Ok here is the backstory:
We purchased our house right before the collapse in 2008, so this October we will have been here 5 years. We bought for $73,000 and still owe just over $68,000. For a while I was doing the Dave Ramsey thing as much as I could, I could never get DH on board with it and still can't, not that it matters right now anyway though because we are so far from making it nothing would help at this point. I had the $1000 emergency fund in the bank, and was working on slowly paying off the last of my credit cards. I have probably $14,000 in debt between 3 cards and 1 bank loan. Both the cars are listed as collateral on the bank loan.
On June 30th my husband went in for an appendectomy and the Dr. messed up really bad, they cut his intestines open and would not listen to DH so it was 4 days before they went back in and found him septic, they tried to fix him, it didn't work, he had to have yet another surgery (total of 3 surgeries in 10 days) and spent a month in the hospital, and just got released from wound care last week, in this last month he had to go to the doctors 3+ times a week and could not work. In this time 2 windows in my house got broken, and my cistern failed twice along with 90% of my plumbing. We have not had running water for 2 weeks. The first time the cistern failed cost me $4,500 to fix, this second time I am not even done getting it fixed and I am looking at close to another $3,000. I am hoping to have running water again tonight or tomorrow morning when the plumbers can get here to fix the last of it because I just can't fix anything else myself.
My Jetta's clutch also went out and that cost another $1,400. Its like everything that could go wrong has gone wrong.
So Husband has been out of work, we owe a ton of money to the hospital, the credit cards, the bank and still need to find money to eat and live on. I *hate* my house, it just keeps breaking and has been since the day we moved in. We pay $720 a month to live here and since DH came home from the hospital he lost most of his computer clients (thats how we made enough money to live was his extra income from computer repair) so we are only bringing in at most $1950 a month.
So now for my question, I talked to 2 people I know in real estate and they told me to let the bank have it and just walk away, there is no way we will be able to sell it for what we need to repay the loan on it. My MIL has offered us the money for a down payment on some land we want. The land we are looking at is between $20,000 - $40,000 and none of it has a house on it. But we could put a shed or a camper trailer on it and live like that for a while, and then build a earthship house or some other form of cheap housing. I am not afraid to live in a camper or shed for a while. At this point I would welcome it. I know that if I walk away from this house my credit is going to be ruined and that I will have a hard time getting any more loans but I am so underwater right now I just don't see any other options. We were told that we can just stop paying on this house, put all the money we would put into the payment into a savings account and then once we actually get foreclosed on and kicked out we would be able to put a hefty down payment on a construction loan or another house. My neighbor wants to buy our place but I just don't see us able to keep paying the payment until he is ready to buy it next year.
So in your opinion what are my options here? What would you do? Would you walk away?
And we already live very frugally, we don't have any extra bills that we can get rid of. We already live at the bare minimum of what we can here in order to survive.