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Author: SeeFoolRun 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 308425  
Subject: Re: Links to the right ====> Date: 7/5/2007 4:53 AM
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OMG - i don't even remember typing that last night!

*embarrassed*

I swear Ambien gets me drunker than 12 shots of Jack. Sometimes it gets me to sleep faster though :)

This probably needs its whole own thread, but in a nutshell we're doing alright. Our income is ok & total debt is high, but manageable. We don't need anything & our wants list is pretty small as well. I've made some dumb decisions with money, but only one in the recent past that was really dumb. Bunch of others were what I call "calculated stupidity" - meaning I knew it wasn't the smartest thing to do, but for whatever reason (expedience, convenience, lack of patience, gotta have it now) went ahead.

Our total debt is around $305k. I have it all in a spreadsheet at work, but I think the numbers are real close to:

$173k - mortgage
$49k - 2nd mortgage
$29k - vehicle
$15k - vehicle
$5k - credit cards
$14k - deferred student loans
$20k - 401k loans

I can explain the dumb things, but what's done is done.

Gross household income is around $110-125k depending on my annual bonus amount. We're in a fairly low cost of living area (NC). Min payments on this stuff are about $2800 (including escrow). We pay about $3100 & I want to divert $800 of savings + some budget cuts to make that $4100. That doesn't include the 2 401k loans. They come out thru payroll deduction and I can't accelerate payments. I can continue deductions, pay entire balance in full, or stop working there & have it penalized/taxed like a withdrawal. I also pay bills bi-weekly instead of monthly, so there are 2 extra $3100s thru the year, but its easier illustrating & calculating things based on monthly numbers.

So in the grand scheme of things, I'd rather pay more toward this debt & have it gone in 7-8 years than to fund retirement. At least for right now with some of the high-interest stuff. I'm 34, so there's still some time to leave what's there grow, cut 401k down to 4% (employer match), & only go with 1/2 into Roth vs fully funded. With conservative estimates, leaving everything as it is & going to 4% into 401k has retirement accts at $1 mil @ 65, assuming no change in salary & always having a 4% match until 65. After the monster is dead in 7 years, I can go back to or above the savings levels I'm at now.

I love the LBYM board & like a lot of the tips there. Some of it is just too much for my taste though. A huge pile of money when I'm old would be nice, but living well now is important too (to me). I just have to find the right balance.

I will talk about the REAL DUMB move I made last year. Took out a $50k 125% 2nd mortgage @ 14% for 25 yrs. Had a bunch of stuff we wanted to do to the house (none of it needed done, just things to get it how we wanted it), a little CC debt, paid off a car, etc. No big deal - I figured keep it for a while & then just refi it to a low rate & pay it off in 5 yrs like a car loan. I can do that, right? WRONG. What I didn't realize was that those are impossible to refi - at least at a lower rate. Only good rates for HELs are <80% LTV & with that loan LTV will be above 80% for a LONG time. Unsecured personal loans for that much - if they can be had on my income (doubtful) aren't much lower in rate. So there really aren't any options other than snowball it. None of my CCs have a limit that high, they're all between $5k - $25k. AMEX will go higher if I send in last year's tax return, but they're at 18%. Even with enough good BT offers to move it all off there I'm hedging that I can get those offers again when the teaser rates are up in 6-12 months or I'm risking going from 14% to 18%+ & double the min payments. Some things are dumb. A 125% HEL is beyond dumb - aggressively stupid is more like it.

So anyway, I'm still kicking around what to do with savings, budget, & debt payoff. One way or another it will all work out just a matter of time & how I choose to spend & borrow going forward.
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