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Not sure if I have posted in the correct area or not...I've been lurking at this site for years. You guys are amazing. I admire all of you for your frugalness :smile2:


Now I need some advice myself...here goes my story

I am almost 50, my husband is 54. We recently took full custody of 2 of our grandchildren, who came to us with just their clothes on their backs. This was after their father died from a drug overdose. We actually got them when they were 4 months old and 4 years old....This being said, our youngest daughter was a Senior in High High School. So we went from the beginning of empty nest to enrolling our daughter in College, starting one in pre-k and the other in Daycare. Basically we started over again. We have now had them for 4 years and they are in our permanent custody/guardianship.

Along the way with us not having anything for them we have maxed out everything we have, including credit cards. I figured up everything that we have accumulated bill wise....it is $40,000.00. Now this did include getting our daughters college stuff for her dorm.. and a few other things.

What was I thinking???? What a mistake!!!:sad:

We have 3 years left on our mortgage and we will offically own our home.

My question is this: Do I get an unsecure consolidation loan and pay it off in 5 years? (the payment would be half of what we are paying now on the credit cards) not to mention a lower interest rate.

Or do we continue to pay these ridiculous monthly payments...

Or do we re-mortgage the house and get the money....I can't believe I have done this. I need a way to pay this off without being so strapped...

What do yall think?
 

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First off, don't beat yourself up about it. What is done is done. Feeling bad about stuff you did in the past does not help the future. Also many of us here have (or have had) higher debt with less good reasons than you. Or maybe that is just me.

A few things to think about:

What is the interest rate on the cards? Is some of it higher than the rest? What kind of interest rate would you be getting on your other loan options? How much would you save?

If the credit cards are at very different rates, a good strategy is to not pay all of them equally. For example, we put as much as we can on the highest interest card and the minimums on everything else. After that card is paid off, everything goes to the next highest card. If you just have one card at really high rate it can help to take advantage of the balance transfer options some credit cards offer.

This does not have to be an all or nothing choice. You could do some sort of consolidation on the highest rate cards and pay the other cards off regularly.

A couple things to think about for the home mortgage:
How long will it take to pay off with this option? How confident are you that will want to stay in that home till it is paid off? You can still sell if you owe money on the home, but it is easier if you do not. We are in a situation where we would like to move because my husband is starting to have issues with the stairs. But we rolled a chunk of debt onto the mortgage so the current equity in our home is pretty low. This makes selling it problematic.

You want to pay things off as fast as you can, but you also want a plan where the monthly payments are something you will be able to make. Consolidation/mortgage takes away some of the flexibility. If things are not consolidated you can pay more on the debt on the months you can and less during months when unexpected expenses come up.
 

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I would refinance the house. A consolidation loan is still an unsecured signature loan - high interest rates plus fees to the consolidator. And the revolving credit card loans have toxic interest rates.
Your major capital is the equity that is locked in the house - that equity is just sitting there earning almost nothing. I would mortgage 80% of the house value, get a 30 year fixed rate loan, it will have a low payment, guaranteed not to increase for 30 years, probably 3.6% to 4%. Then put that money to work for you - pay off the toxic loans, invest the rest in a longterm SP500 Index Fund where it can grow and be available for your retirement and for your second family's needs over the next 15 years.

""What a mistake!!!"" No, not a mistake at all, it is a great thing that you are doing for these children. Just rearrange your assets and keep doing the good things that you are doing, you will be proud of those kids.
 

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You can still sell if you owe money on the home, but it is easier if you do not. We are in a situation where we would like to move because my husband is starting to have issues with the stairs. But we rolled a chunk of debt onto the mortgage so the current equity in our home is pretty low. This makes selling it problematic.
Kathy - not really problematic. All of our rental houses had mortgages on them when I sold them. And I see quite a few house sales, in general, I would guess that over 90% of the houses that are sold in Phoenix have existing mortgages. It's easy to handle, the new lender pays off the current loan and initiates a new loan for the new owner.
 
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I don't have the experience of the others but I can tell you my mistake. I did the re-finance so instead of living in a paid for house I am now looking at 15 years of payments. I regret it each month specially after losing my job and getting one that pays half what I used to get.

If you can live through your monthly 'hell' for 2 years, I would recommend doing that.
 

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Have you checked out a home equity loan option? Perhaps that would be a meet in the middle option for you.
 
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