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Posted by: Sigma on 2009-03-04, 10:01:21
Yes you can. But, be very careful, you are not eliminating any debt, you are just moving it around. This is how everyone gets "under water " on their mortgages. Your house is worth less than what you owe on it. You are getting the feeling of getting rid of your credit card debt, but you aren't. I know, it makes you feel like you are doing something. I did the same thing and I regret it. You have to change your habits. Your overspending got you into the situation you are in. I am not trying to be mean. I tell it like it is. I know because I fell into the exact same trap. You refinance your mortgage and pay off your credit cards. The only problem was that I did not stop spending on my credit cards. I felt like it was a 0 balance so I could just keep on going. I soon had just as much credit card debt as I had before I paid them off and now had a higher monthly house payment to boot. Do you see the trap? You must change your spending habits. Looking back, I would have kept the lower mortgage payment, paid off the cards, and closed the accounts. My wife and I are now getting back to sanity. I know this is going to sound like a commercial but I will tell you anyway. Before you do anything, PLEASE, PLEASE, PLEASE read a book called the Total Money Makeover by Dave Ramsey. This is a guy we ran across on Fox Business Channel. He has an absolutely tremendous program to pay off debt and get you on the road to financial independence. After watching his show for a couple of weeks, we looked at each other and said this guy makes more sense than anyone we've ever heard. We have been on his "plan " since november and man, has it been great. If you are looking to pay off debt, this is the program. He also shows you how and why to set up emergency funds, pay off debt, save for kids college, invest, insurances, etc. It has really helped us out. We paid off both our cars ($800/ month) almost a year early just by adjusting our attitudes and habits towards money. It has also helped us realize where our cash "drains " were by setting up a budget. Yes, I know, the dreaded "B " word. We now know where our money goes each month instead of wondering where it went. In fact, tonight we are getting together with our new investment adviser for the first time. How cool is that? We now have our debts catagorized and are working exceptionally hard to get them out of our lives forever. We now use cash or debit for everything. It is money we already have and can't go into debt. I told you it would sound like a commercial. I get a little carried away by my new found enthusiasm and excitement. Sorry. But seriously, do not fall into the same trap we did. You will have to carry the cards for a while longer as you pay them off. That's fine, just don't spend any more on the cards or incur any other debt. Keep your current mortgage and get your debts in order. Make sure all your debts are current before you start this program. Like I said above, if I had it to do over again, knowing what I know now, I would not have done it. I do not want you to go down the path that we went down. We are finally realizing our mistakes and are working diligently to correct them. Please don't make the same mistakes we did. You will be much better off if you have a solid plan of debt elimination rather than just moving debt around. Trust me. |
