Digging out....

[Soon2bMommy]

Hello! I am looking for thoughts and advice. I have two small children and recently separated from my husband of 10 years. The house we lived in before we left was his. Soon after we left, he filed bankruptcy in order to stop the foreclosure on his home. I walked away with about $32,000 in debt, but I've never stopped paying my bills.

I have been blessed with a great 2 day a week job that allows me to pay my bills, but not much else. I have also been blessed with wonderful parents who took my children and I in while I try to get to a better place financially. Fast forward to today, I am looking for a f/t job. I am one of the finalist for a $65,000/year job with an awesome benefits package. I am praying this works out!!! In addition, I am waiting for my $20,500 tax refund and I have a 403b worth about $12,700.

I believe these things will help me get my life back. I plan to pay off three "small" credit cards to the tune of $11,500 as soon as the refund arrives. This leaves me with one card that has a balance of $19,500. If I get the job, my children and I will have to relocate. Ideally, I would like to buy a home and not rent. I am looking for thoughts and insights on how I should use the remainder of the tax refund and 403b to dig out of the debt and start a new life.

TIA!
Chris

[MaryCarney]

I fell you should NOT look to purchase a home - esp. if you a re relocating. Give yourself a year or two of renting, trying out the new location, before you make such a big investment.
This will give you opportunity to 1) pay off remaining debt 2)thoroughly investigate neighborhoods / churches / schools / etc that may impact your decision, and 3) eventually purchase the perfect home for your family.
Good luck!

[Ceashels]

I totally agree with MaryCarney!

[Nishu]

I agree with Mary as well. I'm not sure that buying a home is a good idea when starting a new job, especially when you have to move to a new area. You might hate your job and you might hate the neighborhood.

I'd put away enough of that return to pay for the move and first months rent, last months' rent and security deposit for a new place. (We're about to move too, and this is what I'm planning on.) After you move and get settled, I'd leave enough for an emergency fund and then use the rest to pay off your bills.

I don't know much about pulling from your retirement account, so take it for what it's worth, but I'd try to avoid using your 403b. If this link is right and you pay a 10% penalty plus taxes, it might be cheaper to pay off the credit cards as you go along. That 19k credit card probably has a minimum payment of 400 bucks or so, I'm guessing. I'd consider using your 403b if you trouble making the payments, but if you can make the payments and you can pay off the credit card within a year, give or take, I'd leave your 403b alone.

» Should I Cash Out My 403b Account To Pay Off Debt?

[krbshappy71]

Hello! I am looking for thoughts and advice. I have two small children and recently separated from my husband of 10 years. The house we lived in before we left was his. Soon after we left, he filed bankruptcy in order to stop the foreclosure on his home. I walked away with about $32,000 in debt, but I've never stopped paying my bills.

I have been blessed with a great 2 day a week job that allows me to pay my bills, but not much else. I have also been blessed with wonderful parents who took my children and I in while I try to get to a better place financially. Fast forward to today, I am looking for a f/t job. I am one of the finalist for a $65,000/year job with an awesome benefits package. I am praying this works out!!! In addition, I am waiting for my $20,500 tax refund and I have a 403b worth about $12,700.

I believe these things will help me get my life back. I plan to pay off three "small" credit cards to the tune of $11,500 as soon as the refund arrives. This leaves me with one card that has a balance of $19,500. If I get the job, my children and I will have to relocate. Ideally, I would like to buy a home and not rent. I am looking for thoughts and insights on how I should use the remainder of the tax refund and 403b to dig out of the debt and start a new life.

TIA!
Chris

Are you relocating within the same state? I'm asking for child support/visitation reasons. If changing states there can be a delay if the states are handling your child support so you will want to plan for a possible shortage of money during that time.

Do you have an emergency fund in place?

I know the urge is strong to buy a home but a new job is always tricky for awhile until you learn the ropes. I'd suggest having a nest egg as opposed to a house just yet.

[Soon2bMommy]

thank you all for your thoughts and insights...I neglected to say that the f/t job is in the department where I worked f/t for 9 years before going p/t in 2008 to be a mostly stay-at-home mommy. It is in the area where I have lived for 14 years so thankfully, loving the job and the area wouldn't be an issue. Greatly appreciated everyone sharing their thoughts. Thanks!!!

[G'MaDebbie]

Oh good heavens!!! You MUST tell me how to get a tax refund of $20k!!!

[frugal is fun]

I fell you should NOT look to purchase a home - esp. if you a re relocating. Give yourself a year or two of renting, trying out the new location, before you make such a big investment.
This will give you opportunity to 1) pay off remaining debt 2)thoroughly investigate neighborhoods / churches / schools / etc that may impact your decision, and 3) eventually purchase the perfect home for your family.
Good luck!

My sentiments exactly. I left my husband 4 years ago, moved a couple of towns over and rented for about 2 years. You're going to need to time to adjust to working full time with kids and everything else that life brings your way. I totally suggest renting first, even if its just a year. Then once you get this dream job and start saving, then you can start looking for a house.

[HoustonDave]

My sentiments exactly. I left my husband 4 years ago, moved a couple of towns over and rented for about 2 years. You're going to need to time to adjust to working full time with kids and everything else that life brings your way. I totally suggest renting first, even if its just a year. Then once you get this dream job and start saving, then you can start looking for a house.

I agree as well. If you rent, you can find out that you really can't afford the amount you are paying, or you may find out that you can afford and need more space. If you are RENTING then you can change your mind, often with minimal expense.

Once you buy a house, you are STUCK barring selling or renting it out. You can't just up and move to reduce your living expenses or to get a larger place.

My advice, rent a bit, take your time, find out what you can afford and what you need to be comfortable. Rushing into a home purchase can be a long-term obligation based on short-term concerns.

[The Muse]

My advice is to rent, but that's only because I think you should pay off your other debt first.

I moved from the US to Denmark last May and I bought a place. Obviously, I'm not an expert on the area, but I was debt free and received a large equity payout from the house in my divorce. In my situation, it didn't make sense to rent. Renting for 3 years (the length of my contract) would run about $72,000 not including deposits, which would've been another $7,000 or so. Instead, I put my money to work for me and the way I did the financing my flat has only cost me about $2,800 since I closed in June. I'm 35, and by now I know what I like in a place, and I know much space I want. Waiting did not make sense. When it's time to move, even if I sell at a loss, it's still going to be a lot cheaper than renting, and in the meantime, I get to live in a beautiful place that would've cost a fortune to rent.

So, if I were you, I wouldn't buy, only because I don't think you you should be taking on more debt and a new job at the same time.

[Greebo]

I agree as well. If you rent, you can find out that you really can't afford the amount you are paying, or you may find out that you can afford and need more space. If you are RENTING then you can change your mind, often with minimal expense.

Once you buy a house, you are STUCK barring selling or renting it out. You can't just up and move to reduce your living expenses or to get a larger place.

My advice, rent a bit, take your time, find out what you can afford and what you need to be comfortable. Rushing into a home purchase can be a long-term obligation based on short-term concerns.

Not to mention, when you buy and sell a home, you pay closing costs that add a good 5% to the buy cost and take a good 5% from the sale profits (if any).

It can take YEARS to recoup those costs based on just rent vs mortgage difference alone, and that doesn't even factor in the extra costs of owning a home.

[cottageliving]

I agree with the other posters. Please rent for the next year. Even though you know the area, you and your young family are going through a lot of changes right now and you want to maintain your flexibility. Also, you do not want to have to be responsibilities of home maintenance items right now - you have too many other responsibilities. Be kind to yourself.

[NikoSan999]

I fell you should NOT look to purchase a home - esp. if you a re relocating. Give yourself a year or two of renting, trying out the new location, before you make such a big investment.
This will give you opportunity to 1) pay off remaining debt 2)thoroughly investigate neighborhoods / churches / schools / etc that may impact your decision, and 3) eventually purchase the perfect home for your family.
Good luck!

Excellent advice. Second that.

[Droppedonmyhead]

I pretty much agree with what the others have said. Rent instead of buying. And I would NOT touch that retirement fund!!!