Dear Mary: We live in Nevada and have a second earth in Arizona. My husband wanted to sell the Arizona property then use the money to pay off our credit debts, car loans and land equity loans on Nevada property – about $ 165,000 total.
I do not agree. I think we should rent Arizona property to generate income and profit from future appreciation.
My husband is concerned that if we can’t rent it, we won’t be able to handle two mortgage payments plus our debt which isn’t well.
Dear Lorna: Suppose you sell an Arizona property and pay off your debts, then it turns out you are right that you can easily rent that property and kill its appreciation.
Even though you will make a return on investment, you are debt free, and you have land in Nevada.
But suppose you don’t sell, and it turns out he’s right: You can’t rent land, and you can’t save with a second mortgage plus a huge burden of unsecured debt. If so, you can lose it all. You should see that as a real possibility.
My advice is to see this as an opportunity to show your husband a lot of respect for his decision.
There is something in this for you as well. This gives him the opportunity to meet your needs to be taken care of and feel financially secure.
It’s like a win-win. However, before you do anything, be sure to check with a tax expert to learn the taxable events, if any, of selling Arizona property can be triggered.
Dear Mary: I am a pilot for a major airline and have $ 70,000 credit card debt plus mortgage. I’m not proud to say that we don’t have savings or emergency funds.
Soon, I will be owed a waterfall of around $ 40,000. Why should I use it to pay off unsecured debts? – Stan
Stan: If you do that, you still have $ 30,000 of unsecured debt and mortgage. Sounds much better, for sure.
But what happens months ahead, when you have an unexpected emergency, or years ahead, when you lose your job? You’ll feel you have no choice but to run to a credit card for a bailout, and before you know it, you’ll be returned $ 70,000, or maybe more.
My advice is to use that waterfall to fund your contingency fund, which is a collection of money equal to three months ’(six better) living expenses, described by many as an emergency fund.
Sock into a savings account, where it can earn some interest. Now live as frugally as you can, and attack the $ 70,000 nut with all the flavor you can use.
Put yourself on a strict spending diet. Just knowing that you are not sitting on the edge of financial doom will give you the courage to endure 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.