Refinancing Our Way To Better Financial Health

dollarSo Denis and I have decided to refinance our mortgage. He called several banks and today we heard back from one with the best offer yet of all the banks he spoke with – 4.75%. The loan officer claimed she’d be able to get that rate for us by the end of the week. We told her we’d get our pre-qual docs into her so that once the rate gets to 4.75% we could lock in our rate and move forward. The result of the refi is a savings of $170 per month.

In addition to the refi, because the rates are so low, we’ve also decided to get a home equity loan. We’ll put 20% of it into savings for emergencies. The other 80% will be applied to credit card debt. The net result is not only instant emergency savings should we need the funds, but instead of paying large amounts of finance charges on my credit cards due to 14% APR, we’ll be paying a loan at 5-6%. My monthly payments will go down approximately 70%. Add in to that – the van will be paid off in April. So basically, by April, we will have a fair amount of breathing room due to the lack of car payment, lower mortgage payment, and home equity loan versus credit card payments.

The good news is that I’ve had the past year to re-learn how to properly use my credit card. And I’ve done pretty well. My old ways were to charge anything and everything. My new ways, since December 2007, have been to live cash-only as much as possible and only use the credit card sporadically. I have two repeating charges on my credit card – Netflix and Denis’ gym membership. The only things I use my credit card for are the occasional Amazon purchase (and even then I’ve mostly used my debit card), and concert/event tickets. That’s about it. So while the old me would have been paranoid about getting a loan to pay off credit card debt (for fear of going crazy with the credit card again), the new me is excited because I’m confident that I’ve learned a lot this past year about living on a cash-only basis and will continue to use the credit card ONLY when using a debit card (or my PayPal account) is just not an option. I like paying by debit and knowing it’s DONE. The Disney trip is really what solidifed that for me. When we came back from that vacation, knowing that we didn’t have to fear the next credit card statement because we’d paid CASH for the entire vacation – that was downright liberating. It’s really the ONLY way to go on vacation!!

So anyway, I’m looking forward to having some financial breathing room for the first time in about five years. And by August, when CootieBoy starts kindergarten and reduces his daycare expenses to half-days, well – it’s gonna be NUTS. We’re talking not only being able to live cash-only, but finally being able to put money into savings AND towards college funds (something we haven’t done since CootieBoy was an infant).

Wow – I’m getting excited just writing about it.

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