Wait -- you have 12 months emergency funds and you are talking about selling your house? What about a job at Target or something?

I would probably take contributions out of my Roth IRA first. After that, I would sell the house for whatever I can get. Since you have a year of expenses saved, you have some time before you have to get serious and take these steps. I would cut your budget as much as possible right now. Maybe your emergency fund will actually last you longer than a year.

OP, Cobra is a very expensive way to have health insurance. If I were in your shoes I'd be researching other options, especially now with ACA. A job loss is a qualified status change that should allow you to seek new, cheaper coverage.

Figure out anything besides cashing out the 401K or selling the house at a discount. Both of those options will haunt you financially for the rest of your lives.

The Roth is OK, you only pay taxes on the interest earned so you can take out whatever you put in as principal. But even that is something you should only do in a pinch. Take a job at Best Buy, or cleaning houses or cutting lawns or childcare or walking dogs. Be creative.

If you really get to the point where you can't make the mortgage payments, then stay in the house and don't make the payments. You will be evicted eventually in several months but you can use the $3K that you will save per month for a nest egg to get an apartment. It would be better to do that than do a fire sale on the house (you may have to pay more to the mortgage company than you get from the sale, or if it's a short sale, you may have to pay income tax). And definitely do not touch the 401K! You are in your prime compounding years. Just leave it. It's not there. It's for you later when you are old and can't work, or disabled, or need it to survive when you are retired.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:And this, people, is why you don't tie up this much downpayment in your house when interest rates are at historic lows.

Op has a 12 month emergency fund. They'll be fine.

Op, if you're that concerned, perhaps you can set up a HELOC now, so it will give you some peace of mind, and a way to access your home's equity down the road. Also, maybe you could cut back on your expenses now, and start bulking up your emergency fund even more.

As PP pointed out, it will be difficult to set up a HELOC now that her husband does not have a job.

She said he'll have to look for a new job "soon". I took that to mean he was still currently employed.

Anonymous wrote:

Anonymous wrote:And this, people, is why you don't tie up this much downpayment in your house when interest rates are at historic lows.

Op has a 12 month emergency fund. They'll be fine.

Op, if you're that concerned, perhaps you can set up a HELOC now, so it will give you some peace of mind, and a way to access your home's equity down the road. Also, maybe you could cut back on your expenses now, and start bulking up your emergency fund even more.

As PP pointed out, it will be difficult to set up a HELOC now that her husband does not have a job.

Anonymous wrote:And this, people, is why you don't tie up this much downpayment in your house when interest rates are at historic lows.

Op has a 12 month emergency fund. They'll be fine.

Op, if you're that concerned, perhaps you can set up a HELOC now, so it will give you some peace of mind, and a way to access your home's equity down the road. Also, maybe you could cut back on your expenses now, and start bulking up your emergency fund even more.