Dear Mary: We live in Nevada and own a second home in Arizona. My husband wants to sell the Arizona property and then use the income to pay off our credit debt, auto loan and home equity loan on the Nevada property – about $ 165,000 in total.
I disagree. I think we need to rent out Arizona’s property to generate revenue and benefit from its future appreciation.
My husband is worried that if we can’t rent it out, we won’t be able to deal with two mortgage payments plus our other debts.
Dear Lorna: Let’s say you sell the Arizona property and pay off your debts, and then it turns out that you were right that you could easily rent the property and kill it because of its appreciation.
Although you would have forgotten a return on investment, you are debt-free, and you own a home in Nevada.
But let’s say you don’t sell, and it turns out he’s right: You can’t rent the house, and you can’t stay side-by-side with both mortgages plus the large burden of unsecured debt. In that case you could lose everything. You have to see that as a real option.
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 fulfill your need to be cared for and feel financially secure.
This looks like a win-win. However, before you do anything, be sure to consult a tax professional to find out what kind of tax event, if it were to occur, a sale of the Arizona property could cause.
Dear Maria: 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 funds.
Soon, I will get a whirlwind of about $ 40,000. Should I use that to pay off the unsecured debt? – Stan
Stan: If you did that, you would still have $ 30,000 without collateral debt plus a mortgage. Sounds much better, sure.
But what happens next month when you have an unexpected crisis, or next year when you lose your job? You’ll feel like you have no choice but to run to the credit cards for a bailout, and before you know it, you’ll be back at $ 70,000, or probably more.
My advice is to use that good fortune to fund your emergency fund, which is a lot of money equal to three months (six better) living costs, many known as an emergency fund.
Grease it in a savings account where it can charge some interest. Now live as sparingly as possible, and attack that $ 70,000 nut with all the joys you can collect.
Include a strict spending diet. Just knowing that you are not sitting on the brink of financial ruin will give you the courage to endure an imminent sacrifice.
All you need is perseverance and determination.
Mary invites questions, comments, and advice at EverydayCheapskate.com, “Ask Mary a Question,” or c / o Everyday Cheapskate, 12340 Seal Beach Blvd., Suite B-416, Seal Beach, CA 90740.