I had the privilege of talking to Mrs. D to help her and her husband decide whether or not to sell their investment property. Here is the background:
Mrs. D has been on her baby steps journey for a few years now. Like most long journeys, sometimes you wander off course. A little course correction is all she needs.
She is a military spouse in her 40s with one young child. They recently moved from an assignment overseas back to the states. She runs a small business and her husband is enlisted. Over the last months, their emergency fund slowly disappeared and their debt slowly climbed. After their years of hard work to pay off all their consumer debt, this felt like torture. But there’s no shame. It was totally normal stuff. They had to get cars, rent a new home in a much more expensive market, and start her business over again. It just adds up. Actually, roughly $40,000 of debt. Sound relatable?
But here’s the great news. Mr. & Mrs. D are left a big fat pot of gold in another state. Two assignments ago, they purchased a great little starter house for themselves and when they were assigned overseas, began renting it out to some friends. In order to keep amazing tenants, they charged just enough rent to cover the mortgage. Mr. D feels like it’s a wash and that they should hold tight to the property. Mrs. D feels like it’s just not worth the hassle of maintaining a rental thousands of miles away in a place they never plan to return to. She’s raising a baby and restarting a business, so she’s got a lot on her plate. They have about $80,000 in equity for that home.
Should they sell?
I would. That money would allow them to pay off their debt, get their emergency fund back in place and start saving for a down payment on a primary home.
This is where Mrs. D was leaning and I helped her explain to Mr. D… “If you had $80,000 in cash right now. Would you a) go buy a rental house thousands of miles away that doesn’t bring in income b) pay off your debt, fill up your emergency fund and start saving for a home. Most people would not choose A when you put it that way.
So I hope that whatever decision Mr. & Mrs. D make, they can get rid of this heavy weight of debt and move towards their sooner-than-later military retirement with joy and peace.
Cheers!