Decisions, decisions

iVillage Member
Registered: 04-04-2003
Decisions, decisions
Wed, 05-28-2003 - 6:34pm
I read here often, though I don't post very often. You guys are great support! I always come read here and the compulsive spenders board when I get the urge to go spend! Anyway, I don't even know where to start.

We have about 20k in consumer debt right now which includes a car that we owe more on than it is worth by a few thousand dollars. We want to get rid of the car with its high interst rate and payment but I'm not sure if it can be done.

We've considered a home equity loan to consolidate but I'm not sure how wise this is and I can't seem to find any of the articles I've read before on this type of thing. I think we could get about 40k which we could consolidate the cc's with and part of the car until we get it down to current blue book and then sell or trade it in for something cheaper.

Or we have about 7k coming to us from different things that we were planning to pay down cc debt with, but maybe it should go to the car instead. I'm not sure we can get a decent rate or loan on another car without possibly consolidating or paying cc's down. Plus I can't refinance it because I owe too much on it. Part of me wonders if we should just keep the car with the high interest rate and upside down loan and just keep paying on it until it is paid off and run it into the ground. The payment isn't super taxing on us, but it would just be nice to get rid of it and get something cheaper.

Plus we want to refinance our home! But I'm not sure how my current debts would figure into it--would they prohibit me from getting the good rates offered right now, you know the debt to income ratio thing? My current rate isn't horrible--6.75--in fact comparing it to our first home which was at 9.5, the 6.75 doesn't seem that bad. However, it is a 5 year arm that readjustes every 5 years and then is fixed for the next 5 years. So I wonder, especially if my current debt situation isn't going to give me a great rate and since it isn't a horrible, horrible rate that I currently have, if I should wait another year when I should be in a much better financial position, to refi and hope the rates are still great.

Ugh. We want to do the right thing and ultimately get out of debt but with so many choices we don't know which way is best. So if anyone has any insights on any of the above scenarios or ones we haven't even though of yet (yikes! that would mean even more choices!), we'd sure appreciate the feedback.