Refi or HEL ?

[34saving]

jevb - I don't see any indications you're looking at bankruptcy, so . . . yeh, probably don't need to worry too much about those comments. You are looking at trading unsecured debt for secured debt and that can be dangerous. However, as long as you're no where close to maxing your equity (which is sounds like you won't be), you really don't have to worry about your house being foreclosed upon. (Since, worse case, you could take a HELOC to make the refi. payments . . . but we're not even gonna go there ) Also, your wife and your kids are more important than your finances. Period. (Not that I think you're questioning that. . . .)

Pennywise -- slavery to money can go both ways. You can be a slave to debt or you can be a slave to the money you have or want to have. If you're worth $3.5 million, but are unwilling to turn on the air conditioning or pay for an ear infection presciption maybe you need a little bit more balance in your life?

Oops. I guess there was a revision in the net worth while I was writing my last comments. I think the gist of my comments still work though.

[jmjj215]

Pennywise, I wasn't speaking to getting assistance if you're a SAHM from anyone. You weren't specific in your comment about "justifying" staying at home. I see now you're talking about SAHMs getting assistance instead of going out and working - we agree.

Your net worth - in two posts, has dropped $3.15 million. In your first post you said it was

I won't do that and that is why I have >3500000 NET worth.

and in your post just above you now say it's

>350,000 Net worth

I'm assuming you mean the latter is the real net worth.

In that case, I can understand why you are still budgeting and being disciplined and cutting back. Can you understand why I might have raised the AC question when your first post said you had 3.5 million not 3.5 hundred thousand?

Secondly, I guess that is why I have >350,000 Net worth and you don't.

You assume way too much, and you're talking about 350,000 as if that's a lot of money for a net worth - it's not. And how the heck do you know what my net worth is? I've never been so public about it.

[jevb]

Originally Posted by pennywise

I have >350,000 Net worth and you don't.

Well, all I have to say is that my net worth isn't measured in $$$, but by the Cross.

[pennywise]

This is how I did it. We are a close family on this site. We are to help each other! Thirteen years ago I married my spouse who had child support for two children. I could not pay the bills. Something in the house needed fixed and he would say "hire someone". He managed our money poorly, so I took over. And he knows it. I will always tell the truth, and black is black and not grey (that is why he is in law school). I got lotus 1-2-3 and created many financial spreadsheets (Income: annual income, taxes paid, outgo general categories; I could see year to year what has happened), next savings (this is where my balance is, income column, outgoes, total) - done for the next 4 years so I can see strenght and weaknesses, next budget (the entire budget for 4 years, this transfers weekly to the savings worksheet as the outgo column). Whenever I had an extra $500 I opened a CD at the local bank (I then learned how to shop the best rate, tier the deposits, etc). I locked the money. When I saw a shortfall in the budget I worked an extra shift (I have always worked 2+ jobs at one time, and my spouse one). Then I graduated to the stock market, purchasing DRIPs, now I do some day trading (do not advise - I am still in the red but have learned enought I will recover). I read, read, read, about money. Like: the house does not put food on the table (does it - NO way, lose a job and try to refi). I know that 1 million at 3% (better be conservative, those stock people lie so much I am sure they have a special door to get into hades' to see the devil and live with him) will generate a 30,000 income stream in retirement. The 1 mil has to be locked up so creditors cannot reach it so my income will continue in addition to the SS. we have no pension, etc. The 1 mil will then be passed to my dtr and she IS being taught money every day by me. I take her to car dealerships to demonstrate pricing and negotiating, I have then taken her to the car insurance shop to demonstrate anciallary bills to the 1st WANT. My 500,000 CANNOT be touched or I will live day to day. I will retire or become disabled some day. so the sooner I build this the better. I always worked 2+ jobs that is why a SAHM story does not cut it. I have a great family, dtr and spouse. However, the spouse lost his job too many times and let me tell you he will never live to regret it. You as the male have a responsbility to provide for your family. Using your woman as back up is not appropriate, it is negligence on your part. You must provide current income, save for the future, and save for your childrens college. My spouse was negligent, blew me off when I told him the stock market was crumbling (I told him the blond hair comes from a bottle). he has been told if he loses another job he is not to come home, period. If you can't pay the mortgage do not put the key in the door. Well, he is in law school now. Okay, want to know more, I will tell, just ask.

[pennywise]

Okay, lets go for it. I like a good challenge. My net worth is judged by my assets because in this world I need money. When I go to heaven and need hugs for food then I will give alot of hugs. What is it you need in what world you live in is what you had better figure out. Oh, and I have a strong faith in the God I believe in. I thank him for every 10 cent can he gives me on the ground, I thank him always, and publicly. For God loves to be thanked. The more you thank him, the more he will give you. Ask him to show you how, and He will show you how in more ways than one. You too can amass the money I have. I did it only in 13 years! You have to sacrifice, do things that involve work, work extra hours for more income, and save, save, save. Stop justifying your spending. Eliminate debt ASAP and never take on another note. Come on, if I could do it, so can you, and I will tell you how.

[pennywise]

Anyone know a way to transfer a lotus diskette to this internet site from an old fashioned computer and I gladly will GIVE you my financial spreadsheets and teach you how to use them.

[jmjj215]

I think you already have told him how. I just think you're doing it in such a way that it comes across as condescending.

[Fern]

OK, Pennywise, no one is attacking the choices and sacrifices you've made to get where you are. But everyone has their own way, and there are many to becoming financially independent.

Whether someone's wife stays at home is a personal decision.

Let's focus on helping jevb and give him a day or two to get his expenses listed here so we can all help him make an informed decision.

[terry1156]

I think it's important in these forums to remember that even when people write a lot of details of their financial situation, we only see a slice of everything that is going on in their life. I've also come to learn over the years tht what works for one person doesn't for the next. Each person has to adopt the methods that work for him or her to tackle their debt problems.

There is a big difference in saying "you have to do such and such" and "If it were me, I would do such and such"

Nowhere have I seen jevb trying to take the easy way out. And I commend him for not even bringing up the bankruptcy possibility. he knows he incurred the debt and he wants to pay it off. The question is how is he going to do it.

Could he cut back and pay off the credit cards without doing a refi? Yes, he probably could. That doesn't mean that the refi is not a legitimate option (he bought a house and has gained equity in it - with all the credit card debt he has, that move was a good financial move and if he can leverage that move, he should consider it as an option).

In the same way, his wife maybe doing some part-time work or ebaying is also a legitimate option. The kids have grown and after we see the budget, maybe that is an option they might want to discuss.

[pennywise]

Now we are getting back to issue. There is some incorrect info. How much you mortgage has nothing to do with foreclosure. Foreclosure occurs because you cannot make the payment, and after so many no payments, the house is take away. In Michigan no payment of taxes - 3 months and your house is put on the block by the state, period, end of subject. So taking unsecured debt and transferring to secured is not good. I agree, and so does he, lets look at the budget, look to trim, see if income can be increased after discussion with the family after a family meeting and family goals made. The main thing to think about is this gentleman and his wife are going to need to retire and the risk of disability is getting higher as he ages. Transferring debt to the house is not a first option, it is an easy option. You all are right, we all have different ways of doing things. What works for one may not work for another and that is why we all are here. Someone else may have a better idea, or maybe one that one of us did not think about. I am a strong advocate as you can tell of discipline, staying the course, setting a goal and not deviating, and do not borrow from paul to pay peter. The correct is 350,000 liquid assests with 500000 asset over liabilities. I don't care if you want to know. I am sure there are business owners in here doing seek survey's for self profit and are worth more. Some are financial advisors giving incorrect information from a knowledge deficit - not disclosing all the fees. However, from going from a poor girl on ADC at age 20 to where I am today, I think I have good advice and hints to give. On another hand, I have also gotten great advice from others and IMPLEMENTED their ideas. Disclosure is to be open and not criticised, or what good are we. I am not a slave to having money, I am a nurse who has seen poor to rich. I have seen what you have not. So I know I need money for my retirement/disability. And thank God I am not disabled. I will not touch the money, period and I told you why, and I told my husband why when he lost his job. I am no better than anyone here. Some of you have blessed me with ideas and thank you. I am here to learn and help. Now to the gentleman with the question. We will wait while you accumulate your data and then we will help you. You listen to the advice, and then do what is in your heart and families best interest.

[34saving]

Pennywise -- perhaps I was unclear in my previous post. Of course I understand how and why a house is foreclosed upon. However, 1) If you still have equity you can (with some ingenuity) use that equity (often in the form of a HELOC) to make payments and avoid foreclosure. 2) If you still have equity you can sell your house and avoid foreclosure. I don't think either of these are good options, but they are factors to consider when faced with the decision of whether or not to trade unsecured debt for secured debt -- not that jevb ever asked for our opinion about that. (The orginal question was refi. vs. heloc.)

[Snoopy2645]

Well to answer your question I would do neither I would transfer the 30k to very low or no intererest cc's intro rates & pay it off. And for your sons education I would make him get a job & pay for it at least part of it. I worked fulltime & was a single mom & went to school at night if I could do it anyone can I wish you luck the reason I say this is because really refinancing or HELOC is not really taking care of the problem its only moving it somewhere else

[jevb]

Let me try to make this clear one more time. I *AM* going to do one or the other, HELOC or REFI. The reason: I need more free month to month cash for expenses and savings. I have learned that my main problem over the years has been not saving money, but like I said, I have raised seven children on one income, so there never was very much left over after the kids were fed and clothed. My wife and I agreed when we got married that she would be a SAHM. That's just our preference, okay? It doesn't matter what your position is on that issue, that's what is right for us. We knew there would be financial sacrifices, and we were willing to accept them. So, don't bring that up again, that's a non-issue in this thread.

Also, I never once mentioned bankruptcy. I am not even considering that option at all. The debts are mine, I own them, and I have every intention of paying them off to the best of my ability. I accept that responsibility and I am in no way trying to skirt it. I am not even close to having to do that. So, don't bring that up again, that's a non-issue in this thread.

I could have not started this thread at all and kept on going the way I am for the rest of my life. I have no doubt that I could do that. But, I want to do better, I want to get the debt under control and I want to see my savings begin to grow. And. like I said, the only thing that's been a problem for me has been the larger expenses. I need a way to be able to put money into savings at the end of each pay period. Increasing cash flow is one way I know to do that. I saw a HELOC or a REFI as *one* of the ways.

PLEASE READ THIS:
If I don't get more cash flow for savings real soon, the debt *will* continue to grow. Because the large expenses are still out there looming, i.e. tires for the car, crowns for teeth, etc., etc., etc.

So, again, the only question is, for paying off CC debt, which is the best option, REFI or HELOC? Please understand, I have run the numbers, I can afford either, that is not an issue.

Here's some numbers:


Current mortgage: $1224 per month
Current CCards: $ 600 per month
Total: $1824 per month

Other possibilities: (I have already talked to some lenders.)

Refi with Capital One: $200K @ $1414 per month
(30 years @ 5.875%. This would give me about $35K cash to pay off CCs, and it frees up $400 per month.)

HEL with Capital One: $35K @ $340 per month
(15 years @ 8.25%. $340 + $1224 = $1564 per month. Frees up $260 per month.)

Refi with CitiMortgage: $206K @ 6.00% @ $1501 per month
(28 year term. This would give me about $40K cash to pay off CCs, and to set up an emergency fund.) This would free up $323 per month.

Citi is my current mortgagor, so I'm a little inclined to go with them. Not for a refi, but for a HELOC.

I'm looking to free up as much per month as I can. NOT to go blow it, but to SAVE it. So please, let's stick to the issue at hand.

[jevb]

Originally Posted by Snoopy2645

Well to answer your question I would do neither I would transfer the 30k to very low or no intererest cc's intro rates & pay it off.

With what, my good looks?

Originally Posted by Snoopy2645

And for your sons education I would make him get a job & pay for it at least part of it.

He is.

Originally Posted by Snoopy2645

I worked fulltime & was a single mom & went to school at night if I could do it anyone can I wish you luck the reason I say this is because really refinancing or HELOC is not really taking care of the problem its only moving it somewhere else

I *know* that. You didn't read all of my posts, did you?

[terry1156]

Originally Posted by jevb

What would you consider a good emergency fund? $5K, $10K, or what?

Your credit card statements probably are the best place to look to answer this one. If you have kept them, go back through and see what those big expenses were and how much they cost each month. If the number comes to less than the money you'll be saving on teh refi or HELOC, then your emergency fund should always be full. If it is more, then you'll have to find some other places to cut corners so that the emergency fund doesn't dwindle away.

Calculating these should also help you decide which refi or HELOC is most appropriate.

[34saving]

I'm still thinking refi. at 5.875% is better than the HELOC at 8.25% esp. considering your current mortgage is a 6% if I remember correctly. Any news on refi. fees? I know they vary all over the place, so it is really important to shop around. Also make sure that the refi. doesn't have any pre-payment penalties. That way as soon as you possibly can you can put the extra $400 (+ anything else you can earn and/or save) a month into paying off the mortgage principle. Just because it's a 30 year term doesn't mean you have to spend 30 years paying it off

[jevb]

Hey, I just got my August mortgage statement from Citi. It has an offer on it for a refi with No closing costs, application fees or appraisal fees, for current customers! I'm going to call them first thing in the morning.

[terry1156]

Originally Posted by jevb

Hey, I just got my August mortgage statement from Citi. It has an offer on it for a refi with No closing costs, application fees or appraisal fees, for current customers! I'm going to call them first thing in the morning.

Good. Hope that it turns out to be good. Don't be afraid to shop around. Find the best deal you can and then show it to your current mortgage lender. Many will match rather than lose a customer.

You mentioned earlier that you were on a bimonthly payment program. Are you paying for that? If you are, you'll want to get rid of it. You can make the payments on you own in most cases without paying anyone to do it for you.

[Tree0164]

I took a quick glance at the posts.

Personal finance is personal. Let's not attack people for their posts or their past choices. Nuff said on that.

I wanted to welcome you to the board. I personally wouldn't take a Refi and a Heloc to cover my credit card debt. You are just moving the debt around.

I would highly suggest that you read Dave Ramsey's Financial Peace or Total Money Makeover. It is great eye openning book on how to handle credit card debt.

Good luck!

[jevb]

Originally Posted by Tree0164

I wanted to welcome you to the board. I personally wouldn't take a Refi and a Heloc to cover my credit card debt. You are just moving the debt around.

I would highly suggest that you read Dave Ramsey's Financial Peace or Total Money Makeover. It is great eye openning book on how to handle credit card debt.

Good luck!

Okay, let's suppose I took your advice and did nothing. Then, what do i do in six months when the car needs $600 in tires and I don't have the cash to pay for them? Then what? I can't drive to work, I lose my job, I lose my house, and then we're looking at bankruptcy. Please tell me how your advice is going to benefit me in the near future. Please read ALL of my posts.