The end of the tunnel. pt1

It has taken a long time to get here but I can finally see the light at the end of the tunnel. What am I talking about? Well,of course, that's a bit of a story.

When our group first came together, our vision included all living together for a few years, so that we would be able to pool our finances to pay off all our debt and eventually be able to buy homes for each of us.The key part there was getting rid of our debt and having a financial plan for success. For various reasons that turned out to be a whole lot more difficult to do than it was to say.

Our initial plan was to get the best mortgage we could possibly get with our credit ratings and to start paying off debt as quickly as possible. Due to the number of people we had, a five bedroom house was the smallest size house that could reasonably accommodate us. Because of bad credit and or bad work history, the best mortgage we could get was still a terrible mortgage. We had a first and second mortgage. The first mortgage was a  variable rate forty year mortgage that started at 8% and the second was a thirty year at over 10% . The plan was to make our payments on time and after two years consolidate the two terrible mortgages into one better hopefully around 4%. The idea was to work things in such a way that we would all live in the same house for seven years. During that time we would pay off all our debt and start saving money to buy more houses.

The exact time when we were eligible to refinance is when the housing crash happened and nobody anywhere would talk to us about refinancing. Around then is when the first mortgage company started changing our rates every few months and our bills started going higher and higher for no real reason. Our group went through a lot of painful change during this time. Very little was directly caused by our mortgage troubles, but all directly affected our finances.

I am the third of our financial managers. The first two were very difficult to get straight answers from about our finances. All we knew was that thousands of dollars a month were going into our group pool of money and at the end of the month we were always just above broke in our group account. There was no transparency. It was never clear whose contributions were exactly how much or how much each person was keeping for personal debts. People moved out and took their debt with them and still our bills didn't seem to go down.

When I took over the finances, at first, I didn't really have a plan. I was just so overwhelmed with attempting to keep up, that I wasn't looking far enough ahead to make a plan. I saw that we were still spending as much or more than we made a month. I realized that this pattern could not continue if we were to be successful.  So, I started taking steps to reduce our monthly outlay of cash. 

An opportunity came up to get rid of our 2nd mortgage for about five percent of what we owed on it. I snatched that up in a heartbeat and suddenly an extra $700 per month was available. I got a copy of everyone's credit report and made a list of who owed how much and prioritized who was getting paid and who wasn't. Basically any accounts that were still open I would pay. Any medical bills or things that were closed would wait. I looked for and found several ways that some bills could be consolidated. Some like our phone bill, I cut in half by switching companies.