$50,000 In Debt...Advice Needed

[disneysteve]

You can't borrow your way out of debt.

[bjl584]

Can you post your monthly income and expenses?

It might make more sense to stay put and work on paying off the debt via working more, selling unwanted items, trimming your budget where you can, and downgrading certain aspects of your life.

Yes, it may take longer, but selling a house, buying another one, paying closing costs, PMI, realtor fees, moving expenses, and everything else seems like a complicated and expensive way to get rid of $50K in CC debt.

[Gailete]

In your first post, (2-13) you wrote this:

Both cars have under $10,000 left to pay off.

6 days later (2-19) you wrote this:

We do not owe any money on our 2007 and 2011 cars

In 6 days you managed to pay off an awful lot of debt. At that kind of pay off rate, you should be able to get rid of $50K of cc debt in a month or two. Or do you have 4 cars? Two with loans and two without?

I appreciate all of the advice but I am surprised not one person seemed to consider the merits of my plan...paying off big CC debt right away and the rest relatively soon after

Because for whatever reason, none of us see any merits in your plan. One of the reasons that people would like to see you income and outgo, to see if there is another way out of this difficulty. For instance when you say you make $80K plus $3-5K in bonuses, is that all pre-tax or after payrall deductions? It makes a huge difference. When we have folks come here and say they make $250,000 and can't make ends meet, I always figure it is because in their head they see themselve as making a quarter million$$$/year and spend as if that is what they make. In reality, they are probably bringing in around $180,000 which is a whole lot less in spending power.

As someone that lives on a whole lot less than you, I too wonder if you have leaks in your budget that you just don't notice, that we could see and help you with. Part of the problem is it seems all you really want is confirmation from some of us that you have an amazing plan to get out of debt. I don't see it as a great idea, I see it as a plan that can run you into difficulties that you may not even be noticing that is going to take even more money out of your wallet and what you think you can pay off. Buying a new place just 5 miles further away from you job, depending on your mileage in your vehicle, is almost 2 gallons extra a week, 8/month. That means your gas budget is going to have a bit of trouble. Same when you wife starts working, there is the transportation costs for her as well. And that is just one aspect of dribbles out of your budget with moving.

Will you end up in a different school district? The best thing I felt I ever gave my boys was they were in the same school district/school complex until they graduated. Same thing with their stepdad did as well. I feel very left out when the three of them start yakking about school. Whereas I went to 8 different schools including moving between 10th and 11th grades 3000 miles away. It wears on a kid both academically and with socializing. And if they do have to move school districts, is it for 'better' schools or 'worse' ones?

There is so much more that goes into a move than just the money you will get and you have to look at all those aspects. Those were just some examples.

[autoxer]

I am not being difficult I just don't see how that is convoluted?

Because shifting debt from a credit card to a larger than necessary mortgage isn't exactly eliminating it. Start tracking your net worth, instead of just your debt and you will see that this transaction is just lowering your asset pool and lowering your debt pool at the same time. Actually it will temporarily lower your net worth, because of all the other costs that bjl584 just mentioned.

The only way this move is a good idea is if downsizing actually lowers your total housing expense. This includes maintenance, utilities, taxes, insurance, interest (and PMI). Going from a $220k house to a $180k house might not have a huge impact on the total monthly cost. Sure the principal will be lower, but the maintenance, utilities and interest could be higher.

[Jluke]

I think your plan is weak and will lead to more debt. sorry...

I've been following this closely and now more than ever, I am sticking with my original conclusion on your plan...


Yes, I just quoted myself

[breathemusic]

I realize I'm late on this, but as someone who recently bought a house, you could totally end up blowing your budget set aside for any minor home repairs in the new place. Inspections can be hit or miss. So that's a big risk that you're taking.

Also, I'd like to reiterate what someone else said in the that I believe for FHA loans you have to pay PMI for the life of the loan now, not just until you have 20% equity, so that's a big waste of money.

I realize that you're not wanting to spend years and years paying down your CC debt, but if it's split across more than 1 card, you'd be surprised at how it can snowball as you pay each card off and free up more cash flow. Also, over time, with your wife getting back into the swing of work, maybe she would have the opportunity to make more money after the first year or 2 after getting some work experience under her belt?

You could also consider doing some 0% interest balance transfers on portions of the debt that you think you can realistically pay off during the initial 0% time frame to try and reduce all the interest building up on those CCs.

To me, the risks of selling, buying, and moving just aren't worth the hope that you can pay off the debt a bit faster. If you hate the home that you're in now and moving isn't forcing you to downsize to something uncomfortable or something your family will struggle to grow into, then sure, it might be something to consider. But if you like your current home, schools, etc. Then that's a big change with a lot of risk to have to make when there are probably other alternatives.