[Kris B]

I need some advise on an idea I have about how to get our monthly expenses lower. I've already done the usual stuff but I need to do something a little more extreme. Here's the deal. My DH is a Home Inspector so you can imagine how bad business is right now. In the last 2 1/2 years our business has gone down about 85%. Ugh. So we had a big savings account from when times were good but it's almost gone now. I'm starting to get freaked out so I had an idea...

Here's a bit of where we are at:
We've lived in our house for about 7 years. We only owe around $110,000 on it but there is a $13,000 equity line (all used for house updating, adding a bedroom & bath, stuff like that). The house payment is $935 mo., the equity is $206 mo. We also have a car payment of $241 but only until September then that will be gone. I have a credit card and up until last Oct I always paid it off every month. That card is up to about $1,800 now.

I'm thinking we should refinance. We called around yesterday and we could get a rate of 4.75% plus 1 1/4 points. They figured our payment would be around $875 or so. If I pay off the house & equity & car that will lower my monthly expenses about $500. I hate the thought of putting the car on our house especially since it's almost paid off but right now it's all about the monthly expenses. One more thing to consider is that we want to move to another state once we get through these hard times. So it's not like we'll be having this same mortgage forever. In light of that I was thinking maybe I should add in the credit card??? Here's another CRAZY idea I had last night. What if I bought gift cards to grocery stores I go to useing the CC and then I would have those to use and my grocery costs would be way less each month. I know how stupid that sounds but I'm trying to think outside the box for a temporary fix to keep us going for now. This is all so against anything I would normally do that I'm having a hard time trying to figure the best way to deal with all of this.

Any ideas would be very greatly appreciated. I just can't believe I am thinking this way but we are self employed and so there's no unemployment money to help us out. We keep hearing that things are going to get better and I believe they will. Right now it just about staying afloat until it does get better. It amazes me that just 3 years ago I felt totally secure with my $15,000 emergency fund and now I only have $1000 of it left. I'm scared.

 

[mama2James]

This must be very hard to deal with, but take a step back for a minute. You are considering rolling all of your debt into your house, into just one payment. What happens if you can't make that one payment? You are risking losing the roof over your head. If you needed to sell your house, you would need to get more for it just to break even. I know how tempting it must seem though.
Is you husband working few enough hours at this point that he might be able to pick up a side job? Are you able to work extra hours, or another job? Anything would help, even delivering newspapers can bring in $100/week.
From the outside looking in, it seems like increasing the income is the best route to take. Cut expenses wherever you can. But, please think again about rolling everything into the house. Perhaps you could refinance just the mortgage and the equity and not add in other things? How much would that save you in monthly payments?

 

[frugalwarrior2]

Couponing is my big thing this year. Actually super couponing.
U-tube has great tutorials. The coupons pay for the papers in savings and you can trade w/ others. I am picking up things for pennies on the $$.
Savings w/ scissors, Macomb savers (local), and a whole host of others will help you for free. It takes a little practice but I am getting better at it all the time. Last week alone-8 free bottles of Pantene,.45 whole pie, .75 2L of pepsi, 18 bottle of vo-5 shampoo, .35 cent cans of soup,.79 3-packs of popcorn, and I am just beginning.

 

[Josephhgoins]

I FEEL YOUR PAIN!!!

I have had to relook at all of my expenses and see what I could cut out of my monthlies. By utilizing a loan from my 401K I will be able to pay off almost all of my unsecured debt, cut over $300 out of my monthly bills AND now the interest I was paying is now going into my 401K and not a bankers pocket.

I also think that you are asking for trouble if you roll all of your bills into your house. Can you cut expenses other places?

Is a part time job an option? Even a little per month will help your EF last longer.

My Aunt and Uncle ran into this a few years ago, and ended up loosing the house. They lived with us for about 6 months until they could get enough up to rent a place. It was one of the main reason they finally divorced.

I wish you luck!

 

[Kris B]

Hi,

I wanted to add a few things.
I am a huge couponer already. It's a great thing to learn! I feed 3 people and 2 dogs for around $200 a month and that includes all HBA, paper products and everything.
I've been a stay at home mom for around 15 years so I don't see who would ever hire me especially in this economy where people with experience can't even get a job. My DH and I have talked about him getting a job but first of all there aren't many out there and what happens when someone calls for an inspection and he has to be at some other job? We can't let this business go down the tubes after all we've put into it and in this business, people want the inspections done right away so you have to be available. If you can't please the realtors then they go somewhere else. We have to keep them happy.
I want to make it very clear that I know how stupid it is to put unsecured debt onto your house. I have never done it and I never thought I would consider it but it's about survival now.

We came up with another idea, does anyone think this might be the lesser of 2 evils???

In the first senario there would be about $6,000 in closing costs and we would have to close our equity line. I don't know if we would be able to open another one in this economy. In this second one these wouldn't happen.

What if instead of doing a total refinance (our rate right now is at 5.37%) what if we just used the equity line to pay off the car and cc? that would take out around $450 from our monthly costs but add $100 for the equity payment so I would be not spending $350 monthly. Our equity line is at 3.25%

 

[frugalwarrior2]

Got any crafting talents?? People make money on ETSY all the time. My DD sells jewelry at her college and graduating parties and anywhere she can wear it. She recently learned to do fake nails. She studies u-tube to learn how to do everything.

Once you pay off that car you'll want to start that e-fund a little higher and raise the old deductible.
What about buying new/used clothing at S/A. and reselling on ebay and other sites?? 5/$5.Fri. seem to attract the resellers at ours??

 

[Kris B]

Perhaps you could refinance just the mortgage and the equity and not add in other things? How much would that save you in monthly payments?

We figured that would save $240 a month but it would cost us $6,000 in closing costs plus the equity line would be closed.

 

[Russ]

Question is... Is your home worth enough to borrow enough to pay the mortgage and equity line?

 

[mama2James]

Cutting $350 from your expenses could help a lot, moving debt to a lower interest rate is not a bad thing. As I understand it, an equity line is still secured by your home, but sometimes you do what you have to to survive. I do understand that.
Is it possible for your husband to pick up a job during hours that people don't generally expect their inspections to do done? Like later evenings or overnights? Even 20 hrs per week would help you significantly.
Even though you haven't worked in years, there may be something you can find even on a temporary basis. Maybe start keeping an eye out for opportunities that might work for you?

 

[Mom2-3]

I guess you have already took a long look at your budget? Cut cable and extras? I would do that before I refinanced my house (BTDT)

Your grocery budget is great tho!!:fdance:

 

[frugalwarrior2]

It looks like it would take 2 1/2 years just to recoup the closing costs. Could you take in a renter instead. Taking short term debt and making it long term is never a good idea because this is not the last repair or emergency that will occur in your life. Can your DH get free retraining for another career. Can you?? You should see some of the people that are in school now. We have no worker left behind free tuition here.

 

[Kris B]

Got any crafting talents?? People make money on ETSY all the time. My DD sells jewelry at her college and graduating parties and anywhere she can wear it. She recently learned to do fake nails. She studies u-tube to learn how to do everything.

Once you pay off that car you'll want to start that e-fund a little higher and raise the old deductible.
What about buying new/used clothing at S/A. and reselling on ebay and other sites?? 5/$5.Fri. seem to attract the resellers at ours??

I have tried selling my beadwork and rubberstamped cards many times before but it never goes well. I'm pretty talented in those areas, even being published in magazines before. I think people just don't have extra money for those things right now. It's a great idea and I've tried it but I can't seem to make it work for me.

I don't understand what you mean by "starting that e fund a little higher and raise the old deductable"? Could you explain it to me? Our deductables are alreay high to keep our monthly payments lower for the cars and homeowner insurance if that's what you are saying.

Thanks for the ideas.

 

[Kris B]

Question is... Is your home worth enough to borrow enough to pay the mortgage and equity line?

conservativly including the equity line we probably have another 75,000 in equity

 

[Greebo]

Absolutely DO NOT put your car OR your credit cards onto your house!!!!

For the car, think about it - a car is something that ONLY LOSES VALUE. You're already paying interest on something that loses value - putting it onto your house, which (in general) gains value - which is the roof over your head - bad bad idea. If you can't make the car payment, they can yell, scream, pitch a fit, take your car and even sue you for the difference, but that's it.

For the cards - even worse - that is *unsecured debt*. If you can't make those payments, they can yell, scream, pitch a fit, and even sue you, but that's it.

If you can't make the house payment, they can do all the above, but instead of taking your car they take your house, AND sue you for the diff between what it sells for and what you owe!

Not to mention - how do you think the real estate market ended up popping anyway? People werent just buying houses and paying too much, they were refinancing and adding debt and debt and debt to the equity, so that they kept ending up owing MORE on the house than they bought it for.

I was one of em - my $155k house has a $230k mortgage on it now. I was freaking BRILLIANT let me tell you!

No - absolutely not.

Do the refi if it makes sense - but refi ONLY the house debt. Nothing else.

 

[Kris B]

I guess you have already took a long look at your budget? Cut cable and extras? I would do that before I refinanced my house (BTDT)

Your grocery budget is great tho!!:fdance:

Ya, I've done that so many times already. I just called my car insurance last week and got that lowered from $147 a month to $85. I was very happy about that.
I guess I could go over my health insurance options. Right now I have a great policy with Kaiser but I could go down a few levels and get less coverage for less money. That one scares me though but $429 a month just for me is very hard to come up with right now. DH is covered by VA. DD has her own policy at work.

 

[frugalwarrior2]

It is what I'm saying. $1000. on the car deductible. Got to weigh it out w/ your ins. I wouldn't suggest going to no-fault or bar boes on the car ins. unless it's a junker. I assume not if your just paying it off and you can't drop coverage until it's paid off in Sept.

If you are really good at the couponing and get free stuff,donate extras and write them off to lower your taxable income thereby increasing your refund. It's about what it sold for not the amt. after coupons.

Are you sure you write off everything expense wise for the business?? Space at home,milage,losses,work supplies??

 

[Kris B]

Absolutely DO NOT put your car OR your credit cards onto your house!!!!

For the car, think about it - a car is something that ONLY LOSES VALUE. You're already paying interest on something that loses value - putting it onto your house, which (in general) gains value - which is the roof over your head - bad bad idea. If you can't make the car payment, they can yell, scream, pitch a fit, take your car and even sue you for the difference, but that's it.

For the cards - even worse - that is *unsecured debt*. If you can't make those payments, they can yell, scream, pitch a fit, and even sue you, but that's it.

If you can't make the house payment, they can do all the above, but instead of taking your car they take your house, AND sue you for the diff between what it sells for and what you owe!

Not to mention - how do you think the real estate market ended up popping anyway? People werent just buying houses and paying too much, they were refinancing and adding debt and debt and debt to the equity, so that they kept ending up owing MORE on the house than they bought it for.

I was one of em - my $155k house has a $230k mortgage on it now. I was freaking BRILLIANT let me tell you!

No - absolutely not.

Do the refi if it makes sense - but refi ONLY the house debt. Nothing else.

Thanks Greebo, I was hoping you would chime in. I know what you are saying is right, I'm just scared.

I will take all the helpful advise I have gotten and think hard and figure out what to do. I appreciate everyones ideas, it's VERY much appreciated.
I have a lot of thinking to do...

 

[Kris B]

If you are really good at the couponing and get free stuff,donate extras and write them off to lower your taxable income thereby increasing your refund. It's about what it sold for not the amt. after coupons.

Are you sure you write off everything expense wise for the business?? Space at home,milage,losses,work supplies??

I do donate alot of free stuff I get with coupons. I've been doing that for years! Great minds think alike.

We've had our own business for 20 years, believe me I get every write off I can (every little penny).

Thanks again!

 

[frugalwarrior2]

Are you taking generics and do you flip back and forth on those $25. prescriptions programs? Not possible now,but 3 years ago at 8 preescriptions a month I made $4000. of free groceries in 18 mo. I was buying the $30. ones from other states. You can still get some leverage out of some of them.

If your really in dire straits some rescue groups will help w/ food and vet care. We used to get open bags free at our rescue from Walmart.

As far as a job goes don't be so sure. Trade services w/ someone. Years ago my grandmas was the champion of such horestrading. Tomato seeds for skirt hemming and such. As far as interveiws say like this. Many people are looking for jobs but they are over skilled and will only stay until they find something better. I am not looking for a career but to help my DH out in this struggling economy. I will stay because I have been out of the work force and will be thrilled to work here. You could start a couponing advice class or design a packet to sell w/ tips. People around here want me to take them shopping and teach them for a fee. I am thinking it over.

 

[Kris B]

Are you taking generics and do you flip back and forth on those $25. prescriptions programs? Not possible now,but 3 years ago at 8 preescriptions a month I made $4000. of free groceries in 18 mo. I was buying the $30. ones from other states. You can still get some leverage out of some of them.

I don't take any prescriptions. I have done that before with my DH antibiotics he has to take when he goes to the dentist. I loved that free money!!

On a happy note DH just got a call for an inspection for this afternoon. Yea!