The beatles Case Study

[Jakejake]

They're going to see it as an insult.

Us downgrading them from a 300k house with granite countertops, marble bathrooms and heated floors to a $75k rental.

I get how that sounds.

I get how ALL this sounds.

Does your WIFE understand how it all sounds?

You are 100k in debt, at risk of losing the entire net worth of the first rental and paying as much as 25% interest on some of your debts.

You moved out of the McMansion because you were living beyond your means. So instead, you are financing her parents to live beyond their means because it would be "insulting" not to finance them to live in a way neither they nor you can afford.

You will argue they are paying their way, but no, they are in effect taking an interest free 100k loan from you at a time when you desperately need that 100k to protect your own ass(ets).

Further, you are prioritizing her parents' inflated lifestyle over your children's college. Is that okay with you? Is it okay with her?

By enabling her parents to live beyond their means instead of forcing them to deal with their financial problems, you're actually making things far worse for them and your entire family. They will continue to go further into debt and become more and more dependent on you and their expenses will only increase as they age.

The amount they are paying for the McMansion mortgage? What if they lived in a place without marble bathrooms, paid half the amount in rent as they are paying for your mortgage, and the excess that they save in lowered rent and lowered utilities went to pay off their delinquent taxes? What if that was the push they needed to be debt free in the next 10 years, so they don't spend the next 40 years being a burden on you - and causing you in turn to become a financial burden for your children and their future spouses?

[Iplawyer]

Can we just ignore the 2nd house?

Go back to focusing on rental 1.

No.  If they don't pay a bill or the mortgage because of something that happens - you will lose that house and a good portion of the $100K because that is how foreclosure works. Your family is on the cusp of going under and your wife would rather have her parents live in luxury than her kids have financial security?  If so - divorce her immediately. 

[Malum Prohibitum]

He's got to explain to his parents why his in-laws are moving into the rental house.  They have to to tell the in-laws what their options are.

  They are probably paying close to $2000 in rent, utilities, property taxes and any other carrying costs.

Right, The beatles?

So why on earth should he move them to his other house?

Two grand a month can rent you a place almost anywhere.

I get it.  They like the place.   Your wife is upset.

The beatles has to have a serious talk with his wife about where they are headed and how they can fix it.

This will be nothing but a minor inconvenience for the inlaws.  They will have plenty of time to find another place.  The property is not likely to sell and close for months.

There is no reason to make this such a big deal, and certainly no reason to move them into another property he owns.

[aceyou]

Beatles, with the two rentals, would it be accurate to say that you have a positive net worth?  If you could really quickly add up the assets vs liabilities with the 2nd rental included, I'd really appreciate seeing it. 

If you can lay that out there, then I'd like a chance to lay out a pretty simple plan that can get you squared away in way less than 8 months (disclaimer, it will likely involve you selling 3 things).  At that moment, this thread can close down and you can join the "getting to 100k net worth" thread in the throwing down the gauntlet section.   

I have laid that out:
What is wrong with this then?

His bad roof rental property has month to month renters.  They need to go.  Sell the car with equity.You can make it with one car until the big equity house sells.   Use the money to fix the roof and insure the small rental.  The renters are month to month so they can go.  Offer the wife's family the option of renting the small rental at market rate or finding housing on their own.  Sell the big equity house (most of the time you can even sell it with a tenant in the apartment).  Pay off ALL debt to everyone.  Put remainder in emergency fund.  Then you avoid the awkward discussion with your parents and your wife's family is housed.  Then your rental income improves because all of it except for taxes and insurance is money you can invest. But you must sell the car now to get the money to get the roof fixed immediately so you can get insurance. 

How is that for a good solution?

Yup, that was going to be my solution, except not worded as well as you were going to. 

So, it turns out Beatles doesn't actually have a money problem at all.  He has an allocation problem.  Here how I'm seeing his plan at the moment:

Step 1: Take out 4 loans (3 mortgages and auto loan) to get a boat load of money to spend.

Step 2: place: some of that equity into the houses/car (i.e, each one of those properties has positive equity.) 

Step 3: balance that by placing negative equity into boring things like taxes to the IRS and county and credit card companies. 

---------

So, the logical solution is to sell some of the things from step one, unlocking the equity from step 2, to pay off the debts in step 3.

Once that is done, He's still got a kick ass house to live in, no debts, and money in the bank.  He can then insta-join the group of savers on here working towards FI.

....

Or, we can continue to keep the equity COMPLETELY LOCKED UP in his real estate, and hope that the IRS, County, and CC companies are cool with this indefinitely.  Good luck with that.

Now that we have complete information, this is one of the simplest case studies on the forum. 

[LittleWanderer]

Can we just ignore the 2nd house?

Go back to focusing on rental 1.

You want to ignore $100K? 

[begood]

Can we just ignore the 2nd house?

Go back to focusing on rental 1.

I'm sorry, sweetie. We can't ignore the 2nd house because the 2nd house is $100K worth of salvation. It's the IRS, the property taxes, the credit card debt, and your car loan all wrapped up in a shiny granite-countertopped package.

Focusing on the 2nd house is the best way for you to get to stay in your current home.

You're juggling knives, my friend. We're trying to get you to put two of them down. Ideally, you'd sell both rental 1 and the 2nd house. We've suggested other options, but that's the neatest from a financial perspective.

I see that you've got extended-family stress weighing you down on both shoulders: sunk costs from your parents in rental 1 and deadbeat relatives accustomed to a certain lifestyle on the other.

You can't worry about them. You don't have that luxury. You need to worry about your nuclear family. You. Your wife. Your kids. You need to do what is best for YOU.

In time, when this is all a dark cloud in your rearview mirror, maybe you can sit down with your parents and set up a payment plan to reimburse them for some of the funds they have infused you with over the past few years. They will appreciate the offer, and paying them back something will make you feel better. But that's for later. Today you need to be selfish.

[Malum Prohibitum]

You want to ignore $100K?

  LOL!  More than the property debt, IRS debt, credit card debt, and car debt put together.  Just ignore it, MSquared.

[LadyMuMu]

Your inlaws don't have to move into the other rental--it's just an option you can offer to them in case they are unable to secure another rental.

To Mrs. Beetles,

I want you to know that I am sincerely sorry if this thread upsets you or if we come across as being judgey. I can honestly say that I am very scared for you. As a SAHP, you have the MOST to lose from this entire situation--even more than your children. I am a SAHP as well, so don't think I'm downing your for that. But the fact is that we are the ones whose workplace value diminishes the longer we stay at home and away from the office. When there is a SAHP in the family it is so much more important to have sufficient savings and no debt. If your husband got in an accident and couldn't work for one, maybe two months, this entire financial house of cards would collapse nearly overnight. As Whoopi Goldberg said in "Ghost," "Maggie, you in danger,girl!" I can only imagine how awkward it will be to tell your folks that you need to sell the house they are living in, knowing full well they are in no position to purchase it themselves.

[BlueHouse]

I've skipped a lot of this thread because I've found it to just be annoying after a while.  I was terribly annoyed at many of the people giving advice because they were harping on the same things over and over.  And they were nagging to get accomplishments in pretty unreasonable amounts of time.  I felt like most of the mustachians who were so actively trying to help were really treating the beatles like a child. 

Then it finally dawned on me -  Mr. Beatles, you really are behaving like a child.  It's as if you want this attention and you get it.  You get yelled at, some good advice, but berated, and just when everyone is tuckered out of giving advice and it's your turn to do something, you say something outlandish and childish.  Like "just forget I said anything about it" or "I wish I never brought it up" or "oh yeah, i forgot about this [very important fact]" 

Beatles, I really don't mean this to belittle you, but it appears from all of your posts that you have allowed your parents to bail you out on a number of occasions and to pitch in on other occasions that most independent adults wouldn't accept.  And you seem to have a childlike quality about how you ask for and respond to advice.  I just need to ask, how involved are your parents in your day to day life?  Do they "tell" you what to do the same way that some of the posters on this thread have been "telling" you what to do, even going so far as outlining and numbering your next steps?  Do you live an independent life? 

In one post, you mentioned that you didn't want to accept your parents' money because you didn't want them "in your business".  But as long as they are giving you money, it IS their business. 

I find this whole thread tiresome because you are continuing to behave in this forum as you have with your parents and family -- irresponsible.  If you really want to make progress (and I do believe that you do), you need to change a few things about how you communicate and when you communicate and what actions you take and when.

About 5 pages ago, I wanted to yell out "Just ask your parents for the money and be done with it!" Now grow a set and man up or continue with this childlike behavior and come up with excuses, delays, etc. 

[Iplawyer]

Your inlaws don't have to move into the other rental--it's just an option you can offer to them in case they are unable to secure another rental.

To Mrs. Beetles,

I want you to know that I am sincerely sorry if this thread upsets you or if we come across as being judgey. I can honestly say that I am very scared for you. As a SAHP, you have the MOST to lose from this entire situation--even more than your children. I am a SAHP as well, so don't think I'm downing your for that. But the fact is that we are the ones who's workplace value diminishes the longer we stay at home and away from the office. When there is a SAHP in the family it is so much more important to have sufficient savings and no debt. If your husband got in an accident and couldn't work for one, maybe two months, this entire financial house of cards would collapse nearly overnight. As Whoopi Goldberg said in "Ghost," "Girl, you in danger!" I can only imagine how awkward it will be to tell your folks that you need to sell the house they are living in, knowing full well they are in no position to purchase it themselves.

Agreed.  Please don't continue to put yourself and children in danger by continuing the current course.  Please.  Your parents have other options - including living in the smaller rental home - or renting from somebody else that has a luxury home - but you cannot afford to let them continue to rent from you. 

[Khaetra]

My wife is very upset with this thread at this point.

Will she be more or less upset when you and your children are homeless?


*Added after reading this back to myself*
This comment is an extreme scenario, but I meant it to be. 

You're living on a knife edge financially and even a small loss of balance could be catastrophic, I really hope your wife can see this so that there isn't a follow on post in 6 or 12 months time when they come to repossess your house.

Or worse.  Is her name on any of the properties, CC's, cars, etc.?  It may sound morbid, but none of us are guaranteed a tomorrow and if something were to happen to you and her name is on everything then guess who loses the houses, car and get's sued by creditors?  Her.  Is that fair?  No, but sadly it will happen if you do not take the very hard steps of getting rid of the properties and the car asap.  You're worried about ticking off family.  You need to look after your own immediate family first, meaning wife and kids.

[researcher1]

Now grow a set and man up or continue with this childlike behavior and come up with excuses, delays, etc.

THIS!

[TheStachery]

YOU HAVE ANOTHER RENTAL???

You know what, I'm out. This is ridiculous. You do realize that at this point nobody can take you serious anymore? You're acting like a little child here and occasionally, every couple of pages, you drop a bomb like this. You "forget" 40k IRS debt. You "forget" property tax debt. You "forget" to mention that in addition to house #1 and house #2 there's another house.

This is a total waste of time, and not worth any effort. At this point, I am beating the troll drum, and I think you're making all this up as we go. And even if this is all true and you're not making it up then you, sir, are the only person in here not realizing how frustrating trying to help you is.

Good luck. I'm out.

+1
I'm out too.  Trolling at its finest to start and attract reader eyes to his own blog. 



Sent from my iPhone using Tapatalk

[CheapScholar]

This is hilarious.  Beatles is either one of the greatest internet trolls, or one of the most financially irresponsible people in the country.  I'm still not sure which to believe but I can't look away. 

[Malum Prohibitum]

but I can't look away.

  LOL!  I plead guilty!

[Moustachienne]

Beatles is certainly a master of chumming the water.  But good on the kind hearts of Forum members to keep rising to the bait.  People here are so committed to helping.  Maybe some of the advice will be helpful to beatles and even if not, it will be to other readers.

[Laura33]

It is possible that Mrs. Beatles' family needs a place to live because their nonpayment of debts has shot their credit rating and no one else will rent them an apartment.  In which case moving them into the smaller rental is a reasonable option.

But, yeah, no, the big house has gotta go.  You need that $100K, stat.  Like the airplanes say, put your own oxygen mask on first. 

[Iplawyer]

It is possible that Mrs. Beatles' family needs a place to live because their nonpayment of debts has shot their credit rating and no one else will rent them an apartment.  In which case moving them into the smaller rental is a reasonable option.

But, yeah, no, the big house has gotta go.  You need that $100K, stat.  Like the airplanes say, put your own oxygen mask on first.

Beatles - you have a huge heart.  But you are in a burning house.  Your in-laws are safely 1000 yards away and doing nothing to rescue your wife and kids.  It is up to your wife and you to rescue yourselves.  Do it.

[theotherbeatle]

I am the wife.  This will probably be my only post.

1) When Mr.B and I met I already owned Rental #1 (the one we owe $25k on).

2) Shortly before getting married, I received an annuity for $14k. I wanted to put the $14k on the HELOC to pay it down to $11k, but he wanted to use it on a business idea of his. So we used it on his business idea and now its all gone.

3) After our honeymoon, we moved into the $300k house. This house was previously owned by my family, but they couldnt own it anymore for various reasons so we purchased it from them, and then we moved in and they moved out.

4) The $300k house was a lot to handle. Keep in mind that $300k in our area is different than $300k in a big city. $300k in our area is a 2500-3000 Sq foot big house on several acres with a pond and a rental apartment. It's huge. Just the lawn mowing was $160 per month.

5) The mortgage was very expensive and the interest rate is high. It was a big burden. We got into a lot of debt in this house. About $25k in debt. My husbands parents give us $25k in cash to pay this debt off.

6) A couple years go by and my family needs a place to live again (their lease ended). So we decided to move out of the $300k house and let my family move back in and pay the expenses.

7) We find our current house, which is much cheaper than the $300k house. We buy it and move in. My husbands parents give us $15k for closing costs.

8) We move into the current house and it doesn't have nearly the luxuries that our previous house did so Mr. B buys crown moulding, hires a landscaper etc. Our debt gets racked up to who knows how much. I honestly dont even know how much its at right now. My husbands parents bail us out several times. Along the way we have had several months where we cant pay the mortgage and my husbands parents give us cash for it.

Thats the story. A lot of you have it wrong. You need to be nicer of people who live differently than you.

[Iplawyer]

I am the wife.  This will probably be my only post.

1) When Mr.B and I met I already owned Rental #1 (the one we owe $25k on).

2) Shortly before getting married, I received an annuity for $14k. I wanted to put the $14k on the HELOC to pay it down to $11k, but he wanted to use it on a business idea of his. So we used it on his business idea and now its all gone.

3) After our honeymoon, we moved into the $300k house. This house was previously owned by my family, but they couldnt own it anymore for various reasons so we purchased it from them, and then we moved in and they moved out.

4) The $300k house was a lot to handle. Keep in mind that $300k in our area is different than $300k in a big city. $300k in our area is a 2500-3000 Sq foot big house on several acres with a pond and a rental apartment. It's huge. Just the lawn mowing was $160 per month.

5) The mortgage was very expensive and the interest rate is high. It was a big burden. We got into a lot of debt in this house. About $25k in debt. My husbands parents give us $25k in cash to pay this debt off.

6) A couple years go by and my family needs a place to live again (their lease ended). So we decided to move out of the $300k house and let my family move back in and pay the expenses.

7) We find our current house, which is much cheaper than the $300k house. We buy it and move in. My husbands parents give us $15k for closing costs.

8) We move into the current house and it doesn't have nearly the luxuries that our previous house did so Mr. B buys crown moulding, hires a landscaper etc. Our debt gets racked up to who knows how much. I honestly dont even know how much its at right now. My husbands parents bail us out several times. Along the way we have had several months where we cant pay the mortgage and my husbands parents give us cash for it.

Thats the story. A lot of you have it wrong. You need to be nicer of people who live differently than you.

The other Beatle - Nobody is not being nice.  We are trying to save you.  And while your story is interesting I don't know how it changes what you should do now.  Neither your family or you can afford the big house - they because they cannot finance it with their other issues  - and you because you don't make enough money.  What that means is that NEITHER of you can live in it.  You owned the rental before getting married?  Well - maybe that makes it yours under the law where you live - but as we understand it - your in-laws have put a lot of money into it to.

So what is the problem with asking your family to move into it from the house neither of you can afford to save your family?  Your family is on fire.  You are going to lose everything. 

[wenchsenior]

I am the wife.  This will probably be my only post.

1) When Mr.B and I met I already owned Rental #1 (the one we owe $25k on).

2) Shortly before getting married, I received an annuity for $14k. I wanted to put the $14k on the HELOC to pay it down to $11k, but he wanted to use it on a business idea of his. So we used it on his business idea and now its all gone.

3) After our honeymoon, we moved into the $300k house. This house was previously owned by my family, but they couldnt own it anymore for various reasons so we purchased it from them, and then we moved in and they moved out.

4) The $300k house was a lot to handle. Keep in mind that $300k in our area is different than $300k in a big city. $300k in our area is a 2500-3000 Sq foot big house on several acres with a pond and a rental apartment. It's huge. Just the lawn mowing was $160 per month.

5) The mortgage was very expensive and the interest rate is high. It was a big burden. We got into a lot of debt in this house. About $25k in debt. My husbands parents give us $25k in cash to pay this debt off.

6) A couple years go by and my family needs a place to live again (their lease ended). So we decided to move out of the $300k house and let my family move back in and pay the expenses.

7) We find our current house, which is much cheaper than the $300k house. We buy it and move in. My husbands parents give us $15k for closing costs.

8) We move into the current house and it doesn't have nearly the luxuries that our previous house did so Mr. B buys crown moulding, hires a landscaper etc. Our debt gets racked up to who knows how much. I honestly dont even know how much its at right now. My husbands parents bail us out several times. Along the way we have had several months where we cant pay the mortgage and my husbands parents give us cash for it.

Thats the story. A lot of you have it wrong. You need to be nicer of people who live differently than you.

No, this is pretty much exactly the story we've been getting for 20 pages.  Life is hard, but it's harder if you willfully keep making bad choices and living beyond your means. That's not "living differently". It's refusing to act like a responsible adult.  Your life is (metaphorically) a flaming car crash OF YOUR OWN MAKING, and you want us to have sympathy?

This is just unbelievable.

[Malum Prohibitum]

Mrs. beatles,

You posted basically the same story as your husband.

Is there a nice way to tell you that your problem is easily solved? 

You have high interest debt that you cannot service.  You are crashing and burning.

You own over half a million dollars in real estate.  Selling just some of that real estate will easily free you up from ALL of your debt except your current mortgage, which you can easily service on your husband's income.

It's pretty simple, really.

Was I nice enough?

[charis]

I am the wife.  This will probably be my only post.

1) When Mr.B and I met I already owned Rental #1 (the one we owe $25k on).

2) Shortly before getting married, I received an annuity for $14k. I wanted to put the $14k on the HELOC to pay it down to $11k, but he wanted to use it on a business idea of his. So we used it on his business idea and now its all gone.

3) After our honeymoon, we moved into the $300k house. This house was previously owned by my family, but they couldnt own it anymore for various reasons so we purchased it from them, and then we moved in and they moved out.

4) The $300k house was a lot to handle. Keep in mind that $300k in our area is different than $300k in a big city. $300k in our area is a 2500-3000 Sq foot big house on several acres with a pond and a rental apartment. It's huge. Just the lawn mowing was $160 per month.

5) The mortgage was very expensive and the interest rate is high. It was a big burden. We got into a lot of debt in this house. About $25k in debt. My husbands parents give us $25k in cash to pay this debt off.

6) A couple years go by and my family needs a place to live again (their lease ended). So we decided to move out of the $300k house and let my family move back in and pay the expenses.

7) We find our current house, which is much cheaper than the $300k house. We buy it and move in. My husbands parents give us $15k for closing costs.

8) We move into the current house and it doesn't have nearly the luxuries that our previous house did so Mr. B buys crown moulding, hires a landscaper etc. Our debt gets racked up to who knows how much. I honestly dont even know how much its at right now. My husbands parents bail us out several times. Along the way we have had several months where we cant pay the mortgage and my husbands parents give us cash for it.

Thats the story. A lot of you have it wrong. You need to be nicer of people who live differently than you.

How does anyone have it wrong, exactly?  This is how I read the story to be.  Suggesting that you need to sell some of your property so you don't become completely ruined is not "not nice."  Yes, it's some tough talk, and you thought you were doing the best you could.  But it's time to face the music.  You can do this.  You need to turn things around quickly by following the advice on this thread.

Talking to your family will be hard, but starting by telling them that you are belly up and could lose your home is a good beginning.  They WILL understand that tough decisions have to be made.  You helped them, let them help you.

[begood]

Hello, theotherbeatle! First I'm going to give you a hug. I'm not much for face punching. You have been living one way, and we're trying - in a variety of tones and approaches - to encourage you to consider a different way of living. One that doesn't include cold sweats at night over bills, fear over losing your home, or dread about how to pay for college for your children.

It's becoming clear that this financial tight-rope walking is multigenerational. Your parents have been living above their means, and now you and your husband are living above your means. Mr. beatle's parents are the only ones we've seen in this story who seem to have adequate resources, but those resources are slowly being drained as well, as his parents continue to come to your rescue and/or allow you to live above your means.

I'm concerned about a lot of things, but I want to ask about one in particular. The family members living in the $300K house. It was their house, then you bought it from them? And now they're covering the expenses again and living in it. What do they owe "a couple hundred thousand" in back taxes on? They seem to have been renting just prior to moving back into the house.

Little changes aren't going to get it done, I'm sorry to say. But in better news, if you can make a couple of big changes, it will create a blank slate - debts wiped clean - and then you can decide whether you want to risk falling down a well of debt again, or whether you want to live, as you put it, differently.

[former player]

I am the wife.  This will probably be my only post.

1) When Mr.B and I met I already owned Rental #1 (the one we owe $25k on).

2) Shortly before getting married, I received an annuity for $14k. I wanted to put the $14k on the HELOC to pay it down to $11k, but he wanted to use it on a business idea of his. So we used it on his business idea and now its all gone.

3) After our honeymoon, we moved into the $300k house. This house was previously owned by my family, but they couldnt own it anymore for various reasons so we purchased it from them, and then we moved in and they moved out.

4) The $300k house was a lot to handle. Keep in mind that $300k in our area is different than $300k in a big city. $300k in our area is a 2500-3000 Sq foot big house on several acres with a pond and a rental apartment. It's huge. Just the lawn mowing was $160 per month.

5) The mortgage was very expensive and the interest rate is high. It was a big burden. We got into a lot of debt in this house. About $25k in debt. My husbands parents give us $25k in cash to pay this debt off.

6) A couple years go by and my family needs a place to live again (their lease ended). So we decided to move out of the $300k house and let my family move back in and pay the expenses.

7) We find our current house, which is much cheaper than the $300k house. We buy it and move in. My husbands parents give us $15k for closing costs.

8) We move into the current house and it doesn't have nearly the luxuries that our previous house did so Mr. B buys crown moulding, hires a landscaper etc. Our debt gets racked up to who knows how much. I honestly dont even know how much its at right now. My husbands parents bail us out several times. Along the way we have had several months where we cant pay the mortgage and my husbands parents give us cash for it.

Thats the story. A lot of you have it wrong. You need to be nicer of people who live differently than you.

No, this is pretty much exactly the story we've been getting for 20 pages.  Life is hard, but it's harder if you willfully keep making bad choices and living beyond your means. That's not "living differently". It's refusing to act like a responsible adult.  Your life is (metaphorically) a flaming car crash OF YOUR OWN MAKING, and you want us to have sympathy?

This is just unbelievable.

Mrs Beatles, you and your husband were sucked into some bad choices to meet the convenience of your parents.  You bought a house from them that was totally unsuitable because they wanted you to, you put $100k into it, and now they are back living there at your expense.  You are in unpayable amounts of debt while they are sitting on $100k of your cash and giving you nothing for it.   Your parents are also living in that big, smart house at the expense of your husband's parents, who are effectively subsidising your parents by bailing you out because you are short that 4100k - how is that fair?

Please make a list of the priorities in your life.  Hint: your priority should be the safety, security and future of your immediate family.  And by "immediate family" I mean you, your husband and your children.  Build the four of you a liferaft, rather than letting yourselves drown while your parents suck you dry sitting pretty in that big smart house.  This will be hard for you to recognise, but your parents do not have your best interests at heart, nor do they have the best interests of their grandchildren at heart.  Once you do recognise that, you can start to make smart, logical choices about what to do.

[Ramblin' Ma'am]

I am the wife.  This will probably be my only post.

1) When Mr.B and I met I already owned Rental #1 (the one we owe $25k on).

2) Shortly before getting married, I received an annuity for $14k. I wanted to put the $14k on the HELOC to pay it down to $11k, but he wanted to use it on a business idea of his. So we used it on his business idea and now its all gone.

3) After our honeymoon, we moved into the $300k house. This house was previously owned by my family, but they couldnt own it anymore for various reasons so we purchased it from them, and then we moved in and they moved out.

4) The $300k house was a lot to handle. Keep in mind that $300k in our area is different than $300k in a big city. $300k in our area is a 2500-3000 Sq foot big house on several acres with a pond and a rental apartment. It's huge. Just the lawn mowing was $160 per month.

5) The mortgage was very expensive and the interest rate is high. It was a big burden. We got into a lot of debt in this house. About $25k in debt. My husbands parents give us $25k in cash to pay this debt off.

6) A couple years go by and my family needs a place to live again (their lease ended). So we decided to move out of the $300k house and let my family move back in and pay the expenses.

7) We find our current house, which is much cheaper than the $300k house. We buy it and move in. My husbands parents give us $15k for closing costs.

8) We move into the current house and it doesn't have nearly the luxuries that our previous house did so Mr. B buys crown moulding, hires a landscaper etc. Our debt gets racked up to who knows how much. I honestly dont even know how much its at right now. My husbands parents bail us out several times. Along the way we have had several months where we cant pay the mortgage and my husbands parents give us cash for it.

Thats the story. A lot of you have it wrong. You need to be nicer of people who live differently than you.

It's not as though a group of strangers accosted you in the street to criticize your lifestyle (although I understand if maybe it feels like that). Your husband posted here to ask for financial advice, so people are trying to help. There are some pretty straightforward steps that could go a long way in solving your situation (I won't say "easy steps," since it's tied up with your family relationships, but straightforward from an outside perspective.)

[LadyMuMu]

The most interesting new information here is the degree to how financially enmeshed your families are. Mrs. Beatles, your family may well feel like the "big house" is still theirs or "should" stay in the family and thus making it difficult to sell. You basically have two generations of a family unwilling to part with a piece of real estate that is ruining you all financially. If your family hadn't been paying the high costs on the big house, how much closer would they be to paying down their IRS debt?

Mr. Beatles, you've been a little light on the degree to which your family has bailed you out over the years. Sounds like it is a reoccurring habit. Now I understand why you were so certain they would give you money to solve this problem if you asked for it. Sounds like the money tap has been on a slow dribble for quite some time.

I stand by my advice to do a dramatic all-in-one solution that severs all this financial enmeshment.

[mustachepungoeshere]

8) We move into the current house and it doesn't have nearly the luxuries that our previous house did so Mr. B buys crown moulding, hires a landscaper etc.

Our debt gets racked up to who knows how much. I honestly dont even know how much its at right now.

You seem to have worded that very carefully to avoid taking responsibility for the debt.

"Mr B buys" - no, you both did this. You both spent money or agreed that you "needed" crown moulding and landscaping. = "We buy..."

"Our debt gets racked up" - this did not happen independently of you. = "We racked up debt..."

You guys will not make progress till you can own your mistakes. You created this mess together, time to fix it together.

[Zoot]

You created this mess together, time to fix it together.

This is the best, most succinct summary of this thread that could possibly exist.  :)

The community here has given its best brass-tacks suggestions and honest assessment of what's at issue.

It's now time for the two of you to sit down together and decide what you're going to do, together, as a team, to secure the future of your family.  You two together can actively create the family that you want your children to grow up in by cleaning this up--and doing so is an act of love for each other, and an act of love for your children.  "And in the end," to quote the actual Beatles, "the love you take is equal to the love you make."

Please, both of you, come back and tell us about your plan when you've decided on a strategy.  We'd love to follow your updates and cheer you on.  :)

[Jakejake]

Our debt gets racked up to who knows how much.

This is a big part of the problem. I think if you had realized how much trouble you were getting into, you might have sold the big house early on - before your parents moved back into it, and then you wouldn't be in the awkward position of having to tell them they need to move out so you can sell it.

I'd be curious to hear what other married couples here do regarding finances. In my house, my husband manages the big spreadsheet of money, and on the final Friday of each month he prints it out, and shoves it in front of my face. It includes our bank account, his retirement accounts, my retirement accounts, our other assets (just the house we live in, we don't count cars or furniture), and any loans including the mortgage.

On yours, right now it probably would make sense to also include all those credit cards, tax bills, and also the required minimum payments on them. And given your situation and that you are trying to change so much at once, it might make sense to do this weekly instead of monthly until you're out of debt completely. 

[mustachepungoeshere]

In my house, my husband manages the big spreadsheet of money, and on the final Friday of each month he prints it out, and shoves it in front of my face.

I love this.

[wenchsenior]

In my house, my husband manages the big spreadsheet of money, and on the final Friday of each month he prints it out, and shoves it in front of my face.

I love this.

We do this exact same thing, on the 1st Sunday.  I print the sheet of our assets and liabilities (none anymore expect modest mortgage), and stick it in front of my husband whether he wants to look or not.  He hates managing money, but he understands that I cannot manage it for us without consistent input from him. Normally, he glances at our totals and says something joking like, "Are we rich yet?"  But that is the time to discuss any and all discretionary spending for the month, or any random expenses that have popped up. One half hour. Once per month. Keeps on the same page and working toward the same goal.

[RamonaQ]

Thats the story. A lot of you have it wrong. You need to be nicer of people who live differently than you.

I haven't posted here yet, though I have been reading along.

You guys have been living differently than a lot of people on here.  This has been your "normal" and you have a lot of money and real estate deals tied up with family, which I'm sure adds a whole layer of complication and emotion onto things.  So perhaps some suggestions trigger an immediate "no, we can't do that!" response.

Do you want to live differently?  For me, the stress of having that much debt, being behind on taxes, owing money to family - that would eat me up inside.  If it's affecting you similarly and you want to change, I encourage you to seriously consider the options that people are laying forth, even the ones that immediately seem impossible.

I get that solutions in the real world might be tied up with a whole lot of extra emotion.  But can you even imagine the positive emotions that could come from being debt-free, knowing where your money is going, having savings, not spending a ton servicing debt, having extra money left at the end of the month?

[Unique User]

I am the wife.  This will probably be my only post.

1) When Mr.B and I met I already owned Rental #1 (the one we owe $25k on).

2) Shortly before getting married, I received an annuity for $14k. I wanted to put the $14k on the HELOC to pay it down to $11k, but he wanted to use it on a business idea of his. So we used it on his business idea and now its all gone.

3) After our honeymoon, we moved into the $300k house. This house was previously owned by my family, but they couldnt own it anymore for various reasons so we purchased it from them, and then we moved in and they moved out.

4) The $300k house was a lot to handle. Keep in mind that $300k in our area is different than $300k in a big city. $300k in our area is a 2500-3000 Sq foot big house on several acres with a pond and a rental apartment. It's huge. Just the lawn mowing was $160 per month.

5) The mortgage was very expensive and the interest rate is high. It was a big burden. We got into a lot of debt in this house. About $25k in debt. My husbands parents give us $25k in cash to pay this debt off.

6) A couple years go by and my family needs a place to live again (their lease ended). So we decided to move out of the $300k house and let my family move back in and pay the expenses.

7) We find our current house, which is much cheaper than the $300k house. We buy it and move in. My husbands parents give us $15k for closing costs.

8) We move into the current house and it doesn't have nearly the luxuries that our previous house did so Mr. B buys crown moulding, hires a landscaper etc. Our debt gets racked up to who knows how much. I honestly dont even know how much its at right now. My husbands parents bail us out several times. Along the way we have had several months where we cant pay the mortgage and my husbands parents give us cash for it.

Thats the story. A lot of you have it wrong. You need to be nicer of people who live differently than you.

I'm sorry you feel insulted.  I get that you feel like a lot of strangers are judging you and don't understand your life and choices.  But, this thread has made me realize the incredible community on here.  We all want everyone to succeed, we don't want anyone, even anonymous internet strangers to fall into financial ruin.  We've all made stupid choices, heck I posted one of my most idiotic, losing $90k on a house.  My husband and I worked part time or not at all for 15 or so years.  We took crap jobs because that was all that was available when we finally realized where we were headed.  But we realized our dumb choices, vowed to fix it and now ~7 years later we just ticked over the seven figure mark of assets.  I'll hope you make it through.  But it will take tough choices and realizing that luxuries and how people perceive you are not what is important, your husband, your kids and your peace of mind are what is important.  Good luck. 

[BlueHouse]

4) The $300k house was a lot to handle. Keep in mind that $300k in our area is different than $300k in a big city. $300k in our area is a 2500-3000 Sq foot big house on several acres with a pond and a rental apartment. It's huge. Just the lawn mowing was $160 per month.

Well, there's $160 someone can earn in their spare time!

theotherbeatle:  how many people are living in the $300K house?  Because I would seriously consider moving back in there with your family (make room).  Your parents can help with childcare so that you're not stuck in the house with the kids all day and you can either get a part time job or do other chores to help around the financial house.  Or get better at grocery shopping.  Or mow the lawn. 

When I read your post, I thought maybe you were an immigrant family because they tend to do the type of house swaps that you're talking about.  But immigrant families (especially Asian) usually have no problem sharing living quarters.  If you all are so close, you can probably stand to get a little bit closer!

I agree with the others -- you don't see that you're subsidizing your parents.  You think they are "covering expenses" but think about whether this would be a fair arrangement if they were not related.  If you were bleeding this kind of money on a stranger, I think you'd be quicker to make a decision.   

Something has to change.  I hope you see that at least.  Maybe this is the right place for you, maybe not.  Good luck. 

[Panly]

my money is on MMM having a good laugh as "the beatles".


innocent hint: "does MMM ever post here?"

plus plenty of other hints:
- dripfeeding facepunch demanding stuff, day by day
- a hidden 300k house with granitemarbletops, heated floors and whathave you  :)
- the Mrs. having a single post.
etc.

[honeybbq]

I am the wife.  This will probably be my only post.


Thats the story. A lot of you have it wrong. You need to be nicer of people who live differently than you.

Every single person in this thread is trying to help you and being nice. We live differently because we live within our means. The sooner you realize that the closer you are to fixing your situation.

Not liking what we said and not liking how we said it are two entirely different things.

[Iplawyer]

I think I have figured the big house issue out.  Mr. and Mrs. Beatles are helping the in laws avoid paying the IRS the 100K in equity in the big house.  That is really why it is a non issue. Please tell I am wrong Mr. Beatles?

[honeybbq]

You need to be nicer of people who live differently than you.

How nice do you think the people will be who are going to foreclose on your house? Think about this honestly and try to get some perspective. You and your children are in a very precarious spot.

[The beatles]

The women who lives in mexico (Baja username I think).

Please check your PM's.

[smilla]

I agree with the others -- you don't see that you're subsidizing your parents.  You think they are "covering expenses" but think about whether this would be a fair arrangement if they were not related.  If you were bleeding this kind of money on a stranger, I think you'd be quicker to make a decision.   

It's worse than that. Mr. Beatles parents are subsidizing all of the Beatles and Mrs.B's family. I wonder if they (Mr.B's parents) realize it.

[Iplawyer]

I agree with the others -- you don't see that you're subsidizing your parents.  You think they are "covering expenses" but think about whether this would be a fair arrangement if they were not related.  If you were bleeding this kind of money on a stranger, I think you'd be quicker to make a decision.   

It's worse than that. Mr. Beatles parents are subsidizing all of the Beatles and Mrs.B's family. I wonder if they realize it.

No - I have come to the conclusion that it is so much worse than just finances.  The Beatles have conspired  with their in-laws to hide 100k from the IRS.  They could go to jail.

[Laura33]

I am the wife.  This will probably be my only post.

1) When Mr.B and I met I already owned Rental #1 (the one we owe $25k on).

2) Shortly before getting married, I received an annuity for $14k. I wanted to put the $14k on the HELOC to pay it down to $11k, but he wanted to use it on a business idea of his. So we used it on his business idea and now its all gone.

3) After our honeymoon, we moved into the $300k house. This house was previously owned by my family, but they couldnt own it anymore for various reasons so we purchased it from them, and then we moved in and they moved out.

4) The $300k house was a lot to handle. Keep in mind that $300k in our area is different than $300k in a big city. $300k in our area is a 2500-3000 Sq foot big house on several acres with a pond and a rental apartment. It's huge. Just the lawn mowing was $160 per month.

5) The mortgage was very expensive and the interest rate is high. It was a big burden. We got into a lot of debt in this house. About $25k in debt. My husbands parents give us $25k in cash to pay this debt off.

6) A couple years go by and my family needs a place to live again (their lease ended). So we decided to move out of the $300k house and let my family move back in and pay the expenses.

7) We find our current house, which is much cheaper than the $300k house. We buy it and move in. My husbands parents give us $15k for closing costs.

8) We move into the current house and it doesn't have nearly the luxuries that our previous house did so Mr. B buys crown moulding, hires a landscaper etc. Our debt gets racked up to who knows how much. I honestly dont even know how much its at right now. My husbands parents bail us out several times. Along the way we have had several months where we cant pay the mortgage and my husbands parents give us cash for it.

Thats the story. A lot of you have it wrong. You need to be nicer of people who live differently than you.

Mrs. Beatles: if you are still reading, thank you for providing so much more background and context for your situation.

Unfortunately, how you got there over the past several years does not change the reality of where you are right now, today.  That is just math.  And the math says that you absolutely, 100% cannot afford three houses, two cars, and a SAHM. 

The people here are just trying to show you all of the options that you really do have to fix that fundamental problem.  Some may say it nicely; others may choose to be more direct to try to break through what can sometimes feel like repeated, bullheaded resistance.  But it all comes from a place of wanting to help, of wanting you to be ok. 

But all we can do is point out your many, many options; it is up to you to decide which of them, if any, to follow.  Just realize that rejecting these options is also a choice -- and you are the one who gets to make that choice and then live with the consequences.  Debt doesn't rack up on its own; it grows when you choose to spend more than you make.  You don't run short on cash for the mortgage in a vacuum; it happens when you choose to spend money you don't have on luxury finishes.  Etc.

If you want the future to be different from the present, you need to start making different choices now than you have in the past.  Even if they are hard.  And even if saying so doesn't sound very "nice."

[Dezrah]

To the Beatles Family,

Have you guys ever considered going through Dave Ramsey's* Financial Peace University?  It's a nine-week course where you and other families strive to get out of debt and build a strong foundation for future wealth.  The slower format and in-person support/accountability structure might be a better fit.  It's not free, but frankly free help doesn't seem to be enough at this point.

Also, the DR crowd is WAY more understanding about the allure of "luxury" than the MMM forums.  They would probably be more sympathetic to how you got in your current position and would be more willing to help you figure out which luxuries you can keep.

We wish you the best.

*Note: a LOT of forum members take issue with some of DR's advice but the general consensus is his plan is good for the average family.

[The beatles]

I agree with the others -- you don't see that you're subsidizing your parents.  You think they are "covering expenses" but think about whether this would be a fair arrangement if they were not related.  If you were bleeding this kind of money on a stranger, I think you'd be quicker to make a decision.   

It's worse than that. Mr. Beatles parents are subsidizing all of the Beatles and Mrs.B's family. I wonder if they realize it.

No - I have come to the conclusion that it is so much worse than just finances.  The Beatles have conspired  with their in-laws to hide 100k from the IRS.  They could go to jail.

No.

The $100k increase was due to the housing market coming back around. It was originally purchased at close to $200k.

Everything was fair and square.

[Zoot]

Have you guys ever considered going through Dave Ramsey's* Financial Peace University?  It's a nine-week course where you and other families strive to get out of debt and build a strong foundation for future wealth.  The slower format and in-person support/accountability structure might be a better fit.  It's not free, but frankly free help doesn't seem to be enough at this point.

Also, the DR crowd is WAY more understanding about the allure of "luxury" than the MMM forums.  They would probably be more sympathetic to how you got in your current position and would be more willing to help you figure out which luxuries you can keep.

We wish you the best.

*Note: a LOT of forum members take issue with some of DR's advice but the general consensus is his plan is good for the average family.

Here is the first hour, for free:  https://www.youtube.com/watch?v=XUa43GRHt4M

[The beatles]

This our updated budget.

Expenses:

ITEM MONTHLY | TOTAL | INTEREST RATE GARBAGE 36 CALE/INTERNET 114 WATER 50 GEICO AUTO 135 AUTO LOAN 393 3591 6.54% MORTGAGE 1761 164,717 5.125% FUEL 150 GAS/ELECTRIC 150 GROCERIES 650 EATING OUT 100 CAMERAS 25 PARENTS 0 30,K CC1 194 856 25.24% CC2 134 4495 24.49 CC3 25 505 23.24% CC4 25 452 10.23% CC5 20 692 18.49% CC6 75 797 24.15 CC7 (STORE CARDS) 100 2020 25.24 Furniture Loan 276 1950 25.00 Property Tax 535 11,380 18% TOTAL 4948 59,720 Looks like we still need to find things to cut. At $4,948 --- We only have $100 to put towards debt repayment that isn't property tax.

[Zoot]

This our updated budget.

Now we're getting somewhere!  :)

Looks like we still need to find things to cut.

At $4,948 --- We only have $100 to put towards debt repayment that isn't property tax.

First thing I'd cut:  eating out.  Dave Ramsey says that when you're in debt, the only reason you should see the inside of a restaurant is because you're working there.  More here:
http://www.daveramsey.com/askdave/posts/124444

Next thing I'd do:  find $500 worth of stuff in your house that you can sell.  Books and CD's, fancy purses, power tools, whatever it is.  Use Craigslist.  Have a yard sale.  Whatever it takes, get $500 from somewhere.

Next thing I'd do:  Pay off CC4 (your lowest rate card) with the $500 from what you sold.  Transfer as much of your ~25% debt to this card as you possibly can.  This lowers the overall interest rate on your debt and makes your payments that much more effective at killing principal.

Next month, you have the $100 surplus, plus $100 from not eating out, plus $25 that you are now not paying to CC4, for a total of $225.  Pay off half of CC3.  If you can find another $250 that month (sell more stuff, mow a yard or two, economize on groceries, whatever), pay off CC3 totally.

Next month, you have $100 + $100 + $25 + $25 for $250.  Target CC1 next.  You can pay this off in 3 months (or less if you economize more--see how it works?), and then roll that $194 into your snowball.

Now you have $100 + $100 + $25 + $25 + $194 for a total snowball of $444.  CC6 can be history in a month or two.

You really can do this.  It just requires focus, discipline, and having the whole family on board.  I believe you have the skills to do it, and we are all here to help.

Now go for it!

[The beatles]

This our updated budget.

Now we're getting somewhere!  :)

Looks like we still need to find things to cut.

At $4,948 --- We only have $100 to put towards debt repayment that isn't property tax.

First thing I'd cut:  eating out.  Dave Ramsey says that when you're in debt, the only reason you should see the inside of a restaurant is because you're working there.  More here:
http://www.daveramsey.com/askdave/posts/124444

Agreed.

I was just leaving something in case of emergency.

[JoJo]

Where is your health insurance?