Stuck! Need To Reduce Debt
My husband and I are approximately $150,000 in debt. This includes approximately $60,000 in credit card debt and we do not own a house. My husband currently has a steady salary, however, we are stuck. We tried to buy a house last year and were told that due to our debt to income ratio without any $ for a down payment, we could only be approved at a very high interest rate. We can't afford a huge down payment or huge monthly mortgage payment with our current monthly payments. We are current with all of our creditors. We want to pay off our debt, however, we would also like to buy a house now without having to wait an additional 5-10 years to pay down/off our debt. Any advice is greatly appreciated. Luv2bfit
if you want the house bad enough maybe you could change a few things in your lifestyle to start attacking the cc debt, get on a budget and stick to it then when you have extra money start attacking your cc debt begining with the smallest one first. do you have anything you could sell? like a boat, camper,motorcycle?
I would also try and set aside at least a $1,000 for an emergency fund and only use this for emergencys instead of cc
Thanks for the response. We made a bunch of bad investment decisions earlier in life that didn't pan out, and now we are paying for it (our spending habits didn't help either). We thought everything was going great until my husbands company last year in CO informed him that they were closing their doors. We have two fairly new vehicles that unfortunately are a big portion of our monthly payments. Our budget is stretched. Until our daughter's school is paid off in April, we cannot even spend an extra $1.00 towards our cc. We finally started a budget, however, it is very tight. Fortunately, we have a tax refund coming of about $4,000. We were planning on putting that aside for our savings. Unfortunately, we will be relocating again (due to job and health reasons). At that point, whereever we move, we want to buy. We're tired of renting and putting money into someone elses pocket. We were not very wise of the world when we married and lived life to the fullest. We've never owned our own home, and with two children need some stability. Is it impossible at this point to buy a decent home at a decent interest rate with little or no money down? Or am I only dreaming? Thanks again for your advice/suggestions. [ Edited by luv2bfit on Date 02/18/2004 ]
Dear uv2bfit,
I guess you had some great fun days and nights in the past couple of years
The property values are on the rise in Florida, therefore even if you buy at the higher interest rate, you will not make mistake but would enjoy possible appreciation that would most likely wash off higher rate and live you some extra. In the same time while you are looking for the right buy, I would also negotiate with the CC issuer maximally lower interest rates, nearing zero. ( bank do not like to heart that you might file bankruptcy). Lowering credit card payments should give you a cash flow relief that will help you make the house payments.
Hoe this works for you. Good Luck!
I see situations like yours everyday. If you do not want a high interest rate, you should put your credit cards in a safe and start one by one to pay them off. With more towards the principle. Do not close your credit cards just don't use them. Credit depth is is a great factor in mortgages
Lori
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You are not alone, so here comes a strong statement. "If you want to purchase a home you need to set priorities!" i.e. cars, dinner, lunches, dry cleaning, holiday shopping, etc.
This "hole" of debt was created over time and a quick fix is not attainable. Your family must begin with a firm thump!
Our suggestion is to sell one of the cars and carpool, use public transportation.
As for the credit cards, use your noodle and cosolidate to the lowest interest rate, then take that horrific credit card anchor and bury it behind grandma's house. Reduce the glarring expenses like: dining out, grocery shopping without a list, cash station visits, parties, new clothing, and expensive lunches.
Trust us, we (fellow investors) could find an extra $300 per month in nonsense lifestyle expenses. Lastly, find a poorer family and ask them how much their budget is every month for a reality check.
You are way over your head in debt, make a serious change before it is too late.
You can do it as a family!
Eric & Rosa
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