Two years ago, I got divorced. Because I needed cash to pay my lawyer, I put my everyday expenses on a credit card. Before I knew it, between what I charged and the high interest rates, I was in considerable debt. I had a little over $17,000 on two cards.
I looked into transferring my debt to an 18-month no-interest credit card and spending every penny I could to pay off my debt before that interest kicked in. But when I ran the numbers, I wouldn't make it. I was already struggling to pay the combined $580 in monthly credit card payments. I realized I needed to free up cash each month, not tie up more trying to beat the 18-month clock. If I tried to beat it, I would be leaving myself cash poor, and I'd have no money if an unexpected expense occurred. Making the same monthly payments I currently make on the 18-month card was an option, but in the end, there would still be a balance to pay off. And, I'd be left with little breathing room in my budget each month.
After researching alternatives, I found that the best option for me was to use my home's equity. My ex-husband and I bought the home 20 years ago, but between several refinances, including one done shortly before we separated where we took significant cash out, there was still a mortgage on the home. I chose to keep the home and take on the mortgage alone so our children could stay in their school system.
Still, there was a good amount of equity in the house and I decided to borrow $25,000 of it so I could pay off my credit card debt, have lower monthly payments for some breathing room, and have some extra for any expenses that might come along.
In terms of accessing my equity, I had three options: Refinancing, taking out a home equity loan, or opening up a home equity line of credit. Here's how the pros and cons of each worked out:
from Apartment Therapy | Saving the world, one room at a time https://ift.tt/2PrqQzk
No comments:
Post a Comment