Input please

**patticakes** · 01-29-2009, 03:44 PM

We have had an attorney-filled past 6 months. Incurred many bills from that along with having to purchase a piece of property due to a builder screw-up (new $1044 monthly payment

) and now having to pull a chunck from our HELOC(balance 0) to settle a completely different matter.

DH wants to pull a bit more to pay off car & one other credit card since the payment for all of it will be less the original car payment. If the rate is so good, why wouldn't we want to pull more to pay off all the credit cards to we just make a few large payments every month versus all this little pidley lone.

If that is the case, those cards wouldn't be used (heck I haven't used them now for 2 months-huge step for me!) And probably shredded once paid off.

If the answer is right in front of my face, I apologize. My stress level has been high & thinking jumbled. And between the two of us clear, rational thinking has yet to return.

**mombottoo** · 01-29-2009, 04:09 PM

What do you mean by "pull a bit more"? Is it a standard loan you are talking about or another credit card?

If you are thinking of taking out a consolidation loan, I'd make sure you get rid of all but 1 of your ccs...otherwise you may find yourself right back where you are.

**Momto2Boyz** · 01-29-2009, 04:18 PM

If your pulling from your HELOC, then the bonus is that the interest is tax deductible. However, you are putting your home at risk, if for some reason things take a turn, and say you can't pay it due to lack of job, or whatever.

If you are questioning wether you can cut up your credit cards, then don't even think about paying them off with the HELOC. Only pay them off with another loan, if you have the will power to cut up the cards and CLOSE them all! When I was a loan officer, I saw so many people get themselves into trouble this way, and even saw people lose their homes. They would get money off the Home Equity to pay off the credit cards, then not close the cards and max them back out...then they couldn't pay any of it!

So be careful, with your house as collateral, but if you can do it, and cut up and close the cards, then it is a consideration.

But also keep in mind, if you have a 10 year LOC (which is a pretty common repayment terms for equity loans), you'll technically be paying off that car for 10 years. And if that car doesn't last that long, and you finance a new one, you'll be paying the new car loan, and technically, you'll still be paying on the old car that you no longer own.

**patticakes** · 01-30-2009, 02:05 AM

We understand paying off the car in another 10 years versus our current timeframe -- DH is also a loan officer & I teach First Time Buyer Homeownership classes in the area -- its just trying to free up $$$ knowing the market is in decline. The house is safe, I would put rentals in jeporady first, but also if I have individual cards vs one big payment I can juggle if need be. Still thinking this all through.

There is no question as to if I can cut up cards, I know I can.

The complete suck a$$ about this is the HELOC was obtained to assist in building our home not to bail our our keisters.

**Ilovesewing** · 01-30-2009, 09:08 AM

The problem 'I' would have with that is you can't snowball your way out of debt. For instance, if I have a car payment that will naturally end in one year, I can snowball that into my credit card and pay it off in two years etc. If you put everything onto one HELOC then the payment is what the payment is. Does that make sense? You will never have the option of your output getting smaller by paying off loans.....you will have the HELOC payment until it's paid. (It's early here so I hope that makes sense to you.)

**patticakes** · 02-02-2009, 12:12 AM

Originally Posted by Ilovesewing

The problem 'I' would have with that is you can't snowball your way out of debt. For instance, if I have a car payment that will naturally end in one year, I can snowball that into my credit card and pay it off in two years etc. If you put everything onto one HELOC then the payment is what the payment is. Does that make sense? You will never have the option of your output getting smaller by paying off loans.....you will have the HELOC payment until it's paid. (It's early here so I hope that makes sense to you.)

Completely understand. Not everything is going into the HELOC; after running budget numbers this weekend, by the end of the year, I should have one (big)credit card paid off and the other half way gone.

**itlw8** · 02-02-2009, 12:23 PM

I hate to make a short term purchase a long term debt. that 300 fridge will cost thousands if paid off over 30 years.

BUT if the interest is much lower and you can pay extra on the heloc to pay it off early then if you can stick to it. it can work If your interest rates are HIGH it may be the best solution

We did not do a traditional snow ball. I have transferred to a 0% interst that had an end date so even though it was the biggest I had to do it first. It was harder but it worked for us EVERYTHING extra went to pay that several times a month I went online and stuck extra payments on the account.

I guess you need to ask yourself WHY did we get in trouble and find out how to correct that problem.... My problem was not too much spending but bailing our youngest son out of financial trouble over and over. .... That was even harder to fix than my own spending.

Do you have a way to make some extra money? a p/t job?

**Greebo** · 02-02-2009, 12:43 PM

I may be reading this incorrectly, but it sounds like you're thinking about trying to borrow your way out of debt.

If I am reading this correctly, and you think about it in those terms...well, the answer should become clear.

**patticakes** · 02-02-2009, 02:13 PM

We are not borrowing our way out of debt we are ADDING to our debt due to a settlement agreement to stay out of court that could easily triple the costs of our settlement. In the money we are taking from the HELOC, we are taking extra to pay off the car. By doing so, the payment & interest is less than the car and I will pay the car payment amount towards the HELOC every month since I am already in the habit in doing so.

As for why I got in trouble. Running a business in a declining market, getting sued by greedy sobs who strung this entire thing out for a about a year draining our savings. Irresponsible tenants who thinks its OKAY to not pay rent on time every month or just pay a portion because that is all they got. Getting a new tenant in this market is costly & keeping one that almost covers the mortgage is better than paying the entire amount. Property taxes, repairs, life. My DH LIKES his good credit rating so I make sure the mortgages are paid first every month. The credit cards are my debt & at this point I don't give a rip what my score is just as long my DH's is fine-we are set up separately so this is fine with me.

Yes I have taken a part-time job that is quickly pulling me into full time, along with my orgininal job.