Investor 路 Santa Barbara, CA 路 Member since 2021 路 76 posts 路 67 votes
Just received news that I am not permitted by the city to purchase another property due to the affordable housing covenant im contracted under. Not the news I was hoping for and this will severely impact the financing I will be able to get to invest in real estate.. Demoralizing to say the least, but I knew this was a possibility and must move forward.
plan B, C, D, etc
B: Sell current house and get 70k to put towards the 300k student loan debt that has had me stuck in month to month living for the past 10 years. Find a new place to live with no cash available
C: Stay put, see what financing my wife can get and we invest in her name (She makes 30k/yr)
D: Form LLC with my investment group, using my wifes name because I'm also not permitted to be in a corporation, see what we can invest in.
E. Find a partner willing to team up with someone with skills and determination but no cash/financing
Real Estate Broker 路 Cody, WY 路 Member since 2010 路 28k+ posts 路 41k+ votes
5y
Plan B.
Let's be realistic. You have $300,000 in debt that has held you down for ten years. I'm assuming your wife has been around for most of those ten years and she's still only making $30,000 a year?
You should not be investing, period. You're only fooling yourself into thinking you can build wealth when you can't even get out from under the debt you incurred ten years ago. You shouldn't buy a primary home. You should be living cheap, riding a bike, eating beans and rice, working overtime or a second job, selling your plasma, and doing everything you can to pay off that debt that's holding you down. The borrower is slave to the lender.
Read Financial Peace University and attack this like your life depends on it.
Real Estate Broker 路 Cody, WY 路 Member since 2010 路 28k+ posts 路 41k+ votes
5y
Plan B.
Let's be realistic. You have $300,000 in debt that has held you down for ten years. I'm assuming your wife has been around for most of those ten years and she's still only making $30,000 a year?
You should not be investing, period. You're only fooling yourself into thinking you can build wealth when you can't even get out from under the debt you incurred ten years ago. You shouldn't buy a primary home. You should be living cheap, riding a bike, eating beans and rice, working overtime or a second job, selling your plasma, and doing everything you can to pay off that debt that's holding you down. The borrower is slave to the lender.
Read Financial Peace University and attack this like your life depends on it.
Investor 路 Santa Barbara, CA 路 Member since 2021 路 76 posts 路 67 votes
5y
BSN nurse who later got an MBA. Wife is marriage family therapist... very expensive profession that doesn't pay well, that along with several years of deferring her loans without making payments, and pulling out personal loans to pay me rent when we first rented together (i was not aware of this...) So yeah we're in a bad situation that we put ourselves in, but that doesn't mean I'm stuck punching in and out for the rest of life. I will not quit, you don't know me, and I'm not like others you can bully out of here by shaming and judging.
Real Estate Broker 路 Pueblo, CO 路 Member since 2013 路 366 posts 路 303 votes
5y
You need to work a minimum of 80 hours a week picking up every second of overtime. Sleep in the on-call room if you have to and your wife needs a second job, better yet start a new job then get a second job. And the irony of a marriage counselor with severe personal finance issues...
Hope you learned your lesson. This debt is suffocating your family.
You're being rude and defensive to people I actually consider friends (not to mention smart, wise, and wealthy friends) but hey, you don't know us, either.
I used to be an adult ESL teacher. I LOVED it. I was ridiculously good at it. People used to tell me I was born to do it. But I haven't stood in front of a class and taught now in about 10 years. The money sucked, and I had to make some hard choices. So I understand the position you and your wife are in.
I think the first thing you guys should do in your position is try to maximize how much money you're making. Your income is very likely your best tool to get you out of personal debt. @Nathan Gesner mentioned Financial Peace University. I can recommend The Total Money Makeover by the same author, David Ramsey. There are two other books I typically mention to people just starting out overloaded with debt: Your Money or Your Life by Vicki Robin and Set for Life by the CEO of Bigger Pockets, Scott Trench.
You've got to look your personal debt square in the face and go after it. Maybe you don't have to pay it all off before you start real estate investing, but you at least have to make up an ironclad plan to pay it off. For me, my wife and I were totally in the black, with $110K in equity in our primary residence before we bought our first rental.
Real estate can help you change your life. But it's not going to do miracles for you. The $300K hanging over your head isn't going anywhere without a lot of personal truthtelling, focus, and hard work. Get your money right before you start looking at properties.
Real Estate Broker 路 Minneapolis, MN 路 Member since 2011 路 5k+ posts 路 6k+ votes
5y
It is scary how much people just do not understand or accept this law of life today, the law of Earning It before Having It. What you get before you can afford, owns YOU.
Investor 路 Santa Barbara, CA 路 Member since 2021 路 76 posts 路 67 votes
5y
@James Hamling very true, and yet so many people like myself were so blind to it for so long. Not saying I didn't deserve or earn the position I'm in, just thought it could help to hear peoples thoughts. Thanks for sharing
Investor 路 Santa Barbara, CA 路 Member since 2021 路 76 posts 路 67 votes
5y
@Chris Pasternak not worth ruining the relationships with my wife and daughter to get rid of debt. I get what your saying, work more, spend less, pay down debt, simple and effective long term solution. I'm trying to do this AND invest. This way I can get out of the hole sooner, guess I'm just looking for more solutions
Investor 路 Santa Barbara, CA 路 Member since 2021 路 76 posts 路 67 votes
5y
@Jim K. I'm sorry if me not tolerating shaming, judging behavior was perceived as rude. I thought sharing could be helpful for me to get ideas. I was asking for help, not to be told i should never invest, I'm incompetent, or my wife and I's jobs are not good enough. These comments are not helpful nor necessary and i stand for better values than that when communicating with other people. I'm happy you and your friends are successful and appreciate you taking the time to respond, truly. I'm just not sure what you all think you'd get in return when you talk to someone that way.
@James Hamling very true, and yet so many people like myself were so blind to it for so long. Not saying I didn't deserve or earn the position I'm in, just thought it could help to hear peoples thoughts. Thanks for sharing
Immigrants beat Americans on this front over and over and over again and it baffles me how it's not noticed. Willing to knuckle down, work hard, forego the immediate leisure and consumer comforts to achieve what really matters most, achieving financial security, stability, a future. Nobody likes working 2 full time jobs and a 3rd part time, 7 days a week, 16+hrs a day, it's done to time leverage so can get to that destination that matters.
The definition of investing is putting capital to work for you, growing upon itself. A person can not "invest" until they have capital to donate out, to put to work. Non-performing debt is a monster that will destroy investing efforts and must be at minimum muzzled to have any chance at investing.
I would suggest do what an immigrant would do, get another job. If you want to get into REI than it's easy, get a job in real estate, you will gain knowledge and experience while also earning additional capital to kill that debt-monster.
Investor 路 San Diego, CA 路 Member since 2019 路 286 posts 路 135 votes
5y
@Blake Henderson
Whats your interest rate on those loans? Im not familiar with US student loans and how interest is charged. Is it simple interest or compound?
I was knee deep in debt before but managed to get out by slowly getting my W2 income up and by creating a spreadsheet tracker. It might help if you see/track the numbers/ progress. I also utilized those 0% credit cards in the process.
If you鈥檙e getting charged simple interest for your loans, maybe look into investing in real estate instruments that give you compound interest and use those to pay the student loans off.
@Jim K. I'm sorry if me not tolerating shaming, judging behavior was perceived as rude. I thought sharing could be helpful for me to get ideas. I was asking for help, not to be told i should never invest, I'm incompetent, or my wife and I's jobs are not good enough. These comments are not helpful nor necessary and i stand for better values than that when communicating with other people. I'm happy you and your friends are successful and appreciate you taking the time to respond, truly. I'm just not sure what you all think you'd get in return when you talk to someone that way.
I think you misunderstood @Nathan Gesner, Blake. I'm pretty sure you shouldn't be investing NOW. I fully agree with Nathan. That doesn't mean you should NEVER invest.
Now please listen carefully. This is not said in malice. You are clearly incompetent at paying down debt. I used to be, too. You have to get better at it, and it's much, much more difficult than most people appreciate, which is why they stay in deep personal debt. The books I recommended can help. Embarrassment at the reality of debt and doing nothing concrete won't help. Personally, I feel you and your wife have absolutely nothing to be ashamed of. We are surrounded by messages to get into debt and stay into debt. It's perhaps the most insidious way middle-class people are controlled and manipulated by those with real money (I'm talking about the billionaire class).
This is also not said in malice. Warren Buffett once said about his job that he couldn't understand why this economy rewards men who run into burning buildings and women who nurse patients back to health from death door with tiny little salaries, while he was rewarded with billions for being able to spot the mispricing of a commodity. You have to sharply increase your income and decrease your expenses to pay down the kind of debt you have. I fought this reality for YEARS myself. I wanted to believe. But the truth was the truth was the truth. I am not arguing that your job and your wife's job are unimportant. I'm saying what I'm saying in the full knowledge that this is an unfair, broken world.
I have no expectations of getting anything back from you, Blake. But I'm not going to lie to you to try to make you feel better. The world is filled with people who do that, who will yes-yes-yes you to death. I have learned to be deeply wary of people like that. This way, there's at least a chance things will change for you. That's the value I stand for here. Trying to create that chance for change, for you and for people reading this.
China, ME 路 Member since 2014 路 3k+ posts 路 4k+ votes
5y
@Blake H. I feel your pain. Not many years ago, I was in a devastating financial hole that was more like a smoking crater.
I had a small business where I was the victim of my own naivete and trusting people too much. The quick summary is that employees I trusted embezzled a LOT of money from the business. I sold it at a $58,000 loss and in total, was in a $200,000 hole.
I sold off all of my prized possessions, including over $15K in camera gear that I really cherished. I got into real estate as a licensed salesperson and worked my butt off. It took time, but after about 5 years of extreme hustle (7 days/week, 14-18 hours/day), I finally dug myself out. Part of that was frugal living and a wife who had a good job as an RN.
When I say frugal, I mean I made my own coffee and brown-bagged my lunch. Dunkin Donuts and McDonalds were luxuries that I denied myself. If I ever needed food on the road, it was the dollar menu only. No buying toys, no expensive vacations, nothing remotely extravagant.
Fast forward to a year ago. With the debts now extinguished, I migrated to business brokering, covering Maine, New Hampshire and Vermont. The work is a lot more pleasant and the income is over 3 X what I made as a Realtor. The financial stress is gone and in fact, I just bought myself a new Jeep.
You can dig yourself out too. No making only the minimum required payments on your loans. Even if it's an extra $100/month on the principle, do it. Pay down the debt as aggressively as possible. The second job is a realistic way out, especially with so many employers across the country crying out for workers.
Yes, your free time will take a hit in the short term, but that's the price you're going to have to pay to get rid of that debt. Either that or you're going to have that miserable monkey on your back for a very long time.
I understand that you want time at home with your family, but the fact is that you haven't earned it yet. The price for the free time you're taking with family now is the crushing debt you're carrying.
It's an either / or situation. The decision is yours.
Rental Property Investor 路 Indianapolis, IN 路 Member since 2020 路 562 posts 路 554 votes
5y
@Blake Henderson I don鈥檛 think anyone is trying to bully you, though I can see how it comes off that way. Hang in there, you will get there. I do agree that you need to get that debt taken care of first. If real estate is how you plan to do it, that is fine, but the debt will just make it harder.
BSN nurse who later got an MBA. Wife is marriage family therapist... very expensive profession that doesn't pay well, that along with several years of deferring her loans without making payments, and pulling out personal loans to pay me rent when we first rented together (i was not aware of this...) So yeah we're in a bad situation that we put ourselves in, but that doesn't mean I'm stuck punching in and out for the rest of life. I will not quit, you don't know me, and I'm not like others you can bully out of here by shaming and judging.
I don't think anyone was trying to bully you. I assume you were mostly talking about @Nathan Gesner since he was the first response. From what I know of him just on these forums, he's very smart and very good at what he does. He's told me I was doing things wrong a couple different times and while I may not totally agree or like it, he was right. lol He's a tell it like it is kind of guy and isn't going to sugarcoat it to make people feel better. He also follows up with GREAT advice.
So, I think Dave Ramsey's baby steps would be great for you to start with. A lot of people break off with his ideas after steps 3/4, but there's no doubt that his plan works. I don't know how old your child(ren) are, but giving up a year or two especially if they are really young to get yourselves in a better position financially would be much appreciated by them years from now. It's not the quantity of time you spend with them, it's the quality. I'm sure you can do it!
Real Estate Broker 路 Cody, WY 路 Member since 2010 路 28k+ posts 路 41k+ votes
5y
@Blake H. all these guys are just sharing the hard, honest truth. When you don't know us (and when I'm writing in a hurry) it may come across like a hair dryer to the face of a thirsty man in the Sahara at 1pm.
We also don't know your situation. How many hours do you work and what's your salary? Do you have kids? Do you own your own home? What are you driving? How many hours do you spend watching TV or playing video games or smoking dope?
Without all that information, I can only give pretty basic advice: live on a tight budget, pay off your debt like your life depended on it, build an emergency fund for protection against life's little bumps, then save up to invest.
Maybe you own a large home. Could you sell it and use the money to buy a smaller duplex, cutting down on your costs while renting out the other side for additional income? If done properly, that move alone could increase your annual income $12,000 or more a year. Are you close enough to work that you can ride a bike? That will improve your health (mentally and physically) and enable you to sell the car which would give you more money to pay towards your debt while saving thousands a year on insurance and gas. Car loans are one of the biggest killers! Are you eating out a lot? Are you spending money on unnecessary, unhealthy processed foods, chips, soda, sugary cereal, booze? Do you take $5,000 vacations to Mexico?
I have a niece that loves to work with homeless. While going to school for her Masters, she would volunteer her spare time at a shelter instead of working to pay for her education. It's been five years and she will be paying for those student loans for a long time to come. A better option would have been to earn a living while getting her degree so she could graduate debt-free. Then she would be able to earn a living doing what she loves without a massive debt hanging over her head.
What would happen if your wife were unable to work and you lost that $30,000 income? What would happen if you lost your income? You and your wife need to look at your situation and be realistic about where you're at and where you're headed. Figure out how to tackle this debt now. Make the sacrifices while you are young, healthy, and capable. Break free from the debt, then you can think about investing.
Rental Property Investor 路 Atlanta, GA 路 Member since 2016 路 325 posts 路 253 votes
5y
@Blake Henderson May be the news you received about not getting a house is a blessing in disguise. With $300k debt, your ratio of debt to income will inhibit your ability to get more. Also, landlording comes with surprises and sometimes expensive ones. HVAC or water heater can go out and you will have to fork up $2k to $8k with zero notice. Tenants don鈥檛 pay and CDC can enact no eviction moratorium even though they don鈥檛 the authority. Bottom like, getting an investment property is a step one but a lot comes after that will need reserves. You are already debt laden, I think you got really good advice from fellow BPers here. Facts are hard to swallow but these are the facts. What鈥檚 your projected date for the debt pay off at current pace? Why get more debt thinking you will make money when you already have a large debt? You cash flow after paying all expenses, let鈥檚 say is $400 a month, will still get wiped out with one hit for HVAC.
You may not like it but we all been there done that and as a result, what is being told here is what we did to have secure rentals. Wish you a luck. Work with a plan!
Rental Property Investor 路 Columbia, SC 路 Member since 2010 路 1k+ posts 路 2k+ votes
5y
@Blake H. Full disclosure: This is just my experience.
When I get angry or defensive when someone says something to me I think there is likely some truth to what they are saying. At least a little bit. And that's why it bothers me. I don't get mad at all when somebody says I'm tall bc I'm definitely not!
I think it's a worth reminding that there are a lot of wealthy and smart people on these forums and the many of them can provide great counsel.
I don't think you'll regret it if you at least consider what @Nathan Gesner and @Jim K. are saying.
Just received news that I am not permitted by the city to purchase another property due to the affordable housing covenant im contracted under. Not the news I was hoping for and this will severely impact the financing I will be able to get to invest in real estate.. Demoralizing to say the least, but I knew this was a possibility and must move forward.
plan B, C, D, etc
B: Sell current house and get 70k to put towards the 300k student loan debt that has had me stuck in month to month living for the past 10 years. Find a new place to live with no cash available
C: Stay put, see what financing my wife can get and we invest in her name (She makes 30k/yr)
D: Form LLC with my investment group, using my wifes name because I'm also not permitted to be in a corporation, see what we can invest in.
E. Find a partner willing to team up with someone with skills and determination but no cash/financing
Other plans/thoughts?
Any pick me ups appreciated 馃檪
Re: B, C & D ...
See about getting a good business / asset protection attorney. They should be able to show you how to build a business entity structure such that NONE of the entities are owned by ANY human person - they're owned by each other. Then, explore building business credit so they can do business instead of you. This goes back to "Control everything, own nothing". May get around the city thing ... dunno ...
Seek a "friend" (I hesitate to say "mentor" - it has some negative connotations, especially here on BP) who can help you learn how to create income and pay down / off that massive debt you're laboring under. That amount is like owning a house you can't live in which will never appreciate and which you cannot depreciate, and the interest on the loan is the "property tax" on it you cannot deduct. Even if it does generate income at some point, there may not be enough left after debt service to support you.
Student loans are the predatory lending of this decade and the ones before. Something the banksters cooked up when it became obvious they couldn't sell worthless mortgage-backed securities much longer.
Rental Property Investor 路 Dallas, TX 路 Member since 2020 路 50 posts 路 41 votes
5y
@Blake Henderson.
I know you two are stressed but steel yourself to love your wife and assure her and assure yourself that everything is going to be all right. She may be needing some reassurance right now.1st off, protect your health and your marriage. Second protect your personal residence. As long as you have each other, your health, and a home, you will survive this. Find a way to become debt free. Like the others have said, pick up some overtime shifts, both of you.
Investor 路 Santa Barbara, CA 路 Member since 2021 路 76 posts 路 67 votes
5y
@Jim K. Very well put and very much appreciated! Lots of work to do over here on my end, excited to continue to grind, and to continue to learn. Thank you very much
Just received news that I am not permitted by the city to purchase another property due to the affordable housing covenant im contracted under. Not the news I was hoping for and this will severely impact the financing I will be able to get to invest in real estate.. Demoralizing to say the least, but I knew this was a possibility and must move forward.
plan B, C, D, etc
B: Sell current house and get 70k to put towards the 300k student loan debt that has had me stuck in month to month living for the past 10 years. Find a new place to live with no cash available
C: Stay put, see what financing my wife can get and we invest in her name (She makes 30k/yr)
D: Form LLC with my investment group, using my wifes name because I'm also not permitted to be in a corporation, see what we can invest in.
E. Find a partner willing to team up with someone with skills and determination but no cash/financing
Other plans/thoughts?
Any pick me ups appreciated 馃檪
How did you end up with $300K in student debt and without a job good enough to pay that back in a reasonable time frame? And how does your wife only make $30K per year in California? You can attend a 4 year public university in my state for $20,000 per year. In my city McDonalds and other fast food places are hiring for $15 per hour, which works out to $30K annual.
You should both have better paying jobs. That is the answer, but it requires you both taking action to change that. It may even involve relocating to a different part of the country. You are trying to buy properties when you should be increasing income and paying down debt...
Investor 路 Santa Barbara, CA 路 Member since 2021 路 76 posts 路 67 votes
5y
@Dave E. Thank you for acknowledging that, I few realized what everyone meant by "the facts", just seemed a bit lazy in how it was communicated. Happy it all has lead to so many people in the discussion. Now this is a conversation 馃憣馃憤
