1) I don't know the details of the PacNorWest, but in many parts of the country, especially along the coasts, housing prices have risen to extreme levels. Renting may make more sense than trying to buy now.

2) Are you in [link|http://www.metrokc.gov/dchs/csd/housing/1stTime.htm|King County]? Take advantage of programs like that if you can - your tax dollars are funding them. Ask them what you qualify for as far as assistance goes - you might be surprised.

In buying your first house, you probably don't want to put 20% down. It used to be that you had to put that much down so that you didn't have to pay PMI - Private Mortgage Insurance. Now it's possible to put much less down (even zero in some cases) and get a second mortgage (at a higher rate) to cover the 20%. The advantage? PMI isn't deductable (and 2nd mortgages are), and though it's supposed to be cancellable once you have 20% equity, it can be (or used to be) difficult to cancel it. Do what you need to do so that you don't have to pay PMI. When you're starting out, you probably want your mortgage interest deduction to be as large as possible, so you probably don't want to put a lot down. Interest rates will bounce around a little in the next few years, so you'll be able to do a re-fi and combine the 1st and 2nd into a new 1st that may have a lower interest rate.

Don't get an interest-only loan, and don't get an ARM unless you understand what happens when (not if) interest rates rise. Refinancing is easy now, but may be difficult or impossible if rates rise significantly.

3) Cars are a real pain. My wife's 1993 Corolla needed a rear strut (no damping at all) and the shop said all of them were "weak" and they wanted to replace the tires too (mild cupping). Their initial estimate was it would have been $2300 to have them do everything. (Yikes!) As it was, it was $875 for the rear struts and a 4 wheel alignment.

Is there a chance you or Susan could start carpooling?

Digging ones self out of a tough situation involves 3 things in my experience: 1) Persistence. You can't give up. 2) Working smart. Do what you can to impress people you come in contact with that you're smart, you work hard, and that you're good to have around. 3) Work on improving your luck. A lot of stuff is outside your control, but we make at least part of our luck. :-) Keep your wits about you and look for new opportunities.

I sympathize, Thane. Life's tough for lots of people these days. Hang in there and keep slugging away - it will get better.

HTH a bit. Good luck!

Cheers,
Scott.