Everyone wants to know how to handle their finances and whether or not there is a pat answer. The pat answer is simple; it's getting there that is the tough part. The answer is only if it makes sense for you, and you are the one who has to make the judgment call. I certainly can tell you if it makes sense or not, but you are the one who has to make the call as the consequences are yours not mine. You may decide to abdicate the decision, but you can't escape the consequences so you might as well make the call yourself. It is up to me to show you the best way to analyze the situation and to show you the pros and cons of any plan.
You have a house, a mortgage and most likely a home equity line of credit (Heloc), some credit cards, a car payment and who knows what else. If you have been in this situation for a while and it isn't getting any better, then doing the same thing you have been doing isn't going to help. So why not take a different look at the problem? You may begin to recognize the beginnings of a solution. With that type of background, the sheer willingness to take a look at another approach may be enough to shed some much needed light on your situation. Once you grasp the basics, the rest is easy. There are two approaches to the problem. One of them is more analytical and the other more practical. Both should give you guidance and if you can allow yourself to work with both of them, you will do very well for yourself. The first is a comparison of the numbers which I consider the practical look and the other is the analytical approach which s a comparison of the "blended life rate" versus the rates on the solutions. We will examine both and then turn the exercise over to you to help you make a decision for your future.
Let's take a look at the numbers. Take all of your debt and add up the monthly payments for the various instruments. Then take all of your debt and add that up. Now you know what you owe and how much you are paying on a monthly basis. Assuming you owe $300,000 and have total monthly payment sf $2400, you can begin to check alternative ways to save money. You could take a 30 year fixed and pay about $1825 a month or a 15 year fixed and pay a little over $2500 a month. You can take a fixed rate for the first and second mortgages and a short term second for the credit cards and other shorter term obligations. There are many ways to structure a program including doing nothing. I don't recommend doing nothing as I'm guessing that is the one solution, or lack thereof, you have probably already tried and that, in itself, is the whole reason why you're here to begin with.
Roger Schlesinger's Mortgage Minute is heard on hundreds of radio stations and daily on the Hugh Hewitt radio show and Michael Medved shows. Roger interacts with his hosts and explores the complicated financial markets in order to enlighten his listeners and direct them along their own unique road to financial freedom.