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this old house

Mar 18th, 2009
by Jim Reverend.
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It looks like I'm getting stuck with the house (and the SUV and the credit card debt). So I'm trying to decide how best to work that out and I'm hoping that writing it out and your advice together will help me find the best solution.

(This is really not about why I'm stuck with these things or ways around that. If you've got something to say along those lines, let's save that discussion for some other place. What I need here is advice assuming that I am stuck.)

THE PROBLEM

The problem is that we still owe $150k on the house. In this market, I'd be lucky if I could get $125k for it. Recent home sales in my area are going for $77/sqft (which would fetch me about $175k) but with 120 days on the market and very few actual sales despite the number of signs up in my neighborhood. As Jess and I learned a while back, they simply aren't selling for a reasonable price due to the foreclosures. So, that leaves me $25k (or more) in the negative. That's $25k I simply don't have to throw at this problem. So selling the house is not an option.

I spoke to a mortgage guy. I simply don't make enough money to qualify for TWO homes, so renting this one out at a loss and buying another, much cheaper house is not an option unless I start making more money. Recent changes in the mortgage industry keep me from using the rental income to qualify for the second home. So buying another house is out.

My "wife" is asking for child support as well. With a house 3 times bigger than little ole Celeste and I need, a car payment that's about 50% higher than would be ideal, and credit card debt out the wazoo, I'm living on the edge of my means. Coming up with child support seems impossible. All of these things made sense when we were a team
working together to solve a problem. At two separate entities seemingly working against each other at times, it just doesn't work.

POSSIBLE SOLUTIONS

An apartment
I could move into my mom and dad's house temporarily and try to rent my house. Once it rented, I could try to find an apartment for Celeste and I.

I'd probably have to rent for less than I pay in mortgage. I pay $1400/mo in mortgage stuff, plus another $600 or so in utilities — $2000 total. If I could rent my house for $1000/mo and find a cheap — I hate using that work in relation to apartments — cheap apartment for us — say $800/mo or so. I might be okay. Utilities in an apartment shouldn't run more than $200 which means, if I'm doing my math right, I'd have $600 more in my pocket each month than I would otherwise. That's a start.

Of course, then I'd have to live in a "cheap" apartment which is not really what I want for my daughter.

Mom and Dad
My Mom and Dad are very generous. They've offered Celeste and I a place to stay that would include a room for each of us, food, utilities, and everything else you could imagine (including free day care) for free. We would basically have the entire upstairs of the house they have in Keller, a very nice house in a very nice neighborhood that's just as close to where I work as where I live now.

This would allow me to seek a renter for my house (even at a rate lower than what I pay) and use the difference to pay for child support and start building up a bank of cash to use to help qualify for a new home in the future.

Of course the downsides are not having a place of our own, having limited ability to entertain guests (dates? hahaha), and having to live under their rules. However, we see eye-to-eye on most things so I don't see this as too big of an issue.

Room Mate
I could find a room mate. I've even got enough space to take in a room mate with a child. The savings there could possibly offset some or all of the child support. But finding someone I trust to live with my daughter, that I get along with, and that is willing to live where I live may not be easy. Is this you? Do you know someone?

Abandonment
It's really a bad idea, but I want to write it down so that I cover everything. I could just walk away from the house. Just let it rot. My credit will be ruined (and probably Jess's too) and I'll never again qualify for a house or a car or even a credit card. But, with the amount of money I'd save, within a few years time, I might be able to save up enough to pay enough cash to be considered for something. And, if I can sneak an apartment lease in there before my credit looks too nasty, I could afford a nicer place that might be more sustainable.

YOUR THOUGHTS

I'd love to hear your thoughts. Are there other options I haven't considered? Which of these sounds the best to you?

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  • lys1123
    I think you might be overlooking an option here. You alluded to the idea, but didn't put in on the table.

    Option 5: Make More Money

    Based on your apartment option I'm thinking you need around $500 a month more to make ends meet. If you were to hang out your shingle and treat your photography like a real business then I have no doubt you could make that much, even doing it part-time. It would probably mean taking photos that don't enrich you artistically, but I think you should consider the advantages of the option. Start by contacting people, asking if anyone would be willing to do a paid session, and seeing what sort of response you get. You can test the waters on this idea fairly easily if you are willing to put yourself out there.

    Incidentally, if you do give this idea a try you can put my family down for a paid session.
  • I didn't overlook it... but you're right... I should have mentioned it.

    There are pluses and minuses here.

    I don't mind taking photos that don't enrich my artistically. I enjoy
    working with people and I enjoy the artistic leads that working for
    other people tends to generate.

    The downsides are these:

    I'd need to do only location work, charge a lot more in order to rent
    a studio on a job-by-job basis, really rake in enough dough to have a
    full time studio, or figure out how to build a studio in my house
    again.

    Being a single parent means I can't just take off a day whenever I
    need to because my partner will pick up the slack. If monday is my day
    with Celeste, then I can't do a photoshoot monday night without lots
    of work and negotiation. Even if that wasn't an issue, Jess and I
    still haven't worked out an official pattern for custody, so, I can't
    even be sure what days off I have.

    But, if I can work out the above two things, this idea is absolutely
    on the table. I was just discussing it with my mom the other day,
    actually.

    And, even though I'm not actively advertising for new work right now,
    I'm always willing to take it. I actually have a photoshoot lined up
    for this weekend.

    I'd love to photograph you and your family.
  • Sarah
    I'm not sure which option is best for you right now, but whatever you do, if it involves child support AT ALL you have to do it through the state. Let me tell you why. If this goes to court, and the state says you have to pay child support, even if you have been paying money to Jess of your own free will, if it's not through the attorney general, it doesn't count. And they will look for what you owe back to the beginning of when you guys split. So, say, years down the road, if it got ugly (and I am totally not implying it would, this is all worst case scenario), and there was no legal record of the money you paid, you would owe it all again. And then some. So even if you guys are doing this amicably, and don't really feel the need to, you should anyway just so it's on the up and up legally. That way no one gets screwed down the line. And if you go into it agreeing on stuff, the state is all for that. They will, in most cases, basically just let you fill in the blanks on the agreement.
  • We intend to make it legal once we can agree on how it should be.

    The problem is, trying to make it legal before we both agree means we
    have to pay our lawyers to agree for us... and that's a lot of money.
  • Julie
    You should stay with your parents, at least for a few months, while you rent out the house and use that money to pay off some of your CC debt. But ask for more than 1000 per month, I've been to your house, you can get more. nick and I pay 1200 in rent and our house is smaller and not as nice. Once you pay off some of that debt, than look for an apartment.
  • I wish I could ask for more than $1000/mo. They just wont pay it up
    here. Jess and I had it on the market for about 4 months listed at
    $1200/mo. We got some bites, but no takers. Then again, I found out
    after the fact that Jess was turning away requests to see the house, so,
    maybe that's why.

    An apartment would be okay... but I'm starting to think I would almost
    prefer to live with my parents over an apartment. So... if I did that, I
    might just say there with them until I could buy another house.

    So that's the big debate now. Stay here or move in with mom. If I stay
    here I'll seek out a roommate whenever one comes around. And if I move
    in with my mom I'll stay here until I can rent it or sell it and, if I
    try for some set period of time (3 months ... 6 months) then I'm going
    to start making changes to the house to at least get it the way that I
    want it now that Jess doesn't have a say.

    Thank you for your thoughts. You rock.
  • I 100% agree with Cynthia and and ramona - if you're parents are willing, then go there until you can offload the house.

    Rob...
  • It could be up to 5 years before I can really get out from under it
    though. Is it still reasonable when considered that long term?

    My parents are also moving to another city within the next 2 years. I
    would have to move with them, in that case, which should be fine for
    work, but might make other things more difficult.
  • Jez
    Wow, that's a dilly of a pickle you're in there.

    In regards to an apartment, I think your math might be off. You currently pay $2000/mo, if you rent it out for $1000/mo that still leaves you having to pay $1000. Get an apartment for $800 + $200 in utilities would equal another $1000/mo, so you'd still be paying $2000/mo, am I right?

    If you were going to rent the whole thing out, maybe you could have multiple renters. 3 people at even $500/mo would put you in a better place.

    Living with your parents: Might be the best option, provided you could find someone to rent your house out to. That would save you quite a bit of money.

    Roommates: A great option provided you can find someone that is interested and that you trust. That's the hardest part.

    Re: Child Support, maybe this is a case where it would be a good idea to consult an attorney? Getting something worked out that works for all parties is the best course of action and sometimes attorneys can be helpful in that regard.

    I wish you luck
  • The $2000 a month included bills. Mortgage is only $1400 a month and the
    bills would belong to the renter.

    Multiple renters would make liability a chore for me. Probably not worth it.

    Consulting an attorney might not be a bad idea. However, there is a lot of
    free info on the web. Most of it says that, if we agree then we agree and
    that's that. And if we don't we go to a judge.

    With a judge, it's pretty cut and dry. Whoever gets primary support the
    other pays child support. Assets are liquidated and split when possible.
    When there is joint custody, it's usually because the parents could agree
    and generally no child support is awarded.
  • ramona
    if you truly feel like you can live with them, i would go for the living with parents and renting it out first, abandonment second (given you don't need to apply for credit any time soon), and all of the other options equally suck, especially roommate. fastest way to ruin a friendship if you know the person, and if they're a stranger, well, you don't want a stranger in the house with celeste.
    i think child support is absurd, since you're taking care of celeste most of the time, but like you said, that's another discussion. and you're a good guy. so.....
    keller's not that much farther from here, and i love a good jaunt to southlake town center/central market ;)
  • Right. Finding a roommate I can trust and that won't lead to both of
    our hatred and destruction will be difficult. I can't just put on ad
    on craigslist and hope. There's no way I'd trust my daughter with a
    stranger in the house. So... it would mean living in the house for a
    bit and hoping to meet someone that just happen to fit the bill. Also
    unlikely.

    My parents are probably the best option. And... really... it's not a
    bad one. Not in the grand scheme of things.

    I guess an option I didn't mention is that I can stay where I am, do
    what I've been doing, and get rid of important things that are just
    less important (cell phone, internet access, etc) and/or simply not
    pay child support until I'm ordered to do so by someone with
    authority.


    Generally, in a joint custody (50/50) arrangement when indicated by
    the courts, child support is not paid by either party and daycare
    costs, when required, are split equally. I'd happily submit to this
    arrangement and would even agree to cover any and all additional
    expenses including food, clothes, and whatever else that Celeste
    required.


    And you're right... from your place to Keller and from your place to
    my house is roughly the same. :)
  • If it were me, I would probably choose the living with the parents option, at least as a stop-gap measure. They're a major part of your support network, which you and Celeste are both going to need before you are able to completely get back on your feet.

    Both from a financial standpoint and an emotional standpoint, I see that as the best of the options you've presented. Plus, they're going to be supportive when you need some time out by yourself. You can always have dates in other locations ;)
  • You make a good argument. Now that I think about it, I've spent a large
    chunk of my free time at their house even spending the night many times.
    Looking at it from what will support us the best, I think you're probably
    right.

    And my parents live a lot closer to the rest of my support network than I do
    now.

    And my parents rock.
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