Comments on: Just the Facts, Ma’am.

By: jolyn

jolyn — Sun, 07 Feb 2010 18:26:49 +0000

This just proves that sometimes the apple doesn’t fall far from the tree, and all that. I was thinking of doing a modified version of that exact thing: Figuring out about how much extra I thought we could put toward the 2nd in the time we have left in this house and putting that amount on a 0% offer. Not only w/we save interest on that amount, but that much more of the regular $283.90 payment going toward what was still on the 2nd would go toward principle and not interest.
Dave Ramsey fans would not approve, but this is how we have paid off our last two debts: The remaining consumer debt is our car loan that I paid off using a 0% offer, and we will pay that off in the nick of time before the promotional rate runs out. I think we have proven that we can do this responsibly, no matter What Dave Would Do.
I will only do this if I can get an offer with no transfer fees along with the 0%. Last time I had to ask for the no fees: The guy had to “wade through” our offers in his computer and magically finally found one that I fit my criteria! Just goes to show, having a good “I Love Debt” score can pay off! Heh. We do still get offers in the mail, but I have opted out of many mailings and I haven’t noticed 0% in the new ones… I will probably call the one that currently holds the one we’re about to pay off: Maybe they’ll be anxious to get our business back!

By: Jerilyn

Jerilyn — Sun, 07 Feb 2010 14:53:20 +0000

Here’s what I did with our equity loan (that had gone up to 8%) a few years ago. I rolled it all into a 0% credit card and paid as much each month as we possibly could. When the 0% expired, rolled it into another. The payoff went much faster without the 8%.
I don’t know if there are 0% credit card offers out there anymore, but there are definitely some under 2%. Just have to make sure there’s no charge for transferring balances etc.
This was my last step in paying off our debt (except mortgage).

By: jolyn

jolyn — Sat, 06 Feb 2010 03:19:08 +0000

Thanks, Tonya. I appreciate that. Unfortunately, we do not qualify: the bill supports those affected by BRACs and also those who purchased their home before 2006 (we bought ours in 2007). God-willing, we will sell for at least the amount we paid for it! But then there’s the realtor’s fees, and the closing costs due upfront…

By: jolyn

jolyn — Sat, 06 Feb 2010 03:09:52 +0000

No, it’s not too simple! It would probably be good for me to spell out why we don’t just sell everything; I’ve mentioned it here and there, but only in passing, I think.
I last looked into selling the Vegas rental a couple months ago. The market there is inundated with short sales and foreclosures. We would take a loss of at least $20K (from what we still owe) if we sold it now. We can cash flow it, so we’ll wait it out.
We are scheduled to PCS next year, so we’ll certainly be trying to sell this house then! If we didn’t have any plans to be leaving the area, I do think we would be looking into options to get rid of the second mortgage faster, either by moving, or some other drastic measures…
Three months? You give me hope! I’ve had a misstep this month already.

By: Tonya

Tonya — Sat, 06 Feb 2010 02:18:52 +0000

One more thing…there is a bill out that helps military families if they have to sell their home at a loss due to a PCS. Here’s something I found after a quick google search that has more info.

http://militaryfinancenetwork.com/2009/03/18/stimulus-plan-helps-military-members-who-lost-money-due-to-pcs/

By: Tonya

Tonya — Sat, 06 Feb 2010 02:06:19 +0000

Hi! As a fellow mil spouse in similar circumstances also doing the DR program, I say build up the emergency fund. There are always unexpected expenses with moving. SInce you have no clue where you are going, you have to prepare even more. You might need a downpayment on an igloo in Iceland. And yes, you are right…there is an AF base there. God help those that get stationed there.

After you have about 3-6 months of emergency fund saved up, then I would start saving for retirement again. I wouldn’t worry so much about the 2nd mortgage. Hopefully, it will be summer 2011 before you leave, giving you more time to get some equity built up. Refinancing probably isn’t a good idea because you might end up taking all the equity out on doing the refi without enough time to build it back up.

But that’s just my five cents. Hope it all works well for you all!

By: Our Lives

Our Lives — Sat, 06 Feb 2010 01:42:09 +0000

I am learning so much by just reading the comments. Fortunately for us we found Mary Hunt’s book (debt proof living) at the time when we were considering a second mortgage option. My thought on your situation may sound too simple, but would selling all of your properties to pay off the second mortgage and start over be an option? I might be missing something from your post? Please excuse me if you have already mentioned that is not an option.
We have considered selling our condo and start afresh a while ago except to found out that the rental in our town is much higher than our monthly payment. So we are sitting tight and just do DR’s snowball method and hope to be debt free in two years.
btw, my week 1 cash envelope was a success this week (after three months of doing it), I finally have gained some “self control” on spending with cash!

By: jolyn

jolyn — Sat, 06 Feb 2010 00:38:41 +0000

JoAnne,
I wasn’t trying to say we have to have 20% down, just that we should.
And you’re right: whatever we pay down on the 2nd is like paying ourselves (or at least sparing ourselves) 8.34% interest! So however much of that we can get rid of, we can’t lose!

By: jolyn

jolyn — Sat, 06 Feb 2010 00:19:39 +0000

This is why you are The Frugal Dad.

I had never even thought about using a ROTH in this way. We actually already have a small ROTH, with just a little over $3000 in it. (The exact figure fluctuates daily, of course.) I now realize that we already have something for an “emergency” — whether it be for moving expenses, or for bringing cash to closing if necessary. For my peace of mind, I would like to have roughly $10K altogether for combined moving expenses and the cost of selling the house, if necessary. Since you’ve reminded me of how a ROTH can be used, I am thinking we can throw another couple grand at the ROTH we already have, then save up another $5K in a money market (which we used to have, but depleted when we bought this house and never contributed to again) and then we’ll be good to go for tackling that second mortgage! If by some miracle we profited from selling the house, we could then put that amount toward fully funding the emergency fund…

Now I’ve just rambled my thoughts all stream of consciousness-like, but I’m so glad that you took the time to comment your ideas here! Yes, perhaps saving first and paying debt second is the more conservative approach, but peace of mind is important also. And I think it would be ill-advised for us to ignore the realities of our lifestyle and not prepare for something that very possibly could lead us to reaching for the credit card again. I know. We’ve been there.

Getting debt-free is just the first step: Ultimately, we want to live debt-free! (and credit-free, too!)

Maybe this should have just been a post?

By: JoAnne

JoAnne — Fri, 05 Feb 2010 23:07:21 +0000

I beg to differ on the Have to have 20% down to buy a home. As of right now for an FHA loan you have to have 3.5% down payment. I would pay off as much of your 2nd mortgage as you feel comfortable with every month. Remember you are paying 8.34% interest rate. So if you pay on that it is like making 8.34% interest on your money. The savings account that you have your emergency fund in is not making even close to that much. Once you sell your house then your payoff will be less and you will put that money back in your wallet, or emergency fund. I think it is best what DR says, pay off your second mortgage and pay it off fast. Of course I think putting $5,000 in the Roth IRA is a great idea! Whatever you decide you are on a great path!