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!

Best,

James

MANAGE YOUR MONEY TOGETHER

Here are some simple guidelines for DINKS to build wealth:

1) Collaborate: Meet regularly to talk about money, set goals together, track and monitor them.

2) Understand and respect your partner. Take time to understand your partners values about money.

3) Watch the numbers. Get a budget, monitor your spending and track your net worth.

4) Max your retirement. Maximize contributions to your tax deferred retirement accounts.

5) Invest in stock. Stocks perform better than bonds or cash.

6) Avoid high interest debt. Credit cards and title loans are financial cancer.

7) Diversify. Don't put all your eggs in one basket.

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