Dashiell at eight months
Guest post on Green Mom Guide

Debt Reduction: Should we do something radical?


Now that we've identified our ideal life, Chris and I have been thinking a lot about our finances and how we can shift money allocations to achieve that life. Your feedback on our budget also gave us a lot to consider - thank you so much! That's why I love sharing our finances.

A few of you commented that you don't have a huge "emergency savings" because you know that if something significant happened you can use money from other budget allocations, such as travel, entertainment, and savings, to get by. We realized that this is also the case for us and that it might be time to shift our emergency savings allocations to paying down debt. 

Once we started talking about prioritizing debt reduction we began brainstorming ways that we could pay down debt more quickly, even if they're a bit radical. In particular we started wondering if we should:

Rent or sell our house. We should be able to rent our house for an amount that is at least equal to our monthly mortgage payment. Or if we sold our house we should be able to make a profit of about $20,000. Plus, we have about $25,000 of equity in the house. We could put some of that money towards paying down debt and save the rest to buy back into the housing market down the road.

If we went this route the thought would be that we would find an alternative living situation for 2 - 3 years before possibly buying another house. Of course, renting or selling our house would mean moving out of our house. We would want to find a housing situation that allowed us to lower our monthly living expenses so we've considered living:

With friends. We have close friends who might entertain the idea of renting a house together for a year or so. By combining our living expenses we should each be able to save money. Also, it could be really fun to live with friends for a while, especially since our babies are the same age.

In a small, cheap apartment. It would be an adjustment to say the least to move from a nearly 1,800 square foot, 4-bedroom house to a small, probably two- or one-bedroom apartment. But if we were able to make a dent in our debt it's a sacrifice that would be worth it.

With Chris's parents. This would be the option that would lower our living expenses the greatest. Chris's parents would be willing to let us live with them and pay only a portion of utilities and for our groceries (amazingly generous!). The savings would be great but it would be a full house with all five of us and our commutes would be extended by at least 20 minutes, likely more.

When we first started discussing these options I couldn't imagine selling our house. Our house isn't my dream house but I do love it; it's comfortable and open, we have great neighbors, and we like the area of town we live in for many reasons. Plus, at $1,250, our mortgage is really affordable for us.

But the more I thought about what selling our house could mean I started warming up to the idea. I want to remain open to options and be willing to sacrifice in the short term if the end result gets us close to our ideal life, even if it feels a little scary!