Our $20,187.28 Challenge

by James & Miel on November 1, 2007 · 0 comments

To take a quick break from my regular rants about politics and markets, I wanted to talk a little bit about our personal debt reduction activities. When we refinanced our mortgage a few months ago, we did an 80-10 split where we took out a mortgage for 80% of the value of our home, and a home equity line of credit (HELOC) for %10 of the remainder.

The reasoning at the time was we could get a better rate structuring the loan in that manner. Well, it turns out that our loan wasn’t entirely hassle free. The HELOC rate was variable, which means that Washington Mutual can increase our payments as they see fit. Since we took out the loan, they’ve helped themselves to an additional 1.84% increase, from 7 to 8.74%. This is great for the bank, but not for our pocketbook.

So, we currently owe $20,187.28 on our HELOC. Our number one financial goal over the next six months is to try to slash this by at least 40%. Its going good so far, my wife Miel has put $500 towards the principle and I just contributed another $154.00. We’ve also agreed that most of the modest profits from our blog and our investment property will likely be going to this goal as well.

So, the good news about expensive debt is that you can make it go away by throwing money at it!



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