When we first bought our house for $370k, my husband and I had great savings and were in a decent place financially. This was almost 4 years ago.
Fast forward two layoffs, a death in the family that caused us to have to help with a relative, a major car repair, major dental work, a kid who had brain surgery and a kid about to graduate, plus the state of the world and we’re in bad shape. We have new jobs but I’m making less than I was before including significant bonuses. I’m also in office everyday as opposed to fully remote.
In short, our savings have been drained and we can cover bills but not on time, all of the time. I want to sell our house. Our mortgage is $2900 a month, including escrow payments. We would save several hundred dollars per month if we moved. Part of me thinks it’s short sighted and rent for a 4 bedroom is going to be as high or higher.
We had repairs planned to the house, like we need gutters and soffits but I don’t know where that money is coming from. If we sell, we may break even. What do you do when your finances drastically change? I can’t keep being late on payments.
Suddenly House Poor and Struggling
byu/Mundane_Sprinkles234 inpersonalfinance
Posted by Mundane_Sprinkles234
15 Comments
Post your budget.
Budgeting: https://www.reddit.com/r/personalfinance/wiki/budgeting
“Our mortgage is $2900 a month, including escrow payments. We would save several hundred dollars per month if we moved. Part of me thinks it’s short sighted and rent for a 4 bedroom is going to be as high or higher.”
I’m not following. How can you save several hundred dollars a month if you move, if renting costs the same or higher?
Not to mention that currently, part of your monthly payment is going towards the equity in the house, while renting it goes to nothing.
You could rent a room out to an older lady once your kid moves out, just a thought.
>What do you do when your finances drastically change?
You reassess and make changes as needed. One of the assessments you must make is if you can afford your house or not.
>we can cover bills but not on time, all of the time
If you can’t reduce your bills sufficiently, it sounds like you can no longer afford your house. You might need to find a place you can afford.
>If we sell, we may break even
Even after 4 years? Where I live, house prices have gone up significantly.
Post your incomes and all of your bills. With two incomes you should be able to make it work.
Assuming $100k income (two adults making $50k), that’s $6k/month after taxes. $3100/month after the house payment. Where is the rest of the money going?
>Part of me thinks it’s short sighted and rent for a 4 bedroom is going to be as high or higher.
Just chiming in to ask what’s preventing you from getting intel on this now? I appreciate how stressful your situation is, but it seems you’d resolve a lot of this by looking to see what homes are renting for in your desired area(s).
whats your combined income?
go through your entire budget and your normal spending habits and drastically reduce those.
track every last dollar. cut back all of your un-necessary expenses.
No more going into gas stations, No more eating from restaurants, No drinks out, No more delivery anything, no more buying snacks, sweets or treats.
No more spending money on hobbies or shopping trips.
no more going out for entertainment or gatherings unless its completetly free.
cancel cable and all monthly subscriptions like Netflix, disney+ etc.
your Not working from home any longer, so you don’t need internet at home, the internet searching you need to do can be done on your cell phones. possibly look into cheaper cell phone plans/companies instead of AT&T or Verizon.
meals need to be cooked at home using cheaper bulk ingredients, with leftovers taken to work for lunches. no more buying coffee, bring it from home.
basically stop buying Everything unless you need it to stay alive.
if you two have any vices at all: Tobacco, Booze, drugs, gambling, that ends Now. (cut it in half now and in half again in a 2-3 weeks, if you can quit cold turkey.
start/keep looking for another job that pays better. one of you might have to get a second part time job.
the one that’s about to graduate needs to get a Full time job after HS graduation to support themselves, if they are not going to college but will be living at home they should be paying you a token amount of rent. $200-$300 a month.
if you have an extra vehicle, sell it to save money by Not paying insurance on it.
if you have medical debt, talk to them and tell them you need to pay less each month, pay $1 month to the medical bills, seek out help from the hospital to pay off those, often they know rich people that help by paying off medical debts to those in need, esp if its a child.
you need to get out in front of your bills, paying late causes late fees which cost even more money & put you farther behind.
you get the idea. its Not easy and you and your spouse will have to agree to not waste a single penny for the next year or 2.
go to the local food shelf, churches food pantry, etc take whatever free food you can get and plan meals around that, buying as little as possible to make a decent meal.
dont be prideful, ask for and take help from others, you can pay it back or pay it forward in a couple years
Saving several hundred per month sounds great, but there are serious costs that come along with a house transaction and a move.
In the short term, incurring these costs may make your situation worse, and in the long term may wish you kept the house.
Agree with the chorus that a detailed budget is needed to help chart a good course.
Do you live in Florida or what? 370k 4 years ago should have been around 4%, so the math ain’t mathing. Your escrow payment is massive if this is all true.
There’s no way a 4 bedroom in your desired neighborhood (because of kids schools?) is going to be less than $2900/month.
Not knowing all details, if you can downsize a bit, say instead of a 4 bedroom house, go with 3 bedroom apartment. I would rent out the house , and rent a smaller place for about a $1000 less
Use the rent income to ‘cover the mortgage’ and then some left over. And then you have your new job salaries to cover the rent on the new place. You will feel a little more liquid.
I think home ownership is important. Paying a mortgage is an investment to the future , rather than sunk cost. If you haven’t owned it that long, I would try to keep it as much as possible because of all the closing costs you will be disappointed by the final amount you receive.
>>if we sell, we may break even
Then you have to spend less and earn more. You have a cash flow problem, and selling your home won’t fix that- even if you could get equity, which is not the case. Another part time job may be needed to fill the shortfall.
Fixing your gutters and soffits is doable by people with a moderate skill set (can you hold something and hit a nail with a hammer at the same time?). It might be worth looking into DIY solutions for things around the house. It will save you a *ton* of money.
If you haven’t, check what rates you can get if you refinance. I haven’t run the numbers, but your mortgage sounds a little high. Might be able to free up a little bit by refinancing.
Depends entirely what your income is, but sounds like the house is too expensive for your income level