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Author: martybl Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308881  
Subject: Re: credit card debt & refinance Date: 1/22/2006 11:27 PM
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I made an error in my list of expenses, etc.

I also have a mortgage & current HELOC payment of $3100 on top of monthly expenses listed below.

House Market Value: $55000.00. . .


Hopefully the market value of your house is an error, too. I'm guessing that there is an extra zero in there - $550,000. Even so, it's not a pretty picture. By my math you're spending $500/month more than you're making. Shuffling debt around from CC's to HELOC's isn't going to fix this situation. Suggestions:

1) Spend less than you make. The most basic of all financial rules - ask Ben Franklin or Charles Dickens' Mr. Micawber. If you're making $7100/mo. no financial chicanery is going to allow you to spend $7600/mo., even before the inevitable, unanticipated, emergency or one-time expenses arise. You need to LBYM, and this board, even more so than the LBYM board, offers detailed, practical advice at doing so. A number of people post their monthly budgets, and get help from this board in identifying savings opportunities. $4500/mo. in addition to housing sounds like a LOT of money - I bet that this board can find room to save.

2) You can't afford to put your son through college. We'd all like to be able to support our childrens' higher education, but you're not in a position to do so, at least not to the tune of $25K/year. If he's a superior student, then he ought to be able to find scholarships, if not, then a couple years at a community college, followed by the last couple at a "name" state school, is a time-honored money-saving tip. Paying for something that you can't afford isn't doing him any favors. I think that if you ask most young people whether they'd rather have educational debt, or the financial responsibility for their elderly parents, most would take educational debt.

3) Where's the retirement savings? Are you fully funding your tax-advantaged retirement accounts? Do you have additional, taxable, retirement accounts? If you're old enough to have a child in college, you're old enough to worry about retirement. There are a variety of retirement calculators out there, and, even with the most conservative assumptions, none of them suggest that you can retire comfortably with much less than a seven-figure retirement account.

4) Is the "Wedding/home repair" (odd pairing) expense in the future? How much goes to the wedding and how much to home repair? Maintaining a home is necesary to keep the value of the housing investment. Weddings, OTOH, are pure consumption and can be scaled back or eliminated.

martybl
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