Congratulations! You just sold your house, now what?
By Stew
We’re going to Disneyland!
Okay, not quite, but the prospect of facing the next month without a house payment, insurance premium, property tax, gas bill, water bill, heating bill, softwater rental bill and other miscellaneous maintenance costs sounds like a trip to paradise – or at least a couple of days off.
Last week, we closed on the home that we have not lived in for sixteen months. The closing documents were overnighted to us earlier in the week and Mrs. Stew and I signed the papers, had them notarized and then sent them back across the country with our fingers crossed and our hearts in prayer.
I am looking forward to completely revamping our family budget and finding some positive numbers at the end of the month. I actually have fallen behind in keeping track of our budget, the news was just too grim. Next week I will know the final numbers on the damage that this episode has done to our finances. We are definitely in the red, but things are not nearly as bad as they could have been after sixteen months of owning a home in one state while renting in another. Some reasons for thankfulness:
- We were never late on a payment of any kind.
- We never bounced a check.
- We are only about $6,000 in the red on our overall annual budget.
- Our credit score is still quite healthy.
- No foreclosure, no default, no bankruptcy, no short sale.
I have started to reorganize our system for keeping track of our finances and setting priorities for the next couple of years. Here are our financial priorities beginning next month – this is assuming that my wife takes the job opportunity that has developed.
First Priority: 0% APR Balance Transfer
One of the ways that we have made ends meet since we ran out of money in March is by virtue of a 0% balance transfer onto one of our credit cards. This money is interest free until March of 2010. We want to completely pay off that debt before interest starts to accrue. The total debt is around $15,000, we currently have approximately $10,000 on hand. This is a risky strategy that I do not recommend to anyone even thought it seems to be working out for us. If our house had not sold . . . if my wife does not work . . . if I lose my job . . . we could be “up a crick” as they say.
Priority #2: Emergency Fund
We have exhausted all of our emergency fund, savings, cash, etc. The only liquid money we have left is the balance transfer money. This needs to change – quickly! My goal is to have a three month emergency fund saved up before we start to attack our other outstanding debt in earnest.
Priority #3: Retirement
Some of you may remember that we cashed out about two thirds of our small retirement savings back in March. This fall, both my wife and I plan to max out our employee matching opportunities at work. My employer will match up to 5% and my wife’s job will match up to 3%. Lord willing, we will catch up on our retirement savings in a hurry.
Priority #4: Debt Reduction
Beyond the balance transfer we have a number of debts that I consider “bad” debt. I hope to pay off what remains of our home equity loan first, then we will go after our car loan, then my wife’s student debt.
We do not plan to enter into another mortgage for a long time. What is your #1 financial priority?
July 23rd, 2009 at 9:32 am
Stew,
Just curious why you think the balance transfer was such a risky move that you wouldn’t recommend? I can only assume the debt was hanging out on another credit card at some odd percentage rate that you have now transferred to another card that will give you a long 0% grace period. What is the major risk there?
Right now, my major financial goal is to make sure I am adequately pursuing the many goals that I have. I have always been the type of person to pick 1 thing and go after it with all I’ve got and am trying to change my style to allow myself to save for multiple goals in my life.
July 23rd, 2009 at 10:08 am
Thanks for stopping by, Tyler. The BT was not cc debt. It is cash in my savings account. It is risky for all the reasons that cc debt is risky – high interest, fees, etc. I took it out in order to keep up on our bills.
July 23rd, 2009 at 10:51 am
Congratulations! This has to be a huge relief for your family.
My parents were once in a similar situation — had a house for sale in once city, rented in another. Took them about the same amount of time to unload their house. Stressful times for sure.
July 23rd, 2009 at 12:01 pm
Congratultions, I know it is a huge relief.
My priority is to get college finances, then revisiting the assets in various 401ks from various jobs and trying to consolidate and simplify – hopefully trying to get some decent returns without too much risk.
July 23rd, 2009 at 3:02 pm
Congrats on selling the house! Now is the time to bathe the wounds and wait for healing. My emergency funds have taken a bit of a beating this year, too, in part from going overboard on vacation, and in part from slowdowns at work. The good news is I haven’t acquired any more debt, and DH is now working full time, albeit not in his profession. My emergency fund needs a little more infusion before I’m comfortable, but the bleeding has stopped. Come to think of it, that’s funny. Two years ago I wouldn’t have even HAD an emergency fund. Amazing how one’s thinking changes, hanging out with you guys.
July 23rd, 2009 at 3:14 pm
Good for you! Congrats!!!!
July 23rd, 2009 at 3:38 pm
I hear people saying renting is wasting money. Your last sentence suggest you will not buy another house for a while. Is it the fact that it took so long to sell your house or is the cost of home ownership not worth it?
July 24th, 2009 at 11:10 am
Congratulations on the home getting sold! You made it through another financial storm, together.
For me, the #1 priority is getting out of debt. With that said, the only ‘suggestion’ I would make is reverse #3 & #4. If you get out of debt first that will give you more monthly $$$ to put towards retirement when you are finished paying off the debt. There is something about being focused on one thing at a time that makes it work … esp. since you have 20 yrs to go until retirement.
I finally took the ‘more focused’ approach of stopping my 401k contributions this yr. And wouldn’t you know it, my employer stopped their matching contribution this year too so I’m only missing out on the market return not the employer match. Stopping this contribution is temporary – restart it after debt is paid.
July 25th, 2009 at 11:21 pm
Congrats on working toward debt freedom. My #1 finacial priority would be to buy a new house. I know you said that you didn’t plan to enter a new mortgage but I believe a home can be a source of finacial income. In the area that I live in, unless you can find a apartment to rent super cheap, most people are better off trying to buy a home.