have i lost my mind?

[firebird454]

ok boys here is what i have finally realized. im going to share this info with you and see what those smarter or those who have freed themselves think . ok my wife and i bring in $7500.00 a month bring home . 1700.00 house payment in a house thats upside down 70k $1300.00 in day care and 10k in credit card debt 2 kids under 4yo . 1 car has 5 payments left and they both can last 5yrs if we push it . were just spinning our wheels wondering how to get out of this and prosper and we will be doing so forever and frustrated for life that i couldnt figure how to fix this and set up our children . ok my plan is walk away from the house we dont want and want out of our town we didnt plan on staying in anyway . live on one income really buckle down and rent an apartment for 5 years and save over 200k and go purchase a home with cash ,say goodbye to ever borrowing money again and be free of the credit card trap ..by the time this is done the kids wont even be 10 years old . im 45 and we both have stable jobs and we have the guts to do this . if i dont do something now we are screwed . ive really had an awakening lately and people who dont wake up and take some serious action face a bleak future. i dont want to go there .. sorry i didnt mention where we live but it really doesnt matter ..

 

[Superkman]

need more info on the house.

If you're upside down $70k is that conclusion drawn from other comparable sales in your area? or are you in default on like an ARM or something?

The best thing to do in a tight crunch is to total all your assets (i.e., your home value, kelley blue book values on your cars, furniture, cash, jewelry, life ins policies, and business assets) and then total all your liabilities (i.e., home mortgage, car loans, credit card debt, medical bills, taxes due, blah blah). If you have negative net worth, dont panic. Second, take all your liabilities and break them down into 2 categories, secured and unsecured debt. Then write letters to all the unsecured creditors and start negotiating lower payments, lower interest, and stuff like that. You can take this on yourself or make an appointment with a local non-profit credit counselor.

Depending on how much you owe individual creditors ($5,000 or less is a small claim) then you can usually climb out a lot quicker than you think.

Back to the house, essentially, your home is like a stock certificate, and you can cash in today and get todays value or you can continue to hold it and the value will go back up, just depends on if you can hold onto it. If nothing else, rent it out. Even if you take a cash flow loss, the loss is written off on your taxes so there is still "realizable" savings and benefits.

Hope it works out for you.

 

[firebird454]

thanks alot . the house was purchased by my wife before we met and it has really gone down and we are surrounded by forclosures so its not going to get any better for many years . i just feel now that the banks are responsible for most of this due to irresponsible lending and we have been paying the price for this . our income and jobs are good but there is no way out soon so we will probably suck it up and make the decision to leave and live modestly for 5-6 years and purchase a home with cash . this will bring freedom / security for us so this seems to be the way out . i think most people couldnt get out of theyre comfort zone and do this but i see huge rewards . our credit will get wrecked but im willing to go there to be free from the banks. creditors that keep us on the hook

 

[Nssca]

Don't think walking away from a house is a good idea...
but like you said, if its not worth what your paying for it....
why not file for bankruptcy and get rid of all your debt at one time?

 

[ericraven2003]

thanks alot . the house was purchased by my wife before we met and it has really gone down and we are surrounded by forclosures so its not going to get any better for many years . i just feel now that the banks are responsible for most of this due to irresponsible lending and we have been paying the price for this .

Well, its the banks fault, and people that should have not bought more then they can afford. Thats a fact. People are not stupid. They chose to get in over their head. I sold homes to them. I warned many of them, that even though they can get approved they don't make enough money to get this home. Guess what? They bought anyway.

I have a home I cant sell right now. So I am going to rent it out, and when the market comes back in a few years(and it will), I wil sell then.
I promise you. You don't want a forecloseure on your credit history. Credit cards and unsecured debt,ehhh, but don't do a foreclosure unless you have lost your job.
Be smart. Just saying. You can cut out a lot of things if you have to. Juice and eating out are two. Its amazing what you can get buy without.

Not saying you are guilty of any above just saying in general.

 

[firebird454]

I hear ya on people getting in over there head but we didnt do that and we are paying the price for these fools . we have excellent credit for now but ive got to do something right now or be stuck suffering forever . also im planning on taking this all the way on the saving so we can pay cash for a house . thanks for your input

 

[ericraven2003]

I hear ya on people getting in over there head but we didnt do that and we are paying the price for these fools . we have excellent credit for now but ive got to do something right now or be stuck suffering forever . also im planning on taking this all the way on the saving so we can pay cash for a house . thanks for your input

How are you paying the price for these fools? Did you not buy the home? Wasn't it your decision? Just curious.

 

[lucky310]

I'm a Realtor walking away is a bad idea. Most banks are willing to do a short sale and that will save your credit in a huge way. You need to find a realtor in your area that specializes in short sales and see what options you have. If you want PM me and I can refer you one in your area.

 

[firebird454]

thanks lucky i will check that out

 

[NITRO3]

Do yourself a favor and go to creditboardS.com/ forum and just read. It will save you ALOT of headaches and guessing. You may even find support in some of your decisions.

Nobody can predict the future. Hope for the best and plan for the worst.

If you need any help or have questions let me know.

Nitro

 

[richiec]

thanks alot . the house was purchased by my wife before we met and it has really gone down and we are surrounded by forclosures so its not going to get any better for many years . i just feel now that the banks are responsible for most of this due to irresponsible lending and we have been paying the price for this . our income and jobs are good but there is no way out soon so we will probably suck it up and make the decision to leave and live modestly for 5-6 years and purchase a home with cash . this will bring freedom / security for us so this seems to be the way out . i think most people couldnt get out of theyre comfort zone and do this but i see huge rewards . our credit will get wrecked but im willing to go there to be free from the banks. creditors that keep us on the hook

That's the problem with this country, nobody wants to take responsibility! It's NOT the banks fault that your wife took out a loan on the house, they didn't force her to sign the documents! She agreed that every month she would pay the mortgage, didn't she? Let me ask you this, based on your mindset (along with EVERYONE else who's house is worth less than what you borrowed) would you tell the bank if it were the other way around that you should be paying more because when you borrowed the house was worth less money? Look yourself in the mirror and ask that question, if you say yes, you would, you are a liar! There are sooo many ways for you to get out of the "mess" you're in.

For starters, have a WRITTEN BUDGET. Account for your money before you get it, ie spend it on paper before it ever gets to you. Account for EVERY dollar. STICK TO IT! Don't deviate from it. Pay off your smallest credit card first while making minimum payments on the others. When the lowest card is paid, do the same with the next lowest. Once those are paid, start putting it towards the cars to get em paid. When the car and cards are paid, then you can start putting more money into the principle on the house! It's a snowball effect. Here's the first step before any of this takes place: GET AN EMERGENCY FUND NOW!!! $1,000 It doesn't sound like much, but that's a start. That way, in an emergency (and it's ONLY emergencies, not pizza and such) you don't have to charge it. From there, you start the snowball.

I'm going to PM you some info that will help you.

 

[TeknoViking]

Some great advice here. i have learned a lot just from reading the responses seems like you got a lot of good feedback and a lot of bros that are willing to help/share some good info with you. Good luck with everything bro!

 

[Amazon Doll]

I totally down sized my life and am now able to save half my paycheck. I drive a $200 car that I keep well maintained. I listened to a lot of Dave Ramsey to learn a few tricks and get motivated.

 

[richiec]

I totally down sized my life and am now able to save half my paycheck. I drive a $200 car that I keep well maintained. I listened to a lot of Dave Ramsey to learn a few tricks and get motivated.

LOL AD!!!!! That's the advice I was giving him from! Dave knows his stuff through trial and error

 

[AJW91]

I have a home I cant sell right now. So I am going to rent it out, and when the market comes back in a few years(and it will), I wil sell then.

The housing market is not coming back. The oversupply of housing is simply enormous and not supported by economic fundamentals whatsoever.

Let's be honest about what happened here: The Fed set interest rates too low in the 90s, and the excess credit fueled the tech bubble. That bubble crashed in 2000. Following the crash, we were attacked by terrorists on 9/11/2001. In response to these two crises, the Fed (and other central banks around the world) lowered interest rates even more and expanded credit more than ever. Banks were flooded with cash that they had to lend. Moreover, government policy mandated that some of those loans go to "subprime" borrowers. This was compounded by the fact that the government created a market for subprime loans by creating Fannie Mae, Freddie Mac, and Ginnie Mae.

All of this excess credit naturally flowed towards riskier endeavors, eventually ending up in the hands of subprime borrowers. Housing prices spiked as a result. In response, more and more houses were built in order to fill the demand and earn a profit from the rise in housing prices.

Now, the housing market has crashed and the government is doing its best to prop up prices. But unless we return to the senseless lending practices of a few years ago (or unless we enter a period of very high inflation), there is no hope that housing prices will rise again. The current supply of housing was meant to service the demand for housing before the bubble burst - meaning, the current supply of housing was created in response to the enormous increase in housing demand, which was driven by subprime borrowers. This means that housing prices will continue to fall until or unless subprime borrowers will get back in the game. In other words, one can say with almost 100% certainty that housing prices WILL continue to fall until supply equals demand.

 

[ericraven2003]

The housing market is not coming back. The oversupply of housing is simply enormous and not supported by economic fundamentals whatsoever.

Let's be honest about what happened here: The Fed set interest rates too low in the 90s, and the excess credit fueled the tech bubble. That bubble crashed in 2000. Following the crash, we were attacked by terrorists on 9/11/2001. In response to these two crises, the Fed (and other central banks around the world) lowered interest rates even more and expanded credit more than ever. Banks were flooded with cash that they had to lend. Moreover, government policy mandated that some of those loans go to "subprime" borrowers. This was compounded by the fact that the government created a market for subprime loans by creating Fannie Mae, Freddie Mac, and Ginnie Mae.

All of this excess credit naturally flowed towards riskier endeavors, eventually ending up in the hands of subprime borrowers. Housing prices spiked as a result. In response, more and more houses were built in order to fill the demand and earn a profit from the rise in housing prices.

Now, the housing market has crashed and the government is doing its best to prop up prices. But unless we return to the senseless lending practices of a few years ago (or unless we enter a period of very high inflation), there is no hope that housing prices will rise again. The current supply of housing was meant to service the demand for housing before the bubble burst - meaning, the current supply of housing was created in response to the enormous increase in housing demand, which was driven by subprime borrowers. This means that housing prices will continue to fall until or unless subprime borrowers will get back in the game. In other words, one can say with almost 100% certainty that housing prices WILL continue to fall until supply equals demand.

Whatever. Doom and gloom. People said the same thing in the 80's when rates were 14%. That still doesnt give excuses for people to walk away from their finanical responsibilites.
It might take a few more years, BUT it will come back.
FYI. I was in the housing industry for 10 years. Just got out. IMO they will come out with another gift program for FHA buyers withing the next 12 months which will get alot of lower income buyers back in the game with 100% financing.

 

[AJW91]

Whatever. Doom and gloom. People said the same thing in the 80's when rates were 14%. That still doesnt give excuses for people to walk away from their finanical responsibilites.
It might take a few more years, BUT it will come back.
FYI. I was in the housing industry for 10 years. Just got out. IMO they will come out with another gift program for FHA buyers withing the next 12 months which will get alot of lower income buyers back in the game with 100% financing.

You can dismiss it simply as "doom and gloom," but it's simply fact. The oversupply of housing is simply horrendous. Once you realize that economic fundamentals did not support housing prices as they were 2003-2007, you will realize that housing prices will never come back to those highs in terms of purchasing power.

 

[ericraven2003]

You can dismiss it simply as "doom and gloom," but it's simply fact. The oversupply of housing is simply horrendous. Once you realize that economic fundamentals did not support housing prices as they were 2003-2007, you will realize that housing prices will never come back to those highs in terms of purchasing power.

In places like TX, I was in the Dallas area, we never had the high highs, so our lows were not that bad. Areas like CA, NV, AZ or parts of FL are a different story because of the over value, but plenty of places in the US weren't like that.

 

[richiec]

AJW91, you seem like you have a somewhat clue about what you're writing. With that being said, you should know that the economy is CYCLICAL!!! Recessions are not things that happen every 100 yrs, they happen quite frequently. The housing market is no different than anything else, there has ALWAYS been a surplus of housing. That hasn't stopped new homes being built tho. Your argument sounds good on paper (college type setting where they try to preach the evils of capitalism), but in the real world, that just isn't how things work. The interest rate in the 1970's and 80's was unheard of!!! Who in there right mind would borrow money at 18% for the next 30 yrs, but people did it and the markets turned. SO, what have we learned here today, all markets are cyclical. They may never return to their "glory days", but nothing stays in the dump forever. It WILL take a while, but it isn't going to stay in the crapper forever

 

[Superkman]

Don't forget guys/girls that time is running out for affordable mortgages. Few people are aware of the all the details of the financial reform format passed in July 2010. One of the provisions in this legislation is a change to mortgage qualifications standards. By June 2012, in order to obtain the prevailing prefered interest rates, have minimal loan origination fees, and inexpensive mortgage insurance you will have to have 20% down, very pristine credit, and your debt-to-income ratio will change, they will only allow the mortgage payment, in relation to your gross income, to be no more than 26% and your total debt-to-income ratio cannot be higher than 36%. If you have higher ratios, your credit scores are off, or if you don't have the 20% down you will be paying approximately 2% higher on interest rates and your loan origination fees and mortgage insurance will double. If you're planning on buying don't procrastinate and start now before these new laws take effect. If you're planning on destroying your credit by defaulting on your loans (i.e., credit card, mortgage, & auto) then be ready for a different world when you come back to earth after seven years of credit limbo.

I'm just saying a foreclosure is going to set you back more than you think and bankruptcy is not the answer. It is a LAST resort.