Laurie wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.
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“Dear Steve,
I’ve lived in my home for 20+yrs.Brought it for 65,000. I’ve refinanced 3 times, one was to pay my ex husband his portion of the house worth and twice to pay off my debts. Now I owe 200,000. plus 37,000. in creditcard debt. My credit scores are still above 710, I’ve never paid late or had a collection account.
My mom helps to much I won’t take anymore of her money, her health is bad she will need all she has.
I don’t know if I should refinance( if I even can) I don’t want to hurt my credit.
I take home $2900 a month, $1500 in house pymt and I have to pay $1000 a month in credit card pymts. I’m not sure where to turn! I can’t keep this up.
HELP.!
Laurie”
The Answer:
Dear Laurie,
I’m going to have to give you a bit of caring and compassionate tough love.
What the hell are you doing here? This will be the third time through a debt consolidation refinance loan and it still isn’t working. The reason it has never solved your problem is that you’ve never addressed the underlying issue, your overspending.
You can’t borrow your way out of debt Laurie. At some point you have to use more money to pay down debt than use debt to live beyond your means.
While I can be a fan of using a refi to pay off credit card debt, I have no confidence that you have learned your lesson at this point and my money is that you’ll repeat the same mistakes again. I really hate to be this brutally honest with you but it is only because I care.
I would suggest that you go into a debt management program at this time and pay down your debt that way for a while. Prove to me and yourself that you can actually reduce your debt with some professional help. The downside is that it may ding your credit score but right now the last thing you need is yet another ineffective loan. Laurie, click here for debt management information.
