Downsizing Home?

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oldtimegal
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Downsizing Home?

As I read and learn from Turd's site, I need to ask for  some more advice to consider from members.   I have written in the past that my husband is not for PMs [in which I have have] and feel the economy is fairing pretty well.    As many write here about their own family/friends, he views my thoughts out there in re of preparing.   We do have a small farm in which I grow/can, etc but the family still will only partake in boxed prepared foods/fast food.   

There are other problems with finances in our family.  Filed for bankruptcy and paying, like many others, a mortgage for a home  that has lost its value quite a bit.

But there is a bigger issue that hangs over me and I look to you folks to possibly provide me with some thoughts to consider in re of what I am asking.

I have inherited a home from my parents and have held on to it for about 4 years now. I struggle whether to sell it or not. It seems to be holding its value here in this area.  Possibly purchase something smaller in size and rent it out and look into what to do with the extra cash that would come from the home if I can sell it.

I also ponder over whether to rent the current inherited home as well but need to really wonder if it's worth the screening of possible renters, getting into unknown legal battles etc.  

What I would like is for my husband and I to do a short sale of our current home, sell the inherited home and move into  a lesser of a home and be debt free, but he won't do it.  He and I are at opposite ends of our views of the economy and preparing.  

I have joined a preppers group to educate myself in re of how I can protect, to the best I can, myself and family.   I do this cause I need some sort of support system, as I gain from Turd's site.  Been part of this community for a good 2 years and have learned so much from all of you.  Miss Shill too!!

Hope to hear back with some suggestions in which a  54yo gal needs.  The *preparing* journey is a lonely one with no companion to travel it with.  

Oldtimegal

Edited by admin on 11/08/2014 - 06:06
Eternal Student
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Some general ideas

It's impossible to say without more information. So take this with a grain of salt, and do your own due diligence. I'd consult with professional advisors on all of this.

One thing to keep in mind is that this is the last year in which you can get tax relief on doing a short sale. In 2012 (if memory serves) any loss taken by the Bank on the mortgage is treated as taxable income. So if you're going to do a short sale, talk to a Tax expert, and look at what you're facing.

Also, from what I've heard, if any of the mortgage money (say from a HELOC) was used on things which weren't house related (E.g. vacations), then that money is taxable, too.

Short sales take time, as well. Sometimes, a lot of time. I'd talk to a Realtor who specializes in this area for some advice at what you're looking at.

As for your other house, keep in mind that it is also an easy target for a debt collection agency, or the IRS. So is any cash in the Bank.

In general, I'd advise getting out of debt. All debt. The name of the game is to keep you in debt. This should be very obvious by now. When (not if) the current Ponzi credit/debt scheme implodes, money will become precious, and having to pay it out for debt will become even more costly.

As to "when", no one knows. And anyone who says they do know is lying. There are far too many cards in the air to tell "when". And the power of the Federal Reserve is significant. But even the Fed isn't omnipotent. For even inspite of their best efforts, we still don't have a recovery in the U.S.. And the effects of their money printing on the economy keep growing shorter with every round.

Bernake is also trapped by oil. An increasing price of oil leads to a negative effect on the economy. This could actually been seen in one of the reports lately. Karl Denniger pointed this out a couple of weeks ago. It was small, but it was still there.

The point here is that there are limits to the Fed, contrary to the image they try to portray.

Sorry if this is rather broad. But hopefully I've given you enough pointers to look further into some areas that might be important to your situation.
 

pailin
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taxes!

In general...it's safe to assume that taxes will be going up over the foreseeable future across the board. Unless employment numbers, consumption and GDP climb dramatically all levels of govt face rapidly climbing outlays coupled with static or falling income. Most efficient method (and easiest) to 'right the boat' is to tax those that have assets and income to tax.

This includes propterty tax, inheritance tax, capital gains tax. And who knows what they'll think up next? Unless you're married to hanging onto that extra home (not to mention the one you're already a slave to), tax considerations alone may make selling while you can the best choice.

Renting out? Well that's taxable income (to you) as well. I wouldn't expect that 28% bracket to prevail for long :)

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To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything. -Edward Abbey

Rear Flank Downdraft
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My thoughts....

I'd echo what ES and Pailin said and add that it is a worthwhile investment to see what the source of the difference is between you and your spouse regarding your differing economic world views.  I am not suggesting you've not already thought about that yet at all, for you may have if you are part of a prepper's group.

It seems the reasons that are bringing you here are ones that your husband seems opposed to, or at least does not buy into them just yet.  No matter what you decide to do economically, whether it succeeds or fails, doing so in unity will go along way in preempting potential division between you both.  In other words, it sounds like you've been through a lot already and making economic decisions when you are both not in full agreement could only escalate potential problems and exacerbate existing ones.

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