Sunday, February 24, 2008

Glimmers of Hope

Right now our 1st and 2nd mortgage payments total = $5700 / month

Based on the recommended ratio that a house payment should be no more than 30% of total net income per month we should have a net income of $19,000.00 per month. 30% of $19,000 = $5700 a month.

So even if we erased all of our credit card and personal loan debts our house payment would be 60% of our net monthly income - at best. That's assuming I get the maximum monthly bonus plus maximum monthly expenses reimbursed each month. That would still be 60% of our net income going to interest-only loans - not even paying down the mortgage. So I'm already a renter - it's just that my landlord is some mortgage backed security financed by my last refi back in summer 2006. And since we don't have a subprime loan and our loans are greater than $720,000 then we dont fall into any category for help - government or mortgage lender.

And with (my wife's) job at risk this year because of the state budget cuts and the value of houses being what they are it just doesn't make sense for us to stay in our house any longer and continue to fall behind each month. If we short sale our house we would be selling it at a $250,000 loss. And everything I read indicates at least two more years of decline in home values - most likely down to $100 a square foot. Might even get down to $75 or $90 a square foot. And where we live there is just not enough high paying jobs to support the market value of the houses around us even at today's prices.

And paying off our credit cards would not change the fact that we have 60% of our income going toward mortgage payments. And if we declare bankruptcy (Chap 13) and wipe out our debt that way then we'd still owe the $5700 a month house payment - we'd still have the 60% of our net income going to a mortgage.

We need a house or rental payment from $2600 to $3000 a month tops - based on my readings.

I'm sorry this realization is coming so late in the game. At least we've managed to stay out of bankruptcy so that helped us a lot. My employment applications with Fortune 500 companies ask if I've ever declared bankruptcy so it is important for me to avoid that which could prevent future employment opportunities. So that helped a lot and was not a financial waste. We just have to get out of this house.

It's been three years since my wife and my kids have been on a vacation of any kind. I still struggle each month. My January bonus and tax refund have already been dissappearing because of expenses that I just can't keep up with even though we have made lots of cuts in our budget. We just can't live like this anymore.

(My wife) goes to work each day and almost every day her co-workers will talk about their vacations they are taking or have taken recently and they'll talk about the stupid people who took out too much mortgage and look what mess they're in and she just has to try and hide her pain at being one of those people that they talk about.

As for me, my co-workers are not as bad but they too talk about their vacations and more of them talk about their pensions and how close they are to retirement. Some have already retired and are collecting their pension and working for another company at the same time. I just nod my head during the discussions and try to get away or turn the discussion back to work. Psychologically, (my wife) and I need to get out of this house and after that maybe get away for a couple days on a mini-vacation just to feel like normal people again.

One of the passages we study in the Bible - Romans 5:3-4 - reads something like "...suffering creates perseverance; perseverance, character; and character creates hope." Well, we got the suffering down and now we're learning perseverance and maybe character is being built because there are the tiniest glimmers of hope.