Another "need advice" subject - your input, please.

[Anonymous]

Anonymous wrote:Don't sell your house. That is stupid advice. You have a 2000 sf house in the suburbs worth $550k for a family of five. It is a reasonable house and renting would not be cheaper. First, you cannot sell without paying off the 2nd mtg. Second, the costs to sell and move could be $50k to $60k.

You are doing fine. Pay off the 2nd as soon as you can then refinance. Maybe your house will be worth $600k by then.

Key thing is controlling the spending going forward.

I agree. Keep the house. It's not huge for five people and not sure you'll do much better.

[Anonymous]

I want to say that I'm impressed at OP's ability to focus on an unpleasant topic and to be able to realize that things need to be done. It takes courage and a lot of hard work.

I think it's really smart to look at alternatives for the Jeep and to see if having less car debt frees up money to help accelerate payoff of other debts, obviously second mortgage and then I think it's really smart to look at your consumer debt and prioritize it by APR.

I do think you need to think about the percentage of return you are getting for savings compared to the percentage you are paying on debt. Anytime the savings return is LOWER than the APR of a debt, you are actually losing money on the savings. It's probably counter to your emotional stake in the savings (having an emergency savings account likely fills an emotional need), but it's worth considering in a very rational way if the extra $5K you want to put into the emergency savings is going to earn much less than you are paying out each month to creditors. I only say this because you indicated you have excellent job security; I would not say this advice to someone with less stable job prospects.

[Anonymous]

OP here, just an update on where we're at. No substantive updates, but I like to keep re-reading this from time to time to both remind myself for why we're at where we're at and to continue receiving the advice and excellent motivation from my awesome DCUMers here.

We are keeping both cars but will pay off the Honda by Dec 16 and the Jeep by April 17. We paid off all credit cards, so we lobbed off about 7500 back in Feb and March. So far we've paid an additional 3K on the second mortgage and are on track to pay that off in July 16. Will turn 401k back on to matching rates at that point. After that, the USAA 9K loan will be paid off in August 16 (it will be lower then, around 7K), the Honda in December, Jeep in April 2017, family loan in May 2017, the big USAA loan (25K by then) by September 2017, and the student loans (30k by then) in December 2017.

Phew. After the debt is gone we'll be both maxing out all retirement and savings and building a six month emergency fund, we should be there by June 2018 (at that point, we'll need about 33K, and we've already got 8K dedicated towards it) (of course who knows what will happen between now and then).

So, ideally, in July 2018, we'll be in a position to reevaluate what our next priorities will be. I've posted since then, here on DCUM, about whether to lob everything towards the remaining mortgage (which will take about five years, just before our eldest starts college) or balance between college savings and additional mortgage payments. Probably the latter, but we'll cross that bridge eventually.

Living on a budget, what an eye-opener. Kicking myself so hard for being so foolish for so long. Canceled cable, no more eating out, living very frugally.

When this debt is paid off, I will treat all of you here to first rounds, as my way of saying thanks for your advice and encouragement.

[Anonymous]

Anonymous wrote:OP here, just an update on where we're at. No substantive updates, but I like to keep re-reading this from time to time to both remind myself for why we're at where we're at and to continue receiving the advice and excellent motivation from my awesome DCUMers here.

We are keeping both cars but will pay off the Honda by Dec 16 and the Jeep by April 17. We paid off all credit cards, so we lobbed off about 7500 back in Feb and March. So far we've paid an additional 3K on the second mortgage and are on track to pay that off in July 16. Will turn 401k back on to matching rates at that point. After that, the USAA 9K loan will be paid off in August 16 (it will be lower then, around 7K), the Honda in December, Jeep in April 2017, family loan in May 2017, the big USAA loan (25K by then) by September 2017, and the student loans (30k by then) in December 2017.

Phew. After the debt is gone we'll be both maxing out all retirement and savings and building a six month emergency fund, we should be there by June 2018 (at that point, we'll need about 33K, and we've already got 8K dedicated towards it) (of course who knows what will happen between now and then).

So, ideally, in July 2018, we'll be in a position to reevaluate what our next priorities will be. I've posted since then, here on DCUM, about whether to lob everything towards the remaining mortgage (which will take about five years, just before our eldest starts college) or balance between college savings and additional mortgage payments. Probably the latter, but we'll cross that bridge eventually.

Living on a budget, what an eye-opener. Kicking myself so hard for being so foolish for so long. Canceled cable, no more eating out, living very frugally.

When this debt is paid off, I will treat all of you here to first rounds, as my way of saying thanks for your advice and encouragement.

OP, thanks for sharing. Keep up the good work and you'll get there in no time.

[Anonymous]

Thanks, PP. Part of me thinks, wow, three looooong years from now, this will take forever. Then I look back on three years ago, and how fast it went, and I know we can do this. Will never get ourselves in this hole again. Ever. God willing.

[Anonymous]

I still fail to understand why you have such expensive cars. I think you need to downgrade. Have you paid off your family member? You are right now missing out on TSP matching because you have stupid expensive cars and debt. Ugh.

[Anonymous]

Don't mean to be a killjoy, but OP seems to be counting down the debt, instead of eliminating debt. You chip away debt by either getting more income moonlighting, or reducing living expenses...no other way!

A lot can happen between now and July 2018 (career/job, health, family emergency, etc.) so I would still vote for downsizing to one family vehicle, selling the house and renting at least until kids hit college.

I would use that 100K 'college fund' (which is never enough for all your kids to go college on anyway) to finance the cost of selling and renting and that would free up some space for the short term. You could save much more by the time the kids get ready for college. With this approach, I can't see why you wouldn't fare much better by July 2018.

[Anonymous]

The expensive cars caught my eye right away. I know they give you that warm and fuzzy feeling that;s why you are not getting rid of them. Just hard to understand how they can be do warm and fuzzy that you are putting them ahead of your children's college money.

[Anonymous]

Lot of people get in debt in this area to impress with their house, cars, and what they have.

[Anonymous]

OP's update from 2017:

http://www.dcurbanmom.com/jforum/posts/list/15/641842.page#12781062

Hope we get a 2018 update.