So I lost my job not long ago, and when my severance payments end in a few weeks we'll be about $1000 short every month. We've already cut back wherever we can but we lived kind of minimally/frugally already so there wasn't much room to cut back. I can't get a new job right now for multiple reasons (& so can't get unemployment either).
Our biggest expenses are health insurance & the mortgage. It looks like we may be eligible for assistance with health insurance, which could save us $500 a month, just don't know for sure yet whether/how that will work. We'd still be an additional $500 short though.
We have a good amount of savings. We are hoping to live off of that for as long as possible, but it's incredibly stressful to me knowing we are falling short by so much. Plus, having that savings is preventing us from getting help from our mortgage company. Our mortgage payment is about HALF of our income, which is just crazy... I'd really like to get that payment down but we are deeply underwater & not eligible through HARP or anything either. There's a "Hardest Hit Fund" that we may be eligible for but we have a bit too much in savings at the moment to qualify.
Sooo... I had a crazy idea... we could pay off our student loans (which I've been wanting to do anyway). This would save us $250 a month (so even without refinancing we'd now only be ~$250 short if we can get the medical help... I might be able to get a very part-time job or DH could maybe do a bit of OT to cover that shortage). This would use up about half or our savings, but would also make us eligible for the Hardest Hit Fund mortgage help. I have no idea what that program will actually do though... anyone have experience or knowledge of it?
I know there is a student loan interest deduction & we could defer the loans if we ultimately had to, so I'm mulling over whether that's a safety net worth keeping. If I don't pay it off now (and don't defer), our student loans would be paid off in less than 5 years. We'd save a little over $1000 in interest by paying it off now. It would cut into our savings by about half -- so we'd still have enough savings left to live off of for a year or two if we continue with our spending freeze and have no major emergencies. I also do have money in a 401k that I could cash out in an emergency (obviously want to avoid that). I'm thinking though, that if we ultimately lost the house and/or had to declare bankruptcy, we'd at least be debt-free if we'd already paid off the student loans, so we could start fresh.
I feel like this is a bit of a gamble but the only option I can see for "getting ahead" and not having this constant stress of being so far short every month which is really making me miserable. I see this as a long-term problem so I'm hoping for a long-term solution. I've always been able to get the numbers to work out somehow, until now. We are just in this gray area of making a couple dollars too much to qualify for food stamps etc. but not enough to live on & no way out of this house & the local economy is really bad.
Not sure if I've even explained this well but... any thoughts?
Our biggest expenses are health insurance & the mortgage. It looks like we may be eligible for assistance with health insurance, which could save us $500 a month, just don't know for sure yet whether/how that will work. We'd still be an additional $500 short though.
We have a good amount of savings. We are hoping to live off of that for as long as possible, but it's incredibly stressful to me knowing we are falling short by so much. Plus, having that savings is preventing us from getting help from our mortgage company. Our mortgage payment is about HALF of our income, which is just crazy... I'd really like to get that payment down but we are deeply underwater & not eligible through HARP or anything either. There's a "Hardest Hit Fund" that we may be eligible for but we have a bit too much in savings at the moment to qualify.
Sooo... I had a crazy idea... we could pay off our student loans (which I've been wanting to do anyway). This would save us $250 a month (so even without refinancing we'd now only be ~$250 short if we can get the medical help... I might be able to get a very part-time job or DH could maybe do a bit of OT to cover that shortage). This would use up about half or our savings, but would also make us eligible for the Hardest Hit Fund mortgage help. I have no idea what that program will actually do though... anyone have experience or knowledge of it?
I know there is a student loan interest deduction & we could defer the loans if we ultimately had to, so I'm mulling over whether that's a safety net worth keeping. If I don't pay it off now (and don't defer), our student loans would be paid off in less than 5 years. We'd save a little over $1000 in interest by paying it off now. It would cut into our savings by about half -- so we'd still have enough savings left to live off of for a year or two if we continue with our spending freeze and have no major emergencies. I also do have money in a 401k that I could cash out in an emergency (obviously want to avoid that). I'm thinking though, that if we ultimately lost the house and/or had to declare bankruptcy, we'd at least be debt-free if we'd already paid off the student loans, so we could start fresh.
I feel like this is a bit of a gamble but the only option I can see for "getting ahead" and not having this constant stress of being so far short every month which is really making me miserable. I see this as a long-term problem so I'm hoping for a long-term solution. I've always been able to get the numbers to work out somehow, until now. We are just in this gray area of making a couple dollars too much to qualify for food stamps etc. but not enough to live on & no way out of this house & the local economy is really bad.
Not sure if I've even explained this well but... any thoughts?
) I know spending savings is painful - I hate it, even when we're spending it for exactly what we saved it for - car insurance, midwife fees, etc, but you will have the complete elation of not having debt hanging over your head. I know this personally, too - dh and I paid off $8,000+ in student loans in a little over a year, and it was so exciting to be FREE of that. For us, it was our only debt. It sounds like, other than your house, that's your situation, too. We don't have a house, so we don't have that debt, but we also don't have that asset (or lack thereof, as it sounds like in your case). But it was nice to know that, other than our lease, we didn't owe anybody anything. We were free. Yeah, things would get crazy if dh lost his job, or a lot of other things happened, and breaking a lease is definitely not a good thing (not as bad as foreclosure, which is your equivalent in this case, but certainly bad), but other than that ugliness, no one would be after us for anything. We could decide to ditch all our possessions and move to the jungles of Africa and not be fugitives on the run from our creditors. No, we wouldn't ever do that, but it was exhilarating knowing we could. Anyway, psychology aside, I don't think it makes sense to be paying interest, even fairly small amounts, on loans you could get rid of and not totally lose your safety net. That's just my
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