Dear Mary: We live in Nevada and have a second home in Arizona. My husband wants to sell Arizona real estate and then use the proceeds to pay off our mortgage, car loan and home equity loan on Nevada real estate – about $ 165,000 in total.
I do not agree. I think we should rent Arizona’s real estate to generate income and benefit from its future appreciation.
My husband is worried that if we can not borrow it, we will not be able to pay off two loans plus our other debts.
Dear Lorna: Let us say that you sold the Arizona property and paid off your debts, and then it turns out that you were right that you could have simply rented the property and died on its recognition.
Even if you forgot a return on investment, you’re debt free, and you have a home in Nevada.
But let’s say you did not sell, and it turns out he was right: you can not rent the house, and you can not deal with both loans plus the large burden of unsecured debt. In that case, you could lose everything. You have to see this as a real possibility.
My advice is to see this as an opportunity to show your husband a great deal of respect by trusting his decision.
There is something for you too. This will give him the opportunity to meet your needs, to be looked after and to feel financially secure.
This looks like a win-win. But before you do anything, be sure to check with a tax professional to learn what taxable event, if any, could trigger the Arizona real estate sale.
Dear Mary: I am a pilot for a large airline and have a $ 70,000 credit card debt plus a mortgage. I’m not proud to say we have no savings or emergency funds.
Quickly I get a windfall of around $ 40,000. Should I use this to pay off unsecured debt? – Stan
Stan: If you did that, you would still have $ 30,000 unsecured debt plus a loan. Sounds much better, for sure.
But what happens next month, when you have an unexpected emergency, or next year, when you lose your job? You feel like you have no choice but to run on credit cards for a rescue, and before you know it, you’re back to $ 70,000, or probably more.
My advice is to use this windfall to fund your counseling fund, which is a pool of money equal to three months (six is better) of living expenses, which is known by many as an emergency fund.
Stir it away on a savings account where it can earn some interest. Now live as frugally as you can, and attack that $ 70,000 nut with all the joy you can.
Introduce yourself to a strict spending diet. Just knowing that you are not on the brink of financial doom will give you the courage to make short-term sacrifices.
All you need now is persistence and determination.
Mary invites questions, comments and tips at EverydayCheapskate.com, “Ask Mary a Question”, or c / o Everyday Cheapskate, 12340 Seal Beach Blvd., Suite B-416, Seal Beach, CA 90740.