Financial advice?

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We have recently bought our 1st house, which we managed to get a mortgage for by accident (a mistake on the advisors part) an accident that I am truly grateful for! I love my home & after moving 3 times in 1 year…uprooting my kids, I don’t ever want to move again. However, we have had fanacial difficulties and both me & my partner have bad credit history from before we met that we have never been able to recover from. We managed to get a small secure loan after we moved which we used to put in a Kitchen & bathroom (the property was very run down when we bought it) we are now struggling to keep our heads above water and are behind on many payments to creditors & stupidly got a couple of payday loans that take up all my partners monthly pay so we have to repeat the loan each month to pay the mortgage. We have tried to increase the secured loan unsuccessfully as we only have 8 months mortg history and bad credit. I don’t want to sell the house & start over so I’d love any suggestions ?

  1. Reply
    May 4, 2011 at 12:42 am

    Check this for really good ways to save money…

  2. Reply
    Lori K
    May 4, 2011 at 1:20 am

    You and your partner will each need to get a 2nd part time job for about 6 months. Get out from under those payday loans as soon as possible. Start paying down your debt. As soon as you are comfortable, start easing out of the 2nd jobs. It will be difficult, but most of us have had to do it at some time in our lives…usually with a first home.

  3. Reply
    May 4, 2011 at 2:16 am

    If you don’t stop taking out payday loans you’ll never get ahead. They charge ridiculously high interest. Call your mortgage co. and tell them you are a little behind and ask if you can only pay the interest this month. Since you haven’t had the house very long the interest will be most of your payment though so it might still be a stretch. See if there’s a credit counseling agency in your area. They can’t help a whole lot with the mortgage but they might be able to help lower your payments on your other loans so that you’ll have more cash free to pay your mortgage. Other than that, is there anything you can sell? You or your partner might want to try to get a second, part time job until you can get caught up and get things under control. If either one of you like to get up early, get a paper route. You might be surprised how much you can make. Or one of you could deliver pizzas or wait tables in the evening.

  4. Reply
    May 4, 2011 at 3:02 am

    The only way to get out of debt is to earn more or spend less. Pay day loans, etc. are just deferring debt payments and can only go on so long – as you now know. You aren’t paying off debt if you are borrowing to make the payment. You are just transferring it from one debt to another (and usually the “other” is at a higher interest rate, so by doing short-term loans like payday advances, car title pawning, etc. you are making things worse and getting deeper and deeper into debt without even buying anything new.)

    Since you are unable to pay less on the house, you will have to pay less each month in other areas. If you are only buying the bare minimum necessities and can’t cut back anymore, then the only option is to increase income.

    You didn’t say how much you were having to borrow each month for the payday loans. First thing is to get back to where you aren’t having to do payday loans. If that’s only a few hundred dollars, a quick option that you may want to consider is having a yard sale so that you can make enough to get out of that viscious cycle. Other ideas for quick cash to break that cycle would be to cut grass for people or clean houses.

    After you get out of that cycle, one or both of you will need to get a 2nd job in order to catch up the bills you have. However, sounds like even once you catch up the past due bills and get out of the payday advance cycle that you still may not have enough income to make the bills month to month. In that case, you guys may need 2nd jobs long term.

  5. Reply
    May 4, 2011 at 3:44 am

    You sound like you are trying to be responsible. The responsible thing is to sell your house and pay off the debts, rent for a year and try to start over again fresh.

    You can look into filing a chapter 13 bankruptcy, putting all derogatory acounts and late payments into that plan, settle on a low monthly payment to the courts for 3 years, and make your mortgage payments outside of the plan. That would also be a responsible thing to do, because you are still paying back the debt.

    1 year into the 13 plan you can refinance withan FHA loan as long as 12 months payments to the bankruptcy trustee are on time. By including this negative debt into the plan, the FHA underwriters would not look at anything except the payment history to the trustee for your debt and payment history.

  6. Reply
    May 4, 2011 at 4:19 am

    Well, yup, sounds like most of us 🙂 Here’s a little advice for bills you may have all around.
    *If you have credit card debt – PAY off your debt from smaller balances first, and so on. People tend to pay off HIGHER interest cards first, and they should pay off smaller balances as it’s easier and will easily eliminate one minimum payment, leaving you free with more money after paid off to pay other bills. If you’ve paid on a card for a while, call the company and nicely ask if you can request an lower interest. Also, you can transfer your higher interest cards, to your lower interest cards to help relieve your payments.
    *If you take out more loans, you’ll easily become overwhelmed and in more debt. What you need to do is make a chart on a board so both of you can see breaking down ALL your payments…this can be from electricty/utilities, to the loans you have. Payday loans are OK for need quick money type, but remember, you’re only paying it all back when you get paid PLUS interest fees. So you’re just losing money. Paying off debt is all about dispersing your paychecks accordingly. PAY YOURSELF FIRST> meaning if you get paid, lets say $ 1000 2/wks. Put $ 50-100 in the bank for savings and don’t touch it. PAY YOURSELF FIRST!! lol..THEN pay off all other necessary bills. If you dont have to pay everything all at once, then dont. Instead of paying a lot you owe in two weeks for $ 300…see if you can pay $ 150 now, and $ 150 next pay. I would greatly help you out if you’d like with dispersement of payments for you and your partner. My boyfriend and i are in the same predictiment (minus the morgage) but it’s the same difference.
    *Since you DO have a house, try slowly, cheaply, and creatively decorate and improve. Cheap improvements can be new carpet, paint, window treatments, etc. I know you dont want to move, but if you fix up this house a little bit, turn around and see what it’s worth. You may find yourselves making $ 20,000 at least easily on the market. A house is a great asset to have that you can turn around and sell and get the difference of cost, and put that towards your next DOWN payment. Anyway, there’s numerous ways to go about this..if you’d like detailed info, you can e-mail me. Good luck!

    And from comment above, DONT file bankruptcy if you don’t have to. Doesnt matter what chapter you file, but when i collected on people at my previous job and they were going to file, i let them know it affects your credit..and even though you’re hurting now, you may be better later in years, but it will STILL be on your credit – for 7 – 10 years. Instead, see if you can do some research online with a loan company dealing with bad credit and try to CONSOLIDATE your payments. That way instead of numerous different payments, try one easy monthly payment a month.

  7. Reply
    Happy to Help
    May 4, 2011 at 5:18 am

    Sortaclarksville gave you the bottom line truth.

    Spend less and make more money. Pay down debts.
    Stay awy from loans – you’ll just sink further into debt.

    Here are some resources that may help for additional income:

    Even with the above resources or others – it may take a minute to get things rolling so be willing to find part time additional work if necessary.

    Regardless of how much debt you are in start setting aside 10% of your gross income and place it in a high interest savings account. Always pay yourself first. It’s the first law of attaining lasting long term wealth.


    The Richest Man in Babylon & The Automatic Millionaire

    If you are not willing to do the above, then it may be wise to flip this house. You should get more than you paid since you did some home improvement.

    Just don’t get into any further debt.

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