I have a dream....but little to no money

[Soybean]

I finally have my husband on board with wanting to live in the country and have a farm. My dream is to own a farm and grow/raise/hunt my own food and try to live as simply as possible. Electricty would be a must though, but only to keep the house warm enough to keep my snakes and run their enclosures. I breed snakes as a hobby and plan on starting a feeder animal business, breeding mice, rats, insects, rabbits, etc and selling them for other people to use as food for their exotic snake/lizard collections. In addition to this, I also want to plant and grow a lot of my own produce as well as raise several different kinds of livestock including goats, chickens, cows, turkeys, etc. This will require quite a bit of land, but I don't expect to go out and get a crap ton of land right off the bat. I want to start small with my first house with a little land and maybe do chickens and goats to start off with, then save money to get the BIG farm.

Here's the problem. My husband and I make about $3,000 a month together. This gives us about $700 extra after all bills are paid. We have quite a bit of debt. I have a credit card that was maxed out at $3000 (I was not responsible. I learned my lesson) and a medical bill of around $3000. My husband also has credit card debt and a medical bill. The credit card debt is from having to put a medical procedure on credit cards because we didn't have health insurance at the time. That's around $3000 and he also has about $1500 on a medical bill. We also have our car loan but that is being paid off diligently every month. We never miss a payment. So other than the car, we have a little over 10k in debt and no savings in the bank.

We have never bought a house before and we have no idea how to go about getting a loan or how much we'd be able to afford. With debt like ours, would we even be able to get a loan? We need to get out of our current apartment as soon as the lease is up (7 months) because living there is horrible. We have roach problems, our neighbors are horrible, and we just don't have enough space. So we are either going to rent a house (so our dog can finally have a backyard) or we are going to try and buy a house. But with no savings as of right now, 10k in debt (and that doesn't include the car loan), and only 7 months left of our lease. I'm wondering how this is all going to work. We will probably end up staying in our apartment month to month after the lease is up just so we can figure out how to get some of this debt paid off and save up some money for a down payment.

With $700 to split between debt and savings, what would you do?

 

[Dreaming of Chickens]

Hi Soybean! Welcome to the site. If you check in often you will get a lot of good advice here. I'm just a beginner myself, but I know a thing or two about not having a lot of money!! First off, I don't consider $10K to be all that bad, although some people might, I've had friends who had to dig themselves out of much, much bigger holes. I hope you are paying more that the minimum on your credit cards, if not, you'll be paying on them till the cows come home, and as of now, you ain't got no cows, so that's a long time! If you have $700 a month extra after paying bills on a $3000 per month budget, then you are a little better off than I am, but our boat is about the same size and has about the same number of leaky holes. One thing to think about, is that $700 before or after food cost for you and your animals? Some people don't consider groceries to be a bill and don't budget for it, but it's an expense, so it needs to be counted.

Buying a house is not as easy as it used to be, but it ain't that hard. You need a starting point. My suggestion is first, pull your credit reports. Don't know if you have ever done this before but if not, you can do this at freecreditreport.com and guess what, you really do get a free credit report, from all three agencies, every year! You can take a look at the reports and make sure there is noting on them that shouldn't be. Sometimes when you pay off a debit companies don't bother to report that, even though they are fast to report it when you don't pay. It's also the best way to see your credit score yourself and get an explanation as to weather or not it is a good score. Best of all you can make sure someone isn't monkeying around with your credit. So just make sure you don't have anything to clean up and then go to the bank. You can start with the one you usually bank with. Tell them you'd like to buy a house, but you want to see where you stand. They'll take a look at you finances and a good loan officer will tell you what you need to work on, if anything. They will also be able to tell you what you qualify for. Most people with decent credit qualify for more than then can afford, so what you qualify for is not the same as what you can afford (the reason for our current financial and real estate mess in this country). You will have to decide what you can afford to spend. I look at it this way. You know you can afford your rent and other bills and still have $700 per month left over, so you can probably afford a note that is within a couple hundred of your rent. Don't forget that there will be another couple hundred on top of your mortgage for homeowners insurance, so whatever the bank tells you would be your loan amount, you have to add to that for insurance. Since you know that your first house is not going to be you forever home, you might want to stay right at your rent amount so that you can save for the BIG Farm! But, you can't do much of anything until you know where you stand, where you want to go and have a plan to get there, so that's my suggestion. I'm no financial expert or anything, but I hope this helps.

 

[moolie]

My personal view is that it is always better to start fresh rather than add to existing debt, so if I were in your shoes I would look for a nice rental place that suits your needs and that is close to what you are paying now and rent for another year after your lease ends on your current place.

$700 per month over the course of the next 7 months plus a year of renting a different place = $13,300.

This is more than your debt, but doesn't allow for the interest that accrues on that debt each month--however I'm assuming that you have already budgeted the "minimum" monthly payments on all that debt? If so, you'll be totally out of debt in just over a year and a half

Then that $700/month is free and clear as savings and you should have a down payment on your own property in no time!

I know it sounds like a long time, but it will go so quickly if you keep your eyes on your ultimate goal.

 

[dfr1973]

With $700 to split between debt and savings, what would you do?

First question: do you have an "emergency fund" saved up? Things like an auto breakdown and whatnot ... no matter how mechanically sound your vehicle is, there is always a nail hiding on the road waiting for the person who doesn't have the funds to cover it (Murphy's Law and all). I recommend a low four-figure cushion ... after a central heat bill in January I bumped mine up to about $2k when I was in get-outta-debt mode.

Second: If you do have an E-fund, what would your budget look like without the debt? What is the interest rates on those credit cards? With savings rates being as close to zero as they can get, I would say you'd get more bang for your bucks knocking out the credit cards first. Speaking for myself, ours became SO much easier to do once we got out of the consumer debt hole, and made saving up for a down payment that much easier.

We're not much above you in monthly income, but because our only debt left is the mortgage we can run the household on around $1800 per month - which even includes fun money budgeted in. It's a position of strength that leads to peace of mind, so I tend to be heavily biased towards getting out of debt first.

Third: I would go back over the monthly budget looking for places to cut expenses if you can. Live as frugally as you can tolerate, and throw every spare dollar (above minimum payments) towards your smallest debt to pay it off quickly. Once the smallest one is done, then take aim at the next smallest, and just keep going at them. As you eliminate one, that frees up more money to pay off the rest. If either of you is able to pick up a side job for extra income, that makes it even faster. The sooner you pay off these debts, the sooner you can build up the funds for that land (and I have serious "I want some land in the sticks!" fever myself).

 

[rd200]

we are kinda in the same boat as you. We want to move, we are saving for a down payment and had quite a bit of money saved, but we have debt also. I made the decision to take all of that money and put it towards out debt. I left 1K in savings for emergencies for now. I would like that to be a minimum of 5K, but for now, 1K is fine. I took 15K and paid off my truck loan. then i took the remaining 8K and paid down my MIL. (we borrowed 16K from her for our adoption) So, now we no longer have the 525/month truck payment so we added that money onto the 750 we were saving a month for our down payment, and now have 1275/month to finish paying off our MIL. We should have her paid off in a bout 4 months. Then we will have 1375/month to put towards a down payment for our new house. Im sooooo excited at the mear thought of having no debt except our mortgage. I hate oweing people. And the amount of interst you pay is ridiculous on top of that.
I would definetly pay OFF your debts or DOWN at least to half before i would even look for a place to buy. Given your income, bankers wont loan more than 1/3 of your income in house payment. So, your payment cant go over 1000/month. Which, in terms of a farm with acreage, probably wont get you very much. And dont forget, you have taxes and insurance on there too. That will add an additional amount on to your loan pymt a month. Banks do look at your debt to income ratios and if they are too high they may not approve you or only approve you for a lower amount. And alot depends on your credit score too. If your interest rate is lets say 5.5% instead of 4% because of lower credit scores, that is a huge amount of money you will end up paying more on your loan. We refinanced 3 months ago to a 15-yr loan @3.25%. Our original loan was a 30-yr@5.25. We will be saving 4000 in interest in the first year alone!!!

Once you have everything paid off you will feel much better and beable to get a bigger loan probably. Good luck to you

 

[Leta]

We have three kids and a net income of $2000/mo. It can be done.

One, save $1000. Two, do the snowball method and pay off your ccs and medical stuff.

Do you get a tax return? Put that in the bank and forget it's there. Just forget it. Magic bullet fixes never solve the debt problem (trust me on this, PLEASE); you need to pay it off out of your regular income.

Based on your income, it sounds like you would qualify for a government guaranteed mortgage- an FHA loan or a USDA loan- in most places. Investigate. You would need a down payment from zero to 3.5%, so not much.

Give yourself 1-5 years. Nobody gets their finances in order overnight.

Do as much as you can where you are. Even in an apartment, you can:

-make soap, including laundry soap, shave bars, shampoo bars
-make toiletries, including hair gel, conditioner, lotion, sunblock, toothpowder, deodorant, lip balm
-make cleaning products including glass cleaner, wood polish, laundry soap, fabric softener, plus just baking soda and/or white vinegar
-learn how to do and make your own first aid
-give your animals their shots, make their food, etc.
-learn to sew/knit/crochet
-stop buying bread and do all your baking
-cut your family's hair
-stock and rotate non-perishable staples
-cook all meals from scratch
-turn milk and cream into yogurt, butter, cheese, sour cream
-move from paper goods to reusable cloth goods
-learn how to conserve energy
-homebrew beer, wine, mead, soda
-grow a few herbs in a windowsill
-replace electric/battery powered things with hand powered/nonelectric verisons
-get the equipment and handwash laundry (this actually would be especially useful in an apartment!)
-buy veggies and fruit from a farmer's market and can/freeze (they make small chest freezers)
-find good online vendors to order essentials from (so you are not so dependent on gas/cars/stores)
-Read! Learn about sustainable energy and animal husbandry

If you are busy, time passes faster, and this stuff will ALL help you save money in the long run, even if you have to spend some in the short run.

We started getting serious about eight years ago. We've since bought this house and now are looking for our second place, either land or a house with acreage. We have our preapproval letter. This house will become a rental.

It can be done.

 

[Wannabefree]

I'd worry about paying off debts first before even thinking of getting into a house. Emergency fund of at least $1000 should come before paying down debts even. So you have a long way to go, but the good news is the income of $700 over expenses will get you there before you know it. You can get there quicker if you are willing and able to take on second part time jobs to make it happen faster. I'd have a minimum of 20% down payment saved to buy a home too. I don't think with your debt and income a bank would make a loan right now, because they are being very very stingy at the moment with the housing market still not bouncing back, but I could be wrong. Even if they would, I'd still suggest waiting till you are better able to pay for it.

 

[Beekissed]

Renting is a good option and if you rent a place that has a little acreage, it might also give you an opportunity to live the life a little before you finally get to invest in a piece of property of your own. You might find that you don't really want to have a farm after you've tried a little backyard farming...or you might find that it solidifies your dream and makes you try a little harder to achieve the goal.

$700 left over after bills is a gold mine where I come from! That can go a lot toward getting you to debt freedom...and I bet if you look at your finances and living practices you might even be able to save money in other places as well.

 

[hqueen13]

I had a whole post started and the dang internet ate it! UGH. Let me try again....

Leta beat me to it, and probably much better than I!

I can give you a direct example of this: We made our first batch of laundry detergent last year. The recipe calls for Borax and Washing Soda, and a few other ingredients. Purchasing all ingredients, the total cost was less than $10.00 (and that included purchasing the water rather than using our tap water which is gross). There is enough Borax and Washing Soda to make several batches, so that $10.00 investment has surplus of some ingredients which can be used later. The recipe makes 5 gallons, which turns out lasts us a whole YEAR! We made detergent for an entire year for less than what it cost us to buy a container of store bought detergent for one month. If store bought detergent cost $10.00 per container (It was probably more like $12 or $13.00, I don't know, I can't remember, its been more than year since we've bought any! ), then that is a savings of a minimum of $110.00 per year! That's HUGE! Next year's batch will cost less than $10.00 since we've already made the investment of the Borax and Washing Soda. That batch probably cost only about $5.00 or less!

The second thing that I can think of off the top of my head is to check your credit cards and make sure that you are getting the absolute best rate possible. If you've used your cards for a long time, then call and see if they'll reduce the interest rate. All they can do is say no. Use www.cardoffers.com to check and see what credit cards are available to you. If you can find one that you can get accepted for that has a lower interest rate, SWITCH! lol There is no reason to keep forking over money to a company when somebody else will give you a better rate. Before you apply, call your card company and hold that over their head (I can get a lower interest rate elsewhere, if you don't lower mine, I will roll my credit into a different card with X company), and see what they'll do for you. Also, I would highly recommend getting a card that has some sort of reward system. Be it cash back, frequent flyer miles, etc. If you're going to spend money, might as well make your money work for you.

Take your time, don't rush into a decision, spend this time gathering information and doing lots of learning, both here as well as books. We are a bit locked in our situation for the moment as well due to finances and when Borders books went out of business we cleaned up their "farming" book department and have been doing lots of reading! The more know how you have going into things, the less likely you'll be to make a mistake that could cost you funds. Some mistakes are cheap, and some are expensive, knowledge can help reduce the chances (it won't remove it entirely, that's just life!)

Sell items, and use your talents to bring in money. Good at odd jobs, do handyman repairs? offer your services up. Good organizer? Can you make things? Soap? Food? Find a way to market your talents.

Just a bit of a thought, too, on your diet. Food is health - don't sacrifice eating nothing but mac and cheese to save funds. What we put into our bodies determines our ability to output and accomplish our goals. Take that very seriously and you'll stay out of the doctor's office and out of the drug store and be able to be highly productive and reach your goals!

 

[~gd]

We have a program locally that seems to be working. I call it the old farmer program. There comes a time when your kids are gone and want no part of the family farm for one reason or another and it is getting to be too much to handle by yourself. At the same time there are people that want to farm but can't raise the money to buy or rent the farm. The Coop. Ed. service is acting as match maker bring these two groups together to work out details. No two matches are the same but they usually include the young giving some labor help in return for the chance to learn what farming is really like. If the labor starts to include more and more then things like free houseing,[Often farmers have a spare house built for a son or daughter to live in and when they take off the houses are either rented or sit empty] and wages or "gifts" of land start to enter the picture the dairy deals seem to be working out the best because the busy time milking can be done before and after normal work hours for the learner. We had 5 farms change hands through this system this year. that does not sound like much but only one farm was sold normally. often the old farmer is holding the mortgage on the place and using the payments for retirement income. Like I said these are pretty much non-standard as each couple works out there own terms and mostly it is in the 40 acre size range, too small for corporate farmers or real estate developers and yet big enough to make fine homesteads and hold an outside job if needed, We are in the far suburbs. and are more country than urban. Some one might want to check this out if it sounds interesting . Every county has a office like this but they may not have taken up the program.