Housing and Urban Development (HUD) Program

[Ruffnek]

I hate the thought of government assistance and welfare and I swore I'd never take hand outs.Now I have a family and am starting to realize that my pride is going to have to take a hit.My wife and son and myself live with my parents and brother and having only one room to ourselves and to store all of our things is cramping my style,my marriage,and my claustrophobia.Most of the carpet in our trailer is ruined from years of not-so-well trained dogs and other aspects of living.I love my parents and the last place I want to be is away from them but I'm starting to think that the nest just isn't going to hold us much longer.

My obvious first concern is money.I only make $11.88/hr for 40hrs/week and my wife only makes $7.25/hr for ~20hrs/week.We have two car payments and a handful of other bills plus the costs of raising a child.We would absolutely have to have SNAP and probably go through the HUD program to even find a place.I know that I can't stand the thought of an apartment so it'd have to be at least a trailer or small house.Prefer not to live in city limits due to the lifestyle of freedom that I've grown up with.Anyone gone through this before?

My second concern is the process.How do I go about it?I don't want to get myself into a hole that I can't get out of.

My third concern is telling my parents.I'm trying to put my family in a better situation.My parents have never had money but they always gave us kids everything they possibly could so I want them to understand that I'm not leaving because they can't give us enough,just because we are wanting more.Any parents that have gone through this that can offer advice on how to break it to them?

I am,of course,going to do my own research but I was just seeing if anyone here could offer any pointers.

 

[hoosierdoc]

Just a thought... what are your car payments, and how much are the cars worth? Best advice is to find a way to have ZERO car payments. I see cars for sale for $1500 all the time. You can likely rent a house for what you are making in car payments.

Another thought, work 70 hours a week, not 40. Not trying to be mean, but you are the means out of the situation you find yourself in. If you work 70 hours a week and she makes what she makes, you guys would be at $50,000/year which is approximately the median household income for the US.

http://www.homes.com/property/in-43-solsberry-in-47459/id-200315833/

Small home in your city, $77k list price. $70k mortgage with 0.5% PMI is $400/mo payment including property taxes and interest. Two bedroom place, one bath, and two acres of land. I would look into busting my butt and get into my own place. Staying in the home you are in, working more, while you save for a down payment and ditch the car payments could be a good 12-month plan to getting on your feet.

$995 Concorde - http://bloomington.craigslist.org/cto/4185287758.html

$1800 Chevy Cavalier - http://bloomington.craigslist.org/cto/4149878810.html

$1300 Ford Taurus - http://bloomington.craigslist.org/cto/4186054751.html

$800 - Truck http://bloomington.craigslist.org/cto/4185816653.html

$900 Cutlass - http://bloomington.craigslist.org/cto/4185598383.html

 

[Ruffnek]

Problem is that I don't know if any way to ditch the car payments without killing our credit and I know that the vehicles we have now are reliable.

 

[hoosierdoc]

what are the payments and what are they worth? Many banks will let you sign a loan for the difference if you are upside down.

If you have two $250 car payments a month, that's $500/mo, or $6k/year. Save up $2k and buy two beater cars (Dave Ramsey method)
If you are upside down $4k on each car and sign an $8k personal loan to cover the difference when you sell them, that's $239/mo in loan payments over 36 months. No ding to credit and you are out of the car loans.

You have two paid-off cars and are savind $261/mo just on that alone. These are not cars you fix. If one cost you $900 and it dies after 5 months, you're buy another one and you were still better off than with your prior ones.

Of course I'm not sure what your loan/value issue is on the cars, but car payments are not the way to handle this.

 

[GodFearinGunTotin]

Hoosierdoc has some good advice. This ain't rocket science. But it does take commitment and a willingness to live outside your current comfort zone. I've listened to Dave Ramsey's radio show off and on and he has, what I think is a sound strategy for folks that have been in your position. I know he has a web site. It's probably daveramsey.com. There might be some tools there you can use; maybe even some free ones.

But I would second hoosierdoc's advice: Get a second job or work overtime, if it's available; get rid of your debts--smallest first and then snowball the savings to knockout the next larger one, rinse and repeat.

It's amazing what you can do when you set your mind to it. Good Luck!

 

[gunman41mag]

Have to be tight with your money, getting rid of the car payments would be a wise move

 

[rgrimm01]

Similar strategy is to apply money to additional principal payments on highest interest loans while making all other financial obligations regular payments. When the high interest loan is paid off, apply that amount of regular payment + additional principal to the additional principal of the next highest interest loan and repeat.

When all loans are satisfied, pay into a (savings acct) the amount that you were paying for loan payoffs [until such a time that you reach your target (downpayment)].

 

[IndyGunworks]

I agree with hoosierdoc as well. If you cannot afford the housing you want while working 40 hours a week, then pick up another job and work 60. You got yourself into those car payments, so get yourself out of them. with any and all additional money coming in apply it towards whichever payment is the highest. once its paid off use what you were putting towards that and pay off the other car loan. when that's paid off take what you were paying cumulatively on the second car loan and save for a down payment on a home.

Sure their are federal programs that may finance you with above normal debt to income ratio's and lower credit scores, but you would still be taking on debt that you cannot afford at this point. It sounds like you are already living a little bit above your means, and using a federal program to add more debt to your life will more likely hurt you in the long run.

When I was trying to get out of some debt to set myself up to be able to save money for the down payment on the place my wife and I are going to build, I was working around 90 hours a week. Fulltime fireman, worked part time at a gunshop, and worked part time for myself. It sucked working that much, but I paid off some stupid loans, applied that towards some other stupid loans, then applied that towards my truck. My truck payment was 350 a month. with all the additional principal going towards that I had it paid off in a year. then I was able to save 500 dollars a month, and at this point in my life I will be paying cash for any other car purchases I make in my life. All because I worked my ass off, ate off brand foods that I prepared myself (no prepared or frozen foods), never went out to eat or to the movies, or spent money other than towards my debt.

It sounds like you just want to much to quickly and instead of sacrificing and working your ass off to get it, you want to explore the options of federal monies to make it possible.

 

[Cpl. Klinger]

I happened to get a house at just the right time, back in 2007 when all you needed to get a mortgage was a pulse and a steady paycheck. Through some other stupidity, we had ourselves in quite the bind. We've been steadily working through the Dave Ramsey plan, and we've made some huge headway in our financial situation. This year alone we've paid off somewhere around $5000 in debt on one credit card. Part of that was my wife's income going up, but it's also from us being smart with our money. No cable since 2004, just Netflix and a fast internet connection (that work helps pay for). Cell phones that aren't on a contract, and that we rarely have to actually spend money on because we get cash on them from our grocery shopping (Kroger's iWireless phones). The wood floors that we've been wanting to put down? I cash flowed two rooms worth from overtime that I worked. I take on extra side jobs to help with Christmas, and to fund other things we want. I'm hoping to be transferring sections at this work so I'll go back to full time, even if it means I go to graveyard shift. I've taken to doing my own wrenching on the cars since it's cheaper. Why pay Jiffy Lube $50 bucks for an oil change I can do for $20? It's all about being smart.

In your situation, you either have to get rid of debt or make your income go up, no two ways about it. And as others have said, look at your lifestyle. We've cut a lot ourselves, but we're getting ready to try and go deeper. Eating out is our downfall, but we're cutting that totally off. I hate to sound like a huckster, but Dave Ramsey's plan works, and is the best thing going for getting out of debt. Right now he's doing one of his $10 book sales so you can get the Total Money Makeover for cheap. Best money I have ever spent

 

[Rookie]

I used to have the same outlook on vehicles "but it's reliable" so I bought a brand new Suburban. That was eleven years ago. Now, I own the same Suburban with 200,000 miles on it. It's starting to rust, the leather seats are cracked, the body has some dents in it, and the motor has a tick in it. Guess what I have now? Zero vehicle payments, lower insurance payments, and lower taxes. Sure, that motor is going to blow, and it's going to cost me a few grand to fix it, I'll probably have to rent a car while it's being fixed, but it still beats $800 a month in vehicle payments and higher insurance.

Could I afford a new Suburban? Momma just got a new job and we have plenty of disposable income, so yes I could. Instead, we're paying off all of our debt and banking for retirement. It's all about priorities. Fancy car or comfy retirement?

 

[hoosierdoc]

I have the book and will send it to you for free if you PM me your address. The "total money makeover" book.

 

[CountryBoy19]

I know more people that buy new cars because "it's reliable". IMHO, that is just a scape-goat because what they really want is to show that new car off to people and get that instant satisfaction of knowing they have a new car.

I'm going to break it to you the hard way. Poor people live like they're rich and rich people live like they are poor.

I see too people living in trailers, living on welfare driving brand new cars when they could take that money spent on a car and apply it to actually improving their life.

Look at it this way. A car is something that gets you from point A to point B and nothing more. It doesn't have to look pretty on the outside because YOU ARE ON THE INSIDE. It only has to get you to/from work/store/church/etc. A house, OTHO, is where you eat, sleep, spend free-time, and raise your family. Which would you rather spend your money on? A car that will be worth 10% of what you paid for it 5 years later or a house that will continue to be more valuable?


I took the latter option. I drive a 14 year old Buick (granny-car as some people like to call it) that has 200k+ on it. I treat it well and it treats me well. And I don't buy a different car every couple years. I've had this beauty for 9 years now and put 130K miles on. I maintain it well and it has paid me back very well for that. I also have a truck that I use to haul firewood, make runs to town for larger things etc. I paid $1600 for it 4 years ago. It's 16 years old and has 324,000 miles on it. Is it rusty? Sure is! Does it have problems? Yep, sure does. But it was cheap and it gets the job done and if it dies I'm not out much. I have never had a car payment and never will. If I don't have the cash on-hand to buy a car I don't buy it. So where does all my money go then? My mortgage. At the age of 23 I bought a $250k house that was selling for less than $170k because of the poor market. Today, 4 years later, I'm 27 and have that house over half paid off because I've been piling every bit of extra income into paying down the mortgage. I have just over 8 years left on my mortgage. If things keep up I will own my house free & clear at age 35.

How is that possible? Live like a poor person. Eat cheap food, don't eat out except for special occasions (we eat out no more than 1 time per month). Don't buy expensive things that depreciate in value like electronics, cars, boats, etc. Those things have the "aura" of rich about them but make no mistake, unless you have a very healthy income they will make you a poor person in short order. Don't be ashamed to bend over and pick a penny up off the sidewalk, they all add up. If you have a credit card, be very, very careful with it. Don't spend anything you can't pay off each month. Interest charges on a credit card will kill your finances very quickly. Ditch the "elegant" things in life like cable tv, smart-phones (often have a hefty monthly plan charge) and XM satellite radio too. The standard "cheap options" of all of those do 90% of the job at less than half the price (often even free in the case of cable tv vs. OTA TV).

 

[Rookie]

"Poor people live like they're rich and rich people live like they are poor."

Funny you should say that because I was just thinking along the same lines. True story of two people I know...

When I was growing up, my grandfather was the biggest tightwad I've ever known. He did permanent damage to his rotator cuff because his garden tiller was the biggest piece of crap made. He would brag about how he got 75,000 miles on his 40,000 mile tires. He drove a decent low priced used car. My father in law was a different story. Brand new Cadillac every other year, extravagant vacations, the works.

Now, here's the interesting part. My grandfather was a doctor. He had over 100 rental properties. I have no idea how much he's worth, but, a few years ago, he had to move closer to my parents so they could help him. The house he bought was not handicap friendly (my grandmother has back and foot problems), so he paid to completely remodel the house. House plus remodel cost over $500,000 which he paid for in cold hard cash.

My father in law is a different story. He and his wife worked at Delco. He retired early because he didn't want to work anymore. A few years ago, my mother in law died, so he lost her pension. His house has three mortgages and it's falling apart around him. After he pays his bills, he has $250 for the month to buy food.

 

[Double T]

While you may not like it, you CAN use a state tax deduction for $3500 worth of rent. Anything over that is a waste. The plus side of renting is that you don't have to cover repairs (unless you cause damage), you don't have to pay property insurance (and renter's insurance is plenty cheap).

We rented for quite a while, and my finances are a MESS due to health issues of my wife BUT we are making ends meet on a 35k a year salary with 2 kids. No car payment, and buying our house from my mom instead of the bank. No mortgage per se, but we still are "paying" like we have one.

You can do it, just have to figure out a good budget that gives you a little "mad" money built in and also has leeway for a killer sale that you can't live without.

 

[IndyGunworks]

I disagree with not paying property insurance... I GARENTEE you, that you ARE paying it. you are just paying it to the landlord who in turn gives it to the gov't. You are also paying for home insurance through the rent as well. Its all included in the markup, as are the repairs. While renting the landlord also has a built in profit so you are normally paying a significant amount more than what you would be if you were to otherwise own the property.

 

[CindyE]

Is it possible to trade down one or both of your cars? Hard to know, without knowing what they are and how much you owe. We traded down once.
At least if you've kept up on the payments, you may have a decent credit score. Might check around and see what banks and finance companies can do for first time home buyers. There used to be some good programs.
Are you sure your family isn't going to take it well? We love being empty nesters.

 

[jsgolfman]

Do you pay for cable, cell phone, alcohol, tobacco, etc. All easy ways to save money by cutting them out.