OK, I am ready...please help me start!

**momofmy3kids** · 08-31-2009, 03:58 AM

We read the TMM in 2003...did some serious eliminating of debt and got out of debt except for our duplex (we owed like $175K) that we lived in one side. BUT, we decided that we couldn't stay there and I was hating the neighborhood...never felt safe.

We moved back to about 5 minutes from my husband's house. 5 years later, we went from 175K to over 800K in debt...won't bore you with everything that happened.

I will tell you what happened - we lost my FIL to cancer in 07. In 08 I was diagnosed with Adult ADD...9 months later...I can't believe I EVER let us get here ... and again. That's the shameful part. So...here we are again.

I feel like I'm at an AA meeting...Hi, I'm me...and I have debt.

Seriously. When I actually added the real estate into our debt it makes me SICK! Our goal was to save a Million in 10 years and we've managed to go the opposite way in 5!

CC Debt - $17K~ mthly pymt $600
Medical - $1200K ~ going up to about $2300 in another month due to a surgery that I'm hoping we can delay about 6 months.
Van - $13K - we are considering saving or selling...not sure mthly pymt $475
Truck - $19K - we can sell it for $25K - our business pays the $680 pymt a month. We bought it because the gov't paid us to buy it...stupid move.

Ok... now the Biggies

Rental Property - $257K, mthly pymt is $2000, we get $1000 in rent.
Our House - $575K, mthly pymt is $4100.

We've been bringing home about $8300 - you do the math (see the credit card debt??).

Seriously. We have to do something and fast. There's no way we shouldn't be the opposite direction. We've been blessed with money and that's the problem. We have NO idea how to be stewards of it.

So...we figure we can sell a ton of stuff and eliminate about $5200 of the CC & the medical bill. (Depends on if I want to part with a couple items or not...I'm still having issues there).

Our other expenses...we've eliminated most Dave says to eliminate. Except our cell phones & internet - we have to have both for our jobs.

We also pay $85 a month for our son to do Martial Arts...which we figure is going to be our incentive for him when he realizes we are taking away all the electronics in our house (minus our computers).

We are selling the truck. The van I'd love to sell...it's a KIA and it's the stupidest thing we ever did (well one of the many).

The real estate...we haven't figured out. Our house we would realistically like to get it refinanced at a lower rate...but to do that we have to come up with over 200K...so that's our goal.

The other property, I don't know and right now neither one of us care.

I can't sleep...and I know I contributed. So this is how I do it...I read and get facts...read...get ideas...

Anyway...that's me and my story.

**ladykemma2** · 08-31-2009, 05:05 AM

the first thing that jumps out at me is you are paying more than 50% of your take home pay in housing.

edit: the house has to go. it's killing you. everything else will fall into line if you sell the house. portland oregon - easy to sell. no?

**Greebo** · 08-31-2009, 05:36 AM

Thats what I saw too. I'm sure it's a beautiful house, but like LK said, it's 50% of your pay.

We moved back to about 5 minutes from my husband's house.

? Confused - is there a third house you all own? Rental, your current, and your husbands?

CC Debt - $17K~ mthly pymt $600

Not huge compared to your income, but still - time to cut up those cards!

Medical - $1200K ~ going up to about $2300 in another month due to a surgery that I'm hoping we can delay about 6 months.

Ok, I am curious - these medical bills - were they for his father or for you or both? Did you guys agree to pay for his dad's treatments, or was his dad supposed to be covering this? I'm just concerned why - if this was his dad - why would his dad's medical be *your* responsibility?

Van - $13K - we are considering saving or selling...not sure mthly pymt $475

Sell it to a private buyer NOT a dealer, for what you can get (see kbb.com) eat the loss, buy a $2-3k van, used and pay cash to keep it running. If that van starts costing you more than $6,000 a year to keep running, rinse and repeat.

Truck - $19K - we can sell it for $25K - our business pays the $680 pymt a month. We bought it because the gov't paid us to buy it...stupid move.

Sell it. Your business may pay for it but you own the business, right? So you're paying for it. Buy a couple year old used truck for half the price.

Rental Property - $257K, mthly pymt is $2000, we get $1000 in rent.

Ok this is not cash flowing. So it's not a rental property, it's a hobby. Can you make it profitable so it pays for itself? if not, get rid of it. Forget the cheese, get out of the trap - it's bleeding you.

Our House - $575K, mthly pymt is $4100.

Wow - what exactly is the interest rate on this?

Also, some food for thought: your house debt is about 2.5 times ours, but your payment is 3.2 times ours (and that's including the extra we pay on our int. only heloc each month to ensure we always reduce principal). Meanwhile, your net income is only about 1.6 times ours - a little lower actually if I were to factor in our rental income.

I think its GREAT that your business is doing so well - but I'm thinking with that house you maybe got a little ahead of yourselves? I'm thinking you really need to evaluate your real estate positions carefully.

No matter what, it's going to take a LONG time to fill in that medical hole - but there are things you can do to make that time be seriously reduced. They're pretty radical - I'm suggesting you consider moving down in house quite substantially - but you're in a pretty radical place right now.

*hugs* I'm sorry you're having to go through this, but I'm confident you can overcome it.

**momofmy3kids** · 08-31-2009, 10:18 PM

Greebo - We had a $100K remodel run into $300K...that's what happened with the house.

Sell it in Portland - not a chance...we've already tried that.

The Rental - we've had 6 failed offers on it.

The medical debt is ours. Mainly my husbands. Sorry for the confusion.

Today was a hectic day. I feel motivated...but a little bit overwhelmed. I'm working 12 hour days and I'm exhausted and school starts for the kids next week.

But you all said what I know is true...now to just put my foot forward.

**CouponShelle** · 08-31-2009, 11:33 PM

As you know from the first time (and 2nd?) you did this... admitting its out of control and getting it on paper is the hardest part. Once you see where you are, you can see where you're going.

Greebe gave you great advice (as usual)!! Try not to feel overwhelmed, remember that feeling goes away especially when you start making headway. You're motivated now, time to strike while the iron is hot.

I'll be rooting for you!!

**phoeny_moonstar** · 09-01-2009, 02:07 AM

No advice just hugs to get you started.

**Greebo** · 09-01-2009, 05:12 AM

Originally Posted by momofmy3kids

Greebo - We had a $100K remodel run into $300K...that's what happened with the house.

Ouch!

Sell it in Portland - not a chance...we've already tried that.

Keep trying. The market will turn around. Can't say when, but it will.

The Rental - we've had 6 failed offers on it.

Keep trying. The market will turn around. Can't say when, but it will.

The medical debt is ours. Mainly my husbands. Sorry for the confusion.

Thanks. How are they being about payment - are they willing to work with you while you deal with these other financial issues? (IE : the real estate)

But you all said what I know is true...now to just put my foot forward.

Keep trying.

We'll be here for moral support.

**a.nonymous** · 09-01-2009, 06:53 AM

Originally Posted by momofmy3kids

Rental Property - $257K, mthly pymt is $2000, we get $1000 in rent.
Our House - $575K, mthly pymt is $4100.

We've been bringing home about $8300 - you do the math (see the credit card debt??).

..

The real estate...we haven't figured out. Our house we would realistically like to get it refinanced at a lower rate...but to do that we have to come up with over 200K...so that's our goal.

The other property, I don't know and right now neither one of us care.

You've gotten some quality feedback from several posters already, but let's hammer it home over these points.

Your house clearly is too big and together with your rental payments you're well beyond 50% of your income.
Even if you were able to refinance your house, I doubt you'd get your house payments anywhere near a reasonable level (meaning 35% of income to be able to struggle, preferably 25% to have plenty of breathing space). I'd drop that for now, it's unneeded stress that won't make a big enough mimpact to justify the efforts.

Now, I get it that you're finding it difficult to sell those as well as, from a psychological point of view, letting them go.
However, just imagine what you could do financially if you were able to reduce those to just half the payments? You'd instantly have 25% of your income available to throw at your debt.

And if you can reduce your vehicles to roughly one third to half of their current value, you'd free up a bunch more in cash flow.

Since the vehicles should be easier to flip than the properties, you'd better address that sooner rather than later. If you can buy your repacements in cash you'd have over $1150 in monthly cash flow freed up to give you a tad more breathing space while addressing the properties issue.

If you struggle with taking the first steps, just draw a mental picture of yourself after taking the steps in 5 years' time versus not taking those steps after the same period. That should give some motivational momentum to make the painful cuts.

You have to do it, and you know you can. It's the mind that needs to be addressed and you need to realize that (and imagine how) it's worthwhile down the road.

**kita** · 09-01-2009, 07:15 AM

Do you owe more than your home is worth? Can you live in the rental? I would put both up for sale and which ever one sells first, goes. Hopefully it would be "your house". That $2000 mortgage payment looks so much better than the $4100. That would free up $3000.

**kita** · 09-01-2009, 07:18 AM

Ooohhh do you mean 1200000 in medical bills...1.2 million? or is that a typo and it is 120 thousand? Because at 1.2 million (1200K) I would be talking bankruptcy...

**Greebo** · 09-01-2009, 08:41 AM

Originally Posted by kita

Ooohhh do you mean 1200000 in medical bills...1.2 million? or is that a typo and it is 120 thousand? Because at 1.2 million (1200K) I would be talking bankruptcy...

A person making a net of almost $100k with a debt of over a million isn't bankrupt --- YET.

There may very well BE a bankruptcy in this future, IF the medical people insist on payment in full right away. Clearly that won't happen and if the hospitals went to court to try to make it happen, then it's time to call up the bankruptcy attorney.

What they CAN do is go to the hospitals and say, "We are so very grateful for saving my husbands life, but the sad truth is we have no way to pay you back in anything like a reasonable time frame. Can we possibly come to an agreement where we can at least pay you back something a month for so many years and call it even? Because otherwise, if you insist on payment in full, we will have no choice but to declare bankruptcy, and we do NOT want to do that to you."

**mommy4ever** · 09-01-2009, 09:05 AM

Can the rental be modified to be 2 rentals and make closer to the 2K a month to cover it's cost? Can a basement suite be set up?

Keep trying to sell. Not much you can do with that. You've had offers that fell through, so it's a matter of time.

Keep your head up and keep plugging away, that's all you CAN do for sure. There are many variables you can't control. Just keep working at it!

**momofmy3kids** · 09-04-2009, 09:22 PM

Sorry I didn't get back. No the medical debt is our smallest for now - it's only $1200 total. Well, until I discovered I have to have a $5000 surgery on the 2nd of October - I can't put it off

My insurance will cover 80% of that after my 1,000 deductible. So that's easy to get rid of.

We cannot sell our house because Wells Fargo won't let us short sale...the only thing we can do at this point is go into foreclosure. IF we wanted to. To us that's not right and ethical.

I did make $200 this weekend toward our debt - I sold our extra refrigerator. We are going through our stuff this weekend.

**momofmy3kids** · 09-04-2009, 09:25 PM

We didn't realize but we have about $8K in an investment fund...we are using that for an emergency fund...slash pay Uncle Sam fund. So if we have to we have $8K to play with on the sales price.

We are both in real estate...so we are waiting to see. Our industry expects our area to recover in early 2010. Our hope is to work on all the other debts and worry about the house then.