Filed Away

I’m getting creamed on my house, pure and simple. When we bought it in 2002 we took out a 147K mortgage, paid 10K down and wound up paying less in Principle, Interest and taxes than we would have on a 3 bedroom apartment in our old neck of the woods. But it was an older house, built in the early 60’s and it still had an original front door, windows, even (from the looks of things) driveway, plus a septic system that would not pass Title V requirements in Massachusetts, but weren’t an issue in NH- the inspector told us to pump the tank and the drywell once a year and we ought to get a decade or two out of it.

So there were, happy first-time home owners. First order of business was the doors and the windows- that ran about 18 grand, so after our first year there we went to the bank and got the ubiquitous Home Equity Line of Credit, or HELOC for short. New windows, new doors and a serious drop in our winter heating costs. Like a very, very many foolish people we also spent that money on some pretty spurious crap, including paying off one of the cars. Still, we were making plenty of money and  the bills were pretty easy to pay…

The kids got older, and more expensive. We started leaning on credit cards. We refinanced the house to wrap up the HELOC, credit cards and the other car payment- and got screwed on the mortgage because of my own stupidity- it was an accelerated equity deal, but they didn’t escrow and as soon as I heard that I should have stood up and walked away (I literally discovered this as we were sitting down to sign the papers- entirely and inescapably my fault and my failure). Like an idiot I did it anyhow.

We struggled with that mortgage for 9 months before refinancing again, this AFTER spending thousands on credit cards to meet tax upward-spiraling property tax payments as well as car insurance from our oldest’s hobby of collecting speeding tickets.  This DID NOT stop us from buying things that quite frankly we could have done without, including a third car (Why on God’s Good Earth did we think letting Speed Racer take a car to college was a good idea?).

Braces for the youngest- another $5500. Finally failed Dry Well- another $2500. Replace the exciting All Wheel Drive Racecourse we referred to as a driveway- $2700. It piled up fast and we ripped through our cash reserve in moments, falling back on- you guessed it- credit cards, to tide us over.

So, I have a mortgage of $232K on a house that’s worth probably $220K (the market here is not nearly as soft as in other places, but it’s still soft) and close to $40K in credit card debt.

Staggering, isn’t it?

Yet here I am with a six year plan to get out from under. We cut Christmas to the bone. Looked at our financial software and actually paid attention: Gee, what’s that tall bar every month- dining out? $400 a month? Yikes!  We have learned to cook in house again and are embracing the notion of leftovers. That extra life insurance policy for close to $100 a month? Gone- just don’t die, and if I do the insurance through my employer isn’t bad at all.  Dump the land-line and move the home phone number over to my wife’s cell phone. Cut the cable internet from the ultra-high-speed tier down to the ‘gee that’s damned fast’ tier. Rebuild my old computer as a media center and dump the DVR service.

Not counting the dining out we shaved close to $200 a month from our fixed expenses and are slowly building a cash reserve while putting extra money towards payments. The plan is to pay off the car first ( a normal $266 monthly payment) since I can pay it off fastest, then start working on the credit cards with the money that frees up.  The credit cards are all at mercifully low rates so they can wait… for a little while.

“But Wait!” you cry, “What if your job goes away!?”

A very real possibility that, though management seems to feel we have a handle on things since the company is carrying very little dept and has enough institutional and enterprise customers to stay afloat so long as things don’t REALLY spiral out of control. Still, yeah, I’ve thought about it, even talked to a bankruptcy lawyer just in case. His advice, and I quote:

“If you get laid off the first person you call is me, not your wife, not your creditors- me. The first place you go after you clean out your desk is my office, not home, not to a bar. Yeah, the laws have changed, but if you lose your job in this economy there is no point in pussyfooting around… unless you like sleeping under bridges?”

So I guess that end of things is as under control as it can be, as in it’s out of my hands. I get very mad at myself when I think about this because I saw it happening, I knew what I was doing was stupid and I just kept doing it because I didn’t know what else to do. There were so many times that it all seemed so easily controllable and then you take that one extra step (in our case I believe it was the septic system wiping out our cash) and that suddenly you are in a position where if you can’t change your life habits you are so royally screwed.

I have to count my blessings here- the job looks stable and if we stick to what we’ve been doing since October we can dig our way out of this mess on our own. Then it is just a matter of repeating over and over “Never Again” and “Always Pay Cash”.

Okay, whining’s done. Move on.