Sorry for the horrific title, but my situation is confusing and I’m trying to be as smart as possible about a very constrained situation, almost none of which is my doing. (Essentially, the loss of my reserves and the debt portion are circumstances brought in by my family members.)
I am about to go to closing to buy the house I live in, which I can only do because it has an apartment I can rent out (I need to paint it and do minor repairs).
This transaction is contentious, and I am buying the house from a family member. Because of their bad decisions, I have house-related debt on credit cards, and it was supposed to be resolved in the closing but was not. That circumstance wiped out my cash reserves — which were modest. I am young to be a widow, and consequently will have one income forever.
With respect to debt, I use YNAB and NEVER spend unbudgeted money. I am not a person who uses credit cards without pre-budgeting, so I’m not worried about creating debt. There is no chance I will have issues with credit card debt because I don’t use them that way.
Obviously, this situation isn’t ideal, but it’s the best path available to me – I never want to remarry, and the rental income can stand in for my husband’s income. A second job wouldn’t work because my day job takes up all my time and I barely have time to do other stuff as it is.
Because I’m buying from a family member, the amount I’m paying is WAY under market/the appraised price, and after closing I should have significant equity on paper. Having this debt that isn’t truly mine has been financially and cognitively draining, and I don’t want to have uncertainty if I can avoid it.
My questions largely involve whether and how I can leverage equity to give me breathing room. I’d really like access to a few months expenses until I have them in cash, and I’d like to consolidate this debt so my cards are back to all being at zero balance/PIF monthly. If possible, I’d like to do very modest repairs for things that have worn out since me and family member moved in about 8 years ago. (If there’s a better approach or ANY insights, please tell me.)
I know my situation is not normal on PF, but I am a financially organized and responsible person who is aware of how risky not having access to liquidity is and how precarious my position will be. None of my current difficulties are a result of bad financial choices, but I also want to really ensure every move I make is going to lead to the security I once had (savings, no debt).
I can give details, but if anyone has ideas about optimizing my situation, please let me know. I’ve been trying to figure this out since the final numbers came in and I feel like I’m not getting anywhere. Thanks, PF.
Edited to add: I’m taking my son to the movies tonight, so I’m not abandoning the discussion but will be out for a few hours (I just got the inbox alert). Thanks.
ETA: FHA loan if it matters.