Please advice 180 000 in unsecured debt ..any thoughts?
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    Default Please advice 180 000 in unsecured debt ..any thoughts?

    Hello everyone. We are in our late 40's 3 boy's 1 on his own 1 in university (last year) 1 in last year of High school'
    We have a mountain of debt. It consists of travel house reno ((100 000) University costs and I went of the rails and got caught up with gambling (mid life crisis) for about 3 yrs. My hubby had no idea I had acquired aprox. 90 000 on credit. Yes Crazy! but that 90 is added on to our aprox 95 000 we had already on 2 lines of credit. We are lucky that our debt is on lower rates but some have recently converted back and the highest interest we pay is 11.9 % ..that being said I had confessed everything to hubby and haven't gambled since march and I'm now addicted to paying off debts and committed to becoming debt free. I have started the Every Dollar budget this is 3rd month. We have paid off about 13000 extra in 3 months. Long way to go though.
    So our income is gross about 205 000 last year.. will be a little less this year prob 185 000. Hubby's bus. sold new owners..so income dipped a bit..should recover though as things stabilize.
    We owe 175 000 unsecured debt.
    plus mortgage 270 000 2.4% 2.5 years left on term house worth 450 000
    1 car loan Hubby's mid life 600 per month 48months
    I have paid off 1 cc of 7500
    2000
    4000..plus all reg payment on everything else.
    We have 80 000 in RRSP we contribute 600 per month. and our 1000 baby EF is funded.
    I would like to have us debt free in 5 years except mortgage..Looking at our situation do you think its possible? I don't think anyone could be as bad as us..
    We are both committed and sick of debt. I'm wondering about opening up the mortgage and using equity also may be able to get a fixed 9% 40 000 personal loan to pay off considering this. Just so things are more stable. I love the Every Dollar can't believe how much this has helped. We pay cash for everything only automatic debits and bill pays come from account.
    I have extreme anxiety over this and of course guilt for what I've done.
    Thanks to everyone in advance.

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    Debt is all relative. With your income level, I'd say you should be able to make significant progress on paying it off in five years, especially if you have taken steps to address how the debt was acquired in the first place.

    I paid off about $100K in debt over five years myself on a lower income (though with my side business I built in the last three years, it's getting pretty close) so I know it can be done.

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    plus mortgage 270 000 2.4% 2.5 years left on term house worth 450 000
    I'm not familiar with Canadian mortgages - but in the US I would refinance the house, get a 30 yr, fixed rate, $360,000 loan (about a 3.6% rate). Apply the $90,000 to your $180,000 debt. Then sell whatever interest you own in the travel house (is that like a Time Share in the US? Or an actual house?).

    I would keep the collateralized loans (the car, etc), and pay-off the revolving consumer debt.

    Prioritize the RRSP investing - that will be far more important to you 20 years into the future. If you can, increase the investing from $600/m to $1200/m, keep the money in 10%/yr investments - your $80,000 will grow to about $1,350,000 in 20 years. That $1.3 M is way more important to you that prepaying a small car note.

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    Hi thanks for the reply...
    Our mortgage has 2.5 years left on the term we owe 270 000 and the house is worth about 450 000 ...In Canada you can borrow up to 80 % of your equity if you qualify. We do not own any other real estate. So we could refinance but I'm not sure bank would do this unless we had some of this debt paid down first.
    Yes I'm only concerned with paying down the unsecured debt right now. Then ramp up the retirement fund. ..Right now our main goal is to pay down this debt as fast as we can.
    Thanks again.

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    Yes I'm only concerned with paying down the unsecured debt right now. Then ramp up the retirement fund. ..Right now our main goal is to pay down this debt as fast as we can.
    An important concept in wealth-buillding is to apply your income stream to it's highest and best use. Usually, that is to invest in a 10% or 11%/yr account as young as possible ("time" is very important). So if you direct $10,000 of your money to prepaying a car loan, that costs you about $250,000 in 30 yrs. So be careful about spending your money on prepaying loans - (I became wealthy by doing the opposite). With your $205k/yr income, you have the opportunity to direct it to wealth-building.

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    Quote Originally Posted by old guy View Post
    An important concept in wealth-buillding is to apply your income stream to it's highest and best use. Usually, that is to invest in a 10% or 11%/yr account as young as possible ("time" is very important). So if you direct $10,000 of your money to prepaying a car loan, that costs you about $250,000 in 30 yrs. So be careful about spending your money on prepaying loans - (I became wealthy by doing the opposite). With your $205k/yr income, you have the opportunity to direct it to wealth-building.
    Yes I get what your saying....I won't worry about our one car loan or the mortgage....just the unsecured debt...then wealth building.
    If you follow DR he even advises to stop all investment until ALL debt is paid off...but I'm with you I think that's too extreme at our age..also we need the he tax deduction of RRSP's as hubby is in a very high tax bracket..
    If I can just get rid of the unsecured debt we can put even more than 10% away by far.
    Thanks again ..it's good to get other perspectives on things.

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