Ask The Money Coach

Question: We live in a home appraised years ago at $80,000 and owe $44,000. We have a home rented out which appraised at $65,000 years ago too and we owe $22,000. We have never taken a home equity loan on either house. I have been drawing unemployment and paying bills with this money for 16 months but my credit card bills are driving me crazy. I have 3 cards which total $10,000 and all are maxed out. Is there anything I can do to pay off these credit cards?

Answer: Sorry to hear about your job loss and your extended period of unemployment. It’s hard to rid yourself of credit card bills when you simply don’t have any earned income coming in because your unemployment benefits, naturally, have to just pay all your current bills. You said “we” several times in your message. So I assume that you have a spouse or a significant other. Hopefully, that person is earning W-2 wages or self-employment income. Your rental home may turn out to be your saving grace. You said that the appraisals on both homes were done “years ago.” Was that two years, five years ago or something else? Whatever the case, that’s an eternity in the real estate market. So do yourself a favor and get an up-to-date market analysis of your house. You don’t have to pay for a full appraisal at this point. Just get an experienced realtor or real estate agent to check out your rental (and your home too) to tell you what the current market value is for those properties. If you do have to sell one of them shortly, at least you’ll know how much money you can expect to net. Those funds may be sufficient to pay off the credit card debt. Meantime, read this post about tips for getting out of debt and managing your finances when you’re out of work or have reduced income. And this one too for advice about debt management plans and a referral to the National Foundation for Debt Management (http://www.nfdm.org). Good luck!

Related articles

• One more time: The best paths to help you wipe out credit card debt (askamoneyexpert.com)
• How U.S. Consumers Are Conquering Debt (money.usnews.com)

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