I Over-Invested in a Horse Barn. What Now? - Mark
Posted April 22, 2013
WRAL Reader Question
I am now 61 years old.
Several years ago I built a nice Horse Barn on my property so my wife could finally have the facility she had always dreamed of before being too old to use it.
Unfortunately, that was when cost jumped on fuel, metal, etc and I invested beyond my expectations.
I am now faced with debts that I can manage the payments now, but when I am forced to retire in about 7 to 10 years, that will not be the case.
I had 18 years with a company that had a pension that went bankrupt, and have a minimal stint with the state, so I have very limited retirement resources.
The horse barn was also to provide some income after retirement, but doubtful enough to compensate.
My question would be, due to the limited time frame I have, would bankruptcy be a valid process for me?
And would that require giving up my home? It is basically fully mortgaged. That is how I funded the barn.
Your situation brings up some interesting dilemas people are facing more often as they head for retirement.
If we take a step back and just let the math talk to us for a bit it is apparent the sooner you begin saving for retirement the more you can take advantage of the little remaining time you have left before you stop earning a living.
When someone retires and is no longer able to work, they must make ends meet on the money they have saved and invested. With growing life length it is entirely possible you and/or your wife might life for five to twenty years after you stop earning an income.
There are solutions for problem debt but there is no solution for lost time. Once the time is wasted, it is gone forever. People make bad choices all the time and those bad choice can cost them millions of dollars in lost retirement. See this calculator as an example.
So before we react to the situation today, we need to think about that potential situation in the future. Only you can answer this question for yourself but is it more important to deal with your short changed retirement situation or deal with the immediate unfortunate debt?
The one fact you did not mention was if you had other debt outside of the mortgage. If you do then a chapter 7 bankruptcy now to discharge the debt and hand back the house and get to saving for retirement as soon as possible is a real consideration. You can click here to find a bankruptcy attorney.
If the issue is just the home mortgage, then finding a local real estate agent that has experience with short sales might do the trick to sell the house and get you out from under that debt.
If you sell the house and downsize, you could get back to saving very quickly and get a move on getting yourself in shape for a safer retirement.
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