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Thread: What should we do to avoid disaster?

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    BalefulHead's Avatar
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    #1

    What should we do to avoid disaster?

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    So my husband's been in for 17 years or so -was aiming for retirement soon.

    I'm full time college mom - a few years left of schooling and I'll have a degree in business management.

    We have 4 children - all under the age of 14, still in school.

    He's National Guard (Active Duty) and has been on the same orders for a few years. Just recently rules have changed and in an effort to cut military budgets down - those who have been relying on renewed orders for fulltime employment are getting the axe (I'm sure not all are - but he is). Other than military experience he has nothing else to fall back on.

    So he has 8 months to either A) find a new position within the military that will be a set of new orders or B) Cut lose of the military when the time comes and try to get into civilian life/employment (hard to do now more than ever) or C) follow through with our plans to open a small business - which requires us to be able to pull out a small loan to get started.

    **********

    Our financial situation:
    We're not upsidedown on our home - last year we were suppose to be moving so we've had it appraised and after remodeling is finished it will be marketed at $120 - $140 K . . . we are considering the option of being able to rent it out.

    We've maxed out our credit cards:
    Just over 9K in CC debt to pay off - most of it went towards home improvement. Thus: our credit ratings are in the crapper. Other than CC debt and debt on home/mortage we have no other financial issues in a negative way.

    We are paying on two vehicles:
    My husband has a sports car - with 3 years (9K) left to pay on it.
    I have a minivan - with 5 years (17K) left to pay on it.

    His work vehicle bit the bullet last week - the transmission died. So he's having to drive his sportscar to work (which is tanking it's value).

    We have 7K in savings to play around with.

    We have about 800 extra each month - more if we slash and burn our expenses and tighten our budget significantly.

    *****************

    So - what to do? What's the best course of action to take?

    Should we rent the house out as soon as possible - move into a small apartment or rental house much closer to my school and his work?

    Should we trade the sports car in and get a vehicle he can drive to work instead - putting a significant amount of our savings towards a downpayment to try to avoid financing at all?

    Or - to improve credit scores (to be able to possibly get a business loan) should we focus on paying off all of our credit debt (or most of it - not 100% to keep our lines of credit open at least)

    What would be best? We have 8 months to figure this out and get things moving. Any advice would be great - we just have a lot to do and I'm a bit lost and afraid of throwing all of our eggs into one basket (like we've been doing) and then the basket breaking.
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    #2
    I would say your best course of action would definitely be to move into a smaller and more affordable place that is closer to your job/school. Not only will this save you in gas (regardless of what you chose to do about your husband's car), but will not put as much wear and tear on them. I think focusing on your home and car situation is going to be a more immediate financial help than trying to improve your credit score (although you should try to put some towards your debt every month, obviously) right now.
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    #3
    (edit - thank you . . . I feel the same way, too - we can rent the house - something we were planning on doing if we relocated anyway - and move closer. Cutting some of our costs down significantly. Right now we're shelling out around 400 for gas because of our distances we have to drive for school/work every day)

    Ok - I'm sure people will reply to this as time goes by . . . but I thought that as I learn more from sources outside of this forum I'll share for people in the future who might be reading and might want to know.

    According to this article at CNN our credit scores will benefit more if we pay significantly towards our credit card balances - and not closing any.
    6 steps to improve your credit score - Aug. 26, 2010

    What I'm considering, then - is to sell our sports car and use that money to fix the small car and put the remainder back into savings and towards some more of the credit card debt.
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    #4
    Well - we've solved our vehicle situation and reduced our credit debt some. We traded in the sports car for a smaller more fuel efficient used vehicle, it's old - it's dicy, but buying it was as much as fixing his current work vehicle so it's a wash.

    I've tightened up our budget - and will continue to do so (some things take a bit of time to get squared away) - but in a month or so we should be in less debt and be able to put a significant amount into savings.

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