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It's been a while since I've been here but clearly I need to reabsorb being frugal some more. Well, we definitely did something not Dave Ramsey approved. I'm still convinced it's a good idea in the long run but right now it's killing us financially.

Back in December we bought our *dream* home. Exactly what we wanted, where we wanted - the once-in-a-lifetime opportunity home. But we bought it before selling our first house.

It costs more money to move and everything else than you think it will (always) and with all the added expenses everywhere, suddenly I lost a lot of my income as well and fell to part time. I'm working very hard on rebuilding that, but it will likely be April before we really get my income again. Then I did my taxes, had messed up withholding, and owe the IRS ~ $4000.

So, I'm stressed to the maximum. BUT, no one to blame but myself, AND, I'm 99.99999% sure I will be happy about this in the long run. In the short term, our total debt is up to the gills. I'm going to update my signature to reflect shortly, once I figure out how much debt 2 is exactly, but:

MTG 1: principal: $122697 (5%) ($35-40K equity at sale)
MTG 2: principal: $170410 (2.875%) (20+% down)
Debt #1: $2717 (0%)
Debt #2: ?? ~3000 (0%)
Debt #3: $44749 (2%) (where we got the 20+% down without selling old house)
IRS: $4000 (if I can't scrape it together by April 15, remainder gets added to debt #3).

We got to move a month and a half ago, into the new house (we did a rentback to the previous owners for the first month). But now it's borderline insane. Our house should sell fast (and net $35-40K equity, in theory), but it has to be sellable! Right now it's not even listed because we were fixing it up. Between weather and child illnesses, it's taken almost 2 months to get it ready to sell, and 2 mortgages + winter utilities is getting old really really fast. :(

Here's to a half day of work followed by (HOPEFULLY) finishing the interior painting at the old house. Until we sell, we have zero money to snowball with until my income increases (but due to how my industry happens, it's unlikely to pay out for a month or two even if I can see it coming.)
 
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You can arrange a payment plan with the IRS which is what I recommend over borrowing more money against another source. You'll be able to pay off that $4k within a year or two - easy.

Right now, the biggest stress I see if your cash flow. With reduced income and increased expenses (2 mortgages, new debt payments on the down payment, credit cards, utility bills (for 2 houses), home improvements on the old house, and the IRS) you're going to have to tighten your belt quite a bit! This is where the pantry principal and stock-piling comes in handy. The problem is, usually after a move all that has been decluttered.

Much happiness on your new home!
 

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*hugs* we did the mortgage and rent for 5 months. It was the worst 5 month of our lives. But we made it through. Our house was supposed to net $25k but only netted 10k. But we got it gone!
 

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We did a similar thing in 2003. Bought the dream house & figured the old house would sell immediately. Bankers all thought the same. The old house was in an upscale neighborhood. We got a "wrap mortgage" so both houses were on same mortgage. Plan was to refinance once old house sold. Well, it didn't sell & after a period of time we talked one of our adult kids into living in it at their current rent just so it wasn't empty. After 3 years we finally auctioned it. The year after we moved, my husband lost his EXCELLENT job. Things were a little grim, we had a few other setbacks & I was paying for two kids in college. Long story short, husband found a low paying job & we just knuckled under, kept plugging away & are now debt free & still happy we chose to buy this house.
 

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it's taken almost 2 months to get it ready to sell, and 2 mortgages + winter utilities is getting old really really fast.
We have had several rental houses - bought & sold several. A common mistake is spending too much on preparing a house to sell. You'll find that you'll spend $20k and it only adds $10k to the selling price - ie, an instant $10k loss. Plus it sits empty, you spend money on the monthly payments and you have no rental income. The point - do an "as is" sale, and price it so that it moves in less than 3 weeks. OK to do a few cosmetic things (such as the paint that you are doing) and cut some bushes/weeds along the front to help curb appeal. But that's all - list it right and sell it quick.

Say you get $25,000 from the sale, I would pay the $4000 to the IRS (they have the right to put a lien on on your new house).
Then pay off the $5700 debt 2 & 3.
And put the remainder (~$15k) on the $50k, 2% loan.
That frees up cash flow, 3 old payments - Mort #1, and the 2 small loans - can now go toward the $45k 'bridge' loan.

AND, I'm 99.99999% sure I will be happy about this in the long run.
Great! And agreed - after you have executed & finished the deal you'll look back and (1) pat yourselves on the back and (2) wonder what all the stress was about.
As for tying up $30,000 of 'dead' money in an EF - we've always limited ours to $5000 max, everything else is invested and working for us. (you are age 28, $30,000 placed at 11%/yr will be $1,400,000 at age 65, you may not want to waste that opportunity.)
 
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