Considering some major changes


#1

Lately, DH and I have been discussing our financial situation…which isn’t HORRIBLE…but definitely isn’t GREAT either. We “own” our home…but that just means we have a big fat mortgage. As a matter of fact, as a result of a poor decision when we first moved into it (7 years ago) we also have a second mortgage, :rolleyes: . Additionally, we bought a new minivan last year when we had our third child. While a different/bigger vehicle was warranted. a “new” one was not…however, we fell for the salesman’s line about how when it comes to minivans, you’re probably better off buying new because you’ll drive it forever, etc. Yeah, we’re kind of suckers that way…but we did get a decent loan on that (only 4.5% APR) and only 60 months, so the principal has been paid down quickly. I also have an outrageous balance of student loans and simply thank God every day that the interest rate was locked in at 3.5% and it’s a payment I could handle for the most part.

Anyway, we have kind of come to the conclusion that it might be the smartest move to sell our house, pay off the mortgages and as much of the van’s loan as we can, settle into a small apartment with the girls for 12 - 24 months and sock our money away (which will become much easier once we do not have a car payment anymore) so we can buy a new home “the right way”…and to us that means having a 20% down payment. We figure if we have the discipline to save up for a 20% down payment, then we are ready to handle a house again.

These decisions have been hard to come to. I met with my priest this morning. He asked about why my oldest isn’t in the Catholic school there…of course, as I stated our reasons that we came to regarding why we keep her in her public school…they sounded much more shallow (IMO) as I said them to him than they had to us when we first formed our opinion. The school is a wonderful Catholic school where all children do an age appropriate amount of adoration each week and I see the projects out when I take my daughter to the Sunday school classes…Catholicism is weaved into all the subject. Anyway, we are now considering an apartment complex close to our parish and seeing about putting her in school there (she’ll be in 1st grade). But, no matter what, we must sell our house before anything can materialize…and our current residence is about 10-12 miles away from the parish/school.

Another problem is…until we sell the house, we will be unable to contribute the amount of money necessary to cover education for our family at the school (the Parish has it set up…a certain %-age of tithe … maybe it is 7%???) and the family pays no tuition, no matter the number of children in the school.

I’m ashamed to say that DH and I do make a middle class income (together), but due to our debts, there is usually not much left after each paycheck and we care for our children’s needs. Yes, we overextended ourselves and now we are hoping to get ourselves out by selling our house…but until that happens, the bills are still there to be paid…

So, I am considering still calling the principal (a sister) to have us take a look at the school and perhaps discuss our options. But we may not be able to actually enroll our daughter until January and maybe not until the next school year (when she is in 2nd grade).

Does anyone have any words of encouragement or advice for me? Has anyone ever been in this situation? It has taken quite a bit of growth on my part to come to the conclusion of what we have to do…and DH is coming around, too…I’m trying not to spend too much time feeling ashamed and just focus on what needs to be done. Our house is in a growing area and is probably one of the smallest in the subdivision…but we have cared for it well and hope to get a good settlement out of it.


#2

God bless you for wanting to provide a Catholic education for your daughter! The successful sale of your home will be in my prayers. :slight_smile:

~~ the phoenix


#3

The best Catholic education you will give your children will come from YOU and your husband.

If Catholic school education will put you more into debt, I would opt against it.

Getting out of debt is a good thing. Go for it.


#4

What do nice apartments and/or homes rent for in your area? Are you going to be spending about the same or way less? Can’t you just trade your minivan in now or sell it on autotrader, craigslist or something of the like?

I guess it seems sad to lose the equity you’ve already built into your home already and with housing prices falling and houses not selling, what if you don’t get your asking price? I’d also consider how much is going to be left after you pay your commission, etc.

It’s great that you want to send you kids to Catholic school, but I don’t think you should give up your home to do so.


#5

Well, the giving up the home thing is going to happen regardless. I’m just sick of it, really. It was just today, we seriously began considering the schooling thing again. We have equity in the first mortgage…it’s the second one that eats it all up (poor decision, again). And honestly, at this point…the van…well, we’ve had it 14 months…might as well keep it and get it paid off ASAP.

The apartments I have seen that are 2 BR are tops $655 / mo or so…that is 1/2 the cost of our 1st and 2nd mortgages alone. So, yes, it would probably be a good thing to do at this point and just “suck it up” and sock it away for 12-24 months.

Thanks, though! I just wondered if anyone else had ever gone form “owning” to renting again temporarily…and we DO plan for this to be temporary at this time.


#6

As for financial advice, it is not always the “Right way” to put down 20% on your home. It might make you feel more secure but the money “in” your home makes no money. In other words, if your home appreciates, it will do so whether you have paid it free and clear or owe 100% of the purchase price.

I say, keep the kids in Catholic school, and ten years down the road, if you are still in the same house, you will probably chuckle at your mortgage payment. I remember our first mortgage, $800. I worried so much. We had no equity in the house either. What I would give now to have that mortgage payment again. I’d be rich!!! lol

Caveat: I am not a financial advisor so please don’t take my opinion as professional advice. Just experience.


#7

You mentioned that you have three children. A two bedroom apartment is not very big. If you put three children in one apartment bedroom, they would really be crammed in. Apartment bedrooms are typically much smaller than house bedrooms. It sounds like the poor kids would really be miserable in there. Where would their toys go? Are there any parks nearby where they could play outside?


#8

Have you seen a financial advisor? Yes, it costs money, but it’s well spent. We saw one early this year and got some really good advice. —KCT


#9

They are small right now and not home every day of the week as it is. We do have lots of toys…I imagine we’d make things work. The older two already sleep in bunkbeds, and a toddler bed isn’t all that big for the baby to move into in the next 6 months or so.

Nothing is really final anyway…and if our house doesn’t even sell, well, it’s all moot. There are two major parks in walking distance, there are also two pools and a playground on one of the complexes looked into. None of this is going to happen tomorrow or anything…I guess we were just thinking that cutting our housing bill in 1/2 for a small period of time to get back on our feet, might be a good thing and if it meant that we get into a situation where we can put our dd’s in the Catholic school, it would also be a bonus.

Believe me, this wasn’t the first idea to come to us regarding “fixing” our situation…over time, it has just seemed like the best way to go. We’re still thinking/discerning, but still getting our house ready to put on the market.

We are just trying our best to find the way to follow God’s Will as best we can…and right now, it seems we should at least get our house on the market and take it from there.


#10

About the financial advisor…we are planning to see one. WE started a college fund for our oldest DD when she was a baby. People had given us money for her and so we put it all in there…amounted to something like $1500 or so…anyway, we really haven’t been back since we opened it, but we trust her, so we’ll probably pay her a visit.


#11

Have you asked yourself whether Catholic homeschooling is an option for you?

amazon.com/Catholic-Education-Homeward-Useful-Schooling/dp/0898705665/ref=sr_1_13/103-7408097-6083055?ie=UTF8&s=books&qid=1183841364&sr=8-13


#12

Ah yes…actually, part of our pridicament is due to our feeling called to have me at home (no longer work outside the home) and pushing that along too fast…so when we realized our situation was one in which we couldn’t live on DH’s income alone, we seemed to be further in. Actually, I had thought that going this route (selling the house, renting for 12-24 months then trying again) might be a way to move us along. My DH has now been promoted and is one step away from a position where he would make a salary and something we could rely on (currently hourly, so they can send him home early and he doesn’t make as much). he is now in a sort of “trial” supervisor position and one more position would make him salary, and bump him up a bit income wise. Anyway…if homeschooling is in our future, it is quite a ways in our future…maybe 5-10 years from now…which might be perfect as that is when our oldest will start high school. Anyway…thanks for the suggestion and it is one we constantly re-evaluate and keep in our prayers. :slight_smile:

Thanks for all your replies…this is an ongoing discernment process and I just pray right now that we make the right decisions and do what we are supposed to do.


#13

Definately speak to a financial advisor before you resort to selling your house! The early years of marriage and family life frequently have tight financial situations that improve over the years with good investments–and real estate is usually a very good investment.

I don’t know the area where you live or how the housing market will turn in the next few years, but I would advise you not to sell a house and move into rental *unless you have a strong sense that the bottom is going to drop out of the housing market where you live or unless you face foreclosure. *I heard of a family who did just what you want to do, and a year after they sold the housing market went wild to the point that their old house value doubled.

Think of real estate as an investment that you live in, and unless you think the investment will loose money, (such as pending foreclosure or dramatically falling house prices) its usually financially wise to own a house compared to renting. Several years ago, we sold our old house and rented while we waited for our new house. When we factored in the tax advantage on the mortgage interest, the cost of the rental wasn’t much less than our old house payments. Don’t just look at what you pay for your mortgage and property tax–look at the tax advantage of owning a home also, as that also affects your financial picture.

Sometimes people buy more home than they need, but even in that situation, selling and buying a smaller home may not be financially wise. Real estate agents recieve a sizable percentage from the sale of the homes. Again, speak to a good financial advisor before making any permanent changes. We don’t know your full financial picture to give you specific advise, but as a general rule owning a home is a very wise financial investment.


#14

I echo the Catholic homeschooling suggestion b/c it is so hard to find a good catholic education nowadays and honestly, homeschooling isn’t as daunting as it appears. I dunno if you work full or part time, but if you work part time now, then homeschooling is totally possible. It doesn’t take up as much time as one would think and since it’s flexible, you can adjust it as you need to around work. It’s waaaay cheaper also, which is a big plus in your situation :thumbsup:


#15

I thrid the idea of a financial advisor. You might also consider refinancing and rolling your 2 mortgages together. I do understand want to get out of debt and wanting to have your kids in what sounds like a great Catholic school (although homeschooling can truly be wonderful). Consider also whether you when/if you would have a 4th child–at that point having your own house with room for all will be a real blessing. Ask your priest and the school principal to pray for you also.


#16

I’m not a financial wizard either, but wouldn’t the closing costs on one (or two) houses negate much of the benefit if only renting for one year? I would definitely talk to a financial advisor on that one.

Also, the Catholic school thing… just speaking from my own experience… Catholic school keeps our whole family close to the church, not just the kids of ours that go there. Don’t underestimate the effect it could have on you, not just your kids.

That said there are a lot of great Catholics that don’t go to Catholic school… I’m sure the debate could go on and on…


#17

Speak to the pastor and principal, explain your situation. They might be able to help you, esp., for the 1st year.

Tell them you would volunteer to clean the church, or work on the grounds or something in exchange for the tuition. Those passionate about catholic education are very flexible, esp. if you are a “good” catholic going through a hard time (by “good” I mean a very regular massgoer). :slight_smile:


#18

The tithing part of your post just hit me. Malachi 3:10 “Bring the full tithe into the storehouse, so that there may be food in my house, and thus put me to the test, says the Lord of host; see if I will not open the windows of heaven for you and pour down for you and overflowing blessing.”

Financial planning is largely about prioritizing what we spend our money on. Tithing is a sort of “financial planning” that puts contributions to God as the first priority. As you plan your finances, consider that the Bible does say tithing gives us the chance to “put God to the test”.

Again, I don’t know your financial picture, but when money is tight, rather than holding onto things tightly sometimes we need to be ready to give things away. You seem to recognize that in wanting to “give away” your house. Maybe you could try looking at your house payment as a method of savings and instead give away some of the other money you save for your children’s education.

It sounds like you live in one of those diocese that offers basically free Catholic school tuition to those who tithe, which is a huge advantage. The cost of Catholic tuition in other diocese often exceeds the average family’s tithe, so from a practical worldly standpoint, your diocese offers you an educational bargain. (More children in Catholic schools may also keep the property taxes lower, as those children need to recieve an education somewhere–again from the worldly financial perspective this is a good idea.)

When you speak to your financial adviser, I think you should talk about tithing. Make giving back to God your first priority, and you may discover that He opens the windows of heaven to bless your family.


#19

Anyway, we have kind of come to the conclusion that it might be the smartest move to sell our house, pay off the mortgages and as much of the van’s loan as we can, settle into a small apartment with the girls for 12 - 24 months and sock our money away

I disagree.

Seriously look into doing a re-finance, and rolling your outstanding major debt (2nd & car) into a new fixed-rate mortgage… yeah, you’ll pay some costs, but it’ll stretch out your monthly cash flow, and you’ll instantly OWN your mini-van (a tangible asset that could be sacrificed for a “lesser” vehicle, and pocketing a few grand in the process).

IMO selling a house, and going back to renting is about the same as taking $100 bills and flushing 'em down the toilet.

However hard it is to do, every $$ you pay towards your mortgage is equity - in the single most valuable item a family will purchase… yeah, right now you might only own the front doorknob of your home, but next month you’ll own the hinges, the next month the whole door…


#20

I’ve been in this situation. My husband and I got in way too deep with a $300,000 house in San Antonio. We also had our children in Catholic schools. Our expenses were enormous. Finally we woke up one day and said, “What are we doing???!!! This is ridiculous!” So we sold the house and moved into a very nice rental home for 6 months. Bear in mind, our kids were teenagers! We moved the boys in one bedroom and the girls in another. We got back on our feet gradually and were able to keep the kids in good schools, which in my opinion is the single most important thing we ever did for our children, who are all now in college (or married) and doing great.
We have since bought a much more modest home for $72,000, added on two bedrooms, so everyone has their own bedroom; and our payments are only $600 per month. My husband and I both work and are able to help our children through college and with their other expenses (with teenagers it’s always something!).
We no longer feel out of our depth financially. Sell the house - it’s only a house! Your peace of mind is much more important and you can always buy another one in a better price range.
But IMHO, get your children into Catholic schools ASAP! It’s worth every cent!


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