Two years ago I refinanced my mortgage at 3.75% and paid off my credit cards so that’s the only debt I have now.
“Two years ago I refinanced my mortgage at 3.75% and paid off my credit cards so that’s the only debt I have now.”
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Three years ago we didn’t have the foresight to refinance our mortgage to pay off our considerable credit card debt. No, instead, we knuckled down, cut up the cards and snowballed our credit card debt. Next, we took the remaining funds post credit card, put it against a parent plus loan for our daughter. Once that was paid, put the remaining funds against our mortgage. Now we have no credit card, parent plus or mortgage debt. $91K paid in 3 years. Stupid I know.
Yeah, we had to use an actual budget and stick to it. Yeah, we had to do without things we wanted. The only downside is we are totally debt free and are now forced to put 40% of our income into 401k & Roth’s. No gratification in that, man.
We (Ms. fatboy and me) have to admit though that we are too stupid to still have a mortgage. Smart savvy people have better places to put their money instead of their primary residence. I speculate that my Mom might have dropped me on my head when I was young.
We find that while inflation is a concern, we have the money to buy our food and fill our gas tanks. Sora sucks I have to say because I really miss the financial security and low interest rates having a mortgage offered and having 4 credit cards in my wallet for emergencies. This really hit home last week when I ordered pressure treated lumber to rebuild our deck. We just paid cash for the decking and had it delivered. We were deprived of the thrill of swiping a plastic card at the checkout.
So, what is my snarky point? To make the point, refinances are fine but unless you do so to shorten the time remaining on a mortgage, using those freeded up funds is paying off unsecured credit card debt with secured debt which happens to be your primary residence. You might save a few hundred dollars/month in the short run in cc interest rates but you are looking at added time measured in years paying off your home. Consider instead getting on a no frills budget, getting serious and changing the spending habits and then follow through. While not my first choice because they are not what they seem to be but introductory (18 month) no-interest cc balance transfers might serve the determined to be debt free individual better than prolonging the life of an existing mortgage. I can say that one of our CC had $18k @ 15% we snowballed it without modification in 11 months so it can be done.
It’s a great feeling to have zero, zip debt and allows us to view the current financial crisis more as a concerned spectator than a participant.