Living on a Budget, Saving Money/Home refinance or sell
I started a landscaping business in 2005 and went full time at the end of 2010. My business is growing and I have the ability to earn 70,000 working by myself when the business is fully developed and I can bill $350 x 17 days per month. (Very possible). I should make 40k in 2013. My wife works at our church and makes 52k as a w-2 employee.
We have a home that we built in 1997. Our current market value is 350k. We owe 242k. Our loan is an arm with a minimum interest rate of 7.15%. My credit is bad because I borrowed on credit cards and have not been able to pay back principal. Making no payments at this time.
Should we refinance at a much lower rate and keep holding off the creditors as business grows or sell, rent and begin the process of paying off debt and improving credit? My wife's credit scores are good. We have protected her.
Thanks for any advice you can offer. Would enjoy seeing your ebook and budgeting course online.
Thank you so much for choosing me to assist you on your journey to financial freedom. If I understood you correctly you are self-employed and your wife is not. Your combined income is approximately 92,000 for this year. You have an adjustable home loan with a balance of 242K. Your question is “based on your current income should you refinance the house or sell the house/rent and pay down debt”?
My first recommendation is for you to look at the ratio. The recommended rule is your monthly mortgage payment is no more than 25% of your monthly take home pay. If you are less than 25% then go to my next recommendation. If you are more than 25% and refinancing brings you at 25% or less then refinance.
My second recommendation is for you to review when your ARM is set to adjust. Determine after the adjustment if you will be within your 25% window. If the adjustment will take you over the 25% window and refinancing do not put you within a 25% reach then selling and renting for a while may seem like the next best option.
It sounds like you and your wife are feeling overwhelmed with the monthly expenses. Continue to work as a team and be honest about the numbers. You mentioned you have the "ability" to increase your income, almost double it. The best guidance is to set a time frame i.e. 6 months or 9 months for your increase to become steady. Then it will come down to emotional endurance. If you can emotionally hold-on then this may be an option. From that point maintain a written monthly budget and move forward. Thank you for being proactive, I hope this helps.
Here are the links for my class/book. Let me know which one is a better fit for your learning style (reading or watching video). I do have a coupon for the online workshop (not sure why the link is not live-will have to cut and paste)