Refinancing the Home

An investment in knowledge pays the best interest.

Benjamin Franklin

Continuing with the knowledge of life. Now that I was finally in the positive (see previous post), I needed to figure out a way of not only staying there, but having enough each month to pay for food, gasoline, and other expenses without using a credit card. I wanted to get to this point before I started budgeting, because I felt that if I did not have enough money, what was the point of budgeting. Incorrect thinking on my part, but it is was I truly felt.

As it turned out home values in my area were going up and I thought we were in a pretty good position to refinance our home. If the value was high enough, we could get rid of mortgage insurance and save a couple of bucks in the process. We owed $205,000 on our home and decided to give it a shot.

To our surprise, the appraisal came in at $310,000, which meant that we could take out an additional $60,000 for a total of $265,000 and still be in the 80% range to get rid of mortgage insurance. At a 3.99% interest rate that meant our new payment would be a little higher at $1,433 (from $1,412) and we would lose 4 years (that is how long we have been in this home), but we would have some money to pay off some debt and try to get more in the green.

By refinancing our home, we had to payoff the 2nd mortgage along with it, which freed up $335. Not to mention that payment was going to balloon in a couple of years, so we were happy to rid ourselves of that debt. Minus the $21 from an increase in house payment we netter $314 dollars. Add that to the $78 we were up from the last post and we now were working with a positive $413. Almost enough to eat.

We decided to add gasoline from the credit card, which was generally $100 a month, so we had $313 a month for food and other items. Here is where we stood:

Mortgage: $ 1433

Utilities: $300

Internet: $50

Student Loan: $100

Vehicle: $143

Consolidation Loan: $440

Insurance: $90

Credit Card: $300

Cell Phone: $100

Tithing – $528

Offerings – $40

401K – $50

Total – $3,574 ($4075 was before so I had freed up $501.) Still a mess, but getting better!

Debts paid so far: Vehicle paid for with a bonus. 2nd Mortgage was a refinance of the home. Reduction in Student Loan payment (temporary, I hope), and I was rid of the TV bill.

My next biggest goal was to rid myself of the consolidation loan and another vehicle. These vehicles are older and under $5,000 left on them. I have previously paid them off on two occasions, but when things got tight I borrowed against them.

The other goal was with $300 for food, it was time to start budgeting.

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