Just a rant about Post BK debt (buying a house vs saving $$$)

[Franco]

I'm almost half way through my BK CH13. The thought of buying a house and incurring a large debt is frightening to me, especially after going through this BK. I have friends that have houses here in Arizona, and they aren't 100% payed off, they have people that rent their house to pretty much pay their mortgage etc.

For me, personally, after the next 3 years, when my CH13 is payed off and my Truck is mine and payed off, I want to just save $$$. To me, just the thought of having more "payments" and a commitment to pay off a house is frightening to me. Has anyone felt that? I know renting an apartment is literally throwing your money away, but in a sense I would rather rent a cheap apartment and save the $$$ in an account instead of taking on a big commitment like a 20-30 year loan/mortgage to pay off a house with a high monthly payment.

This might sound very negative, but i'm being honest. I don't know if I'll be alive even 5-10 years from now, getting a Covid test a month ago was no issue, I tested negative. But I also was informed my blood pressure was EXTREMELY HIGH, no joke it was 190 over 120! Since then I lost 20lbs, lowered my salt, eating healthy, yet here I am only a month later and my blood pressure is still high. I take full responsibility for my bad eating and drinking habits, but I'm on a good road right now, but still this was a wake up call to me personally.

Sorry to ramble on, I guess it comes down to this, I'd feel more comfortable knowing I have $$$ in the bank in the short term VS having $$$ invested in the long term, like a house etc. Nobody know's how long we are going to live for, but going through this CH13 BK makes me NOT want to have ANY monthly payments when it is behind me, it will feel so good when I can save that $800 a month instead of it going to some Trustee.

Rant over/

[shipo]

I'm kind of in the same boat as you, just three years in front of where you currently are.

Nearly two years before I filed I rented a very inexpensive apartment, like well under $1,000 per month, this in the vain hope of being able to survive without filing for a Chapter 13; wasn't enough. My bankruptcy was discharged and closed earlier this year, and since then I've been operating as if I was still in the 13, but instead of paying the Trustee, I'm paying my savings account, and yeah, it feels real good.

The above said, my income jumped by about 36% during the 5 years, and is on the cusp of jumping another 50% by the end of this year, and my wife and I are getting the itch for a nicer place to live, even though we're now in our mid-60s; as such, we've been hunting for a nice town house to buy. Our thinking is to borrow some from my 401K so we can put down 20% on the home, take out a 30 year mortgage for the 80%, repay the 401K over say, a two year period, and then refinance the home for 15 years. Assuming we pull that off, we'll have the home paid off by our late 70s or right bang on our 80th birthdays. What if we go Tango Uniform before then? No problem, our kids will have a nice asset to sell and split amongst them.

[sophieanne]

Hi Franco - congratulations for being at the halfway point of your plan. It sounds like you’re on track for never getting yourself in debt again - good for you. I understand your fear going forward but as a rule real estate is something that normally appreciates over time, you’re not throwing money away, you’re investing in your future, plus giving yourself “your own space”. If things suddenly turn, you could sell or rent out part of it to help support yourself. I assume you’re paying rent now? If you’re saving, you could make a down payment on an inexpensive home and make mortgage payments instead of rent. Hopefully your trustee payments won’t go totally to the mortgage, unless that’s your decision to do so. After my chapter 13 ended, I refinanced to a 15 year mortgage and now have decided to take part of the trustee payment..it was over 2500 a month and pay extra on it each month. By doing so, and living within my budget, my now 12 year mortgage will be paid off in 4 years. I’ve really learned that budgeting is a key to keeping in control. I hope you get your health issues under control. It’s hard, but focus on your health as well as your finances. Good luck as your plan continues and gets closer to completion,

[Barbisi]

I agree 100% with you Franco -when we finally regain our life in 2022, the last yoke I want around my neck is to continue paying this mortgage!
Admittedly,since foolishly buying that first house and having to flip it for a 100% loss after my mother died,and then buying this current house with a too high mortgage and 13 year (left) solar panel lease is the only reason we are in this BK13, I have every right to want out of this home and state!
The only reason we are stuck in Colorado after 10 long disappointing years is this house and the BK13 we had to file in 2017.
Selling out and renting after relocation is the only scenario that makes sense for us! This current 1975 house is on the crusp of needing $$$$ to update and repair and staying here until Feb.2024 just so we can buy another house is extremely upsetting and demoralizing to me, as those two years could be used exploring a new part of the US (or elsewhere if we were very lucky LOL! ) ,traveling after being trapped in one place for 10 very unhappy, unproductive years, readjusting to a healthier more humid sea-level climate and maybe using my language skills,singing and speaking training,etc. - somewhere more accommodating to non-tech and non- outdoor interests!
The argument that my husband has to stay here until he turns 70 years old to retire is not borne out by the market increase raises he has received this year (and likely will be the property of the trustee when the upcoming increased payment motion is decided after the court hearing) and the interest other companies showed in other parts of the country when he was almost laid off earlier this year.
There is no guarantee that this company won't lay him off in the future, and there are other high -tech companies in better places to live!
There is no reason to stay here beyond 2022!
Renting for two years or longer will be a good thing while we relocate and figure out where we really want to be!
That is real post-BK13 freedom!

[Carmella]

Renting is NOT throwing money away. I wish that mindset would go away. There's a reason they call a house a MONEY PIT!

If we sell the house we live in now. Excluding the HEL...if I talk just on Mortgage we are not going to make a red cent. We paid more into it in the last almost 20 yrs including interest we would never get a profit.

Only if you buy a house in an up and coming neighborhood and then sell it before the value falls without putting much money into it will you make a decent profit.

The first house we had we lived in for 8 yrs. We sold it for more than we bought it, but we put money into the house so in reality we broke even. My husband still believes we made money off that house since it sold for more!

Renting can be a smart move you don't have to pay for upkeep. You don't have to buy and maintain lawn equipment or snow equipment. You don't have to keep up landscaping, etc. You don't have to put a new roof on it, etc.

Our house is paid off next month. Our HEL will be done soon after. It makes sense for us to stay. We will move later to another house, maybe a lateral move. But that is because we wouldn't have a mortgage to pay, but property taxes (which are lower here than other parts of the country) and upkeep.

[Barbisi]

You are 100% right as well Carmella -owning a home isn't always the best course for every one!
Had we kept on renting here or, better yet relocated in 2014-2015 , I believe we would never have been forced in BK13!
When you are living somewhere you no longer want to be (as I am) owning a home keeps you tethered and trapped. And if your job is lost and your mortgage is very high, you run the risk of another BK13 to avoid foreclosure!
I was so much happier and lived relatively stress-free before home ownership and inevitable ( here) BK13!
For us, Colorado + homeownership = repeated BK13.
For us , home sale + relocation = hope + new life.

[bcohen]

To me, just the thought of having more "payments" and a commitment to pay off a house is frightening to me. Has anyone felt that? I know renting an apartment is literally throwing your money away, but in a sense I would rather rent a cheap apartment and save the $$$ in an account instead of taking on a big commitment like a 20-30 year loan/mortgage to pay off a house with a high monthly payment.

I would not go so far to say that rent is "literally throwing your money away", because assuming that you rent from a reputable landlord, you are hopefully receiving the benefit of a clean comfortable home for a reasonable monthly cost. As you correctly pointed out, renting allows for flexibility in the sense that once the lease is over, you can easily move to a different city, or to a different home. It should be noted that there are plenty of greedy slumlords out there, who milk their tenants for every dime possible, while putting as little money back into the property as they can get away with. A lot of corporate-owned apartment complexes and REITs fall into this category as well. However, even a decent landlord will still raise the rent every year due to rising costs and market trends.

And this is precisely the reason why you should try to own your home if at all possible! It is true that today it might cost $2000 per month to own a house in some city, while a similar house might rent for $1500 per month, and a small apartment might rent for $900 per month. However in 10 years, it might cost $2300 per month to own that house (which has appreciated in value), while a similar house might rent for $2500 per month, and the apartment might cost $1500 per month. While you are working, your wages will increase with inflation, however once you are too old to work, you will still need somewhere to live--hopefully a paid-off house. It becomes very difficult to pay ever-rising rent on Social Security and retirement savings!

[Franco]

Thanks for the wealth of knowledge shared here everybody, I truly appreciate it! I never thought I'd be in this predicament, but I must say going through this BK has seriously opened my eyes. One thing my coworker was talking about today was his rising electric bill, which was $430 for the month of August and he also complained about his property taxes going up year over year, he said it was due to people moving to Arizona and school zoning or something to that nature. He flat out said that owning a house is a double edged sword, it's good and bad. Keep in mind he owns two houses, his 2nd house he rents out so the married couple pays $1700 per month but he said he still has to come out of pocket for repairs etc, he said last year he had to replace the water heater and it cost him a lot of money.

This might change 3 years from now, my mindset etc. Hell I don't know what will happen in 3 years, nobody does. I'm just extremely grateful there are people on this forum that know what they are talking about. I thank you all! Cheers!