Surviving Foreclosure, by Cindy D.

I know there are a lot of intense feelings out there about people who have had a foreclosure.  I wanted to write about my experience to help others that may be facing the same situation. Even though I may write this very simply and factually, it was a very emotional and devastating time in my life. I learned a great deal but don’t want to ever go through it again.

I want to preface my story with a little background. My husband and I have been married for 28 years and have always been fortunate enough to pay our bills on time. We also had very excellent credit. We were like so many others-ill prepared for the economic “downturn”.  Yes, we spent almost every dollar we had and even those we didn’t have. We owed lots of money on credit cards, PLUS school loans and a car; we even had a mortgage on a home we couldn’t really afford. We made a lot of bad choices! My husband and I both had good paying jobs but never could get ahead or stay out of debt.  My husband had transferred with his job twice since 2000. We moved to another state and then back into our home state. Each time we were fortunate to make money on the sale of our home. We’d take the money to pay off our credit cards, and roll the rest of the cash into a down payment on the next home.  The home that we purchased (that was foreclosed on Sept 2010) was the most expensive. We just assumed we would continue making money when we sold it too.  The plan was to sell this house in 3 years at the same time my husband would retire and we would then move near our families (both of us have mothers that aren’t in the best of health and live five hours away) and use the “gain” to buy a small inexpensive home we could afford on our reduced income.

The problem with our plan was unexpected income reduction. While we didn’t lose our jobs, many were laid off in both of our companies.  Job security began to be a major concern for both of us as each week and month more were being laid off. My husband’s company needed further measures to stay competitive and remain in business so they cut his salary.  I made the adjustment in our Money program and made changes to stay in the black with our budget.   

Our number two daughter came home one weekend to have her father help her to find a good used car. We did not feel we could co-sign for her loan like we did for our number one daughter as finances were much tighter. We did give her a down payment courtesy of our credit card. She went back to work on Monday and was laid off.  She had recently graduated from college and wasn’t in her job long enough to qualify for unemployment benefits. She now had rent, a car loan, car insurance, expenses and health insurance needs. We helped with what we could and advised her she needed to move back home as we couldn’t afford to continue to pay her rent and expenses.  She came home to look for work but couldn’t find anything. She needed to go back to the larger city to look for employment.  We sent money and I made adjustments to our Money program and adjusted expenses in our budget to stay in the black.

Our number one daughter was laid off her job a month later and began looking for another one without success (she lived with us but there were no jobs in our town. The job hunt spread to the large city 1 hour away then the even larger city five hours away).  She had an auto loan that we had co-signed for, auto insurance, a chronic health problem that required regular medical attention thereby requiring she keep COBRA health insurance, and school loans. She had been in her job for two years since graduating from college so she did receive unemployment benefits but not enough to cover all her expenses. I made adjustments to our Money program and budget and began to get concerned. 

Our only son was one semester away from graduating at the state university five hours away. We told him we could not afford to send him that semester and he needed to find full-time employment to pay for school or come home. He looked for a couple of months and moved in with daughter number two but could not find even part time work for more than 10 hours a week.  He was using the 10 year old family minivan for transportation when the transmission broke and he came home. 

A month after our son came home he received an offer for a non-paying internship position with our state government, a five hour drive away. This was one of the many applications he had filled out while looking for work.  My son, husband and I were very hopeful that this might lead to a job offer when the internship was over.  But again it was a five hour drive away. He couldn’t commute.  I looked at our Money program and instead of the brief dip into red and then back into the black, the red continued down, down with no end.  Our son would need a place to stay, transportation, money for food, gas, and a new wardrobe (the job required business attire and our son had a college wardrobe with 1 suit for interviewing).

This is when I realized that we needed to make some big changes.  This is probably where my decision to have our home voluntarily foreclosed has some people going ballistic. We had listed our house for sale and had three or four people look at it – one for every month it was on the market. We also had lowered the price to rock bottom. We had put $85,000 down on it three years ago but were asking less then we owed on it. We weren’t trying to make money or even break even- we just wanted out and an opportunity to help our children and give ourselves a chance to get out from our enormous debt.  No one even made an offer. The Money program was telling us a very bad thing was just down the road.  My husband didn’t want to believe we were just months away from being unable to meet our obligations. He didn’t believe until I showed him all the red. One event, an unplanned expense could ruin our excellent credit rating and make us delinquent on our mortgage. Eventually we were going to reach the point of not being able to pay all of our bills when due anyway and lose our house. 

The first thing I felt we needed to do was secure another place to live.  I had recently come across SurvivalBlog and was a ready believer in preparing for tough times ahead. I only wish I had known things were going to get bad financially sooner or that I had paid attention to all the signs that were out there.  After much debate, we decided to try and get pre-approval for a home loan and we were accepted by two lenders – go figure.  We drew up our want list and what we could afford to pay. (This time is was what we thought we could afford not a percentage of our income. We also figured how much cash we could come up with for a down payment). My husband had more vacation time (as he was with his company for 27 years) so he took off on Fridays to look for a new home.  We were looking in the Southeast (sorry Jim, this was a compromise as we felt we weren’t ever going to move again and we wanted to be near our mothers and our children- within two hours of family). We didn’t want to be any closer then that to the large city.  We felt if worse came to worse all the kids could live with us and still commute to work when they found a job.  Also on the wish list was room for a large garden.  My husband looked all around the state within two hours of the state capital.  He liked the mountains the best but needed to find a home with a suitable spot for a garden. 

Finally after nearly giving up he found our home.  We’re in a small town (outside town limits) in the mountains.  We have a small two bedroom cabin with a loft and full basement.  We cashed in my retirement account (it was small) and a Roth IRA that we managed to put some money into before things started crashing down. We went through the most intense final loan approval we have ever dealt with for our “retirement” home.  This is where 28 years of excellent credit worked in our favor. As this is the last time we will have excellent credit for a long time.  

We closed on our new home in April 2010. We were foreclosed on our old home in September, 2010 after missing four mortgage payments. It is scary to think how close we were to losing everything and being out on the street.  The home we bought was also a foreclosure and had been empty for about 18 months.  It needed some work and TLC.   In summary we have turned over a new leaf financially and are very grateful for our second chance.  Since we have reduced our housing expense we were able to:

  1. Pay off our credit cards (except what we just borrowed to pay the IRS – it’s expensive cashing out retirement accounts early)
  2. Pay off the PLUS loans for our children’s education
  3. Have our son take over the car payment for our newest and only unpaid for car (he got the job after the internship and needed transportation)
  4. Make repairs and upgrades to the house paid in cash – finished two rooms in the basement for laundry and home office. (I’m able to telecommute in my job.)
  5. Fenced in the property and garden with help from our son and our future son-in-law.
  6. Begin self sufficiency prepping: We cut down trees and graded for a garden.  My husband built 13 raised beds measuring 4×10 for this year’s garden and he plans on building seven more, next year.  Bought a dump truck of organic growing mix to fill the beds. The beds are planted with potatoes, peas, tomatoes, squash, eggplant, cucumber, cabbage, peppers, onions and broccoli. I still need to plant melons, winter squash and beans.
  7. Planted grapes, raspberries, blackberries, blueberries, peach and apple trees to be as self-sustaining as possible.
  8. Bought five day old chicks that are now ready to go out into their chicken coop and moveable (think chicken tractor) run in the garden.
  9. Begin self defense prepping: Purchased a shotgun and handgun.  Have several months supply of food, first aid supplies and several cases of canning jars in anticipation of the harvest.

Update on our children [– Omitted by JWR for brevity and to protect the author’s privacy.]

I am very content now knowing that we have a safe and secure place to live close to our family. I would not have chosen this way to get here. I wish I had made better decisions with money.  I have learned many important lessons this year. We did survive foreclosure. It was a very hard decision we made to stop paying our mortgage. We did it to survive financially, to assist our children and to have the opportunity for a better life if the SHTF. It cost us money, our financial reputation and anguish. I don’t suggest it if there are any other options. I don’t expect others to go down with a sinking ship why should I expect it of myself.  Everyone has to make decisions based on what is best for them. If you’re facing the inevitable foreclosure, do something offensive, don’t wait until you are dragged from your home to make plans for housing.  I hope that my experience helps someone else survive foreclosure.