I don’t know about you, but lately my list of things to get done is growing a mile a minute. The dreamy thoughts of a relaxing summer have pretty much vanished. I don’t know if it’s just the pull of the waxing moon or if everyone is feeling this mounting avalanche.While it seems natural that events and needs ebb and flow, I have certainly felt my share of waves crashing and mixing up the calm the sand into a storm of cloudy, grit.
Last summer I built myself a zero-based budget. Every single dollar had a job and an allocation. My husband and I were not sharing our money yet, and my budget was the best thing I had ever done. My money worries drained away. When my husband saw the results of my zero-based budget, he started to get on the same page with me.
We also had an offer on our home at that time so we started looking at houses, soon to expect our 2nd child. Little did we know that the first two sales of our home would fall through and we would need to make a small deal with the financial devil to bridge the gap between buying our new home and finally selling our old one. Actually, it was my husband’s home. He purchased that house during his first marriage and I was ecstatic to be a home owner and finally into our own house with just our (my husband and my)history.
In the spring of 2018, my husband and I took all of the steps to open a joint checking and savings, order new checks and create a joint zero-based budget. I read the Total Money Makeover by Dave Ramsey and within 2 months we had money in all of our budget categories and started our debt-snow ball. This was a MAJOR money accomplishment. My husband and I were on the same page, sharing our resources, and setting ourselves up for success.
Then came the second round of major layoffs at my job. While I have managed to survive both major layoffs, there is a price paid in my emotional health and overall morale about my employer…not to mention my exploding workload and stress. My husband and I had deep discussions about me leaving work altogether. It seemed possible. It seemed likely. I started to look forward to it. But there was a catch….the financial deal we made to secure our new home (pre-Dave Ramsey, mind you). We are required to refinance within one year which will repay the bridge loan in full. Since we were thinking I may be leaving my job, we decided at the 6 month mark, to start the refi process. We wanted to show our dual income to secure the loan.
Everything seemed to be in our favor. We had purchased a nice older home in an upscale neighborhood. We have a home owners association which helps protect our home’s value. The home has been maintained meticulously. We thought for sure the home would be assessed at a higher value than what we actually paid for it, and it was, to a degree….and here is where it gets sticky. When you refinance a home, they will only give you 80% of what the home is assessed as being valued at. And no, Zillow and other home sites are not accurate assessments of a home’s value. If that were the case, we would be in a much different predicament.
Essentially our home would need to be appraised at 30K above what we purchased it at. Not a far stretch at all. However, our mortgage officer had told us that the assessors have been appraising homes very conservatively. I also did some research and read that this is a common tactic leading the home buyer to pay for a second appraisal or appeal the first one at the very least. Our appraisal came in at the half way mark, adding an additional 16k onto the closing costs. OUCH!
So here we are, finally caught up with our budget, paying down debt and now we will need to scrape together an additional 16K which will wipe out our budget and leave us juggling for a few months after the refinance is completed. It’s doable, but it’s STRESSFUL. I will need to use our Christmas fund which I was so proud of finally having funded.
On the positive side, we have nearly the EXACT amount in our accounts. Maybe this is God humbling us and setting us up to cobble together baby-step 1 all over again. Maybe he is tearing away our finances and will build us even stronger as a COUPLE and we build our resources back up and dig ourselves out of debt. The other oddly positive thing about putting down an additional 16K is it makes our payment significantly lower. In fact it would bring it down to 28% of our income (Dave recommends 25%, no more than 30%). Funny how this is all working out. Lastly, we will be able to submit a tax grievance in the spring. Armed with a current professional home assessment, we will likely see a significant reduction (15-20%) in our property and school taxes, which would also decrease our mortgage.
While I can see the potentially positive outcomes of all of this, it feels REALLY uncomfortable to be in this situation. I am motivated more than ever to get out of debt!
How are you weathering August? Have you been thrown for any loops?