for one of my children, it was one of those things that you have no choice but to do for your child in terms of an awful health scare that is now over, thank you God)

previous to that we knew we would owe 17500 to the IRS this year for 2010 which was since wiped out (we had most of this in the bank ready to send in april).

Here is our current situation at this time
I stay at home with my 2 children and expecting my 3rd in december.
My husband will make 150,000 next 12 months and probably make that on average (he is in sales and this is a good solid average, median not high)
We now owe $26,500 in credit card debt
still 17,500 to IRS April 2010.
No savings now
We could sell our home and take our 75K downpayment out and make about oh $19,000 after commissions (have to put movign costs in, but thast not high)

Our expenses now WITH the credit card debt leave us almost nothing per week and there aint any fat, I mean nothing, skin n bones
Without credit card debt it is only about 250 ish week and that just wont cut it in the future.

The catch and its a big one: is that since we had to MAX out our credit score our normally stellar credit is shot. To recover this per our trusted mortgage officer, we need to pay down 16500 in credit card debt to get us into a nice favorable rate.

We have the option of taking a $13,000 interest free loan from the owner of the company at this time. (which would be paid out monthly from us at a agreed amount per month)

We have the 3500 around to make it 16500 to pay down CC and then lower interst rate

OR we could stay in the home, not uproot the family in a chaotic move with me having a high risk pregnancy. When we bought htis home, our interest rate was 4.61 on a $375,000 home with 20% down for a great deal. Now we would get about 5.61

When I did the numbers I just dont have enough weekly to cushion against other "unforseen" debt and any extras or unforeseen stuff. I dont see how I can add savings at such little incoming after outgoing.

Is there another solution besides moving at all? I am now on bedrest for high blood pressure because the stress of the last 6 months has about done me and my husband in. God bless him he is trying and feels like he is to blame for not making "things work" he has done the BEST anyone could do, he couldn't have seen this one coming

Please help
Josephine

[maat55]

IMO, if you are not able to save at least 10% of your income, at some point in the near future, you are in an over priced lifestyle.

I've been where you are without the trauma, and sold my home to get on track quickly.

Most people will have excessive expenses they can eliminate if they want to keep their home bad enough: cells, cable, eating out, car payments etc.

Without knowing your budget and exact income, I can only speculate. Typically, you want your house payment to be less than 30% of your take home pay. It is better in the long run to have less house and less stress, with more room in your budget for surprises.

[zetta]

I think we'd need to see your budget to give sound advice. A visit to a financial planner might be worthwhile.

By selling your house, would you end up with $19k or $94k (it wasn't clear to me)? Have you checked recent house sales to get an accurate idea what your house is worth?

Is the $26.5k on credit cards primarily medical bills, or just regular purchases?

How long would you have to repay the $13k interest-free loan? What kind of rate could you get on a home-equity loan (the rate would likely be lower than the interest rates charged by the IRS and credit cards)?

If you returned to work a few months after the baby is born, could you make enough to come out ahead after daycare expenses? If it came down to selling the house or returning to work, which would you choose?

[LivingAlmostLarge]

Need more details like income after baby comes if you are working? How much is rent and how much mortgage is to income.

[minnie1928]

I agree, I think if you post some real numbers we can give you better advice. Also post any assets (aside from the house) such as 401k, IRA balances, etc.

[graceful]

I think we'd need to see your budget to give sound advice. A visit to a financial planner might be worthwhile.

By selling your house, would you end up with $19k or $94k (it wasn't clear to me)? Have you checked recent house sales to get an accurate idea what your house is worth?

Is the $26.5k on credit cards primarily medical bills, or just regular purchases?

How long would you have to repay the $13k interest-free loan? What kind of rate could you get on a home-equity loan (the rate would likely be lower than the interest rates charged by the IRS and credit cards)?

If you returned to work a few months after the baby is born, could you make enough to come out ahead after daycare expenses? If it came down to selling the house or returning to work, which would you choose?

I think she meant that there would be a profit of $94K or whatever amount but after deducting the sales commission, she would only net $19K from the sale.

[graceful]

OP,

Sorry you are going through all this. Sounds like the pregnancy, hormones, and stress are all getting to you.

Wishing you a safe pregnancy and delivery and a healthy baby. Hope that you and your DH make the financially sound decisions necessary to keep your family living within your means so that you will be less stressed about money.

It's always good to get an objective opinion of your financial snapshot and how you can make things work. Sometimes, making a tough decision earlier can save a lot of additional pain and suffering later.

Good luck.