My situation is so messy, bizarre, and seemingly impossible to resolve. I've been reading a lot on this forum and there seem to be a lot of wonderful, helpful, non-judgmental people out there. So please give me some good advice! I don't know how to resolve this. I apologize for the length of the post. It's a good news/bad news story and I don't know how else to explain it.
I earn $200,000 a year. My wife doesn't work because we have moved a great deal in my career and she's been following me, picking up work in different countries we live in, but the last two years haven't worked out for her in terms of employment and as I am 52 and she's 51, age discrimination may be kicking in. (She's also not from the US and has a foreign accent.)
We own an apartment, long term rented out, which is worth about $260,000 and has a $19,000 mortgage. It's in a foreign country, we can't sell it without a 60 percent capital gains tax so even though it's basically a slight money loser (a couple hundred dollars a month, on average) we are waiting until we retire, move back there, live there legally for a year, and can shelter it 100% from tax at sale. It's kind of our retirement nest egg but we can only access it AFTER we've retired and moved there. (It's in a really beautiful spot.)
We own another house in the United States near my corporate HQ which we bought for $260,000 (I've posted about just this house before elsewhere on this forum, for advice whether or not to sell.) Here are the details:
Market Value: Hard to assess, but a local discount broker told me to put it on the market for $450,000 and he said he could sell it quickly. Zillow (Zestimate) claims (apparently on basis of comparable prices per square foot in the area) that its value is $600,000. Redfin says between $450,000 to $650,000
Original Purchase price: $260,000
Original Mortgage Amount: 234,000
Interest Rate: 3.25%
Mortgage Term: 15 years
Term remaining: 12 years
Amount remaining on mortgage: 199,000
Gross Rents: *
Here's the tricky part. I am overseas. My gross rents were $41,149 last year but I have a full service management contract and all rental expenses are deducted so I only get the amount that comes after all expenses. last year that was 19,447. My house is across the street from a medical school so I rent out short term to doctors in residency. I have cleaning services, trash collection, everything taken care of for these tenants. (Who are ideal tenants, they work all the time, don't party, are spotless. But because they are short term I pay VERY high insurance, reflected in my escrow accounts, because I am considered to run "a boarding house" and insurance is very high for this.)
Here's my mortgage:
Payment: $2,773.96
Principal and Interest: $1,644.25
City Tax: $536.30
Hazard Escrow: $417.95
So this house is basically a wash, financially.
Also have $530,000 in our 401K. Saving that for when we get really old & the rules don't allow me to touch out until I am sixty. And I am not allowed to take a loan from it for any reason. (Believe me, I've tried.) Another $10,000 in a Roth IRA (for a rainy day in retirement)
Separately we have a $5,500 monthly pension, defined benefit, which I am eligible for as soon as I retire but ONLY after I retire. It's for life with automatic COLA increases. I am already vested for retirement so I could retire tomorrow if I wanted to. So all is good, right? !BUT!:
Our finances are a disaster. We have a credit score 0f 640. Three years ago I had a terrible bike accident at a bad time: we were in the middle of rehabilitating our house, it was stripped down to the studs in places, and we were living in it as well. We had two kids in (expensive, private colleges) My bike accident essentially incapacitated me for about half a year (couldn't lift arms, lift anything, even paint. nothing. nada). We ended up taking out a Home Equity Line of Credit, which is now still maxed at $50,000 & paying lots of contractors on credit cards. We have $40,000 in credit card debt. One child now finished college (break out cheap champagne here); other is now finishing and essentially financially independent. We have two cars now, necessary for work. (really really necessary for work, no choice even though I hate it) No cable. No expensive hobbies. No vacations in two years. ("Staycations") No expensive hobbies, really. We read library books. I get $7,000 net salary a month. (Big deductions to pay for my great pension.) I also have to pay the IRS $1000 a month (for another 7 months only, thank God) for a tax filing error I made three years ago. The IRS won't accept less than $1000 a month. The good news is that I've paid it down from more than $40,000!
I plan to sell the US house near my HQ when I retire. (I am in employer housing now, outside the US.)
Here's the crisis. I feel that I am asset rich, bad debt desperate, and living hand to mouth entirely unnecessarily. The solution, I think, is to go to the bank, refinance for an interest only loan to the US house, pay off the credit cards, and then just bank the $300,000. But our credit score is so bad, nobody wants to touch us. Besides the house in the US is not owner-occupied so can't get a mortgage refinance. My bank won't lend me money personally to pay off credit cards because my credit card debt too high. (Although they're happy to offer me ONLY, no other option, a thirty year refinance which I think would be insane.) Every month with 7,000 in salary and 2800 in net rents and the cost of carrying my foreign apartment I barely make the minimum payments. So I can't get off the treadmill, even though I think I am relatively well off if I could just redeploy my finances more effectively.
How do I get out of this mess? What's the magic bullet??? Help!