Hi all, I'm on the horns of a dilemma, and am asking this question of /frugal, /financialindependence, and /personal finance. I will then combine all perspectives to make my final decision. Below, I've laid out my personal details, budget, debts, assets, and 8 possible options on how I can move forward.
Personal Details
- Location: suburb of Seattle (50 minutes away by public transit, so can sleep on the public transit).
- Me: Single 49 year old male (no kids), with a fair amount of IT skills, should be easy to get another job as I look young - appear to be about 37-39. Currently unemployed as I moved to another city to be near my now ex-girlfriend, and then moved back. I rented a room when I moved to that city, so I appear as if I've never left my house.
Budget:
- Mortgage: $1250/ month .
- Unlimited Cricket phone $65/month
- Food: $200/ month -> just got a hotpot, so am eager to lower this bill.
- Gym: $21/ month
- Netflix: $15/ month
- MoviePass: $99/ year. (about $10/ month)
- Coffee: $300/ month. This will be $10/ month as I've just discovered the joy of French Press...so good!
- I will confess my ex-girlfriend loved going to very expensive restaurants (paid by me). I don't plan on dating until my financial situation is under control - or I find someone who's willing to split dating expenses.
Assets:
- House is valued at approximately $270,000 - I owe $155,000 on it. So, after selling would have about $100,000 (had house since 2004, and have been living in it the entire time, but need to pay realtors).
- No 401K (cashed out when I was an alcoholic - fully sober for over a year now) or retirement savings. Yep....way behind where I should be financially, but just counting my blessings on no longer drinking.
- Car is a 2012 Prius, fully paid for. Value about $8000.
Credit Score:
- 626 - it was 780 before I started racking up the below debt. I'm at 100% on all payments now, so if that debt was paid off, I'd be anywhere from 790 to 810( I was at 780 with a 97% on-time payment rate).
- I used /pf to raise it to 780 from 580 (thank you!).
Debt - the following debt was incurred to fix up my house and cover day to day living. I am doing all the work myself, so have saved a lot of money with that, but materials cost money.
Total Debt:
- $56,082.37, if not including school debt or parental debt.
- $71,082.37, if not including parental debt, but including school debt.
- $101,082.37, if including all debt.
Debt Details:
- Mortgage: $155,000 left, $1250/ month
- Assorted credit cards - 26,082.37 debt incurred. Total Credit Limit $52,300.
- Personal loans through Marcus and Prosper: 15,000 each or $30,000 total.
- IRS: have not paid taxes for a few years - I owe $10,000 for the first year of those years. Due to the alcoholism,and being wayyyy under-employed, the government most likely owes me money for the years after that. So, $10,000 to the IRS minimum, maybe $12,000 maximum.
- Parental Units - owed $30,000. They are comfortably retired, so there is no pressing need to pay them off immediately - but I WILL pay them off no matter what happens.
- School Loans: $15,000. I know - I should have paid them off when I had the money.
Wildcard (IASIP):
My house is on a huge lot. I have a tiny house on it that I can move to the far part of the property, and live in it legally while renting out my house. The house would rent out for $1600-$1700. So, everything would be covered including food. Zero bills as long as I'm frugal.
Potential Jobs:
Should be able to get a job anywhere from $45,000 to $55,00 minimum. I am evaluating possibly hitting a code academy, but at 49, not sure if that would be a good thing to do. I'm good at coding though, and learn very quickly. Still researching it...
Potential places to move to:
Outdoor activities on the weekend are very important to me, as it keeps me out of bars.
- If I stay where I'm at, biking around Seattle, surfing in Westport, or stand-up paddleboarding on lakes near Seattle.
- In Portland (which I'm in love with), biking around Portland, wind-surfing on the Gorge, and surfing at Ecola Beach.
Variables:
- Interest rates are moving up, and housing prices might crash. I bought my house in 2004, and watched my house's value crater in 2008/2009. Very sensitive to this.
- Self-driving cars might cause housing values in near suburbs to crash - why pay more for 1 hour away, when you can live 2 hours away and pay 1/4 less? On the other hand, the massive loss of driving jobs might cause a necessary implementation of UBI (Univeral Basic Income), so being a landlord might be advantageous.
Which option do you recommend? I know which one I'm leaning towards, but am very eager to hear your opinion/recommendation.
Option 1:
- Don't sell.
- Rent out the house and tiny house it up.
- Get a job and use the lack of mortgage to pay off all debts - probably take 3/4 years to get them all paid off. Getting two jobs is not really an option due to the commute.
Option 2:
- Don't sell.
- Rent out the house and tiny house it up.
- Declare bankruptcy, using Washington's bankruptcy wildcard housing exception of $125,00 to shield house and car. Due to the recent upsurge/possible continued upsurge in value of the house, might lose the car. While I would hate to lose the car, I can get by with a bicycle if needed.
- Note: I'm very good at building up my credit score thanks to /pf. I believe I could be back to 700's within 2 years.
Option 3:
- Don't sell.
- Don't sell, bring in roommates to cover all but $200 in the mortgage, and split all utilities.
- Declare bankruptcy, using the housing exception, etc.
Option 4:
- Sell.
- Use the $100,00 profit from the house to pay off all debts, except for parental debt, leaving $30,000 to live on while moving to Portland.
- I am very comfortable living out of a car using 24 hour fitness/ storage locker, etc to keep expenses low until I get a job.
- Pay off parents after getting a job.
Option 5:
- Sell.
- Use the $100,000 profit to pay off all debts, except for parental and school debt, leaving about $44,000 to live on while moving to Portland. (live out of the car..etc).
Option 6:
- Sell.
- Pay off all debts, including parents. Live on the street in Portland making use of 24 hour fitness, storage locker, etc.
- Use credit cards to pay for food, until I get a job.
Option 7:
- Sell.
- Use the $100,00 to live off, and don't pay off the debts, but pay them off incrementally until I get a job.
- Move into an apartment right away.
Option 8 ?
Thank you very much for your help on this!
June 07, 2018 at 06:03AM
