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Borrowing from Peter to pay Paul

September 27th, 2005 at 02:02 pm

I am thoroughly puzzled. It sucks because I should be focusing more on my twenty million classes and chores... but I just can't seem to make up my mind. My problem is financial in nature and well.. what better place to rant about it than this lil' ole corner of the net I call home Smile

The problematic Paul

Hubby has over 20K in Student Loans that are deferred until he gets out of the service. Problem is.. the interest YEAR AFTER YEAR gets tacked on to the principal.. and well.. it is growing exponentally. We haven't paid since 2002.

We traded in a leased vehicle that we hated for a nice vehicle that we love. Problem? Well.. the leased car wasnt paid off so now we pay for the new vehicle AND the remainder of the leased one.. ouch! We're talking over 30K here. We pay 700/mth on this monster alone.

My Car is still not ours.. I've got until 2007 and the monthly payment is a choker (500/mth)

A few other bills (non credit) have surfaced so we pay them monthly ( approx 400/mth)

Bottom line.. these bills are choking the budget, offering NO tax deductions, and frankly.. they're driving me bonkers.

TOTAL 1600/mth

The protagonist Peter

We have been preapproved for a loan that will wipe all these debts, plus leave a lil pocket money for us to play with. The PROS: our cars will be OURS, the loans will plague us no more...

THE CONS: This house will have NO equity whatsoever. We'll be paying this loan right alongside the first mortgage.. and so, i'll be freaking out more than the usual ...

TOTAL: 1600 in payments becomes approx 700...

What would you do?

2 Responses to “Borrowing from Peter to pay Paul”

  1. Anonymous Says:

    1. if you can deduct the interest from the new loan then you are even farther ahead
    2. if you can still afford 1600 a month or even part of that, then use some of the freed up money to pre-pay your mortgage and rebuild your equity
    3. as long as you don't blow the freed up money by going into more debt seems like a good deal

  2. Anonymous Says:

    Remember home equity lines of credit are like a diet. You can go on a crash diet and then rebound and owe far more than you started out. Or you can change your patterns and end up better off than you imagined.

    It just depends on you.

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