Everyday Cheapskate: The Agony and Ecstasy of Getting Out of Debt
Dear Mary: We've just received notice that the rent on our three-bedroom house is going up from $950 to $1,200 a month. We were struggling before, so we really can't afford the increase. We have looked at an apartment community, where our rent would be around $850 a month.
I found another home that could be a great permanent family home. This one is a rental, but with an option to purchase. The monthly rent on this house is $1,250.
We have huge student loan balances, and our credit isn't that great. Should we move to the cheaper apartment, opt for the house with the higher rent and option to purchase, or just stay where we are? Thanks for your advice. -- Henry
Dear Henry: If you are already struggling to make your $950 rent each month, how are you going to handle $1,200 a month -- with or without an option-to-purchase clause?
Have you looked carefully at the conditions and terms on that option? Typically, included in those terms is that a portion of the rent you pay each month will be credited against an undetermined purchase price, if and when you are able to buy. That could be a small amount, like $25 a month.
Given the information you've given me -- even if that option to purchase appears favorable -- I would advise you to go with the $850 apartment, provided you keep your moving costs to an absolute minimum.
You need to be seriously cutting expenses, not adding to them. Lower rent plus a strong commitment to go on a spending diet should give you the boost you need to get your debts paid in the next two or three years. Then you'll be ready to start saving a down payment so you can begin looking for a home to buy.
Dear Mary: It's been years now since my husband and I finished a debt repayment program offered through our local Catholic Charities, based on your philosophies and book "The Financially Confident Woman." In two years, we paid off tens of thousands of dollars of debt that would have otherwise taken decades to repay.
When Catholic Charities was contacted by several large businesses and a local hospital about starting a program for all their employees, they asked me to spearhead this project. I agreed as my way of showing gratitude for what we have received.
I want you to know that between you and Catholic Charities, my life has been permanently changed. My husband and I now truly enjoy the love of each other and our three beautiful children. Thanks for changing my life and making frugality something not to be despised. God bless you. -- C.L.