Trying to turn over a new leaf on finances. Having worked on this for a few months (mostly just reducing expenses, building an emergency fund, and moving high-interest credit card debt onto low-interest balance transfer offers), here is the current state of things:
- $67k of credit card debt, which is nominally at 0% until at the soonest Jan 2018, but I think of as being at 3% since that was what the balance transfer fees upfront for it were. We are paying only the minimums on this as we try to bring up our emergency fund and figure out what to do.
- $70k of Parent PLUS student loans at an average interest rate of 7.2%, of which only about half are currently in repayment and the other half will go into repayment in Dec 2017 (D-day).
- $5.5k car loan at 1.99%
- $52k mortgage left at 7.25% on a home worth $100k-$200k, but probably more like $100k
- $24k 401k loan at 5.25%, which I think pays the interest to ourselves, so I don’t know whether this is considered “debt” except that it reduces our take-home pay when the payments are deducted. There is currently $330k in the 401k.
We are ~60 years old and in not great health, but also not actively sick. We have an income of ~$100k/year pre-tax. Even so, we’re having a hard time covering expenses + payments on all this debt out of our income. The other half of the student loans kicking in could make that impossible.
We currently have a little more than a month of buffer/emergency fund. When we started getting serious about this two months ago, we had no buffer at all and were living paycheck to paycheck.
Here is our current plan for what to do next:
- Try to refinance our mortgage, hopefully with a cash-out refinancing that will allow us to pay off some of our credit card debt.
- Our land is worth ~$100k, and our town assesses our home to be worth ~$100k as well for property tax purposes, for a total of a theoretical $200k. However, the home is in bad repair (we never felt we had enough money to repair it) and may be worth nothing, we don’t know. We hope we would still be able to refinance based on the land value alone, but it seems difficult.
- Our land is worth ~$100k, and our town assesses our home to be worth ~$100k as well for property tax purposes, for a total of a theoretical $200k. However, the home is in bad repair (we never felt we had enough money to repair it) and may be worth nothing, we don’t know. We hope we would still be able to refinance based on the land value alone, but it seems difficult.
- Refinance student loans to lower interest.
- Haven’t even started to think about this yet.
- If there is still high-interest debt after doing these refinancings, maybe look into getting a personal loan if it would be better interest than credit cards?
Obviously increasing income and decreasing expenses would also help, and we’re trying to do that, but it’s slow going and no magic bullet so far.
Do you all have any suggestions? Are we totally thinking about this wrong? We have been mostly focused on trying to eliminate the credit card debt through refinancing since the prospect that if could shoot back up to 20-30% if we run out of balance transfer offers is terrifying. Is there something else we should be doing?
Submitted March 19, 2017 at 03:16PM by throwaway130948235 http://ift.tt/2mJJIf0
