Dear Mary: We live in Nevada and own a second home in Arizona. My husband will sell the Arizona property and then use the proceeds to pay off the credit debt, car loan and mortgage on the Nevada property – a total of $ 165,000.
I disagree. I think we should rent the property in Arizona to generate income and benefit from the future valuation.
My husband is worried that if we fail to rent it out, we will not be able to handle two mortgages plus our other debts as well.
Dear Lorna: Let’s say you sell the property in Arizona and pay your debt, and then it turns out that you were right that you could easily have rented the property and killed on gratitude.
Even if you would have forgotten a return, you are debt free and you own a home in Nevada.
But let’s say you do not sell, and it turns out he was right: You can not rent the house, and you can not keep up with both mortgages plus the large amount of unsecured debt. In that case, you can lose everything. You have to see it as a real opportunity.
My advice is to see this as an opportunity to show your husband great respect by trusting his decision.
There is something in this for you too. This gives him the opportunity to meet your need to be taken care of and to feel financially secure.
This looks like a win-win. Before you do anything, however, check with a tax professional to find out what taxable event, if any, that the property sale in Arizona can trigger.
Dear Mary: I am a pilot for a major airline and have a credit card debt of $ 70,000 plus a mortgage. I am not proud to say that we have no savings fund or emergency fund.
Soon I will have a drop of around $ 40,000. Should I use it to pay off the unsecured debt? – Stan
Stan: If you were to do that, you would still have $ 30,000 unsecured debt plus a mortgage. Sounds probably much better.
But what happens next month, when you have an unexpected emergency, or next year, when you lose your job? You will feel like you have no choice but to run to the credit cards for a rescue, and before you know it, you’re back $ 70,000, or probably more.
My advice is to use the unexpected to fund your contingency fund, which is a pool of money equivalent to three months’ cost of living (six is better), known by many as an emergency fund.
Sock it out on a savings account, where it can earn some interest. Live as frugally as you can and attack the $ 70,000 nut with all the gusto you can muster.
Put yourself on a strict diet. Just knowing that you are not on the brink of financial ruin will give you the courage to endure short-term sacrifices.
All you need now is perseverance and determination.
Mary invites questions, comments and tips on EverydayCheapskate.com, “Ask Mary a Question,” or c / o Everyday Cheapskate, 12340 Seal Beach Blvd., Suite B-416, Seal Beach, CA 90740.