When I totaled up the debt I had originally included the mortgage, but we are definitely not at point where we can tackle that debt so in an effort to delude myself of reality I decided to focus on EVERY DEBT except the house.
CAR (really an ultra-dorky minivan) – $8,555 @ 10.5% interest
STUDENT LOAN – $23,551 @ 4.875% interest
PERSONAL LOAN – $4,900 @ 0% interest
CREDIT CARDS – $11,216 @ varies 9%-23% interest
Total = $48,222
While it certainly feels more manageable if you don’t factor in the mortgage - it’s still a lot of debt. In the past I would have looked for a quick fix for this. Interest rates on Home Refinances are pretty low right now. Luckily we made one or two smart financial moves in our past and have a lot equity in our house. Why not do a cash-out refi, roll up all this debt into the house with a lower interest rate and have only one payment a month?
According to the debt snowball calculator if we keep plodding along and a keep up with the current payments to all of our debt (and snowball correctly) it will take us 5 years and cost us $9,600 in interest to be debt free. Ugh!
What if we consolidated our debt into a mortgage at 5.5% fixed rate with a 25 year term. In that scenario the amount of interest alone would cost:
And if we did consolidate, all of our debt would be “secured debt”. We could lose everything in the event of a financial disaster.
Some of the credit cards have rates over 20% is there a better way to pay these off that I’m missing?