How much cash on hand is too much?

[Fallonedward]

Please give some strong thought to your notion of keeping an underwater property. Your son's high school days will pass quickly. The housing market here is not going to improve at the same pace. Bankruptcy offers you a life jacket; staying underwater defeats the purpose. If you're underwater, don't reaffirm. You can likely continue to stay in the house provided you submit payments.

The amount of cash you can protect depends on which set of exemptions you use. Michigan permits residents to use Federal exemptions (in which $10k+ in unused homestead can be applied to any property, including cash). Yes, you can coordinate a particular filing day with your attorney.

I'm not going to reaffirm my underwater property but I have a 3.9% mortgage and I've looked into renting in my school district but by the time I save for a security deposit, deposit for utility's, cost of moving etc. We calculated it would cost over $5k to move. So we will not reaffirm but continue to pay the mortgage and then if the financial picture does not change for us, we will then be forced to leave...

[HakunaMatata]

It definitely sounds like you have a solid plan (I was concerned you were considering reaffirming your mortgage)! There are far too many Michiganders who think the housing market will transform back to pre-bubble burst days. It's tough to digest considering we fostered notions of houses being investments for decades. We have numerous foreclosures presently flowing through the pipeline. It took a year for my house to go to Sheriff's Sale. Once these foreclosures hit the market, housing values will further reduce. It's utterly baffling; and, I'm so happy I'm no longer financially tied to this insanity.

Don't let the bank "force" you to do anything (they don't deserve the power). If your financial life or desire to remain in your property don't/do change, you have control. You have choice (even if it doesn't feel like it at times). There is no shame in freeing yourself from a bad investment. You didn't single-handedly create this economy.

Best of luck to you!

[Fallonedward]

It definitely sounds like you have a solid plan (I was concerned you were considering reaffirming your mortgage)! There are far too many Michiganders who think the housing market will transform back to pre-bubble burst days. It's tough to digest considering we fostered notions of houses being investments for decades. We have numerous foreclosures presently flowing through the pipeline. It took a year for my house to go to Sheriff's Sale. Once these foreclosures hit the market, housing values will further reduce. It's utterly baffling; and, I'm so happy I'm no longer financially tied to this insanity.

Don't let the bank "force" you to do anything (they don't deserve the power). If your financial life or desire to remain in your property don't/do change, you have control. You have choice (even if it doesn't feel like it at times). There is no shame in freeing yourself from a bad investment. You didn't single-handedly create this economy.

Best of luck to you!

HakunaMatata: Thank you for your kind words. It will take Michigan 20 plus years to come back from the horrific financial situation the state is in.

This option will allow me to stay in the house as long as I make the choice to do so vs someone else making that choice for me.

I no longer feel bad. Both my hubby and I worked hard all of your lives. We both lost our jobs in Michigan within weeks of each other and only I have been able to find a new opportunity but at a severe pay cut.

I am now doing everything possible to do the right thing for me and my family. We are both highly educated and very talented individuals. We did not create the mess this economy is in. We have always been strong savers but no one could predict that we would both lose employment and that our 6 month emergency fund would go so quickly as we have had more emergency-one off bills come up in the lat 6 months then in our previous 20 years prior.

We had our ac, fridge, washer and furnace all go out within the last 13 months. Today our hot water heater died along with the sump pump, so more of the emergency funds will be spent. Our two sons had very expensive health issues that we could have never predicted nor anticipated that the insurance would pay so little of the mega-watt bills. So because of medical bills and job loss our lives got pushed to the brink but thankfully we live in a world that gives us a chance to start over