Debt Free or Bust!

I need some advice about whether or not refinancing would be a good idea. We currently have a 30 yr fixed FHA loan with an interest rate of 6%. The balance we owe is $126,915.43. Our principal and interest payment is $814.24 and our PMI is currently $52.35 monthly. Our escrow (taxes and insurance is $413.36 monthly) According to the Central Appraisal District of my county, the value of our house is $145,393. I believe that would give us a loan to value ratio of 87%. I know that mortgages with a loan to value ratio of 80% require PMI.

I called my lender (Wells Fargo) and inquired about a FHA streamline refinance. They told me that there is no appraisal required and no pulling of credit required for a streamline refinance.

They offered me two options for a 30 year fixed refinance. The first one is a 5% interest rate with 1/2 of a point. There would be closing costs of about $3,500 rolled into the loan. The second one is a 4.875% interest rate but we would pay $4,200 out of pocket for closing costs.

I don't want to pay anything out of pocket so we are looking at the 5% one. With this the principal and interest would be $722 a month and PMI would be $54 a month. The quoted me a monthly payment of $1,162.00 including escrow.

They also told me that we have an escrow shortage of $876.00 and our payment will go up in June to $1,324. We are currently paying through escrow $66 a month for insurance and $264 a month for taxes. In June, insurance will increase to $73 and taxes will increase to $311.

The total new 30 year loan would be for $134,507 and would include upfront FHA insurance, the loan payoff and closing costs.

All of this information has my head spinning and I am not sure if refinancing would be the best option for us.

We are following the Dave Ramsey plan and just finished baby step two this week. We don't know whether it is worth it to refinance for the lower interest rate or if we should just try to keep it as is and pay extra as we can. I also thought about checking into a 15 year FHA refinance to see how the payment would increase with that. With a lower interest rate I am wondering if that would be an option since the payment is not really an issue.

Also, it was asked in the comments how long we've been in the house. We've been here almost five years. We closed in June of 2004.

Any advice y'all could give is sincerely appreciated.

I haven't been on here in a while but I've missed this place so I decided to start up again.

The following is from a blog entry of mine on 3/22/07:

So, about my debt... Here is what I have:

Visa card - New balance before I paid $50.00 yesterday was $2,254.08. APR is 13.18%

Discover in my husband's name - (hereafter called Discover-D) New balance after I paid $103.00 yesterday is $5,040.00. APR is 0.00% for life.

Explaination of APR - Last year we got a credit card offer for a Discover Platinum Card where you could transfer balances and have a 0.00% APR for life. The "catch" is that after the introductory (12 month) period is over, you have to make two purchases (no minimum purchace amount) per billing cycle on the card.

Discover in my name - (hereafter called Discover-E) which I forgot to bring the statement for but the balance is around $7000. APR is 0.00% for life.

Same APR deal as the above mentioned Discover.

Bank of America car note - Principal balance is $6,972.79, payment is $311.55 per month.

So there you have it...my debt snowball items. The only other debt that we have is the house. The principal balance on the house is $131,127.75. We have a 30 year fixed rate mortgage at 6% and the payment is $1220.32 per month.

********

Since then I have done some smart things with money and probably some dumb things.

The good news is that our total debt now (not including the house) is down to a total of $4,800.00 on one Discover card. All cars and other cards are paid off.

I hope to throw all extra money toward this card and have it paid off in a few months.

My husband and I each have cell phones and do most of our talking on them. Until the year before last we also had a Verizon home phone but I felt that was a rip-off so we got Sunrocket and when the went out of business we got Vonage. I am happy with the Vonage plan we have and have no reason to discontinue the service other than I think it is a waste of money since the 90 % of the calls we get on the home phone line are telemarketers. It's not a lot of money ($19.38 per month total) but this is a good way to trim the budget if the line is unnecessary.

I am wondering if any of you discontinued home phone service for just cell phones and are happy with it or still wish you had a home phone.

One of the only reasons I can think of to keep the home phone would be 911 but I am wondering if cells can be tracked by some kind of GPS and that isn't a valid concern...if we weren't able to give our location verbally or something.

I have Sprint and this is what their website says about 911 calls:

The Federal Communications Commission (FCC) has mandated guidelines to enhance wireless 911 location services. Sprint Nextel has complied with its federally mandated obligation to make 911 location services available to its customers. All wireless phone companies send money for 911 funding to designated local government authorities. This money is collected from their customers in the form of surcharges. Some local and state governments have chosen to forego investments that would permit customers to take advantage of wireless 911 location services. As a result, local Public Safety Answering Points (PSAPs) and emergency services are sometimes unable to effectively respond to wireless 911 calls. In these areas, when wireless phone users call 911, the dispatcher does not automatically receive callback phone number or caller's location, making it difficult to route call to nearest emergency responder.

I did e-mail my local police department to ask them about this but I haven't heard back yet.

Thanks for the advice, y'all. We discussed it last night and decided to keep the Explorer and pay it off asap (including using our tax rebate money on it). His job will be full time but he will work 24 hours and be off for 48 hours, so that is where the every third day thing comes in. We live about 35 miles from where his new job will be and unfortunatly my office is about 2 miles down the street from his fire station so switching out cars on his shift days wouldn't do us any good. It's not that bad for him but I am really packing the miles on my car with having that drive five days a week for going on four years.

Anyway, we are going to get estimates going on the tires and get the mirror fixed asap. I am thinking about going to a local wrecking yard and asking them about the mirror. I don't think it would hurt to start there and see what they can help me with. Used parts have got to be cheaper than brand new.

Regarding TB's new job, he will still be working some hours at his retail job and his salary is more at the fire department so we are excited to get our debts taken care of once and for all.

I think that one of the huge mistakes people make when they make more money is to increase their lifestyle immediately and that is something we have dicussed and decided we are not going to do. Paying off our debt is our first priority with any 'extra' money we make.

Well, so much for more frequent blog entries. Sorry about that. Life gets in the way sometimes.

Excellent news since I last wrote. My husband got a job in a local city as a firefighter/paramedic. I am soooo proud of him. He worked long and hard for this and it is going to be awesome. His start date will be May 5th. WOOT!!

So, here is where today's entry title comes in and where I need some advice:

Lafawnda the Honda (my car...an Accord) is paid off and in good condition. She gets decent gas mileage and I plan on driving her as long as I can.

My husband's Explorer is a different story. We are working on paying it off and the current balance is around $2,600.00 (this is our smallest debt and next on the debt snowball). With the way gas prices are now and the longer drive he'll have to work (even though it might not be that bad since he's only going to go once every three days instead of five days a week) we are thinking about a different vehicle for him. It has been a long while since we looked at cars/trucks and I am worried about getting a good deal, decent car, etc.

This is the dealio though...I don't know whether we should pay off the Explorer asap (and throw the tax rebate check of $1,200.00 at it to get it down faster) or try to trade it in now. It does have a few issues (passenger side mirror got broken and the mirror part is missing, needs new tires which would be around $450.00).

I don't want to deal with the whole private sale thing so I was thinking maybe Carmax. But should we take it up there as is now or what?

Also, for the replacement vehicle...we are thinking a small truck or small car. I have no idea where to get started on that because I don't want a payment and I don't want to deal with dealership scumbags.

Advice? Thoughts?

My SIL called this week and asked us to keep her four kids on Saturday. She is going to drop them off Friday evening and pick them up after bedtime on Saturday night. TB and I are excited about it because we always have a lot of fun with them. The three boys are 11, 10 and 9 and the little sister is 6. They're well behaved and we always have a good time. Unfortunately, we also usually spend a lot of money entertaining them. I'm sure this is not a newsflash but activities with four children are not cheap! Sometimes we take them bowling or to laser tag and that can really add up.

Anyway, I am trying to think of some fun alternatives to do with them this time. I'd like to take them to the movies and out to eat pizza, and then maybe to the park to play on the playground and play basketball. If we go to the movies it will definitely be during the day so I can save a little money...and I'll be sneaking in some snacks for them too.

I am not that good of a cook but I am going to make hamburgers and hotdogs on Saturday night for them. Easy and cheap...and GOOD!

We had a relaxing weekend and didn't spend too much money. Yesterday after church we went out to lunch with two couples from our Adult Bible Fellowship class. They're both around our age and we have a lot of fun with them. One of the couples is expecting their first baby in two weeks. We are so excited for them. TB and I are getting close to wanting to try again but I am really scared. I went to a new OBGYN last year for my yearly check-up, thinking that I was going to change to her before we tried pregnancy again but I really don't like her that much. I mean, she is a nice person and seems attentive but I just don't feel like she is on the same page with me when it comes to certain things. Our pregnant friend is a NICU nurse and really likes her doctor so she gave me his information yesterday. I looked him up and he does take our insurance (yay!) so I am going to go to him next time for my yearly exam and check him out. My main criteria is that I find somebody who is going to put a lot of time into reading my charts and learning about my past pregnancies. I might need to even go see some kind of high risk doctor too but our friend said this doctor referred her to one who was awesome for some visits.

Anyway, the thought of pregnancy is kind of freaking me out but TB is so ready for it. I think he'd have me knocked up right now, given the chance. LOL. I absolutely know that there is never a perfect time to have kids but I am still trying to put it off longer. Both because I am scared and I would like to get this misc. debt paid off.

TB did get out of paramedic school last year. Woot!! He took the National Registry (big, hard test that you have to pass) and passed that in December. Last month he got his state certification in so he is all official. I am so proud of him for all the hard work he put into this. Also, I am amazed at all the stuff he knows. I guess that is a really good thing seeing as how he is supposed to be saving lives and all, but you know what I mean. He is just full of all this medical terminology and random drug information. Pretty cool!

Anyway, by getting his paramedic certification he really narrowed down the number of people he is going against for some of these firefighter jobs so that is good news. Basically, you just have to wait until the cities are testing and sign up for the tests so that is what we've been waiting for. There are several tests coming up (one tonight) that he's registered for so hopefully something good will come from one of those. We are so ready for him to get a firefighter/paramedic job.

***

Oh,and I wanted to tell y'all thanks for the nice comments. It feels awesome to have that credit card gone and our emergency fund built back up. I'm excited to get the ball rolling again.

Well, I haven't written here since April of 2007 and I am kind of depressed because I don't have that much accomplished (debt snowball wise) since then.

I have been reading a lot of the other blogs and enjoy them though so I decided to start back up.

So, we got our tax refund today. $2,712.00.

I used $1,372.94 of it to pay off our smallest credit card (WOOT!!) and $1000 more will go to get our emergency fund back up and running.

Total debt left (besides our home) after that bill:

Discover D - $4,283.88
Discover E - $6,100.15
Discover 3- $3,454.00
B of A (truck) - $3,600.00

I get another paycheck on the 29th (with a small bonus, I think) and all the bills are paid for the month so I hope to use a chunk of that on the truck. Technically, Discover 3 is our smallest debt but the truck is so close I am going to concentrate on that one next. The truck payment is $311.55 per month so getting that out of the way first makes more sense to me. If I don't start paying extra on it the loan will not mature until February of next year. Wayyyy too long. I need to call and ask Bank of America how I can make extra payments on the truck. Right now I go through the drive thru at the bank and pay it..but I don't want to wait till the monthly payment is due again to pay the extra money, I don't think.

Well, I called a guy that TB volunteers with at a local fire department and who owns his own shop. He agreed that I should probably get the maintenance done soon since I'm pretty far over the manufacturers recommended time to do it. He quoted me a price of $773.52 w/ tax, which includes changing out all the belts and the water pump. Also, a bunch of other little things are included like when they take out the water pump they do some things on the cooling system and antifreeze as well. I think this is pretty much a no-brainer to get this done. It is just hard to part with money now that I am trying to make it work in my favor. (Yeah, I should have told that to myself when I spent over $400 on eating out last month. You know you wanted to say it!)

My check on Friday will be (by about $500) more than a normal check would be because I am getting a performance bonus and I also have 10 hours of OT on it. We have the ability to get a performance bonus about once per month and I usually always get it. Sometimes it is more than others. This just happened to be a really good month. For the OT pay, I have been working 5 hours per week for the past month or so. It's not too much but it give my check an added little boost.

On the coupon/ad shopping front, I am really starting to get involved in it. I bought a Sunday paper last week and clipped a few coupons for stuff that I know we'll be using. Grocery store ads came in the mail yesterday and I went through them last night making a list of the items I want to price match at Wal-Mart. My goal is to do most of my shopping at Wal-Mart and price match the other's ads at Wal-Mart. Unless, of course, there are BOGO items or really good coupons that I can use at the other stores (since Wal-Mart won't double or triple like they do). For the past two weeks, I have done the price matching thing and it is really easy. Why I never did this before, I don't know. It's actually kind of fun. Oh, and I found some pretty cool websites (maybe this is old news) called taylortownpreview.com and couponmom.com. (Sorry, no hyperlinks. I'm having to hurry). On the Taylortown site, every Wednesday they list the coupons that will be in the next week's paper. I think that is pretty cool! The couponmom site has where you can plug in your local stores and see what coupons get you the best deals.

Also, in the Sunday paper there was a Walgreens insert that had some good coupon buys in it. I went and got just those things last night. They had 12 packs of DP products for $2.00, Kraft mac & cheese 2 for $1 and Van De Kamp pork and beans 3 for $1. I got the limit for each of those items and spend just over $15.00.

Ok, I have rambled enough for today. I am off to try and figure out how to add my favorite blogs over on the left side of the page.

Bills paid today:
Geico Auto Insurance - $120.88
TXU Electric - $164.97 (budget billing amount...actual bill amount was 94.91)
Bank of America (truck) - $311.55 (balance before payment was $6,701.21)
Sprint PCS - $50.62
Visa - $50.00 (balance before payment was $2,231.48)
Discover-D - $148.40 (balance AFTER payment was $4,900...0% interest)

That's all the bills through the end of the month except Netflix ($19.29) which will be deducted on 4/26. Other than groceries, gas and tithe, I should not spend any more. Since I don't get paid until Friday and Visa (lowest on the debt snowball) is due on Thursday, I just made close to the minimum payment. I plan to make another payment as soon as Friday's check is deposited. Figuring out how much that will be is where I am having trouble.

My dilemma: I paid off my 2000 Honda Accord last month. Well, today I got a coupon type booklet in the mail from the local Honda dealership. In there, I noticed an ad for $35 off a timing belt replacement. Well, that got me thinking about maintenance on my car. I bought my car used when it had 25,000 miles on it. Now it has 125,000 miles on it. I have never had any belts replaced. I called a friend who works at another local dealership and asked him about having the belts changed out/checked and he said that it would definitely be a good thing to have it done soon. He said it should have been done at 90,000 miles. So, now I am all worried about needing my belts changed but if I do that, it will mean way less going toward the Visa because the cost of changing out the drive belts, timing belt, water pump and whatever else is right around $700.00. I should still have at least $600 to go toward the Visa and still have money for necessities through next month.

So, should I go ahead and get the work done on the car? I am kind of thinking it is a perfect time to do it since I have the "extra" money. And it would be a nightmare to have a belt break and be on the side of the road...and maybe cause more damage. TB is at school so I get to ask him about all this when he gets home tonight. I am just kind of let down because I called him this morning saying we should have $1,200 to pay toward the Visa and we were both so excited about it.