Dear Mary: We live in Nevada and own another home in Arizona. My husband wants to sell the Arizona property and then use the proceeds to pay off our credit debt, car loans and home loans on the Nevada property – approx. $ 165,000 in total.
I disagree. I think we need to rent the Arizona property to generate revenue and benefit from its future revaluation.
My husband is worried that if we are not able to rent it out, we will also not be able to handle two mortgage payments plus our other debts.
Dear Lorna: Let’s say you sell the property in Arizona and pay off your debt, and then it turns out you were right that you could have easily rented the property and killed because of its appreciation.
Even if you would have forgotten an investment return, you are debt free and you own a home in Nevada.
But let’s say you are not selling and it turns out he was right: You can not rent the house and you can not keep up on 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 also something in this for you. This gives him the opportunity to meet your need to be taken care of and feel financially secure.
This looks like a win-win. Before doing anything, however, contact a tax professional to find out what taxable event if someone selling the Arizona property 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 or emergency fund.
Soon I will have a storm of about $ 40,000. Should I use it to pay off the unsecured debt? – Stan
Stan: If you had to do that, you would still have $ 30,000 unsecured debt plus a mortgage. Sounds definitely 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 to get a rescue, and before you know it, you’re back to $ 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 (six is better) cost of living, known by many as an emergency fund.
Soak it away in a savings account where it can earn some interest. Now live as accurately as you can and attack that $ 70,000 nut with all the lust you can muster.
Put yourself on a strict expense 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.