The beatles Case Study

[The beatles]

Where we live, the town sells unpaid tax liens to a 3rd party collection agency.

We asked the collection agency if they could take the house and they said yes, but probably won't because we don't owe a lot.

They said we could put 10% down and pay monthly as well.

I am going to let you in on a little secret.

Here is how these companies make money.  There are two options.  (A) the owner redeems the property, in which case the company gets a really good interest rate on the money it used to pay the taxes, or (B) the company gets the property.

I personally know persons who have built millions in net worth mainly by getting the property.  They look at getting their money back with interest as a downside to this business.  Their goal is always to buy tax liens that are small in relation to the value of the property and thus grow their net worth very quickly.

There is just a teeny-tiny chance* that the person to whom you spoke on the phone has a vested interest in encouraging you not to freak out and redeem your property.









*By teeny-tiny chance, I mean that there is absolutely no incentive for them to want you to redeem your property.  They are really out to obtain properties.  So, the teeny-tiny here is something close to 100%.  I was being facetious.

Fair point.

[The beatles]

You act like paying off debt takes study time.

I had to follow-up on this quote, as it proves my point that your head is in the clouds about the situation at hand.

Paying off debt is actually a very small part of the problem you are facing!  You have far greater issues that you should also be addressing, like learning how to set up & live on a budget and why your wife uses shopping as a coping mechanism.

I find it interesting that you mention this about Paul Graham in your blog...
"He is brilliant, brilliant. Transcending higher education status quo, brilliant. And because of this, or perhaps forced by this, I read his blog and study his advice as if they are the last written words of wisdom on earth."

So you are willing to study this guy's words for your side venture, BUT you don't think your financial situation requires study time???

We already did.

Budget set up on Mint and everything.

Next?

[Iplawyer]

Doing the math on the rental.

$500 * 12 months * 6 years = $36,000
$650 * 12 months * 24 years = $187,200
.................................TOTAL = $223,200

I'm having a hard time thinking about giving away $223k for momentary gain.

We would be netting maybe $35k if we sold.

The problem is you're bad at math.  If you were any good at it you wouldn't be in this mess in the first place. 


Sent from my iPhone using Tapatalk

^for real.  You need to expand your knowledge of investments, opportunity costs, and such.  The above is such an over simplification of your rental situation.  Are you accounting for the new roof?  How about the 2 new water heaters, new furnaces, new paint, new carpet, new driveway, other new roof, tenant damage, vacancies, new bathrooms, new kitchen appliances.  All of these things have a usable life that will expire at least once in the next 30 years.  Did you look into the possible investments you could make with that money?  Even if you were to save up and put 20% down on a multi family property, you could come out way ahead depending on your market. 

If only someone had written a blog post about selling stuff you wouldn't buy right now...hmmm.

Oh, yeah. 

http://www.mrmoneymustache.com/2015/07/02/if-you-wouldnt-buy-it-you-should-probably-sell-it/

It's a good read, if someone hasn't linked it before.

Do you think I'm a moron? That's an open question to everyone, as that's the vibe I'm getting.

I have two degrees. One, oddly enough as the jokes create themselves, is in finance. The other degree (graduate degree) is the field of work I am in so I don't want to say it. But suffice it to say, I'm not an idiot.

We lived in that house, and as such, everything is new.

We tore the house down to its studs.

It has brand new dry wall (2012). Brand new subfloors (2012). Brand new carpets (2013). Brand new tile (2013). Brand new bathroom (2013). Brand new 30 yr rated furnace (2014). Brand new hot water heater (2015). Brand new driveway (2013). Brand new recessed lighting and ceilings (2012). Brand new ceiled concrete floor in the basement (2012). Brand new concrete patio in the backyard (2012). Brand new siding (2013). Brand new stove and refrigerator - both stainless steel (2014).

The only thing that isn't new is the roof and that's because we ran out of money.

I didn't over simplify anything. The fact is that nothing is going to need to be replaced, other than the roof, for a very long time.

As far as opportunity cost. How are we going to make any investments with that money??

The money we get from the sale would pay off our debt. Not go toward an investment.

And the very most the debt could extrapolate to, even at 25% interest, is a sum many times less than the nearly 250k we would be given up.

If you have a difference of opinion, fine. But don't ever insult my intelligence.

But then explain how you are "giving" away $223K?  Include in that formula paying off the HELOC, roof, and property tax.  Then you'll have our attention.  That is what people here are telling you.  Do a believable formula where you really end up putting $500 or $600 in an investment account after the house is free and clear of debt of all kinds and the roof is put on.  BTW - I imagine that part of your credit card debt is because of all of the NEW STUFF in the rental house - right?  You still owe the money for all of that new.

[ChipmunkSavings]

Doing the math on the rental.

$500 * 12 months * 6 years = $36,000
$650 * 12 months * 24 years = $187,200
.................................TOTAL = $223,200

I'm having a hard time thinking about giving away $223k for momentary gain.

We would be netting maybe $35k if we sold.

The problem is you're bad at math.  If you were any good at it you wouldn't be in this mess in the first place. 


Sent from my iPhone using Tapatalk

^for real.  You need to expand your knowledge of investments, opportunity costs, and such.  The above is such an over simplification of your rental situation.  Are you accounting for the new roof?  How about the 2 new water heaters, new furnaces, new paint, new carpet, new driveway, other new roof, tenant damage, vacancies, new bathrooms, new kitchen appliances.  All of these things have a usable life that will expire at least once in the next 30 years.  Did you look into the possible investments you could make with that money?  Even if you were to save up and put 20% down on a multi family property, you could come out way ahead depending on your market. 

If only someone had written a blog post about selling stuff you wouldn't buy right now...hmmm.

Oh, yeah. 

http://www.mrmoneymustache.com/2015/07/02/if-you-wouldnt-buy-it-you-should-probably-sell-it/

It's a good read, if someone hasn't linked it before.

Do you think I'm a moron?

I have two degrees. One, oddly enough as the jokes create themselves, is in finance. The other degree (graduate degree) is the field of work I am in so I don't want to say it. But suffice it to say, I'm not an idiot.

We lived in that house, and as such, everything is new.

We tore the house down to its studs.

It has brand new dry wall (2012). Brand new subfloors (2012). Brand new carpets (2013). Brand new tile (2013). Brand new bathroom (2013). Brand new 30 yr rated furnace (2014). Brand new hot water heater (2015). Brand new driveway (2013). Brand new recessed lighting and ceilings (2012). Brand new ceiled concrete floor in the basement (2012). Brand new concrete patio in the backyard (2012). Brand new siding (2013). Brand new stove and refrigerator - both stainless steel (2014).

The only thing that isn't new is the roof and that's because we ran out of money.

I didn't over simplify anything. The fact is that nothing is going to need to be replaced, other than the roof, for a very long time.

As far as opportunity cost. How are we going to make any investments with that money??

The money we get from the sale would pay off our debt. Not go toward an investment.

And the very most the debt could extrapolate to, even at 25% interest, is a sum many times less than the nearly 250k we would be given up.

If you have a difference of opinion, fine. But don't ever insult my intelligence.

I am no house/rental expert, but there might be other types of maintenance fees, such as :
- Changing the Windows (did that this year, pretty expensive)
- What if the water heater breaks? Those things are only good for 10 years right?
- Plumbing issues : a drain came loose with our dishwasher, and we found out because the bathroom wall in the basement was getting damp.
- Are you at risk of flooding? Would you have to pay a deductible on it?
- Vacancy is always a risk as well, apparently you should estimate 10% vacancy in calculations

In your first post, you note that the rental brings in 1100$ per month
You then posted that the expenses were 130$ for the HELOC and 375$ for taxes, bringing it to a net of 595$.
Do you have any insurance on the property?
I think there should be at least some maintenance calculated into this as well. I suppose the renters are paying electricity, trash and all those expenses?

[Malum Prohibitum]

You act like paying off debt takes study time.

I had to follow-up on this quote, as it proves my point that your head is in the clouds about the situation at hand.

Paying off debt is actually a very small part of the problem you are facing!  You have far greater issues that you should also be addressing, like learning how to set up & live on a budget and why your wife uses shopping as a coping mechanism.

I find it interesting that you mention this about Paul Graham in your blog...
"He is brilliant, brilliant. Transcending higher education status quo, brilliant. And because of this, or perhaps forced by this, I read his blog and study his advice as if they are the last written words of wisdom on earth."

So you are willing to study this guy's words for your side venture, BUT you don't think your financial situation requires study time???

We already did.

Budget set up on Mint and everything.

Next?

Next?

Let us see it.  You are anonymous here.  Nobody really knows who you are.

Is mint going to be able to track all of your spending?  It did not for us due to cash purchases, which is why my wife and I write down each and every purchase on a piece of paper.

[The beatles]

You act like paying off debt takes study time.

Actually, it does.  Look at the time the people on this thread have spent researching laws in your county, running numbers, noodling on plans.  If you add it up, it's likely hundreds of hours.

Take the time to write Craigslist posts and sell your stuff.  Take the time to work with a realtor.  Take the time to research quotes on replacing the roof on your rental if that's the path you're going to take.  The stuff about the side venture will just clutter up your head and distract you from your main focus, which is escaping the cheetah that is about to turn you and your family into gazelle burgers.

Call each credit card company and have a chat?

Yes, actually, you SHOULD do this.  Ask them to lower your interest rate, and see if they'll budge.  Sometimes they will.  Sometimes they may have offers.  Sometimes a card on which you have a little room may be able to accept a balance transfer from one with a higher interest rate.  Play the game--you need every win you can get, however small.

Everything you've mentioned, we've already done.

Would you like me to do it a 2nd and 3rd time for fun sake?

  Really?  How much did you net from selling stuff on Craigslist?  How much are the roofing bids?

Additional:

Have you put together a budget with your wife?  If so, then post it up.

Getting a spending plan is step one.  You have to know where the money is going.

Have you instituted tracking of your spending?  If so what are you doing to track it?  Is your wife tracking, too?

Yes, tracking and budget are both on Mint. DONE.

Roofing quote was $4,000.

Does Mr Money Mustache himself ever post on these forums?

[Moustachienne]

I think most people on these forums treat optimizing their family finances, especially when there's debt, like a startup, that is, with all in intensity and focus. Beatles may be doing that but we can't tell from his posts which are one off questions and partial answers. It would be great if he could take the time to post a comprehensive picture of where his family is at but it might not be his thing.  In which case, we're left with an apparent clash of world views.

One word to Beatles: putting a laser focus of time, energy, and attention on your "family business" can be as exciting as any product startup and very,very rewarding.

[The beatles]

Doing the math on the rental.

$500 * 12 months * 6 years = $36,000
$650 * 12 months * 24 years = $187,200
.................................TOTAL = $223,200

I'm having a hard time thinking about giving away $223k for momentary gain.

We would be netting maybe $35k if we sold.

The problem is you're bad at math.  If you were any good at it you wouldn't be in this mess in the first place. 


Sent from my iPhone using Tapatalk

^for real.  You need to expand your knowledge of investments, opportunity costs, and such.  The above is such an over simplification of your rental situation.  Are you accounting for the new roof?  How about the 2 new water heaters, new furnaces, new paint, new carpet, new driveway, other new roof, tenant damage, vacancies, new bathrooms, new kitchen appliances.  All of these things have a usable life that will expire at least once in the next 30 years.  Did you look into the possible investments you could make with that money?  Even if you were to save up and put 20% down on a multi family property, you could come out way ahead depending on your market. 

If only someone had written a blog post about selling stuff you wouldn't buy right now...hmmm.

Oh, yeah. 

http://www.mrmoneymustache.com/2015/07/02/if-you-wouldnt-buy-it-you-should-probably-sell-it/

It's a good read, if someone hasn't linked it before.

Do you think I'm a moron? That's an open question to everyone, as that's the vibe I'm getting.

I have two degrees. One, oddly enough as the jokes create themselves, is in finance. The other degree (graduate degree) is the field of work I am in so I don't want to say it. But suffice it to say, I'm not an idiot.

We lived in that house, and as such, everything is new.

We tore the house down to its studs.

It has brand new dry wall (2012). Brand new subfloors (2012). Brand new carpets (2013). Brand new tile (2013). Brand new bathroom (2013). Brand new 30 yr rated furnace (2014). Brand new hot water heater (2015). Brand new driveway (2013). Brand new recessed lighting and ceilings (2012). Brand new ceiled concrete floor in the basement (2012). Brand new concrete patio in the backyard (2012). Brand new siding (2013). Brand new stove and refrigerator - both stainless steel (2014).

The only thing that isn't new is the roof and that's because we ran out of money.

I didn't over simplify anything. The fact is that nothing is going to need to be replaced, other than the roof, for a very long time.

As far as opportunity cost. How are we going to make any investments with that money??

The money we get from the sale would pay off our debt. Not go toward an investment.

And the very most the debt could extrapolate to, even at 25% interest, is a sum many times less than the nearly 250k we would be given up.

If you have a difference of opinion, fine. But don't ever insult my intelligence.

But then explain how you are "giving" away $223K?  Include in that formula paying off the HELOC, roof, and property tax.  Then you'll have our attention.  That is what people here are telling you.  Do a believable formula where you really end up putting $500 or $600 in an investment account after the house is free and clear of debt of all kinds and the roof is put on.  BTW - I imagine that part of your credit card debt is because of all of the NEW STUFF in the rental house - right?  You still owe the money for all of that new.

No my parents paid for everything in the rental. All the construction and upgrades

Credit card debt is from the new house.

[Malum Prohibitum]

Malum Prohibitum - I think you are confusing the two houses.  The rental has no mortgage; therefore the taxes and insurance are the responsibility of the owner.  The house they are living in has a mortgage.

  If that were the case, then the solution is easy.  Sell the big house and live in the rental house.  Even with a 25k HELOC and 9k in taxes owed, that is still probably the best solution.

This was actually our original thought, but after speaking to a realtor and breaking down the numbers, we would be losing money on the sale and we literally dont have the money to make up the difference.

What would the house sell for (different than its value on page 1?) and what is the realtor's commission?  Lets see the breakdown in numbers and how much you are losing (I assume by losing you mean the amount you would net is slightly less than what is owed).  Even if you have to come up with a little at the closing table, this might still be the best option.  It has to be a tiny amount if your page 1 value was anywhere close to accurate.  Then we can discuss how to raise that amount of money.

[Malum Prohibitum]

Does Mr Money Mustache himself ever post on these forums?

  Yes, but not as much as he used to.

[Malum Prohibitum]

The beatles,

What is your goal for this thread?

 I just now went back and read all of page 1.  I realized that you really never said.  We may be imposing our goals on you, rather than helping you meet your own goals.

If your goal is maximizing your savings rate and financial independence, then you have to cut down spending drastically.  In your case, that is easiest accomplished by selling stuff, lots of it.  Either sell the rental house, sell the big house, or sell both and go rent for a while.  Rent a place so close to work you can walk or even bike (we still, on page 17, do not know how far away your house is from work, or your rental house is from work).  Then sell one or both cars.  Stop buying so much shit, yes, that includes birthdays and Christmas.

Moving into the rental house probably means you can't fit everything, which means, of course, selling more stuff.  Craigslist, yard sales, empty it out!



BUT YOUR GOAL MAY NOT BE A HIGH SAVINGS RATE AND FINANCIAL INDEPENDENCE!

So share what you hope to get out of this experience, and we can better tailor our advice to fit what it is you and your wife want out of life.

Help us help you.

[former player]

Malum Prohibitum - I think you are confusing the two houses.  The rental has no mortgage; therefore the taxes and insurance are the responsibility of the owner.  The house they are living in has a mortgage.

  If that were the case, then the solution is easy.  Sell the big house and live in the rental house.  Even with a 25k HELOC and 9k in taxes owed, that is still probably the best solution.

This was actually our original thought, but after speaking to a realtor and breaking down the numbers, we would be losing money on the sale and we literally dont have the money to make up the difference.

For the house you are currently living in, your case study shows a value over mortgage of $10k.  What would your sale costs be?

If you are looking at the cost of all the changes you made to it after purchase, such as those expensive moldings, then you need to look at those as a consumer expenditure that is lost to you.

Your calculation of the value of the rental to you misses several important points, and not just those which relate to voids, maintenance and property taxes.  It misses the point that you are currently paying 25% on the money which is paying for this house (that being the amount you are paying on the debts which selling this house would get rid of).  In fact, you are quite possibly paying even more, which is the total value of the equity in the house which you will lose when it is foreclosed on, and the cost to you of continuing to stiff the tax man on his $40k in income tax.  Which as I understand it could even land you in jail.  But "people like you" don't go to jail, right?

If you are truly stuck as to which house to sell, put both on the market and sell the first one that gets a decent offer.  That saves you from having to make your mind up.

I don't think you explained why pizza delivery was not an option for you.  Is that another "I'm too good for this" issue?

Having two degrees means someone has a certain level of intelligence and a certain level of education.  Sadly, it doesn't prevent them from being stupid about some things.  We are all relatively good at some things and relatively stupid at others.  Your level of debt suggests where your problems lie.  Now you have realised you have a problem, real stupidity would be not doing everything you can to sort it out.

[The beatles]

I am no house/rental expert, but there might be other types of maintenance fees, such as :
- Changing the Windows (did that this year, pretty expensive)

Windows were done a couple years before we bought the house (around 2008).

- What if the water heater breaks? Those things are only good for 10 years right?

Depends on the year rating. Ours is a 15 year (with warranty).

- Plumbing issues : a drain came loose with our dishwasher, and we found out because the bathroom wall in the basement was getting damp.

We replaced all water pipes in the entire house with the new flex tubing that doesn't corrode or break.

- Are you at risk of flooding? Would you have to pay a deductible on it?

Nope, not a flood area.

- Vacancy is always a risk as well, apparently you should estimate 10% vacancy in calculations

True. We've been lucky in that department. It has never not been rented.

In your first post, you note that the rental brings in 1100$ per month
You then posted that the expenses were 130$ for the HELOC and 375$ for taxes, bringing it to a net of 595$.
Do you have any insurance on the property?

Insurance dropped us because of the roof.

I think there should be at least some maintenance calculated into this as well. I suppose the renters are paying electricity, trash and all those expenses?

Yes, its triple net (renters pay all).

[The beatles]

For the house you are currently living in, your case study shows a value over mortgage of $10k.  What would your sale costs be?

Approximately $18k to sell it.

That's what the sellers paid when we bought the house.

Also, we owe a couple grand in escrow fees because the mortgage company improperly calculated escrow.

So we would need to come up with about $20k in order to sell the house.

[former player]

]

Insurance dropped us because of the roof.

Your only asset and it is not insured?????  Oh god.

[The beatles]

The beatles,

What is your goal for this thread?

 I just now went back and read all of page 1.  I realized that you really never said.  We may be imposing our goals on you, rather than helping you meet your own goals.

If your goal is maximizing your savings rate and financial independence, then you have to cut down spending drastically.  In your case, that is easiest accomplished by selling stuff, lots of it.  Either sell the rental house, sell the big house, or sell both and go rent for a while.  Rent a place so close to work you can walk or even bike (we still, on page 17, do not know how far away your house is from work, or your rental house is from work).  Then sell one or both cars.  Stop buying so much shit, yes, that includes birthdays and Christmas.

Moving into the rental house probably means you can't fit everything, which means, of course, selling more stuff.  Craigslist, yard sales, empty it out!



BUT YOUR GOAL MAY NOT BE A HIGH SAVINGS RATE AND FINANCIAL INDEPENDENCE!

So share what you hope to get out of this experience, and we can better tailor our advice to fit what it is you and your wife want out of life.

Help us help you.

Our goal is to:

1) Pay off every ounce of debt we have.

2) Save a lot of money and feel finanically secure (at least $25k in readily accessible funds).

[ShoulderThingThatGoesUp]

Insurance dropped us because of the roof.

Hold up. Is this thing legal to rent? Are you OK with the municipality? Is it legal to rent without insurance?

[The beatles]

]

Insurance dropped us because of the roof.

Your only asset and it is not insured?????  Oh god.

Yeah, it's not great...

[Poundwise]

Sorry Mr. Beatles, I went to bed and it looks like you got pretty buffeted overnight!

Folks, beatles HAS been making a lot of steps in his first week... small steps, but forward steps.   He DID cancel that TV. He DID stop buying lunch for everyone. He DID get his wife on the same page, and they HAVE been cutting spending. Etc. He DOES seem willing to sell his rental although understandably scared to take such a large step after throwing so much money into it. Yes, most of us would be running and screaming long before we got to the point where he is, but at least he is tiptoeing away from the fire, not further into it.

Mr. Beatles.  You are concerned about selling one of your houses; you may never have sold a property before; it is scary to you.  How about going to the Real Estate forum,  and asking how to get the most for one or both houses, even with a renter and a roof needing replacement? Link to this discussion, but summarize everything there is to know about the properties (HELOC, property taxes, insurance, deadlines, escrow fees, lease agreements with tenants, market, realtors you have consulted, etc.) Focus solely on the work it would take to figure out how to get the most out of your property before it gets taken away from you. I suggested Redfin for saving on selling costs, but I'm not an expert in real estate; you can get advice on choosing a realtor and reality checks on what the realtors tell you.

http://forum.mrmoneymustache.com/real-estate-and-landlording/

Whether or not you should sell, and what you should sell, you can keep discussing in this thread if you like. But it's time to break down the big daunting task of selling, into realistic little chunks that you can work on.

[Iplawyer]

Malum Prohibitum - I think you are confusing the two houses.  The rental has no mortgage; therefore the taxes and insurance are the responsibility of the owner.  The house they are living in has a mortgage.

  If that were the case, then the solution is easy.  Sell the big house and live in the rental house.  Even with a 25k HELOC and 9k in taxes owed, that is still probably the best solution.

This was actually our original thought, but after speaking to a realtor and breaking down the numbers, we would be losing money on the sale and we literally dont have the money to make up the difference.

What would the house sell for (different than its value on page 1?) and what is the realtor's commission?  Lets see the breakdown in numbers and how much you are losing (I assume by losing you mean the amount you would net is slightly less than what is owed).  Even if you have to come up with a little at the closing table, this might still be the best option.  It has to be a tiny amount if your page 1 value was anywhere close to accurate.  Then we can discuss how to raise that amount of money.

If your statement is true you "literally don't have the money" to pay the property tax or for the roof on the rental.  PUT IT ON THE MARKET TODAY.  DON'T LET ANOTHER DAY GO BY.

Once sold - you can pay off most of your debt - including to the IRS - and put what you were paying in credit card payments in an investment account - BOOM - $250K in less than 20 years in savings, and peace of mind, and teaching your children financial responsibility, and freedom.  There - your life solved almost by doing ONE thing.  And you haven't even started doing it.

If a fire burns it down - you lose it and all of the new stuff.  This situation is worse than we imagined.  Get it sold NOW.  Pay off the debt on it, pay off the IRS, then pay off a credit card with anything left.  That is your stated first goal - get out of debt. 

Do you know how irresponsible keeping that rental without insurance is?  If your renter trips and breaks their back on a lose something or other - are you prepared to have part of your paycheck the rest of your life garnished for their care.  Do you have any idea how much liability you have placed on you and your family by keeping this rental without insurance?

[Mmm_Donuts]

I don't think you want MMMs response on this thread. It would be the same as what you've heard but are ignoring - sell the car, the rental, every unnecessary gadget in your home, including kids toys, get a second job (that will pay hourly, vs some pie in the sky startup dream that will COST money you don't have.) And he would tell you that your hair is on fire and that this debt is an emergency.

So you've heard the dozens of hours of wisdom everyone is imparting here - have you done any of these things? As far as I can tell you've called an accountant about your income taxes, signed up for mint, saved a few bucks on groceries, and that's about it. You have very few choices here- you HAVE to take some of these actions you're avoiding. And forget about a startup at this point in your life - where are you going to get the money for this??? You should be making these debts a #1 priority. How to do that? SELL YOUR ASSETS!!

[kms]

I have two degrees. One, oddly enough as the jokes create themselves, is in finance. The other degree (graduate degree) is the field of work I am in so I don't want to say it. But suffice it to say, I'm not an idiot.

I have two degrees. I am certainly not an idiot. I am an engineer. Still doesn't mean I know how to program a VCR.

What I'm saying is that having two degrees unfortunately does not save you from making horrible decisions. We've all been there, and like pretty much everyone I know I too have made terrible decisions based on knowledge and experience I should have had due to my degrees. Still made those calls and sometimes needed outside help to fix the ensuing havoc. Nobody says you're an idiot, it's just that many of those things that we learn at university turn out only to work in a perfect and ideal world. Especially when it comes to finance, I took a few classes because I was interested and boy did these professors idolize their models...

Anyhow, I'm proud of how far you've come. And I actually agree with you that keeping the rental property might be the smarter choice. This will, however, only work out well for you if you manage to pay off your debt as soon as possible - all of it - and treat that rental as the investment that it is supposed to be. Re: invest those $500 each month and make sure to have enough cash to fix whatever needs to get fixed. Then and only then does the math add up and you will make a profit. Right now, however, you're losing money left and right. Here's another idea that hasn't been tossed into the ring yet:

# Inform your current renters that unfortunately, they will need to move out in X months due to a personal emergency.
# Move back into the rental yourself. Yes, it'll be crowded but this will be the perfect opportunity for you to declutter and sell tons of stuff to make some money you can throw at those credit cards.
# Rent out the house you're currently living in. As far as I understand this should make you much more money in rent than the current rental, meaning you'll increase your incoming cashflow. That money, in turn, can be used to pay off debt faster.

Would that be a viable option? It sounds like both houses are in pretty good or at least decent condition and won't need any expensive repairs anytime soon.

[Iplawyer]

I don't think you want MMMs response on this thread. It would be the same as what you've heard but are ignoring - sell the car, the rental, every unnecessary gadget in your home, including kids toys, get a second job (that will pay hourly, vs some pie in the sky startup dream that will COST money you don't have.) And he would tell you that your hair is on fire and that this debt is an emergency.

So you've heard the dozens of hours of wisdom everyone is imparting here - have you done any of these things? As far as I can tell you've called an accountant about your income taxes, signed up for mint, saved a few bucks on groceries, and that's about it. You have very few choices here- you HAVE to take some of these actions you're avoiding. And forget about a startup at this point in your life - where are you going to get the money for this??? You should be making these debts a #1 priority. How to do that? SELL YOUR ASSETS!!

The beatles only real asset isn't.  The rental property is uninsured with people living in it that could trip on something and have lifelong injuries.  The rental property is a net liability in my book.  SELL IT.  GET IT ON THE MARKET TODAY. TAKE A SICK DAY TO DO THIS.  YOUR HAIR IS ON FIRE.  YOU ARE RISKING YOUR FAMILY KEEPING THE RENTAL WITHOUT INSURANCE.

[Iplawyer]

I have two degrees. One, oddly enough as the jokes create themselves, is in finance. The other degree (graduate degree) is the field of work I am in so I don't want to say it. But suffice it to say, I'm not an idiot.

I have two degrees. I am certainly not an idiot. I am an engineer. Still doesn't mean I know how to program a VCR.

What I'm saying is that having two degrees unfortunately does not save you from making horrible decisions. We've all been there, and like pretty much everyone I know I too have made terrible decisions based on knowledge and experience I should have had due to my degrees. Still made those calls and sometimes needed outside help to fix the ensuing havoc. Nobody says you're an idiot, it's just that many of those things that we learn at university turn out only to work in a perfect and ideal world. Especially when it comes to finance, I took a few classes because I was interested and boy did these professors idolize their models...

Anyhow, I'm proud of how far you've come. And I actually agree with you that keeping the rental property might be the smarter choice. This will, however, only work out well for you if you manage to pay off your debt as soon as possible - all of it - and treat that rental as the investment that it is supposed to be. Re: invest those $500 each month and make sure to have enough cash to fix whatever needs to get fixed. Then and only then does the math add up and you will make a profit. Right now, however, you're losing money left and right. Here's another idea that hasn't been tossed into the ring yet:

# Inform your current renters that unfortunately, they will need to move out in X months due to a personal emergency.
# Move back into the rental yourself. Yes, it'll be crowded but this will be the perfect opportunity for you to declutter and sell tons of stuff to make some money you can throw at those credit cards.
# Rent out the house you're currently living in. As far as I understand this should make you much more money in rent than the current rental, meaning you'll increase your incoming cashflow. That money, in turn, can be used to pay off debt faster.

Would that be a viable option? It sounds like both houses are in pretty good or at least decent condition and won't need any expensive repairs anytime soon.

I disagree. Keeping the rental is not an option.  First - it needs a new roof.  Second - it is encumbered by property tax debt that must be paid immediately or the third party collections people are just likely to buy it for themselves, third IT IS UNINSURED,  fourth - it is highly unlikely he can rent the house they are living in for mortgage payment plus property taxes, plus insurance, plus cash buffer for house emergencies, plus cash buffer for period when it isn't rented, fourth they are in too much debt to make it work.

[kms]

I disagree. Keeping the rental is not an option.  First - it needs a new roof.  Second - it is encumbered by property tax debt that must be paid immediately or the third party collections people are just likely to buy it for themselves, third IT IS UNINSURED,  fourth - it is highly unlikely he can rent the house they are living in for mortgage payment plus property taxes, plus insurance, plus cash buffer for house emergencies, plus cash buffer for period when it isn't rented, fourth they are in too much debt to make it work.

Neither the roof nor the insurance will matter if they live in their by themselves. He may be able to fix the roof himself, who knows?
And whether or not he will make a profit depends on how high the resulting rent would be. In a HCOL area a house like that can easily net around $3,000 each month.

Again, it all depends on math. Based on real numbers, not fictitious models ;)

[Laura33]

You act like paying off debt takes study time.

Actually, it does.  Look at the time the people on this thread have spent researching laws in your county, running numbers, noodling on plans.  If you add it up, it's likely hundreds of hours.

Take the time to write Craigslist posts and sell your stuff.  Take the time to work with a realtor.  Take the time to research quotes on replacing the roof on your rental if that's the path you're going to take.  The stuff about the side venture will just clutter up your head and distract you from your main focus, which is escaping the cheetah that is about to turn you and your family into gazelle burgers.

Call each credit card company and have a chat?

Yes, actually, you SHOULD do this.  Ask them to lower your interest rate, and see if they'll budge.  Sometimes they will.  Sometimes they may have offers.  Sometimes a card on which you have a little room may be able to accept a balance transfer from one with a higher interest rate.  Play the game--you need every win you can get, however small.

Everything you've mentioned, we've already done.

Would you like me to do it a 2nd and 3rd time for fun sake?

This goes directly to the "do you think I'm a moron" comment: you are giving us almost no visibility into what you are actually doing. People make suggestions; they get no response; then the next post from you is something like, "gee, I don't really want to sell the rental," or "wow, I have this exciting startup idea I'm spending my spare time on."  From our perspective, it sounds like we spent a lot of time making suggestions, and your response was to come up with rationales to blow them off.

The quoted bit is just one example.  Here were several specific action items.  This was not the first time these specific actions were raised.  But the only things you had mentioned in response to those earlier suggestions was stopping buying lunches, brown-bagging your own lunches, and calling the tax office when it was closed.  If you have actually done all of these other things, that's freaking awesome -- so tell us about it!  We want to cheer you on!

People are treating you like you are stupid because they are not seeing the effort and analysis and calculation you are putting into it, which makes it seem like we need to say the same thing multiple times and it's still not sinking in.  And you are treating us as stupid for exactly the same reason -- what a bunch of silly suggestions, can't you see I've already done that, move on to the next thing (even though we have no way to know what you've done until you give us the eye-roll response above).  This is really, really not productive for anyone.  If you want useful suggestions for next steps, you need to give more detail on what you have already done since you started posting here.  And if you don't want specific suggestions and advice, then what is your goal here?  What are you looking to get from this?

[Malum Prohibitum]

The beatles,

What is your goal for this thread?

 I just now went back and read all of page 1.  I realized that you really never said.  We may be imposing our goals on you, rather than helping you meet your own goals.

If your goal is maximizing your savings rate and financial independence, then you have to cut down spending drastically.  In your case, that is easiest accomplished by selling stuff, lots of it.  Either sell the rental house, sell the big house, or sell both and go rent for a while.  Rent a place so close to work you can walk or even bike (we still, on page 17, do not know how far away your house is from work, or your rental house is from work).  Then sell one or both cars.  Stop buying so much shit, yes, that includes birthdays and Christmas.

Moving into the rental house probably means you can't fit everything, which means, of course, selling more stuff.  Craigslist, yard sales, empty it out!



BUT YOUR GOAL MAY NOT BE A HIGH SAVINGS RATE AND FINANCIAL INDEPENDENCE!

So share what you hope to get out of this experience, and we can better tailor our advice to fit what it is you and your wife want out of life.

Help us help you.

Our goal is to:

1) Pay off every ounce of debt we have.

2) Save a lot of money and feel finanically secure (at least $25k in readily accessible funds).

Well, then, that's pretty damn easy.  You just have to make some adjustments.

You did not say how soon.  You could have debt gone (except mortgage) and $25,000 in readily accessible funds in two years or less with no selling of the houses, no selling of the cars, just modifying your current spending habits.

The last update we had was you project $670 savings.  That was work lunches and massages.

You are working on groceries and eating out.

Get your groceries down to $550 a month.  Stop eating out, period.  Make some more cuts in your budget, establish an emergency fund.  Stop borrowing anything for any reason whatsoever (just do without instead of borrowing).  Add those savings each month to your $670 already realized, and this will add up pretty quickly.

It's just numbers, and you are a finance major, so . . .

Stop buying.

My wife and I are doing a No Spending Week starting tonight at midnight.

We feed a family of six on roughly the amount I am suggesting to you.  We have spent 0.09 on eating out in January (yes, that's nine cents, LOL!).  My wife, the family CFO, is projecting in her report to the CEO (me! ) that we will meet that $550 goal.

Start looking at each and every expense, with the goal of spending $0 on that category, or getting as close to $0 as possible.

If you want to beat the two years or a little less timeline, then more drastic action needs to be taken, such as selling stuff.  Take a little while to buy nothing that is not directly related to survival, such as food.  This would make the most dramatic impact. 

[Unique User]

I don't get the impression it is a HCOL area.  Beatle - you say don't want to lose the $500 a month in rent, I understand, but how much will insurance cost?  And what if property taxes go up?  And what happens when they move out and it needs to be painted and carpets cleaned or they break the microwave.  What happens when the tenants move out in the middle of the night and you find they left a pile of crap for you to clean up.  These things have all happened to me with rentals.  $500 is just not enough per month to justify when you are in this kind of situation.  Maybe you are not truly freaked out because your parents will bail you out.  Maybe you just don't think it will happen to you.  But, you need to sell the rental or move into it and sell the other house.  You can't have a rental without insurance, that is potential financial ruin, please don't do this to yourself or your family. 

[Malum Prohibitum]

what is your goal here?  What are you looking to get from this?

  Look at my similar question to him, and his response.

He wants out of debt and to save $25,000.

If we had all known that earlier, it would have saved a lot of trouble.  Those are pretty easy goals to attain.

[Iplawyer]

He makes roughly $60K per year.  He owes $40K to the IRS, $60K to Credit Card, $15K to property taxes, $4K to fix the roof - that is almost 2 years of before tax pay.  I don't see how you calculate he can pay off all of this debt and live on any grocery budget at all?  Can you elaborate please?  Because he already doesn't think his hair is on fire.  And his rental house has no insurance because it needs a new roof  - BTW - if that roof fails it could ruin all of the "new" stuff in the house his parents paid for.

BTW - when you have a failing roof - why do you put new appliances in a house?  Why isn't the first priority the roof?

[Malum Prohibitum]

He makes roughly $60K per year.  He owes $40K to the IRS, $60K to Credit Card, $15K to property taxes, $4K to fix the roof - that is almost 2 years of before tax pay.  I don't see how you calculate he can pay off all of this debt and live on any grocery budget at all?  Can you elaborate please?  Because he already doesn't think his hair is on fire.  And his rental house has no insurance because it needs a new roof  - BTW - if that roof fails it could ruin all of the "new" stuff in the house his parents paid for.

BTW - when you have a failing roof - why do you put new appliances in a house?  Why isn't the first priority the roof?

  I keep forgetting about he $40k to the IRS.

[scantee]

Whether the rental is profitable long-term is irrelevant. Beatles, you do not have the financial sophistication nor the mental energy to own two properties. You just don't. Maybe someday in the future, when you've gotten your financial house in order and have been stable for years, you'll be able to own rental property, but not now. You need to sell one of your houses asap and simplify your financial situation as much as possible.

[Mmm_Donuts]

Maybe Beatle's hesitance to sell the house comes down to the fact that his parents put so much money into it already. Beatles, I'm sure you're aware of the Sunk Cost Fallacy. I believe that is what's happening here. You definitely need to sell this property, for many reasons already mentioned above. Basically, you can't afford it, since you haven't been able to pay taxes on it for THREE YEARS! To me this is a no brainer. I can only guess that you are not able to do the math for emotional reasons.

Would it help if you sat down with your parents and had a talk with them about selling it? Not to ask for more money from them, but to let them know, and tell them that it is weighing you down. I think it would be hurtful to your pride to admit this, but I am hearing in your brief replies that you are having a hard time admitting to yourself that you've made some mistakes here. You have overspent on cars, housing, groceries, gadgets, relative to your income.

It's not rocket science. You are a smart person. But sometimes emotions get in the way. You must see that to solve your problem you need to a) sell assets b) earn more money without risk (such as a startup) and/or c) cut expenses. Those are the only three adult options available to you to clear your debt. It seems like you are hoping MMM and his forum users can magically cut your expenses to the point that you don't have to deal with any of these past mistakes. Maybe the first step for you needs to be taking a very clear look at your life, admitting you have (or had) a spending problem, and then fixing it from there. If you're concerned with the speed of fixing this problem, then a) and b) are your fastest routes. On your current income, with your current habits, c) might be a good solution too but will be the slowest.

Good luck.

[wenchsenior]

I don't think you want MMMs response on this thread. It would be the same as what you've heard but are ignoring - sell the car, the rental, every unnecessary gadget in your home, including kids toys, get a second job (that will pay hourly, vs some pie in the sky startup dream that will COST money you don't have.) And he would tell you that your hair is on fire and that this debt is an emergency.

So you've heard the dozens of hours of wisdom everyone is imparting here - have you done any of these things? As far as I can tell you've called an accountant about your income taxes, signed up for mint, saved a few bucks on groceries, and that's about it. You have very few choices here- you HAVE to take some of these actions you're avoiding. And forget about a startup at this point in your life - where are you going to get the money for this??? You should be making these debts a #1 priority. How to do that? SELL YOUR ASSETS!!

The beatles only real asset isn't.  The rental property is uninsured with people living in it that could trip on something and have lifelong injuries.  The rental property is a net liability in my book.  SELL IT.  GET IT ON THE MARKET TODAY. TAKE A SICK DAY TO DO THIS.  YOUR HAIR IS ON FIRE.  YOU ARE RISKING YOUR FAMILY KEEPING THE RENTAL WITHOUT INSURANCE.

+1 million

This situation is beyond terrifying. I have no words.

[Jakejake]

Going in a totally different direction than other posts here for the last page or two. Or dozen. :)

I want to go back to a couple earlier points - your wife shopping because it makes her happy, and driving all over town every day to keep the children occupied and entertained.

There's a real opportunity here. For whatever reason, through your posts here the day to day life of your family members is coming across as somewhat unfulfilling, like a void that needs to be filled by external things. Not that they hate their life - but that something on a very fundamental level is missing.

Other people are saying drop the blog side hustle, put ALL your time into negotiating credit cards, researching when your foreclosure might happen, tax laws, etc.

As a person who is working to undo 30 years of accumulated clutter in my own house, now that I'm retired - I see that I am making good progress but I cannot just clean and craigslist and donate to thrift shops every minute of my waking life. I can keep up with regular chores, and accomplish one or two other tasks on my infinite to-do list and then I hit a wall and need a break.

I understand why people are saying you can't take a break - this is an emergency. Going back to the hair-on-fire metaphor, you can't be the fireman and decide in the midst of the fire - I'm going to just sit for ten minutes. Because the fire will get worse. I get that. But also - I get that you will need some down time. Even firemen battling raging wildfires take shifts.

What I want to toss out though is that a different sort of break might have more value to your family. Your blogging side hustle is about you getting a break to do something you find fulfilling. But you have a wife who is struggling to find something other than shopping that makes her feel happy. You probably get to talk to other adults in your day to day job, and then the side hustle is something you find intellectually stimulating on top of that. It's so much harder as a stay at home mom, spending all the waking hours solely interacting with toddlers. And you have children who apparently are struggling to find happiness on their own, who need to be entertained by outside activities or things. What if you used your spare time to create family experiences and traditions and memories with your wife and children, instead of coding a website, or retreating to a mancave in the basement to watch a giant tv or play video games?

It could be building an outside temporary fort with the kids (out of items you find, blankets and chairs - not a trip to the hardware store), and having a picnic in it once a week - and having an indoor picnic weekly if it's raining out. It could be a talent (or "no-talent") show once a week, where you take turns singing, or telling a joke, or doing a dance, or performing athletic feats, or telling a story, or doing a puppet show. You could have a weekly "kids pick a meal they like, and we learn together to cook it" night. Find multiple things like this that add value to your family life, and make your time together what brings happiness to your wife and the planning for these things during the day could be the thing that keeps your kids actively engaged in the world, instead of outsiders having to create the entertainment or environment for them.

[ysette9]

Beatles: we care about your situation (I do at least) and if this were just a cash flow problem we could absolutely help with trimming fat and getting you set up in the black and saving. That is step 2 though. Step 1 is almost literally making sure you don't end up homeless and destitute next month. The more you tell us, the more and more scared I am getting on your behalf. You have constructed a house of cards that is one small breeze away from completely falling down around you. I can't impress upon you how scary this is and how much you stand to lose. This is so frightening. Please, please set your pride aside and do what is best for you and your family. Sell both of those suckers immediately and move to a 2-bedroom apartment close to work. Your kids are too young to know the difference but they sure as heck will thank you for keeping their world together and not ending up at a homeless shelter.

[Laura33]

Going in a totally different direction than other posts here for the last page or two. Or dozen. :)

I want to go back to a couple earlier points - your wife shopping because it makes her happy, and driving all over town every day to keep the children occupied and entertained.

There's a real opportunity here. For whatever reason, through your posts here the day to day life of your family members is coming across as somewhat unfulfilling, like a void that needs to be filled by external things. Not that they hate their life - but that something on a very fundamental level is missing.

Other people are saying drop the blog side hustle, put ALL your time into negotiating credit cards, researching when your foreclosure might happen, tax laws, etc.

As a person who is working to undo 30 years of accumulated clutter in my own house, now that I'm retired - I see that I am making good progress but I cannot just clean and craigslist and donate to thrift shops every minute of my waking life. I can keep up with regular chores, and accomplish one or two other tasks on my infinite to-do list and then I hit a wall and need a break.

I understand why people are saying you can't take a break - this is an emergency. Going back to the hair-on-fire metaphor, you can't be the fireman and decide in the midst of the fire - I'm going to just sit for ten minutes. Because the fire will get worse. I get that. But also - I get that you will need some down time. Even firemen battling raging wildfires take shifts.

What I want to toss out though is that a different sort of break might have more value to your family. Your blogging side hustle is about you getting a break to do something you find fulfilling. But you have a wife who is struggling to find something other than shopping that makes her feel happy. You probably get to talk to other adults in your day to day job, and then the side hustle is something you find intellectually stimulating on top of that. It's so much harder as a stay at home mom, spending all the waking hours solely interacting with toddlers. And you have children who apparently are struggling to find happiness on their own, who need to be entertained by outside activities or things. What if you used your spare time to create family experiences and traditions and memories with your wife and children, instead of coding a website, or retreating to a mancave in the basement to watch a giant tv or play video games?

It could be building an outside temporary fort with the kids (out of items you find, blankets and chairs - not a trip to the hardware store), and having a picnic in it once a week - and having an indoor picnic weekly if it's raining out. It could be a talent (or "no-talent") show once a week, where you take turns singing, or telling a joke, or doing a dance, or performing athletic feats, or telling a story, or doing a puppet show. You could have a weekly "kids pick a meal they like, and we learn together to cook it" night. Find multiple things like this that add value to your family life, and make your time together what brings happiness to your wife and the planning for these things during the day could be the thing that keeps your kids actively engaged in the world, instead of outsiders having the create the entertainment or environment for them.

I love this.

[The beatles]

Have some good and bad news.

I called around and got the property tax payment plan set up.

The monthly payment is a bit of a shocker, but what can you do?

Moving forward...

http://stackingpennies.org/property-tax-payment-plan-rental-house/

[The beatles]

Sorry Mr. Beatles, I went to bed and it looks like you got pretty buffeted overnight!

Folks, beatles HAS been making a lot of steps in his first week... small steps, but forward steps.   He DID cancel that TV. He DID stop buying lunch for everyone. He DID get his wife on the same page, and they HAVE been cutting spending. Etc. He DOES seem willing to sell his rental although understandably scared to take such a large step after throwing so much money into it. Yes, most of us would be running and screaming long before we got to the point where he is, but at least he is tiptoeing away from the fire, not further into it.

Yeah ... BUT i'm not looking at a spreadsheet of my debt every second of every day.

And i'm not selling our kitchen sink to get $3 and twenty one cents to put towards the credit card.

And i'm *gasp* spending 30 minutes while I'm in bed at night thinking about a cool idea I have.

How dare I!!!!!!

[The beatles]

Do you think I'm a moron?

I have two degrees. One, oddly enough as the jokes create themselves, is in finance. The other degree (graduate degree) is the field of work I am in so I don't want to say it. But suffice it to say, I'm not an idiot.

According to Thomas Stanley, the profession that most grossly UNDERaccumulates wealth in relation to income is . . . drum roll please . . . doctors.


Do you think doctors are morons?  Are they idiots?  After all, they have degrees!


There is no relationship to your IQ and your net worth today. 

The only thing that matters is your savings rate.  This is the percentage of your net income that you do not spend.  Do you even know what yours is?  Your college degrees will not tell you what it is.  Your IQ will not, either.  My grandparents did not graduate high school, but they had huge savings rates.  Yours probably did, too.

I am guessing it is this pride at your degrees and intelligence that is standing in the way of your financial success.  Learn to listen to some people who may have been where you are but turned it around.  They may have degrees, too.  They may not.  But learn what you can from those who have succeeded in having high savings rates.

Thank you.

[1967mama]

Beatles, you asked if MMM ever posts on the forum himself which made me wonder how much of his writing you've had the chance to read? I was actually just saying to my husband the other day that I would like to print out his blog posts and assemble them in a binder for reading and motivation. I know they are all here online but I'm old fashioned that way and want to make my own MMM book.

Anyhoo, here's a link to what he affectionately calls "All The Posts Since the Beginning of Time" which some forum members have binge read ... it kind of got MMM inside my head. I'm sure your wife would find them helpful as well. It doesn't take long to read one of his original posts and it often seems like he is writing directly to you:-)

http://www.mrmoneymustache.com/all-the-posts-since-the-beginning-of-time/

[The beatles]

I don't get the impression it is a HCOL area.  Beatle - you say don't want to lose the $500 a month in rent, I understand, but how much will insurance cost?  And what if property taxes go up?  And what happens when they move out and it needs to be painted and carpets cleaned or they break the microwave.  What happens when the tenants move out in the middle of the night and you find they left a pile of crap for you to clean up.  These things have all happened to me with rentals.  $500 is just not enough per month to justify when you are in this kind of situation.  Maybe you are not truly freaked out because your parents will bail you out.  Maybe you just don't think it will happen to you.  But, you need to sell the rental or move into it and sell the other house.  You can't have a rental without insurance, that is potential financial ruin, please don't do this to yourself or your family.

Being a landlord yourself, what is enough to make it worthwhile for you?

How much do you require your properties to net you?

[The beatles]

I don't think you want MMMs response on this thread. It would be the same as what you've heard but are ignoring - sell the car, the rental, every unnecessary gadget in your home, including kids toys, get a second job (that will pay hourly, vs some pie in the sky startup dream that will COST money you don't have.) And he would tell you that your hair is on fire and that this debt is an emergency.

So you've heard the dozens of hours of wisdom everyone is imparting here - have you done any of these things? As far as I can tell you've called an accountant about your income taxes, signed up for mint, saved a few bucks on groceries, and that's about it. You have very few choices here- you HAVE to take some of these actions you're avoiding. And forget about a startup at this point in your life - where are you going to get the money for this??? You should be making these debts a #1 priority. How to do that? SELL YOUR ASSETS!!

The beatles only real asset isn't.  The rental property is uninsured with people living in it that could trip on something and have lifelong injuries.  The rental property is a net liability in my book.  SELL IT.  GET IT ON THE MARKET TODAY. TAKE A SICK DAY TO DO THIS.  YOUR HAIR IS ON FIRE.  YOU ARE RISKING YOUR FAMILY KEEPING THE RENTAL WITHOUT INSURANCE.

We've tried to get insurance on it!

Companies sign us up and then as soon as they do the drive-by inspection, they cancel it!

We have NOT ignored the property insurance. We've tried hard to do that.

[honeybbq]

I was wrong.

It's 3 years, not 2.

Ugh.

OMG. This changes everything.

Pizza's are not an option.

WHY?

[The beatles]

Going in a totally different direction than other posts here for the last page or two. Or dozen. :)

I want to go back to a couple earlier points - your wife shopping because it makes her happy, and driving all over town every day to keep the children occupied and entertained.

There's a real opportunity here. For whatever reason, through your posts here the day to day life of your family members is coming across as somewhat unfulfilling, like a void that needs to be filled by external things. Not that they hate their life - but that something on a very fundamental level is missing.

Other people are saying drop the blog side hustle, put ALL your time into negotiating credit cards, researching when your foreclosure might happen, tax laws, etc.

As a person who is working to undo 30 years of accumulated clutter in my own house, now that I'm retired - I see that I am making good progress but I cannot just clean and craigslist and donate to thrift shops every minute of my waking life. I can keep up with regular chores, and accomplish one or two other tasks on my infinite to-do list and then I hit a wall and need a break.

I understand why people are saying you can't take a break - this is an emergency. Going back to the hair-on-fire metaphor, you can't be the fireman and decide in the midst of the fire - I'm going to just sit for ten minutes. Because the fire will get worse. I get that. But also - I get that you will need some down time. Even firemen battling raging wildfires take shifts.

What I want to toss out though is that a different sort of break might have more value to your family. Your blogging side hustle is about you getting a break to do something you find fulfilling. But you have a wife who is struggling to find something other than shopping that makes her feel happy. You probably get to talk to other adults in your day to day job, and then the side hustle is something you find intellectually stimulating on top of that. It's so much harder as a stay at home mom, spending all the waking hours solely interacting with toddlers. And you have children who apparently are struggling to find happiness on their own, who need to be entertained by outside activities or things. What if you used your spare time to create family experiences and traditions and memories with your wife and children, instead of coding a website, or retreating to a mancave in the basement to watch a giant tv or play video games?

It could be building an outside temporary fort with the kids (out of items you find, blankets and chairs - not a trip to the hardware store), and having a picnic in it once a week - and having an indoor picnic weekly if it's raining out. It could be a talent (or "no-talent") show once a week, where you take turns singing, or telling a joke, or doing a dance, or performing athletic feats, or telling a story, or doing a puppet show. You could have a weekly "kids pick a meal they like, and we learn together to cook it" night. Find multiple things like this that add value to your family life, and make your time together what brings happiness to your wife and the planning for these things during the day could be the thing that keeps your kids actively engaged in the world, instead of outsiders having to create the entertainment or environment for them.

This is awesome.

Thank you.

[Malum Prohibitum]

Have some good and bad news.

I called around and got the property tax payment plan set up.

The monthly payment is a bit of a shocker, but what can you do?

Moving forward...

http://stackingpennies.org/property-tax-payment-plan-rental-house/

Taking everything at face value in your blog post - You can pay at 18% interest

OR

you can sell and walk away with $30,000.

Then use the 30,000 to pay off debt.

Just by selling, you will have eliminated the property tax debt, the HELOC, the car note, all of the credit cards, and, if I am correct, be left with no debt but your mortgage and the $40k to the IRS. 

Is that right?

I know which way I would go.  In one fell swoop, you will have eliminated ALL of those monthly recurring obligations.  The $535 to the property tax lien holder.  The $670 you already did (lunches and massages).  The $393 to the car . . . are you adding this up?  By the way, once you payoff the car, you can reduce the insurance on it and save monthly there, too ($135 a month for insurance is insane).  Plus the $850 monthly on credit cards and furniture debt.  Plus the monthly payment on the HELOC ($135???).  How much a month is that, total?  Start setting it aside each month, stockpiling cash to workout your IRS issue. Then start saving for real.

[The beatles]

WHY?

Because of my back, I physically can't get in and out of a car that many times a night (to deliver pizza's).

If there was Uber or Lyft in my area, I would work 20 extra hours a week AFTER my day job, just for the extra money. Because I wouldn't have to get in and out, in and out etc.

[Zoot]

Have some good and bad news.

I called around and got the property tax payment plan set up.

The monthly payment is a bit of a shocker, but what can you do?

Moving forward...

http://stackingpennies.org/property-tax-payment-plan-rental-house/

AWESOME work.  Now you know what the requirement is, and you have a path forward.

The next step is figuring out how much money you have in your budget to devote to debt repayment.  That's your starting "snowball" amount.

Run the numbers and calculate what that number is.  Then go back and look at your budget again, and see where you might be able to squeeze more money out of it.  Be ruthless.

Report that number back to us, and we can then suggest a payment plan. 

Great work!

[Iplawyer]

Have some good and bad news.

I called around and got the property tax payment plan set up.

The monthly payment is a bit of a shocker, but what can you do?

Moving forward...

http://stackingpennies.org/property-tax-payment-plan-rental-house/

Beatles -you cannot afford that payment given your current other obligations and THE UPCOMING PROPERTY TAX OWED THIS YEAR.  The rental is not insured.  It must go on the market or you could be in serious liability trouble should something happen. YOUR HAIR, PANTS, AND SHOES are on fire.  You have to sell the rental.  Why are you putting this off. You could lose everything you have and FUTURE paychecks because your rental is uninsured.  And a strong storm could devastate you.  And it is in a place going downhill in value. 

[Malum Prohibitum]

Selling the home would save you almost $3000 monthly in expenses.   Seriously, add up the categories I put up there in post #854 (HELOC, property tax, credit cards, furniture, car payments, and I am including the $670 already saved in work lunches and massages).

Grocery/eating out expense modification could save you another $1000.

That's $4000 a month just by selling the rental.

How soon could you pay off the IRS with an extra $4000 a month available?