The stress of two mortages

By glblguy

If you’ve been following me here on Gather Little by Little over the past year or so, you’ll know about our quest for a new home. If your fairly new here or maybe even need a refresher let me summarize for you.

We decided a year or so ago that we wanted to move to larger home further out of the city. Our goals were simple: Find a house big enough for our family of 8 (but not too big) and a home with a few acres. We found a few we liked but nothing felt right. 6-months ago, I was given the option of being able to work from home full-time, thus completely changing the area we were house hunting in. See, we have always wanted to live in the NC mountains. We found the perfect home, put our house on the market and worked out a contingency contract on the mountain house we wanted. We knew the housing market was bad, but had no idea at the time how bad.

The mountain home received an offer and the kick-out clause in our contingency contract kicked in. We decided to go ahead and buy the house even though our current home hadn’t sold. We were still a little naive thinking it would sell quickly. Long story short, I now have two mortgages one on a new home we absolutely love, another on a home that sits empty 3 hours away.

Stress of two mortgages

Before you jump all over me, know that I did the math…at least a dozen times. I worked out a budget and we can safely pay both mortgages and the associated expenses of both homes. Sure, we had to tighten the budget reins a bit along with slowly down our debt snowball to almost a standstill for a bit but we can do it.

Here’s the problem though: stress. While I know I can make the payments, I worry about it constantly. I worry that if we buy something here or have to eat out one day that spending that money may cause us to not be able to pay for both. Is that likely? No, but I still worry. I think it’s the whole psychological impact having two very large chunks of debt associated to our names. I’m just not used to that.

I find it simply amazing how much stress debt can bring into your life. When I did the math and made the decision it looked fine, but once you actually have to start dishing out the money it’s far more painful. Writing a check for a house that sits empty and you no longer live in hurts. I’ve done it twice now and wince every single time.

I wince for two reasons: 1) I feel like I am just throwing the money out the window and 2) I didn’t plan on having to pay for the house this long. I honestly believed our home would sell by now.

Debt equals stress

Shedding debt equates to shedding stress. Less debt, less stress. That’s one of the main reasons I want rid of mine and want no debt in my life. I have enough things to stress and worry about in my life and debt is one thing that I have full control over.

I cannot wait until the day our old home sells and I can start snowballing that money into paying off the remainder of our debt. Yes, I plan to just continue making that old house payment, but instead of paying on an old house I plan to knock out the last remaining Visa balance. I’ve budgeted for it and will have already been doing it for a while might as well let it benefit me.

Just imagine your life debt free. Think about all of the things you worry about on a daily basis. I’ll bet most of them are about debt or a direct effect of the debt you have. What if those worries were gone?

Do you have debt? How does it impact your life? Do you stress about it? How do you cope? Add a comment!

Photo by: Jam Adams

25 Responses (including trackbacks) to “The stress of two mortages”

  1. Nick Says:

    Have you considered renting your old home?

  2. Dom Says:

    This is why I proposed that you not buy the second home until the first was sold.

  3. Nicki Says:

    That’s a bummer of a situation, but at least it’s good that you planned for it and are still able to make it. I agree … debt is stressful.

  4. Doreen Orion aka Queen of the Road Says:

    We were in that exact situation. Fortunately, we were able to rent our old house. Although not as stressful as sitting empty, it’s still stressful: things break, need repairs, the rent doesn’t cover the mortgage, there’s always the fear that you’ve got some awful renters who will do who knows what. (Once, they took care of a friend’s snake. We had a showing to sell the house. They let the snake loose, with its lunch – a rabbit – cowering in the corner. Needless to say, the prospective buyers turned and left. I was just thankful they didn’t sue us for emotional distress.)

    We finally sold the rental house last summer, and now are in the process of selling our “dream house.” We could afford it if we kept working, but having spent a year travel the country in our RV, we decided that’s the lifestyle we want. Our biggest stress is figuring out if we should trust what the GPS says vs. Mapquest.

  5. ReddH Says:

    I would strongly recommend renting your home. My family owns a 5 bedroom house that is handled by a property management company. Their fee was three quarters of the first months rent and after that they just collect the rent from the tenant and keep up with anything the tenant needs, only contacting my family when something comes up.
    We’ve been in this arrangement now for 2 years and it has worked out beautifully.
    If the house isn’t likely to sell, you may as well have someone else pay most or all of your mortgage. Using a property management company will also alleviate that stress from you because you don’t have to deal with the house at all.
    The current tenant in our house also has first option if we decide to sell it, so it might be that you can have someone else rent it, fall in love with it, and then choose to buy it from you.
    I’d highly recommend it.

  6. Diane Says:

    Debt definitely equals STRESS! I’ve never had 2 mortgages, but I have been in a bad debt situation.

    After my ex-husband’s business failed and he left, I was stuck with some $700K in business debt I hadn’t signed for (community property state) and and IRS lien on the house, due to his failure to file business taxes.

    I had to file bankruptcy and wait 10 years for the tax lien to expire, since the IRS would not deal with me – they wanted HIM to file taxes. Meanwhile I was paying ll.75% interest on the house and could not sell or refinance it without losing all equity to the IRS.

    I also had to start over in the working world, as I’d been a stay at home mom with 2 young kids for 10 years. Even after filing bankruptcy I had to use credit cards for several years to survive until I worked my way into a decent job.

    It took a long time, but I worked my way through it all and now have a house financed at 6.25% & nearly paid for at 6.25% and no other debt to speak of. I paid off my 2006 Chrysler Town & Country when I refinanced the house.

    I use credit cards for things I can pay off each month, or with 0% interest for large purchases (washer/dryer, home improvements) ONLY. If I can’t pay it off or get no interest credit I just don’t buy it until I can pay for it.

    I would use my credit cards for living expenses temporarily if it became a matter of survival, but I just can’t handle the stress of debt anymore for optional purchases.

    Good luck with selling the house! At least you know there’s a reasonable option to get rid of the debt (hopefully soon) and the 2nd option of renting it out – which I would consider…

  7. Phil Says:

    Well, I guess if this can happen to a wise frugality blogger it can happen to just about anyone.

    I don’t want to pile on too hard here, but for the sake of folks watching at home: Never buy another home before selling your current home if you still have a mortgage on the current home. No matter what the temptation, don’t do it unless you’re independently wealthy or something.

    That said, I would tend to agree with the others who suggested renting out the old home. The housing market is going to remain in a deep funk for some time to come.

  8. Sarah Says:

    We are with ya on the two mortgages (of sorts….) We are still making mortgage payments on our house in WI, while making major rent payments on the duplex we are in. It is not fun, and we so often think about what we could be doing with all of that money if our house would sell.
    It is a hard situation, one that you never plan on. We will keep your family in prayer, as you look to Him to provide for both payments.

  9. glblguy Says:

    Thanks for all the replies everyone. I know many of you “told me so” and thus it’s perfectly fair to call me out on it. I still think I made the right decision and hoping that soon I’ll have my old house sold (or rented out) and be sitting on a goldmine of equity with our new house given the deal we got on it.

    I knew it was risky going in and knew there was a very good chance I would be in this situation, just don’t like the stress of it!

    Our contract with the current agent runs out on 1/31, the house will go up for rent if not sold by then. Will definitely use a property management company!

  10. dogatemyfinances Says:

    It’s been vacant for a YEAR? It stresses me out just hearing that.

  11. glblguy Says:

    @dogatemyfinances – No, only 6 weeks.

  12. Make Friends, Earn Money Says:

    Paying Two mortgages requires plenty of faith and whilst the short term stress is probably unpleasant the longer term gains from moving to a property that it much more practical will outweigh this aspect.

  13. Matt Keegan Says:

    I hope that you are able to get out from underneath this burden soon, Larry.

    In the event that you end up being a landlord, look for a property manager who has a stellar reputation and if you find a good tenant, bend over backwards to keep them as a tenant even if that means keeping rent stable for years.

    Of course, you’ll want to eventually sell it, so maybe a lease to buy option would entice a young buyer who doesn’t have much credit.

  14. Phil Says:

    “Paying Two mortgages requires plenty of faith”

    However, It was caused by impatience. Faith would have waited until the first house sold.

    “whilst the short term stress is probably unpleasant the longer term gains from moving to a property that it much more practical will outweigh this aspect.”

    Sorry, but you sound like a real estate agent here. It was a mistake to buy before the first house sold. It could end up OK, but in this environment it could end very badly.

    sheesh… I feel like I should be the frugality blogger – the frugality bloggers have gone non-frugal and non-wise.

  15. Phil Says:

    “and be sitting on a goldmine of equity with our new house given the deal we got on it.”

    glblguy: However, the deals will only be getting better from here until about 2011. Then prices will be flat for a few years at least. You fell for the “but it’s such a good deal” sales pitch when there would have been other (likely better) deals out there.

    Look, I hope it works out for you, but since you are in a position of giving out financial information to your readers you should be clear that what you did was a very serious financial mistake and you should advise people not to repeat it.

    I’ll repeat: unless your first house is paid off and/or you are financially independent (wealthy, as in you could live for many years without an income) you should never buy another house before your first one has sold. ESPECIALLY in this economic environment. Yes, you probably could have easily gotten away with this 3 years ago when the bubble was nearing it’s peak, but not now.

  16. Phil Says:

    Always remember: “The borrower is slave to the lender”

    Debt is slavery.

  17. SingleGuyMoney Says:

    Sorry to hear about the two mortgage dilemma Glbl. I know the feeling I had when I was knee deep in credit card debt and it sucked. I was always stressing out and had problems sleeping at night. Once all of the credit card debt was gone, it seemed like a huge weight had been lifted off my shoulders. Good Luck and hopefully you can get your old home sold soon.

  18. glblguy Says:

    @Phil – You can’t walk in my shoes, so please don’t try. I do agree this isn’t advice I would normally tell people to do. It’s not something I would typically do either, but there is more to the story. Isn’t there always?

    Funny, I make one decision that goes against the grain of most smart personal finance and suddenly I’m not frugal? To be honest, I wouldn’t really consider myself frugal anyway, just a little tighter than the average bear.

    I do appreciate your comments though and understand exactly what you are saying.

  19. Gina Says:

    You DID plan for this so no one should say ‘we told you so’. You did what was best for your family AND planned your budget around this exact scenerio. Your message was about “dealing with the stress/worry” of _____ (fill in blank). In your case, 2 mortgages. In my case, $30k in debt. Maybe I missed it but I noticed no one offered advice on how they cope in a stressful situation.

    When I finally sat down and wrote out a budget and cut up credit cards in January, “Murphy” moved in {just like DRamsey said he would} and wrecked my plan (replace garage door, replace dishwasher, replace AC system, $3k in car repairs, $1300 root canal). I had only budgeted for the AC replacement. Each time I stopped in my tracks and prayed for God to help me. And He did. I somehow cash flowed everything and I even have a little bit for Christmas – my first cash Christmas ever. The better you handle your finances the more Murphy tries to derail you. This is your Murphy situation.

    Stay on track, keep up the good work (you are much better off even today than 2 yrs ago) and pray. While you are praying, be sure to thank God for the beautiful view from your front porch. I think that alone is worth 2 mortgages.

    Focus on today and let God handle tomorrow. It will work itself out; you will be stronger having been through this situation. Soon you will be telling us how you survived – maybe a subject for the next eBook?

    We are praying for you.

    P.S. Is there a Dave Ramsey real estate ELP in the area where the old house is located? If so, try them. If not, I like the rent idea.

  20. janet Says:

    Well I may have a story that makes you feel a little better and smarter than you do right now. We did the same thing you did but twice! It all started innocently. We wanted to downsize from a large home that we had raised our family in into a smaller one, 900 sq ft. We searched and found one that suited us. The real estate mkt was booming and so decided to keep our old home to rent out and let it appreciate. But once we moved in to the new, small house we realized we had drug dealers as neighbors. The neighborhood was not run down but it was not as nice as our other one. It just wasn’t a good fit for us. By this time the market was starting to tank. We found another small house in an amazing neighborhood, rented the other out and now we have 3 mortgages. Both houses are rented but it causes a great deal of stress for all the obvious reasons. I don’t think anyone saw this economic meltdown coming. We have always been cautious w/our money, followed all the rules and the first time we step out of the box this happens. We handle our stress by talking about it on a daily, evening walk through our new beautiful neighborhood. That helps. We watch the numbers closesly and live very frugally. We feel we have about 5 more years before the properties can be sold. Who knows maybe even make a little. We focus on what we have, good health, good food, good family and friends. After all these are the true measure of one’s wealth. As far as the comments like “I told you so”…what if the housing market continued to go up? What if it was a smart move we made? Better to have tried and failed than never to have tried at all.

  21. serena Says:

    Thanks for the interesting article.