Home & Leisure



Income issues, rising debt put former homeowner in a difficult position

Ilyce Glink and Samuel J. Tamkin, Tribune Content Agency on

Q: Thanks for your financial newsletters. You helped me back in 2008 when the Great Recession hit, and I was able to save my townhouse from foreclosure.

Fast-forward. I moved to Sonoma County, California, about 10 years ago. I unfortunately sold that home in 2020 due to many reasons. One of them was that our income was not, and has not been, stable. I also didn’t realize that buying a bigger home would be so expensive to maintain.

In 2017, when the wildfires hit, everything changed. Home values went way up! We sold our home and made some money. My goal when I sold the home was to get a better paying job. I did that, and then I wanted to buy another home at some point.

We hoped to put down 20% on a new home when the market went from a seller’s market to a buyer’s market again. But that never happened. Now I’m wondering whether I made the right decision to sell. I’ve run through all my savings from the sale of our home and no longer have a down payment.

Worse, now I have debts. I’m trying to figure out how to pay off $30,000 in debt. While I make more money, my rental payments are more than 30% of my income. My sister lives in Connecticut, where it’s cheaper, and has asked me to move there. But, my parents are older and I want to be closer to them. Where do I go from here?

A: Thank you for being a loyal reader of Ilyce’s newsletters; we’re glad they helped you during the Great Recession. But we’re so sorry to hear that you’ve dug yourself into another hole. We have some questions, but we’ll try to give you some guidance going forward.


We suspect you came out of the sale of your home with a sizable profit, as real estate values in Sonoma County have boomed during the last 10 years. What happened with the money that you got from the sale of the home? It seems that the cost of living in Sonoma got out of hand and started to eat into your savings. (Trust us, we understand, having recently visited California’s wine country.) Once that was gone, you took on debt. We suspect your income instability may be partly to blame.

Given your income issues, spending less is a top priority, especially if you hope to stay near your parents. Ilyce’s advice over the years has been that you need to budget based on your known income only. That budget should include a percentage that you should set aside for emergency expenses.

That means, if your after-tax income is $5,000 per month, you should try to set aside $500 per month for your emergency fund and live on $4,500 per month. If the only home you can find will cost you more than $2,000 per month, you either have to find a way to augment your income (a second job or side hustle) or reduce that overall cost by co-renting with someone else (so your share of the rent will be less than $2,000 per month).

If you can’t find a way to make it work with the cash you earn today, and you can’t increase your income reliably, then you have to consider Plan B. Maybe that’s moving in with your parents or it’s moving across the country to live with your sister.


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