Should I sale one of two homes to get out of debt?

**disneysteve** · 10-22-2013, 08:15 AM

Originally posted by beto101 View Post

We can have a much better quality of life

I think this is your answer right here. And I agree.

Selling the 2nd home wouldn't be moving backwards at all. It would be getting you debt-free (except your home) and improving your quality of life.

You should NEVER borrow from a 401k. That doesn't fix anything anyway. It doesn't change the amount of debt you have. It just changes who you owe the money to.

**beto101** · 10-22-2013, 08:29 AM

Thanks DisneySteve for you reply. How would we explain to our families why it is what we are doing. They dont know about our financial situation and we would like to keep it that way. No body even our family (parents) need to know our business but I can see the questions arise as in why we would be moving from a big house to the smaller house we bought 10 years ago. Thats one concern I have but it does not bother my other half. Any tips.

**TheKayla** · 10-22-2013, 08:38 AM

Originally posted by beto101 View Post

Thanks DisneySteve for you reply. How would we explain to our families why it is what we are doing. They dont know about our financial situation and we would like to keep it that way. No body even our family (parents) need to know our business but I can see the questions arise as in why we would be moving from a big house to the smaller house we bought 10 years ago. Thats one concern I have but it does not bother my other half. Any tips.

I agree, it sounds like you've been living beyond your means for quite some time to rack up debt like that. Make sure you have your spending habits under control as well so you don't dig yourself back into a hole! If downsizing and getting rid of all your debts will make you stress less, simplify life, and enjoy it more, that's a huge life improvement -- not going backwards at all.

Tell your family you want to simplify, pay off debts (they can assume its your mortgage, and etc. you dont have to give more details) and have more freedom to put savings elsewhere while freeing up more cash to enjoy life experiences more. Sounds like most of your real reasons are the exact reasons you can share with everyone else.

**disneysteve** · 10-22-2013, 08:40 AM

Originally posted by TheKayla View Post

Tell your family you want to simplify, pay off debts (they can assume its your mortgage, and etc. you dont have to give more details) and have more freedom to put savings elsewhere while freeing up more cash to enjoy life experiences more. Sounds like most of your real reasons are the exact reasons you can share with everyone else.

I agree. Telling everyone you want to cut back and have more time and money to do things you all enjoy with less stress sounds like a great reason to me.

**breathemusic** · 10-22-2013, 01:29 PM

I'm assuming based on your desire to sell the larger home, that the smaller one still meets your needs for space? Would selling the smaller home not make you any profit to pay off the debt? Of course, that also means being able to live with the higher utilities and such. Just wondering.

**beto101** · 10-22-2013, 03:16 PM

Originally posted by breathemusic View Post

I'm assuming based on your desire to sell the larger home, that the smaller one still meets your needs for space? Would selling the smaller home not make you any profit to pay off the debt? Of course, that also means being able to live with the higher utilities and such. Just wondering.

The smaller house doesn't have much equity we owe what the house is worth in today's market. It's a 3 bedroom 2 1/2 bath that will fit our family of 4. We are just tired of being in debt and not being able to take family vacations. Out money goes to CC bills and interest and to the rental when tenants move out and need to make repairs or pay a month of rent out of pocket while looking for new tenants.

**Chris Leese** · 10-22-2013, 05:06 PM

I agree that if you will be comfortable in the smaller home, than sell the other, pay off your bills and enjoy being debt free (other than your mortgage, of course) and vacations with the family.

I would not take a loan from the 401k as that affects the growth of your investments for retirement and also somewhat ties you to that job as it factors in to being able to leave should you find another one (or get laid off) as you would need to pay it off when you leave or be penalized (at least that is my understanding).

**kyoko** · 10-22-2013, 08:30 PM

I agree with everyone's advice here. No matter what your family say or think, "simplification" is definitely the way to build the wealth. If you sell your larger house, your monthly expense would free up $1150 (plus utilities and home insurances, etc), some of which you can put into college savings or retirement plans. But also you would want to make sure you put enough savings for emergency or any sort of long term plans so you won't go back to the old habit of swiping credit cards.

If you had lived your house you are thinking of selling for more than two years (doesn't have to be consecutive), you can also benefit the tax break... I think it is also a plus

To your financial success,
Kyoko

**Jerry91** · 10-22-2013, 10:14 PM

I agree with your initial plan. You can sell off the property and pay off your debts in full. Once you are debt free, you will be able to concentrate on your savings and will be able to lead a happy life with your family.

**Wino** · 10-23-2013, 12:54 AM

Once you use the equity to pay off the debts, make sure that you do not run up new debts. Your debts are not the problem. The problem is that you spend more than you earn, which is why you never have any money. Just paying off the debts doesn't change your spending habits, and it is possible you'll soon be back at $50K in debt, but without a second house you can sell.

Take the extra money you're now using to pay the mortgage on the second house and put it into a good mutual fund. Use the not-credit-card-payment money to increase your standard of living. You'll get both of what you desire, and you'll set up a cushion for later. Whatever you do, don't borrow for a new car "because you can afford it," and don't do improvements on the smaller house "because we're staying here and we have the money now," and definitely don't go on extravagant vacations "because we're now able to and we owe it to ourselves."

**JoeP** · 10-23-2013, 06:15 AM

You only get once chance at life, so I'd do what it takes to get the most positive effect on the things that really matter. When you free up money, you can afford more trips and can save more into your retirement.

**Petunia 100** · 10-23-2013, 08:08 AM

Originally posted by beto101 View Post

Thanks DisneySteve for you reply. How would we explain to our families why it is what we are doing. They dont know about our financial situation and we would like to keep it that way. No body even our family (parents) need to know our business but I can see the questions arise as in why we would be moving from a big house to the smaller house we bought 10 years ago. Thats one concern I have but it does not bother my other half. Any tips.

You don't have to disclose anything you don't want to disclose.

Keep your answers general and vague. "We decided we like this house better". Or, "We decided this house suits our life goals better".

**Petunia 100** · 10-23-2013, 08:09 AM

Originally posted by Jerry91 View Post

I agree with your initial plan. You can sell off the property and pay off your debts in full. Once you are debt free, you will be able to concentrate on your savings and will be able to lead a happy life with your family.

He won't be debt free, he will still have a mortgage.

**Petunia 100** · 10-23-2013, 08:11 AM

And to answer your original question, yes, I think it is an awesome idea. Enjoy your new, more relaxing, less stressful, more family-oriented lifestyle.

Should I sale one of two homes to get out of debt?