Our Debt Structure

by Dual Income No Kids on August 13, 2006 · 0 comments

Some people think that couples should run their finanacial live as if they were a for-profit business. In light of this, we wanted to blog a bit about our debt with a view towards better understanding it, and addressing how the notes might be best managed.

Here is a handy table to discuss the strucure of our indebetness.

For our readers, we can offer at least two clear conclusions:

1) Do your homework before borrowing: We’ve taken a BIG hit on the mortage in our apartment. When we bought the place, we didn’t think through the potential impact of increased interest rates on our monthly budget. Now, we enjoy our apartment, but we don’t necessarily enjoy making Washington Mutuals stockholders rich.

2) Keep an eye on the debt you do have. Nearly ALL of our debt is variable, this means that when the FED raises interest rates, all of our debt payments go up. Also, if you aren’t paying attention to your statements, its easy to get caught up in reverse amortization or other pitfalls.

For us personally, the following is the case:

1) Our students loans are less of an issue. In terms of our budget, most of it goes toward our mortgages.

2) This reaffirms the need to refinance. While the FED did not raise interest rates at their last meeting, rates are still very low historically. We’ve blogged about refinancing before, but have been caught up in some difficulty comparing apples to oranges.

Best,

Miel&James

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