First of all, congrats on almost paying off that mortgage! I would love to have a $350/month mortgage payment. I watch a lot of financial shows on TV, so I hope some of the stuff I learned can help you.
1. Pay yourself first. I know this sounds hard to do, but if you put a little back each paycheck to a savings account, you can avoid getting caught in the credit card circle again. It doesn't have to be much. We do $40 a paycheck into 2 "club" accounts, $20 into a Christmas Club and $20 into a vacation club. This really helps out when those times of year come around.
2. Pay your highest interest rate credit cards first and/or lowest balance first. You say you have a credit card in the 20% range for interest with a balance of $200. Try to pay that one off ASAP, while still maintaining minimum payments on the others. Once that one is paid down, I would start on the next lowest balance (since 3 of your credit card interest rates are in the similar 20% range). You should put the money you were paying on the $200 card (after it's paid off) on the next card.
3. Try to make your payments as soon as you get your bill for that statement; don't wait until the due date. Interest is figured on a daily basis, so the sooner you pay it for that month, the less interest you'll end up paying.
4. The $5000 that you are planning on getting would probably be best used by paying off the credit cards for 2 reasons: 1) The interest on your house is probably a lot better rate than those on the credit cards. 2) The interest you are paying on your house can be tax deductible.
If I were in your situation, I would start out with the first 3 suggestions. After you get the $5000, I would follow through with number 4. Finally, any remaining balances left, I would try to obtain a home equity loan. Home equity loans are not second mortgages. The closing costs are much less, usually not more than $100, if any. The interest on a home equity loan would be better than any of your credit card interest rates, and again, the interest paid on a home equity loan can be tax deductible. When shopping for a home equity loan, try to find one with a fixed interest rate rather than adjustable (the market's just too volatile and rates aren't that bad right now). You should be able to find one with a rate somewhere around 7%.
Good luck to you! |
Some advice -- been there myself, - mtroadie
