If the garage is full of stuff get rid of it...get an outside shed to hold things like the lawnmower...THEN remodel the garage into a new room.
Much cheaper than building an addition.
You can even leave the garage door in place and put up a false wall behind it so that should you or a future owner wish it would be simple to turn it back into a garage.
I bet you could turn the garage into a new room for under 10 grand.
P.S. If you think you have to have the garage to park the car in instead of just the driveway because it needs protection (Hellowww...where does it sit while your at work???)..then IMO you have too much car.
I don't have a garage OR carport for that matter and my vehicles have been fine left outside.
Though I will admit that my father was a car dealer and to my family cars are commodities...not prized posessions.
A house is not an investment, it is a place to live. Through careful planning and saving up extra payments, I paid my house off completely in less than 8 years; in addition to making several capital improvements. Now that I am selling it twelve years after purchase, it is barely worth more than I paid for it. I don't feel great about it, but sometimes you get the bear, sometimes the bear gets you.
Government subsidized loan modification is like stealing money from the taxpayers. If you took a loan modification, you are no different than a bank that took a government bailout. Even worse, most banks have paid back their bailout money while those that take loan mods never will. I'm not siding with the big banks, but just understand you have your hand out to the American people just like them.
SA12 - I'd love to find out more about that city that just starting tearing down the foreclosed homes that remained empty. I've thought for a long time that is what we need to do in our city. Many of them are in poor to horrible condition - they make neigborhoods look bad and they drag down values because they are appraised so low. There are probably twenty properties - business and homes - in a one mile radius of my house that have sat empty for years - slowly deteriorating and bringing everything else down with them. I'm underwater (not badly and not anyone's fault - it just is what it is. Ten years ago the same decision would have been just fine, and I bought because I wanted to own a home, not make a killing. I just view myself as "renting" again.) I really worry more about what these empties are doing to our city - turning it into a slum. What city starting tearing them down? I'm really, really curious. Please tell us more!
RE: STIFF CLOTHES - Hang Drying... no stiffness if you add the fabric softener when washing the clothes (Downy Ball) instead of relying on dryer sheets - a step you're obviously skipping if you're air drying.
Wow, you are getting a lot of advice here. I would stay put and pay the mortgage until you can sell. If you wait until the value rises a lot then your new home will also have risen in value. So you just need to wait until the value rises sufficient for you to sell, even if you sell at a loss.
Maybe parents can help store some of your stuff or you could rent storage. It will all work out in the end if you choose the right and keep to your standards.
Don't let a bunch of crooked bankers and politicians get you down.
Wow, you are getting a lot of advice here. I would stay put and pay the mortgage until you can sell. If you wait until the value rises a lot then your new home will also have risen in value. So you just need to wait until the value rises sufficient for you to sell, even if you sell at a loss.
Maybe parents can help store some of your stuff or you could rent storage. It will all work out in the end if you choose the right and keep to your standards.
Don't let a bunch of crooked bankers and politicians get you down.
You called the bank hoping that they would reduce what you owe on your house so you can turn around, sell it and get a bigger house?
I know this is a "frugal" website, but what you just attempted isn't frugal, it should be considered criminal. The sad thing is, I bet a lot of people able to pull this off right now...
You're completely right about goals changing. We have friends who had a surprise baby at 40 and 45. Luckily, they had the savings to provide for the child, and the flexibility to reconfigure their lives.
For the majority of us who don't have pensions coming, the simple goal of "not live in a box when I'm old" is a pretty good motivator. It's not one most of us articulate, though.
"They made him a loan and he's paying it. But because he can't sell right now, he thinks he can just walk away."
It's not that he can just think about it, it's that he can actually DO IT; and that doesn't make him a deadbeat for doing so either. Rather, he's doing what he thinks is the best possible choice for his family, financially speaking.
Strategically defaulting is a legal option that should be considered by everyone who is significantly underwater. Yes, in a lot of states, they can go after a deficiency judgment so you may still be on the hook. However, from what I've read that rarely seems to be the case. But that's why I suggest consulting an attorney before sending any jingle mail.
The problem with taking the hard economic line on mortgages and analogizing to other depreciating assets is that it fails to take into account that a house is also a home, a shelter, and for most people, the largest investment they will ever make. On top of that, people who would not generally classify themselves as "investors" buy homes (noted that they also buy cars). No question, too many people had too much faith that "the bank won't approve me for more than I can afford" and "I have a job, I am entitled to a home" but at the same time, lenders capitalized on the uneducated and the sense of entitlement. This happened to varying degrees - some of these lenders are guilty of actual fraud for lying to people about what they were signing. Some signed off on appraisals without a second thought as to accuracy. Some just flat out approved deals that never should have happened. And some lent money to Paul here.
As I've explained, Paul is not the homeowner being rescued by federal or lender programs. Those that are fall all over the spectrum. Many were victims of abuses by the lenders, and in those situations, I strongly disagree that we are merely socializing an investment loss.
Keep in mind we are talking about lenders who have received bailout money here - they aren't playing by the rules of capitalism anymore either. If they're too big to fail, I think they should have some accountability to clean up their mistakes here.
News coverage and water cooler chitchat has mischaracterized what these programs can and can't do. The MHA, HAMP, FDIC mod-in-a-box all work based on evaluating interest rates, principal, home value and the expense of foreclosure to attempt to reach a scenario where the homeowner can afford to stay in the home, and the lender makes more money than they would have if they foreclosed. Sometimes we do try to get the lender to forgive some principal if the home has lost significant value, but still - you cannot get one of these modifications if you do not show that the lender benefits more from the modification than the foreclosure.
All I'm trying to say is that this isn't the huge handout it may seem from the outside (as it must for people like Paul to think it applies to them). It's government assistance, and full of humiliations and bureaucratic paper shuffling. Hopefully it will keep a few people from having their lives ruined by abuses, but rest assured that most people will have to learn a painful lesson about investing from this.
I think it is reasonable to expect a meaningful, face-to-face conversation with a vendor that you paid $100K over 7.5 years. And, if you are willing to negotiate a deal that could help both parties, that doesn't sound so sinister.
This goes for clothes and shoes. I prefer this over the internet because you can try things on. It also cuts back on the circulation of 'stuff' from the factory to the garbage--what a shame.
I just wish we had more consignment options in France.
I think the moral to the story is to really know what products you'll use. I actually find brown rice to be a great thing to buy in bulk. You're right, however... it will vary by person :)
When will people start getting bailed out of their 2 year old cars that they bought on a 5 year note because their car is worth less than what they owe after 2 years?
Or how about the farmer that bought a tractor to farm on a 10 year note and the tractor is worth a less than the note 5 years into the loan and the farmer dies and his children have no interest in keeping the farm and want to sell the tractor? Should they be allowed to walk from it and let the bank, and ultimately the people with money, eat the cost?
Because that is exactly what you and others propose. As long as the value of the house goes up it's all good but as soon as it goes down someone else should pick up the tab?
It is unfortunate that this had happened and people are upside down on their mortgages but it is no different than trying to get out of any other depreciating assets. The only difference is that people were lured into the house buying assuming or promised that they would hold their value. Well that assumption or promise was unfounded and untrue. So why should everyone pay the price for it?
Which part of you think you are entitled to be able to sell your house at no loss and get a new one? I have co-workers who relocated from Florida to Texas and they bought their house at the peak and sold after the collapse. They lost $30K. They ate it, sucked it up and went on with their life.
If you can't afford to bail yourself out of your current house you can't afford to buy a bigger one even if you have outgrown the one you have with having two children. And you're most certainly not entitled to moving into a bigger house by any standard just because you have two children. Not on my dime at least!
Houses are not financial instruments... equity doesn't even exist until you actually try to tap it. He's not underwater until he tries to sell it. The fact that some random person wants to buy something at a certain price doesn't mean anything unless you sell. We know that when it comes to other objects, but somehow with houses we've forgotten. A house is not a stock or a CD or a bond.
I'm not coming down on the side of the unregulated mortgage industry who handed out giant undocumented loans or the unregulated Wall Street fools who decided that mortgages were exciting new "can't lose" investments. They caused the crises that put so many people out of work and so many neighborhoods in jeopardy. I'm not FOR the banks and AGAINST the little guy.
Sure, it's a bummer that he can't offload his house at a fat profit. Obviously that'd be preferable. We'd all like to make a cool 100K for doing nothing (or at least nothing we weren't doing anyway). But he doesn't have to sell and can make his payments (I'm basing this on his own description -- he didn't buy too much house, it was and is within his means, he's made every payment... it's just that he's cramped and wants a bigger house).
As he said he "did everything right." Where he's unclear though is whether the lender did anything wrong. They didn't. They made him a loan and he's paying it. But because he can't sell right now, he thinks he can just walk away. If I abandoned a car and quit paying for it because I couldn't sell it right then for more than I owed the dealer people would think I was a deadbeat. If I decided to keep the car while not paying until the repo man showed up, I'd be a criminal.
"That's like saying I only feel bad for the starving kids in Africa because they have no food and no shelter, whereas the impoverished children in America at least have shelter. How dare they complain!"
Sorry, no. It's more like "I only feel bad for the starving kids in Africa... not the kids in America who didn't get an iPhone for Christmas." Dude's got a house after all and can, by his own admission, make the payments. And yeah, if he got laid off because the economy's rough and began to have a hard time paying for his house, I would have more sympathy.
Why is that hard for YOU to understand? Someone who can't make their payments now and stands to lose their house gets sympathy... someone who's unhappy with their house and wants to cut out of their mortgage because they're a bit cramped, not so much.
And hey, this is my opinion in response to his opinion. That means that I can judge and moralize all I want, left and right, night and day, fair or un. That's what opinion is, after all.
Interesting on the "Best Stuff Not to Buy in Bulk" links to a companion article of the "Best Stuff to Buy in Bulk". And there's a number or items that end up on both lists.
Basically: only buy in bulk if it's cheaper per unit price, you'll use it up before it goes bad (or you get sick of it and it sits unused until it goes bad) and you have room to store it. Otherwise, not a terribly useful set of articles.
Yeah, for the most part you are correct. I'd add that another major reason they do not care about whether you pay or not is due to the suspension of mark-to-market accounting. Changing that accounting rule has allowed them to play pretend and extend on all their mortgages.
Additionally, there is a disincentive for them to foreclose and sell the property as a successful sale means they would have to write down any losses. Therefore, they'll continue to hold they non-performing loans on their books as money good when a 10 year old could tell you that's not the case.
It's kind of funny how the government has a program called Making Homes Affordable, yet that very act does the opposite. It props up housing prices, trying to spur up artificial demand. High housing prices != affordable homes. People need lower prices in order for the to be affordable, but leave it to the government to mess this up.
If you're seriously underwater, there aren't many options left. However, one I might suggest is advertising your home on a lease option (e.g. rent to own) to a buyer who can't get traditional financing.
Usually, these renters/buyers have an aversion to throwing money away on rent, but can't qualify for a mortgage because they have poor credit for various reasons. It's certainly an ideal fix, but it's one suggestion if you want to close the cash flow gap on rental income and get a sales price slightly above market value since lease option agreements usually sell at a premium.
Yeah, for the most part you are correct. I'd add that another major reason they do not care about whether you pay or not is due to the suspension of mark-to-market accounting. Changing that accounting rule has allowed them to play pretend and extend on all their mortgages.
Additionally, there is a disincentive for them to foreclose and sell the property as a successful sale means they would have to write down any losses. Therefore, they'll continue to hold they non-performing loans on their books as money good when a 10 year old could tell you that's not the case.
It's kind of funny how the government has a program called Making Homes Affordable, yet that very act does the opposite. It props up housing prices, trying to spur up artificial demand. High housing prices != affordable homes. People need lower prices in order for the to be affordable, but leave it to the government to mess this up.
I've also just read about a process called "gleaning"
http://blog.greensherpa.com/index.php/personal-finance/slashing-your-gro...
Has anyone tried this and been successful in keeping grocery expenses at a minimum?
Garage???
If the garage is full of stuff get rid of it...get an outside shed to hold things like the lawnmower...THEN remodel the garage into a new room.
Much cheaper than building an addition.
You can even leave the garage door in place and put up a false wall behind it so that should you or a future owner wish it would be simple to turn it back into a garage.
I bet you could turn the garage into a new room for under 10 grand.
P.S. If you think you have to have the garage to park the car in instead of just the driveway because it needs protection (Hellowww...where does it sit while your at work???)..then IMO you have too much car.
I don't have a garage OR carport for that matter and my vehicles have been fine left outside.
Though I will admit that my father was a car dealer and to my family cars are commodities...not prized posessions.
A house is not an investment, it is a place to live. Through careful planning and saving up extra payments, I paid my house off completely in less than 8 years; in addition to making several capital improvements. Now that I am selling it twelve years after purchase, it is barely worth more than I paid for it. I don't feel great about it, but sometimes you get the bear, sometimes the bear gets you.
I like to now when is a good dial in wagreens and so day can alort me off.
Government subsidized loan modification is like stealing money from the taxpayers. If you took a loan modification, you are no different than a bank that took a government bailout. Even worse, most banks have paid back their bailout money while those that take loan mods never will. I'm not siding with the big banks, but just understand you have your hand out to the American people just like them.
SA12 - I'd love to find out more about that city that just starting tearing down the foreclosed homes that remained empty. I've thought for a long time that is what we need to do in our city. Many of them are in poor to horrible condition - they make neigborhoods look bad and they drag down values because they are appraised so low. There are probably twenty properties - business and homes - in a one mile radius of my house that have sat empty for years - slowly deteriorating and bringing everything else down with them. I'm underwater (not badly and not anyone's fault - it just is what it is. Ten years ago the same decision would have been just fine, and I bought because I wanted to own a home, not make a killing. I just view myself as "renting" again.) I really worry more about what these empties are doing to our city - turning it into a slum. What city starting tearing them down? I'm really, really curious. Please tell us more!
Do you really think that is is the market working?
Isn't it really greed and selfishness working?
RE: STIFF CLOTHES - Hang Drying... no stiffness if you add the fabric softener when washing the clothes (Downy Ball) instead of relying on dryer sheets - a step you're obviously skipping if you're air drying.
Wow, you are getting a lot of advice here. I would stay put and pay the mortgage until you can sell. If you wait until the value rises a lot then your new home will also have risen in value. So you just need to wait until the value rises sufficient for you to sell, even if you sell at a loss.
Maybe parents can help store some of your stuff or you could rent storage. It will all work out in the end if you choose the right and keep to your standards.
Don't let a bunch of crooked bankers and politicians get you down.
Wow, you are getting a lot of advice here. I would stay put and pay the mortgage until you can sell. If you wait until the value rises a lot then your new home will also have risen in value. So you just need to wait until the value rises sufficient for you to sell, even if you sell at a loss.
Maybe parents can help store some of your stuff or you could rent storage. It will all work out in the end if you choose the right and keep to your standards.
Don't let a bunch of crooked bankers and politicians get you down.
Author, please help me understand.
You called the bank hoping that they would reduce what you owe on your house so you can turn around, sell it and get a bigger house?
I know this is a "frugal" website, but what you just attempted isn't frugal, it should be considered criminal. The sad thing is, I bet a lot of people able to pull this off right now...
You're completely right about goals changing. We have friends who had a surprise baby at 40 and 45. Luckily, they had the savings to provide for the child, and the flexibility to reconfigure their lives.
For the majority of us who don't have pensions coming, the simple goal of "not live in a box when I'm old" is a pretty good motivator. It's not one most of us articulate, though.
"They made him a loan and he's paying it. But because he can't sell right now, he thinks he can just walk away."
It's not that he can just think about it, it's that he can actually DO IT; and that doesn't make him a deadbeat for doing so either. Rather, he's doing what he thinks is the best possible choice for his family, financially speaking.
Strategically defaulting is a legal option that should be considered by everyone who is significantly underwater. Yes, in a lot of states, they can go after a deficiency judgment so you may still be on the hook. However, from what I've read that rarely seems to be the case. But that's why I suggest consulting an attorney before sending any jingle mail.
"I think it is reasonable to expect a meaningful, face-to-face conversation with a vendor that you paid $100K over 7.5 years."
You're right. We've all been focusing on the ridiculous entitlement attitude expressed here, that we've been forgetting about the core complaint.
CitiMortgage obviously has terrible customer service.
The problem with taking the hard economic line on mortgages and analogizing to other depreciating assets is that it fails to take into account that a house is also a home, a shelter, and for most people, the largest investment they will ever make. On top of that, people who would not generally classify themselves as "investors" buy homes (noted that they also buy cars). No question, too many people had too much faith that "the bank won't approve me for more than I can afford" and "I have a job, I am entitled to a home" but at the same time, lenders capitalized on the uneducated and the sense of entitlement. This happened to varying degrees - some of these lenders are guilty of actual fraud for lying to people about what they were signing. Some signed off on appraisals without a second thought as to accuracy. Some just flat out approved deals that never should have happened. And some lent money to Paul here.
As I've explained, Paul is not the homeowner being rescued by federal or lender programs. Those that are fall all over the spectrum. Many were victims of abuses by the lenders, and in those situations, I strongly disagree that we are merely socializing an investment loss.
Keep in mind we are talking about lenders who have received bailout money here - they aren't playing by the rules of capitalism anymore either. If they're too big to fail, I think they should have some accountability to clean up their mistakes here.
News coverage and water cooler chitchat has mischaracterized what these programs can and can't do. The MHA, HAMP, FDIC mod-in-a-box all work based on evaluating interest rates, principal, home value and the expense of foreclosure to attempt to reach a scenario where the homeowner can afford to stay in the home, and the lender makes more money than they would have if they foreclosed. Sometimes we do try to get the lender to forgive some principal if the home has lost significant value, but still - you cannot get one of these modifications if you do not show that the lender benefits more from the modification than the foreclosure.
All I'm trying to say is that this isn't the huge handout it may seem from the outside (as it must for people like Paul to think it applies to them). It's government assistance, and full of humiliations and bureaucratic paper shuffling. Hopefully it will keep a few people from having their lives ruined by abuses, but rest assured that most people will have to learn a painful lesson about investing from this.
I think it is reasonable to expect a meaningful, face-to-face conversation with a vendor that you paid $100K over 7.5 years. And, if you are willing to negotiate a deal that could help both parties, that doesn't sound so sinister.
This goes for clothes and shoes. I prefer this over the internet because you can try things on. It also cuts back on the circulation of 'stuff' from the factory to the garbage--what a shame.
I just wish we had more consignment options in France.
What you are proposing is capitalizing gains and socializing losses. Couple that with a sense of entitlement and we're heading for disaster.
I think the moral to the story is to really know what products you'll use. I actually find brown rice to be a great thing to buy in bulk. You're right, however... it will vary by person :)
Thanks for the comment!
Linsey Knerl
When will people start getting bailed out of their 2 year old cars that they bought on a 5 year note because their car is worth less than what they owe after 2 years?
Or how about the farmer that bought a tractor to farm on a 10 year note and the tractor is worth a less than the note 5 years into the loan and the farmer dies and his children have no interest in keeping the farm and want to sell the tractor? Should they be allowed to walk from it and let the bank, and ultimately the people with money, eat the cost?
Because that is exactly what you and others propose. As long as the value of the house goes up it's all good but as soon as it goes down someone else should pick up the tab?
It is unfortunate that this had happened and people are upside down on their mortgages but it is no different than trying to get out of any other depreciating assets. The only difference is that people were lured into the house buying assuming or promised that they would hold their value. Well that assumption or promise was unfounded and untrue. So why should everyone pay the price for it?
Which part of you think you are entitled to be able to sell your house at no loss and get a new one? I have co-workers who relocated from Florida to Texas and they bought their house at the peak and sold after the collapse. They lost $30K. They ate it, sucked it up and went on with their life.
If you can't afford to bail yourself out of your current house you can't afford to buy a bigger one even if you have outgrown the one you have with having two children. And you're most certainly not entitled to moving into a bigger house by any standard just because you have two children. Not on my dime at least!
Houses are not financial instruments... equity doesn't even exist until you actually try to tap it. He's not underwater until he tries to sell it. The fact that some random person wants to buy something at a certain price doesn't mean anything unless you sell. We know that when it comes to other objects, but somehow with houses we've forgotten. A house is not a stock or a CD or a bond.
I'm not coming down on the side of the unregulated mortgage industry who handed out giant undocumented loans or the unregulated Wall Street fools who decided that mortgages were exciting new "can't lose" investments. They caused the crises that put so many people out of work and so many neighborhoods in jeopardy. I'm not FOR the banks and AGAINST the little guy.
Sure, it's a bummer that he can't offload his house at a fat profit. Obviously that'd be preferable. We'd all like to make a cool 100K for doing nothing (or at least nothing we weren't doing anyway). But he doesn't have to sell and can make his payments (I'm basing this on his own description -- he didn't buy too much house, it was and is within his means, he's made every payment... it's just that he's cramped and wants a bigger house).
As he said he "did everything right." Where he's unclear though is whether the lender did anything wrong. They didn't. They made him a loan and he's paying it. But because he can't sell right now, he thinks he can just walk away. If I abandoned a car and quit paying for it because I couldn't sell it right then for more than I owed the dealer people would think I was a deadbeat. If I decided to keep the car while not paying until the repo man showed up, I'd be a criminal.
"That's like saying I only feel bad for the starving kids in Africa because they have no food and no shelter, whereas the impoverished children in America at least have shelter. How dare they complain!"
Sorry, no. It's more like "I only feel bad for the starving kids in Africa... not the kids in America who didn't get an iPhone for Christmas." Dude's got a house after all and can, by his own admission, make the payments. And yeah, if he got laid off because the economy's rough and began to have a hard time paying for his house, I would have more sympathy.
Why is that hard for YOU to understand? Someone who can't make their payments now and stands to lose their house gets sympathy... someone who's unhappy with their house and wants to cut out of their mortgage because they're a bit cramped, not so much.
And hey, this is my opinion in response to his opinion. That means that I can judge and moralize all I want, left and right, night and day, fair or un. That's what opinion is, after all.
Interesting on the "Best Stuff Not to Buy in Bulk" links to a companion article of the "Best Stuff to Buy in Bulk". And there's a number or items that end up on both lists.
Basically: only buy in bulk if it's cheaper per unit price, you'll use it up before it goes bad (or you get sick of it and it sits unused until it goes bad) and you have room to store it. Otherwise, not a terribly useful set of articles.
Xin,
Yeah, for the most part you are correct. I'd add that another major reason they do not care about whether you pay or not is due to the suspension of mark-to-market accounting. Changing that accounting rule has allowed them to play pretend and extend on all their mortgages.
Additionally, there is a disincentive for them to foreclose and sell the property as a successful sale means they would have to write down any losses. Therefore, they'll continue to hold they non-performing loans on their books as money good when a 10 year old could tell you that's not the case.
It's kind of funny how the government has a program called Making Homes Affordable, yet that very act does the opposite. It props up housing prices, trying to spur up artificial demand. High housing prices != affordable homes. People need lower prices in order for the to be affordable, but leave it to the government to mess this up.
If you're seriously underwater, there aren't many options left. However, one I might suggest is advertising your home on a lease option (e.g. rent to own) to a buyer who can't get traditional financing.
Usually, these renters/buyers have an aversion to throwing money away on rent, but can't qualify for a mortgage because they have poor credit for various reasons. It's certainly an ideal fix, but it's one suggestion if you want to close the cash flow gap on rental income and get a sales price slightly above market value since lease option agreements usually sell at a premium.
Xin,
Yeah, for the most part you are correct. I'd add that another major reason they do not care about whether you pay or not is due to the suspension of mark-to-market accounting. Changing that accounting rule has allowed them to play pretend and extend on all their mortgages.
Additionally, there is a disincentive for them to foreclose and sell the property as a successful sale means they would have to write down any losses. Therefore, they'll continue to hold they non-performing loans on their books as money good when a 10 year old could tell you that's not the case.
It's kind of funny how the government has a program called Making Homes Affordable, yet that very act does the opposite. It props up housing prices, trying to spur up artificial demand. High housing prices != affordable homes. People need lower prices in order for the to be affordable, but leave it to the government to mess this up.