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:
$40,573!
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?
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Stay at Home Mom CFO - one mom, one income, too many issues... 
February 4, 2010 at 3:36 pm
Student loans suck so bad. I graduated with $30,000 to pay off. Ug. This is so brave of you to ‘fess up to the world what you owe!
February 4, 2010 at 3:54 pm
They are the worst. That total is down from the original $50k+!!! Do not let your children go to NYU without a full scholarship.
February 4, 2010 at 5:35 pm
I guess my two-bits w/be not to consolidate unless you and your husband are on the same page and cut up your credit cards and never use them again. I also know that financial gurus say to NEVER consolidate and put your house at risk.
Do you get any credit card offers in the mail? I’ve noticed those are starting up again…
February 4, 2010 at 6:10 pm
Yeah – I not going to consolidate, the risks and the interest are too high. I haven’t seen any great offers on balance transfers lately. And balance transfer for the store cards wouldn’t work. Did you see this article:
http://asklizweston.com/2010/02/03/expect-higher-balance-transfer-fees/
February 4, 2010 at 6:49 pm
hello! I just wanted to pop over and say thank you so much for your comment today. it was really a sweet thing to say & I love to hear about other people who have MS, so thanks for sharing about your mom.
I have never looked into consolidating our debt, so I can’t comment on that, but I have been going through your archives and laughing…a lot. Your honesty is refreshing & your sense of humor is perfect for the mood right now.
February 5, 2010 at 10:58 am
Formerly, we did pay off our cc debt with a HELOC (home equity line of credit in the past) and re-enjoyed our new found $0 balance credit cards only to rack up more debt once again. At one point we owed $89K of debt (excludes the mortgage).
We finally learned from our past bad habits. So we felt secure enough to consolidate recently. My husband and I just consolidated our credit card debt with a personal loan(s). And the cards are still at a $0 cuz they are all cut up. Plus, I finally hit that bottom point where I truly realized I don’t want to be in debt anymore.
My tidbit from past experience: only do it if you are sure you are not going to rack up the debt again! Really sure. Good luck with your decision. 🙂