I want to get my debt under control.

[EMP912]

We have gotten ourselves into a bit of a financial bind. A few of the stupid moves and A LOT of things that have been out of our control. Well I do not like being in debt this much and right now I do not see the light at the end of the tunnel.

We are looking at our options for the best way to get out of this and hopefully get some stuff paid off and lowering our monthly money going out the door.
I know people on this site understand this stuff better than I do and I am sure some have even done this stuff before so I am hoping you all can give me a few pointers and which one is the best way to go.

2nd mortgage, HELOC, or consolidation.

We owe 118,000 on our house. It will appraise for at least 165,000 – 170,000. So we have equity in the house. We are around 30000 with the vehicle we want paid off and all the other bills that we have.

I am leaning toward a 2nd mortgage because it is a locked rate while the HELOC is variable. At least that is how I understand it.

Any suggestions.

[ontrider]

That does sound like a good option... I don't know much about finance and debt control, but it would seem like you've covered the obvious things.

If you want to get rid of your debt, you will need to do the second home loan or some type of consolodation loan... whichever will get you the lowest interest on payments I would assume would be the choice.

You also need to take a serious look at spending habits, and needs vs. non-essentails. What can you cut out of your budget every month? There must be something that you don't have to have or spend money on, or perhaps try and spend a bit less every time you go out.

Maybe you can get a meeting with some type of credit counselling service as well that will assess your situation more thoroughly and make suggestions as to the areas you can cut back to reduce payments.

Again... I'm just throwin' crap out there, I don't have any experience here.
Seems pretty basic though. Lower interest rates + spend less $.

[EMP912]

Thanks Ont.

Yeah we were actually starting to do a lot better. I have never been one to spend much on anything. My wife tells me I am cheap skate and that makes me feel good and take it as a compliment. Still we made a few bad choices but I major issues are stupid Dr. bills. Things that are out of our hands.

I was working a 2nd job to try and get this all under control.
With my first job, 2nd job, other responsibilities I have I am killing myself. I have to slow down or even more Dr. bills will be coming in. Either way I really appreciate the suggestions and any information.

[ontrider]

EMP912, sounds like you have a good handle on it then. That type of stuff is understandable. I know a lot of people that work at financial institutions and usually it's just people overextending themselves... buy a big house / boat / car... then stretch themselves to make the payments and put everything else on the good old CC. Before they know it they have 8 Cards maxed out at 18% and their lease is up and they're already behind the 8-ball with nothing to show for it. Sounds like you are doing the right thing though!

[edrex]

Hey man, congrats on making the decision to get out of debt! I finally made that choice too twards the end of last year. I have Credit card and auto/boat loans that I want gone, and if I stick to my plan I will be debt free in about a year and a half.
Before taking a second on your house, I would look really hard at your debts/spending habits. You might be able to get everything under control just by laying out a gameplan as to where your extra money will go each month. You will have to pay for a 2nd (which I'm sure they will just add in to the loan and you will end up paying interest on that part too) so you need to make sure that the costs of getting the 2nd will actually save you money in the long run.
If you want to share a little more info (breakdown of each debt including amount, interest rate, minimum payment, plus how much you have each month to go twards those bills) we might be able to offer a little bit better advice.
There is a thread on another forum that I'll post a link to for you (the forum is down for an upgrade right now) that motivated me to get my debt under control. There is a ton of good advice in that thread about situations like yours. Once I can access it, I'll send it over to you.
Good luck man!! Once you start heading for the light it really does get brighter and brighter!!

[edrex]

Found the link:
Here
He went from around $34k debt in Jan 2005 to about $3k now.
It's a long read, but you can skim through and find the posts that have real advice in them. I laid out my debts for advice starting around post #304 and got some good advice from the guys there.

[Wakebrad]

EMP912, $30ks not too bad if a good portion of it is for a car. I would think the most important parts are getting rid of the high interest payments like credit cards. Those are what will eat you up. A car loan at 4-5% isn't bad. Most of the families I know are still paying off both of their cars. My wife and I are fortunate that we've had both of our cars paid off for 3 years now. Helps to put that extra money in the bank, making interest instead of paying it. Our next 2 cars should be able to buy cash.

[jjaszkow]

EMP912, as others said, you really need to look at the options before looking to the home equity to pay down your debt. Keep in mind that with HELOC, you will likely be paying a fee to TRANSFER your debt. My suggestion is to keep the transferring to a minimum, unless there is a clear advantage (either much better interest rate ... don't forget to calculate this using all fees, or if you are overextended so much that a lower monthly payment will be the difference betweeen making it or being so close to income that you risk missing payments).

I don't have much experience here, but I understand that often times, high interest credit cards and other unsecured loans can have their interest rates reduced by negotiating with the companies.

There are two ways of looking at this: 1 - Pay off highest interest loans first, and then apply the payment as an additonal amount to paying the next progressively smaller interest rate. 2 - Pay off the smallest loans first, then apply the additional $$$ freed up to the next larger loan.

Which one to choose would really depend on how disciplined you are. If you already have very good financial discipline, I would use option 1. If less so, I would use option 2, because the reward of paying something off will make you feel like you have made progress.

Good luck with this. I hope that things go well (and quickly) for you.

[Bowen]

EMP912, you have any updates? How is it all going so far?

Also, some further advice.

1. Call your credit card companies and explain the situation, many will lower your rates on the spot and work with you to set up a payment plan.

2. Are you upside down on the car? If not, consider selling it to pay it off and get something über cheap but reliable.

3. Have you called the Dr.'s Office and tried to work out a payment plan? Most Hospitals and many Dr's will set something up with you.

4. Personally, I'm personally weary of taking out other loans to pay of debt. I feel like it's just more debt to think about, but I understand the want/need to do it.