Thursday, July 26, 2012

My Life Summarized in a Few Movies

I normally don't change my stand on something but I'm at a crossroad. I have always thought that it was best to do everything possible to pay off your mortgage. Anything from washing out baggies to reusing dental floss, OK I'm kidding on the dental floss but save your pennies to pay down your debt. We have done everything that we were supposed to. We pay cash for our cars, we have no credit card debt(I'm not counting the appliances cuz it shouldn't be much longer!) and every extra penny has gone to the house. We have given up a lot. Well given up a lot compared to many-we don't eat out, we don't buy new things and we don't waste.
I have been going through our bills again. Mind you I keep an eye on everything daily/weekly/monthly. We don't have a lot of bills but it brings joy to my heart to get the ones that we do have, down even farther. I wanted to get our car insurance down which I could by switching home owners. That would save $300/yr. Plus Anna had an accident and it will be off our record in Sept. so that will save another $200. Which in turn brought me to our mortgage. And then to my current state of turmoil. We could refinance and save $100 to $200 a month. But we have lost so much in equity that we would be back to paying PMI which would probably be $50 a month. So it would depend on how much we would save as to whether or not we do it.

And that brought me to a very sad thought, our town is getting to be so bad that there is no way we could retire here. Den says we would get to live Gran Torino. Everyone complains about where they live but we are having a terrible time with gangs. There has been quite a few robberies and a high speed chase just down the road. I give the police credit, they are fighting the good fight but we are all losing. There was a 40 person gang fight down the road about a year ago. One gang member hit another gang member in the high school parking lot at the kid's school. Sad. These kids are ending their lives before they even start.
So that brings me back to my original thought, is it wise to pay down a home that is losing value and that we won't be able to stay? I'm really starting to think that we should save the money in a savings account. I can't believe that this is even a thought with us. Things must be bad.
My life is a string of sad movies!
What do you think,
Sonya Ann


Jenny Woolf said... take on this might not seem practical for you to do, and I hope I have not misunderstood, too, because I've never lived in the US and I don't know how the property market works there.

But,in general, my feeling is that location is vital when it comes to selling a home. Location, location, location (that's the catchphrase here, I don't know if you have it too).

If it was me I'd see how things were going and sell while I still could get a reasonable price. Thne I'd move to a home in a better location - a location that's going up or is holding steady, EVEN THOUGH it will likely be a smaller home further away from the places I need to go, or shabby, etc. I think I'd go for a run down place it was possble for me and my family to improve and make nicer, even though it would require a box of fireworks under each of us us to blow us out of our chairs and get moving on renovations.

Then I would keep trying to pay the mortgage off on the NEW home. It would be discouraging because money would still be tight and the accommodation would be worse, and we'd have to be slaving away doing renovations.

But I would persevere because I'd know that I was buying something basically worth having and that I could always improve or trade up even. It would devastate me to try so hard to pay off a mortgage only to find that the place had meanwhile got so undesirable that I didn't want to stay myself, and nobody else wanted to to pay me anything like the price I'd paid.

Tough decision, so good luck.

Mamma has spoken said...

What Jenny said.
However instead of selling you could always rent out the house. Of course you'll have to buy a second home but I had a neighbor that did this and that's how they climbed the housing market. They started out with a small house and instead of selling it, they rented it out for the cost of the mortgage payments on their second home. Then continued doing this, never selling, just renting. Problem came when they decided to get a divorce and it all came tumbling down. But I would do it with just ONE house, not several.

Mark said...

Cut your losses and get out now!

Sonya Ann said...

Jenny Woolf-You got it head on. The sad thing is we have been here 17 years. That is an eternity. When most people upgraded to huge houses we stayed put. And what did we get to show for that-ghetto.
I know that we will stay in our town for 2 more years. Den is adamant that DJ gets to finish school where he started. Den moved around a lot as a kid and hated making new friends.
We could buy another house in this area but it is the same thing all over here.
I keep telling Den that we need to find a way to work online! Then we could move to Vegas.
You are completely right though about finding a fixer-upper.
Thank you SOOOOOO much for taking the time and effort that you put into that comment. You care!
I really have come to love the house and the yard-its just some of the people that are really bad here. The city is kind of swallowing up everything here.

Sonya Ann said...

Mamma has spoken-That is a really good idea about renting not the divorce. Well....................;)
Laughed at the "What Jenny said."

Sonya Ann said...

Mark-I like your thinking! And you too.

slugmama said...

Well you KNOW I would give you my 2

About refinancing.....your house has lost THAT MUCH value that you'd have to pay PMI AGAIN?? That's crazy!!!
But remember even if you refinance for the lower interest rate(even if you still have to redo PMI)that you reset the mortgage clock back to 30 years again too(unless this new one is for a 15 yr mortgage)...if you have only 18 yrs to pay it off, you now have the whole 30 yrs to pay off again. Is is worth still having a mortgage after you retire?
I'd say no....
The only way I'd refinance(with PMI again and 30 yrs left)is if you can still throw what you are throwing NOW at the smaller mortgage and have it paid off before Den quits his job and retires. Going into retirement income with a mortgage is not something you want to do.

But you need to sit down with Den and figure out your retirement know, the stuff like how much money you'll have and what/where you want to do/live before you refinance or not.

Retire in place?.....or elsewhere? is a big decision. Remember that once your kids are gone, you don't need as big a house and you will want to be near your grandkids once they start coming. This means no matter what you plan, it could change once you add
Why did you buy this house?
As an investment or as a place to live?
If you don't see yourself living here forever and you are upside down in your mortgage, it's tempting to just pay what you have to each month(keep current)and once DJ finishes school, walkaway. Of course you'll need to plan ahead where you will live and pay for it if you walkaway since nobody will give you a new mortgage(unless Den OR you are ONLY on this mortgage, in which case, the one NOT on this mortgage can apply for the next mortgage)and you'll have a hard time renting from an apt. rental company(credit score being impacted by the default on the mortgage). If you can find relatives to rent from or think about a non-traditional living situation after defaulting it could work. How about saving the money extra you are putting to pay off the principle aside and save to buy a trailer. You could spend retirement in a trailer put on a couple of acres out in the country or something.....or go ahead and really BE trailer park

If your town is crazy expensive, why would you want to stay there in retirement? Start looking around at states/towns that are cheaper to live, etc. If Den is due any kind of pension from a job, find a state that does not tax his pension(state taxes....the feds will get their cut anyway), find a state that doesn't tax social security, find a state with low taxes or no sales tax.
You really need to plan this and do your research.

And remember, if the town is too expensive now, it will just get worse as you age and the taxes go up and up and up. Your fixed income will not keep pace with expenses in retirement....unless you take up pole dancing and start a strip club in your home. ;-)
And don't let any relatives talk you into staying if you are not happy there.
Follow your bliss......

McVal said...

I would definitely just put your extra cash in a savings account! It'll be a lot easier to get to than selling a house that may not be easy to sell in the future.
Hey! I've a house on either side of me for sale!!! Move here!
The only crime to speak of is the nekkid guy at the cardtrol gas pumps... and he was just passing through.

Annmarie Pipa said...

apparently the refiance options are incredibly low..the lowest could get a very low adjustable rate if you are planning on moving..worth doing the math!! there is always $ to be saved some place just takes time and effort...

Sonya Ann said...

sluggy-You wrote a book! Thank you for putting so much thought into our little problem. Honestly, we aren't sure what we will be doing. I just wanted to ask everyone for ideas. And boy did I get them.
Den and I have been thinking more and more about retirement. Mind you he is 38 and I'm 40 but with DJ leaving in two years it is really making us think about what our next step will be. And asking a ton of questions before I try and make a decision is what I'm all about. It really helps so much to see what everyone is thinking about. I also, like to say to Den, and sluggy said this............
We bought our house as a home and we have been here for 17 years. Honestly if the crime wasn't on the upswing and it wasn't so expensive we would stay. But there is no way that we could stay when he retires. Even with maxing out his 401k and having the house paid for, we wouldn't be able to swing it. We are paying just shy of $6000 a yr in taxes. But we know we don't want to get to far away from the kids either.
LOL the only thing that we can agree on is that we want to live in Vegas for the winters!
Thank you for all the food for thought. We are in the just talking stage now but I will as for your $.02 the farther we get into it.;)

Sonya Ann said...

McVal-Could you imagine how much trouble we could get into if we were neighbors? You probably would have to keep your kids away from us-we are scary honest as my kids put it!~

Sonya Ann said...

Annmarie Pipa-I love to find a new area of my budget to squeeze out a few more pennies!
Thank you for the advise and for coming to see me!

Jill said...

Sonya Ann,

I have moved so many times I just had to comment here. If your neighborhood is that bad it will only get worse. Something I'm sure you already knew.

I would certainly seriously think of moving and getting into a manageable mortgage, even if it is a fixer upper. The longer you wait the more the value of your current home will decrease based on location. You can get an ARM adjustable rate mortgage to save $$ while trying to sell. They can be as low as 3 %. Sometimes older homes are lower in taxes too. We pay 6500 a year now in taxes, but our neighbors down the Rd. with more land pay about $3000, crazy huh? Sometimes in school districts you can pay a small fee to have your child finish out the year, but you would need to transport him back and forth. Small price to pay for everyone's safety. Or start new in a better area or homeschool. There are options :-)

I would certainly save and not sink more into a home you will more than likely not retire in. I know it's a tough choice, but it sounds more necessary then heart felt at this point. Sorry to be blunt but I have dealt with real estate for years in moves and with my close friends as realtors. Some times when making tough choices we have to put feelings of the heart aside. I certainly wouldn't want you or anyone in your family to become a statistic of crime.

Hope I'm not sounding too tough love, but I am concerned for you and your family. Start researching homes for sale, etc. and get your current value and then go from there. If I can help you more email me :-)

On a lighter note, have a wonderful night!


Sonya Ann said...

Jill-You are a sweet heart. I have to say that I have felt so loved after putting this out there. Truly, a heartfelt thank you for caring about mine and my family's welfare.
It's just so sad. We had planned on being here forever. It's not the greatest but its our home. And then it just started to slide down hill.
Anna has talked about where to go after she graduates and Den and I are both pushing her not to come back. How sad is that? And it isn't because we don't want her, we just don't want her to put down roots around here. She is dating a boy that she really likes. Mind you, I have no idea if they will stay together but it has been 2 yrs and they are serious. Anyways, he is from a small town 2 hours from here. Den and I have both said that if it works out between them, it might not be a bad idea to move down there.
We have a lot to think about. But we are going to get DJ through his last two years of high school around here. Beyond that, we won't be tied to a house around here.
The nice thing is we are really thinking about what we want for retirement. That feels pretty awesome. Not that it will be anytime soon but it is closer!
Thank you again!