HELP! ADVICE! PLEASE! Before it's to late

**trying to be frugal** · 02-18-2009, 07:22 PM

I am going to try to give a rundown of our situation and then get YOUR feedback please.

Here we go...

My Hubby is 41 and I am 36. We bought our first home 3 years ago and we did not have great credit. We were sucked into an interest only loan with not a great interest rate and no money down. We paid 198,000 for a fixer upper. We have 2 loans out one for 160,000 and one for 38,000. To late to berate me, trust me we know! We have put about 25,000 cash into it over the last 3 years and it is now worth less than we owe because of the way the market is. We live in a small town in Minnesota. Our mortgage is about 1730.00 a month, ick. We have had no problem with the payments but we feel very stuck because even though it needs about 10,000 to 15,000 more dollars we can't afford to put it into it anymore and it is stupid to. We can not refinance due to credit and no equity.

NEXT...
We pay all our bills and have a little extra but no savings. Hubby has 5,000 vested in a retirement account. The outlook of his job is not looking good. Layoffs are being talked about. He is in Construction Management, he is a Project Manager for a mechanical company. They are losing contracts left and right because businesses are streamlining and holding off projects. He could be about the third to go if things don't get better. Nothing specific has been said but we are trying to have our ducks in a row. I homeschool four children and do not work. I do fill in for a friends cleaning business about 2 times a month. I get about a hundred dollars.

Debt...
We just paid off one vehicle and the other we are making payments of 380.00 a month for. (it will not be paid off soon) We consolidated all of our credit cards and other misc debt and we pay one chunk of 652.00 a month. Then we have food, utilities, insurance, fuel etc.

MY QUESTION...
What should we do now, Before something happens or should we just ride it out and save every little bit we can and decide in the end. I can save 830.00 by the end of March and that is it. I have started looking into what happens with foreclosure and short sales just to be armed with the info just in case. We are current now just to let you know.

Do you need anymore info? Let me know and give us some advice please. Thanks!!!!

**trying to be frugal** · 02-18-2009, 07:33 PM

We wish we never bought a home. We should have just continued renting and we would have no problem doing it again. FYI

**Debbie-cat** · 02-18-2009, 07:51 PM

I think you are doing well with how much you earn. I would say try and save as much as you can and cut back on everything you can. What part of Minnesota do you live? I too live in a small town. Will be watching for updates.

**rowdy35** · 02-18-2009, 10:25 PM

are you able to get a job and put the kids in school or is that not an option? If it's an option I would consider it because of the risk of being on such a tight budget. If something happens to hubby's job you will probably lose your home to foreclosure. I'm not sure if you are ok with that option? I understand your situation as I am in a similar one but luckily I was finally able to refinance this month after 23 months of being in a rotten subprime loan. Hugs and I hope you get through this and hubby does not get laid off.

**TinyDancer** · 02-18-2009, 11:00 PM

I'd probably start saving as much money as possible. Would it be possible to for you to find part time work on the weekends to help pad the savings account until you find out if your DH is getting laid off?

Will he qualify for unemployment? Between unemployment, any severance he might receive and your savings, you might be better off than you think.

I hope everything turns out okay for you!

**kmonokwe** · 02-18-2009, 11:26 PM

Absolutely find more money. Get a part time job, sell stuff, have your hubby do odd jobs on the weekends. It sounds like you guys aren't in trouble yet, so at least you've begun contemplating now! Its good that you're current on your home. As others have said, get some extra money and save save save. Best of luck! We'll be waiting to hear how things go for you and your family.

**mrsfoamy** · 02-19-2009, 07:47 AM

I hear some many stories about how people negotiated to have their interest rates changed and they did.
I know it sounds like a fairy tale sometimes.
I just heard on the news that part of the new economic plan will force them to do that.
I hope it happens for you!
We applied for a new home construction loan during the inflated real estate period, and the bank was going to hand us 250,000 based on the value of our property where as 10 years prior to that when we tried to buy, no one would touch us because my husband is self employed.
Oh, the greedy greddy banks!!!!

**Greebo** · 02-19-2009, 09:04 AM

Sell the not-paid-for-car and buy a beater that doesn't cost you $380/month.

If you owe more than it's worth, borrow the difference. Better to owe a little and have a paid for car than owe a lot on a car you could lose if times turn rough.

**trying to be frugal** · 02-19-2009, 09:33 AM

Originally Posted by Greebo

Sell the not-paid-for-car and buy a beater that doesn't cost you $380/month.

If you owe more than it's worth, borrow the difference. Better to owe a little and have a paid for car than owe a lot on a car you could lose if times turn rough.

In theory that would be smart! I have no problem driving a beater car but, we won't qualify for a loan.

**Greebo** · 02-19-2009, 09:37 AM

Originally Posted by trying to be frugal

In theory that would be smart! I have no problem driving a beater car but, we won't qualify for a loan.

Why? Do you have bad credit history?

**trying to be frugal** · 02-19-2009, 09:42 AM

After writing all our info down it does not seem so dire in contrast to other stories I have read. But, it feels dire because we have nothing to fall back on with no savings. If he gets laid off in his field it will be hard to get hired in this field in general so he will take a pay cut. We are fine with that if it comes to that we are not attatched to anything material. We just know we could not afford the house if that is the case. Our priority would be to keep paying our old debts that we have consolidated of 652.00 a month. That is a lot of money! Are we looking at this right?

AS for the working and putting our kids in school that is not an option WE are willing to look at. We have a 19 graduated daughter and a 15 year old son, 11 year old daughter and 7 year old son. We have always done Homeschooling with our children, we are so far into it that we would not quit when everything has gone so well and they have never been in public school. I do agree I need to find a way to bring a little income in right now to establish some savings with the time we may have left. Layoffs are abounding!

**trying to be frugal** · 02-19-2009, 09:45 AM

Originally Posted by Greebo

Why? Do you have bad credit history?

Our Fico is in the mid 500's, not so good. We have changed our ways but we still have to live with past mistakes. we should never have bought a home under the circumstances. The reason for opening this thread is so we think ahead and don't just react when something comes down the pike. We want to weigh all our options now and try to be smart and proactive.

**Greebo** · 02-19-2009, 09:48 AM

Ok well before we assume you can't do anything about the car:
What is the make and model? What do you owe on it currently?

**trying to be frugal** · 02-19-2009, 09:53 AM

Originally Posted by Greebo

Ok well before we assume you can't do anything about the car:
What is the make and model? What do you owe on it currently?

It is an 07' Mazda3 and I just checked payoff--$19,386.48

**Greebo** · 02-19-2009, 10:02 AM

So best case you're about $1k under and worst case about $6k. You can get more specific at http://www.kbb.com/KBB/UsedCars/default.aspx and do the "private party" value NOT trade in value.

If you absolutely cannot borrow the money, then I would work on paying this down as much as possible until you can sell it and pay it off in full, and buy a beater for *cash*.

In your financial uncertainty, it makes 0 sense to hang onto a car you quite probably will lose *if* the worst happens.