Making Money Journal

So now I have laid out our family finances in the previous posts. We are trying to come up with options on how to tackle the $50,000 in credit card debt. Currently, just the minimum payments hover around $1200 per month. Because of this, we keep feeding the debt. There will be no possible way to pay down the bills if we keep adding to it.

At the same time, I am looking at where in our monthly expenses we can trim some dollars. The first place I see is the grocery bill. If we can keep a close eye, I am sure $100 can be knocked off easily. Clothing and gifts is another area, but very tough to keep track of because there are peaks and valleys there. Gas is a problem since who knows where prices are heading. We could eat out less and trim some activities, but not our older daughter’s piano lessons.

I have guesstimated that my wife’s promotion will bring in around $310 per month. This is done just by playing with the new pay rate and hours. Could be low, could be high, but seems not too optimistic. So taking this into consideration and adding it to the changes above, I have come up with a new budget.

So with no change to the loan payments, the negative number falls to below$1000. Not bad for a start, but it still means we have to throw that amount on the credit cards, and don’t forget the interest on those cards. So we have to cut more expenses and also lower the payments on the credit cards.

For the latter I am wondering if a home equity loan is a good idea. I ran some numbers on a 10 year loan and what I think is a high 7.5% rate and came up with about $600 per month. This halves our current payment and brings the negative total to $400. The thing I don’t like about the loan is that it will take 10 years to pay off, but maybe with more raises and bonuses, we can accelerate the payments.

So the question is if that 10 year Home Equity loan is a good idea?

Filed under: Journal

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