[QUOTE=gazpacho]
That 15% mortgage is pretty high. I am confused by you OP do you have two loans on the house 15% and 8.375%? If you have a comfortable amount of savings and self discipline paying the highest interest debt off first is best.
[/QUOTE]
We paid 5% down.
We got an 85% mortgage at 6.625%.
We got a 15% mortgage at 8.375%.
[QUOTE=Santo Rugger]
I do have a question for you, though, happywaffle. How the heck did you get such low interest rates on your cards? My main card is at 10.5, and everybody seems to ooh and aww about what a low rate that is.
[/QUOTE]
Behold, the power of BALANCE TRANSFER!!! {thunder clap} 
[QUOTE=masterofnone]
About twice a month my credit card compaies send me offers of either 0% interest for 6-12 months, or 3.99% for the life of the balance.
[/QUOTE]
Correct. I transferred to two new cards - one at 5.99% and one at 6.99% - each valid for the life of the balance.
I used a similar thing for a car down payment; I wrote a $4,000 check using one of those convenience checks. It’s good for 3.99% for the life of the balance, much lower than the car loan APR.
Now, there’s some serious self-discipline involved with these; if I’m late on one payment, the APR shoots up to a 20-30% rate. Eek. So I gotta be careful there.
[QUOTE=masterofnone]
Good to look out for this, but IME, the fee is insignificant compared to the savings in interest. It probably wouldn’t be worth transferring from an account at 5% to one at 4% interest, but I only transfer when the difference is significant, and the fees are usually paid off in interest savings within a few months.
[/QUOTE]
You’re correct. Even with a high balance, there was a maximum fee of $100 or something, and I saved about $1,000 in interest.
Something that I have not seen addressed yet.
The Credit Cards may have the lowest Rate but what are the monthly minimum payments, and are you paying just the minimum?
The minimum payment on the Car loan is more than likely a greater percentage of the loan value and will likely be payed off sooner as defined by the regular schedule. Credit Cards seem to me at least to have insane low minimum monthly payments to the point where they just barely cover the interest and not much principle. 6% over 8 years isn’t better than 12% in 4 years at least in my thinking.
[QUOTE=happywaffle]
@Santo: I really like Dave Ramsey. And that trick’s a nice idea, but it’s just a mental trick. More useful for people with serious spending and debt problems. I think I’m over the mental “hump” that I can go by APR instead of balance.
[/QUOTE]
That’s because finances are a lot about behavior. Ivylad and I do not have serious spending or debt problems, but we are working the debt snowball (have to rebuild the emergency fund a bit first) and we should have made a substantial dent in our debt within the next six months.
It’s not just about fixing debt problems. It’s about building wealth, which you really can’t do if you have debt.
[QUOTE=happywaffle]
@Santo: I really like Dave Ramsey. And that trick’s a nice idea, but it’s just a mental trick. More useful for people with serious spending and debt problems. I think I’m over the mental “hump” that I can go by APR instead of balance.
[/QUOTE]
That’s because finances are a lot about behavior. Ivylad and I do not have serious spending or debt problems, but we are working the debt snowball (have to rebuild the emergency fund a bit first) and we should have made a substantial dent in our debt within the next six months.
It’s not just about fixing debt problems. It’s about building wealth, which you really can’t do if you have debt.
[QUOTE=ivylass]
That’s because finances are a lot about behavior. Ivylad and I do not have serious spending or debt problems, but we are working the debt snowball (have to rebuild the emergency fund a bit first) and we should have made a substantial dent in our debt within the next six months.
It’s not just about fixing debt problems. It’s about building wealth, which you really can’t do if you have debt.
[/QUOTE]
Another excellent point. We do have a plan in place for saving up our emergency fund (medium-term goal: 3 months of living expenses) and for retirement while we pay off the debt. If Dave’s way works for you, go for it.
[QUOTE=Skipper Too]
Something that I have not seen addressed yet.
The Credit Cards may have the lowest Rate but what are the monthly minimum payments, and are you paying just the minimum?
The minimum payment on the Car loan is more than likely a greater percentage of the loan value and will likely be payed off sooner as defined by the regular schedule. Credit Cards seem to me at least to have insane low minimum monthly payments to the point where they just barely cover the interest and not much principle. 6% over 8 years isn’t better than 12% in 4 years at least in my thinking.
[/QUOTE]
We’re going to pay $50 more than the minimum on all our debts besides the “primary target.” I calculated how much time and interest we’d save on each debt by paying extra on it. Paying $50 extra per month will save me $775 in interest for my credit cards, and $29,000 in interest for my mortgage!
Does anybody know how to calculate my “actual” interest rate on the mortgage after tax deduction is taken into account? That’s an excellent point, and a good reason why we might tackle the car payment first instead!
[QUOTE=happywaffle]
Another excellent point. We do have a plan in place for saving up our emergency fund (medium-term goal: 3 months of living expenses) and for retirement while we pay off the debt. If Dave’s way works for you, go for it.
[/QUOTE]
At the risk of quoting Dave like a parrot, I think you’re trying to do too much at once. Pay off the debts first, then build up the emergency fund, then get your retirement set.
[QUOTE=ivylass]
At the risk of quoting Dave like a parrot, I think you’re trying to do too much at once. Pay off the debts first, then build up the emergency fund, then get your retirement set.
7 Baby Steps
[/QUOTE]
Heh, and I thought my coworker was the only Dave-head.
We have enough income for me to donate 6% to my 401k (fully matched by my employer), AND pay off debts at a rapid pace, AND save up an emergency fund ($1k money market to start with, just like Dave says 
).
[QUOTE=happywaffle]
Correct. I transferred to two new cards - one at 5.99% and one at 6.99% - each valid for the life of the balance.
I used a similar thing for a car down payment; I wrote a $4,000 check using one of those convenience checks. It’s good for 3.99% for the life of the balance, much lower than the car loan APR.
Now, there’s some serious self-discipline involved with these; if I’m late on one payment, the APR shoots up to a 20-30% rate. Eek. So I gotta be careful there.
[/QUOTE]
That’s why I’d pay the cards off first. Yeah, it says fixed interest for the life of the balance but there are always weasel words reserving the right to change your interest rate if there are changes in your credit scores. So if you screw up once and get a late from something, all your cards may also raise your rate (even if it’s a different bank entirely). At least with the mortgage, you know the rate will remain the same.
[QUOTE=tremorviolet]
That’s why I’d pay the cards off first. Yeah, it says fixed interest for the life of the balance but there are always weasel words reserving the right to change your interest rate if there are changes in your credit scores. So if you screw up once and get a late from something, all your cards may also raise your rate (even if it’s a different bank entirely). At least with the mortgage, you know the rate will remain the same.
[/QUOTE]
I’ve never seen these terms. I’ve been late on one payment with one of these deals, and I lost the deal, but my other cards did not lose the deals I had on them. Of course, always read the fine print.
[QUOTE=masterofnone]
I’ve never seen these terms. I’ve been late on one payment with one of these deals, and I lost the deal, but my other cards did not lose the deals I had on them. Of course, always read the fine print.
[/QUOTE]
It’s called universal default.