Starting All Over Again

No, I'm not referring to the Bobby "Blue" Bland song; I'm talking about my own personal blues.

I'm 48 and living in my in-laws' basement. Our house was foreclosed last month. I bought it in 2008, just a month before the housing market collapsed. Before my first mortgage payment was due, the house was worth $35,000 less than I'd paid for it. I fought 11 years. I could be fighting still; I could have tried one last, desperate trick to keep the house. But frankly, I was tired. Foreclosure ruined my credit, but improved my blood pressure - I call that a net gain.

Through it all, I became interested in permaculture. I tried a few ideas at my little, suburban lot, but I never had the space I wanted. Now that restriction could be removed. If I play this right I could wind up with far more than I had. The question is, how do I get there from here? I have a fair - but not stellar - weekly income, and I have about a week's pay in the bank. I also have a credit score so low it smells like sulphur. Has anyone else here pulled themselves up from such a situation? Any advice?

Thanks.

It may be too personal,  but there is a lot not included in your description. The house being worth 35k less is relevant in what way? Did you have to produce the 35k? You did not want to make a payment on a house that is worth 35k less?  You don't have to answer that. Its of interest because I do not know how the whole finacial collapse played out.


To answer. It's time. A friend had a crappy credit score through divorce but recently financed 17 acres with a house. He took what credit that was offered and whatever rate and used it and payed it on time. Then bought a car on credit. What amazed me was the quick turnaround from crappy to buying a house. It was a few years, not decades.

wayne fajkus wrote:It may be too personal,  but there is a lot not included in your description. The house being worth 35k less is relevant in what way? Did you have to produce the 35k? You did not want to make a payment on a house that is worth 35k less?  You don't have to answer that. Its of interest because I do not know how the whole finacial collapse played out.

Wayne,

If I were worried about getting too personal, I wouldn't have opened this thread. It wasn't just the market value of the house; that was step one of a long downhill run. The problem was the job market in Michigan. Within 9 months of buying the house, unemployment in this state hit 22%. My career up to then had been as a commission-based salesman. Commissions dry up when nobody can buy anything. I bought the house in August, and by March I was fighting every day to keep it. It was a fight that wouldn't abate for 11 years. I even changed careers in 2013 in order to stay afloat. I'm now a truck driver out of necessity, even though it would not by my chosen path. Without the house, maybe it's time to fix that, too.

Gotcha. The sad part is the time fighting works against the time restarting. The clock doesn't start till the actual repossession or bankruptsy takes place. The 7 year thing when stuff removes from the credit score.

I look back at my life and homeownership is valuable in what I have done. Appreciation of the property, locking out inflation with a 30 year loan. As time goes on and with promotions,  the payments get "smaller" year to year. I guess it can work in reverse also.

Good luck to you. Other than the recent panic, the economy seems to be good to work through a problem like this.

Chris, if you're not attached to property ownership, finding a partnership, community, or some form of symbiotic relationship with others on their land is a great option.  You can farm, live sustainably, and try another way of living without actually owning land.    There are a lot of opportunities out there, all over the country and globe!  Have you checked out the community section?

Chris,

I agree with Jen. If you are "starting all over again" do you have to do it in your present location?
There are opportunities for people who are willing to move to a place where they can prosper.
You didn't say much about your family situation, other than you are in your in-law's basement. What are the "cards" that you need to play right to improve your lot in life? Are you tied in some way to the Detroit area?
Many people thrive with land that they don't own. In the end, do we really own land anyway?

Steve Mendez wrote:Chris,

I agree with Jen. If you are "starting all over again" do you have to do it in your present location?
There are opportunities for people who are willing to move to a place where they can prosper.
You didn't say much about your family situation, other than you are in your in-law's basement. What are the "cards" that you need to play right to improve your lot in life? Are you tied in some way to the Detroit area?
Many people thrive with land that they don't own. In the end, do we really own land anyway?

I'm tied to Michigan for the sake of our children. It doesn't have to be Detroit. My parents live up north, hers live here. We insist on our kids knowing their grandparents.

For now save up a downpayment, thats going to take 7 years anyway.
Keep you credit card utilization rate below 40% and keeping it to just 4% is even better.
As a truck driver I assume you are making $50k and your wife is making $30k, for a total of $80k
If you put away 20k per year in 7yrs that is $140k. Maybe keep $40k as a cushion in the bank and do a downpayment of $100k. Your county might offer a 1st time homebuyer program where they will give you a $10k grant for downpayment and even carry another 20% second mortgage with zero interest rate and no repayment after 10yrs.

So if the property cost $200k.
Downpayment assistance = $10k
2nd Mortgage with zero interest = $20k
7yrs Saving = $100k
Actual Mortgage = $70k

I just found this house with 2.3acres and you wouldn't even need to pay a mortgage just $100/month in tax and $100/month in insurance, and then $100/month for your maintenance account, so only $300/month.
https://www.zillow.com/homedetails/46271-Jefferson-Ave-Chesterfield-MI-48047/83652876_zpid/


Or you could buy land in 3yrs cash or the end of this year and carry a note
https://www.zillow.com/homedetails/000-Inkster-Rd-Brownstown-Twp-MI-48174/2088898079_zpid/

Then start planting fruit trees and at the end of the 7yrs. Get a all in one construction to mortgage loan from the bank and have a general contractor build you a dream house for $140k or so, on top of the $60land that is available.

Is your family on board with a more permie/self sufficient life? If so, there must be some kind of side-hustle you all can work. Maybe some kind of off the wall niche crop, or something that could be harvested from forest, swamp, creek, river, or lake, or maybe a product that you could make? There is probably someone in the area who would let you use their land if you demonstrated that you would take care of it, improve it, and pay the taxes. Any neglected orchards or small farm plots, or buildings that you could rent cheap?
In any case, gaining experience in something that really gives you a reason to leap out of bed in the morning will go a long way towards making the "starting all over again" thing a fulfilling adventure.
Get thrifty. Boosting your savings to a lot more than a weeks pay will give you peace of mind and provide options when the road gets bumpy or the right opportunity comes along.  

Just throwing this out there... if every answer I get is "wait 7 years" I'll probably blow my brains out. That is precisely the opposite of why I started this thread.

So with a long term goal of saving $20k per year, lets work on a budget to make it happen.
The biggest thing is putting away that $385 every single week, direct deposit before you even see it. You two make $1154/week after taxes so its doable.
The 7yr limit is there because after 7yrs the foreclosure disappears and doesn't count against your credit score/report.

$80k - $20k for permie dream
$60k - $20k for taxes
$40k - $12k for temp 7yrs housing
$28k - $12k for transportation

$16k - $2.5k for utilities or $200/month
$13.5k - $2.5k for clothes or $200/month
$11k - $7k for food or $600/month
$4k - $2.5k for insurance or $200/month
$1.5k for misc

I have an answer but you might not like it.

In Socorro County New Mexico, you can get property during their back taxes sales. 5 and 10 acre lots go for $65 to $400 each.

...but the subdivision, Valle De Manna, is on a dirt road, a very long one, west of Belen on the other side of I-25.

...to be successful out there, you will need to live completely off grid, you will need a sturdy vehicle, a way to transport water, and a method to do earth works so you don't die of heat in the summer.

purple moosage me and I can give you more details.

There are places like this all over the States....but the places are remote and some are dangerous.

Hi Chris, we were in the same boat albeit a bit younger back in 2008.  As a young couple we were expecting our first kid and shopping for our first house, trying to get credit approval for new- but decent- credit when SHTF.  Lost our jobs.  Lost our apartment and moved in with spouse's grandmother in the basement.  We were on a month to month lease so be never broke lease, but when I went to go pay off what should have only been a month and a half missed rent with our tax return, we found out the apartment owner had already filed a collection action for OVER $5,000 DOLLARS and was taking us to court for it.  He'd beefed up the charges from the rent owed by tacking on repairs for every little bit of regular wear and tear- most of it already existing when we moved in- as well as updates he'd decided to make (things like charging us for replacing carpet in the whole unit when the carpet was fine, didn't need replacing).  I'm an honest person who wanted to pay what we owed but this guy was a shark, and the judge just shrugged and said since we didn't have pics and the apartment manager wrote it down on his little form (he ALSO didn't have pics to prove the damages WERE there.  he just checked boxes on a home made form he made himself in excel) he couldn't say we DIDN'T do it, so he had to side with the landlord.

We filed bankruptcy for less than $1,000 rather than give the turd the satisfaction of one cent.  He was still on the hook for all his lawyer's fees.  It took us 10 years to build back up, but I don't want to say it will take you that long either because much of our build up was figuring out the direction we wanted to go and how to get there.  At 23/24 we were spinning our wheels, directionless because we'd tried doing things the way our parents had, the way we were told WORKED, and we got punished for it.  When I started finding things online about backyard farming and permaculture, I went outside with the baby in a sling and raked up the garden that spouse's grandmother hadn't touched in years due to arthritis and having to care for her husband.  Had...  Well, not a lot of success with the annual crops that first year, but oh boy the herbs and flowers I started from seed exploded, and I got a decent compost pile going!  Everything since has been doing and learning.

So things I have learned during the restart: you can build your credit back up pretty quick with a really basic card (anything they will give you) and doing the thing where you just put the bills you already have on it then pay it off at the end of the month. But if the current economic jig is anything to go by, lending is probably going to freeze up anyway for another 3-5 years as soon as the bubble actually bursts (and it will). With nothing hanging over your head right now, it's the perfect time to start implementing any of those Dave Ramsey methods you might want to try and start trading in cash.  But even better is bartering.  If you're handy or crafty, that's a good use of those skills.  If your job doesn't tie you to a place, you can take the cash you save and buy land just about anywhere.  Cash talks.  Find some place where the codes and permits aren't super strict because then you can DIY.  Get good at framing if you aren't already.  I say any idiot can do framing because.... well let's say I've known a lot of framers and the good ones are GOOD but most of them are young guys looking to make quick cash.  But it's one of those skills that's quick to pick up, and once you've got basic carpentry you can build just about anything (and that can be another income source).  Keep expenses down by doing as much yourself as you can, and make friends with the folks who got the skills you don't (or if not friends then at least have skills they don't so you can trade).  Figure out what modern conveniences you just CAN'T live without then challenge yourself to try living without them anyway.  Whatever you can cut out or find an off grid solution for is another service you don't have to pay a service company for.  When it gets down to it, you can live quite comfortably on very little, using all cash and furnishing a lot from your own work or from within your local community.  And then things like credit and finances and banks and what not don't matter so much.

Chris whats the biggest thing that would make you feel better.

Privacy/No in laws
Would that be not being under the inlaws roof? Even with a foreclosure you can easily find somewhere to rent. I had budgeted for $1000/month but I am seeing prices even cheaper.
https://detroit.craigslist.org/search/apa?sort=priceasc&min_price=300&availabilityMode=0&sale_date=all+dates

Land for Growing
Is it that you want some land, alot of owners will carry a 2yr note with 30% down. with no credit check
So if you found 2.5acres for $60k, did a $20k downpayment and pay off the rest. I know because I did a 33% down last year and got 1.5 acres with the seller offering owner financing, they did no credit check and I paid it off before the end of last year even though I had the option to stretch it out to this year.

Hate Owing Money
Like you I dislike the stress of owing money, so my plan is to build my little house on the 2 acres. So that when it is done, I dont owe anything, I might also cave in and buy 1 of the abutting properties with a mortgage, but like you I dont really qualify. The same person I bought the land from said that he will carry a 3yr - 5yr note on an abutting lot with only interest payments, but at the end of the term I will have to sell or refinance with a regular bank, because he will want his lump sum payment then.

Being too old
I feel like I this entire process is taking me way too long. And likewise you. But you will get thru it. In the mean time I help run a local permaculture group.

S_Bengi

Good Zillow links. But the Certificate of Occupancy in the first link needs to checked. I could be nada or it could be a serious problem.



Rufus

S Bengi wrote:Chris whats the biggest thing that would make you feel better.

Privacy/No in laws
Would that be not being under the inlaws roof? Even with a foreclosure you can easily find somewhere to rent. I had budgeted for $1000/month but I am seeing prices even cheaper.
https://detroit.craigslist.org/search/apa?sort=priceasc&min_price=300&availabilityMode=0&sale_date=all+dates

Land for Growing
Is it that you want some land, alot of owners will carry a 2yr note with 30% down. with no credit check
So if you found 2.5acres for $60k, did a $20k downpayment and pay off the rest. I know because I did a 33% down last year and got 1.5 acres with the seller offering owner financing, they did no credit check and I paid it off before the end of last year even though I had the option to stretch it out to this year.

Hate Owing Money
Like you I dislike the stress of owing money, so my plan is to build my little house on the 2 acres. So that when it is done, I dont owe anything, I might also cave in and buy 1 of the abutting properties with a mortgage, but like you I dont really qualify. The same person I bought the land from said that he will carry a 3yr - 5yr note on an abutting lot with only interest payments, but at the end of the term I will have to sell or refinance with a regular bank, because he will want his lump sum payment then.

Being too old
I feel like I this entire process is taking me way too long. And likewise you. But you will get thru it. In the mean time I help run a local permaculture group.

Of the things you've mentioned, being too old is the biggest one. I'm 48 with blood pressure and edema issues. I probably only have one fresh start left in me. Everyone saying "just hang out for seven years" is really depressing.

As for privacy, it's an issue, but not the worst one.

I don't mind debt as long as I have a chance of repaying it. I just spent 11 years in deep water. Now I want a wading pool.

I want land for growing. I don't mind if it's separate from my house; I don't mind driving to the garden. Unfortunately, that concept is so alien to my wife that years of discussion haven't budged her. I'm just weird.

S BENGI has provided some good specifics.  I have found that credit scores can carry little meaning in specific cases.  I had an employee declare bankruptcy, and she was flooded with credit card offers.  It will take time to rebuild you credit, but maybe not that much.  Plan on needing at least a 20% dp.  You said you are tied to Michigan .... does that include the UP?

John F Dean wrote:S BENGI has provided some good specifics.  I have found that credit scores can carry little meaning in specific cases.  I had an employee declare bankruptcy, and she was flooded with credit card offers.  It will take time to rebuild you credit, but maybe not that much.  Plan on needing at least a 20% dp.  You said you are tied to Michigan .... does that include the UP?

The Eastern UP is definitely an option. My parents live in Harbor Springs: about 30 minutes below the Mac. My wife and I love the Tahquamenon/Newberry/Munising area and could see ourselves there. But from a permaculture standpoint, the UP changes the game. Most of the land has about 3 to 6 inches of topsoil on pure granite bedrock, with substantial elevation changes.

Lets say the foreclosure/credit score was a non-issue. Would you feel comfortable signing a mortgage note with no cushion in the bank right now.

I think your place will cost $250k, and you will need 20% down aka $50k.
$50k means you will have to save for 2.5years.
I would recommend 6months living expense aka $20k in the bank as a cushion, so thats another 1yrs for a total of 3.5yrs.
You will probably end up paying a much higher interest rate on the mortgage but after the other 3.5yrs (total of 7yrs) you can refinance for a small $4k fee, with better interest rate.
Hopefully that 3.5yrs timeframe sounds a bit better to you.


In the meantime you can rent some land and garden. Tell your wife it helps you de-stress and keeps you focus. Its okay if she isn't crazy into seeing an increase in the amount soil life/worm or walking around with a scythe. Its enough if she just let you be and hangout with you outside from time to time. How will she feel about this whole put away $20k/year plan? If you put away 20k for ten years the new permie property would almost be owned outright. Thats retirement money/non-expense at 58.  After that you can buy and rent out a few apartments and you now have retirement money to sit all day and talk to your trees.

> wading pool...

I _like_ that picture!  Great!

> 7 year hanging out...

Well, that's not quite right. You will be following up on the plan all along and many  things will unfold and in all likelihood get better and you will come upon actual choices, some of which might be quite a bit better than you can imagine right now. The situation will grow and evolve real time - you won't have to be sitting watching the clock.

Sounds like you got a bad case of   "Gotta do SUMTHIN!!!  Right _NOW_!"    Errrgh!  And I think you're right to want to keep yourself moving and not just settle into blues.

Seems real understandable and normal. Maybe S_Bengi's idea of arranging a garden for yourself would serve as a real accessible , pretty quick, starting experiment. Low risk, pay out as close to $ 0 as possible. Put a few stakes in the ground and move those old bones around the dirt regular and dedicated. Throw up a shade shed with a couple comfortable chairs for a recovery station, bring a cooler as part of the gardening equipment and start making motions. Putting the body in motion can help settle a lot of frazzled nerves and you have the (absolutely true) excuse that you're developing your future plans and skills. Perfect. Hard to see a down side,

I went through some real bad times once and while I didn't do much of the right & good stuff, one thing I _did_ manage was to avoid any big reactionary moves in life.  When we're worked up or strung out emotionally,  or even just antsy, we generally are not at our decision making or action taking best. From what you say your physical personal situation is somewhat stable and adequate and has some prospect of staying that way, so no big moves are _required_ at this moment. Good. One month from a major milestone event that looks real negative to you now means you're being affected strongly and will be for maybe almost a year. But like I said, I totally agree that you want to keep in motion, facing the right direction and moving.

A garden might be a good choice right now. There will be a  lot of other small/medium sized decisions and changes coming down the pike in the next year and if your plot works for you in any way at all, it will help with everything else.



Cheers,
Rufus

Hi Chris,

Of course, my point was that land is generally less expensive in the UP.  Buying land does not necessarily mean moving.