What to do after selling house

[Starry436]

We bought a house in 2015, and sold the house in 2016..long story short, we had a horrible, terrible, witch of a neighbor and we refused to keep living our lives in a house that we felt like prisoners in. We sold the house for more than we paid..got a small check back at settlement, but it wasn't profit since we put more into the house than the check was for.

Anyway, I have some student loans, and we have 2 vehicle loans. We are staying with my dad until we find another house to buy but we will need a down payment of at least 3.5%. We've got the down payment saved so now I'm going back and forth on what to do. One of my student loans has a 6.8% rate and is about $2,200 (total of all loans is about $13,900). My car loan is about $18k with a 1.9% rate. I'm debating whether to just keep saving up money for the house, payoff the $2,200 loan, or put $2,200 towards the car and try to get that debt eliminated since the student loan payment is a min. of $120 a month and the car is $380 per month.

We've been kind of stupid in the sense of not saving a lot of money and vehicles I'll admit. The house we just sold ate up a lot of money in various ways, even though it was brand new and we had some pet emergencies that cost a good chunk last year as well. So in terms of saving, we have just enough to cover the down payment..closing costs..and a little buffer for other expenses. We plan to be at my dads probably another 4 months at least and are paying him $400 a month for the troubles of having our 3 animals there. Even being there our expenses are about $1,495 (car, truck, dad, storage, cell phones, student loans) and income after taxes around $4,700 (more if husband works OT which happens very often).

What's some advice on our situation? I thought I had things figured out, but clearly we don't and we make ok money to not have more saved than this.

[rennigade]

Im not sure where you live but if possible...buy a house on some acreage. Its a nice feeling going outside of your home and not seeing another house in any direction. Complete privacy and you never have to worry about neighbors.

Pay off the 6.8% student loan. Its only $2,200.

How much do you currently have saved? Whats your EF?

[Starry436]

^^^100% trying to do this, but anything with land in our area is upwards of $275,000 or more which we're trying to stay under $250,000 with the next house. We're trying to be patient for Spring/Summer months to see what gets listed, but I'll tell you this neighbor we had was pure evil and we couldn't of been more happy to of moved out of there.

[Starry436]

Im not sure where you live but if possible...buy a house on some acreage. Its a nice feeling going outside of your home and not seeing another house in any direction. Complete privacy and you never have to worry about neighbors.

Pay off the 6.8% student loan. Its only $2,200.

How much do you currently have saved? Whats your EF?

About $16,000 right now...it's really not enough, I know. Which is why I'm torn with eliminating some debt or focusing more on saving since we technically don't have a home right now. We just made the move-in with my dad in December. January is our first month without a mortgage and finalized on the utility expenses, etc.

[corn18]

We are staying with my dad until we find another house to buy but we will need a down payment of at least 3.5%.

You should save up until you can do a downpayment of 20%. If you can't do 20%, you can't afford to buy a house.

If you agree, we can talk about how to do that in your current situation.

Tom

[Fishindude77]

My advice would be to pay off any debt as quickly as possible, then start saving to create an emergency fund. If you really want another house suggest you continue living where you are or rent until you have at least 20% down payment, plus the emergency fund money.

Sounds like you got a taste of how expensive it is to keep a house, renovations, repairs and general upkeep. Nothing at all wrong with renting forever if you don't like dealing with that stuff.

[disneysteve]

My advice would be to pay off any debt as quickly as possible, then start saving to create an emergency fund. If you really want another house suggest you continue living where you are or rent until you have at least 20% down payment, plus the emergency fund money.

I agree. You are not in a position to buy a house right now. As stated, you need a 20% down payment and a 3-6 month emergency fund.

I haven't seen anyone mention the car. You owe 18K. How much is it worth? If you aren't upside down, I would consider selling it and replacing it with something more modest. $5,000 will get you a perfectly functional car and would immediately eliminate $13,000 worth of debt.

[rennigade]

About $16,000 right now...it's really not enough, I know. Which is why I'm torn with eliminating some debt or focusing more on saving since we technically don't have a home right now. We just made the move-in with my dad in December. January is our first month without a mortgage and finalized on the utility expenses, etc.

You can live with your dad for a short period of time but you may want to consider renting for the time being...until you have 20% to put down on a house and a comfy emergency fund.

Nothing wrong with renting...so many people look down it for some reason. We rented for 11 years. Was able to put 45% down on a house and now have a yuge emergency fund.

[msomnipotent]

I can totally relate to this. I wonder if my neighbor that threw rat poison in our yard and killed my dog and cat moved to your neighborhood after I let her know I would be burning her house down. A lot of our other neighbors are idiots, too. We are planning on moving and will probably lose $80,000 to $100,000 and I don't even care at this point.

If I were you (and you can tolerate each other), I would stay at your father's house as long as possible to save and pay off the bills. Having only 3.5% down payment is just asking for failure. Loan officers don't make money unless you get a loan, so they are not the best at doing what is best for you financially. You should have at least 10% down and a good emergency fund, but 20% or more is better.

Are both cars financed? If so, I would really consider selling the more expensive one and paying cash for a used one, depending on your circumstances. Paying a small amount on the car really isn't going to help much because 1. You will still have the car loan, and 2. You will still owe your student loans. If you want to pay something, at least pay enough to close the line of credit so it helps your credit score. However, I would continue to stockpile savings until I was sure of what I wanted to do.

Did you save your receipts for home improvements? You will probably have to have them for tax time.

[Jluke]

Pay off the $2200 student loan today.

Really think about the 18k car loan. What do you want more - the car or the house?

I can't tell what your income is bc normally I would look at the car as leveraging debt at a low interest rate. I just don't know if that is true here.

If you're willing let us know your net take home. You already told us your expenses are going to be $1500 ( a little less after paying off the one student loan)

[Starry436]

I can totally relate to this. I wonder if my neighbor that threw rat poison in our yard and killed my dog and cat moved to your neighborhood after I let her know I would be burning her house down. A lot of our other neighbors are idiots, too. We are planning on moving and will probably lose $80,000 to $100,000 and I don't even care at this point.

If I were you (and you can tolerate each other), I would stay at your father's house as long as possible to save and pay off the bills. Having only 3.5% down payment is just asking for failure. Loan officers don't make money unless you get a loan, so they are not the best at doing what is best for you financially. You should have at least 10% down and a good emergency fund, but 20% or more is better.

Are both cars financed? If so, I would really consider selling the more expensive one and paying cash for a used one, depending on your circumstances. Paying a small amount on the car really isn't going to help much because 1. You will still have the car loan, and 2. You will still owe your student loans. If you want to pay something, at least pay enough to close the line of credit so it helps your credit score. However, I would continue to stockpile savings until I was sure of what I wanted to do.

Did you save your receipts for home improvements? You will probably have to have them for tax time.

Never in our lives did we think people could be the way this neighbor was! It was torture coming home everyday. She ruined everything about our first home ownership.

We did save some receipts, I hope cleared checks work ok too.

To answer other questions, together we make about $85-95k a year - this fluctuates with my husbands OT. The truck and car loans and student loan debt is all we have on our credit right now but the vehicles "decision was stupid" I know, the truck is at $19k 4%, and my car is at $18k 1.9%. We got sucked in like many Americans do and now I'm trying to dig us out.

I really want to pay off the $2,200 student loan because of the rate..the loan was originally $2,000 so interest is accruing on it. The others are steadily going down. But I'm torn because I feel like every penny should be going into savings right now, and then we should decide what to do with the money but at the same time, does paying off that loan help my credit score now? Could I reap better benefits now by going ahead and paying it off and trying harder to put that 2,200 back into savings?

[StormRichards]

I definitely think you should get rid of the 6.8% student loan.

I didn't see an answer regarding the value of the vehicles. Are you able to sell either of them without still owing money? Are you two able to share a car for awhile?

If it isn't going to strain the relationship with your father, I think you should stay there while you pay down debt and save for your own home.

[Jluke]

I really want to pay off the $2,200 student loan because of the rate..the loan was originally $2,000 so interest is accruing on it. The others are steadily going down. But I'm torn because I feel like every penny should be going into savings right now, and then we should decide what to do with the money but at the same time, does paying off that loan help my credit score now? Could I reap better benefits now by going ahead and paying it off and trying harder to put that 2,200 back into savings?

If you're not comfortable paying all $2200 at one time. Pay $1100 asap. As you have seen with this loan paying just the minimum doesn't get you anywhere. Then next month pay it off or put $500 towards it. You need to get the feel for paying off debt and realizing that 2200 is not a lot of money in the grand scheme of things.

With 50k in debt (is my math right?) no need to worry about financial moves affecting your credit score.

please realize that you are getting advice from a very experienced group of individuals. Some who have net worths of 700k or more.

[Petunia 100]

Never in our lives did we think people could be the way this neighbor was! It was torture coming home everyday. She ruined everything about our first home ownership.

We did save some receipts, I hope cleared checks work ok too.

To answer other questions, together we make about $85-95k a year - this fluctuates with my husbands OT. The truck and car loans and student loan debt is all we have on our credit right now but the vehicles "decision was stupid" I know, the truck is at $19k 4%, and my car is at $18k 1.9%. We got sucked in like many Americans do and now I'm trying to dig us out.

I really want to pay off the $2,200 student loan because of the rate..the loan was originally $2,000 so interest is accruing on it. The others are steadily going down. But I'm torn because I feel like every penny should be going into savings right now, and then we should decide what to do with the money but at the same time, does paying off that loan help my credit score now? Could I reap better benefits now by going ahead and paying it off and trying harder to put that 2,200 back into savings?

Don't worry about it. Pay all of your bills on time, always. Don't get in too much debt. That's all you have to do to have perfectly good credit.

Have you ever heard of Mr. Money Mustache? He writes a blog and has a saying, "If you have debt, run around like your hair is on fire, because it is." When your hair is on fire, you don't worry about trivial details. You have an emergency, so you act immediately to solve your problem.

You have 50k of consumer debt. Your hair is on fire. You don't need to buy another house right now, you need to deal with your emergency.

I'm sorry about your horrible neighbor experience. I had a horrible neighbor, too. His elderly mother owned the house, he lived there with her. He was mentally unstable and hated animals. He poisoned my daughter's cat, he poured gasoline on my dog's head, and a neighbor across the street believed he poisoned their dog. He also spent a good deal of time trying to see in our windows and listen in. About 1.5 years ago, his mother sold the house and they moved. It has been wonderful.

[Starry436]

Yes right at about $50k in debt. My car probably has positive equity since we put money down and pay more than the minimum, the truck we just purchased used last year to have a 4wd/hauling vehicle. We need two vehicles because we work different schedules but we don't need -those vehicles-.

While my dad doesn't mind us being at his house, it is chaos to say the least with all the people and animals. But, other than feeling cramped and having no peace, some days worse than others - we could stay there for a while and I think he would be ok with it.

I do like the idea of paying $1,100 on it now and then chipping away at it in hunks. I'm only hesitant right now because I know we are going to owe somewhere around $1,000 in taxes since I work FT now (no longer a student) and we have no other deductions.

For some reason, I like to see money sitting in saving's and hesitate to use it to pay off debt, I guess I'm always paranoid about what emergency each day could hold. For instance I have another student loan sitting at $1,600..no reason I couldn't pay that off now but every time I get close to doing it I get paranoid that an emergency could come up and hate the fact that we haven't saved more. Maybe this comes from watching my mother struggle paycheck to paycheck and not having any money to cover things that life threw at her? I don't know.


Petunia - Wow how crazy!! I don't understand what makes people like this to the point where they waste so much time and energy on making others miserable!