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Getting back on track

May 17th, 2008 at 08:52 am

So the goal was always... retire in 2017, DH will have his pension at 38 of around $2500 to $3000/mo. So what was I to have? I don't work at a government job nor does my company even have a 401k plan... so I opened a Roth IRA and we bought a house in the goal that we could use it to pay for the kids' college (or at least help) and then the rental income could supplement my retirement since I lack a pension.

We have two houses now... and I'm seriously not entirely sure what to do with them. I love our current house... there is seriously nothing about it I hate. Our old house is in a good price range for most families in this area, we have good tenants.

I think most of my problem started with reading "Automatic Millionaire" - David Bach kept saying "don't sell your first house" so we didn't.

Right now we are operating on a $6000-$7000/yr loss. Which is good when it comes to tax time... last year our W2s totalled to $77K... but with the rental loss it lowered our AGI to $69K.

So I don't know. This year we should make $115-$125K and I appreciate the rental loss kicking in to reduce our taxable income. But perhaps that isn't the best thinking.

Then the other part of me tries to avoid thinking about it cause it is stressful. Could I really pay off a $223K mortgage and $26K HELOC in 9 years?

Probably... and in that case it would be worth it, I guess. Again, I don't know... still thinking. But needless to say these two houses are the last ones I plan on buying till DH is out of the military.

Dh's idea was when the tenants leave to sell the rental, and then use the proceeds (hopefully if there are proceeds) to pay down the balance on this house and rent it out.... cause even if we leave here there may be a shot we'd have to come back.

Again, I don't know. Feels overwhelming if I try to tackle this huge issue.

Right now the mini-goal is to pay off the CC... then cars... then HELOC... then my student loan.

Posted in Goal Setting and Negotiation | 4 Comments »

4 Responses to “Getting back on track”

  1. managinglife Says:
    May 17th, 2008 at 09:08 am

    Welcome! This site's bloggers will give you great advice to your financial situation. Have you thought about a written financial plan with goals (monthly, annually and long term). This helped me and DH to prepare for our military retirements and beyond. I look forward to your financial progress in the black!

  2. Ima saver Says:
    May 17th, 2008 at 11:24 am

    As I mentioned earlier, owning rental homes was the worst move I ever made financially when I was younger. I sold mine at a loss but not having that stress anymore was worth it. It was a lesson learned.

  3. mom-sense Says:
    May 17th, 2008 at 06:51 pm


    Welcome, we have two houses as well - we kept our first one as a rental property. We were thinking about selling it awhile back. with the market the way it is now, it makes the most sense to keep it. but it is diffiult to save for retirement and education at a rate which I would like to.

  4. noppenbd Says:
    May 19th, 2008 at 06:18 am

    Maintaining a rental unit that loses $6000 a year is a disaster. Even in the 25% tax bracket you are only saving $1500 in taxes!! In a post you mentioned losing $600 a month. That is assuming you don't have to make any more repairs to the house, ever! I think you are rationalizing this purchase so you don't feel bad about it. You should try to look at it from the outside, as if it were a business decision, and don't think about the money spent, just future pluses and minuses.

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