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Lost My Job This Week
Vanity | 07/04/2012 | Ron

Posted on 07/04/2012 5:40:54 AM PDT by Free America52

Lost my job this week which comes on top of 4 years of putting kids to college, etc. Cash funds are depleted and I am seriously considering something I never thought - doing a strategic foreclosure on my house, cashing in IRA / 401(k) funds and paying cash for a smaller house. Just curious about everyone's thoughts?


TOPICS: Miscellaneous
KEYWORDS: foreclosure; unemployment
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To: Free America52

I’ve been there.


21 posted on 07/04/2012 6:04:30 AM PDT by Eric in the Ozarks
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To: Free America52

Note to OP: If you go Chpt. 13, retirement savings does not count as ‘assets’. They are protected.


22 posted on 07/04/2012 6:05:23 AM PDT by firebasecody (Orthodoxy, proclaiming the Truth since AD 33)
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To: cripplecreek

Find a job close to home. A different house may not be the best option if it isn’t in good condition. See Mike Holmes before signing.
http://www.hgtv.com/mike-holmes/bio/index.html
http://www.mikeholmesinspections.com/


23 posted on 07/04/2012 6:07:14 AM PDT by Son House (The Economic Boom Heard Around The World => TEA Party 2012)
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To: Free America52
I too am sorry this situation has befallen you and yours. There is Great advice (imho) on your thread. May God hold you and yours in His Hands. Tough times come and go. God will carry those who go to Him. It will still be tough, though God cares. Good Luck FRiend. Will be in prayer for you and yours.
24 posted on 07/04/2012 6:08:22 AM PDT by no-to-illegals (Please God, Protect and Bless Our Men and Women in Uniform with Victory. Amen.)
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To: GlockThe Vote

hear...hear...., I know the feeling my friend.


25 posted on 07/04/2012 6:10:04 AM PDT by swampfox101
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To: Free America52
paying cash for a smaller house

Generally, rates are low -- 4% range.

I would not cash in savings funds for that. Check your savings funds rates. Your savings account(s) may be earning more than the current home loan rates.

I have an IRA. When I took it out 15 years ago, it had a rider that the minimum rate it would ever pay is 4%. At the time, normal-low rates were in the 8% range. Ironically, it is now my highest interest rate earner.

About 4 years ago, I moved some cash from a money market to 4% CDs. When those CDs matured, they renewed at 2%. At the next renewal they were at 1%.

==


26 posted on 07/04/2012 6:16:05 AM PDT by TomGuy
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To: Free America52

Sorry, FRee America52...yet another Preezy O victim...

Cash in your assets, buy bartering goods, metals, tobbacco, whiskey or pure grain alcohol....time to go Galt.

With this lawless administration, and nobody on “The Hill” willing to hold them to account, it is time to go Galt.

I might be assuming too much, as we are not aquianted...if you can tap your 401 to maintain status quo until January 20, 2013, do so.


27 posted on 07/04/2012 6:16:04 AM PDT by SgtBob (Freedom is not for the faint of heart. Semper Fi!)
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To: GlockThe Vote

Very common situation in Obummers aMeriKa.


28 posted on 07/04/2012 6:23:19 AM PDT by ncfool (OMG 2012)
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To: Free America52
This is just my take on this, but if you're at the point where you're seriously considering foreclosure or cashing out 401(k)/IRA funds, then you probably shouldn't even be considering a purchase of another home. Even for cash. Especially for cash.

As you are finding out, your home is a very illiquid asset that isn't easily sold to generate the funds you may need for other things. If I were in your position I would sell the home outright and rent for a while with the proceeds of the sale before even thinking of cashing out the retirement accounts.

Most important of all ... you need to slow down, step back, get advice from people who know a lot about these things, and think carefully before doing anything that could have serious unknown tax consequences later.

29 posted on 07/04/2012 6:25:48 AM PDT by Alberta's Child ("If you touch my junk, I'm gonna have you arrested.")
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To: Free America52

What kind of leasing market do you have in your area? Depending of how much you are underwater on your current home it might be make sense to lease your current home if the lease would cover much of the current mortgage payment rather than defaulting. Next step might be to rent rather than buy a smaller place while looking for another job.Do you want to exhaust all your emergency reserve in the IRA in an all cash purchase of another home? The longer you can retain your IRA as a emergency reserve while looking the better.


30 posted on 07/04/2012 6:27:22 AM PDT by chuckee
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To: Free America52

I’m just thankful for you that you did not lose your job at my age with my financial situation. Pay cash for a smaller house? I probably wouldn’t qualify for a small rental. I’m holding onto the home I’ve had for 25 years, just praying our corrupt politicians don’t tax me out of it. I’ll never live long enough to find another job.


31 posted on 07/04/2012 6:27:39 AM PDT by arrdon (Never underestimate the stupidity of the American voter.)
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To: Free America52

If you are not 59 1/2 you will be hit with a penalty.
Everything you take will be taxed as ordinary income, so you most likely will take a big hit there because you will be in a higher income bracket. Run the numbers.
Conceptually I like the idea.
Two years ago, I would have said “what foreclosure”, now. It might be a good idea.
God’s Speed. Think very carefully about your idea, every which way you can.


32 posted on 07/04/2012 6:27:55 AM PDT by svcw (If one living cell on another planet is life, why isn't it life in the womb?)
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To: TomGuy

If you have a good amount in retirement savings take a loan from it for four months of your problematic mortgage payment to give yourself so breathing room to access and network.

Cut expenses. Apply tomorrow at your companies two best competitors. You may be a fresh asset to them.

Do all the employment efforts you can compile. Take any offer that will keep the lights on. I have seen people turn down an offer as too low that months later they wish they had taken.

If you are upside down due to borrowing on the house that is a separate issue — treat it that way.

Best wishes.


33 posted on 07/04/2012 6:29:05 AM PDT by KC Burke (Plain Conservative opinions and common sense correction for thirteen years.)
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To: Free America52
Something else to think about ...

This is easy advice for me to give when I'm not in your situation, but if your kids are grown and you don't have a compelling reason to stay where you are I would advise you to be open to the possibility of relocating. There are places in this country where good workers are in high demand. Maybe you don't have the ideal skill set for some of these jobs, but your best assets are a good work ethic, flexibility, and a willingness to learn. A wise employer would covet someone with these attributes, regardless of the job in question.

34 posted on 07/04/2012 6:31:07 AM PDT by Alberta's Child ("If you touch my junk, I'm gonna have you arrested.")
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To: Free America52

Sorry to hear it, FA52. But every cloud has some silver and you will find it; don’t lose heart.

Now about advice...even folks who emit advice incessantly, will not be able to tell you much without some details, which understandably you might not want to impart on a discussion forum where we enjoy anonymity.
So my advice will be general and limited.

If your kids are grown and flown, you may have too much house there. Is the mortgage substantial? With unemployment insurance, would it be in the budget? You might want to think about downsizing, even in a bad market. Strategic foreclosure, as you phrased it, can get complicated. First order of business would be to talk to an attorney and then the lender, explore lower payment options, refi, and the acceptability of various other avenues, like renting out the house and moving to another, whether purchase or rental.

Just to be on the safe side, the first thing I’d probably do in the situation: find a house in foreclosure, or a decent house going to sheriff’s sale, and buy it for cash while you still have some lying around. It is your safety net and you may one day need a safety-net house. Owner-financed homes and sheriff’s sales are out there.
You can pick up a good home for $2k or less. It won’t be the prettiest in the litter, but you must regard it as a temporary thing, a stepping stone.

And remember, when you meet with your lender, the very last thing they want is your house. They will negotiate if at all possible, and it usually is.

All is not lost. You have experience, assets, and your family. You are in very good shape, when you think about it. Don’t let this rattle you and weaken your assets or your family ties.

Cut your expenses right now. Can you live without the tv? Lower the insurance payment on the car? Live with fewer cars? It’s amazing what you can save by chatting with your insurance agent about the legal minimum of car insurance. :)

You should also talk to the local tax office and see if, given your age and income, you qualify for a discount on your property taxes. In some areas, if you’re not employed, there are some taxes you don’t pay, or pay much less.

Finally, look for a job. Any job. You never, never know what’s behind a door, and what seems like a lowly job, a bitter comedown, may actually increase your overall happiness and contentment. I’ve known people who started driving a cab or delivering pizza, and found it preferable to the career they left. Others take part time jobs and discover they can live very well on part time income.

What seems a catastrophe now, may turn out to be a blessing. The two are easily confused.

Finally, God’s got your back. Don’t forget to thank Him!

LL


35 posted on 07/04/2012 6:47:18 AM PDT by Lady Lucky (If you believe what you're saying, quit making taxable income. Starve the beast.)
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To: Free America52

Just remember that your mortgage is your strongest tax-lowering mechanism. Talk to your tax preparer about the implications of your plans. Also, if I may say so, the only way to make real money is to go into business for yourself. If you have a skill and the time to knock on doors and make cold calls, you have a job.


36 posted on 07/04/2012 6:51:40 AM PDT by golux
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To: Free America52

Instead of selling your home, what about renting it out and you rent something cheaper yourself until things work out? Someone I know did that, eventually found a job again and was able to afford to move back into their home. Worked out for them because the value of the property had increased greatly over time. Not sure how that would shake out with your situation and this economy, but just another option to consider. Particularly if you don’t really want to lose that home.


37 posted on 07/04/2012 6:51:55 AM PDT by Ladysmith (The evil that's happening in this country is the cancer of socialism...It kills the human spirit.)
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To: Free America52
In 3 1/2 years (age 59 1/2), you won't have to pay the 10% penalty on withdrawal of 401K savings.

If your only serious debt is your mortgage, you shouldn't have to seek bankruptcy protection.

You are wise to consider, now, going through a short sale or deed in lieu with your mortgagee bank. If you no longer need a house the size you own, why keep paying for it.

Restructuring your lifestyle is not in lieu of looking for a new job, it gives you peace of mind which allows you to concentrate on moving on.

Congratulations on getting your child her education. It will serve her well in life, as well as your example of bearing up through thick and thin.


38 posted on 07/04/2012 6:52:49 AM PDT by kenavi (Obama doesn't hate private equity. He wants to be it with our money.)
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To: Free America52

Prayers


39 posted on 07/04/2012 6:53:38 AM PDT by Coldwater Creek (He who dwells in the shelter of the Most High will rest in the shadow of the Almighty Psalm 91:)
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To: Alberta's Child

“f your kids are grown and you don’t have a compelling reason to stay where you are I would advise you to be open to the possibility of relocating. “

Very good advice. Pessimism is your enemy. Avoid it as best you can.

I would also think about whether or not your personal beliefs and politics are known where you work and may have played a role. Stranger things have happened. If this is a possibility, you might want to look into legal options, but this is a long and painful road.


40 posted on 07/04/2012 6:57:45 AM PDT by pieceofthepuzzle
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