Hi everyone, I have been a reader of this website and just joined because I have been obsessing for a few years about this situation and finally we might be ok. I wanted to discuss and get input on my plan from liked-minded people, so I appreciate you taking the time to read. I know it is lengthy.

My husband and I have been married for one year and are 27. In 2007 he bought a town home in the Chicago area - since then the house has lost almost 60% in value. We are in the works of short selling - my name is not tied to to it. Please do not focus on the short sale as I have already been working with lawyers and real estate agents and my name is not tied to it legally or financially and his name will not be tied to anything in the near future.

My husband made many poor financial decisions when he was younger and accumulated debt, bought an unnecessarily expensive truck literally with the worst MPG available, and still is struggling with bad spending habits. Thankfully over the last few months he has really improved these bad habits.

We bring in about $6k a month but are not able to save much because 1) we admittedly could be better at it and 2) we have debts. We have two car loans (in which both will be paid off in 2013 and we have agreed to drive them into the ground), I have a student loan, we both have credit card debt. With association fees and utilities, this house sucks out about $2k a month (half his pay if he works a full week every week) which is sad considering right now we shouldn't be paying more than $900 with what they're worth. He spends about $400+ a month in gas. Plus he does not work in an office so has the bad habit of buying lunch almost every day.

I have a piece of land with a small mortgage of $27k that doesn't really cost much a month but does add to the pain. We are going to build a house at the cost of materials in a few years.

I have been going slightly crazy over our finances and have been obsessing over how to improve our situation. I was looking forward to renting and having less to spend each month. However, because the Chicago area has been hit really hard by housing (it's just behind Las Vegas I've read because of unemployment) the rental market is BOOMING. We would still be saving but realistically only a few hundred. Rent for us would be between $1200 and $1400 on the low end. Every little bit counts of course but...

My husband has built and remodeled hundreds of homes in his life. My new plan is for us (me) to try to purchase a house to live in for the next few years and flip. A house for under $70k would be maybe $500 a month. The situation I'm looking for is a house that's livable now and any updates/fixes are nothing major (no electricity or plumbing problems etc). We could easily squeeze $500 a month in fixes - everything would by DIY. In the end we either sell it and make money off of that, or turn it into supplemental income as a rental property. Plus if god forbid either one of us lost our job we'd be fine.

I realize that him having a short sale could affect this even if he is not on the loan, but let's just assume that it won't for sake of my education.

Does this sound incredibly stupid? I am not a big fan of risk, however this seems almost like a no brainer. The biggest problem is that I would only feel comfortable with $5k at closing, including a down payment and closing costs. We have $10k in easily accessbile savings and I don't want to dent that too much in case there's an emergency of some sort.

Thank you for reading all of this and for your input I really appreciate it!

how far does $500 a month in DIY projects get you? IME, not very far. Is your husband good at bidding and cost estimating home improvement jobs. I know you said he has done a lot, but that does not always equate to estimating costs and time involved. Have you ever done dishes in your bath tub for 3 months straight? It gets old fast.

You came seeking opinions, and you're going to get mine. It's worth what you paid for it. IMNSHO, you're being irrational. If you're only paying a couple hundred more on your townhome than you would in rent, what's the problem? You've over spent in the past and that is meaning you need to cut back somewhere else. Admittedly, you're screwing over the bank in your hope to get ahead. It takes time and doesn't happen right away.

If your combined take home pay is $6k/month, $2k/month on a mortgage isn't unreasonable. Personally, I'd deal with it and listen to that wacko who advises a debt snowball or whatever. I wouldn't want to go through the remodeling of a crappier house.

Chalk this up to another example of gen y entitlement.

Under your current circumstances, I would not buy the house to flip unless you were a fan of MASSIVE risk. Get rid of the vacant land, too. IMHO, you two cannot extend yourselves any further and need to focus on paying off your debts. Like Bichon Frise said, it doesn't seem to make sense to switch to renting and ditching your current mortgage since there's not much difference and you definitely can cover the mortgage if you don't spend frivolously. You ought to read Dave Ramsey's Total Money Makeover and begin a debt snowball if you haven't already. Frankly, you say "this seems almost like a no brainer" and I agree -- a no brainer that you should not take on the house flipping under your current circumstances. I realize I don't know all that much about your lives, but this is my opinion based on what you've presented here.

Are you this rude in person? I'm sorry, did I say something that offended you? You know nothing of our short sale circumstances. You can't just short sale a house without a reason, you are aware of that correct? You need a reason, and we have reasons and I'm not going to get into my personal life here, I was here looking for opinions on making the best of our situation. You call me a self entitled gen-y and yet I have done nothing rude, mean and have not name called or done anything to you personally. I came here seeking help. Unbelievable.

Thank you for your response.

Renting would still be less than our current mortgage. Part of the problem is that our home has lost over 60% of its value (over 100k) and it will never recover because of location and high unemployment in the area so realistically we would have to live there for the next 20 years before we could sell it at what it is worth which is not feasible with work, life and having a family. We have had a difficult year health and work wise unfortunately which is part of it as well and it's sad that I actually have to state that here. But I'm just a self entitled gen-yer and I guess expect everything to be handed to me.

methinks this is part of the problem. I speak from experience. I gave you the opinion for making the "best of your situation." You came seeking opinions. And you threw a hissy fit because you don't agree with it.

PS, I consider it rude to hang someone else with your debt obligations. And I understand we all have a different moral compass. So, YMMV.

Yes, you gave an educated response and then lost credibility with your childishness. I did not throw a hissy fit, it's aggravating to be judged on your age. Like being judged based on your skin color or gender. Has any of that ever happened to you? It's pretty irritating isn't it. Please, tell me if this is self entitled to you: right after our wedding, mere days, I found out I have a life long illness that is incurable. A few months after, my parents divorce and then just a few weeks later my mother finds out she has breast cancer. My husband works 7 days a week sometimes commuting over 100 miles a day to another state and I work full time too, we do this to stay afloat. Add this to the difficulties of a first year of marriage in this economy, in a state with high unemployment. Am I expecting anything in return? Nope - I love my life and my husband, appreciate what he does for us, and love my family despite their differences. And yes, life could be better, but it could be worse too, and we are just trying to make the best of it and improve it. If that's self entitled then you have a very bizarre view of the world.

Remember what generation raised gen-y.

Good thing you know me so well.

Perhaps we can get a thread going where all we do is share our sob stories and one up each other. We could even mirror a modern day sitcom.

Again, while you have faced some bumps in the road, it's nothing to keep you from living in your place. The only difference has been, you feel you have been cheated b/c of market forces. You were happy once to pay $2k/month, it shouldn't matter what other people are paying. Again, $6k/month take home should handle $2k/month living expenses.

Listen to Dave Ramsey. He has a free podcast.

Maybe I'm misunderstanding, but from reading your post, it sounds as if the reason you're selling is because you're underwater. Is that correct? Now, I understand there are plenty of reasons people may need to sell when underwater: loss of job, moving out of the area for a new job, etc. But selling just because you're underwater makes no sense to me - especially if you're just going to rent in the same area and pay almost the same amount in rent per month. Buying high and selling low is never a good financial decision.

Hi alohabear - it's not entirely the reason, unfortunately due to some circumstances our debt, bills and expenses have increased tenfold. We are struggling to make payments - the lender would not let us short sale if we did not have a hardship. Just wanting to be out is not, and should not, be a reason to short sale I agree. Unfortunately when my husband bought he was young and immature and making a lot of money and made a horrid financial decision. I never would have bought a house at the age of 22 myself, even if I did have the money. It makes more sense to live very cheap, especially before you are married and have kids.

The problem with your plan is that you have decided to give up on the existing house, let someone else pay for your mistake, and now plan to jump right back into a risky situation. Bichon pointed that out but it's just not what you want to hear.

So let's review: You bought a house that is now underwater. You want to sell it and realize the loss because of your prediction that it will recover its value in 20 years. You also say that health and job issues are part of the decision.

After selling the house and allowing the bank's shareholders to pay for your inconvenience, you want to buy another house to fix up. Do you think that fixing up a house will be less taxing on your health, family, and job demands than staying in one that has simply lost value on paper? Do you actually believe that you will not be spending way more on the new mortgage PLUS the renovation costs (materials).

I hope you don't think this post is rude as well. You are making a bad decision. Bichon pointed that out to you. I did not find his message rude. But even if it was, his information and assessment of the situation seems pretty accurate.

If you want suggestions regarding what is the smart thing to do financially then listen to what you are being told. If you are looking for validation for something you have already decided then you'll need to provide a much more compelling story than you have. Because I think you should skip the sale and put your effort into making the most of your current situation.