Follow up on Advice-- Results

[lostgator]

Hi Everyone,

I tried to respond to my original thread but after I had written everything out I got a message that it was too old to reply to. My original post, outlining our situation back in 2011 is here: http://www.early-retirement.org/for...decide-whether-or-not-to-refinance-58295.html

In short, I actually did sell the empty lot and that turned out to be a huge blessing for us. We have since paid off both second mortgages and our current balances on our properties are way down. We still owe $533k on the beach house and $409k on our primary residence. Importantly, our primary residence appears to now have substantial equity ($150k). Our beach house is still underwater but it currently is not costing us anything to hold. This will change if interest rates go up though.

Getting rid of our HELOCs and taking other means to reduce our expenses has also resulted in our ability to max out retirement accounts. We both opened up 457b plans and we currently have $460k in our retirement accounts today.

Its not the best situation, but a step above what I posted in 2011. I wanted to take a minute and thank the people that responded to my original cry for help. It made a world of difference and I appreciate it so much.

 

[prudent_one]

Congrats on your progress!

 

[MooreBonds]

In short, I actually did sell the empty lot and that turned out to be a huge blessing for us. We have since paid off both second mortgages and our current balances on our properties are way down. We still owe $533k on the beach house and $409k on our primary residence. Importantly, our primary residence appears to now have substantial equity ($150k). Our beach house is still underwater but it currently is not costing us anything to hold. This will change if interest rates go up though.

Getting rid of our HELOCs and taking other means to reduce our expenses has also resulted in our ability to max out retirement accounts. We both opened up 457b plans and we currently have $460k in our retirement accounts today.

Congrats on the progress!

In your original post, you mention your primary residence has a high 30 year interest rate. Did you ever refinance that? Rates are still low enough that it would make sense (and check out penfed.org for great rates on mortgages, along with the fact that you aren't raked over the coals with tons of fees at closing, like most other finance companies, since they are a credit union serving you). Also, it sounds like you might have 20% equity, and therefore would avoid PMI on your mortgage (which could be several hundred $ per month savings!). So a doubly good reason to refinance that if you can into a much lower interest rate, or even if you can just get rid of the PMI (but you should be able to improve the interest rate even just a little bit).

 

[38Chevy454]

Sounds like you are getting the ship turned in the right direction! I agree to look into refinancing the primary house mortgage if you can. If your numbers are right, house value is $560K, so you are over the 20% minimum equity to refi. You are actually at approx 73% loan to value, or 27% equity in the house.

 

[Bestwifeever]

What a great post! Thank you for updating us! Your retirement account balances are amazing for having started them since your original post.

 

[lostgator]

Just to clarify, we actually DID, finally, get a refinance on our primary residence. No "national" mortgage outlets would refinance it for us because there were no comparables in our area that met "the guidelines" and our mortgage was for over 417k, so we took the situation to a local bank who holds the mortgage in-house. We got our refinance at 4% for 15 years and we have been paying that for the past 2 years, I believe. So, without the exact numbers in front of me, our total mortgage situation looks like this:

Primary: $409k @ 15 year fixed (original balance was $465k when we refi'd)
Beach House: $533k @2.875 but it varies every year...Right now, we are benefiting greatly from the low interest rate environment.

Once we could breathe again, so to speak, I noticed that our school offered a 457b account and we both signed up. Around the same time as selling that beach lot, getting rid of the two HELOCs and buying down the balance on our primary home, our expenses went down enough to max out all these retirement accounts. Of course, here we are benefiting from the Bull run.

In short, I look back at selling that beach lot as the magic pill that got us back on track. Whether we made exactly the right calls with the above steps is to be debated, but I feel 100% better than I did when I came to you guys originally and I wanted to take a minute to say "thanks!"

 

[ERD50]

Hi Everyone,

I tried to respond to my original thread but after I had written everything out I got a message that it was too old to reply to. My original post, outlining our situation back in 2011 is here: http://www.early-retirement.org/for...decide-whether-or-not-to-refinance-58295.html ...

You certainly can reply to an old thread, that's a warning only. Just click the box to acknowledge that you know it's old.

http://www.early-retirement.org/for...er-or-not-to-refinance-58295.html#post1526365

-ERD50

 

[BigE]

Thanks for the update and CONGRATULATIONS on you/wife's disciplined approach! Had to go back and read the original thread again, good stuff. I assume you sold the beach lot for at least a small loss and I assume you wrote this off as a capital loss on your personal taxes.

 

[clifp]

Lostgator

I really appreciate you coming back and giving us an update. I went back and reviewed the thread and I remember your situation. I did my normal 2 sentence do X post which I generally give to newbies asking for advice. Once you proved persistent, I gave your situation a more detailed analysis and advice. Nords gave you some tough love which is a bit uncharacteristic of him.

I guess I probably took me an one to 1.5 hours to think about and write the posts. I like giving advice, but still even being retired there are times I wonder why do I bother spending an hour writing advice to a stranger. It's probably worth to them exactly what they pay for it. So it is always nice to hear that was listened to taken seriously and best of all seem to help.

 

[lostgator]

I think I clicked the "it is old but post anyway" link and it still blocked me. I looked at my older thread and someone mentioned that my low post count probably prevented me from completing the post.

Bestwifeever--we were contributing at the time of my first post, but not very much. I recall that we were contributing at or just above the match. I mentioned to my wife that we (and the university) had contributed just about the same amount in the last 2 years as in our previous 8-10, respectively. What a blown opportunity! Still, we are certainly pleased with bringing our retirement accounts up so much. Looking at the numbers, it actually makes me wonder if we had more at the time of our original post, but I am pretty sure that I took the time to lay out our situation as accurately as I could back then. I think we are just benefiting from the recent stock gains.

To an above poster: We took a big loss. My accountant quipped that we would have $3k (I think) to put against our future losses for pretty much the rest of our lives! At least we have that to show for the sale.

Clifp--I definitely did listen and I am glad you (and others) shared your thoughts. I think it helped me out immensely, so I am very glad that at that moment in time you decided to lay out your opinion so thoroughly. I know some felt I was close-minded and ignoring the advice I was receiving, but that wasn't the case. It is scary to think that had we sat on our hands, we would likely be just a few more years down the road with our minimum payments! I am basking in the lack of a $3k property tax payment on that lot, as it would be due right about now! I did a poor job of "keeping in touch," so to speak, but I haven't forgotten the good advice I got here. Again, that is why I wanted to check in with a follow-up and again, thanks to everyone who took the time to weigh in on our situation.

 

[heeyy_joe]

In time, that beach lot you sold will really be under water. Nice job!

 

[Texas Proud]

Just a question.... why have a variable rate on the beach house I would lock in a fixed rate and not have to worry about interest rates going up..... which they will eventually....

 

[Nords]

Glad to hear the news, Lostgator. Thanks for the update.

Nords gave you some tough love which is a bit uncharacteristic of him.

I guess I probably took me an one to 1.5 hours to think about and write the posts. I like giving advice, but still even being retired there are times I wonder why do I bother spending an hour writing advice to a stranger. It's probably worth to them exactly what they pay for it. So it is always nice to hear that was listened to taken seriously and best of all seem to help.

Perhaps I was reminded of all the other posters over the last decade who've kept digging.

Maybe you like giving advice because it's a good way to check our own situations and make sure we're not missing anything!

 

[Katsmeow]

Thanks for posting the update... Whenever people ask for advice on a situation, I always want to know what ended up happening.

 

[lostgator]

If this is a duplicate post, I apologize. It appeared that what I had written was not saved! I had copied what I wrote, so it is below:

Hi all,

I thought I would provide a quick update on our situation. As you can see above we sold that empty beach lot and it continues to pay dividends for us. In fact, I look back on that decision and I regard it as one of the best (if not the best) decisions we have ever made. Nothing has changed in the real estate market down there, so our situation in terms of property values would have remained unchanged in the intervening years. We would have just had 2-3 more years of property tax bills and servicing the large HELOC bills that we carried as a result of not having the cash to pay them off. However, selling the lot and unlocking that money has changed everything for us! It allowed us to pay down lots of debt (150k+), which saved us lots of interest. This also allowed us to refinance a gigantic mortgage into much more favorable terms. We are now just a few years into riding that decision.

Today, we have 620K in our 403b and 457k retirement accounts combined. (We also have $231k in our own contributions to a state pension plan, which I assume, in a worst case scenario, we could take in cash if we both left our jobs since we are both vested, but I put this in parentheses because I don't know how this works--we plan on enjoying a pension when we are 60).

Our mortgage balances are 357k (primary) and 498k (beach house). Our primary residence would sell for $600k and our beach house would sell for $450k. I will say again that these are "fire sale" prices, as I believe these numbers represent the very minimums of what they would actually go for. Our income remains the same; basically $200k between the two of us.

Anyway, I just wanted to chime in and say "thanks" again for your advice. I check in often; I just don't post often. But as a college professor I can appreciate how frustrating it is to invest your time into preparing lectures (or posts) and wondering if anyone out there is even listening (I hear you cliffp). I just wanted to update again so you all could see the fruits of your advice. We are sleeping like babies relative to how we were 5 years ago, and are actually now thinking about buckling down to saving for an early retirement. We can still trim a lot of expenses, so we are planning on 2017 to be our best year yet.