The plan, when I moved in with my boyfriend, was to rent out my house. No, I'm not really making any money on the rent - enough to pay the mortgage and the siding loan is about all I am raking in. Okay, you got me - I am making $24 a month on the rent!
The thing was, with the house rented, I still had the house and at some point it *could* or *would* become basically a passive stream of income. Since I no longer had to pay a babysitter to watch the children while I worked all the freaking time (yes, the boyfriend could have watched them. No, I would not allow it. Call me silly, but I refused to *use* him for that without more of a committment than we were going out on dates and were not seeing anyone else but each other) and because I was not going to have all the other bills associated with the house (utilities, ect.) I was going to have a boatload more money to throw at the debt. Technically, with the plan I had, I would have been credit card debt free in May, the same time I graduate.
I got the house rented right before I lost my job. Which really is/was a great thing, because at least the mortgage was taken care of. At the time I lost my job, I stated that come March I would revisit the idea of either renting the house or actually selling it. I wanted to give myself time to adjust to the new income levels and see how things were progressing before making a major choice to unload the house off of my spreadsheets.
Well, March has come around and it is time to revisit the question, Sell or keep renting it out?
I have had the same renters since August. Their lease was up last month so now they are on a month to month basis. I have had no major issues with the renters. Actually, I haven't had any issues with the renters, really, except for their not maintaining the garden that I planted a few months before I moved out. But, that wasn't in the lease, so I really can't say much. They pay rent in full and on time every month and when I did enter the house in December over the hot water replacement issue, nothing was falling down or severely damaged. Yes, they hung a television on the wall which is going to require a repair job, but it isn't thousands upon thousands of dollars. If they don't fix it when they do leave, the security deposit will cover the repair.
I say all of this just to quantify the fact that I am not having issues with the renters or keeping my house rented. The income comes every month.
But here is the issue - I am graduating in May. My GI Bill, which has already been slashed in half last month due to not needing full time enrollment this semester to graduate, is going to be gone. That is $684 that I will no longer have coming into my checking account.
With the current economy, I am not sure if I will be able to obtain employment in the general vincitity of where I live in my field of study. Sure, people say just move to where the jobs are, but I have the wonderful boyfriend who I am going to marry, so I can't just up and move away when he is basically stuck here for a few more years due to his job.
So that means that I have to be open to employment that may very well have nothing to do what I went to school for. Which is okay. It's life. I get it.
But - again with the economy thing - I don't know if I will be able to get solid employment in ANY field. I may very well have to bartend for a bit after graduation, riding out the storm, if you will.
Now, I have made some pretty good money bartending, so I am not knocking it. And the bar I am working at now has been good to me. Not as good as my last bartending job, but I have been able to pay all my bills, not touch my buffer, paid cash for tuition and even got one debt paid off! But I have also had the benefit of a full GI Bill from August until January, a $900 GI Bill check in February and will have half benefits until June, which is $684 a month. After June, that money is gone.
And I will still have $16,000 in credit card debt. Which terrifies me to no end.
Chances are I will not make up that $684 difference every month. Especially not starting in July - the middle of summer- the slowest season for bars. So what happens when the bills come and I don't have the money to pay them?
I have worked hard at getting the debts paid down. My starting debt when I started this blog is NOT the debt I started with. I have gotten my debt down from around the $70,000 mark to where it is now. I have worked hard to do it. The idea that all that work would be for basically nothing if I couldn't pay the bills - have my credit score tank - late fees - still owe the money, but more of it in fees and interest- makes me feel sick to my stomach. I may not have made the most progress the last 8 months in getting the darn things dwindle down, but I have paid them on time, every month. Not paying them on time is not an option for me, even if it could become reality.
But, that is one option I have. Just pay what I can and to hell with whatever I can't.
Another option I have is to seriously consider and file for bankruptcy. But again, the idea makes me sick to my stomach. I could have just done that 7 years ago and saved myself over six figures in payments when you include interest payments and it would be off my credit report by now. I didn't do that because I felt that it was my responsibility and duty to pay back the money that was borrowed. So, although it is *an* option, I really do not consider it an option for *me*.
The third option I have available to me is to sell the house. Which is painful to think about. I know it is just a structure - but it is *MY* house! I brought both of my babies home from the hospital to that house! I put my blood, sweat and tears into that house! It is a safety net - a place where we can always go!
And this is where I need to let go of the emotion and really think about what is best for my family.
I could net between $12,000 and $17,000 with the sale of the house after realtor's fees, which when combined with the $5,000 I am applying towards debt with my federal tax refund, leaves me anywhere from $4,000 left in credit card debt to having money left over to put towards my Fully Funded Emergency Fund.
Not having any credit card payments would certainly relieve stress, worry or concern with the current economic situation. Only having $4,000 left of credit card debt still leaves some bit of concern, but nowhere near the same magnitude.
Either way, it is preferable or at least highly manageable for me. If I have to keep bartending for a period of time, all the work I have done will not become for naught.
I have another issue with selling the house - I hate the thought of having owned it for 11 years and having nothing to show for it when it is all said and done because every dime of the profits go towards debt payments. It really irks me. Of course, none of that should matter. I needed shelter no matter what - and debt free or close to it is what is going to help me sleep at night. I need to get over myself.
So, okay, say I have decided to sell the house. What do I do with the renters? Do I leave them renting the house until it sells? Expect them to keep the house show ready when there is nothing in it for them whatsoever? Or should I end their lease and keep the house vacant for showings?
If the house is vacant, will I be able to afford the mortgage without that rent check? Honestly, at this point in time, I could cover it for two months, MAYBE. More likely just one month.
So now comes into the quandrum of using my tax return to cover the possible months it may take to sell the house, instead of sending it straight towards the debts. Which, in the long run, keeps my overall debt totals higher after the house does sell.
Now, some people may worry that the house won't sell because of the housing market and people having houses listed for over a year. I feel pretty confident that my house will sell for the following reasons:
1. The area in which I live, although affected by the housing crisis, has not been demolished by it
2. I live right next to a military base. Soldiers buy houses all the time and have the advantage in these times to have the VA back their home loan. Less risk for the banks when lending money.
3. My house is not a McMansion. It is a 50's style bungalow house. It is small, but a perfect "starter" home or a "downgrading" home.
4. Price - the price of my house is one of the best features of the place! Listing prices in my neighborhood are anywhere between $35 - $65,000. I am figuring my house would sell for anywhere between $45,000 and $50,000. It could potentially go for higher, but I don't know. But anywhere in that range is a REALLY good price for a 3 bedroom/1 bath brick home with a attached garage pretty much ANYWHERE you go. It isn't in the ghetto - housing prices have always been pretty low here. When I bought the house in '98, it was only $36,000. (And silly me, with my 30 year mortgage, was paying just what the note said. So I owe $30,000 - 11 years later. Urgh!)
5. The house has had the roof and siding replaced 5 years ago - so no big repair there. The stove/oven, washer and dryer (which would stay with the house) were purchased in 2007. The Fridge was purchased last February and the hot water heater was replaced in December. The kitchen floors were redone (beautiful hardwood flooring!) the summer of 2008. So, there are a lot of new and newer things that come with the house.
On the flip side, there are some things that could be done to the house that I never had the ability to get around to. The bathroom needs a cosmetic update. It could be done for about $2,000 if we did it ourselves. I am not talking about plumbing work - all the fixtures in the bathroom (except for the tub itself) were actually replaced in 2006. Just things like ripping out the pink tile that goes around the entire bathroom and replacing it with sheetrock and installing a new tub surround and flooring. The house could stand for some new carpeting. The carpet currently there isn't torn or worn (completely) out - but it does look a bit dated. The house has new kitchen cabinet hardware and the cabinets themselves have been sanded and painted, but it could use a new sink and countertop.
Which is why I estimate the house selling for $45-$50,000. Perhaps if I put the $5-$7,000 into the house on those issues I could get $65,000 for it - but there is no guarentee of that. Besides, I don't have the 5-7 thousand dollars available to do the work anyway.
So, if you have read this entire post, I thank you and hope that you can make sense of what I am saying! LOL!
I know that selling the house is the right thing to do financially for family. I know that getting the proceeds from the house can really help the purse strings. It will allow for more breathing room into the budget. With the uncertainity that is looming closer and closer to us, it will bring more security.
So why, even after everything that I wrote, do I want to stomp my feet and scream that I am not going to do it and no one can make me?
I am going to set up a meeting with the current property managers though for next week. When I used them to manage the property I had to sign a contract which states that if I were to sell the house within 6 months of their involvement with the property, I had to use them to sell the property. I don't feel like getting into a legal deal with them over it and hey, it's Remax.
Hopefully they will have some really good news for me. Like, list it for $65,000 even with the imperfectations because someone will bid $54,000 for it and I will end up with 4-9 thousand more than I originally thought.