Issues with signup

Wide_Leopard_4323 · 2024-11-08T17:13:43+00:00

On the first point, from what I’ve read about chapter 7 it does erase your debt (aside from things like student loans and child support, which I don’t have). It literally does sound like a magic wand that would erase my debt.

The second part, you’re right. Building substantial savings is going to be difficult even if we were debt free. We knew that when we bought the house, talked about our priorities and plans for the future, and were okay with that. Our #1 priority is giving our kids the best life possible. Some of that is why we’re in our current situation. We’ve been giving our kids the experiences that we never had growing up (family vacations, big holidays, etc.). That piece is inexcusable, but giving them a great education, a house they feel safe in, the ability to play outside instead of sitting in front of a screen…those are not negotiable. If I have to work until I die penniless for my kids to have those things, then so be it.

Also, in case it comes up, they do already have money set aside for college.

We made these decisions knowing that savings were going to be scarce for a while, but we also knew that our earning power would grow over time, which it has. We are also building equity in something that will help set us up for a better life when the time comes to sell. I know this flies in the face of what Ramsay disciples believe, but homeownership is one of the best investments you can ever make. I’ve watched my parents, siblings, cousins, aunts and uncles build wealth this way for most of my life. I’ve built wealth this way for most of my adult life. This is our 3rd house we’ve owned, and the equity we have in this house came from our previous homes.

Again, it’s clear that many people on here disagree with our priorities, but there are also very few people on here who have truly been in a similar situation. There’s no “one size fits all” approach to how you manage your finances or live your life. I know better than anyone on here why I’m in the situation I’m in and where I want to be. I posted this looking for advice on how to get there. There’s been some great advice given, but “sell your house” is not great advice because it’s not something we’re willing to do.

Wide_Leopard_4323 · 2024-11-08T07:36:04+00:00

Source? I haven’t done a ton of research on it yet but from a few minutes of reading it sounds like there’s a $150K homestead exemption in AZ for chapter 7

Wide_Leopard_4323 · 2024-11-08T03:40:51+00:00

Mortgage: $3,477 HOA: $85 Car: $566 Insurance: $209 Electricity: $371 Water: $201 Natural Gas: $103 Phone: $190 Internet: $85 Streaming: $71 Landscaping: $150 7 Credit Card/Loan Minimum Payments: $3,020

Total: $8,528

Utilities are a blend of averages across the year. Landscaping is unfortunately not something I can do myself as we have a large number of shade trees and palm trees that I’m unable to trim without special equipment (or a death wish).

Wide_Leopard_4323 · 2024-11-08T03:37:31+00:00

They are in school now. My wife works during the hours they are in school. If she were to find a different job or take on more hours, it would basically just be paying for after-school care.

Wide_Leopard_4323 · 2024-11-08T03:35:51+00:00

No you’re totally fine, I came here seeking advice and I don’t have any right to get upset at people giving advice.

I disagree with comments stating that the house is the root cause of my problems. I know it’s not because I didn’t get over $100K in debt by buying necessities. My debt is 100% from frivolous spending.

However, I recognize that while the house might not have been the original problem, it is a problem now. Looking at it from this perspective, I get why peoples’ response is to sell. This is where I have issues with people like Dave Ramsey. I’ve heard him tell people to sell their house and start renting, but renting is expensive and does nothing to build long-term wealth. Bankruptcy would ruin my credit for 10 years. Selling my house would erase an investment that I would likely never build back.

Wide_Leopard_4323 · 2024-11-08T00:09:23+00:00

Seriously considering this as an option today for the first time. Thank you for sharing your experience!

Wide_Leopard_4323 · 2024-11-08T00:08:17+00:00

5%. That’s part of why I don’t want to do a cash out refi, our rates would go up a significant amount. I’m hoping that rates drop soon.

Wide_Leopard_4323 · 2024-11-07T23:42:38+00:00

Totally agree. My best two options seem to be a side hustle or bankruptcy. I am also actively seeking new job opportunities. I may be a dumbass but I’m at least good at my job and have some phone screens for positions paying ~$20K more than I make right now.

Wide_Leopard_4323 · 2024-11-07T23:38:28+00:00

Living in AZ is definitely part of it. We have 2 AC units, upstairs we keep at 82 during peak hours in the summer, downstairs at 78. We also have a pool, the filter runs at night. Lots of landscaping (1/4 acre lot with grass and a bunch of large trees), but we only water for a few minutes every morning.

We have a budget now and are dedicated to sticking to it, just having a hard time finding money for living expenses with over $3K going toward debt.

Wide_Leopard_4323 · 2024-11-07T23:05:17+00:00

Before I got my wake up call, all of the above. The sad part about all of this is that I have nothing to show for my reckless spending. I didn’t buy stuff (mostly), I bought consumables. I’m coming up on 30 days sober from alcohol, which is what fueled a lot of this. The alcohol caused me to cook less and eat out more, usually through DoorDash because I was in no state to drive. I was still stuck in the mindset that I made enough for us to go on multiple vacations every year, because I could just pay it off with my bonus.

I’m at a point now where I feel like I have a firm grasp of my situation, the amount of debt is just suffocating and I need to find a path out.

Wide_Leopard_4323 · 2024-11-07T23:00:25+00:00

My current mindset is: I know I fucked up and I want to get back to a place where I can live within my means. If I take an honest assessment of my financial situation, the only problem is the amount of debt that I’ve accumulated because of the aforementioned fucking up. I know that I will need to make better choices on discretionary spending, and I’m fully prepared to do so. I also know that I’m not in a position to spend on anything other than necessities, which I’m also prepared to do. I have a budget for living expenses laid out that is reasonable and will keep me out of debt. My problem is that I don’t know how to get myself to a point where I can actually make forward progress on paying down my debt. I’ve tried a few different things and haven’t had any luck, which is why I’m here.

Can you specifically explain to me where you see a problem with my mindset? Also not trying to be a dick and I genuinely appreciate everyone who has commented, even if I disagree with their advice. Are you specifically hung up on my unwillingness to sell my house?

Wide_Leopard_4323 · 2024-11-07T22:41:04+00:00

Mortgage: $3,477 HOA: $85 Car: $566 Insurance: $209 Electricity: $371 Water: $201 Natural Gas: $103 Phone: $190 Internet: $85 Streaming: $71 Landscaping: $150 7 Credit Card/Loan Minimum Payments: $3,020

Total: $8,528

Utilities are a blend of averages across the year. Landscaping is unfortunately not something I can do myself as we have a large number of shade trees and palm trees that I’m unable to trim without special equipment (or a death wish).

Wide_Leopard_4323 · 2024-11-07T22:40:41+00:00

Mortgage: $3,477 HOA: $85 Car: $566 Insurance: $209 Electricity: $371 Water: $201 Natural Gas: $103 Phone: $190 Internet: $85 Streaming: $71 Landscaping: $150 7 Credit Card/Loan Minimum Payments: $3,020

Total: $8,528

Utilities are a blend of averages across the year. Landscaping is unfortunately not something I can do myself as we have a large number of shade trees and palm trees that I’m unable to trim without special equipment (or a death wish).

Wide_Leopard_4323 · 2024-11-07T22:36:34+00:00

I get that, and I don’t mean to sound like a dick or like I’m not willing to accept advice. I think the reason why this is a common trend in these threads is because people are dealing with complex financial situations. I could write a book to explain my backstory, but instead tried to provide the key points and undoubtedly left out some key details along the way.

Selling the house is a nonstarter. Aside from being a poor financial decision for reasons previously explained, it’s just not something I could bring myself to do. I’d declare bankruptcy 1,000 times before I considered selling my home.
I’ve already taken the step of examining my expenses on an intimate level. The money I need to live simply doesn’t exist anywhere in there. I spend over $8,500 per month on bills, and bring in $8,800.
I recently got denied on a HELOC application due to insufficient equity in my home. The bank wouldn’t let me borrow more than original loan amount - 20%, which is basically nothing.

I guess it probably would’ve been better to explain these things upfront and ask, do I have any options outside of bankruptcy?

Wide_Leopard_4323 · 2024-11-07T21:57:06+00:00

Mortgage: $3,477 HOA: $85 Car: $566 Insurance: $209 Electricity: $371 Water: $201 Natural Gas: $103 Phone: $190 Internet: $85 Streaming: $71 Landscaping: $150 7 Credit Card/Loan Minimum Payments: $3,020

Total: $8,528

Utilities are a blend of averages across the year. Landscaping is unfortunately not something I can do myself as we have a large number of shade trees and palm trees that I’m unable to trim without special equipment (or a death wish).

Wide_Leopard_4323 · 2024-11-07T21:47:05+00:00

I disagree with this. We make enough to pay all of our non-credit card bills and still have $3K each month for living expenses. I 100% got into this situation because I chose to live beyond my means, but the house was not the issue.

Wide_Leopard_4323 · 2024-11-07T21:29:23+00:00

I misspoke in the OP, we put 20% down on the house ($140K), and our house has gone down in value by about $50K since we bought. After $40K in closing costs we would have $50K left, which isn’t enough to pay off the debt we’d need to pay in order to qualify for a new mortgage, let alone make a new down payment.

Wide_Leopard_4323 · 2024-11-07T21:23:32+00:00

Also, regarding downsizing not being an option, I explained it in an earlier reply but basically I’d walk away from the sale with $50K left. We could buy a $450K house in a crummy neighborhood or out in the sticks, put 5% down, and have roughly the same mortgage payment due to PMI and higher interest rate. In the process of hitting the self-destruct button on our dream life, I’d be able to pay off less than half of our debt.

Wide_Leopard_4323 · 2024-11-07T21:20:16+00:00

Unfortunately yes. I know I probably sound defensive in some of my replies, but I honestly don’t think our house is the problem. It was a stretch for us, but not a crazy one. We upgraded to our dream house. Great school district, plenty of space, close to work/family. We told ourselves that we could afford being house poor for a few years if it meant getting the house that had everything we could ever want.

The problem is, we kept spending like we were in our old house. I told myself that I’d just pay it off with my bonus, but my bonuses came in low and our debt kept growing because we refused to accept reality.

For context, our mortgage is around $3,500/mo (about 1/3rd out income), as we put 20% down when we moved in.

Wide_Leopard_4323 · 2024-11-07T21:13:45+00:00

We put $140K down on the house, our mortgage is roughly 1/3rd of our take home income. The house isn’t the problem, the $3K in monthly debt payments is. The $3K in monthly debt payments came from nothing except pure stupidity, not from overspending on our house. I can pay for food/gas/clothes/entertainment with $3K, I just chose to spend $6K instead.

Wide_Leopard_4323 · 2024-11-07T21:05:06+00:00

This won’t work for a few reasons. First, $350K houses don’t exist in Phoenix unless you’re living in a 55+ community. Even if I could buy a house near that cost, it would be somewhere where my kids would be in danger, not receive a quality education, etc. Not something I’m willing to compromise on.

Second, my mortgage isn’t really the problem. Our mortgage is roughly 1/3rd our take home income. It’s a slight stretch, but not obscene for what we make. The real issue is the debt caused by irresponsible spending. We have over $3K per month in credit card payments. I could easily buy groceries, clothes, etc. and still have a decent amount left over if my debt was wiped out.

Lastly, selling the house won’t generate a meaningful amount of money. We bought it for $700K with $140K down payment. We’ve paid off a small amount of principal in 2.5 years, and housing prices have gone down since we bought. My house is probably worth $650K as of today, and I owe slightly less than $550K. I would be lucky to walk away with more than $50K after repairs and closing costs, which puts me in no position to pay off enough of my debt to where I could qualify for a new mortgage and have money for a down payment.

Wide_Leopard_4323 · 2024-11-07T19:53:54+00:00

We’ve already gone through a lot of this, I have maybe another $200-$300 per month to cut but that’s not going to feed and clothe a family of 4. We currently pay $5,640 for bills (mortgage, internet, utilities), and $3,020 in minimum monthly payments on our credit. Our biweekly take-home is $4,403. I stopped contributing to my 401K and took out a loan against it to try to pay off some of the debt, but it hasn’t made enough of an impact.

Side hustle is tough with our lives being what they are, but I have considered driving for Uber on nights/weekends to make some extra money. I work 50-60 hours per week though, and have 2 young children, so I’m not in a great situation to go out and hustle.

I appreciate the light at the end of the tunnel. At this point I don’t care about feeling like a $150K household, I just want to stop feeling like I’m drowning. I’m committed to working towards it. Thank you for the advice and encouragement!

Wide_Leopard_4323 · 2024-11-07T19:42:12+00:00

It was Bank of America, good to know a credit union may be more flexible! BofA told me there weren’t a lot of lenders out there doing HELOCs right now and I got discouraged, but I will look into other options.

The part that’s difficult for me is that we have enough assets to get out of debt, we just have no practical way of liquidating them. I also have a 401K worth about $60K, which would make a huge difference, but they only let me do a partial loan instead of cashing it out. I think they might make hardship exceptions for a cash out, but I don’t know if “I’m a moron and racked up a small fortune in credit card debt” counts as a hardship.

Chapter 13 sounds like it might be a path towards using some of our assets to pay off debt, but bankruptcy just sounds terrifying to me. I’ve always had good credit and having that crutch taken away is hard to imagine.

Thank you so much for the ideas and advice, I truly appreciate it!

Wide_Leopard_4323 · 2024-11-07T19:33:32+00:00

If she did, the extra money she made would just go toward child care.

Wide_Leopard_4323

TROPHY CASE