Thank you …and nice to “meet” you

I have been lurking for a while now but figured I should go ahead and introduce myself. I am mom to 4 children, wife to a wonderful husband and a DR enthusiast. We live in Florida where we have 4 seasons, Hot, Hotter, Hotter than Heck and Hurricanes.

I take care of the tedious part of our finances in our house but DH is involved in decisions. We have been followers of DR for a while and we had completed step 1 ($1000 baby EF). We were working on our snowball and making good progress. We were able to pay off $17,000 of $28,000 before we ran into a couple of snags.

In the past year we have experienced a reduction in pay for the same 60 hours DH works every week and we had a major medical crisis that sent us over the edge. It put us into a hole so deep that there would never be a way out. Our bills totaled over $400,000. Add that amount to an already stretched budget and plenty of debt and you have a recipe for disaster.

We had no other choice but to file bankruptcy to survive. We are losing our house in this process as well. I know how Dave feels about BK but seriously there was no other way to deal with this. We tried, we tried REAL HARD. Even though none of this is pleasant I feel blessed. We will be fine.

Now I am starting to try to deal with the future and how we should best approach all things financial . Since we won’t have a house we were thinking of taking our remaining 401K money to buy a very very modest house. ( we used almost all of the 401k to pay bills until we realized we were not going to get anywhere) We won’t be able to get a mortgage anytime soon because of the BK and renting is very hard to do as we need a handicap accessible home.

We live in Florida and live in a house ( for a little while longer) that would have gone for about $475,000 at the height of things and now we want to spend about $40,000 for a house and about $10,000 for making it right for our needs. We are certainly changing our lifestyle so that we can live within our means. We need a place to live anyway and our 401k isn’t earning anything right now.

I know that Dave recommends paying off house as one of the last steps but we feel that we will be able to fund our 3-6 months of expenses, contribute 15% to retirement and save for kids college at a much faster pace without a mortgage.

Now I am curious to see what other DR followers think of buying a house with 401k money without working all of the steps in order. Is is a horrible idea ? Is there a better way to deal with things? Will there be some consequences that I am not thinking of right now? I want to hear your thoughts on this but please don’t slam our decision to file for bankruptcy. It was a very hard decision to make especially after trying so hard and making some really great progress toward paying off our debts prior to our medical crisis.