05/23/2013 05:11 pm ET Updated Dec 06, 2017

We Tithe, Pay Our Bills, Are Deep in Debt and Want to Buy a House

Reader Question

My husband was without income or on reduced income for 3 years. We accumulated debt during that time in the name of "just surviving", but managed to spend/owe about $65,000.

We currently rent a house and have 3 children, ages 15, 13, and 10. I have done odd jobs to bring in extra income, but do not have much time to do this because I school our children; 2 of them with learning disabilities.

We pay for our own family insurance plan and my husband has his insurance at his current job.

He has held his position for 1 yr and 3 months and is waiting for the company to get additional contracts to secure his job beyond November.

By the time we pay our tithe, rent, regular monthly bills and all our minimum payments on our debt, we have approx. $1000 a month. That has to cover food, gas, medical co-pays, prescription co-pays, and any other miscellaneous expenses.

We want to begin paying off our debts one by one, but don't have the extra cash flow to do that without missing payments on some of the credit cards.

We understand and are okay with this, even though our credit will take a hit. However, we would like to buy a house as soon as possible. Is it foolish for us to try to buy a house first and then ruin our credit while we pay off this debt?

If not, I thought we would not be able to get a home loan for many years and the rates are low right now.


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Dear Annie,

With that much debt I'm not even sure if you could get qualified for a mortgage at a reasonable interest rate. One of the factors the mortgage company looks at is your debt to income ratio. If your debt is too high then it knocks you out of consideration and puts you in the group of higher risk borrowers that will get charged a higher interest rate.

I understand the house is an emotional wish for you at this point. There is nothing that is forcing you to buy the home. But rather than listen to me tell you it might not be a smart move, I think you should go do some research and find a local mortgage broker to talk over your situation. I like a mortgage broker rather than just a local bank because the brokers represent a number of different lines and might find a program that will fit your situation.

The more critical issue is the $65,000 in debt that has built up. It doesn't sound like you have the extra money to make all the payments on a regular basis. It also doesn't sound like you are able to save money each month and are not current saving for retirement.

So if you don't take the steps necessary to set yourselves up for a better financial future, who is going to be financially prepared to take care of your special needs kids when you and they get older?

What is the long term plan here?

We need to stop thinking of today and envision what your plan for retirement and building an emergency savings account is and develop a plan to get to that point.

Let me toss out a hypothetical solution. What if your consumer debt could go away in about 90 days, you could then repay what you could afford at 0% interest, you could start saving and building an emergency fund in a couple of months and you could buy a house in two to three years. Would that approach work for you? That solution is at hand and possible to give you a second chance to move forward financially better to care for you and your family.

Let me know. Post your responses in the comments below.

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