Dear Mary, we live in Nevada and have a second home in Arizona. My husband plans to sell the Arizona property and then use the proceeds to pay off our loan debt, auto loans, and home equity loans on the Nevada property – approximately $ 165,000 total.
I do not agree. I think we should rent the Arizona property to generate income and benefit from its future appreciation.
My husband is concerned that if we can’t rent it out, we won’t be able to make two mortgage payments plus our other debts.
Dear Lorna, let’s say you sell the property in Arizona and pay off your debt. Then you are right that you could easily have rented the property and killed its appreciation.
Even though you would have waived a return on investment, you are debt free and own a home in Nevada.
Let’s say you aren’t selling and it turns out he was right: you can’t rent the house, and you can’t keep up with both mortgages and the large amount of unsecured debt. In that case, you could lose everything. You have to see that as a real possibility.
My advice is to see this as an opportunity to show your man a lot of respect by trusting his decision.
There is something in it for you too. This gives him the opportunity to meet your need and feel financially secure.
That looks like a win-win situation. Before doing anything, however, you should check with a tax advisor about what chargeable event, if any, the sale of your Arizona property could trigger.
Dear Mary, I am a pilot with a major airline and I have a credit card debt of $ 70,000 plus a mortgage. I’m not proud to say that we don’t have a savings or emergency fund.
Soon I’ll be getting about $ 40,000 in profit. Should I use it to pay off the unsecured debt? – Stan
Stan: If you did that, you’d still have $ 30,000 unsecured debt plus a mortgage. Sounds a lot better for sure.
But what happens next month if you have an unexpected emergency or next year if you lose your job? You will feel like you have no choice but to run to the credit cards for a bailout. Before you know it, you’ll be back to $ 70,000 or probably more.
My advice is to use this chance to fund your emergency fund. This is a cash pool equivalent to the cost of living for three months (six is better) and is referred to by many as an emergency fund.
Put it in a savings account where it can earn some interest. Live as thriftily as possible now and attack this $ 70,000 nut with all the enthusiasm you can muster.
Put yourself on a strict diet. Just knowing that you are not on the verge of financial doom gives you the courage to endure short-term sacrifices.
All you need now is perseverance and determination.
Mary invites questions, comments, and tips to EverydayCheapskate.com, “Ask Mary a Question,” or c / o Everyday Cheapskate, 12340 Seal Beach Boulevard, Suite B-416, Seal Beach, CA 90740.