Reader Mailbag: Novel Writing Update

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What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
1. Recycling
2. Bankruptcy or not?
3. Downsize or not?
4. Praying for money
5. Figuring out down payment
6. How much for extra payments?
7. Distant family
8. Dream beach house?
9. Combining credit card problems
10. Simple game for couples

A surprising number of you have written to me asking for updates on the novel I’m working on. The first draft of it is about 60% complete. I have a detailed plot outline done and maybe 30% of the writing finished.

Once it’s done, I will let it sit for a few weeks without looking at it, then I’ll edit it myself. After that, I’m going to pass it on to several editors to polish it up.

I’m really happy with it. It’s fairly light reading, I think – nothing incredibly deep or complex, but lots of fun.

Q1: Recycling
I’ve noticed a few times that you mention “tossing” items such as unread magazines after you browse through them. Just wondering if you recycle paper or other items – I think it would be great if you would mention recycling instead of just “tossing” when you refer to throwing things away.

- Anna

The relatively rural area where we live does not offer any sort of recycling program. In order to recycle materials, we have to take them to a center in another town.

We tend to re-use magazines, though. They become fodder for children’s art projects, wrapping paper, and, since we go camping a lot in the summer, they often become an abundance of firestarters. They get “tossed” into a magazine box, usually, and are then harvested for these types of uses.

We do save all of our extra boxes, flatten them, and take all of them and any extra magazines over to the recycling center about once every two months or so.

Q2: Bankruptcy or not?
The short version of my story is that I am 26 with about $35K in debt ($18K in student loans, the rest is credit cards, medical bills, and car loans). After being unemployed for almost a year, I got a job a few months ago paying $30K, but living in DC, it’s a miracle I can provide for myself and my child, and there is nothing left over to pay down the debt. I make about $1800/month after taxes: I pay $1000 for my apartment, $300 for groceries, $200 for transportation expenses, $50 for my cell phone, $50 for internet, (both of which I need for work) and $100 towards my student loans. I’m really worried my creditors will come after me now that I am employed again and I won’t be able to make ends meet if I get a judgement against me. I have no assets- no car, no savings, no retirement accounts, and having a small child means I can’t get a second job. My parents gave me money to pay basic expenses while I was unemployed and are willing to lend me the money for a bankruptcy attorney if it will help, but they are unable to help more than that. My question is, should I file bankruptcy to get rid of the non-student loan debt?

- Jolene

The biggest downside to bankruptcy is that it severely hurts your credit for the next seven to ten years.

This can affect everything from your potential job hires to your insurance rates, though your bankruptcy is far from the only factor there. It also severely disrupts your potential to get loans during that period.

If those issues are relatively minor to you, I would consider talking to a bankruptcy lawyer. You have a child, and if you have more bills than you can afford to pay by any reasonable standard, bankruptcy is probably the best route for you.

Q3: Downsize or not?
I’ve reached an impasse as to whether I should sell my house and downsize to a smaller living space. I currently pay $1,300 PITI a monthly with an FHA mortgage of $146,000. My net income is about $3,200/month as a contractor in work I enjoy. I’ll probably be working on this contract into next year. I pay over $600/month for health insurance. I attend grad school part-time and will have about $21,000 in student loans to pay off in 2014. I have about $12,500 in credit card debt and I am working hard to pay it off–paying at least $500/month most months.

So the burning question is: should I sell my house? On the market, it would ultimately sell in the $190s, and I would guess it would take maybe six months to sell. But in order to sell, I estimate that it would take at least $5,000 worth of work (mostly new paint, carpet, and fencing). I like my neighborhood. But I’m a single person (I got the house in a divorce two years ago), and the house is a lot to take care of.

Should I stay and continue to build equity in the house and possibly refinance (which also costs money). Or should I cut my losses and make plans to sell?
- Linda

If you’re struggling to care for the house, then the best solution is to downsize.

You need to also remember that it’s not just the time invested in caring for the house, but you’re also paying property taxes on it and you’re also paying inflated energy bills for it. Those have a significant negative impact on your financial state – and the time spent caring for the house is a drain, too.

If I were you, I’d invest my extra money into getting the house ready to sell, then put it on the market.

Q4: Praying for money
We are in a world of financial hurt. I don’t want to talk about numbers, but we barely can keep up with our minimum payments. My wife won’t face them with me. Her solution is to pray all the time for money to solve our problems. She goes to church several times a week and prays a few times a day for money. What can I do to get her to address our problems directly?

- Carl

While prayer is a powerful mechanism, particularly for one’s spiritual sense of balance, it’s often not the answer all by itself.

My view on prayer is that it’s often a key for figuring out what you’re supposed to do. Rather than thinking of prayer as a ticket to a gift, look at it as a finger pointing the direction.

In the end, it’s still up to you to take action. Prayer just helps guide you to the right action.

I would approach your situation by asking your wife what her prayer is telling her to do. If she doesn’t know, suggest that she pray not for money to fall on her lap, but pray for some guidance on which path to follow.

Q5: Figuring out down payment
My wife and I are looking to buy a house. The price of homes in our area are around $270,000-$315,000. We are shooting to purchase a home for $285,000 or under. Currently, we have $45,000 in savings and are saving $4,300 a month since we just moved back with my parents at the end of January in order to save more. (My parents are more than happy to keep us here as long as possible so there is really no rush to move out.) I figure that by July we will have the 70,000 necessary for the 20% down payment, closing costs, and reserves. We also have an emergency fund of $5,000.

My question is whether it is smarter to go with an FHA loan and pay down my graduate student loans, which are at a higher interest rate or to save the extra money for putting down 20% of the purchase price to avoid the pmi and to have a lower mortgage for the next 30 years. I am leaning toward the 20% down because of the attractiveness of such a low mortgage payment, but I cant help feeling like doing so would be tossing money in the trash because our graduate loans are at a much higher rate. I am not good with numbers so I cant figure out exactly how much I am costing us by paying down the mortgage debt over the student loan debt.

Here are the numbers I do understand:

The interest rate for purchasing a home right now via FHA are at around 3.75% BUT our mmi on a $285,000 loan is a little over $250 extra a month and we wouldn’t be able to cancel the mmi for at least the first 5 years. (I know the mmi sounds high, but that’s what the bank quoted us.) Our mortgage payment on a FHA loan of $275,000 would be $2,200 a month ((purchase price) 285,000 – (3.5% down payment) 10,000 = 275,000 (loan amount)).

With a conventional loan of $228,000 and an interest rate at around 3.75% ((purchase price) 285,000 – (20% down payment) 57,000 = $228,000) our monthly payment would be approx. $1,600. Our graduate student loan debt is $90,000 at 6.55%. We have no other debt.

Long story short, are we losing money putting down 20% on the low interest mortgage and if so, how much?
- Bill

You want to always minimize the interest rates you’re paying. So, what I would do if I were you is get some quotes based on your situation now.

When you get a quote on your mortgage, it will tell you the effective interest rate on your mortgage including the PMI and other factors.

If it’s lower than any of your outstanding debt, then you should pay off that outstanding debt first. That’s the move that will cause you to pay the least amount overall on your debts.

I would not get a mortgage until I had those higher interest debts gone and a 20% down payment, but if I were going to force the issue, I’d make sure I had the debts gone as a higher priority.

Q6: How much for extra payments?
My husband and I are in a somewhat good situation where we have more money coming in these days, yay, but a ton of bills/debt to pay off. The money isn’t always coming in consistently (while we both have base salaries, I am in sales, so commission comes in spurts and he gets a bonus here and there). I need help in learning how to pay down bills, but not too much so that we are left in the hole again for a month/few months. I get so motivated and excited to pay bills/pay off some debt, that I pay too much and then am left stressing again because we don’t have enough to get by for awhile. So how do you balance out paying off bills/debt with saving some when there are so many bills to pay? Is there some ratio, advice for knowing when to stop paying stuff and waiting a little longer.

- Kelly

Make minimum payments for a while. Instead, put every extra dime you have into a savings account.

Whenever that savings account has a balance of over $1,000 in it, put the extra toward your highest interest rate bill.

If you need some extra for an emergency, take the money out of savings, then replenish it when you have more money.

That $1,000 is your emergency fund, and it will protect you from such issues.

Q7: Distant family
I believe you’ve mentioned that your wife’s family is in Seattle. How do you guys deal with that? I’m originally from Portland, Oregon, and my husband and I are currently living in his hometown of Mechanicsburg, Pennsylvania. I love my husband and we’re certainly blessed by his family here, but I miss my family, and the Northwest, very much. We visit once or twice a year, and my parents usually visit us once a year as well. If we moved to Portland – besides facing the scary risk of giving up two stable jobs for a relatively unstable job market – I think eventually my husband would begin to miss Pennsylvania just like I miss Oregon. It really saddens me to imagine having kids here, and feeling “stuck” here, far from my family, for the rest of our lives. It’s hard to talk with my husband about this, 1) because I get pretty emotional when I let myself think too much about the situation, and 2) because he feels pretty helpless about it, and consequently, insufficient and guilty.

How do you and your wife deal with this situation? Does she miss her family? Do her parents get to see your kids very often?
- Charlotte

My wife’s immediate family is split between northwest Washington state and rural Illinois.

For the portion of her family in Illinois, contact is pretty easy. We see them perhaps once a month for some reason or another.

For the portion in northwest Washington, it’s a bit trickier. Over the past several years, Sarah has been to Washington at least three times and our entire family has been out there twice. Since the crowd size in Washington is smaller than that in the Midwest, they tend to travel to the Midwest more often. We try, in the end, to have the total travel cost for all parties balance out. We feel that’s worked pretty well for us.

Communication is the key. Talk about these things.

Q8: Dream beach house?
Since I was 18 years old, I had wanted a beach house. My husband and I have saved for it for years. This year we sold our condo (mostly paid off) and were able to purchase the beach home of our dreams…or so we thought. We used $180K from the sale of our condo plus about $50K in cash on a down payment on the new home. Unfortunately, we took out a loan for about $543K with a 7/1 year ARM at 3.125% or $2325 per month. Now that we are moved in, I feel crushed by the debt I have taken on. All I want to do is sell the home and move into something that is more affordable. Secondly, the new home needs some work and I do not feel up to making the changes. I find the layout very difficult to manage and the house is way too big for our family’s needs. I made a mistake by paying $775K when our budget should have been around $600K max. We currently have no debt outside of our mortgage and are still able to save several thousand a month after mortgage payment…so we technically can afford it, but I am not comfortable with the debt. Lastly, we also realized that we probably overpaid about $75K for the home.

I feel that I made a rash decision on the house (busier beach location rather than a quiet location) and I do not “love” it like I think I would. Also, I am experiencing health problems (loss of eyesight in one eye from a macular hemorrage) and am considering limiting my hours at work so we can adopt children (work less or part-time) at some point.

My question is… when do you think we should consider selling the property? We are thinking of waiting around 5 years so we can save 100K or more in cash and any possible inheritance money. It would allow us to enjoy the house for a few years and we could downsize at this point…perhaps paying mostly cash for a smaller home further inland. The only problem is that we live in CA and it is difficult to buy anything for less than $500K in a desirable neighborhood or in good condition.

On the other hand, waiting to sell would result in us paying $100K in interest to the bank. We just think it would be rash to sell now because of all of the realtor’s fees, loan fees, and possibly selling the home for less than we bought it. Also, we have not really had the opportunity to really enjoy summers at the beach. Does this plan make sense to you? Or, should we consider selling soon and just accept a loss on the house…but get out of debt. I just feel like my priorities have changed since I was 18…but we would be throwing away the opportunity to live near the beach.
- Claire

Without running the complete numbers, it’s hard to tell whether or not you’d be cash ahead by selling the place now and renting for a while or living in the house for a while (or perhaps renting it). There are a lot of factors to consider in that decision, from commuting costs to property taxes and upkeep.

This type of decision isn’t a purely financial one, though. It sounds like the house isn’t something you’re particularly enjoying and the realization hurts a bit. It just means you’ve grown as a person. Don’t let it get you down.

If you aren’t happy living there, sell, even if the money isn’t perfectly in your favor. There is value in living in a situation you’re happy with.

Q9: Combining credit card problems
Currently my fiancé and I own a home together with a mortgage balance of $91,000 on a home that is worth $134,000. We are in the process of combining our finances and both of us have a “problem” credit card. My card is at a $4,000 with an APR that would make you fall of your chair, and her card is at about a $5,000 balance with around a 12% APR. We are spinning our wheels on making payments, barely paying more than the interest charge monthly.

She has a very stable job at this point and I’m currently in a temp position while taking classes so my employment is currently not very stable. The reason I bring that up is because I am a little shaky taking unsecured debt and putting it on my home, but the money we would be saving a month is without question. My plan was to obtain a 10,000 Home Equity Line of Credit (currently at about 4.0% in our area) and paying off and closing both credit cards so we could not be enticed to use them again. I know I would take a credit hit since I have had the card for a long time but I already have a home and a car so I don’t think it bothers me that much.
- Alan

That’s probably the best plan overall.

The home equity loan has the risk that you’re using your house as collateral. With the credit card debt, there really is no collateral (other than your credit score), so nothing directly painful can really happen if you default. With a home equity loan, if you default, you might face foreclosure.

If the move significantly trims your monthly payments, it is still probably the right move to make, though, as it secures your month-to-month financial position.

Q10: Simple game for couple
My wife and I often play card games in the evenings, but we really feel like we’ve exhausted most of the good two player card games with a deck of cards. After all, we’ve played a card game or two most nights of our five year marriage!

Do you have some suggestions of really good inexpensive two player games that are easy to learn? Also, we don’t want games that are too long like Monopoly which never seems to end. I know you and your wife play a lot of games so I was hoping for some ideas for something we could play a bunch of times in the evenings.
- Leon

My wife and I play a lot of games and we have our favorites. However, if you’re looking for something straightforward that isn’t too long, I have a few ideas for you.

If you guys like card games, I would suggest Lost Cities. It’s something of a set collection game (vaguely like rummy) with five suits and some really interesting twists.

If you want a game you can play with the two of you, but also play with some others, I would highly suggest either Ticket to Ride or Carcassonne. Both are tons of fun with two players, and work well with any number up to five players.

Got any questions? Email them to me or leave them in the comments and I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive hundreds of questions per week, so I may not necessarily be able to answer yours.

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36 thoughts on “Reader Mailbag: Novel Writing Update

  1. So you don’t recycle?! Or do you take a trip once every 2 weeks to the depot to recycle things? I really need to hear that you do not just through glass jars and plastic bottles into the garbage to go to a landfill just because it’s not convenient for you to recycle them.

  2. Not recyling doesn’t make someone a bad person. There is no recycling center near where I live, and our living space is too small to build up a collection of recyclables that we would have the opportunity to drop off maybe 1x month.

  3. We’ve had recycling and composting programs in my neighborhood ever since we moved here 12 years ago. That said, one of our friends doesn’t bother. When we visit her, it drives me nuts to watch her just throw plastic and paper into her garbage can. She even throws wine and beer bottles right into the garbage! I’m like, “You can return those for money!” She doesn’t care. Drives me bonkers, but it’s her house.

  4. Q7 – Try Skype or other video phone calls. I have a friend with a son & his family living in China & that’s how they stay in contact even though they can’t visit in person more than once a year.

    Also, Portland’s job market isn’t just unstable, it’s extremely tight. I have family & friends there who have been trying for several years to find a decent permanent job. Don’t move back there until you have a firm job offer in writing.

  5. Remember that the slogan goes “Reduce, Reuse, Recycle” – and those are in order of importance.

    If you have to drive your recyclables to another town, it seems to me that the fuel you burn on the trip would negate most of the environmental benefit you get from recycling. But I haven’t run the numbers.

  6. @Q10 Leon

    My wife and I have purchased a few games recently, and love them all. We specifically look for 2-player games. On a regular basis we play Boggle, Yikerz!, Fluxx, Blokus, and Ticket to Ride: Nordic Countries (this is a specific 2-3 player version). I suggest you look at each one, as they are each quite different.

  7. adding to Johanna #6 – Trent & family seem to have reduce & reuse down. If you do that, there isn’t that much that could go to the recycling.

  8. Maybe instead of going to church for several hours a day, every day, “Praying for Money” could get herself a part time job.

    She could also look into Financial Peace University which is a faith based program to get your personal finances back on track. Many churches sponsor this or help mitigate the cost for those who cannot afford the materials.

  9. @Q5 6.5% isn’t that high of a rate on your student loans. Depending on your income it may be tax deductible. Even after you buy a house, you will have $2700 per month to pay towards that student loan ($4300 – $1600). It will take 30 months at that rate.

    I somewhat agree with Trent, that if you can live with your parents for two or three years and pay off the loan, do that; but otherwise, I think you have so much spare income to go towards the down payment/student loan that you would be better off getting a traditional loan.

    Also, 25% is the new 20%. You don’t have to pay pmi/mmi if you put at least 20% down; but you get a slightly lower rate if you put 25% down.

  10. Q6: We’re doing something similiar to pay off our mortgage.

    We have a budget which has about $4K in monthly costs. Any time our checking account balance is greater than $10K, we transfer the ‘extra’ $6K to the mortgage, leaving us with our minimum of $4K. You could adjust your numbers accordingly. ie: If you want your minimum balance to be higher/lower or your threshold to be higher/lower. That way, you don’t get too excited to pay off more debt than it could affect you negatively.

  11. Bill @Q5 got a useless answer. I’ll give it a try.

    Bill, if your PMI is $250 a month, it’s $3,000 a year for five years, or $15,000.

    If you applied $57,000 to your student loans up front, you would save interest of 2.8% on that amount (6.55 – 3.75), or $1,596, a year, or $7,980 over five years. And if you opt for the conventional but whale away at your student loans after that and pay them off in less than five years, the conventional loan will have been an even better deal.

    Based on that alone, I’d go with the conventional loan.

    Moreover, you are currently saving $4,300 a month. If, after buying your house, you applied $4300 a month for five years to debt reduction of your mortgage and student loans, your student loans would be paid off in about 18 months with a conventional loan and 36 months with an FHA loan, and after five years, both your total debt and your monthly payments going forward would be considerably lower if you choose the conventional loan.

    However, I think you should check your numbers. At 3.75% for both loans, with $10,000 down on the FHA and $57,000 down on the conventional, your payments exclusive of taxes and insurance should be $1523 (including PMI) and $1056 respectively.

    Your property taxes and insurance should be the same under either scenario, but you come up with payments of $2,200 on FHA and $1,600 on conventional. So you’re paying an extra $677 on the FHA loan but only $544 on the conventional loan. What’s the extra $133 a month going for?

    Bill, wouldn’t it be worth a couple hundred dollars to sit down with an accountant to help you run the numbers on this? On such big-ticket items, I really can’t understand people’s reluctance to pay a little to consult someone who actually knows what they’re talking about and can make sure all relevant factors are being considered.

  12. Q4 Carl:

    Suggest to your wife a reading of the very short fable, “Hecules and the Wagoneer”

    Many versions are available on the net, but they all say the same thing.

  13. Q2, Jolene, if you’re earning $30,000 a year, and only taking home $1800 a month, you might want to check your tax withholding and adjust it. I’m pretty sure you qualify for the earned income credit, and should be paying no income tax and essentially getting part of your social security tax back. $700 a month deductions seems pretty high, although if you’re contributing to health insurance I guess you could get up there.

  14. AnnJo the only thing I can think of that explains the difference of $133 could be an FHA origination fee being rolled into the mortgage. Your answer was excellent, btw.

  15. Re games: this wonderful website seems to harp on games like Carcassone and similar world-building games. Those might be fine for some people but take as long or longer than Monopoly. I think there are a whole series of great classic board games that can be played by two people perfectly. How about Mille Bornes? Yahtzee? Othello?

    I presume the questioner is already playing cribbage. If not, do that next.

    I hate those world-building games, but show me a big pile of Trivial Pursuit boxes and I’m putty in your hands. We’re all different…..

  16. Q8: Claire, your question sounds like a case of “the grass is always greener on the other side of the fence.” You spend your whole life wanting a beach house, and now that you have a beach house, you feel like you don’t want it anymore, and you start wanting all sorts of other things instead.

    Before you make any more big changes in your life, I’d encourage you to think hard about what you’re trying to accomplish, and what kind of life you’re trying to build for yourself. Ask yourself whether the change you’re proposing to make will really bring you closer to achieving that life, or whether you’re building it up in your mind to be something better or more than it really is.

    At some point, you’re going to need to stop chasing after things you don’t have and start enjoying what you do have.

  17. Claire @Q8.

    Obviously, your emotions drove you to make what has turned out to be an emotionally unsatisfying and financially poor decision. Are you sure they are not still short-circuiting your judgment? Was a beach home your husband’s life-long dream as well and is he equally dissatisfied?

    Sometimes having made a bad decision the best course is to just cut your losses and be done with it. But sometimes it makes sense to figure out what drove that bad decision to avoid a replay.

    Your question is full of contradictory statements: You don’t enjoy the house the way you thought you would, but your plan would “allow you to enjoy the home a few more years” and you haven’t had time to “really enjoy summers at the beach.” The layout doesn’t work and i’ts too big for your family, but its the same layout as when you bought it and also the same size, and you’re looking to expand your family in the coming years.

    The fact that your equity is $75,000 less than when you bought it is pretty much irrelevant. So’s everybody else’s.

    I wouldn’t make a change until I understood better what was really driving my decisions.

  18. AnnJo, we have really got to stop this habit of saying exactly the same thing at the same time. I’m afraid we might warp the space-time continuum or something.

  19. Q8 Claire – it sounds like you’re not really enjoying it at all right now–it’s a busy location, too big, too pricy, etc. You’ll have to pay all those closing costs, etc. no matter when you sell it–it makes more sense to me to sell ASAP. You might want to talk to a real estate agent about the best time of year to sell a beach house and do it then–I expect it’s in the spring.

    Another possible idea is to find a way to take advantage of its busy location and hugeness. Can you invite friends and family over a lot to make it a lot more fun? Can you make it into a little bed and breakfast or otherwise rent out part of it somehow?

    When you sell, you might think about renting for a while. It’s quite possible that there’s still a perfect beach house out there for you, though maybe in a less expensive part of the country. You could have more choices after retiring or semi-retiring (so you don’t need to be near specific jobs). Meanwhile you could still live in driving distance of the beach for weekend trips.

    We all screw up. It’s brave to admit it instead of denying it. Take a lot of notes about what your new place and your condo–what you like, what you love, what you dislike, and what you hate. Your next purchase likely won’t be perfect either–it’s hard to know all the things there are to like and dislike–but it sounds like it can be a lot better.

    Good luck!

  20. #16 – I agree completely. Also backgammon, Sorry, or even Chinese checkers. Go together & browse the more classic board games at a regular toy store.

    Q4 – You can’t force your wife to face the issue directly, but you can do everything you can to get a budget set up that minimizes as many of the expenses you can control. And I agree with the FPU (or similar faith-based program)recommendation at comment 9, not to mention suggesting you both go to counseling by the pastor of the church who might be able to steer her toward the idea of taking personal responsibility.

  21. Q4: What, specifically, would you like your wife to do to “address your problems directly”? Do you have in mind a way for her to earn more money or spend less money? Or do you just want her to sit with you and stare at the numbers so you can tear your hair out together?

    It may be that your wife is distancing herself from the problem because she feels there’s nothing else she can do. And if you can’t keep up with your minimum payments, maybe there isn’t anything you can do either. Assuming the bulk of your debt isn’t student loan debt, your best option may be to meet with a bankruptcy attorney, with or without your wife.

  22. on prayer and money:

    My dad’s comment regarding faith and prayer:

    “Pray to God, but steer away from the rocks!”

    I believe in God and miracles, but I also believe we are given tools (skills, knowledge, and the ability to recognize opportunity) to help ourselves. Praying for money to fall into your lap is laziness, not faith.

  23. Q10: My husband and I have two small children and are pretty tired in the evenings. We enjoy playing Labyrinth, a board game made by Ravensburg. We really enjoy it because it doesn’t require too much thought for our sleep-deprived minds, but it’s not entirely based on luck – some skill is required, too. And although you are technically playing against each other, it’s not really that competitive when played by only 2 (you can play with up to 4 people). You can make the game as long or as short as you like by just not distributing all of the goal cards.

    Another game we enjoy is dominoes. There are many variations, and you can even make up your own family rules if you don’t like the details of a particular variation. It’s also a great game to start kids on, especially when they’re starting to learn how to count. That, and knocking down lines of dominoes is just fun.

  24. Q5: You have another option which would be a second mortgage instead of the full 20% down.

    If you put down 10%, you can take a 80% first mortgage for around 4% and a 10% second mortgage for around 6.5% (this is what I was quoted last month on a purchase price of $225k).

    Then you can plan on paying off the second mortgage faster than PMI, thus reducing your housing payment sooner and freeing some money for other debts, now and in the future.

  25. Q2 : You are worried that creditors might come after you. I take it you aren’t paying the debts now and they are in default. It seems worst case that you could always declare bankruptcy later. What does paying a lawyer to do bankruptcy really get you thats better than simply not paying the debts like you’re doing now?
    What about the childs father? I guess he’s providing no support? Why not go after him for support? And as AnnJo said your take home pay seems pretty low compared to your gross. You might adjust your W4.

    Q5 : Look at it this way. $250 a month for PMI is $3000 a year extra cost for that $57,000 difference. $3000 /year for $57,000 is basically the same as paying an extra 5.2% interest on top of the 3.7% mortgage interest. Thats more like paying 8.9% interest.

    If you put the money into the student loan you save 6.5% but pay 8.9% costs between the 3.7% mortgage interest and $3000 /yr in PMI.

    Q8 Claire : TO me it really sounds like you’re panicing about the $534k ARM loan. A big loan like that is scary. I don’t know why you’d take out an ARM loan in todays market either unless you don’t plan on staying in the home long. Your worry about the loan may be souring your experience about the house in general and fueling your buyers remorse. Hoewver you do say that you can save ‘several thousand’ a month. So it doesn’t sound like you’re in any financial jeopardy or that your loan payments are difficult at all. Whats the worst case scenario with that loan? You can’t make the payments for some reason and you have to move. Moving now would be a big waste of money. You’d probably end up paying a realtor $40-$50k in commmissions to sell your current home and another $10k in closing to get another home. All to end up with a home thats $275k cheaper than your current home and not on the beach.

    Stay in your beach house for now. If you’re worried about the mortgage that much then do something to mitigate that risk like piling up a larger emergency fund with your ‘several thousand’ per month in extra money. You could even get one of those insurance policies that help you pay your mortgage if you lose your job or are sick or such. THose policies are mostly not worth what they cost but if it helps you feel happy with the mortgage then it might be worth it to you.

  26. @Q2. Look into airbnb for options to increase your income. Since you live in the DC area you may do quite well.

  27. Q4, Carl, your wife needs a job, and if she still has all that time on her hands, a part time job also. You need a second job. “The Lord helps those who help themselves.” If she refuses to work to raise money to pay off debt, she may have some sort of mental illness which manifests itself in so much time praying and no time working to make money to solve your financial problems. I’m NOT saying people who are religious or pray a lot are nut cases. But a person who prays for financial success instead of getting a job / jobs and earning money to achieve financial success, may have a problem.

  28. I think Q4′s wife would be far more helpful to the situation if, instead of going to church all the time, she went to the Help Wanted section of the newspaper and got a job to help pay for their expenses.

  29. #31 Johanna: because she spends a LOT of time per day and per week praying and her husband is complaining that she does not face the problems directly.

  30. Where in the post does it say she spends “a LOT of time per day” praying? Praying can be done concurrently with lots of other things, and going to church a couple of times a week certainly doesn’t interfere with having a full time job. It sounds like people are judging her for praying and equating that with being lazy. Carl said she prays a few times a day. To assume from that that she doesn’t work is really jumping to conclusions.

  31. The amount of praying Carl’s wife does is not all that much and easy to do while also working full time. Theres no reason to conclude she doesn’t work. Heck we don’t know that Carl works for that matter.

  32. What Baley and jim said. Going to church “several times a week” and praying “a few times a day” does not take so much time that it would prevent her from having a job. Personally, I think that the sort of praying she’s doing is a waste of time. But it’s not like nobody else with a full-time job ever does anything that is a waste of time.

    And maybe she thinks that what Carl is doing is also a waste of time. Maybe what Carl is doing really is a waste of time. He does not elaborate on what he means by “address the problems directly.” Maybe he has a specific plan in mind that has a realistic chance of solving their financial problems. Or maybe he’s just sitting and stressing about it, and he wants his wife to sit and stress with him.

    But none of this actuall answers Carl’s question, which was not “What do you think of my wife for going to church and praying for money?” but rather “How do I get my wife to address our problems directly?”

    To which I’d say: First, make sure that your way of “addressing your problems directly” is actually doing some good. Then, explain to her what good it can do, and how much more good it can do if she gets on board. If she says she’d rather pray, tell her the “I sent you two boats and a helicopter” joke.

  33. My husband and I play a lot of games as well, we love The Rivals for Catan, a two player card game based on the Settlers of Catan tile game. We also play Mr. Jack, which is about a group of detectives trying to stop Jack the Ripper. It’s a board game with a twist – you take turns controlling a random group of characters and only one of you knows which character is Jack. Both take under an hour to play and offer a lot of re-playability. Rivals for Catan actually has a basic level and three more advanced levels.

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