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Old 06-14-2018, 07:10 AM
 
12,404 posts, read 9,199,643 times
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Quote:
Originally Posted by LifeIsGood01 View Post
Why not buy a smaller house? Renting is throwing money away.
Interest is throwing money away too.
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Old 06-14-2018, 09:41 AM
 
3,538 posts, read 1,988,790 times
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Quote:
Originally Posted by veuvegirl View Post
My husband was unemployed all last year and we racked up a lot of credit card debt. The good news, he finally has a great paying job.

Now however, crawling out of this hole seems impossible. We own a house in a strong market. The house is way too big for us, and the mortgage payment is high. We could sell, pay off all of our debts, move to a smaller rental house.

The answer seems obvious, but I am waffling back and forth. I love the house, but have so much pressure not having any savings.
You've answered the question for yourself... Take the equity, downsize, payoff any high interest rate debt balances.
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Old 06-14-2018, 09:59 AM
 
Location: Florida
4,379 posts, read 2,426,594 times
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We sold our house and moved to a condo in 1987, never regretted it. Seven days after we paid off the mortgage I retired.

Renting is like flushing money down the toilet.
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Old 06-16-2018, 09:03 PM
Status: "Career Changer" (set 2 days ago)
 
1,020 posts, read 290,055 times
Reputation: 1359
First, find out if your house is above water. Is the value of your house significantly above your mortgage? If yes, you're in a good place to do the next calculation.

What's larger?

Your mortgage payment + utilities + maintenance/repairs per year

or

Your rent payment + utilities not covered in rent per year

Is there a positive difference? Then calculate a monthly amount for this difference by dividing by 12.

Calculate the cost of moving, divide it by that difference above to see how long it takes to break even.

Then make the decision. How long does it take to break even? How long is too long?

Also, take into account that rents will go up, because property taxes will go up. Usually owners don't appeal their property taxes and those go up guaranteed.

Then there's the other decision: Own a smaller residence - condo, see how the numbers run on that every month versus renting.
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Old 06-21-2018, 09:30 AM
 
Location: Oceanside, CA
1,738 posts, read 827,032 times
Reputation: 3894
Quote:
Originally Posted by veuvegirl View Post
My husband was unemployed all last year and we racked up a lot of credit card debt. The good news, he finally has a great paying job.

Now however, crawling out of this hole seems impossible. We own a house in a strong market. The house is way too big for us, and the mortgage payment is high. We could sell, pay off all of our debts, move to a smaller rental house.

The answer seems obvious, but I am waffling back and forth. I love the house, but have so much pressure not having any savings.
Selling the house won't help you a bit if, the next time you experience a downturn, you turn to credit cards again.

The obvious answer is to use a program like Dave Ramsey's to get that debt retired, get the house paid off, build savings, and really prepare for the future; not to apply a Band-Aid today. Otherwise, you'll wind up back in debt and face the prospect of paying ever-higher rents for the rest of your life.
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Old 06-21-2018, 09:32 AM
 
Location: Oceanside, CA
1,738 posts, read 827,032 times
Reputation: 3894
Quote:
Originally Posted by ncole1 View Post
Interest is throwing money away too.
No, it isn't. It's the cost of borrowing. It also comes to an end one day if you pay off your loan... rents will only ever go up.
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Old 06-21-2018, 01:39 PM
 
16,491 posts, read 17,513,441 times
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Quote:
Originally Posted by ncole1 View Post
Interest is throwing money away too.
Not really. Itís deductible for one. And you can beat or cheat the system slightly by paying additional payments to principal thus paying off the house sooner and not paying as much interest as a result. Youíre also paying interest on money borrowed years ago. For example right now I have a mortgage for about 3.5% rate. In 10-15 years that rate will most likely be wishful thinking. My last house I had a 4.25% rate. Everyone else was in the 6-7%. I had a narrow window and I was able to refi for that rate. Still own that house. My payment was about 35% of he purchase or rent monthly payment for the area. While todayís rates are similar I borrowed less money than I would have to borrow to buy that same house today.

And it goes away once the house is paid off.
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