It’s the Great Pumpkin, Charlie Brown
I’ve been watching that show “Til Debt Do Us Part” for the last couple of weeks. Have y’all seen it?
Basically, this woman comes in and fine tunes a couple’s finances. She figures out how they can get out of debt within a couple of years, and shows them how far into debt they’ll be if they don’t change. It’s pretty cool, actually.
It inspires me. It makes me fired up for financial change!
Right up until that means I can’t go shopping anymore, that is. 
Finances are a huge source of stress for me. 99% of that comes from the fact that I don’t work so I bring in very little, yet because of me (my kids) I’m spending lots. The imbalance weighs on me.
I’m leaving out all of the “it was his choice, blah blah blah” because that’s not where this is going. Where it’s going is in my motivation for wanting to make smart financial decisions.
When the money belt gets tight, I feel the responsibility for it. For all of my attempts to keep the grocery bill low, I can blow the whole deal by ordering pizza or having a “Grandma moment” in the toy aisle. Or Am’s braces (which she got off, btw. Teeth look awesome), the coming Accutane treatments, someone needs bras or socks or underwear or school supplies or lunch money, or it’s picture time or it’s yearbook time or .. gads… it’s an endless list.
Having it broken down into a pie chart, according to the show’s recommendations of how a monthly budget should work, it not only makes it easy to see where we are overspending, it eased my mind tremendously to see that I’m within budget on things like groceries.
Of your monthly net pay, she recommends this: Housing: 35%, Debt: 15%, Life: 25%, Transportation, 15%, Savings 10%.
I’m still trying to figure out where some of the bills fall on that chart. Like medical bills, for instance, are they life or debt? (the “life” category includes everything from groceries, to gadgets to entertainment.) And does car insurance go in transportation? Do utility bills fall in the housing category?
Anyway, we’re revamping the budget and we’re committed to making some sacrifices and some changes. A lot of it will be easy for us. We do not do credit cards so that’s not going to be a problem. We don’t really have expensive hobbies to sacrifice or entertainment costs to cut. We’re pretty content little homebodies.
Some of it is little things- like, by making some slight changes to our cell phone plan, which on the surface means increasing our cell phone bill, we can eliminate the house phone and end up spending less. To the tune of about $50 a month, actually. Cancelling the boy’s WoW account that he hardly plays anymore saves another $15. Cancelling AOL since Master’s travel schedule has been drastically reduced saves another $25.
Little things add up.
So why am I telling you all this anyway? As if you care about my monthly budget!
Where it gets tricky for me is big things. Surely someone reading this will have a working knowledge of the real estate market and what that means in the banking/credit world.
Here’s my question:
We has a house. Only we don’t live in it.
Long story short, we moved here and are now renting out the old house and we’re waffling on keeping it as a rental property or selling it and being done with it.
The pros and cons that my ignorant self has are as follows:
Pros for selling:
1. It’s extremely unlikely that we’ll ever move back that way. Which means we should buy a house here. Having multiple home loans in this economy scares me rotten.
2. It makes me very nervous to be so far away from it (4 hours) and have it rented out to strangers. We can’t observe what they may or may not be doing to it.
3. It is a constant source of stress, thinking about how, if something big did go wrong with it, it could potentially sink us. As landlords, we’d be required to fix it, no? (we’ve already had the furnace repair guy out there twice this winter. And at least one of those was the renter’s negligence.)
4. What we’d make as a profit by selling, we could use as a down payment on a house here.
5. It just scares me to have it sitting there. It seems like a huge liability.
Cons:
1. Our payment history on that mortgage is perfect.
2. I’m sure the house could be used as collateral or.. something.. whatever.
3. The rent payment, even though it only covers the mortgage and taxes, does count as extra income (I think) if we were to apply for another mortgage.
4. We *might* move back there someday. Who knows. Nothing is certain in this economy.
5. I have no idea whatsoever of the housing market. None. It makes zero sense to me.
6. I’m sure we’d have to do some fixing up in order to get out of it what it’s worth and I absolutely do not want to do that. At all.
Probably those aren’t even the right pros and cons. I just don’t even know what to do.
So why that silly title that has nothing to do with the post?
Hee.
~me
Uncategorized | kaya | 
January 12, 2010 8:01 am
If you’re looking for sound financial advice, I highly suggest Dave Ramsey. He has a website, books, a radio program, an internet radio program and I think a television program. His financial “get out of debt” program is called Financial Peace University. Many times Churches will have classes that you can attend (or you can just listen to his show and read the books – it’s not one of those spend lot’s of money to save money kind of things)
He’s an awesomely down to earth guy and gives very practical advice about the big things. His program uses what he calls the “debt snowball” method, which, used correctly has gotten couples COMPLETELY out of debt – credit cards, house payments, car payments – in a matter of years, rather than a lifetime.
If nothing else, try to catch his friday show either online or on the radio. It’s the day that he has people call in and they get to scream “I’m/we’re debt free!” He asks them how much debt they cleared, what their income was and how long it took them to do it. It’s very moving and motivational. People call in to the radio show asking questions just like the one that you asked about your rental property all the time. He breaks it down for them and tells them what he’d do, and why it’s more beneficial for them to do it one way or the other.
It’s good stuff.
I will check him out. I’m curious to see how much his advice differs from Gloria’s.
I too think Dave Ramsey is great. His website,daveramsey.com, also has has some nice, free, software that might help you.
Please don’t sell yourself short. (No pun.) You are the glue that holds your family together and a great role model for your children. A stay at home mother and wife adds more than money can buy to the family.
I enjoy your blog very much. Thanks.
tavia
Hi Kaya!
I sell real estate in Georgia, so take this advice how you will.
Before you make any decisions on selling or not based on what you *think* having the other house is going to look like to the bank for collateral as a new loan, talk to an experienced loan officer in your area.
Typically, unless you have two years of rental history under your belt, the bank is not going to look at your having a secondary house as a asset right now – it’s a liability since you may end up having to handle both mortgage payments and foreclosures are so rampant.
Also, get a referral for a good real estate agent where the home is located and ask them for a realistic assessment of what the home would sell for. They can give you statistics on what homes are selling for, how many homes are selling each month in the area and what you would have to fix (or not) in order to be competitive on the real estate market.
Loan officers and real estate agents don’t charge for these consultations, and should already be able to answer these basic questions for you in about 15 minutes.
I ALWAYS feel like I make better decisions and worry less over things when I have hard facts to help me get the whole picture.
Good luck!
“it’s a liability since you may end up having to handle both mortgage payments and foreclosures are so rampant.”
Yeah. That is exactly my fear.
Thanks! I’ll make some calls.
+1 for Dave Ramsey…
Call or write into the show to see if you can get a personal answer from Dave.
Your vote is duly noted.
Yeah, Master listens to Dave Ramsey in the car when we go on his work trips. He is pretty smart about getting your finances straightened out. We are fans!
[rq=1837476,0,blog][/rq]Challenges, shopping, cooking, and crosswords. Oh, and sex.
I’ve got to check that Ramsey-guy out.
I’d say sell the house. Srsly. Because what you may end up paying to repair water damage, pipes, walls, roof… it’s *a lot* of money. You don’t need the stress, so get rid of it.
I’d also suggest you start couponing, join something like “The Grocery Game”, and stockpile. Buy when cheap, buy in large quantities, and stockpile. Toiletpaper wont go bad. Neither will toothbrushes or plasters. Look at what dry or canned goods you buy a lot and buy them when they’re on sale.
I’m staying within budget on groceries.
Coupons have never really been a particular money saver for me because I hardly ever buy brand names items. And even with double-coupon days, generic is usually cheaper still.
I’ll stock up within reason, though.
Heee. I stockpile incase of Shit Hits The Fan, for three adults (there’s only two of us, but if SHTF, I might end up preggers and, yanno, pregnant women EAT). It includes things like 180lbs of dry beans and legumes. O.o Though I’m not up to that much just yet..
On a side note, how’s Jes and her reconstructive surgery? And…. WTF did the doc DO?! I’m still pissed about that, for real. (Perhaps I needz life, yes, no?)
While I’m a big of fan of generics, coupons have saved me a ton of money. For example:
– I recently got 40 cans of chicken broth and 20 bags of frozen vegetables for a combined total of $4. When my grocery store had good sales on the above products, I bought coupons for them off eBay for $4. The coupons arrived in the mail before the sale ended (I could have gotten a raincheck if they didn’t). The food was free after sale price and double coupons. I’m also more than stocked up on both products to last until the next sale, ensuring that I won’t need to pay full price again.
– Today I got four canisters of Quaker Oatmeal for free thanks to coupons I printed off the internet.
– I also recently got two large bottles of brand name lotion for free thanks to a sale + one coupon.
I could go on, but my point is that even a generic-loving, picky eater like me can still find a way to use coupons to save money. I highly recommend that you check out http://www.afullcup.com. Go to the forum there and look for your favorite grocery store. They usually have sales + coupon match ups to maximize your savings.
I use pear budget to handle our household expenses. There’s a free spreadsheet. It helps me a lot.
I buy my dry goods (flour, sugar, salt, etc) in bulk from the bulk bins at the grocery store. It’s usually fresher because it has to be refilled constantly and it’s not as expensive as branded packaged stuff and I can buy just what I need.
I don’t use a lot of coupons because I’m not usually buying national brand items.
My income is sporadic because I just sell my art. I’ve been thinking about and am allowed to take a job, but I haven’t done it yet because I haven’t found one that fits my life to a degree that he wouldn’t be upset about the fact that I’m not at home.
Your medical bills should have their own category in my opinion. Every budget I’ve ever used has had medical in its own category to the tune of 5-8% a month. Anyway, check out pearbudget.
It’s free.
[rq=1830803,0,blog][/rq]Spam is a delicacy in Russia
I’ll have to check out pear budget.
I have not seen bulk bins of dry goods like you’re talking about. I wonder if that’s just not something they do up here. Maybe they do at specialty stores or something. Another thing for me to check into.
I agree with you on the medical bills, because, really we have a lot of them. They need their own category.
We also have “label free” stores where the stuff just doesn’t have a label. It comes to the stores without a label and they just have a stack of cans and a sign that says “Dole Peaches” or whatever and you use a sharpie marker to write what it is on the can
The cans are like 10 cents each without the label.
I don’t know if they do that anywhere else, either.
Oh, and bakery stores for bread so that the loaves of commercially baked bread are like 50 cents?
[rq=1832272,0,blog][/rq]How Not To Mail A Package
Hey Kaya – Sorry, I can’t help with the real estate question but something that I have really benefited from is using a website called http://www.mint.com. This website gives you a snapshot of all your accounts (bank accounts, investments, credit cards, etc.) in one spot. It has graphs to show different things like networth, debt to credit ratios, your spending habits compared to other people (different ciites), pie charts depicting your monthly/yearly spending, etc. It also has a budgeting tool. It is really cool. I love it! It really helps to keep our finances “in our face” and handy. Being aware of what you have and where you are spending is half of the battle to cutting back.
I actually came to comment just to recommend mint.com as well, so I second girlandhercat’s post
Mint creates a budget on its own at first, but you can tweak it however you’d like, change categories, or whatever you want. It also helps as an overview of all of your accounts.
here’s another emerging nation to hear from, while i don’t have the nitty gritty of your finances, gut instinct says keep it – why? it sounds like you have equity in it, you have probably lost some equity as well in the past 2 years.( I am assuming you have a “normal mortgage”, keep it.) With foreclosures increasing, for those that do not move back home with mom and dad that means the rental market is getting better, which means you can get more for your rental property, depending on the area. You may want to think about enlisting the aid of a real estate agent to act as an agent on your behalf for the rental, of course they take on a commission but to keep an eye on the property. I am sorta assuming that right now you have fairly good renters as I don’t recall reading anything to indicate otherwise. And finally, never say never. It is always good to know that you have a place to go back to. If you don’t have credit card debt you are WAY AHEAD of the curve and should pat yourself on the back for that one! Again, opinions are like assholes we all have one…and having limited info to work with that’s my opinion.
simplyfem
cfp/cfo/cpa
I don’t have time to leave a detailed response right now, but I just wanted to chime in and point out that selling the house will not in any way erase your perfect payment history.
You could see about negotiating a rent-to-own deal with the people living there? Otherwise, though, I’d say to keep it. In this particular market(ha!), there aren’t many buyers, and you could spend a fortune just trying to sell it, while no one’s even thinking of buying a house right now.
i am in the same situation with a house i have been renting for over a year. i am still trying to figure our best course of action but i can tell you from my experience i wish i would have just sold it. It is becoming more of a pain in the ass to rent then to have sold and paid off some debts (and reap benefits of being able to live better month to month NOW)…
[rq=1842569,0,blog][/rq]TMI Tuesday 1/12/10