I saw a post in a group today about a woman who wanted to buy a duplex. She had $45K in cash, $900 monthly income for a disability, and a credit score of under 550. Oh, and she had to find new housing asap due to an untenable living situation.
Any guesses as to what my advice was?
This is a tough one because disability tends to limit how much you can earn from a job. When I worked in an Independent Living Center, we had staff with disabilities who had to reduce their hours every time they received a pay raise. Talk about a messed up system! Unlike unemployment or falling on hard times, their disabilities are not going away. But, I digress…
She had a few things she could do to put herself in a much better position in not a lot of time:
The first recommendation would be to find an inexpensive rental, like a room or an efficiency apartment, or move in with friends or relatives to get away from the current unsafe place. Safety first.
Then, if she did not have something already, she could find a job and work as many hours as she can to maximize her income.
As far as the cash? Put it in a low to moderate risk investment. If she is afraid she will waste it, locking it up in a certificate of deposit is a very safe place. She could even put it in multiple CDs with staggered end dates, just in case she might need a cash infusion.
For the credit score, she could pay someone to help her fix her credit, or she could start by signing up for the three credit bureaus and filing disputes for every derogatory item. Time consuming? Yes, but not as bad as years ago. Worth it? Well, it is definitely worth a shot. She may find that some of her creditors are willing to give her a break and she does not need to do too much to get her credit back up to the minimum needed to qualify for a loan.
She could also look at zillow or realtor.com for houses in her price range that were structurally sound. Since she is paying cash, she would want to keep at least $5K for closing costs, leaving her with a budget of $40K. There are houses available for that. They may not be pretty- and some have very questionable design choices- but it is amazing what a coat of paint can do!
As someone who went from $30K in debt to buying my first home (a very modest singlewide on an acre of land with a detached garage) in 1.5 years, I know what I am suggesting is possible. I sold my newer car ($10K loan) and bought a junker, lived in a family-owned house until it sold, then moved Morgan and I into an efficiency apartment at a very seedy apartment complex (which was mostly used as a place to sleep- it was so nasty we spent as much time as possible down the road at my parents’ house), and poured every extra dime into paying off the debt. I was lucky that I had family to help with childcare. It was not always easy, but it was so worth it!
Too many people want to just give up and say “it’s impossible”! But, anything is possible if you want it bad enough. It may not be easy, it may take time, and you may need some help, but it is possible.
So, what is stopping you from what you want? If that something is a home of your own: Yes, prices have increased dramatically. Yes, there is not a lot available for sale. Yes, the cost of improvements are so much more than two years ago.
But, if you really want a home, there are still some decent deals out there. It may not check all of your boxes, but with a little time and determination, you can make it the house of your dreams. Or, wait a few years until you can sell and upgrade to that “something perfect”.
Giving up and doing nothing will not get you any closer, so what do you have to lose by taking those little steps towards what you want?
Money Moms will do whatever it takes to have a better future for their family. If you want to take your kids on super fun vacations, make sure you can retire on your terms, have money in the bank so unexpected expenses do not completely derail you, and teach your children about money so they are better prepared to handle it than you were, email me about the Money Mom Academy. There is no expiration date so you can learn at your own pace and learn as much (or as little) as you want about all things money, finances, investing, and money mindset. It is a great way to have ongoing access to me, discuss what is going on with your life and how to best handle it, and create a life you live on your terms.