Refinancing plan starting Dave Ramsey total money make over

[JenniferG]

Hello everyone I've got my husband on board and we've started the total money make over I'll start with my question and then give a quick budget overveiw.


I purchased my home in 2010 30 yr mortgage at 4.25 for 127000 fast fwd 5 yrs and we owe 113k. Current monthly payment is 1040 with taxes and insurance. I called the bank today and to refinance to a 15 yr loan would cost 3k and bring my payment to 1208 assuming we will rid ourselves of the pmi charge. The mortgage company has offered to have our home assessed for free currently homes in this area like ours are selling for 150 to 155k. We are planning on paying the home off much sooner.


Current debt

Mortgage 113k
Honda 16300 payoff dec 2016
Truck 18000 payoff june 2017
Credit card 3200 payoff april 2016
Nebraska furniture 2700 payoff April 2016

Payoff using snowball

Savings me 1500
Husband 10k (this is for his business ef plus money saved up to pay taxes)

My take home 3600 plus monthly bonus up to 500
Husband make 50 to 60k per year he has a remodeling business but he brings home at least 3200 per month he pays taxes at the end of the year

Total take home 7k

Mortgage 1040
Honda 540
Chevy 415
Electric 200 ( I plan on shopping for lower rate plans )
Gas house 30 (more during the winter)
Att cell 200 ( We owe 600 each on our phones thinking of paying them off and switching to cricket mobile)
Internet 84 ( 8 months left on contract will switch to cheaper plan around 50 dollars)
Water 80 - 120 (live in Texas and we water the yd during the summer for foundation)
Car insurance 160 (Chevy and Honda)
Dish network 120 (we're on contract for a year will look for something cheaper then)
Groceries 500 (we've decreased this)
Netflix 8
Church 400


Total 3797 (additional goes toward entertainment, household items, eating out etc.)

Nebraska 111 min (husband is paying 500 a month from his personal account until paid off we owe 2700)

Boa cc ( I'm paying 500 a month from my personal account until paid off we owe 3200)

We will then snowball 1k towards the cars.

Extra money going toward debt per month 1k



My savings per month

Ef 150
Vacation 30
Christmas 30



We originally bought the truck for my husband work however he was putting so many miles on it that he purchased with cash a second truck to keep the miles low on the new truck. Hindsight he should of just purchased the truck for cash. We paid 5k down on the truck so we're not upside down. Since we will be able to payoff all of our debt except the house by June of 2017 we've decided to keep the truck.


My 401k 40k
I've decreased my contribution once we get our debt paid off in June of 2017 I will put 15 percent and husband will open a Roth to contribute 15 percent

My husband is self employed and we are in need of a health insurance plan for him that's affordable he just turned 30 any suggestions would be greatly appreciated. This is my top concern at the moment is for him to have health insurance no reason not to. I currently pay 300 a month at my job for mine.

Also since my husband is self employed and pays other employees his business account fluctuates a lot. We currently have 3 checking accounts 2 personal and one joint we put 2k each into our account totaling 4k per month for our expenses house utilities cars and groceries etc. My husband also has a business account. What ever is left over goes to our personal accounts from our personal accounts we pay for gas clothes etc, we also use 500 each from our personal accounts to throw at debt each month. Any thoughts on this? I feel like there is more money we could be allocating towards debt each month but since we have separate accounts it's hard to manage.

My goal is once we get our debt paid off is to open a joint checking account and save up 6 months of living expenses (30k)

[corn18]

My 401k 40k
I've decreased my contribution once we get our debt paid off in June of 2017 I will put 15 percent and husband will open a Roth to contribute 15 percent

Does your employer match any of your 401k contribution? If so, you should contribute up to the amount they match. Hard to find any investment that offers a 100% return.

[JenniferG]

They dont offer a march they do offer a stock share and I contribute 20 dollars a paycheck

[snafu]

Could you include interest rates? Do you know your FICO type score as it is helpful in negotiating interest rates for a new mortgage. Have you explored what other lenders can offer? You need to understand that when you re-negotiate a mortgage you reset the ratio of sums going to interest and principal. A mortgage is not a straight forward loan like those for vehicles. You might print a payment schedule for the first 5 years of this new mortgage plan to see the damage.

Is it in your plan to combine income and expenses in a 'family' plan or have you both decided to manage finances separately? How do you fund house maintenance? Do you each have term life insurance? Self employed, does DH carry disability insurance? How would injury, accident or illness affect his income and the DR plan?

Sorry for so many questions

[JenniferG]

Currently our interest is 4.25 percent for 30 years to refinance for 15 years I was quoted be 3.6 percent and the cost to refinance would be 3k which would roll into our loan . Our monthly payment would go from 1040 to 1208. I did look for lower rates however the cost was 7k. My fico score is 754. our plan is to be debt free by June 2017 and then save 3 to 6 months of living expenses using our snowball. Hopefully by 2018 we can then use our snowball to payoff the house which Im figuring will take around 4 years in that case I'm not sure if it's worth it to refinance at this time. given what you said about resetting what goes towards principle it sounds like we could possibly end up paying less towards principle if we refinance then we are currently paying right now? Definitely something to look into.

I spoke with my husband tonight about combining all of our accounts his income varries so much it's hard to budget precisely, ideally all of our income would go into one account where he would set aside separately a percentage for his taxes and his buisness expenses would go directly to his buisness account. Then we would be able to have a set amount go into smaller savings accounts (like capital 360) for things like home maintaine, gifts and hoa dues in addition to an ef.

I currently do have life insurance and ltd however my husband has neither. Right now my main concern is him getting health insurance even if it's a higher deductible and lower cost per month it's better than nothing. I definitely think looking into both ltd and life insurance is a great idea once we settle on a health insurance plan.

[greenskeeper]

If the "paid off" truck is doing the job, sell the financed truck that will free up $415/month plus less insurance costs.

[Jluke]

You need to plan your payoffs based on interest rates.

I imagine the credit card and Nebraska card have the highest interest rate.

Pay the car loans off naturally and/or sell the nice truck. If you have a Honda loan that is probably 1.9% or 0.9%, which is pennies in interest.

Focus on your mortgage and retirement.

I bet you will save a ton of money in interest by either refinancing to a 15-year loan or putting any extra money you have on the current 30-yr mortgage. Download an amortization schedule. Resetting your mortgage doesn't have the same impact on interest/principal b/c you are knocking 10 years off your loan (less if you pay aggressively)

You are definitely on a good track but I think some of your priorities could shift if you take a closer look at your "bang for your buck" in paying off your debts.

[JenniferG]

Good afternoon,

Right now the highest interest card is my boa at 18.99 and Nebraska furniture is 24 months 0 percent interest, your right instead of me throwing 500 at the cc and my husband paying off the Nebraska we should payoff my boa first.

As far as the Honda it is 1.99 and the truck is very low to around 3 percent without looking at the paper work. As far as selling the truck it would be a stretch to convince my husband to and since we should be able to pay it off withing a year and a half we've decided to keep it.

According to the amortization schedule if we refinance 485 each month would go to principal and 350 to interest vs currently 398 going to interest and 226 to principal

[Jluke]

According to the amortization schedule if we refinance 485 each month would go to principal and 350 to interest vs currently 398 going to interest and 226 to principal

Given the numbers in the first post (127k at 4.25% for 30 years), I don't see a 50/50 principal to interest breakdown until 2023. I must be missing something.

Also, you should prioritize so you are not paying PMI either.

Another factor to consider is the total interest paid on the mortgage. Figure out when you plan to have it paid off under the 30-year loan and calculate the total interest paid to that date.

Then do the same for the 15-year refinance. But for the 30Y, expected interest is almost 98K vs 34k interest for a 116k loan (113+3k), 15Y at 3.6%.


Aside from the boa credit card, your mortgage represents a good opportunity to save a lot of money.

[ktmarvels]

Currently our interest is 4.25 percent for 30 years to refinance for 15 years I was quoted be 3.6 percent and the cost to refinance would be 3k which would roll into our loan . Our monthly payment would go from 1040 to 1208.

Have you run the numbers to see if you just make an additional $170 principle payment each month on your current loan?

[snafu]

I'm delighted you're both onboard to prioritize to eliminate debt. You will need to include their fees [$ 3K] when working out mortgage sums. Will the new evaluation be sufficient to eliminate PMI? How much has PMI added to your monthly payment? Will you continue to allocate that sum to helps with $ 168. payment increase?

With a 754 score, I think BOA's 18.99% is excessive. I suggest calling talking through their hierarchy until someone brings it to more reasonable than 20% You could likely transfer the sum to a 0% CC if you're sure you will pay it off before interest smacks you again.

I'm concerned if you have no savings at all. Would you reconsider the paydown plan order to designate a sum each pay to at least have $ 1K designated as emergency [savings] fund.

[Jluke]

Have you run the numbers to see if you just make an additional $170 principle payment each month on your current loan?

With the information given on the 30Y plus some assumptions (and note that my amortization did not match the principal/interest ratio she gave), adding 170 per month starting in Jan 2016 reduces the amount of interest paid over the life of the loan to 74k and it would end some time in 2032.

But I also get the impression that she wants to pay the mortgage off sooner - just not sure when exactly. So I can't say for sure that the 15Y is definitely the right way to go.

[LivingAlmostLarge]

Maybe with the debt it's time to put into your joint account all you need to live and any extra money goes to debt. You have a lot of car loans. I would be uncomfortable with that much debt hanging around in cars personally.

[JD2775]

Your math isn't adding up:

Honda 16300 payoff dec 2016
Truck 18000 payoff june 2017

your timetables on those balances aren't realistic with these monthly payments:

Honda 540
Chevy 415

Or am I reading that incorrectly?