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Here's my story....

We bought this really big beautiful house. We sold another house but didn't get much $ out of it because we had to pay off some debt but still held on to some debt also. While speaking with the lender, she told us we could take out a loan that would cover the cost of the new house and also pay off the existing debt. The new house cost $401K with the existing debt of $30K. We decided to move forward with the move. Still feeling a bit leary of the whole thing, we went through the negotiating process with the underwriters (?), and the original woman we had been speaking to, who said we could pay off exisitng debt had left the company. Well much to our suprise, the new person we started to work with said they COULDN'T pay our existing debt, but we would be qualified for the 432K loan. She suggested we use the extra money towards upgrades on the house since the 32k wouldn't make that much of a difference on the payment. Well the payment is high, really high. And now that you know this history, here's where I am looking for any suggestions....

We have a total income of $5,900 per month.

Our Mortage is broken down to a 1st & 2nd, they called it an 80/20 loan. The interest rates are extremly high. The 1st, $345K is at 9.125% and the second is $86k at 12.5% interest. We are in the process of renegotiating the 2nd to lower that interest payment, and they seem to be cooporating. The 1st (Altegra Credit Corp) are crooks! They offered to lower the interest rate to 9.08%, charge us $350 and skip next months payment, $2,812. This would bring our payment down to $2,784 --> not much of a savings. Their other option was for use to buy down the points which would cost us $5k in closing & $10k to bring it down to 8%, the payment would go down to $2,680 --> also not much for $15K.

Not sure what to do with the following:

1st $2,812
$ 922 --> hopefully will go down to prime rate interest
Car $ 589 --> another big mistake!
Car $ 512 --> trying to trade in for another @ about $200 mo.
Utilities $ 581 --> already got rid of cable & cell's
Child Care $ 450
Household $1,125 --> incl.groceries,drycleaning,gas,entertainment,etc.
CC's $ 382 --> towards debit repayment which I have not negotiated yet.

My husband will try to work overtime which should bring in about an extra $250 a month.

I believe I can bring this total of $7,373 down to approximately $6,861. With the overtime, that still leaves me -$711.

Our goal is to try and make it another 2 1/2 years until the pre-payment penalty is lifted from the 1st Mortgage and try to refinance at that time. Also, we have committed to NO MORE DEBITING!

Any suggestions on how to stay above water? This is eating away at me every day and I am having a hard time functioning!

Please Help.
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Obviously, no post can convey a person's entire situation, so some of these suggestions may not apply. But I'm going to post them anyway for your consideration.

Basically, my suggestions boil down to "you'll have to 'settle for less' for a while until your financial situation improves".

1) Consider trading down to a smaller / less convenient house that costs less. I know this is not as easy as it sounds, but all I'm saying is look into it. This would likely lower your utility bills as well.

2) Consider trading in both cars for used models. Consider station wagons instead of SUVs or minivans (if you feel you need such things because of your children) both for cost and fuel economy. You may take a real loss, but if your monthly payments will be less you could find your cash flow in a better position. Better yet, see if you can arrange life to live with only one car.

3) Look into ways to decrease child care expenses.

4) To lower your household monthly expenses, find ways to either cut down on the things you buy, or find ways to buy the same things cheaper, or better yet both. There are occasionally good tips for such things on the LBYM board, but the signal to noise ratio can get pretty low over there. Glad you got rid of cable; very few things induce "consumer mentality" more than television (of course, if you're still watching commercial television, this benefit cancels out).

Again, these are things to consider, but clearly something has to change. The Fool has some good general tips on elimnating debt that I used as a model for my own debt elimination scheme (another thread); check the home page.

Hope this helps. If not, print it out and line your birdcage with it. :)

Good luck.
El
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femalefuture,

If you still have the "improvement" money, I would use it to pay down the credit cards.
I would trade that $589 a month vehicle for something more sensible, along with the $512 a month one that you are already trying to do that with.
You don't have detail on the dry cleaning and entertainment costs, but those could probably be trimmed. Woolite is good. Not dry cleaning suits as often is good. Entertainment could be an evening at home.
But that still doesn't get you out of the biggest problem, which is the house payments.
Do you need a house that big? Maybe that is not expensive for the part of the country that you live in. It would buy a mansion here.
It sounds like you got talked into it.
Have you considered moving to a less expensive house?
I'm just trying to think of stuff and things that might help.

Beth
(eating a lot of spaghetti for dinner and oatmeal for lunch since 1902)
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Ok, just some thoughts:

One:
the existing debt of $30K
She suggested we use the extra money towards upgrades on the house since the 32k wouldn't make that much of a difference on the payment.

At this point, the 32K could also be used to PAY OFF ALL of your existing debt, which sounds like a better plan than "upgrading" the house at this point. A $400,000 house sounds pretty "upgraded" considering your income, as it is. Just because the mortgage company can't pay the debt directly doesn't mean you couldn't use the money you receive for that purpose instead of another.

If you were to consider that option, you MUST consider whether the mortgage interest rate is better than the interest on your existing $30K.

Two:
The 1st (Altegra Credit Corp) are crooks! They offered to lower the interest rate to 9.08%, charge us $350 and skip next months payment, $2,812. This would bring our payment down to $2,784 --> not much of a savings. Their other option was for use to buy down the points which would cost us $5k in closing & $10k to bring it down to 8%, the payment would go down to $2,680 --> also not much for $15K.

Well, what do you expect? You are asking for a HUGE amount of money, and don't have much to assure them that you will be able to keep from defaulting on the loan. You didn't mention your credit rating, but if that's good it helps. But you still have a huge amount of unpaid debt and while your income is good, I personally don't think it's in proportion with the cost of the house you want. The bank is giving you an offer in proportion with their risk- they certainly aren't going to give you the best deal, because you seem to be asking for a lot more than you can handle.

Also, points don't do you much good- they're paying the same amount in total; it's just that you're paying the interest up front instead of overtime.

Three:
My husband will try to work overtime which should bring in about an extra $250 a month.

Never count on overtime, because your husband can't control when he'll work it. It's up to his employer (even if your husband decides he wants to work more, his employer may not have enough for him to do or may not want to pay him overtime). It's safest to never include it in your budget.

Four:
Any suggestions on how to stay above water? This is eating away at me every day and I am having a hard time functioning!

My honest opinion is that the best suggestion I can give is to just not get this big of a mortgage. I believe you probably have found a gorgeous house that you've probably fallen in love with, but sit down for a moment and be honest with yourself and consider whether you really can afford this house. My husband and I make about the same amount you do. While we do have some luxuries that we could stand to pare back on, we also don't have any car payments or kids. We have just recently decided that our goal of a $300,000 house is too much for us to handle, even with the relatively good situation we're in, and that we needed to settle on a smaller house for now. I cannot possibly imagine handling a $400,000 house on our income, along with 2 very large car payments, kids, AND $30,000 in debt. IMHO, you're getting yourselves in over your heads.


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Ok, it sounds to me like you were really disserved by your mortgage person (somehow I suspect she had close ties to the builder!). The following are my suggestions:

1. I respectfully disagree with those that suggest selling the house. Not because it's not a good idea, but because I don't think you can pull it off. It sounds like you are 100% financed (80/20, from six months ago -- this says to me that you have essentially no equity in your house. Indeed, if the builder is stll building homes near you, you may well have negative equity, since you would probably have to discount your home to sell it when competing against the "new" homes. If I'm right, then selling will cost you money, because you will probably have to pay a realtor or, if you do it yourself, will probably have to sell for less to get a quick deal. Having to bring cash to the closing table when you sell is not what you need right now, even if it will ultimately be cheaper. On the other hand, if you DO have the cash to do the move, do it.

2. I definitely do agree that the cars have got to go -- get used cars and cut those monthly payments as much as possible. Heck, if you have any money in the cars at all, get old used cars for $2000 each.

3. I know it would be tricky with chlidren involved, but I think you must consider additional part-time jobs.

4. Obviously, you must cut household expenses to the bone.

Others will have better suggestions, I'm sure. Good luck.
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<<Our goal is to try and make it another 2 1/2 years until the pre-payment penalty is lifted from the 1st Mortgage and try to refinance at that time. Also, we have committed to NO MORE DEBITING!
>>


What do you mean, no more debiting? You are proposing to sign on for a $432,000 loan. Who are you kidding?


<<My husband will try to work overtime which should bring in about an extra $250 a month.
>>


Suppose he isn't offered overtime, or suppose he get laid off from work?


<<Any suggestions on how to stay above water? This is eating away at me every day and I am having a hard time functioning!

Please Help. >>


Well, for openers I'd pass on buying the house. Then I'd go back and start paying off debt and increasing your cash savings so that your family has some financial security. It sounds like they need that a lot more than a new house.



Seattle Pioneer


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I respectfully disagree with those that suggest selling the house.

Perhaps I misunderstood, but it sounded to me like they hadn't closed on the house yet, since they were still in the process of getting financing. While it may be a pain in the <fill in the body part of your preference>, they CAN back out of the deal at this point.

If they HAVE already bought the house, and I mean really bought it, they've closed, keys in hand, it's theirs, then you're right, it's not feasible now to get rid of it.
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Perhaps I misunderstood, but it sounded to me like they hadn't closed on the house yet, since they were still in the process of getting financing.

It's entirely likely that I misunderstood. If they haven't closed, I completely agree that they should back out of the deal and find somewhere cheaper to live (hopefully with a better mortgage, too!).
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Ok, it sounds to me like you were really disserved by your mortgage person (somehow I suspect she had close ties to the builder!).

You're right! It was the builders lender we were working with....As I look back at it now, I don't see how on earth they could have approved us for this loan. Or for that matter, how on earth we could have accepted such terms! But I have to put that behind me now, and I appreciate your suggestions. You are also correct in saying that it would cost us too much to sell the house now, also considering the pre-payment penalty involved.

Yikes! My husband want to try and take another Home Equity loan out, he says the house has gone up in value to around 450,00 and thinks we could take out a 35k loan to help us get by...??? Meaning that we could take 1,000 - 1,500 per month for the next 2 years to meet the payments. My response to that was, 'we can't get out of debt by creating more debt' We would then be 65-70k in debt after the 2 - 2 1/2 years and he says we would then be able to re-finance....I don't like that idea!
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As I look back at it now, I don't see how on earth they could have approved us for this loan. Or for that matter, how on earth we could have accepted such terms! But I have to put that behind me now, and I appreciate your suggestions. You are also correct in saying that it would cost us too much to sell the house now, also considering the pre-payment penalty involved.

Good for you for recognizing that what's done is done and all you can do is learn from it and move forward from your present situation. Too many people spend time amenting that they could spend on working on the current problem.

I agree with you that your husband's home equity loan idea is dangerous. Moreover, I don't think it will work. Usually, for homes that were bought within 12 to 24 months, lenders consider the lesser of the current appraisal OR the sale price. It sounded to me like you bough the house about six months ago, so you would have a minimum of six months before you could even get equity out, I'll bet. Has he consulted a mortgage broker about this?

How bad is the prepayment penalty on your current first mortgage?
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OMG! I wanted to read what others said first.

(Warning: I tend to get a tad judgemental about people with high salaries; I'm not trying to, I'm trying to help, really!)

Utilities $ 581 --> already got rid of cable & cell's

Got rid of cable and cell phones, good. What else is costing $581?? I know electric is high right now (I live in SoCal; where are you? you're profile isn't filled out.)

We have another board here called "Living Below Your Means" where you can get lots of ideas for reducing costs, but here are some of the obvious ones:
reduce electricity: turn off computers when not in use, unplug stereos/tvs when not in use, use Compact Flouresent light bulbs everywhere possible, if you use air conditioning, put it on a timer so it turns off when you aren't home, and turns on shortly before you come home from work, same thing for electric heat, try setting the temp a few degrees warmer/colder, turn off lights when not in use, put hot water heater on a timer, make sure major appliances have "energy star" I know the California PUC web site has a lot more suggestions, so does www.sdge.com Does your electricity provider have a "level pay plan?" (that's helping me.)

Phone: get rid of all extras, no call waiting, no voicemail, no caller id; on the LBYM board, someone once posted a link to compare long distance plans.

Water: use the dishwasher as little as possible, take showers instead of baths (how old are the kids? Small kids can take "kitchen sink" baths, 4-7 or so can shower with parent of the same sex) Don't water the lawn, or only water a little bit at night. Do you have a pool? I don't know how to save money on them, but I know someone else here might.

What else do you consider Utilities? probably trash, if it's not included with the water/sewer bill (depends on where you live, I know.)

Do you recycle bottles, cans, etc? Can you turn those items in for cash?

Child Care $ 450

Depending on the kid's ages, there may not be much you can do about that, but have you looked around? Is there any licensed in-home daycare available (when my daughter was 1 year old, I was able to save $25/wk by using a licensed in-home person instead of a center.)

Household $1,125 --> incl.groceries,drycleaning,gas,entertainment,etc.

Break that down more. How much for groceries? Deannda, who has a family of 4, just recently said she only spends around $250 for groceries. On the LBYM board there are LOTS of ideas on how to reduce grocery expenses. Visit www.worldshare.org and see if there is a SHARE affiliate near you. Go semi-vegitarian; make what meat you do buy last a few meals. Kids love mac and cheese, PBJ, pancakes, scrambled eggs, cereal for dinner; cheap, filling, and most of those have protein and carbs, just add fruit or fresh veggies for a complete meal. Get a crock pot, cook more at home, freeze meals and/or meal components (there are 500 things you can do with hamburger meat, on a weekend pre-cook a couple of pounds, break it up into several meal bases, and freeze them. Then, boom, hamburger helper - or homemade one-dish meal - ready in 15 minutes. Cook 3x more rice than your family will eat for one meal, and break it up and freeze it.)

How much for entertainment? Right now, cut it to the bone. Budget a small amount, $100/mo or thereabouts, so you and hubby can go out once or twice without the kids. Go to the park and have picnics, are there beaches near you? Do you go to the movies? Don't. Or, plan in advance to spend your small entertainment budget on a movie, go to a matinee, and bring your own popcorn and drinks.

Drycleaning: how NECESSARY is it? Can you get Woolite or Dryel and do it at home?

CC's $ 382 --> towards debit repayment which I have not negotiated yet.

If you cut expenses in other areas, I think you can increase how much you send to the debt. But if you really have the extra money from the mortgage, then pay off/down the debt as much as possible!!!

I think you need to examine EVERY purchase you make, and decide: is this a NEED or a WANT? It seems to me that up until now, your family has made decisions based on WANTS, not NEEDS. Can you change that? Are you willing to? (NEEDS are food, clothing, shelter, and anything necessary to maintain a job. WANTS are $500/mo cars, designer clothes, eating out.)

Ishtar



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My response to that was, 'we can't get out of debt by creating more debt' We would then be 65-70k in debt after the 2 - 2 1/2 years and he says we would then be able to re-finance....I don't like that idea!

You are SO right!! Hold on to that!

Ishtar
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<<Well, for openers I'd pass on buying the house. Then I'd go back and start paying off debt and
increasing your cash savings so that your family has some financial security. It sounds like they
need that a lot more than a new house.



Seattle Pioneer >>

SP and I are just about as far apart as you can get on most topics, but when it comes to debt, we're always on the same wavelength.

What possessed you to make an offer on a house you obviously can't afford?

Wada - No hat, but lots of cattle.
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My husband want to try and take another Home Equity loan out, he says the house has gone up in value to around 450,00 and thinks we could take out a 35k loan to help us get by...???

No No No!

Since the house is bought, keep it. It would cost a fortune to sell it because there's not enough equity in it yet.

Dump BOTH cars and buy 2 used cars outright (this will eliminate car payments entirely).

I am surprised that you are surprised... (being loaned that much money, that is). My local lender said I qualify for a $275,000 house because my credit rating is excellent. However, I would certainly not rush out and get a house that expensive. I could never afford it. Just because someone says you are eligible for a certain loan amount does NOT mean you can pay the money back and still have a life.

Repeat after me:

I WILL NOT GET A HEL
I WILL NOT GET A HEL
I WILL NOT GET A HEL

If you cannot pay back the HEL, you LOSE THE HOUSE!

QUIT BORROWING MONEY!
Sell what you can live without.
Scale back on your expenses (cable TV, etc.)

Did you use the "home improvement" money yet? If not, pay off debt with that money! If you used some of it, use the rest to pay off what you can.

FWIW

Louise



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Hi female. After reading your post, I'm confused as to how you were approved for the mortgage in the first place.

You should come over to the "Living Beneath Your Means" (LBYM) Board, where you'll find lots of tips on how to dramatically reduce your monthly expenses. For starters, how about:

1. Is it too late to back out of purchasing the home? I don't know where you are in the process, but this house sounds as though it is far above your family's means (and needs). DH and I have no children, no day care expenses, no credit card debt, and no car payments (although we do have school debt), and we would never dream of buying a 432K home! I think you need to drastically rethink your notions of what your family needs to survive, thrive, and be happy.

2. Drastic solution here: sell your cars, and purhase two old but reliable cars for a lot less money. Not glamorous, I know, but you can hardly afford $1100 in car payments right now. Even better: share a car with your DH. I do. Unless you work in opposite directions, get up a bit earlier and carpool. Alternatively, if you *do* work in opposite directions, keep/purchase one car and have the other person carpool with some work colleagues. I guarantee that the cost of chipping in for gas won't be $1100 per month.

3. I can't figure out why your utilities are so high. It's terrific that you canceled your cellphone and cable service, but where is the rest of the money going? Come over to the LBYM board for advice on energy efficiency.

4. $1100 for "groceries, dry-cleaning, gas, & entertainment"?! Good lord, what are you eating? Where are you driving?! Your grocery expenditures for a family of 4 can easily be shrunk - stop buying meat and soda pop. Drink water, and go vegetarian. Buy generic products, not brand-name. Also, stop spending *anything* on entertainment. Right now, your entertainment should consist of watching your debt load get smaller. You can't afford a night out at the movies, not when there's so much (free) fun to be had at home (especially if your kids are small - they won't know the difference). You don't need to dryclean very much - a quick steam in a hot shower does it for my clothes. As for the gas - remember, think "carpool."

I wish you luck.

bookgrrrl
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What do you mean, no more debiting? You are proposing to sign on for a $432,000 loan. Who are you kidding?


We already bought the house, last November...
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We bought this really big beautiful house. We sold another house but didn't get much $ out of it because we had to pay off some debt but still held on to some debt also. While speaking with the lender, she told us we could take out a loan that would cover the cost of the new house and also pay off the existing debt. The new house cost $401K with the existing debt of $30K. We decided to move forward with the move. Still feeling a bit leary of the whole thing, we went through the negotiating process with the underwriters (?), and the original woman we had been speaking to, who said we could pay off exisitng debt had left the company. Well much to our suprise, the new person we started to work with said they COULDN'T pay our existing debt, but we would be qualified for the 432K loan. She suggested we use the extra money towards upgrades on the house since the 32k wouldn't make that much of a difference on the payment. Well the payment is high, really high. And now that you know this history, here's where I am looking for any suggestions....

Hi femalefuture!

I've just got to ask, and I hope you won't take this the wrong way.

You're posting with obvious concern and misgivings about being able to afford this very expensive home. Do you really need such an expensive house? Could you not go smaller and save a lot of money by doing so?

This may be your dream home, and I can surely understand that, but I can't help wonder if the happiness you're hoping for won't be overshadowed by the persistent stress involved with the upkeep.

Tony
...but I still am...

Off2Aruba
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<<What do you mean, no more debiting? You are proposing to sign on for a $432,000 loan. Who are you kidding?


We already bought the house, last November... >>



Ahhh, sorry. I misinterpreted your comments.



Seattle Pioneer
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A $400,000 house sounds pretty "upgraded" considering your income, as it is.

that depends on the area. In TX, a $400K home is a palace, in Silicon Valley (CA), the same buys a cottage.
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that depends on the area. In TX, a $400K home is a palace, in Silicon Valley (CA), the same buys a cottage.

That is true. I asked where she was, trying to figure out if it was out of line for her area, I was thinking Silly Valley with that kind of price for the house. She hasn't answered yet.

Ishtar
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The house is in San Diego. All of your comments are welcomed, I already feel like a fool. And the house is NOT bringing me much happiness. In fact I keep asking myself why we sold our smaller house on a cul-d-sac for this house. I feel like I am cheating my children out of their childhood, they are 4 & 6. My 6 yr old learned how to ride her bike, rollerblade & play kick ball on that cul-d-sac. My 4 yr old can't do any of that here becuase we are on a hill and a busy street, and we don't have a back yard, nor the $$ to put one in.

I feel stuck! Can't sell the house, can't keep up with the house. I am sure I'm giving myself ulsers! I'm very stressed not knowing if we should keep up the effort for the next 2 1/2 years, when we would be able to refinance, or file BK and move to a rental and start all over again. I feel like I am getting too old to start all over again...(40)

Please beat me up some more, tell me how foolish our choices have been, I know there isn't anyone that has a crystal ball, but if you get any telepathic vibes from my posts, please bring it on...
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She suggested we use the extra money towards upgrades on the house since the 32k wouldn't make that much of a difference on the payment.

Don't you just love the helpful advice you get from people on commission.

I would strongly consider re-financing even with the pre-payment penalties. If the penalties are in the 1 - 2% range, you will make it up in the first year of a loan with a reasonable interst rate. Unfortunately, it sounds like you are really tight on your debt-to-income ratios, which is why you probably got such horrible rates in the first place.

I can't give you really specific advice since I don't know all of the intricate details, but I would recommend checking on mortgages with a real bank instead of a mortgage broker. Interest rates are very low right now, if you can find someone to take this jumbo loan with your ratios. You may even want to poke around the mortage calculators on BofA's or Ditech's websites to see how far off you are from qualifying for more traditional financing.

I also like your ideas of taking in some side-work / overtime and finding less expensive automobiles. This is a tough one, but I would start working right away to re-structure this debt. Paying credit card type interest rates on $432K in mortgages is going to kill you. You may even have to work it down for a year or two and then grab a new loan after you get some raises and pay down some debt.

I wish that I had some easy answers for you.

Bret

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Please beat me up some more, tell me how foolish our choices have been, I know there isn't anyone that has a crystal ball, but if you get any telepathic vibes from my posts, please bring it on...

FF,

Now you can't make yourself sick over this, and there must've been many valid reasons for making this decision.

If it indeed is a done-deal and there's no way out, how about giving it a go for a while, while having the realtors keep it on the market.

Perhaps it could turn out where in a short time you could resell the house and actually come out with a profit, no? :-)

Tony
...but I still am...

Off2Aruba
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This may be your dream home, and I can surely understand that, but I can't help wonder if the happiness you're hoping for won't be overshadowed by the persistent stress involved with the upkeep.

You are right, there's no happiness here. My husband can't understand why I'm not happy. He says I'm never happy. He doesn't stress out the way I do. I'm the one that has to work the budget, he knows the situation we're in, but won't take over the checkbook.

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that depends on the area. In TX, a $400K home is a palace, in Silicon Valley (CA), the same buys a cottage.

But location doesn't change the fact that $400K is much more than her income can handle, with her other expenses. WHERE she lives has nothing to do with how much she can afford, just how much things cost.
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Is it possible to adjust your tax withholding to account for the interest deduction?
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You are right, there's no happiness here.

FemaleFuture,

I agree with Tony on this one. Please don't beat yourself up about all of this. You made some decisions that are going to be tough to live with, but it's over so don't get depressed about it. This is life, lesson learned and now it's time to deal with it head on. Use your talents and your energy concentrating on solutions, not mistakes.

BTW, I live in Orange County so I understand that a $400 house is just above a median priced home here. Just a few years ago, San Diego used to be a great place to get houses and rent cheap. I imagine it must seem ridiculous to someone who lives in Boise or Minneapolis, but that's the way it is here. At least it's better than Silicon Valley.

Hang in there. We're all here to help.

Bret
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Dump the house... Who are you trying to impress? I am a mathematics and personal finance teacher. As long as there are people like you in this world, I know I'll have plenty of job security!
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Dump the house... Who are you trying to impress? I am a mathematics and personal finance teacher. As long as there are people like you in this world, I know I'll have plenty of job security!

C'mon, tmadz, lighten up. Sarcasm isn't going to help FF now, and she's opened herself up here looking for some ideas.

FF, the most important thing for you to do right now is to communicate with your husband. Sit down and listen to each other, don't just talk at each other.

I've no doubt that you two can get this situation worked out, as long as you do it together.

Be sure to keep us posted throughout. We're here for you.

Tony
...but I still am...

Off2Aruba
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Is it possible to adjust your tax withholding to account for the interest deduction?

That's a great thought! I'll look into it.

Thanks for all of the positive feedback!

FF
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Dump the house...

This would mean bankruptcy...I am trying to avoid that.

Where do you teach, maybe I can pick up a class.

FF
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Hiya FF..

Somebody else suggested looking at your tax withholdings-this is a really good idea. Are either of you contributing to retirement plans at work? You may need to reduce your contributions to the company match to free up some cash. Track your spending for a while to see where it is going-I'm betting you can find some places to cut. Is there anything you can sell (besides the cars)?

It sounds like you know you're in trouble-what are you going to do about it? Do you want to stay in that house, or try to move ASAP? Whatever you decide, you need to have a plan.

And, stick around. People here are great!
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Whatever you decide, you need to have a plan.


I know I need a plan, but I'm having trouble drawing up that plan. I've started tracking our spending with a spending record, and I've put together a Spending Plan for next month. I hope to have a plan together by the end of the month so I can start calling the CC's to break the news to them.

Thanks for the positive words.

FF
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<<that depends on the area. In TX, a $400K home is a palace, in Silicon Valley (CA), the same buys a cottage.

That is true. I asked where she was, trying to figure out if it was out of line for her area, I was thinking Silly Valley with that kind of price for the house. She hasn't answered yet.

Ishtar >>

No kidding. We live in Silicon Valley and we couldn't afford to buy the house we presently own.

A house down the street just sold for $589,000 and we're talking a 1500 sq ft. CA tract house.

Wada
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Click "email reply to this author" on the bottom of this post! I'm in San Diego, in Mira Mesa; my daughter is 5, we could get our kids together, and I can give you LOTS of hints on saving money!!!!!!!!

There IS a SHARE near you!!! www.worldshare.org SHARE started here in San Diego!!! If you are worried about the community service part of it, babysit my kid for a couple of hours a month, there ya go, community service!

Hey, have you thought about renting out a room in that great house??? (hint, a 4 year and a 6 year old can share a room with bunk beds!) That could increase your income. I've seen rooms for rent around here for anywhere from $400-$600/mo plus part of utilities!

email me, seriously; we'll get together!

Ishtar
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You are right, there's no happiness here. My husband can't understand why I'm not happy. He says I'm never happy. He doesn't stress out the way I do. I'm the one that has to work the budget, he knows the situation we're in, but won't take over the checkbook.

You both should work on it together, if you have combined finances.

Ishtar
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<<Hey, have you thought about renting out a room in that great house??? (hint, a 4 year and a 6 year old can share a room with bunk beds!) That could increase your income. I've seen rooms for rent around here for anywhere from $400-$600/mo plus part of utilities! >>

First of all, I apologize for the somewhat snide remark I made when I originally stepped into this discussion.

I do have to agree with Ishtar on this one, although the downside is that you will have a stranger in the midst of your family who will likely be witness to things you'd probably rather an outsider not know. Just be very, very picky about your renter(s). They can cause more trouble than they're worth.

Renting one or more rooms is quite common here in Silicon Valley. It's just a hellaciously expensive place to live if you don't own a place that you've lived in for over 10 years.

Wada
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This would mean bankruptcy...I am trying to avoid that.

Where do you teach, maybe I can pick up a class.


since you're in San Diego, look up Consumer Credit Counseling Service here, they offer free budgeting classes.

Also, sometimes there's cheap classes at The Learning Annex

Ishtar

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A house down the street just sold for $589,000 and we're talking a 1500 sq ft. CA tract house.

Wada,

It's way out of hand. I was walking down my street and my neighbor had a sign up, so I took a flyer. I almost rolled down the street laughing. This is a 1958 house that's just over 1,000 squares, two bedrooms, one bathroom and a one car garage on a small lot. They were asking $358,000. The scary part is that some fool may actually buy it.

Unfortunately, I think a lot of people are going to get burned when the market crashes again. There were a lot of people walking away in the '80s and '90s and I'm pretty certain we will see it happening again.

Bret
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<<Wada,

It's way out of hand. I was walking down my street and my neighbor had a sign up, so I took a flyer. I almost rolled down the street laughing. This is a 1958 house that's just over 1,000 squares, two bedrooms, one bathroom and a one car garage on a small lot. They were asking $358,000. The scary part is that some fool may actually buy it.

Unfortunately, I think a lot of people are going to get burned when the market crashes again. There were a lot of people walking away in the '80s and '90s and I'm pretty certain we will see it happening again.

Bret >>

Hopefully, that won't happen until several years after we sell our house later this year.

Thank God the market price could take an 80% hit and we could walk away unscathed.

Wada
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Hopefully, that won't happen until several years after we sell our house later this year.

I see a pattern in CA where the prices are sky high at the end of every decade and then crash in the middle. I believe the low of the market for last decade in Orange County was February of 1996. At that point there were over 1,800 foreclosures per month.

Why this happens here with such dramatic pricing swings, I have no idea. But I heard on the news two days ago that only 25% of people in Orange County and San Diego could afford a median priced home, so I'm pretty sure it's all going to have to come back down. I don't know too many families that can afford a half-million dollar mortgage.

Bret
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Utilities $ 581 --> already got rid of cable & cell's
Household $1,125 --> incl.groceries,drycleaning,gas,entertainment,etc.


Other people have mentioned it, but check out the LBYM board.
http://boards.fool.com/Messages.asp?mid=15151601&bid=100158
http://boards.fool.com/message.asp?id=1040018001439000
http://boards.fool.com/Message.asp?id=1040018005951000

How much are you spending on drycleaning? Can you try wearing stuff that's machine wash? Wash on cold and dry on a rack to save on energy costs. Can you try using Dryel or another home drycleaning kit? Use coupons for the drycleaners if you must have stuff professionally drycleaned. www.valpak.com should have some coupons for one in your area.

What are you cooking? Can you try buying cheaper groceries? If you don't already do so, start looking through sale ads and cutting coupons. Buy cheaper stuff. Try store brand stuff -- if it really sucks you can always go back to name brand, but most of it is just fine. If you're buying whole bean coffee, switch to Folgers or another decent ground coffee.

Entertainment -- what do you do for fun? Can you switch to cheaper or free alternatives?

What kind of stuff did you buy to get into debt? Maybe you can sell stuff (books, cds, games) on www.half.com to get some money. How about holding a garage sale? Do you have clothes that are nice but you never wear them? See if you can sell them at a consignment shop. If your kids have outgrown their clothes, you can sell them at a children's consignment shop or at your sale. Do you have any excess furniture? Maybe you can sell some of that.

Any suggestions on how to stay above water? This is eating away at me every day and I am having a hard time functioning!

Read the responses here (but if anyone seems harsh please don't take it too personally) and check out the LBYM board. (That board goes off topic a lot, but you can get some useful tips there if you ask for help and are willing to be a bit more specific about what you're spending your money on.)

Also, take a deep breath and relax. By admitting there's a problem, you've taken the first step in solving it.










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Your in a tough spot.

I have an off the top suggestion. A friend of mine had a very large and expensive house (in the millions!!) Anyway, he got divorced and came into some $$ problems. Well, he rented his house out to a foriegn embassy for two years at a HUGE profit. End result: he got back on his feet (rented cheap in the meantime!) To make a long story short at the end of the two years sold the house for double what he paid! (by the way this is in Miami,$400K house is alot of house!)

I am not familar with San Diego but I would look into renting it out. Maybe time away from the house and catching up with the bills & mortgage may make the house more of a "happy place" in a few years! I wouldn't sell though.

That's all I've got, hope it helps or at least puts a smile on your face!

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Well, now I will put in my .02.

1. Don't change the childcare! Most kids don't like change too much, and I believe there are many other areas that you can drastically cut down. I wouldn't be surprised if the kids feel the strain as well.
2. If your home has appreciated $50K, look into selling and downsizing.
3. Work with the lender to reduce the interest rate and don't pay points.
4. Don't borrow any more money, for goodness sake!
5. Spot clean instead of using the cleaners, go to the basics on the phone...no 3 way calling/caller ID/call waiting/long distance, sign up with www.onesuite.com for long distance, cloth napkins and rags instead of papertowels, don't eat out -- your brown bagging it including the kids (if that is a savings for your childcare)
6. We feed 5 people and our entire monthly grocery bill including paper products and personal hygiene products is < $350 a month. Cook from scratch and use a crockpot.
7. Increase the deductibles on the house and car to a minimum of $500 each.
8. Get rid of the cars, get rid of the cars, get rid of the cars. Used older cars work great.
9. Sell stuff on eBay. You won't believe how much I have sold and haven't missed a thing. It's amazing!
10. Clean out your closets and take items to a consignment store (try eBay first) to sell.
11. Wash your clothes in cold. Only do full loads in the dishwasher/washing machine. Use half the soap for everything (hair, toothpaste, dishes, clothes).
12. Generic is your middle name. Try 'em.
13. Hang laundry to dry.
14. Entertainment needs to be the library and the park. They are free.
15. Worst case scenario is that you have to stay in the home a bit longer before selling. Selling is in your future...and you can find a home that is better suited to the needs of your family.
16. Don't put more money into the home. Keep it looking clean and nice so that you will be able to sell (hopefully) soon.
17. Consider taking a foreign student as a tenant. We know several families that have welcomed foreign exchange students that come for a quarter for college. It's an idea.
18. Quit using any credit. You on a cash basis now.
19. You must get things under control so that you can get some type of emergency fund together. God forbid, but what happens if one of you loses your job?
20. Most important. You cannot do this without having dh on board. You must be on the same page. Does he want to move? Is this his dream home? Would he like to be back in a smaller home on a quiet street for the kids? Does he realize how bad your situation is financially? There is nothing wrong with making a mistake. Learn.

Good luck!

L
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<<FF, the most important thing for you to do right now is to communicate with your husband. Sit down and listen to each other, don't just talk at each other.

I've no doubt that you two can get this situation worked out, as long as you do it together.
>>


I agree that the lady needs to be able to communicate her anxiety and fears to her husband, and they need to be able to lean on each other to work through this difficult situation. Adding a divorce to financial difficulties appears to be a popular way of dealing with problems that only makes things a lot worse. Her husband apparently resents that his efforts to provide a nice home are being met with resentment, and probably resents that. Both spouses need to understand the other and be able to support each other.


<<I've no doubt that you two can get this situation worked out, as long as you do it together.
>>


Getting things worked out is dependent on 1) the marriage holding up and both spouses being able to love and support each other and 2) the outside world blessing this family with job security and continued economic growth. If everything works OK, they should be able to work past these problems.


But MY idea of financial planning is to be able to survive economic bad times, job loss and unexpected disaster, not betting everything on the hope that nothing will ever go wrong.



Seattle Pioneer




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I feel stuck! Can't sell the house, can't keep up with the house. I am sure I'm giving myself ulsers! I'm very stressed not knowing if we should keep up the effort for the next 2 1/2 years, when we would be able to refinance, or file BK and move to a rental and start all over again. I feel like I am getting too old to start all over again...(40)

I am so sorry, it sounds like you're really in a tough spot. (Don't worry so much about your kids though, it is too bad that your 4 year old can't play on the street but the wonderful thing about little kids is that they don't miss what they don't have! Not like us grown-ups!)

Have you run the numbers on just what selling the house would mean? If its value has appreciated as much as your husband thinks, maybe you could at least break even on the closing/selling costs. If the house is making you miserable AND draining your budget every single month, it might be worth a cash loss (if you can swing it) to get out & into a smaller house. If not today, then maybe in 6 mos to a year.

Don't beat yourself up. I think people have only sounded kind of tough on this thread because many thought you were looking at buying a too expensive house rather than already suffering the consequences of buying one. We all know what it's like to have to live with the consquences of bad decisions, it's why most of us are here!!

When one person is drowning in a pond, for some reason it is hard for that person to grasp that someone else can be drowning in an ocean. :-) Your grocery/gas/entertainment allotment is a whole biweekly paycheck for me, but that's really irrelevant. Lots of people live on less than half of what I make and I can't imagine cutting my expenses back that far without compromising my standard of living past what I can stand -- it is all in what you're used to. Like dieting, it's hard to eat less no matter what you weigh to start with.

Never mind yesterday's choices. Start examining every single choice you make today, every single day, & ask whether what you get out of each choice is worth what you paid for it. (The book Your Money or Your Life is wonderful on this subject -- check it out.)

Hang on & keep posting as many details as you can bear. We will try to help & not scold about the utility bill. (But what DO you manage to spend $581 on?? Enquiring minds want to know!)

Welcome to the Fool & keep your eyes on the "future" part of your handle!!

Tanaquil

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This is a 1958 house that's just over 1,000 squares, two bedrooms, one bathroom and a one car garage on a small lot. They were asking $358,000. The scary part is that some fool may actually buy it.

At that price, someone WILL buy it. My sister in SF says that when 1BR condos fall into that price range, she starts to feel encouraged that houses are getting more affordable.

This describes the 119K house I am about to buy almost to a T, except that mine has 3BR. Now all I have to do is pick up my soon-to-be house in East Hartford, lot & all, and fly it to Silicon Valley. I could sell & make a fourfold profit!!! And I could live in CA with my SO to boot!

Living for the days of movable real estate,

Tanaquil
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Kudos for giving this Fool board a shot, rather than waiting.

1. As mentioned....ebay stuff if possible.
2. Get hubby onboard. Even if he doesn't want to mess with the checkbook, maybe you can at least lay out your plans for him. It sounds like he is at least with you by being willing to work overtime.
3. If you can somehow get the first & 2nd down to a reasonable rate, that would help tremendously. I recently refi'd my first and a HEL into a straight HEL, taking cash out. I did this through BofA, and it worked out nicely. No points, or upfront fees of any kind. However, my credit was considered very good.

I just plugged numbers in quickly and got the following figures. Someone correct me if I'm wrong. My assumption is that you have a 30-year for both your 1st and 2nd? The 9.25% numbers are only off by ~$5, so I think I'm pretty close. I figured @ 8% for both and 30 year.

1st 9.25% $2,807
1st 8.00% $2,531

2nd 12.5% $ 918
2nd 8.0% $ 631

This shows you saving ~$563/mo. I dunno what the California laws are like. I do think it helped smooth my loan process by laying everything out at the outset, showing how much I was "saving" by using the cashout to pay off credit cards.

I'm curious as to what your 401k/IRA situation is. Normally, I don't feel it is a good idea to take a loan out against a 401k, or stop contributions, but in your case, you might consider it.
--Randy
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Well, have you considered maybe renting a room to a student or a friend? In a $400K house, I'd hope that you have a finished basement with a separate bathroom, and a rental income would be income at no cost but loss of some privacy.

Greta
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Well, have you considered maybe renting a room to a student or a friend? In a $400K house, I'd hope that you have a finished basement with a separate bathroom, and a
rental income would be income at no cost but loss of some privacy.



LOL!!! This is heavily dependent on the area of the country you are in. On the Eastern Seaboard or the Mid-west, basements are common. She's in San Diego; I, personally, haven't seen any basements here. (Are there any?) She also implied that this was a newly built home, so I would guess that it doesn't have a basement.

That doesn't prevent her from renting out a room, however. I would guess that this is at least a 4 bedroom home, and a pretty decent size, with no yard. Just the way things are here.

Right near where I live, there are $300,000 homes only a year or two old that are two stories, have no basements, very tiny yards (room for a patio out back, and that's it; you can spit into your neighbor's bedroom window from yours; they might as well be town houses!) and only a crawl space for an "attic."

She hasn't said what area of the county she's in; I'm rather curious.

Ishtar
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.<< She's in San Diego; I, personally, haven't seen any basements here. (Are there any?) >>

Okay, my mistake. I've never lived west of the Mississippi, and, in fact, not everybody has a basement here in NJ, either. But I have been extremely fortunate to have a very good friend renting my basement since my marriage ended five years ago. I think it would be pretty hard to have a stranger living with me, but if I needed the money badly enough, I might think about it. And it sounds like this woman really needs some extra income.

Greta
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My husband can't understand why I'm not happy. He says I'm never happy. He doesn't stress out the way I do. I'm the one that has to work the budget, he knows the situation we're in, but won't take over the checkbook.


I might be sticking my nose where it don't belong, but it seems to me-being a vet of the Divorce Wars-that there is a bigger concern between you and your hubby besides exclusively the house.
Would counseling be out of the question?

-criscarson-
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You are selling yourself, your husband and your children for a house. Do you really want your husband working overtime constantly to pay for a house? What about time the family? What are about saving for retirement? and college? You are putting all your eggs in one basket.

I don't mean to be harsh, but I get the impression that although the house is big & beautiful, with all the overtime, stress & aniexty it is not much of a home.

Penny


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Just so you know, my offer to email me privately and possibly get together to discuss ways to save money is sincere. You can't be too far away from me.

Ishtar
(waiting for an email!)
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My husband can't understand why I'm not happy. He says I'm never happy. He doesn't stress out the way I do. I'm the one that has to work the budget, he knows the situation we're in, but won't take over the checkbook.

I meant to pick up on this too -- unless this is solely the product of marital conflict, this sounds to me like a possible sign of clinical depression. Depression is extremely common, especially in stressful circumstances. If you have a good health plan that covers some mental health benefits, I would really encourage you to ask for some short-term counseling (besides the marital counseling, which sounds like a great idea) and perhaps anti-depressants until you get past the rough patch. Antidepressants like Prozac really help you to stop beating yourself up and stressing about a difficult situation so that you can focus on solutions. Think about it!!

Tanaquil
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I meant to pick up on this too -- unless this is solely the product of marital conflict, this sounds to me like a possible sign of clinical depression. Depression is extremely common, especially in stressful circumstances. If you have a good health plan that covers some mental health benefits, I would really encourage you to ask for some short-term counseling (besides the marital counseling, which sounds like a great idea) and perhaps anti-depressants until you get past the rough patch. Antidepressants like Prozac really help you to stop beating yourself up and stressing about a difficult situation so that you can focus on solutions. Think about it!!

Another reason we could get together! I have experience in this area! Medication has changed my life (a couple of times, but let's not go there right now!)

Ishtar

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Seattle Pioneer>>Her husband apparently resents that his efforts to provide a nice home are being met with resentment, and probably resents that.

The other half of the problem! FF, you really need to see if that's what is going through his head. Plus, he just may be unable to admit that ya'll made a mistake. He may even feel like you're saying he made a mistake. It's not rational but sometimes that's just the way it is. I'd suggest avoiding the topic of what went wrong and focus on how you two can dig yourselves out of this hole. He probably needs to see a solution, not just an insurmountable problem.

Debora
- not up to proofing today -
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>>1st 9.25% $2,807
>>1st 8.00% $2,531

>>2nd 12.5% $ 918
>>2nd 8.0% $ 631

Randy,

Thanks for this info. You're almost exactly on target.

Actual:

1st 9.125% $2812
2nd 12.50% $922

While working with the 1st, she said our loan was an adjustable rate and that they could renegotiate to a fixed at 9.08 with a payment of $2794 --> not much of a savings! When I questioned her about the adjustable rate, and why it hasn't come down, she said that if anything it would probably go up, and that there was a period of time before it would adjust but she didn't have the paperwork to check on it. I guess I will have to go through our copy of the loan docs and become more familiar with these nasty terms. She has also sent a request into underwriting for us to buy down a point which she says would bring our payment down around $2,600, but this will cost us 5k in closing and 10k for the buy down and that doesn't seem wise to me to pay 15k and save approx 6k over 30 months...(until pre-payment penalty is gone). She said the rates are high because they are a credit company that gets their money from the bank (middleman?). I also asked her if they would lift the pre-payment penalty so we can try to go directly through a bank for financing. I will also try to find what our loan docs say about the penalty, to see if it would make any sense to suck that up and move on.

The second was much more professional to deal with. This woman took our information and submitted the request, said that if approved, they would drop to the prime rate and lift the pre-payment penalty. We need to wait 2-3 wks for approval.

As for 401k -- I've already taken a loan that got us through the 1st 6 months of this mess..

Thanks again for helping with the math.


FF
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>>Hang on & keep posting as many details as you can bear. We will try to help & not scold about the utility bill. (But what DO you manage to spend $581 on?? Enquiring minds want to know!)<<

Tranquil --> thanks for the positive words.

Here's the lowdown....

SDG&E $150 (average) Yes I conserve! No AC, Min lights, full loads etc.
Cable $ 30 basic only - no extra's
Water $ 50 (average)
Tel $ 20
LD $ 30 (reimb by work)
Car Ins $140 ($500 deductable) Hopfully will go down once car is gone
Homeowner assoc. $102
Trash $ 30 (every other month)
Cell $ 30 (also reim by work)

So there is my $581, I guess I could make it $521 if I deduct what I get reimbursed by work.

FF




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Female - one more thing. I have never heard of a pre-payment penalty on a mortgage. In fact, it strikes me as constituting a predatory lending practice, and it may very well be unenforceable in your state (other CA-ians on this board may be able to help here). Particularly given the cozy relationship between your builder and your lender, you may be able to do yourself quite a bit of good by making a little noise. Do you have enough money for an initial consultation with a good attorney? Barring that, can you check out the lending laws in your state?

I think it's terrific that you want to change your relationship to debt. Keep plugging away at it.

bookgrrrl
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Bret...

How did you get so smart? Thanks for all your words of wisdom!

FF
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Folks, please get a grip! I have to admit that I normally read this board purely for entertainment value. There's nothing like a bunch of unduly indignant debtors flaming over *the nerve* of their creditors to expect repayment to remind me of why I have always and will forever live beneath my means. (The thread of postings that the previous statement is sure to generate will no doubt provide much amusement for me in the days to come).

But now my point (and I do have one): Please take care not to jump to conclusions that you have no business making.

A woman posts looking for moral support and cash flow tips to service her $400K+ mortgage and suddenly the thread escalates to diagnose her with clinical depression and verging on divorce? Get real. Who among us is qualified to make that kind of judgement based on only a few paragraphs of text? Yes, there are real people behind these posts, BUT YOU DON'T REALLY KNOW THEM. Ease off.

This is certainly not the first time I've seen this kind of far-fetched meddling on this board (and most often it's the same posters over and over again - don't you ever work?)
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When I questioned her about the adjustable rate, and why it hasn't come down, she said that if anything it would probably go up ...

Variable loans are calculated based on an index value above a couple of different indicators. For example, my loan is indexed 2.3% above the 7th District Cost of Funds or COFI. My suspicion is that you have a high index value over your indicator, which is why you are paying 9% right now. If the interest rates go back up, your loan could index up to 12 or 13%.

She has also sent a request into underwriting for us to buy down a point ...

Save your money to re-finance into a better loan. This is throwing good money after bad.

She said the rates are high because they are a credit company that gets their money from the bank (middleman?).

This is shorthand for "They sold you a cr@ppy loan so they could get a bigger commission".

I also asked her if they would lift the pre-payment penalty so we can try to go directly through a bank for financing.

Don't count on this. They use a pre-payment penalty to lock you into their cr@ppy loan for a reason. They have paid a bunch of comissions (a.k.a. hidden points) and they will need to get their money back. I would try to calculate the impact of a refi now including paying the penalty versus waiting the 2 1/2 years without the penalty.

You are on the right track. Go get 'em.

Bret


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Car Ins $140 ($500 deductable) Hopfully will go down once car is gone
Homeowner assoc. $102


Oh, I see. Semantics. I don't see these items as "utilities." Insurance is, well, insurance; a category that includes homeowners/renters ins, car ins, medical ins, life ins, etc. That doesn't seem bad for two adults and two cars.

I would put the Homeowners Assoc under "housing" along with both your mortgages; you can't live there without paying it, right? So, it's part of your "housing" costs along with property taxes and whatever else.

SDG&E $150 (average) Yes I conserve! No AC, Min lights, full loads etc.

Still seems high to me, and I live in San Diego. Of course, I live in a two bedroom apartment, not a big house; it also depends on neighborhood. Could you talk to your neighbors, just to try to get an idea about what they pay? I mean, EVERYONE has been bitching about the "energy crisis" for months; some people seem to be bragging at how much their bills have gone up, and others are bragging about how they are conserving, could you get a conversation started based on these?

At the height of the "crisis," before they put rate caps in, my highest bill was around $130. I have found lots of areas to save that I didn't realize before. Currently, my monthly usage is around $50; I'm on the level pay plan because of electric heat use in the winter and I'm paying around $89/mo. Are you doing level pay? Makes it easier to budget.

If you contact SDGE, they can give you ideas on where else you might be able to save. My best friend is a customer service rep for them, and they are trained to do this. She's the one that's given me ideas on where else to cut usage; she even convinced me on the compact flouresent light bulb situation. Timers on the water heater? flouresent light bulbs? do you have a second fridge? I was serious about unplugging stereos, tv's and vcr's (of course, if you are trying to do something on a timer, that would ruin it.)

Cable $ 30 basic only - no extra's

I thought you cut out cable? Which system are you with? I'm not familiar with Cox pricing, but with TimeWarner, I have an option of going to local channels with CNN and a couple of spanish channels for $12/mo. (i'm considering it.) By the way, I classify cable as an "entertainment" expense, not a utility. (just my personal preference, but more in line with my personal goals.)


Water $ 50 (average)
Trash $ 30 (every other month)


Those prices aren't bad, and are in line with what I pay. Instead of putting your recyclables in the blue can, can you turn them in for cash? Every convience store and grocery store is supposed to have a sign saying where the nearest recycling point is.


Tel $ 20
LD $ 30 (reimb by work)
Cell $ 30 (also reim by work)


Those don't look bad, especially since some of it's reimbursed. Do you count the reimbursement money as part of your income?

So, to reclass in a way I understand:

Utilites: $235 (I counted $15/mo for trash, since you pay it every other month.)

Car ins: $140

increase ent (cable) by $30

increase housing by $102

Reimbursed expenses: $60


Looks less intimidating than $581 for Utilities, doesn't it?

How to eat an elephant? Break it into smaller/less intimidating bites!!!!

Ishtar





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SDG&E $150 (average) Yes I conserve! No AC, Min lights, full loads etc.
Cable $ 30 basic only - no extra's
Water $ 50 (average)
Tel $ 20
LD $ 30 (reimb by work)
Car Ins $140 ($500 deductable) Hopfully will go down once car is gone
Homeowner assoc. $102
Trash $ 30 (every other month)
Cell $ 30 (also reim by work)

Ah, that makes much more sense. I didn't realize that you were including car ins & homeowner's fees. I think you are right that trading in the expensive car(s) for good lower-cost ones will lower your insurance a lot. The only one of those bills that looks high to me is water -- is that because water is expensive in San Diego, or because a family of 4 with two young kids means lots of showers & dishes & laundry? I'm single with no washer/dryer in the apartment, what do I know. My water bill is about $10/mo.

Good luck!!

Tanaquil
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How did you get so smart? Thanks for all your words of wisdom!

FF,

Unfortunately, I learned all of this stuff the hard way.

If you read my other post, you will understand completely.

Bret
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. The only one of those bills that looks high to me is water -- is that because water is expensive in San Diego, or because a family of 4 with two young kids means lots of showers & dishes & laundry? I'm single with no washer/dryer in the apartment, what do I know. My water bill is about $10/mo.

Tanaquil,

I'm in a two-bedroom apt with no washer/dryer and only one kid and a dishwasher that gets run about twice a week; my monthly water/sewer/trash bill is around $28-$35/mo. with trash being only about $3.

$50/mo for a family of 4 for water isn't out of line, I don't think.

Ishtar

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I'm in a two-bedroom apt with no washer/dryer and only one kid and a dishwasher that gets run about twice a week; my monthly water/sewer/trash bill is around $28-$35/mo. with trash being only about $3.

Water is a lot more expensive in San Diego, then (not surprising considering the climate!). Apart from your daughter, your usage pattern sounds just like mine. These things do vary a lot by region.

Tanaquil
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This describes the 119K house I am about to buy almost to a T, except that mine has 3BR. Now all I have to do is pick up my soon-to-be house in East Hartford, lot & all, and fly it to Silicon Valley. I could sell & make a fourfold profit!!! And I could live in CA with my SO to boot!
Living for the days of movable real estate,
Tanaquil


well there IS movable real estate, just not THAT far.
We live in a building that moved probably around a hundred miles before landing on our place. and it is not a mobile home, but an old (old!)school building. Of course it took quite a bit of work to get a house out of it, & unfortunately we hired a lot of morons (uh, sorta friends & their problematic buddies). I guess the (leaking) silver lining is we can't get the damn thing insured so we don't have the home equity loan temptation problem! Tried sev. times & gave up. OK, they can take their h.e. loans & delicately place them in a dark place.

joyce
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woman posts looking for moral support and cash flow tips to service her $400K+ mortgage and suddenly the thread escalates to diagnose her with clinical depression and verging on divorce? Get real. Who among us is qualified to make that kind of judgement based on only a few paragraphs of text? Yes, there are real people behind these posts, BUT YOU DON'T REALLY KNOW THEM. Ease off.

This is certainly not the first time I've seen this kind of far-fetched meddling on this board (and most often it's the same posters over and over again - don't you ever work?


Well, gee- to this I can respond: FF asked for our help/thoughts, and we gave it. It is not your place to tell me what to say to her-or any other poster-any more than mine to tell you not topost your said, harsh msg.

'Cause, ya know what? That's why they call these OPINION BOARDS!

-and there is mine-

criscarson
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How did you get so smart? Thanks for all your words of wisdom!

FF,

You are entirely welcome. Anything I can do to help.

I just realized that I didn't answer your question.

1. I took a Real Estate Priciples course at my local junior college
2. I read and recommend Nothing Down by Robert Allen
3. I listened to Dave del Dotto's real estate tapes
4. I have a sister and good friend who were in the mortgage business
5. I have a brother-in-law who is an appraiser
6. My former neighbor is an RE investor who gave me some tips

BTW, I don't think anyone can or should buy $10,000,000 worth of real estate as a starving college student, but these tapes and books really do help people understand that everything is negotiable. Once you are in the know, people quickly stop trying to take you to the cleaners. If you are at all confused by the process, you are very vunerable.

Bret
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A woman posts looking for moral support and cash flow tips to service her $400K+ mortgage and suddenly the thread escalates to diagnose her with clinical depression and verging on divorce? Get real. Who among us is qualified to make that kind of judgement based on only a few paragraphs of text?


I will readily admit that I, too, chuckled a little when I read that clinical depression response to the post. HOWEVER, I think that the person who posted it meant only to help the original poster.

Who knows, maybe she DOES have a problem with depression (I know I would in that situation) and hearing it from someone who doesn't even know her might help her realize it.

If not, she, too, can chuckle at the suggestion of it.

Simply suggesting it does no real harm to anyone.


-j9
the diplomat
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A woman posts looking for moral support and cash flow tips to service her $400K+ mortgage and suddenly the thread escalates to diagnose her with clinical depression and verging on divorce? Get real. Who among us is qualified to make that kind of judgement based on only a few paragraphs of text? Yes, there are real people behind these posts, BUT YOU DON'T REALLY KNOW THEM. Ease off.

I can't let this one pass... Warning, this post is not really about FF's problem (she is already getting lots of good advice), it's about the wider issue.

I just wanted to apologize if my mention of depression was frightening or upsetting to anyone, especially FF -- I didn't mean it to be. But my red flag goes up whenever I see anyone suffering emotionally.

People who have never dealt with depression may not realize this, but depression is far more common than most people think. I forget the statistics, but some staggering percentage of the population will suffer an episode at some time during their lives -- and the percentage is much higher for women (no one knows why). And many of those people will not realize that they are suffering from something that can be easily treated, because they think that "normal" people don't need treament for depression -- "normal" people should just be able to snap out of it , right?

Short bouts of anxiety or sadness caused by a specific situation are normal -- these will usually pass by themselves or by taking steps to handle the situation. But intense anxiety, laying awake night after night, frequent bouts of crying, intense feelings of guilt or hopelessness -- these things are not normal! And I don't mean that in a critical way -- I mean that like physical pain, these are symptoms that tell people they need help. A professional can diagnose whether acute emotional distress is a sign of depression or not. I can't. But if someone reported having an intense headache day after day, wouldn't you advise them to see a doctor?

That's why, when I see someone really struggling emotionally with debt on this board, I almost always advise that they at least consider the possibility that depression might be a factor. It might not. But if it is, there's no reason for that person to go on suffering more than they have to.

I have no idea if FF is clinically depressed or not -- I sincerely hope not. And I don't think anyone suggested divorce was imminent -- they just observed that FF & her husband are obviously not on the same page about the debt, which always makes dealing with finances harder. But there is a good reason why people on this board often raise the possibility of depression or marital counseling -- it's because depression and marital problems are very common side effects of financial problems. We are here to provide each other with as much support as we can.

Folks, please get a grip! I have to admit that I normally read this board purely for entertainment value.

I don't find people's painful struggles with debt entertaining... I hope you don't either.

OK, rant over now. :-) And now I do have work to do!

Tanaquil
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Talking about florescent light bulbs. I converted 75% of my house with them. I just got an electric bill and it was $41.00. The last bill was $51.00. No understand I don't use the dryer and hang my clothes on racks, I don't turn on the any of the conventional lights, and have a blanket on my hot water heater. Those light bulbs really save money!

Catleen
Even if they do tend to look a bit funky.

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A woman posts looking for moral support and cash flow tips to service her $400K+ mortgage and suddenly the thread escalates to diagnose her with clinical depression and verging on divorce? Get real. Who among us is qualified to make that kind of judgement based on only a few paragraphs of text? Yes, there are real people behind these posts, BUT YOU DON'T REALLY KNOW THEM. Ease off.

People who have never dealt with depression may not realize this, but depression is far more common than most people think. I forget the statistics, but some staggering percentage of the population will suffer an episode at some time during their lives -- and the percentage is much higher for women (no one knows why). And many of those people will not realize that they are suffering from something that can be easily treated, because they think that "normal" people don't need treament for depression -- "normal" people should just be able to snap out of it , right?


I don't like it when people try to diagnose over the internet (since I've dealt with mental health issues all my life.) But, someone saying things like, "I'm never happy; my husband doesn't understand why I'm never happy," sure looks like a warning sign of depression. I don't mind the SUGGESTION that a person seek help that may be needed. If it IS only short-term anxiety, that's great! But, as Tanaquil is saying, many people that suffer from depression don't realize that that's what it is!!

Ishtar
(butt-in-ski!)



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>>Folks, please get a grip! I have to admit that I normally read this board purely for entertainment value. There's nothing like a bunch of unduly indignant debtors flaming over *the nerve* of their creditors to expect repayment to remind me of why I have always and will forever live beneath my means. (The thread of postings that the previous statement is sure to generate will no doubt provide much amusement for me in the days to come).<<

Fauve --> Thank you for your concern. I do take some of the postings with a grain of salt. I will take care of my physical well being even if I don't know how to handle my financial well being! If there is a physical problem, I do have health insurance and I will see a doctor if I feel I can't handle the stress. I appreciate all of the postings and I can see how some go off in a tangent, but it is all expected when I have hung myself out for all responses.

Anyway, thanks again for the concern.

FF

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I have never heard of a pre-payment penalty on a mortgage. In fact, it strikes me as constituting a predatory lending practice

Actually (and disturbingly), this is becoming common practice in the industry. BF is in said industry, and we ended up discussing pre-payment penalties just a few weeks ago. I remember thinking the exact same thoughts, but he assures me it's quite common. (We're in Chicago)

Definitely check into your state's predatory lending laws, but I think you're probably stuck as far as pre-payment penalities go.

Best of luck to you-
rmf
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I typically never post here, but enjoy lurking. I just couldn't let this slip by.

Total Income: 5900
1st Mortgage: 2812
2nd Mortgage: 922

Mortgage to TI: 63.3%!!!

You got screwed. By yourself...and the lender...

I would consider a lawsuit. I can't imagine what was going through your minds when you signed off on this. I'll grant you the tax break, but what happened to the ol' 25/36 ratios for mortgage loans? Plus the interest rate screams that your credit is not pristine. You need some professional help. (Not a slam, but time to lawyer up...)

DJ

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I typically never post here, but enjoy lurking. I just couldn't let this slip by.

Total Income: 5900
1st Mortgage: 2812
2nd Mortgage: 922

Mortgage to TI: 63.3%!!!

You got screwed. By yourself...and the lender...

I would consider a lawsuit. I can't imagine what was going through your minds when you signed off on this. I'll grant you the tax break, but what happened to the ol' 25/36 ratios for mortgage loans? Plus the interest rate screams that your credit is not pristine. You need some professional help. (Not a slam, but time to lawyer up...)

DJ


Great observation, and I can only imagine what the BACK RATIOS are?????????
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Folks, please get a grip! I have to admit that I normally read this board purely for entertainment value. There's nothing like a bunch of unduly indignant debtors flaming over *the nerve* of their creditors to expect repayment to remind me of why I have always and will forever live beneath my means. (The thread of postings that the previous statement is sure to generate will no doubt provide much amusement for me in the days to come).


Hmmm...I don't recall a bunch of "unduly indignant debtors flaming over the *nerve* of their creditors." I also noticed you only joined the fool this month. That is, of course, unless you are a certain troll that has to keep changing names in order to stay alive on the board.


Kim
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A woman posts looking for moral support and cash flow tips to service her $400K+ mortgage and suddenly the thread escalates to diagnose her with clinical depression and verging on divorce? Get real. Who among us is qualified to make that kind of judgement based on only a few paragraphs of text? Yes, there are real people behind these posts, BUT YOU DON'T REALLY KNOW THEM. Ease off.

This is certainly not the first time I've seen this kind of far-fetched meddling on this board (and most often it's the same posters over and over again - don't you ever work?)


Excellent advice, fauve!

Thanks for pointing out how easy it is to get carried away in threads. It's a good lesson for all of us.

Tony
...but I still am...

Off2Aruba

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Kim,

I was fixin' to post the same thoughts. I'm guessing troll.

FF....not to worry, if the poster is a troll....we'll "protect" you.

BTW, I'm fixin' to start a depression poll thread.
--Randy
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>>Total Income: 5900
>>1st Mortgage: 2812
>>2nd Mortgage: 922

>>Mortgage to TI: 63.3%!!!

>>You got screwed. By yourself...and the lender...

I know we got screwed! And I'm not too proud to say that we did it to ourselves! What I am more furious about is that the lender actually made us believe we could do it. In fact, before our old house sold, we wanted to make sure we were debt free going into this huge mortage, and that's when the 1st woman we spoke with said they could 'add' to the loan our exisitng debt. Then after our old house sold (no backing out) the builders lender (1st woman) quit and our loan was passed on to someone else who was then telling us that they could NOT 'add' on to the loan our existing debt! We have 2 kids and didn't feel like we had anywhere to live at that point! Not the best decision in the world. In fact we both felt very uneasy at the time of signing.

GGGRRR!! I am so angry that we got ourselves into this mess, but I have to focus on how to get out!

FF

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GGGRRR!! I am so angry that we got ourselves into this mess, but I have to focus on how to get out!

Yes, that's exactly what you have to do, and I'm sorry that people keep picking on you about buying that house.

You need to figure out *every* place you can cut expenses. Have you been to the LBYM board yet? Oh, for some EXTREME ideas on cutting expenses, go to the library and look up The Tightwad Gazette. Believe me, my ideas aren't extreme!

Ishtar
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<<BTW, I'm fixin' to start a depression poll thread.
--Randy>>

I'm for it! I've heard an informal theory that a higer than "average" percentage of internet users are on medication. We've heard from two posters already, and I make three. Sure, it's completely OT, but we've already got a built-in support group here. Why not make more use of it?

Greta
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Mortgage to TI: 63.3%!!!

I was thinking about this in my previous posts, but I din't want to re-state the obvious.

Bret
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"2) Consider trading in both cars for used models. Consider station wagons instead of SUVs or minivans"

If these people are buying a $400,000 home, I'm not sure they want to park a used station wagon in the driveway. Don't think the neighbors would be too happy.

If the original poster is truly concerned about money, they should go for a smaller house. Not sure how they were approved for a $400k home making less than $100k a year. They are trying to stretch their income to live at a level they can't support.

Best of luck, but I'm not sure they will want to change their life to fit their income.
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If the original poster is truly concerned about money, they should go for a smaller house. Not sure how they were approved for a $400k home making less than $100k a year. They are trying to stretch their income to live at a level they can't support.

They live in CA! *grin* I'm talking to a real estate agen that keeps telling me that I can get a loan for $50k more than I KNOW I can afford.

Ishtar

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If these people are buying a $400,000 home, I'm not sure they want to park a used station wagon in the driveway. Don't think the neighbors would be too happy.

In my opinion, the first step to financial security is to ignore "what the neighbors think".

I have a neighbor who is my polar opposite in many ways. I'm Pagan, she's Christian; I'm male, she's female; I have a wild overgrown backyard with lots of trees, she's cut down all her trees and treats her perfect grass with ChemLawn; I'm (relatively) young, she's elderly; I have weeds in my lawn, she doesn't; I have pets in the house, she wouldn't dream of it... you get the idea. I'm sure she's as appalled at the way I keep my backyard as I am at the way she keeps hers.

But neither of us is going to change to suit the other, and we get along fairly well.

"Freedom begins when you tell Mrs. Grundy to go fly a kite." -Robert A. Heinlein

Thanks,
El
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If these people are buying a $400,000 home, I'm not sure they want to park a used station wagon in the driveway. Don't think the neighbors would be too happy

So what? They have to do what they need to do for their finances. If the neighbors don;t like it, maybe the neighbors can chip in some money. Otherwise, what say do they have? It's not their driveway.
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"If these people are buying a $400,000 home, I'm not sure they want to park a used station wagon in the driveway. Don't think the neighbors would be too happy."



Anyone that is worried about what the neighbors think should get a life. Does anyone really care? We live in a very nice neighborhood, and when I see an expensive car I think "what a waste of money." I also don't care what my neighbors think since we have no debt, house paid in 5-10 years and drive used, paid for cars.

Maybe more people shouldn't care either. It doesn't matter if neighbor Joe has a big screen TV...if we can't pay cash, we don't need one. Of course, neighbor Joe has quite a bit of cc debt...

L

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Anyone that is worried about what the neighbors think should get a life.

___
They should vist the LBYM board to hear about ' Keeping up with the Jones'" and what that really means. Of Course If they stop over on the LBYM there neighbors will probably be even madder when there laundry is hanging in the back yard !!!

Ho-Lo
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Very Foolishly said! The problem is that too many of us, including our friends, family and acquaintances are not Foolish and we spend our time keeping up with the Joneses, or with neighbor Joe.
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If these people are buying a $400,000 home, I'm not sure they want to park a used station wagon in the driveway. Don't think the neighbors would be too happy.



I live in a neighborhood where houses sell in excess of a million dollars, and we park DH's 20+ year old truck in the driveway. Other driveways up here have things like Jaguars and Mercedes, but I figure it's no one else's business what type of vehicle I drive. If it's registered and roadworthy, then I can and will park it in the driveway. Oh, and DH is the plow guy for lots of these folks, so they do get services from the old truck.

I never worry about what my neighbors think about the things I have and I don't critique what they have. They get to spend their money however they want, and so do I. If they want to complain about it, then they can buy me the next vehicle or whatever, but until they are footing the bill for me, they can't complain and I don't take their opinions or feelings into consideration when I'm getting something for us.

But then, maybe it's that attitude where I spend my money how I choose that has us living in one of those houses in one of those neighborhoods without a massive mortgage or other debt and on one paycheck.
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>> . If it's registered and roadworthy, then I can and will park it in the driveway.

In the wealthy suburb that abuts my neighborhood, you'll be in court if you do. In that snooty little village, it's illegal to park any kind of truck in a driveway overnight.

I know one resident there who has a pickup, but he parks it out of sight in his fenced back yard.
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Actually, your math is just wrong and you didn't understand what they said. There's a difference between gross and net income. Lenders base their ratios on gross whereas you made the mistake of basing your numbers on their stated net income.



<<Original Message

Subject: Re: How do things get so out of control?
Author: DJWKLW     Date: 6/12/01 5:00 PM    Number: 75868
I typically never post here, but enjoy lurking. I just couldn't let this slip by.
Total Income: 5900
1st Mortgage: 2812
2nd Mortgage: 922
Mortgage to TI: 63.3%!!!
You got screwed. By yourself...and the lender...
I would consider a lawsuit. I can't imagine what was going through your minds when you signed off on this. I'll grant you the tax break, but what happened to the ol' 25/36 ratios for mortgage loans? Plus the interest rate screams that your credit is not pristine. You need some professional help. (Not a slam, but time to lawyer up...)>>


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