Wading through the ocean of debt, trying to reach the shore

[ccsauer]

Hey all! I have some debt issues, as I have been unemployed for 20 of the last 24 months, but I now have had a job for the past month now. Here's where we are:

Credit card debt at about 11%: 16K ($150 in fees per month)

Car, worth 23K, still owe 14K at 1.9% ($525/mo)

Car, worth 12K

Second mortgage, 40K @ 8% ($325/mo)

First mortgage, 220K @ 5.25% ($1250/mo)

We have stellar credit, and about $8K in the bank, but have used HARP to refinance back in '09, and our home is underwater and they won't refinance with the 2nd mortgage on there.

We also have about $1300 extra (after expenses) coming in per month, so, my original plan was to slowly pay off the credit cards in about 8 months Iincludes some on-hand cash), pay off the car, get 8K in cash, sell the 12K car and buy a sedan outright for my growing family, (it's a coupe), pay off the 2nd mortgage, then refinance. The obviousproblem here is that by the time I'd be able to refinance...in 3 years...who knows what the rates will be then.

So, I thought about it, and I decided this might be a better plan:

Refinance the first car at 23K @ 4.14% ($360/mo over 72 months, saving $160/mo)

Take that cash and our cash on hand and pay off the credit cards (saving $150/mo) (I've already done these 2 steps, no turning back now!)

Sell my car (12K) and buy the sedan with a loan at 3.9% for 72 months (+$325/mo)

Get a loan from my wife's parents (Who keep complaining about the low returns on their maxed-out CDs at various banks :-/ FIRST WORLD PROBLEMS!) for 30K at 2.5% (or prevailing personal loan rate) for 18 months ($1700/mo)

Pay off the 2nd, refinance the first (saves $325 from the second, potentially $250 from the first)

So, this is all well and good, like i said, we have the extra cash coming in per month to cover the added expense from the personal loan, but the issue now becomes: We own more than 80%, even after the 2nd mortgage is paid off, of the current (assumed) value of the home, and I'm told PMI would be in my future, if we refinanced, and escrowing, too, which we currently don't do. 

So: what are my options? That's my big question for everone. Besides the obvious issues with loans from family, what am I not thinking about? could I, in refinancing, do an 80%/10% first/second? I'd love that, since after 18 moinths paying off the in-laws, a few after that paying off the first car, a little while later paying of the 2nd car, then i could knock off the 2nd, instead of trying to go nuts on a huge first mortgage...assuming I'd want to pay it off early at all at 3.5%

Thoughts?

[webhopper]

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@ccsauer wrote:

Hey all! I have some debt issues, as I have been unemployed for 20 of the last 24 months, but I now have had a job for the past month now. Here's where we are:

Credit card debt at about 11%: 16K ($150 in fees per month)

Car, worth 23K, still owe 14K at 1.9% ($525/mo)

Car, worth 12K

@second mortgage, 40K @ 8% ($325/mo)

@Anonymous mortgage, 220K @ 5.25% ($1250/mo)

We have stellar credit, and about $8K in the bank, but have used HARP to refinance back in '09, and our home is underwater and they won't refinance with the 2nd mortgage on there.

We also have about $1300 extra (after expenses) coming in per month, so, my original plan was to slowly pay off the credit cards in about 8 months Iincludes some on-hand cash), pay off the car, get 8K in cash, sell the 12K car and buy a sedan outright for my growing family, (it's a coupe), pay off the 2nd mortgage, then refinance. The obviousproblem here is that by the time I'd be able to refinance...in 3 years...who knows what the rates will be then.

So, I thought about it, and I decided this might be a better plan:

@Anonymous the first car at 23K @ 4.14% ($360/mo over 72 months, saving $160/mo)

Take that cash and our cash on hand and pay off the credit cards (saving $150/mo) (I've already done these 2 steps, no turning back now!)

Sell my car (12K) and buy the sedan with a loan at 3.9% for 72 months (+$325/mo)

Get a loan from my wife's parents (Who keep complaining about the low returns on their maxed-out CDs at various banks :-/ FIRST WORLD PROBLEMS!) for 30K at 2.5% (or prevailing personal loan rate) for 18 months ($1700/mo)

Pay off the 2nd, refinance the first (saves $325 from the second, potentially $250 from the first)

So, this is all well and good, like i said, we have the extra cash coming in per month to cover the added expense from the personal loan, but the issue now becomes: We own more than 80%, even after the 2nd mortgage is paid off, of the current (assumed) value of the home, and I'm told PMI would be in my future, if we refinanced, and escrowing, too, which we currently don't do. 

So: what are my options? That's my big question for everone. Besides the obvious issues with loans from family, what am I not thinking about? could I, in refinancing, do an 80%/10% first/second? I'd love that, since after 18 moinths paying off the in-laws, a few after that paying off the first car, a little while later paying of the 2nd car, then i could knock off the 2nd, instead of trying to go nuts on a huge first mortgage...assuming I'd want to pay it off early at all at 3.5%

Thoughts?

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I think you should sell the coupe and buy a 12k used sedan.   Don't add a new note..  otherwise, the loan from your inlaws is a good idea...

As far as mortgage refinance options,   you may need to talk to a broker or lender about what is available for you