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This is just a question and advice seeking post about my current financial situation and the 2 options below. This is serious, not a troll. If some numbers below don't make sense, ask and I'll answer. If you have a suggestion for a 3rd option, I'm all ears. Current budget Condo Mortgage $671 Condo Maint $250 StudentLoans $180 Electric $145 Phone & Internet $95 Cell phone $110 TV $100 HealthInsurance $185 LifeInsurance $41 Childcare $750 Groceries $600 AutoGas/Repair $200 WifeSpending $200 HusbandSpending $200 Other/Medical $200 TOTAL MONTHLY EXPENSES = $3927 TOTAL COMBINED INCOME PER MONTH (TAKE-HOME) = $5984 CASH LEFT = $2057 Other irregular expenses Auto Ins $1500/year Home Ins $600/year DEBT Mortgage 92,375 current balance 5.75% interest rate 671 min payment Student Loans 32,747 current balance 6.8% interest rate 451 min payment (request to consolidate the 4 loans is in progress, which will reduce monthly min payment to 180/month for the first 2 years, then increase to 220 for 2 years, then gradually every 2 years etc.) Here are 2 options my family currently has about our future. What do you think? Option 1) - pay $2287 total per month towards student loan balance of 32,747 - Student Loan balance would be 0 on June 1st, 2013 (+1 year, 3 months) - then as of June 1st, 2013, pay $2287 extra towards mortgage - Mortgage balance would be 0 on April 1st, 2016 (+2 years, 10 months) - at this point child would have to go into current public school district kindergarten. not a fan of the C-rated school. or try to get into a magnet/university school which is selected by lottery of some kind/luck. or pay for private school. - if child in free (public or the university) school, we'd have $3358 left over after expenses every month, so we could save up 40k per year. - save 120k in 3 years and have enough for 20% down payment on 250k home with a lot left over for emergency fund and such. - after new 250k home purchase, rent out condo, income $6984, expenses $4239, leaving about $2745 per month for savings/retirement/paying down mortgage. - "disaster plan" budget if husband (higher income) lost job would equal about: income 4753, expenses 4239, so 514 left for savings. Result: Debt free in 4 years 1 month (APRIL 2016), while utilizing the $17k in savings to maintain irregular expenses/emergency fund. Comfortable budget after buying new home. Comfort knowing we could survive on 1 main income. Option 2) - borrow 15k from parents for a 5-year 1% interest loan ($256/month payments) - use current 17k in savings plus the loan from parents to buy home in the area of a $200k purchase price. 5% down, mortgage 190k, 14.5k needed at closing, plus lender wants a 6-month emergency fund to cover current condo mortgage (921 * 6 = $5526), meaning we'd have about 12k left after buying home to use towards repairs/upgrades/emergency fund. - rent condo for $1000/month - after new home purchase, expenses would be about $5946 per month and income including the rent income would be about $6984 per month, leaving us about $1038 to put towards savings/retirement - "disaster plan" budget if husband (higher income) lost job would equal about: income 4753, expenses 5096, so in the red $343 per month. Result: Have a nicer place to live in a better school district much quicker. Not enough to pay down debt any faster than the minimum, so have student loans and mortgages for the next 20-30 years. Tight budget month to month.
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| # ? Mar 5, 2012 04:57 |
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| # ? Jun 18, 2013 07:30 |
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Option one, If anything so you arn't taking a loan from family members. Not spending bajillions of dollars on interest is like a bonus.
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| # ? Mar 5, 2012 05:02 |
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Is this a joke? Option number one. No question.
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| # ? Mar 5, 2012 05:16 |
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Welcome back, zaurg. Look at option 1 again. Look at how beautiful that looks - being debt free in about 4 years. Look at it some more. Give it a snuggle. Call it names, buy it a pretty dress, get married to it. Go forth and have lots and lots of babies because option 1 is the most lovely plan of all. Option 2 isn't even an option. It's madness.
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| # ? Mar 5, 2012 07:05 |
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And people were wondering what we would do with CH being out of debt. Ask and ye shall receive, friends. Option 2 is what your wife wants I'm guessing? Because that's the option that looks like a disaster waiting to happen. Go with Option 1.
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| # ? Mar 5, 2012 07:17 |
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Cicero posted:Option 2 is what your wife wants I'm guessing? Because that's the option that looks like a disaster waiting to happen. Go with Option 1. How do you know, my friend. How do you know? Perhaps the previous long-rear end thread, I'm sure. You are correct. I love my wife. We have spent a good 8 years in this condo. She wanted to move on 2 years ago. Today I asked her for specific reasons. I was given: 1) to move into a better public school district 2) i hate we can't have people over 3) i hate the smell 4) i hate the stairs I agree with all 4. I think #1 we can either incorporate into our budget a private school, or get selected into a university/magnet school, or finally settle with a lower rated school during kindgeraten/1st grade. I think #2 & #3 are fixable. We spend a little cash and upgrade the carpet to wood. We also upgrade the master bedroom with a 1k bedroom set. If there is still a strange smell when we enter the home we hire a professional to eval the A/C as maybe that's where it's coming from. Also we sell the pool table and buy a nice dining room table with 6 chairs, then we can have people over for a dinner party. #4 isn't fixable. I just wanted to give people the understanding why option #2 would even been considered.
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| # ? Mar 5, 2012 07:50 |
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You can pay for private school with the current 750 you are using for daycare.
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| # ? Mar 5, 2012 08:28 |
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I don't think the budget in your OP is reasonable. Analyze your last 6 months of spending and I bet your closer to spending 4400/mo than you are 3900. Life with little kids is expensive. I just paid a bunch of money for portraits of my kids. I just have a 'MISC' line item in my budget for random stuff that pops up in life. This month its pictures. Next month might be a new tire or the 30K service on my car. The month after that might be A/C repair. MISC just covers non reoccurring expenditures that need to be made but don't make sense to budget for. Personally I would go with option 3. Find a happy medium between Option 1 and Option 2. Unless Mrs. Zaurg has changed, Option 1 looks good on paper but probably won't fly with her. Option 2 isn't a smart financial decision. I would find a way to get rid of the condo (renting it out is a bad idea), save 60K for your 20% down on the house and closing costs, and compromise on the options. I think you could do it in a 2 year timeframe. What's the Condo worth if you wanted to sell in the next 3 months?
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| # ? Mar 5, 2012 17:12 |
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skipdogg posted:I would find a way to get rid of the condo (renting it out is a bad idea), save 60K for your 20% down on the house and closing costs, and compromise on the options. I think you could do it in a 2 year timeframe. What's the Condo worth if you wanted to sell in the next 3 months? Thank you. I don't think it's possible to get rid of. I owe 92k and it's value is about 50k.
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| # ? Mar 5, 2012 17:50 |
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zaurg posted:Thank you. It's only worth 50K...but will rent for 1000 a month?
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| # ? Mar 5, 2012 17:53 |
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skipdogg posted:It's only worth 50K...but will rent for 1000 a month? Yes, they are renting in the $925 to $1100 range So we can change that to $925/month for a more conservative estimate
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| # ? Mar 5, 2012 18:42 |
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Ah, a new Zaurg thread. I am savoring this like a nice cup of hot tea. Question about the "possible renting of your condo", who is going to manage it? It costs to get a professional management company, and sometimes even those are hit-or-miss. If you plan to do it yourself, do you have a fix-it go-to guy in mind that you could call for last-minute repairs? I speak as a townhouse renter that it seems like many people who have a townhouse/condo think, "Oh we'll just rent it!" and never think there will be anything past that in repairs or adjustments.
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| # ? Mar 5, 2012 21:00 |
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Nether Postlude posted:Question about the "possible renting of your condo", who is going to manage it? It costs to get a professional management company, and sometimes even those are hit-or-miss. If you plan to do it yourself, do you have a fix-it go-to guy in mind that you could call for last-minute repairs? Manage it? Us, I guess. Hadn't planned that out. Wife says she has a co-worker who would rent from us for $1k/month and that's about the most planning done. Fix-it guy we definitely have.
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| # ? Mar 5, 2012 21:24 |
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I say option 1, but with the twist of ditching the condo once you find a home to live in.
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| # ? Mar 5, 2012 21:59 |
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quote:2) i hate we can't have people over And yeah smell seems like something that shouldn't be too hard to fix.
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| # ? Mar 5, 2012 22:12 |
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That smell is going to follow you, fyi
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| # ? Mar 5, 2012 22:39 |
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zaurg posted:2) i hate we can't have people over Cicero posted:Can you explain this one? She wants to be able to invite people over for dinner and we just have a horrible setup. Picture this... dining room & living room are carpeted. We do not have a dining room table, we have a 8' pool table in the dining room. Between the two rooms we have a fold up card table with some plastic patio chairs. In the living room we have a nice couch but no coffee table. So inviting people over for dinner means you are sitting at the small card table or sitting on the couch with a plate in your lap or using one of those fold up TV trays. That is all fixable. Sell the pool table. Replace with nice dining room table and chairs. Lighting is already there. Buy coffee table. Get rid of the card table. If we want to splurge, tear out the carpet and lay wood. Cicero posted:And yeah smell seems like something that shouldn't be too hard to fix. I don't know what it is.
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| # ? Mar 5, 2012 22:45 |
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zaurg posted:That is all fixable. Sell the pool table. Replace with nice dining room table and chairs. Lighting is already there. Buy coffee table. Get rid of the card table. If we want to splurge, tear out the carpet and lay wood. I don't know much about grown-up furniture or real estate, but I think that would be cheaper than a new house. Welcome back, zaurg.
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| # ? Mar 5, 2012 22:59 |
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zaurg posted:She wants to be able to invite people over for dinner and we just have a horrible setup. What does it smell like? Mould (water damage, carpet)? Death (animal in the wall)? Neighbors? Do you have forced air (mouldy filters, water source in the ducts)? Your reasons to move suck. Stick with option 1 and deal with your condo's problems instead of trying to run from them. No one is going to want to rent it if it's ugly and stinks (anyone that does will likely trash it further). Clean your condo out of all the poo poo that you don't need or use. All of it. Tear down ugly wallpaper, tear up gross carpet, do all the grunt work yourself. Then just book a day to get someone in to replace the flooring in one go. Then paint and do all the other work yourself. Scrub the walls, scrub the grout, just do something.
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| # ? Mar 5, 2012 23:20 |
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I was an idiot who bought a home in 2006 and just now have paid down the mortgage to where it is worth. I got married last year, and the wife wanted a bigger home, etc but the costs to sell the current one, move, and furnish a new home were just too much. Thankfully, she's understanding and willing to be patient. The perfect bachelor's home was not the perfect newlywed's home. The wife and I got creative. We got rid of my huge desk in the spare room and bought a smaller one and a book case. We put a TV up and bought a chair-and-a-half with an ottoman. Now the small spare room is usable as an office space for me, and a study place for her. The guest room was necessary since we have out-of-town visitors a few times a year, but they were cramped and uncomfortable. We bought a bed that has storage underneath, repainted the room, installed a ceiling fan, and mounted a flatscreen on the wall. Now the guest room has extra space for guests, and we can use more of the closet for storage. We put a new dining room table in that has less overall depth, but fits the wall better next to the kitchen. That opened up some valuable real estate in the main area (the living room and dining area are right next to each other with no separation). All of this was done with "extra" money (bonuses at work, gift cards, tax refunds). It took some elbow grease and planning, but now that it's done we are so much happier just living here. I didn't buy the ideal house, but using the space intelligently has made it much more comfortable while she finishes nursing school. We're planning on having the house paid off by the time she gets her Masters, and then we can start looking at a new place to grow our family. It is much cheaper to take what you already have and put a little money into it (not tens of thousands) than to buy a new home. MUCH cheaper.
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| # ? Mar 6, 2012 14:54 |
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Hey Zaurg, I've missed you  I don't really have anything of importance to add other than that being debt-free is a drat good feeling and you should try it out. 
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| # ? Mar 6, 2012 15:08 |
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From what I've been told most private schools are either on par or worse than the public ones and you only want your kid to attend private school for Kindergarten and first grade? What's the big deal just put the kid in public school and supplement their education at home. Unless you live like in the inner city or something but I'm going to bet even those schools (considering we're talking about kindergarten/first grade) aren't as bad as people make them out to be.
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| # ? Mar 6, 2012 16:23 |
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I can't imagine buying a second property when the first one is so far underwater. Do you live in a recourse state? Strategic default, three years renting a house in the school district you want, then purchase or continued renting looks pretty good as option 3.
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| # ? Mar 6, 2012 16:27 |
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^I suggested this for myself once, I think it's a good idea but be prepared for an onslaught of "But it's your responsibility to pay off that debt!!!!" from some goons. Also glad to see you're back Zaurg. Man this OP looks way more promising (in a good way) than your last one, good luck!
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| # ? Mar 6, 2012 16:31 |
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Elephanthead posted:I can't imagine buying a second property when the first one is so far underwater. Do you live in a recourse state? Strategic default, three years renting a house in the school district you want, then purchase or continued renting looks pretty good as option 3. Florida is non-recourse, and walking away at this point would be the logical thing to do. However, this does not factor in Zwife.
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| # ? Mar 6, 2012 16:54 |
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Orange_Lazarus posted:"But it's your responsibility to pay off that debt!!!!" from some goons. I disagree with this sentiment. If the law allows you to abandon ship, and that is the best option for your family's future, by all means do it. It may hurt your pride, it may piss people off, but the ends will absolutely justify the means.
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| # ? Mar 6, 2012 16:56 |
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archangelwar posted:Florida is non-recourse, and walking away at this point would be the logical thing to do. However, this does not factor in Zwife. You sure about this? Everything I searched said the opposite.
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| # ? Mar 6, 2012 18:04 |
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zaurg posted:You sure about this? Everything I searched said the opposite. http://abcnews.go.com/blogs/headlin...ecourse-states/ Use this information at your own risk though, I am having trouble finding a source I trust.
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| # ? Mar 6, 2012 18:45 |
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CornHolio posted:I disagree with this sentiment. If the law allows you to abandon ship, and that is the best option for your family's future, by all means do it. Anyone who has a moral or ethical problem with strategically defaulting should read this article: http://www.newyorker.com/talk/finan...talk_surowiecki
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| # ? Mar 6, 2012 19:18 |
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zaurg posted:Yes, they are renting in the $925 to $1100 range A condo that sells for 50K and rents out for $925/month that you have a renter for? I may unironically buy your condo
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| # ? Mar 6, 2012 20:23 |
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Orange_Lazarus posted:From what I've been told most private schools are either on par or worse than the public ones and you only want your kid to attend private school for Kindergarten and first grade? What's the big deal just put the kid in public school and supplement their education at home. I actually don't want to pay for private school, would rather she go to a "good" public school. Where we're living now the public elementary school has declined from A-rating to C-rating over the past 3 years. I don't think that's a good sign. Also the school is 86% minority... I'd rather the school population reflect real life so I prefer seeing the school A-rated and minority in the 30-50% range.
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| # ? Mar 7, 2012 01:19 |
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Ran the numbers a billion times the other night as wife convinced me option #2 was ok, and somehow my analysis showed a better outcome after a 5-year span (in respect to level of debt, level of savings, and the fact that we'd have the house & condo)... so I finally agreed to option #2. Offer on a 4/2 1650sq ft home has been accepted, closing will be in a few weeks. Everyone asked today if I "was excited" and no, no I'm not. I just kind of have this sickly dread feeling today that I've just secured the rest of my life to paying off debt with little chance of having enough savings to actually put enough money into retirement and no chance of having enough disposable savings to do things like go on nice vacations and such.
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| # ? Mar 11, 2012 04:42 |
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Thank you Z-wife, we were scared this thread might not be going places. Welcome back, zaurg.
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| # ? Mar 11, 2012 05:46 |
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zaurg posted:Ran the numbers a billion times the other night as wife convinced me option #2 was ok, and somehow my analysis showed a better outcome after a 5-year span (in respect to level of debt, level of savings, and the fact that we'd have the house & condo)... so I finally agreed to option #2. Offer on a 4/2 1650sq ft home has been accepted, closing will be in a few weeks. Glad you did it, cant have the kids going to school with them minorities for a few years! Never change zaurg...except please do while it's not too late.
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| # ? Mar 11, 2012 08:33 |
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Holy loving poo poo.
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| # ? Mar 11, 2012 08:45 |
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I really missed you zaurg. For a while there I was scared you'd finally gotten your poo poo together and BFC would never be as entertaining again, but I guess I underestimated the persuasive powers of zwife when she gets a crazy idea.Gogey posted:Glad you did it, cant have the kids going to school with them minorities for a few years! He just bought a new house... I'm gonna say it's too late.
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| # ? Mar 11, 2012 10:20 |
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zaurg posted:
So basically only the possible rent from the smelly, upside-down condo in a bad district stands between you and literally living paycheck-to-paycheck as long as no unexpected expenses arise in a family that has a small child.  Oh, and you haven't seemed to factor in the maintenance costs of being a landlord into your budget. Because that pushes you into 'spending more than you earn even if your budget works out exactly right and nothing unexpected happens ever ever ever' territory whenever your condo is unoccupied. How good's your health insurance?
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| # ? Mar 11, 2012 11:03 |
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I'll play devil's advocate: in a vacuum, this is probably the best option (except for filing bankruptcy lol). He's buying at or close to the bottom of the market using a 1% loan for the down payment and at very low rates for the rest. His existing condo is poo poo, but miraculously, it now makes no sense to sell it or walk away because he has a renter for it and it'll somehow turn a profit. Five years ago, given the same set of facts, BFC would be all over this exact hypo as a solid leverage play, but because we're in a recession (except we're not) and housing is doomed to remain flat for a long time (Warren Buffett is betting billions that you're wrong) it's a terrible investment. He's right, though; the numbers make sense. It'll take longer to debt free status, but if housing prices increase at all, it could potentially be worth hundreds of thousands. Now here's why that was totally devil's advocate and zaurg is doomed: -this depends on the renter wanting to stay in a condo that smells like poo poo; -this depends on them sticking to a budget for several years to come; -this depends on nothing huge going wrong (which is standard) and more importantly, them not making any other major purchases (lol) Yeah he's screwed.
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| # ? Mar 11, 2012 11:13 |
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Seriously, though, if there's any bright side to this at all it's that he has a 50k condo that rents for $1K a month. If I lived in his area I really would be going crazy trying to buy as many of these as possible, because that's ridiculously unsustainable; either prices will rebound sooner rather than later, slumlords in his area will make tens of millions, or both. zaurg, wanna sell your condo? 
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| # ? Mar 11, 2012 11:18 |
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| # ? Jun 18, 2013 07:30 |
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cowofwar posted:You and your wife could easily do a lot of work on your condo yourselves and not only improve your living conditions but also improve the resale value of your condo. Replacing the carpet will help with the smell even if it isn't the source - carpet absorbs and releases odours. Please answer this question, Zaurg. Depending on what the smell's source is, your house insurance might cover it. I say this with only anecdotal evidence to back me up - a buddy of mine had black mold in her house and the clean-up was covered by her insurance.
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| # ? Mar 11, 2012 15:27 |
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