What would you do?

[Anonymous]

Ok, here is my situation:

 

I’m in a DMP (CCCS) that I’ve been in for 1.5 years.  Things are going great but it will be two more years before I’m done if I make no extra payments.  I have no complaints at all except my desire to graduate from it asap.  Started with 55K in my DMP, now down to 35K.

 

In addition to my DMP, I have a CC outside of the DMP with a balance of 25K.  I’ve maintained this balance for almost a year (200+ per month interest).  Never been late, but balance remained the same 25K.  (this is my credit limit on this card)  I’ve turned the corner and I expect to begin paying down this card this year.  Since this card is maxed out, my debt/equity ratio is almost 100%.

 

I have 11K that I just received from a stock sale.  Should I apply the 11K to the CC in the DMP (13% apr) or should I put the 11K towards my CC outside of the DMP (12%apr)?

 

My second question concerns my mortage.

 

I have a 1st mortgage for 140,000 / 15 year (11 years left) at 4.75% apr.

I have a 2nd mortgage for 45,000 / 15 year (12 years left) at 7.75% apr.

 

My mortgage payments are 1800 per month.

 

I can re-finance my balance for 3K in closing costs for a 30yr 4.75% loan.  This will reduce my monthly payment by 900 per month.  This 900 would help me get out of debt much faster than my current plan.  I realize that I’m trading paying off my house in 12 years for a 30 year mortgage, but I’d like to hear some of your comments.

 

Thanks

[Anonymous]

I would do an amortization of the 4 as they are now- The 1st and 2nd mortgage, the CC, the DMP.

Look at how long you will be paying, how much interest total, etc.

Then do an amortization of what the new mortgage would be, and amortization of the DMP and CC, allocating extra payments to them 2, run different scenarios( 1/2 of the $900 to each, all of it to the DMP, all of it to the CC, 2/3 here and 1/3 here, etc).

Then one of the most important questions is "Not can you, but WILL you allocate that $900 you are saving on the mortgage to your other debts?"

Also, if you take this route, it doesn't mean it will take you 30 years to pay off your house. Once the CC and DMP is paid, you can start making extra payments on the house, shortening the time.

[Anonymous]

Thanks.