Moffo34
New Poster
Cash: $ 0.45
Posts: 2
Joined: 27 Jan 2012
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| Need to start saving |
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Hi I.m 36 years old and married with two young kids. My wife and I our getting by paying are bills and debt. We our unable to put a enough savings however. The big reason is two huge debt that we have. First is a personal loan that we took out to help get our new house fixed up four years ago. At first the interested rate was 8% which was high but doable. Over the last 4 years the rate has jumped up to 14%. the plan was to have the debt payed off in 6 years, now it looks like another 4-5 years. We pay about one third of our money income to this debt alone. The end result is about 6000 a year in interest charges to the bank. I have called the bank numerous times about the rate and got no where.
One solution that I have at this points is a old 401k from my wife's last job. After taxes there is enough to pay off the debt. The 401k has t earned anything in the last 3 years as there is no money being being added to it. I hear never to cash in your 401k, but the end results if not is paying out of pocket the value of the 401k in interested to the bank over the the next 5 years.
If we where able to free up that money also, we can then in turn start putting money away for our children future and our retirement. We do also have IRA's and other 401k's that we our currentlly putting money into.
Advice, should we cash out the old 401k to get out of this terrible loan
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Fri Jan 27, 2012 1:50 pm |
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oldguy
Senior Member
Cash: $ 280.50
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Location: arizona
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We'll probably need more info before we can give you advice.
Are you saying that you borrowed $40,000 to fix up the new house?
List your debts - amounts, interest rates, minimum payments.
Do you have any car loans?
Before we suggest cashing out the 401k, maybe we can see some better ways to raise some money. Eg, the new HARP Plan.
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Fri Jan 27, 2012 3:35 pm |
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littleroc02us
Senior Member
Cash: $ 182.10
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Joined: 09 Feb 2009
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So you took a risk on a variable rate loan and life happened? That's too bad, but this is a good example of what happens when you take on high risk loans.  So what can you do to fix this issue? Like Old Guy stated, looking at your budget may help us give you some ideas.
“If you want to stay in debt forever, keep borrowing money.”
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Fri Jan 27, 2012 3:49 pm |
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Moffo34
New Poster
Cash: $ 0.45
Posts: 2
Joined: 27 Jan 2012
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| More info |
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Right now we take in 5100 a month
Mortgage is 2000 taxes tied in, interested rate is 6%
Loan payment is 1200 with 440 going towards interest minimum payment is 900
Second mortgage is 200 with 22000 left on it, and 200 is the min
Cable, utilities is 600
daycare is 300
IRA contributes is 200 ( 100 each in two different one's for my daughters)
Gas and food totals around 350-400
Any extra money is put aside for car insurance, car breaks down, heater breaks Ect.
I lost my job for a couple months but just got employed again but making much less. The above mention is what where taking home with my new job
Last edited by Moffo34 on Fri Jan 27, 2012 7:57 pm; edited 1 time in total |
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Fri Jan 27, 2012 4:47 pm |
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coaster
Senior Advisor
Cash: $ 1330.95
Posts: 6554
Joined: 11 Oct 2005
Location: Wisconsin
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| Re: More info |
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quote:
Originally posted by Moffo34
..... but making much less
Sorry to hear that, but please clarify whether the income stated above is current in this new job.
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This is the website for the program oldguy mentioned above:
http://www.makinghomeaffordable.gov/Pages/default.aspx
~Tim~
Eye Candy : Why Whimsy
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Fri Jan 27, 2012 6:37 pm |
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oldguy
Senior Member
Cash: $ 280.50
Posts: 1339
Joined: 21 May 2006
Location: arizona
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If I understand, you are paying $3400/m for the house, plus utilities? Ie, $41,000 per year? That's over 67% of income going to shelter. Is this really something that you, as a family, want to do over the next 10 or 20 years? $400,000 per decade for housing is a heavy burden - is there a way to move into housing that willl be more in line with earnings? Say $1500 per month?
Your other expenses seem 'normal', no excesses, just the housing seems extreme.
The recently instituted TARP 3 doesn't have a LTV requirement, very few constraints, it allows you to roll all 'house' debt into a single 30 yr loan at the going rate, maybe 4.5% - if you can get into that program, your 14% loan will be rolled into the single 4.5%.
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Fri Jan 27, 2012 8:49 pm |
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johna
New Member
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Joined: 30 Jan 2012
Location: Rhode Island
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I'm confused as to why you took out a personal loan to pay for home improvements. Are you upside down in you mortgage? If you have some equity and really want to stay in your home, you may want to look into a home equity loan to pay off that personal loan. I agree that 67% of your income toward shelter is way too high!
For great articles on saving money, earning money and investing for the future, visit http://www.livingonabeerbudget.com
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Tue Jan 31, 2012 4:37 pm |
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Adk109
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Location: Mumbai
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I think if you concern with financial advisor then you will be able to take proper decision for this situation.
There are many options available for money saving solutions. For future investment or saving people should keep track of their spending money and expenditure so that they would be able to manage their personal finance. If we want to save money for future then we should keep some part of our income for saving.
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Wed Feb 22, 2012 11:36 am |
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