So, me (31m) and my wife (28F) have been tossing around the idea of selling our house and renting to tackle our debt and lower our monthly expenses. We’re worried that if we wait, the housing market will keep getting crazier, and we’ll end up with even higher payments when we decide to buy again. Here’s the scoop:
Our Take Home Income: ~$100,000
Home value: ~$425,000 (State average is over $500,000)
Remaining Mortgage Balance: ~$350,000 ($2,100/mo payments)
Car Loan Balance: ~$15,000 ($400/mo payments)
My Student Loans: ~$8,500
Her Student Loans: ~$50,000
Total minimum monthly debt payments (Student loans, car, mortgage): ~$3,000
Total in retirement accounts: ~$50,000
Where do we even start? Any advice would be greatly appreciated!
- Stressed and Confused Seeker
Response from THE MONEY MINDER:
Hello There,
It sounds like you and your wife are in a challenging financial situation, but you have already taken a big step in considering selling your house to alleviate some of the debt burdens. Your concerns about the housing market and interest rates are valid, especially given the current trends.
One practical approach to consider is to first take stock of your current financial situation, including your monthly income, expenses, and outstanding debt. From the information you provided, it seems that your total debt payments are significant compared to your household income. One option could be to create a detailed budget to see where you can cut costs and allocate more money towards paying off debt.
In terms of selling your house and renting, it may be helpful to speak with a financial advisor or real estate professional to understand the current market trends in your area. They can provide valuable insights to help you make an informed decision. Additionally, it may be worth exploring refinancing options for your current mortgage to lower your monthly payments and interest rates.
Considering the total money in retirement accounts, it’s important to weigh the pros and cons of potentially using some of those funds to pay off high-interest debt. However, this should be approached cautiously and with careful consideration of any tax implications or penalties.
Ultimately, the key is to prioritize paying off high-interest debts like credit cards and auto loans, and then focus on student loans. It may take time and disciplined budgeting, but by working towards reducing your debt burden, you can position yourselves for a more stable financial future.
All the best from THE MONEY MINDER.
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