The reason I put "where do I start" is because I have so many goals and just have to pick one and stick to it. I love the idea of a new year and a new start (although I only have 11 more months - more or less, LOL).

Ok - here is a little about my financial picture. I was in an abusive marriage and divorced in 2007 (finally). I bought a new home as soon as the divorce was finalized so that I could live somewhere that my ex couldn't find me. It probably wasn't the smartest decision financially but it was one that allowed me to feel safe. Because of the divorce though I now find myself with 2 homes - one I am living in and one I am renting out since I am upside down on.

I also have to be careful because my ex has a home and a piece of land both with mortgages and my name is on those loans. If (more likely when) he quits paying the mortgages it will really ruin my credit and could result in a chargeoff that I would be responsible for. I cannot take on his obligations in addition to my own. This is one of my biggest fears financially.

My job situation is really good even if it is in an industry that has been hit really hard by the recession. I am an accountant for a car dealership. I feel really blessed by my job and hope to be there until retirement in 22 years. I have a B.S. in Accounting, a B.S. in Business Administration, and an MBA.

My debt is in fairly good shape also. I have a mortgage on the home I am living in at 4.5% for 30 years. My rental home has a mortgage and a HELOC and the interest rates on each are less than 3% (also a 30 year mortgage and I am in year #6 of the note). Besides that I have a small balance on a 0% interest credit card for the furniture I purchased when I got the new home.

I am preparing for retirement in 22 years by participating in my companny's 401K plan. I have about $70K in it so far and am putting away another $15,500 this year. My company doesn't match and I cannot do a ROTH because of the income restrictictions.

My goals for 2011:

Get my savings up to $15K this year.
Prepare more for retirement.
Continue prepaying my mortgage. (Hope to payoff $15K more this year to get it under $150K)
Tweek my budget.

Gosh that is a lot to take on - where do I start???????

Hi Suz,

Why did you not try to sell the home that the ex is "using". You could use lawyers instead of talking to him in person. I am sorry about your marriage, but glad your in a better and happier place in your life now.


Why is your 401k so low? Do you have any other retirement investment options?

Hi Suz, welcome!

You've got a lot going for you already: good job, mainly low-interest long-term debt, a new home, and no more abusive husband. It sounds like you should consult a lawyer -- if you haven't already! -- about the potential black mark on your credit score and whatever other legal ramifcations there might be to his walking away from the joint mortgage. Ugh.

It would help to see a budget of your monthly expenses, if you're willing to share. Easier to help talk about where you should start if we know where you're starting from!

The standard advice would probably be to pay off the furniture debt first, and save yourself an emergency fund (1k to start, then three months worth of actual expenses; work up to six or nine or whatever makes you most comfortable).

As for how to prioritize, I think there are two main approaches: 1) save a little bit out of every paycheck for each savings goal (retirement, e-fund, prepay mortgage, etc) and watch the balances slowly creep up simultaneously, or 2) focus all your savings power on one goal until you reach it, then turn to the next one (first retirement, then the prepay, etc). Your own psychology will help you determine which way to go. Are you a tortoise or a hare?

As for how to reach your goals, my mantra has been automate, automate, automate. If it isn't in my checking account, I can't spend it. I set up a bunch of savings accounts in ING Direct for various goals (hobby purchases, e-fund, car replacement, bathroom remodel) and annual expenses (christmas travel/shopping, vet bills), and every year I sit down and decide where my automatic deposits are going to go. This year, for instance, I decided to switch from approach 1 to approach 2 because I want to see my mortgage balance go down faster and build up an investment fund. The only things I haven't automated are my mortgage prepayments, because I love the satisfaction of sitting down to click that button twice a month, and my credit card payments, because if I charge something I want to be conscious of the short-term debt I carry and feel the obligation to pay it off.

Cheers,
Cecily.

I cannot sell the house he is using - it is underwater as it was purchased in 2005 and the value has dimished. Additionally, I had to do a quit claim deed as part of the divorce settlement.

The 401K balance is low because of the fact that during the marriage the ex didn't work. As a result I wasn't putting money in the 401k as I was the breadwinner and needed most of the money I made to support him and myself. HOWEVER, I am not in a better situation and am trying to make up for it. If things work out ok, I will be able to sell the rental home when I am ready to retire - it should be paid off and that can produce a lump sum of money to supplement my savings. If I don't sell it, I will have rental income coming in too. Fingers crossed and being responsible now, I hope to have a comfortable retirement.

Cecily,

I have started an emergency fund and it currently has $2300 in it. My goal is $15000 this year and here is the basics of how I am breaking that down:

[table] Update:  SUZWANTSTOBEFREE 1/21/11 $2300.84 (1/18/11 $15,000)
[tr][td] Loan [/td][td] Need [/td][td] Have [/td][td] Difference [/td][/tr]
[tr][td] Property Tax - Rental [/td][td] $2,900.00 [/td][td] $0.00 [/td][td] $2,900 [/td][/tr]
[tr][td] Insurance - Rental [/td][td] $700.00 [/td][td] $0.00 [/td][td] $700 [/td][/tr]
[tr][td] Insurance - Auto [/td][td] $1,200.00 [/td][td] $0.00 [/td][td] $1,200 [/td][/tr]
[tr][td] Vacation - 2011 [/td][td] $3,500.00 [/td][td] $0.00 [/td][td] $3,500 [/td][/tr]
[tr][td] New Car Fund [/td][td] $2,500.00 [/td][td] $0.00 [/td][td] $2,500 [/td][/tr]
[tr][td] Emergency Fund [/td][td] $4,200.00 [/td][td] $2,300.84 [/td][td] $1,899 [/td][/tr]
[tr][td] Total [/td][td] $15,000.00 [/td][td] $2,300.84 [/td][td] $12,699 [/td][/tr]
[tr][/table]

I am not sure if the HTTP setups will work (if it does - it is a nice little table!)
I have set quite a bit aside for a vacation but probably won't use it for that purpose!

I have to be somewhat diligent about saving money because I don't have the rental home taxes and insurances escrowed.

I am curious why you suggest paying off the furniture loan since it is a 0% loan. It will payoff "naturally" in 18 more months (I think). Honestly I was thinking that it was better to save at 1% then pay this off but I am also a little debt adverse now so I really want to get rid of it. But it didn't seem like the best move financially.

I will get the info about my budget up soon. It is one thing that I thought was important to include but didn't really have the time in the last couple of days. I really appreciate the help and advice so I have to do my part

Most of my bills are on auto pilot. The bills come out as soon as my paycheck goes in!

As for the ex - I have contacted an attorney. The ex is not living in the house anylonger and we haven't been able to find anything except for a PO box so far. I don't know how this is going to work out and I really don't like this uncertainty but at least I am safe and out of the situation.

Ah, I missed the 0% part. Sorry! My own debt aversion kicked in there...

Automating the bills -- that's great! My strategy is to automate the saving, too.

Cheers,
Cecily.

I have a small amount of my savings on auto pilot. It is automatically transfered into my savings from my checking on the last day of the month. I would love to automate it more, but I am concerned about the possibility of not receiving my rent checks on time. As soon as the rent check is received, I use half to pay down my principal on my mortgage and the other half goes into savings. I also receive irregular bonuses from work (really just at the discretion of the G.M) and I never know when I might get one. Therefore I use the same strategy on that - 1/2 to savings 1/2 to principal reduction on the mortgage. Whenever I get what I consider "found money" (which is anything outside of my paychecks or rental income) I use this strategy. This includes the bonuses, tax refunds (if any), an escrow refund, etc.

Was this home refinanced in the exes name or your name? Or did you just quit claim it & walk away? If it wasn't refi'd...then I think you have a problem.

Yes. I think you should add a goal, higher priority than the others:

Hire a lawyer to get the loose ends of your divorce straightened out. In most states there are ways to force a refinance in this situation. If he cannot get a loan that is his problem. He would have to sell the house at a loss.

Seriously, this is a big thing to have hanging over your head legally, financially, and emotionally. I would suggest you get that kind of thing fixed even if it means you have to spend some money on the lawyer and miss the other goals. It's the kind of thing that can come back to haunt you many years from now.

I do have a problem. The divorce decree gave him 5 years to refi it due to the fact that it was underwater and that made it difficult to have it refi'd at the time. He has gotten behind in the mortgage payments before but always caught up. He has had a large payout from a lawsuit (another long story) since the divorce and he has the means to pay it but I just don't know if he will. Now that he isn't living in the house, I just don't know what he will do. The divorce was really difficult because of the state of the economy and (I believe) the lawyers gave me quite a bit of good advice but I wonder if it really was in my best interest to do a quit claim deed.

Thank you. This is very good advice and I have a lawyer involved, but perhaps I need to get more involved in it.

Part of the problem is on my end - I probably need to push more and figure out how to deal with this. So far I have "invested" $500 in a retainer but other than trying to figure out where he is, I don't know how much work has been done on my case. I need to follow through on it though.

I hate to tell you this but the quit claim deed was a horrible move. It did not absolve your financial responsibility for the mortgage. Divorce law doesn't supercede contractual law so you are still on the hook for that mortgage regardless of what the divorce decree says. Luckily this hasn't already blown up in your face.

And if your lawyer told you to quit claim this house then he is an idiot.