How to Recover from a Series of Unfortunate Events

[redE2move]

3/2006 Bankruptcy discharged

4/2006 Project credit recovery (credit scores are making a big comeback)

1/2008 Back injury and job loss (down to one income)

3/2008 Still looking for employment but decided I need to go back to school

4/2008 Could no longer make ends meet (Bills began to go into collection even after negotiating)

7/2008 Loss our co-op (no more home)

7/2008 Rental #1 townhouse @ $1800 per month (still one income)

2/2009 Car repossessed could no longer make payments

4/2009 Go figure now I finally found another job (back to 2 incomes but a little to late to save the repo)

6/2009 Homeowner of rental #1 wants 2 move back into the rental due to marital problems

7/2009 Rental #2 @ $2000 per month (easy to get in to owner was understanding of credit issues)

3/2010 Son accepted to college but only partial scholarship (signed up for monthly payment plan @ $922 to pay the balance due)

3/2011 Still in the rental but scared that owner will eventually become tired of renting

Take home both incomes $5600 monthly but monthly expenses are $4500 leaving only $1100 and still haven't been able to pay off debt.  Combined debt is $35,000 which includes the repo.

Priorities (may not seem organized to some)

1) Do not allow our son to graduate from college with debt and end up like us

2) Keeping a roof over our heads (family members who went thru the housing mishap and no where to go from here and no friends willing to take on a family of 3)

3) Only 2 classes away from my Associates degree but 2 years from a Bachelor's (be a shame to quit)

4) To pay off debt but don't know where to begin

5) Have fallen in love with house #2 but do not qualify to purchase

Options (things I have considered but still need other options to weigh in on)

1)  Getting a second job but I I already work 10 to 11 hours per day w/no overtime because I'm a manager w/salary not hourly.  I get the weekends off but I use Sunday's from 9am to 10pm for study, homework, quizzes, papers to write, etc.  Hours during the week suck and I work from 9:30a to 8:30a only to come home tired. Husband works 6 days a week with only Sunday's off.

2)  Negotiating debt but not sure if paying now would benefit if the time in debt restarts.

3)  Asking owner of the current rental to consider Owner financing but will that benefit us in the end when we have to come up with a balloon payment?  Will we qualify for a loan within 2 to 5 years with this option in this tough economy?

I WILL ACCEPT ALL SUGGESTIONS AND INSPIRING THOUGHTS....I have much faith but am looking for the right path.

[llecs]

If I was in that situation, I would stop going to school and I would have my son pay for his own school, even if it meant working for the money to go back to school. That would save $922/mo plus anything I spent on school. Doing this would save additional money in misc. costs that are normally associated with schooling (books, food on campus, supplies, fees, parking, etc.).

I'd then rebudget. I'd do anything to increase income and decrease expenses. If housing costs for the $2000 are about par, then I'd stay as is. Any excess between income and expenses would be first used to build up a savings, just in case the unthinkable happens again, and then I'd save on the side to have 100% on any given debt before tackling it. Once I had 100% of any given debt saved up, then I'd follow the outlines as listed in these forums and take steps to pay off the debt with one payment and all the while take steps to get it removed from my CRs. I would guess that I could take care of the entire debt within a year given your joint income. During that time I would wait on school and certainly wouldn't look at buying a place of my own at that time.

After the debt is retired, then I would agressively save for a new home if that was my goal at that point or consider going to school again or helping my son pay for school at that time. If I had about 10-15% saved for a home, then I might pursue it then too.

Why skip school for yourself? I'd predict that a new degree, had you pushed through, wouldn't immediately spike your income and financially isn't feasable in the short-term. Is there any guarantee that your current employer(s) would give you a 5-figure pay raise immediately upon graduation? Or would you have to change jobs? If so, how's the job market out there? Would the amount of money you paid in to get that degree be returned back to you? With tight finances, I wouldn't pursue it just now. And as for paying for your son, I'm not down on college. However, you really can't afford it. Imagine being debt free, then you'd have more leeway in paying for his schooling. BTW, I dropped out of school in my last year and all I need is 3 stinkin' credit hours to graduate with a dual BA in Poli Sci/Econ. I started a business while in school and realized that a degree wasn't going to get me any further in life that where I was at at the moment. I have no regrets not finishing. Going backwards in time, my folks helped pay for my school. Mid-way through my 2nd year, they ran out of money and had to drop out and pay for my own school. I had no regrets backing away for a semester while I worked to pay for my own tuition. I was never upset with them. If your son paid for his own school, he would treat it very seriously (at least I did) and would give you a chance to pay off the debt.

Don't buy a home yet. Get out of debt and get traditional financing. If you follow the steps as outlined in What Steps Do I Take , then your FICO scores would have increased and you'd be out of debt too if committed. You certainly wouldn't want any balloon payments. You never know where things will be financially in a year, two or three. I bet if you worked hard, stayed focused at debt repayment, then you could qualify for a new home within two years.

Per what to pay first, I'm all for paying the lowest balance first. Make sure you are out of SOL or you have the $$$ to PIF set aside before doing anything. Once you have the $$$ to PIF, then following the steps above and utilizing PFDs, you can offer a settlement amount and be done with it all the while making your CRs look cleaner. Negotiating a debt won't restart SOL. Paying on it or making a promise to pay could. You may want to check your state's laws for more info.

[Anonymous]

Absolutely +1 to llecs' post.