Wednesday, April 02, 2008

Debt Refinance/ Balance Transfer…

I am so tired of catching up!!! I currently have two credit cards with a combined balance of $9,300, $2,400 and $6,900.

The $6,900 balance is the remaining balance on a $25,800, 20% second mortgage resulting from my 80/20 home purchase 5 years ago. The current rate on this credit card balance is 3.99% fixed for the life of the loan. I have been paying $225/month to have the balance paid off in 3 years by 12/2010.

The $2,400 balance is the result of spending in March 2008. Thus far, I have been fortunate to be able to pay off the balance on my revolving card in full each month but there is no way that I will be able to pay this balance off by the end of the month.

My new $67,000 salary will not kick in until May 1 and will be first reflected on my paycheck at the end of May. Until then, I am in a cash flow crunch. I can continue to find ways to pay off the $2,300 balance or I can refinance the balances together and increase my monthly payment from $225/month to $250/month and have it repaid within the same 3-year timeframe. The payment will only increase to $250/month because I will pay down the balance by $800 within the next month with my tax rebate check and my regular monthly payment.

I just took a look and my credit card company is offering a 3.99% fixed rate for the life of the loan. For simplicity purposes, I am thinking about refinancing the balances together at the 3.99% rate and increasing my payment to $250/month. I can keep the balances separate but I like the idea of paying just one company, once a month.

I am just tired of being behind each month. I feel like if I refinance the balances together, then I can finally start attacking my debt in an orderly fashion, including my student loan interest which is accumulating at an unbelievable pace. So far, each month I have been so behind that any extra cash flow goes towards paying off my revolving balance in full versus have a balanced plan towards paying off revolving debt and attacking my student loans.

With the balance transfer, I would refinance my credit card debt to 3.99% fixed for the life of the loan, pay off my parents in full and finally be able to completely move to an all cash/debit system so that I can completely eliminate credit card debt from my life within 3 years.

9 comments:

brainy said...

Hmmm... I know the feeling...

I'd suggest just sticking it out as you have been and avoid the balance transfer to combine the two...

Really, you're not lowering your rate any, so you're not really saving any money either -- you're just moving it around.

I've played the balance transfer game wisely in the past and even then, it never really got me anywhere.

That end of May paycheck really isn't that far away in the grand scheme of things -- is it even worth the transfer fee you'll likely have to pay?

I dunno, as long as you can make the payments as-is, I'd stick it out, but that's just me. :0)

Chitown said...

Actually the rate on my credit card is probably about 12-14%. I need to check but I never worried about it before because the balance was paid in full.

Since it won't be paid in full this month, I was thinking it better for it to be at 3.99% fixed with a balance transfer.

Anonymous said...

If you think that making the balance transfer will really help you attack the debt faster, then I say do it. I just transferred the remainder of my credit-card balance from a 17.99% card (ridiculous rate as I just found out my credit score is 779)to a card with zero percent interest for a year. Without interest I should be able to pay it off within a year or less. I am sure your low rate would allow you to make a big dent much faster, too.

Roman said...

I think it all depends on what you feel is better for you. For example, I would make everything into one loan for the simple reason that its one payment. Less information to remember.But, if you can pay everything off without refinancing there are certain financial advantages to that too. It all depends on your own comfort level to pay and remember to pay.

JW said...

Congrats on the $67,000 salary!! Your shovel is getting bigger and bigger.

pension said...

You have to do what is right for you. If one regular payment will help you reduce your debt then go for it.

Subu said...

So $9,300 at 3.99% and $250 /month... it will take 3 1/2 years to pay off the debt.

Stop foreclosure said...

I hope that you got the right way to be settle on this,anyway this is not just a simple issue and you need to analyze what to do.

www.balancetransfer.citicards.com said...

Hmm... That's great.