We Want to Sell Our House, Pay Off Our Debt and Start Over. – Julie


“Dear Steve,

In 2004, we bought our house for $916,000, put about $50,000 of improvements into it (e.g. finished basement, paved driveway, landscaping). In the last five years we have added a new baby to the mix and racked up $40,000 in credit card bills. Our current plan of attack is to sell the house for $789,000 (what it is worth now), pay off all of our debt, and buy a $500,000 house. This move will make us debt free and give us an extra $1,600 extra a month.

We are in the DC/Baltimore/Annapolis area in a highly sought after neighborhood. We have already had two offers (for 705k and 770k) and our home has been on the market for 41 days. We do have a bottom line which has not yet been met.

Is this truly the best financial move for us considering the huge loss in equity of our current house? Should we simply weather the storm with our huge mortgage and wait until the housing market stabilizes and home value increases before we move?


Dear Julie,

I’m assuming that at the $789,000 price you will have cash back from the sale after real estate commissions. That would mean you’ve substantially paid down the original balance.

I think this comes down to a quality of life issue. I know the D.C. area well, having grown up there. And ironically I have lived a path that is somewhat similar to yours. While we were living over in England we wound up selling our home in Rockville, Maryland. We then purchased a new home when we returned to the U.S. in North Carolina for half the price of our old Rockville home.

I was just thinking yesterday about what our Maryland mortgage payment would have been this year and completely thankful that things worked out for us as they have. I can’t tell you how much I feel blessed to have traded down. The financial pressure is so much less and it has given me the opportunity to do what I love to do most, help others.

See also  Money Does Not Always Bring Happiness. You Can Win and Lose.

Paper profits and losses are interesting and you’ll have to talk to your tax adviser about if the big equity loss helps you out or not.

Think about the move like this, if home prices are going to go back up then the new home that you purchase will rise in value. I guess the most important question here is to ask yourself, what kind of life do you want to live?

For me, downsizing was the best thing I’ve ever done and it made my life so much richer in so many ways regardless of the profit or loss. Call me crazy, I’ll trade money for happiness and a better life any day of the week.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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3 thoughts on “We Want to Sell Our House, Pay Off Our Debt and Start Over. – Julie”

  1. I cringe when I see comments like Scott’s above. Someone posts on a get out of debt site looking for help and is open and transparent about their problems, only to be told by some internet stranger that they shouldn’t be in the situation they are in, that they should stop complaining and feel lucky. I don’t know how Scott thinks this is helpful. I hope that one day he sees the error of his ways and recognizes that being angry at people who are asking for your help leads nowhere. Thank you, Steve, for your kind response to both of these people, one who knows they need help, and one who does not know they do.

  2. Wow, it must be terrible to be in that situation. Then again, downsizing for most people would involve moving into a crummy house. You spent over $900k on a house, put $50k into it (b/c it wasn’t good enough I guess), then put $40k on credit cards. With the required income for a house at that price, you shouldn’t even HAVE any debt. There’s really no sympathy for you. In fact, a $500k house will forever be unatainable for most people. You should feel lucky you have the kind of lifestyle you do. The fact that you even have to ask questions about getting out of debt is rather sad. Heck, the fact that THIS is the debt relief situation Steve chose to publish is sad.

    • Julie,

      It is unfortunate that some have little compassion for people in trouble. I apologize in advance for any pain Scott’s comments may have caused you.

      Change can be painful for people having to alter their life due to financial problems from a $900K, $500K or $150K house. The point is not the value of the house but facing the required change, making adjustments and reinventing yourself to achieve a happier future.

      Julie, I applaud your willingness to consider options to address your situation in advance of it becoming an even more difficult situation.



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