I have Two Credit cards that total $4,500 respectively,(My only negative debt) .I was doing excellent in paying my monthly payments, But because of a drop in my income, my payments became irregular to the point I could not keep up and had no choice but to stop all together, The whole process became worrisome for me, because it is my obligation and I can't continue. My cards are Locked and no longer used.(One acct. is closed by Creditor)
My rent pyt went up, my Utility pyt went up as well as my Car insurance. This has put a dent in my monthly income. I'm a senior citizen who lives on Social Security Benefits and Alimony. I'm retired/Single/Live alone.
When I access "Overview" it shows my total Debt Amount, but then when I access the TOTAL DEBT Link it shows my Total Debt as $0. This I do not understand.
I'm not married, but have a long-time Significant Other. We were struggling each month to pay bills on time, and wasting a lot of money too. I knew in my head that we were making enough money to live off, as well as being able to afford a car payment, it just wasn't working out in reality.
My solution was to make a list of all the fixed bills each month - tv, internet, insurance, rent, etc. and came up with a grand total. I divided that by 4 and came up with a dollar amount needed each week to pay the basic bills. Then I took my SO to the bank and we opened up a joint checking account for bills only. We both direct deposit enough money each week from our checks to cover those bills, with the balance going into our own individual checking accounts. The money in those accounts goes for gas, groceries, savings, impulse spending.
It's surprising how easy it's been to stay on track this way. The evening before payday, I see how much is left in my individual account, and allocate half of it to erasing past debt, and the other half into my emergency savings account. We've gone from being behind every month, to caught up and saving money every month now!
Again, I keep reading your post to see if it would work for me, And I do find it interesting to open a stand alone acct just for bills. But the last part "About "Money Left over" right before payday add it to your balance that's negative" for myself" whatever I have left after paying bills, keeps me going until maybe a day or two before payday. There is never "Money" leftover.
I currently owe about 73,000 on mortgage but have about 40,000 in cc debt, unsecured loans through my credit union and a few medical bills. Our house is valued at 230,000. Should I refi and pay off all debt? My interest rate would probably go up from the rate it is now which is 3.87% and we have about 11 years left on mortgage. Thanks
This is my opinion, and my opinion only. I'm not saying it's best for you. I'm saying it's what I would do were I in your situation and decided at that point I wanted to get out of debt. (I've been debt free for about 10 years now.)
Lets say your CU loans and medical bills are $25K just for the purposes of "my opinion". 🙂
With $73K owed on the house, $40K in CC debt and $25K for the other stuff, that comes to $138K. I'd look at a few numbers first.
Whats the total of all my payments each month, including the house? Y0u need that "magic number" which you can get quite easily.
Once I've got that number then I'd want to look at doing a refi on the house for "no more" than $140K and I would require of myself that it be a 15 year mortgage at the absolute longest. The shorter period on the mortgage will get me a lower rate than a 30 year mortgage will. Additionally, payments on a $140K mortgage at 15 years will be damn close to (maybe less? maybe a bit more?) than my current payments on the 30 year mortgage I now how. But I'm not looking at "just" the mortgage payment I'm making now. I'm looking at the total of all payments I make each month; mortgage, CC payments, CU loan payments, medical bill payments; the whole nine yards.
Now I did a bit of work with the intrate excel program.
If I refi the house for $140K for 15 years with a 4.5% fixed interest rate, my payments (not including escrow) will be $1,070.99 a month. When you figure in escrow for the property taxes and insurance, where I live that would be about another $200 a month, absolute tops. My last property tax bill was $1,100 and my last insurance bill for the year was $857. So that's roughly $2K for the year. Figure that into escrow for 12 equal payments a month and that comes to an additional $163.10 a month added to the payment for escrow. So I'd be looking at monthly mortgage payments of $1234.09 per month. I'll play it safe and round it up to $1300 a month, since my intrate excel spreadsheet isn't perfect with a margin of error of less than 1% (which adds up fast on longer loan terms). Then knowing that property taxes do get adjusted every year, I can pretty much figure I'll have the house paid off (or close to it) before the taxes and insurance would cause my escrow payments to rise above $200 a month.
So I've got my figure of $1300 a month which is the "highest" I would expect to pay over the 15 year loan term. Now lets look at the total of all the payments I'm making now. If it's more than $1300 a month, I'm gonna do the refi with the intention of "never" getting myself into this kind of crap again. Not. Ever.
Once the re-fi is done and all the debts are paid, I'm going to spend however long it takes to use my "savings" realized from lower payments on all that debt I paid off, to build myself an emergency fund of no less than three months of living expenses. Generally though, I recommend anywhere between 3 and 6 months of living expenses. That way, if you lose your job or end up unable to work for "any" reason, you've got a bit of breathing room while you seek other sources of income.