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Written by Admin
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Friday, 20 July 2007 09:25 |
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Hi Chuck, Our combined monthly bring home pay is $2800 without overtime and our monthly rent is $1475.00. I want to get an apartment (we currently rent a 3200 square foot house), but my husband thinks that if we include storage rental we might as well renew our current lease. We will be debt free effect March 2008. Our income increased greatly during the fall. I want to begin living on less than we make and my husband refuses to sell much of our finer furnishings and can't image it being in storage for the next two years. Thats when we hope to purchase our home. We are currently in bankruptcy and emerge next year. What should we do? ~ Rhonda, San Antonio
Hi Rhonda,
Since I don't know your entire situation -- total debt, the work you do, family situation (kids, etc), what caused your bankruptcy, etc -- I'm at a bit of a disadvantage giving you strategic financial advice. Based on what you shared here,though, I'm very concerned that your rent is currently over 50% of your take-home pay. Housing cost over 35% of your net take-home pay is a key ingredient in a recipe for disaster!
Based on your desire to be debt-free ASAP, I'd begin with a drastic makeover -- right now. Your Chapter 13 bankruptcy was designed to not only pay your creditors at least a portion of what you owed them, but to also help you learn the discipline necessary to ensure it doesn't happen again. I'm am very pleased that your bankruptcy will be discharged (completed) next March, since nationwide 6 out of 10 bankruptcy filers don't complete their program. Congratulations!
Since you'd like to be in a home in 24 mos, that's not too long to be somewhere temporarily. I agree with both of you: Find something smaller (and cheaper) and don't pay a bunch of money for storage. If you're going to be in a house soon, you should minimize your living expenses while you're saving for a downpayment. Go through your belongings and narrow them down to what you truly want to hang onto. Sell the rest. Rent something very inexpensive (target for $800 or less) and use the difference in your rent (approx. $700 /mo) to build a small emergency fund and pay off the bankrupcty early (yes, that's acceptable!). You don't want to rent BIG -- you want to SAVE big. The key is delayed gratification.
Once the bankrupcty is discharged, you can build a larger emergency fund (think of it as bankruptcy repellent) and then save a good downpayment (at least 10%) for your home. Before you know it -- I predict much sooner than two years -- you're in your new home.
That's the way to do it ... right!
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