Refinancing Our Home – One Step Back, Several Steps Forward

Again, this will potentially save us tens of thousands of dollars in the long run and we’ll put the extra cash to good use each month, but I hated the thought of that debt increasing in any ways, shape or form.

Starting Credit Card Debt (01.01.19): $126,310.77
Current Credit Card Debt: $109,570.87
Total Paid Off: $16,739.90
Income Going to Savings: 2%

While I’m probably the only one that pays close attention to that little stat tracker at the top of each post, some of you may have noticed that my total credit card debt went up as of today’s post while my total paid off went down. Here is what it looked like yesterday:

Starting Credit Card Debt (01.01.19): $126,310.77
Current Credit Card Debt: $108,870.87
Total Paid Off: $17,439.90
Income Going to Savings: 2%

This is sort of (to borrow a term) “ass backwards” of the intent of my efforts.

When we grabbed our proverbial shovels in January and decided to dig out of debt once and for all, we made a promise that we would close all of our accounts and never look back. We made good on that promise almost immediately, and I can now say that all of our accounts but one are closed for good. The reason we left one open is this:

Our situation is such that we have next to nothing in accessible savings at the moment (we have a good nest egg in a 401k, but no liquid savings to draw from), and thus we made the choice to keep our lowest interest rate line of credit open as a safety valve if needed. It’s got a limit of under $5,000 and an interest rate of ~12%, so we knew we couldn’t get into too much trouble.

Over the past few months, we have taken a long hard look at everything that we can adjust to dig out. Here is a quick recap:

  1. We refinanced my car for a lower interest rate and lower payments.
  2. We canceled all cards other than the one mentioned above.
  3. We canceled our satellite television provider.
  4. We trimmed nice-to-have expenses to around $80 bucks a month.
  5. We took any bonus or stocks we had and put them all towards debt.
  6. We set everything up to auto pay.

This has put us on track to probably close out somewhere between $40,000-$50,000 worth of debt in 2019, which is a pretty fantastic accomplishment. The only other major piece of business was to look into refinancing our home. We bought the home in June of 2018, and the bank required us to be in it for a full year before they would discuss refinancing with us.

This process is finally underway and we have locked in a new interest rate that is 1.25% lower than our original, which as you can imagine will save us a HUGE amount of money over the life of the loan. It will also reduce our monthly mortgage payment by around $400, giving us extra cash to attack our debt and dribble small amounts into savings each month.

The problem with all of this is that the bank of course wanted to get an appraisal on our house, and that was an upfront cost that we had to pay for out of pocket. The appraisal fee was nearly $1,000 bucks, and it left us with one option, which was to use that personal line of credit to cover.

Personal Note: How lame is it that I can’t cover $1,000 right now? I mean seriously. I can’t scrounge together $1,000 bucks in cash. Mark my word that I will never put myself or my family in this situation ever again, but right now? Totally lame.

Again, this will potentially save us tens of thousands of dollars in the long run and we’ll put the extra cash to good use each month, but I hated the thought of that debt increasing in any ways, shape or form.

As the great Paula Abdul famously said in her hit 1988 song “Opposites Attract”: “One step back, two steps forward, we come together because we’re in debt and we hate it and we want to not have to worry so much about finances all the time.”

Or something like that… I might be paraphrasing.

Happy Friday, and keep digging!

2 thoughts on “Refinancing Our Home – One Step Back, Several Steps Forward

  1. Love your blog. You maybe could start copywriting for a finance newsletter and make some extra cash.
    One thing. Did you really close you accounts? Wouldn’t that’s hurt your credit score. When you say accounts is it credit cards?

    Like

    • Thank you for the kind words on the blog! I wouldn’t even know where to begin looking for a copywriting job, but if you have suggestions, please let me know!

      We closed the accounts because we aren’t applying for anymore credit anytime soon! We refinanced our home, we are paying off debt (not looking to get more), and we’ll have the cars we do now for at least the next 3 years. These were credit card accounts for sure.

      Like

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