The Debt
I will give the bad news first. Remember, as stated in my last post, that we were credit card debt free until about 2.5 years ago. Because of a combination of medical expenses, lower income, and some not so good spending, we have a mountain of credit card debt. This is nearing the $50,000 range and growing. This means that were are spent about $20,000 per year over our income. This is right in line with what I have determined out overall current budget to be.
We have owned a home for 6 years now and after a refinance in 2003, our mortgage is $140,000 at 5.75%interest . In 2004, we rebuilt the kitchen and consolidated some debt for a total of $30,000 at 5.25%. Currently, that loan is at $21,000. Last year, we bought a new minivan and have an auto loan that currently stands at $11,000 at about 6.5%.
So, all told, we have about $222,000 in debt. Around $161,000 of the debt is mortgage on a house valued at about $250,000 on the low end. I believe that debt is fine, but the credit card/auto debt is what has to be curbed. To work on that, the first step is to get the rates down. They are averaging around 13%, meaning we are adding over $550 per month in interest alone. Getting the rates down to about 7%, lowers that to $300 per month. Big saving there. Time to get moving!!!
Filed under: Finance and Investing
