I'm in CC debt of about $ 28.00. I put gas in the truck about 17 hours ago and did not feel like walking inside to pay. I'll pay it at the end of the week at the latest.
I check and pay online. That way I have the max limit in case I find the ultimate deal and have to buy 100 of them 
Been buying Spydercos lately.
Been buying Spydercos lately.
Amused
Elite Member
- Apr 14, 2001
- 57,171
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Yes, they are doing the right thing. The wrong thing was the debt on high interest credit cards, and if they refrain from charging those up again, they are doing exactly the right thing.
Remodeling is an investment. It increases the property value of their home. The worst thing you can do is let your home go. It is, for most people, your biggest investment. Unkept houses lose far more value than the cost of remodeling.
Buying a condo to live in during a lengthily remodeling is also a good idea. They can rent it out afterwards and have it pay for itself. A very wise investment if handled correctly. A good portion of my investments are in real estate. Even if they sell it after a year, they will have lost less money than would have paid in rent during that time (assuming they would have rented a large house or condo instead of an apt, and will lose any appreciation due to points and closing costs)
Paying off the cars is also a good investment. The interest rate on their current car loan is most likely 10-12% considering they bought the cars a few years ago. A home equity loan is lower interest, and tax deductible. Well, you've since edited your post to show that their car loan was 5.5%. Yet you say they say the cars are old. I'm confused. If this is the case, paying off the cars with this loan is not a good idea.
Speaking of lower interest and tax deductible, this is the main reason their plan is a good idea. They will save an incredible amount of money because of this alone.
I remember reading an article in the Houston Chronicle about 4 or 5 months ago about cc debt. I think it said the national average was around $10K or $12K. I don't remember the exact number. I know it was damn sure less than $20K, though.
Muadib
Lifer
- May 30, 2000
- 18,120
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Aphex I need to consolidate my debts cuz Citibank give me a permanent 24.9% APR on my current balance ~4k because I defaulted on the account few months back, I need some advice, what should i do? which debt consolidation company/organization that i need to contact and what are my options.
Vic
Elite Member
- Jun 12, 2001
- 50,422
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Not as much as you think, if any at all. Like I said, I've been a mortgage professional going on 8 years now, and it never ceases to amaze me how many people say "lower interest and better tax deduction" together in the same breath and fail to realize the contradiction. The mistake these people are making is not in the refinance itself (they are very much do for a refi), but in going with a 30 year term. I see it all the time, short-term thinking customers who foolishly believe that they are saving $200/mo (as an example) by lowering their interest rate from 8.5% to 7%. No, they are saving that money each month because they are re-amortizing their existing mortgage with (as an example) 25 years left out for another 30. In the end, the penalty from the lower tax deduction (caused by the lower interest rate) combined with 5 more years of payments wipes out all their "savings" and then some.
This particular circumstance is clear though. I am certain that these folks went shopping for the condo first. Their realtor hooked them up with a mortgage broker to do the loan for the condo, and the broker quickly discovered that he had to get their monthly debt load down to the lowest possible level so he could DTI them for the condo loan. No biggie as long as the customers understand that they are taking on debt for the rest of their lives in order to get this condo.
Question: What's the LTV on this deal? Rates have been dropping again and if the LTV is 75% or less on this cash out deal, the broker or lender is pocketing at least a point in fee on the back. On the other hand, if the LTV is greater than 80%, I would strongly suggest cutting the cash back (not paying off the cars). PMI on a cash out deal of that size would be relatively hefty and is NOT tax deductible.
Are your "close realtions" aware that shorter term mortgages, like 15 and 20 year terms, have lower interest rates?
Man...thanks everyone who answered in this thread! I appreciate it! You can always depend on ATOT for a reply, thanks guys!
I'm really in :disgust: towards my parents right now, -mostly about the CC debt. (Yes, these are my parents.) I knew the refinancing was a long time coming because- they have a bad rate currently like 7% or 8%. But when I found out they had credit card debt to pay off I was in shock! I was in shock they haven't paid it off already (like the first month they get the bill!) I was also shocked when they "jokingly" said for me to take-over the payments when I get that 'high paying job' after I graduate."
Ugh....man, though I won't hesitate to help out my parents when I can, I KNOW they're getting a bad deal here.
I talking about the 30year loan! And you guys confirmed it.
I wish they include me in more of these "family discussions," I was arguing for like 10min because, in the back of my mind, I knew they can get a better deal than this. But they come off as if there's no other option when they told me their going to refinance their house. I couldn't believe that.
I hope my parents haven't agreed to anything yet. Maybe I can't get them to talk to my uncle. He's a CPA. Maybe he can repeat to my parents just what you guys said in this thread.
God, it sucks growing up! I mean when you're a kid your mostly ignorant to most of these things. Which is bliss! -Not having to deal with these kinds of things.
So, am I right about my uncle? Do you think he might be able to talk some sense into them? [I'm not even sure I should bother]
Me? They always see me as a their little boy, and never really pay any real attention to me. But they're my parents and I :cough;love them:cough; anyway.
OK enough about this stuff, I guess you guys already had your fill of my story. And let me just re-illiterate that I read everyone's post and they were all very helpful! Thanks everyone for reading!
I'm really in :disgust: towards my parents right now, -mostly about the CC debt. (Yes, these are my parents.) I knew the refinancing was a long time coming because- they have a bad rate currently like 7% or 8%. But when I found out they had credit card debt to pay off I was in shock! I was in shock they haven't paid it off already (like the first month they get the bill!) I was also shocked when they "jokingly" said for me to take-over the payments when I get that 'high paying job' after I graduate."
Ugh....man, though I won't hesitate to help out my parents when I can, I KNOW they're getting a bad deal here.
I talking about the 30year loan! And you guys confirmed it.
I wish they include me in more of these "family discussions," I was arguing for like 10min because, in the back of my mind, I knew they can get a better deal than this. But they come off as if there's no other option when they told me their going to refinance their house. I couldn't believe that.
I hope my parents haven't agreed to anything yet. Maybe I can't get them to talk to my uncle. He's a CPA. Maybe he can repeat to my parents just what you guys said in this thread.
God, it sucks growing up! I mean when you're a kid your mostly ignorant to most of these things. Which is bliss! -Not having to deal with these kinds of things.
So, am I right about my uncle? Do you think he might be able to talk some sense into them? [I'm not even sure I should bother]
Me? They always see me as a their little boy, and never really pay any real attention to me. But they're my parents and I :cough;love them:cough; anyway.
OK enough about this stuff, I guess you guys already had your fill of my story. And let me just re-illiterate that I read everyone's post and they were all very helpful! Thanks everyone for reading!
Not sure of their situation, but if they're making $100,000 a year, they appear like they should be fine.
Let me just clear up some things that were said earlier:
<<I'm a mortgage loan officer and I do refi's like that all the time, except that I would recommend against any of my clients including a low-interest short-term debt like those car loans inside a long-term mortgage. That's a terrible strategy. Plus, at the age of 50, they should take out a 15 or a 20 year mortgage, not a 30. Who is this? Your parents? Sounds to me like they're getting suckered by one of those cheezy "make your payments as low as possible by re-amortizing your debt until after you die" loan officers. Very poor financial planning...>>
Exactly what I was saying. But not in those exact words though "make your payments as low as possible by re-amortizing your debt until after you die" lol
<<My gut feeling is these people need to get their financial house in order. I bet in under 5 years they are buying different cars and they'll be paying for new ones at the same time they are still paying for the old ones (since it's rolled into their mortgage). >>
They were making payments for two cars at the most. I think this is the first time they are rolling it into their mortgage.
<<(Of course, they may have to sell the house and move into the condo at retirement, which would probably help financially.)>>
I think that was their plan.
<<the AT scale of debt for how much you owe:
A:$1-$1000
B: $1000-$5000
C: $5000-$10000
D: I'm RossMAN >>
lol!
<<I'm in CC debt of about $ 28.00. I put gas in the truck about 17 hours ago and did not feel like walking inside to pay. I'll pay it at the end of the week at the latest. >>
Sounds like me! Except for the weekly thing. I pay off my cards at the end of every month[/i]
<<Buying a condo to live in during a lengthily remodeling is also a good idea.>>
The condo/apt if for my sister, she'll be needing one when school starts. And after she's done, the parents plan to rent out to other college students. But I think they can't afford to buy a condo/apt right now.
<<The interest rate on their current car loan is most likely 10-12% considering they bought the cars a few years ago>>
Cars were bought 2000, and 2002. Loan rates were 5.5% and 5.8% respectively. Both on 5 years.
<<Well, you've since edited your post to show that their car loan was 5.5%. Yet you say they say the cars are old. I'm confused.>>
They bought new cars because the current ones were getting old. Sorry if I was unclear
To SyahM
<<Aphex I need to consolidate my debts cuz Citibank give me a permanent 24.9% APR on my current balance ~4k because I defaulted on the account few months back, I need some advice, what should i do? which debt consolidation company/organization that i need to contact and what are my options. >>
What the hell?!? Something's not right here. Pay off that 4k @ 24.9% already with another bank loan!!! I can't believe you can stand for that??! There's must be some kinda of law against this extortion. Man this system sucks! How can they allow people to acumullate debt and charge incredible rates! I hate this.
<<Speaking of lower interest and tax deductible, this is the main reason their plan is a good idea. They will save an incredible amount of money because of this alone.>>
Yeah, they tried to explain to me the advantages here, but I assume the end result can't be that great.
<<I'm a mortgage loan officer and I do refi's like that all the time, except that I would recommend against any of my clients including a low-interest short-term debt like those car loans inside a long-term mortgage. That's a terrible strategy. Plus, at the age of 50, they should take out a 15 or a 20 year mortgage, not a 30. Who is this? Your parents? Sounds to me like they're getting suckered by one of those cheezy "make your payments as low as possible by re-amortizing your debt until after you die" loan officers. Very poor financial planning...>>
Exactly what I was saying. But not in those exact words though "make your payments as low as possible by re-amortizing your debt until after you die" lol
<<My gut feeling is these people need to get their financial house in order. I bet in under 5 years they are buying different cars and they'll be paying for new ones at the same time they are still paying for the old ones (since it's rolled into their mortgage). >>
They were making payments for two cars at the most. I think this is the first time they are rolling it into their mortgage.
<<(Of course, they may have to sell the house and move into the condo at retirement, which would probably help financially.)>>
I think that was their plan.
<<the AT scale of debt for how much you owe:
A:$1-$1000
B: $1000-$5000
C: $5000-$10000
D: I'm RossMAN >>
lol!
<<I'm in CC debt of about $ 28.00. I put gas in the truck about 17 hours ago and did not feel like walking inside to pay. I'll pay it at the end of the week at the latest. >>
Sounds like me! Except for the weekly thing. I pay off my cards at the end of every month[/i]
<<Buying a condo to live in during a lengthily remodeling is also a good idea.>>
The condo/apt if for my sister, she'll be needing one when school starts. And after she's done, the parents plan to rent out to other college students. But I think they can't afford to buy a condo/apt right now.
<<The interest rate on their current car loan is most likely 10-12% considering they bought the cars a few years ago>>
Cars were bought 2000, and 2002. Loan rates were 5.5% and 5.8% respectively. Both on 5 years.
<<Well, you've since edited your post to show that their car loan was 5.5%. Yet you say they say the cars are old. I'm confused.>>
They bought new cars because the current ones were getting old. Sorry if I was unclear
To SyahM
<<Aphex I need to consolidate my debts cuz Citibank give me a permanent 24.9% APR on my current balance ~4k because I defaulted on the account few months back, I need some advice, what should i do? which debt consolidation company/organization that i need to contact and what are my options. >>
What the hell?!? Something's not right here. Pay off that 4k @ 24.9% already with another bank loan!!! I can't believe you can stand for that??! There's must be some kinda of law against this extortion. Man this system sucks! How can they allow people to acumullate debt and charge incredible rates! I hate this.
<<Speaking of lower interest and tax deductible, this is the main reason their plan is a good idea. They will save an incredible amount of money because of this alone.>>
Yeah, they tried to explain to me the advantages here, but I assume the end result can't be that great.
If you're patient with me i can find out the LTV. I don't know what it is, but I'd be happy to find out, if this can help out the situation. I also suggested to them about cutting back on the cash back (Remodeling of the house, paying off cars, the down on the condo).
Also what is PMI? I had a feeling some of these things are not tax deductible. They were saying the entire loan was
How does anyone even come up with the idea to have +$20K in CREDIT CARD dept.
CC depts are the worst kind of dept. APR is sky high. WTF!
I think it's just STOOOOOPID.
CC depts are the worst kind of dept. APR is sky high. WTF!
I think it's just STOOOOOPID.
Basically I don't see the need for a credit card for everyday use, can you?
A debit card works just as good. If you don't have money then..... you'll just have to wait until the next paycheck.
The CC business is a catch 22. To be aproved for a CC you have to have good credit and to have a good credit you need a CC.
First you have too be screwed over by the CC companies (APR) to be able to be screwed even more.
The only good use of a CC is to just have it as a buffer in case your car needs to be fixed, for example.
There is no way to legislate against stupidity.
A debit card works just as good. If you don't have money then..... you'll just have to wait until the next paycheck.
The CC business is a catch 22. To be aproved for a CC you have to have good credit and to have a good credit you need a CC.
First you have too be screwed over by the CC companies (APR) to be able to be screwed even more.
The only good use of a CC is to just have it as a buffer in case your car needs to be fixed, for example.
There is no way to legislate against stupidity.
I didn't literally mean laws to protect the ignorant, but laws to prevent against this kind of extortion.
Amused
Elite Member
- Apr 14, 2001
- 57,171
- 18,807
- 146
Gawd yes. If your debit card is used fraudulently, you're screwed out of your food money for months. I never use a debit card for anything but local purchases at retailers I trust. I especially never use it online. It takes getting ripped off just ONE time to hose your life for a very long time. Especially if you live paycheck to paycheck as most people do. (I don't anymore, but I did for years.)
Amused
Elite Member
- Apr 14, 2001
- 57,171
- 18,807
- 146
A check is a pain in the ass, and takes forever if you pay for internet purchases with them. Cash is inconvienent and impossible for web shopping.
A CC works the best. At the end of the week, log onto your CC website and make an online payment for your charges. You never have to carry a checkbook. You never have to go to an ATM. You never have to set foot in a bank.
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