A doozy of a situation... what would you reccomend?

[nuclear_j]

The Background:
So my wife and I are on board with Dave Ramsey's plan. And to date we have cut up most of our credit cards, we created a budget and spending allocation table and have done very well sticking to it.

The Situation:
We just relocated back to my parent's place from across country. We are looking for permanent jobs and an apartment. My wife and I just happily discovered she is pregnant and we would like to buy a house as soon as possible. We have 0 savings and 107,000 in debt.

Our Plan:
1) We are saving for our deposit,first and last months rent and move in to an apartment
2) We will save up $1000 for the emergency fund
3) We will start our debt snowball
4) For the last three months of the pregnancy we will put the snowball on hold to save some money for when my wife will not be working
5) Continue our debt snowball till we pay off about half of our debt (the other half is student loans)
6) Save up for a down payment on a house and then purchase
7) Start debt snowball again til the end
8) Payoff the house
9) Live happily debt free ever after

The Question:
So I guess the short question is how do you work planning for a baby while also starting the plan?

The Answer:
Hmmmm, As I was typing the question the answer came to me,... we'll just budget the baby costs into the budget once we have stable jobs and an apartment. Thanks for listening!

[Debbie-cat]

Congratulations on the new addition coming!

[MaryCarney]

Congratulations on the baby, children are such a blessing!
Guess what, your baby will not know if he/she lives in a rental or not, so why do you want to buy a house BEFORE you can afford it (i.e. when you still have $50,000 in debt) PLEASE reconsider!!
We have endured some very trying financial times surrounding the births of two of our children. Daddy lost his job two weeks BEFORE Sarah was born and two weeks AFTER Rosie was born. But guess what? We survived, in a teeny, tiny apartment, and our children are happy, healthy well-adjusted adults, who were able to graduate from college debt-free, in part because we made sacrifices when they were young.
Good luck as you get 'gazelle inense' about your debt. It will go faster than you think!!!

[Siebrie]

You may want to reconsider moving out before the baby is born. Especially when you are both job hunting/working it is sooooo convenient to have reliable people nearby who can look after the baby when you're out. I don't know how long your parents agreed to have you stay, but if you can work out something with sharing costs / doing yardwork in exchange for babysitting, etc. I'd say: stay as long as possible and save!! Your parents will want to help you get on your feet properly, won't they?

[ladykemma2]

steps all out of order

pre babystep 1: 4 walls: food, utilities, shelter, transport to work.
1. BS 1: 1000 EF
2. stormclouds in the horizon. no job, no insurance, preexisting condition. how are you going to pay for this baby? sock away money now for hospital. etc. debt snowball on hold, pay minimums.
3. once baby is safe home, begin snowball. figure out how to get into an apartment if you are getting on parent's nerves. stay with parents if all is well.
4. BS 2: snowball, work extra, etc. total 106,000.
5. BS 3: 6 month emergency fund
6. BS 4: 15% to retirement
7. BS 5: kids college ( i would put this on hold...)
8. BS 6: save 20% downpayment on house, buy house. No more than 1/4 of your takehome pay.

slow down. you can't afford a house. an apartment would be the blessing right now. a house is 5 years in your future.

[kita]

Moving into an apartment will have most to do with family relationships. If you are living in a suite with some space and privacy and your parents are okay with it, get your act together there.
But the baby that is coming won't be here for several months...I'm guessing at least six. And when babies come they are very small and compact...easily carried in the arms. They also don't come with the ability to walk. YOU DON"T NEED A HOUSE BECAUSE OF THE BABY. Parents often spend a ton of money on a nursery only to find out that the baby sleeps with them and they diaper it on the bed or couch or on a blanket on the floor.
If you have to get an apartment soon, you just NEED a one-bedroom with a niche or spot for the crib. Two bedrooms would be nice admittedly. But if it would be needed, that one bedroom could last for a while.

[CrazyCat]

see...I'm on the other side of the fence as far as apartments go. When you rent..you put money towards NOTHING~as least when you purchase of house. With the 1000's of foreclosed homes out there..you could get a great deal~PLUS this year is the $8000 Credit from the gov.

That said...with the situation of the new baby coming....that does change things.

[Wendy99]

Wow congrats on the baby coming That alone is very exciting

As for renting vs home owning my door swings both ways for this one. I would be over anxious to have a place of my own as well; however with that amount of debt .. that would be a little scary for me. I mean I have udner $5,000 and that really stresses me out. I guess it depends on your comfort level? I found we were able to sock away much more money while we were renting (some 10 years ago) then when we bought our house and had kids etc. The more you save and the more you pay off, the more options you will have in the end to be honest. Whichever you decide I wish you the best of luck

[Cricketlegs]

My dh and I were 30 before we bought a house--and we had 3 kids already lol!

I agree, get rid of the debt. Also, did you know that if your debt to income ratio(it used to be 30%) is too high no one will finance you a house.

Get rid of the debt, then the house. Work hard and the house is in the near future.

Also, GREAT news on the new baby!

[frugalwarrior]

Congratulations on the baby. I would not buy a house so fast. Babies come w/ so many hidden costs as do new houses. Theres a lot to be said for having a nice calm time before the baby is born. Much better on mama and babies health. Housing will not rise that fast. Make sure the delivery is safe,mama came through it well and reassess. Keep paying debt as fast as you comfortably can. Get your own apt though before the babies born so mom can nest.fix a nursery. Living w/ relatives would be too stressful. I know Iwould struggle not to have too much input if my DD still lived w/ me. It's like a pshycology thing KWIM?

[craftypam]

People are saying apartment good; house idea not so good. I have a 23 year old son, he is paying more for his apartment than it will cost for a condo. His fiance's sister also just bought a house with lower payments than the place she rented. Also the big tax break that you can get by buying this year is also something to consider. My son was also told, and this information is for you nuclear_j, if you buy a house through fha and your income falls within a certain range you can get a loan for a down payment with no interest that won't be due until you sell the house.

[Cricketlegs]

The Situation:
We just relocated back to my parent's place from across country. We are looking for permanent jobs and an apartment. My wife and I just happily discovered she is pregnant and we would like to buy a house as soon as possible. We have 0 savings and 107,000 in debt. <<<<< I Pasted what the OP posted.



The problem here is that not only is the OP just starting the journey of cleaning up debt mistakes but look at the debt they have(no offense OP!) should they dump a HOUSE debt on top of $107 THOUSAND in debt(not house debt so what kind of debt is it?) when with that HUGE number they should already have house debt in my opinion.

Add a new baby......the LAST thing they need is more debt. They need to lose the debt they have, see what a new baby does to the whole shebang, save some money and then move to a house IMO.

[nuclear_j]

Thanks everyone for the warm wishes on our future new edition! We just found out and estimate this is the very beginning and we have 9mos to go. Thanks for all the input! All the feed back gives us more options to think about.

I do not mind putting the house off until we are out of debt, but KB wants to get it as soon as possible. That said, the FHA loan sounds tempting... because if we can pay roughly the same for renting as we can to own it just makes sense to own because we are putting in equity into the house instead of paying someone else's mortgage. On the other hand buying a home and getting another loan is risky and with our amount of debt and being in between jobs, it is going to be tough to get that loan. That being said I am not too worried about jobs because we are very industrious and creative and our goal is to make at least 70K combined.

If we did rent I would not mind staying here until 4-3 months before our baby is born (WOW!). The scene here is good, no problems with the 'rents they would love us to stay... but as frugalwarrior said I think it would be good for the wifey to nest.

Well thanks again for all your help. I discuss with KB and post a new action plan!

[nuclear_j]

The Situation:
We just relocated back to my parent's place from across country. We are looking for permanent jobs and an apartment. My wife and I just happily discovered she is pregnant and we would like to buy a house as soon as possible. We have 0 savings and 107,000 in debt. <<<<< I Pasted what the OP posted.



The problem here is that not only is the OP just starting the journey of cleaning up debt mistakes but look at the debt they have(no offense OP!) should they dump a HOUSE debt on top of $107 THOUSAND in debt(not house debt so what kind of debt is it?) when with that HUGE number they should already have house debt in my opinion.

Add a new baby......the LAST thing they need is more debt. They need to lose the debt they have, see what a new baby does to the whole shebang, save some money and then move to a house IMO.

No offense taken It's ridiculous right? Here are the numbers... It's actually 110K

Target $147.04
Best Buy $215.00
BOA Card $300.00
Paypal $399.99
Macy's $2,300.00
PSECU Equip L01 $2,523.92
PSECU Visa L09 $6,846.81
PSECU Car L12 $9,960.41
Amex Card $15,306.59
School Past Due $16,000
Student Loan $19,497.00
Student loan $37,014.14

I totally agree that more debt is the last thing we need, however we are planning on incurring that debt anyway in the future, so we would be taking it on sooner than later. If we were paying roughly the same as renting, do you think it would make sense to do it?

[kmonokwe]

nuclear, it sounds like your eyes are on the right goal, and you're open to all perspectives, which is just where you need to be at this point!

My only addition to what everyone else has already said is that when comparing owning to renting, be sure to calculate the whole cost of owning, not just the payment. If your rent is $800 and your house payment is $800, its tempting to say you're owning for the same cost. But be sure to do your research on property tax in your area, the cost of maintenance, and all the other small fees like home owners associations.

I feel, like many others that although your goals are great, you ought to slow down and take your time getting into a house of your own. Dave says that a house should be a blessing, not a curse, and getting out of debt first is the best way to go.

Congratulations once again on the baby coming, and many blessings to your family! Good luck, and keep us posted!