Just pay extra on the credit cards

At this point and time, my husband and I have decided to just pay extra on the credit cards and maybe do an equity loan further down the road. That way we could use all the money for the basement and not have 1/2 go to credit card debt. We also will set up a savings pland and get a few things along the way. Maybe we’ll start finishing the basement one project/room at a time.

That’s not true that no one ever pays back the principle. I know that “could” happen, but that doesn’t mean it would in every situation. What do you mean “they are not building anything”? This of course is just my opinion, so TIFWIW. I think an interest only loan can provide you some valuable financial relief. The important thing to reflect upon is what you would do with that relief.

You said you intend to make extra payments towards the principle. If you have the discipline to stick to this, the lower interest of an IO is a benefit you might want to take advantage of… If that relief makes you feel like going shopping then that interest only loan is only putting off till tomorrow a debt you’re better off taking care of today.

If you do go with the interest only loan a good budget is going to be important. I do agree that it could certainly be a disaster! I definitely would never get an interest only mortgage.

Why not refinance everything into one loan?

interest only loan doesn’t build on principal, only pays the bank their interest. It’s a rip off situation… There are calculators to see if you should refinance. Try bankrate.com or do a search for something like: refinance calculator.

On second mortgages etc… Because it wouldn’t just be you ‘planned’ to, but your very house would be in danger of loss in you didn’t. That is a big risk, and you had better be 100% certain you are that disciplined. If you have had trouble before, you probably aren’t.

Interest only, what is the benefit exactly? Again, have you been that disciplined before? If not, you’re kidding yourself that you would now. Just like I’m going to buy this pair of pants even though they are too small right now because I really will lose 10 lbs within 2 month… sure, right… lol Has your (and your spouses) history proven you are that disciplined and be extremely honest with yourself? If you’re that confident, why not just get a 10 or 15 year mortgage with required higher payments?

Somethings to consider are:

Do you really need to do these improvements? If the bank is essentially saying you can’t afford them, maybe you should wait? Is this a want that will cost you more than you can afford, or a need you will just have to live with? Also, without spending more, maybe then you could qualify for a different loan or could in 6 months etc…?

Strongly telling myself, I need to have this conversation with myself much more often. : )

Debt Payoff – credit cards, student loans, and car loan

As I’ve stated before, my husband and I are working dilligently to pay down our debt. The question I have is, with some of our credit cards having lower interest rates than our student loan interest rates, does it make sense to pay down the student loans before the credit cards? I would assume a student loan would show up on a credit report as unsecured, however, it wouldn’t be revolving like a credit card would. Any thoughts?

I’ve always been told the best thing to do is pay off your highest interest rate debts more aggressively than the lower interest rate debts. Do banks look at unsecured credit card debt differently than student loans? Does someone have any experience with this? I rolled my college loans and car payment into a second mortgage to deduct the interest payments on my taxes.

My car loan is at 3.9% so I’m not too worried about that. It’s more or less the student loans that range from 7-9% that are bothering me, when we have a couple of credit cards with 1-3% rates. We don’t have a mortgage so rolling them over is not an option. The student loans are currently in grace, but I know they won’t always be, and even in grace the interest accrues.

If you have a credit card that low, can you transfer the loan to it? You would have to take into account, how fast you would really pay it off, and fees for transfering, would they still be less than 7% etc…? There are calculators to figure out how much this type of thing would cost. Do a search for ‘ debt calculator ‘ perhaps? Make sure it is worth it with any fees etc… Also I’m not sure about taxes… if student loans are considered in taxes, and if you even utilize that if so.

I know you rightly don’t want to get out of it, but if something happened where you absolutely couldn’t pay, credit card debt is better to not pay. The student loan HAS to get paid and will be collected upon if not.

I would list all of the debts, their balances, interest rates, etc. and work on paying them smallest to largest.
Pay everything at least the minimum each month, so nothing falls late (fees, charges, etc.)

Then, after you pay off the first debt, use that debts payment to pay additional on the next one down the line and so on.

If you come into extra money, throw it at the debt too, in the same order. So, this month, you may pay just $50 on a debt. Next month, you may sell something, having an extra $40 available to pay on a debt. You might get a refund for returning something to a store, $45 there. Get another $200 in overtime. Put it all on Debt #1. It will be paid off sooner. If that means you send in a payment to it five times in one month, do it. Just get the thing paid off.

BTW – Do not let your student loans fall behind. They are federal debts and will never go away, even if you file bankruptcy. Unless you went through private companies for your student loans. Have you consolidated your student loans yet?

You can still get fees by paying the minimum.

Example:

If your interest rate has jumped to the loan shark range and you have had a few late fee charges in the past it can make your balance skyrocket. You will continue to be charged an “over the limit fee” until the balance is no longer over the limit. It doesn’t matter if you that you haven’t actually purchased anything. The over the limit fee will be there every month from other charges even if you have not made any purchases.

My student loan is 100 dollars under the minimum to consolidate and my husband has his undergrad loans consilidated and we’ll consolidate his graduate loans before he graduates. i’m good about making sure i don’t miss payments though and figure things will look a lot better in 6 months.