Hello everyone. This is my very first post here. I have been doing a lot of reading and feel comfortable enough to make this thread.
I am writing for my mother. My mom is a 59 year old teacher in GA. She was a stay-at-home mom for many many years, so she really doesn't have much money socked away. She is in her 9th year of teaching. After 10 years in GA, she will be vested. Right now, she has $19,000 in a 403(b). She brings home about $3100 a month after taxes.
She owns a home worth about $110,000. She owes about $130,000 on the first and $14,000 on the second. Both payments combined, as well as taxes and insurance add up to about $1600 a month. She is currently late on her $450 HOA payment.
She has about $15,200 in unsecured debt, most of it in the mid-high 20% range. We called a few companies earlier this year to negotiate lower rates so she can at least pay off some principal. They didn't agree. So it got me to thinking: Wouldn't she be better off to just do a CH 7?
Here is my rationale: She is getting up there in age. She will have to work 11 more years to retire at 70 with 20 years of service. Instead of throwing away $500 in monthly unsecured debt payments and $1600 in mortgage payments, why not just save that money for retirement? My plan was as follows: 1. Stop paying everything immediately, except for the student loans. 2. Max out the Roth IRA at $500 a month. 3. Put about $750 a month into the 403(b) account (above what her employer currently puts in). 4. Use the rest of the money for only necessities. 5. Put about $200 a month in a Money Market Account. 6. After about 5 months, file BK CH 7. 7. Continue to stay in the home until she is forced to leave.
She can get a decent apartment for about $750 a month. This would save her about $850 a month. Also, she wouldn't have to worry about repairs (which her home needs a lot of) and she wouldn't have to worry about stairs (she will need a knee replacement soon). I know her credit will be ruined by the lates, the BK, and the foreclosure. But by then, she should have thousands saved up in her Roth (which would be protected) and some in her MMA.
My questions are:
1. Does my plan sound like a good one?
2. Is there anything we should tweak?
3. In GA, how much money could she have in liquid accounts?
4. Her 2004 Sentra (85k miles) is paid off, what will happen to it?
5. Should she trade her current car in and get a new one with the rebates and the tax credit (something she can drive for at least 8 years) before her credit is ruined?
6. Does BK really make you feel like a loser? How has it affected your life?
I am so worried about my mother. When she was broke and didn't have a job, we were ok. But her and my dad divorced in 2003 and she got a job and went back to school and that's when things started happening. She bought the home and had to buy appliances (on credit because she was broke). I had an incident last year and she had to come see me (on credit). She is just sick and tired of being sick and tired. I just want her to be OK. I want her to be comfortable with the decision she is about to make. Someone please tell me what I can say to her to make her feel comfortable doing it.
Thank you so much for reading my long post. This has been the only thing on my mind. Please help. Thanks a million!
I am writing for my mother. My mom is a 59 year old teacher in GA. She was a stay-at-home mom for many many years, so she really doesn't have much money socked away. She is in her 9th year of teaching. After 10 years in GA, she will be vested. Right now, she has $19,000 in a 403(b). She brings home about $3100 a month after taxes.
She owns a home worth about $110,000. She owes about $130,000 on the first and $14,000 on the second. Both payments combined, as well as taxes and insurance add up to about $1600 a month. She is currently late on her $450 HOA payment.
She has about $15,200 in unsecured debt, most of it in the mid-high 20% range. We called a few companies earlier this year to negotiate lower rates so she can at least pay off some principal. They didn't agree. So it got me to thinking: Wouldn't she be better off to just do a CH 7?
Here is my rationale: She is getting up there in age. She will have to work 11 more years to retire at 70 with 20 years of service. Instead of throwing away $500 in monthly unsecured debt payments and $1600 in mortgage payments, why not just save that money for retirement? My plan was as follows: 1. Stop paying everything immediately, except for the student loans. 2. Max out the Roth IRA at $500 a month. 3. Put about $750 a month into the 403(b) account (above what her employer currently puts in). 4. Use the rest of the money for only necessities. 5. Put about $200 a month in a Money Market Account. 6. After about 5 months, file BK CH 7. 7. Continue to stay in the home until she is forced to leave.
She can get a decent apartment for about $750 a month. This would save her about $850 a month. Also, she wouldn't have to worry about repairs (which her home needs a lot of) and she wouldn't have to worry about stairs (she will need a knee replacement soon). I know her credit will be ruined by the lates, the BK, and the foreclosure. But by then, she should have thousands saved up in her Roth (which would be protected) and some in her MMA.
My questions are:
1. Does my plan sound like a good one?
2. Is there anything we should tweak?
3. In GA, how much money could she have in liquid accounts?
4. Her 2004 Sentra (85k miles) is paid off, what will happen to it?
5. Should she trade her current car in and get a new one with the rebates and the tax credit (something she can drive for at least 8 years) before her credit is ruined?
6. Does BK really make you feel like a loser? How has it affected your life?
I am so worried about my mother. When she was broke and didn't have a job, we were ok. But her and my dad divorced in 2003 and she got a job and went back to school and that's when things started happening. She bought the home and had to buy appliances (on credit because she was broke). I had an incident last year and she had to come see me (on credit). She is just sick and tired of being sick and tired. I just want her to be OK. I want her to be comfortable with the decision she is about to make. Someone please tell me what I can say to her to make her feel comfortable doing it.
Thank you so much for reading my long post. This has been the only thing on my mind. Please help. Thanks a million!
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