State of the Debt – August 2007 Edition

by Sean

Another month, another peek at the ol’ SotD.

  June 30’07 July 31’07 Change
EVERYTHING We Owe
Credit Card Debts
Chase $22,219.09 $21,909.45 ($309.64)
Other Debts
Home Mortgage 39,164.74 39,111.29 (53.45)
Low Energy Loan 16,002.18 15,884.15 (118.03)
Line of Credit 28,656.43 28,092.72 (563.71)
TOTAL Liabilities $106,042.44 $104,997.61 ($1,044.83)

July continued June’s slow but steady progress. A bit more progress would have been realized, but a short vacation to attend a family reunion was in order, which cause us to really blow the ‘Crap Food‘ budget category, and end up a bit over on the ‘Gas‘ as well. Excuses excuses…

At this pace, everything will be paid off somewhere around mid-January, 2016. Absolutely ridiculous. 8+ years to get rid of this balance is untenable. Mind you, before then our other property will be long since sold, which will knock off a hefty chunk of that total. But there hasn’t been a heck of a lot of true interest in it so far this summer, so who really knows when that will be! Still, we’re looking at a more than a couple years before it’s gone. Too long for my tastes!

So, to paraphrase Dave, a bigger shovel is in order. A few things are in the fire, but substantial returns are still eluding me. For now. More on that later…

  • http://www.freetraffictip.com MorganLighter

    Allow me to jump in and give you some advice, which you may or may not need.
    In order to reduce your debt faster why not pay your credit card debt, mortgage debt, line of credit debt, car payment, etc. by using a well known strategy of paying those creditors bi-monthly?
    How it works is this. For ease of illustration, we’ll use numbers that are easy to deal with. For example, if your mortgage payment was $1000 a month, prior to starting this project, you would have to have an extra $1000. Okay? So, assuming your mtg. payment was due on the first of the month, you would send your lender the $1000 and then two weeks later, send them $500, and continue to do this every other week until you’ve exhausted the loan. You would be making one extra payment (13 instead of 12 payments), but because you are sending in the money at a faster pace, i.e., every two weeks, more money would go toward principle than to the interest, as is the inverse of what you’re doing presently. Depending on % rate, you could pay off a 30 year loan in 16-17 years. The same holds true for all your other debt. There are companies out there that will do this for you, but you have to pay a fee, which, in my opinion, is unnecessary as most lenders will allow you to do this. If any lender gives you grief, tell them to ‘pound sand’, and make them show you exactly where, in the contractual arrangements, that is says that you are prohibited from paying in this fashion. My credentials? I’m a former ChFC, CFP and helped my clients reduce their debt in the manner I just described to you. I think it’s the Rx you’ve been looking for. Hope this is of help to you. If you are leery, contact any financial planner with which you are comfortable. Best of luck.

  • http://www.irregularpayments.com Sean

    Definately, paying bi-monthly bi-weekly, now that can really speeds things up. Likewise, I’d certainly agree that it’s entirely unnecessary to pay a fee to do so (and wrote a post on that very topic awhile back).

    Nevertheless, my personal situation makes the plan unworkable: it assumes one is getting paid biweekly and thus would have another paycheck with which to make extra payments in those months. I’m not — the 1st rolls around, and my salary for the month rolls in. The 2nd arrives and I max out my debt paydown based on what I’ve wrangled out of the good ol’ budget(less a small amount as a cushion should small unexpected expenses arrive during the month). Paying twice a month would just add a half month worth of interest to the debt (and do nothing to accelerate the process anyway), so I prefer to do as much as possible, as soon as possible.

    But thanks for the thought anyway, ML!

  • http://www.tradestars.com Ted

    I can sympathise with you – getting out of debt is a real pain. The previous advice to pay off the highest charging cards first is good advice – once paid off, rip em up. You might also want to consider making any money you DO have ‘work a bit harder’ for you.A low risk trading strategy such as at tradestars.com might be suitable, but I would recommend paper trading first on the free parts of the site to see whether you would be any good at it. Failing that, …

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    I have been a Loans agent and Debt negotiator in my time and there are companies out there that will give you a Loan to consolodate all your debt into 1 low monthly payment by usin the cash to pay all your cards off works out much much cheaper, good luck

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    There hasn’t been a heck of a lot of true interest in it so far this summer, so who really knows when that will be! Still, we’re looking at a more than a couple years before it’s gone. Too long for my tastes!

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    You would be making one extra payment (13 instead of 12 payments), but because you are sending in the money at a faster pace, i.e., every two weeks, more money would go toward principle than to the interest, as is the inverse of what you’re doing presently. Depending on % rate, you could pay off a 30 year loan in 16-17 years.

  • http://www.4cheapchecks.com/ Personal Checks

    Paying twice a month would just add a half month worth of interest to the debt and do nothing to accelerate the process anyway, so I prefer to do as much as possible, as soon as possible.

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