Should we looke for a 2nd mortgate to pay off very high credit card debt?

One Comment

1. pbaez3 says:

   October 10, 2009 at 4:49 pm

   Absolutely not! Don’t do it. Your huge problem isn’t financial, it’s behavioral. Most of the answers you’ve gotten are from financial types that have logics about least amount of interest, etc, but they’re missing the issue that refinancing won’t fix your habits, and you’ll probably fall under the fake perception that your cards are now free for more charging once their balances are transfered.
   Been there, done that, so believe me, it will happen.

   End reading Ramsey, he’s your answer.

   Once of the respondants did suggest the debt snowball which is one step on the right track.

   We’re doing them now and they’re working for us. So far we’ve paid $11,000+ in debt over the last 5 months, and place aside an emergency fund (and we’re far from making huge bucks)

   Here are the steps:
   Pre-steps
   -get current on your debts – at least be paying minimums up to current month
   -cut up all your credit cards (yes, all of them.)
   -sit down with your family and clarify that you don’t want to live like this any more and that you want a better future for them. You guys are sinking and it will take a family effort to surface and eventually swim out of this mess. Once you’ve got their buy-in …
   -stop paying extra on any of debts, including extra mortgage payments (we were doing this one)
   -do a simple budget to spend less and save more – we establish we were spending Hundreds a month on going out to eat and see movies. Stop all that. Cook in. DVR movies on cable or get them from your library for free.
   -stop contributing to retirement temporarily or any other savings or investment accounts. Yes, even if your companies match – it’s just temporary, you’ll get back to investing later.
   -adjust your Withholdings through your employer to get more now and less tax return later. It’s your money, may as well have it now.
   -have a rummage sale, sell any extra cars, and get out of leases if at all possible – they’re a scam.
   Now – the real steps:
   1. Place $1,000 into a savings or MM account as an emergency fund (EF).
   2. Sort all your debts from smallest to largest. Pay minimum on all except the smallest. Hit that one with all the money you’ve scraped up (except for the EF) and your necessities (food, shelter, trasportation). Once you’ve paid the smallest, use what your were paying on the first plus the seconds minimum to hit that one. This is known as the debt snowball as it keeps increasing as you go. Keep it going until their all paid. Living frugally is key, during this period.
   3. Now beef up your $1000 EF to 3-6 months of expenses (not income)
   4. Resinstate future and retirement investing to at least 15% (match your companies IRA contribution, and place the rest of the 15% into Roth IRAs.)
   5. Invest in college funds for the kids if you have them
   6. Pay off the home early
   7. Build more investment and retirement wealth and start giving what you can.

   Hope this helped! Again, don’t fall into the trap of using debt vehicles to get out of debt. Pay what you owe. Live on less than you make and you’ll get out of this.

   pbaez

   If you need more ongoing support, join our yahoo group Dave Ramsey http://finance.groups.yahoo.com/group/Dave_Ramsey_Debt_Beaters/