I always knew that credit cards were evil, but I did not realize how bad they were until this morning when I was crunching some numbers.  I used a Credit Card calculator that I found on bankrate.com.  I picked on my Bank of America Card because it has the highest balance.  On my new statement, my current balance is 41,538.44 because $269.27 in interest was added to my account.  My  APR is 7.9.  (I had to use 8% for the calculator to work)

I used $41,984.17 as the balance, 8% as the interest rate, and 1% plus interest as the minimum payment.

If I only paid the minimum monthly payment, it would take me 503 months (Almost 42 years!!) to pay off this card.  Over that time, I would be paying $29,944.76 in interest alone.

Next I re-calculated it using a fixed payment of $700/month which is a little more than my current minimum monthly payment.

If I continuously make a payment of $700/month, I could have this card paid off in 77 months and I would only be paying 11,805.78 in interest.  <—— I like this option.

Next, I wanted to see what impact an extra $10/month would do.

Using a fixed payment of $710/month it would take me 76 months to pay off this card and I would be paying $11,576.42 in interest.  An extra $10/month saves $229.36 in interest.

If I could afford an extra $50/month, I would be saving $1063.17 in interest.

Please correct me if my math is wrong.  I want to try and figure all of this out in a spreadsheet but I have not gotten that far yet.  The reason why I wanted to do this is so that I can set some realistic milestones for us to work towards.

My wife and I are finding that a lot of people are against our plan to buy another house before we attempt a short sale on our current house.  As long as we can do it, we are going to try and buy another house.  We spent a long time thinking about this one.  Over the last 6 months, we have looked at rentals, spoke with multiple lenders, and spoke with 3 different realtors.  It is actually cheaper for us to buy another house than to rent in the current market.  The only way to rent cheaper is to be in a bad neighborhood.  With a 1 year old and a 5 year old at home, that is not an option.

I still have hope that we are able to keep our current home, but the situation gets worse everyday.  Every month that goes by, our mortgage balance increases.  At the same time, the value of our home is decreasing.  It sucks that we allowed ourselves to get into this situation, but there is only so much we can do at this point.

Here are some of the reasons why we would like to purchase a new home:

1. We have been told that unless our lender adjusts our current loan balance, that there is nothing we can do about our payment on our first more than doubling in size.   We cannot afford a payment of that size.    We tried to cut everything unnecessary out of our budget and it is not mathematically possible.
2. Unless we completely relocate to another area, it is actually cheaper for us to pay a mortgage.  A comparable home to what we live in rents for about 1700/month.  We can buy a new house with about the same payment with taxes and insurance included.
3. By buying a new home, we can deduct the property taxes and mortgage insurance from our taxes.  As far as I know, there are no tax benefits to renting.
4. By buying a house, we have the possibility of using equity to pay off our credit cards.  I haven’t explored whether this is a good idea or not but I would think more of the principal balance would be paid down each month.    My head hurts when I see all of the credit card interest I am currently paying.
5. We are not looking to get into a “bad” loan or an interest only loan.  We are looking at a 30 year fixed mortgage.
6. We are looking to buy bank owned properties that are not in a short sale.  These properties tend to be a lot cheaper.  Some of the ones we were looking at are in perfect condition.

The only negative thing that we can come up with is that we will be paying more in gas each month.  Right now my commute to work is less than 10 miles each way.  My commute will be about 25-30 if we buy in the area we are looking in.

Congress is proposing a plan to help people out of their mortgages.  The problem with the plan is that current lenders still have to approve the plan.  Our lender does not want to help us now and I don’t see that changing any time soon.  From what I have researched, our lender is very stubborn about loan modifications and short sales.

I want to say Happy Belated Mothers Day to all of the Mothers out there.  I tried to devote all of Sunday with my Wife and in laws.  Unfortunately my wife had to work the second half of the day on Sunday.  She works at our church daycare center and had to work because they had evening service.  I spent an early Mothers day with my Mom because she was going to be out of town on Sunday.

I am proud to say that this is probably the first Mothers day in several years that I did not use Credit cards.  I managed to use our checking account when we went out to breakfast and for the flowers and gifts.  I usually rely on credit cards for anything extra because I don’t have a budget. ( I am working on one though :)  I always tell myself that I will pay for it with my next paycheck.  The problem is that I never had the extra money to cover it.

I did not post anything this weekend because I was completly swamped  I have been getting about 4-5 hours of sleep at night because of work.  I had to work Friday night till after 1AM because of issues at work ( I was on call)  The following morning, I had to be back at work at 6:30 AM for a scheduled upgrade. I stayed up late again on Saturday night for more work because I wanted to get it all done.  I wanted to make sure that I was not working on Mothers day.

Usually I am lucky if I get 2 hours of overtime for the entire month.  I am grateful for the extra money, but it really put a drain on me this weekend.  Later on, I will try to post an update on our housing dilema.

Our stimulus arrived in our checking account this morning :)  We received $1800 because we have two kids.  My wife and I keep tossing ideas back and forth as to what we should do with this money.  I know the Government wants us to spend it, but that may not be the wisest idea for our situation.  I wanted to put it towards credit cards because it would pay down a pretty nice chunk.  At the same time, I was thinking that we should put this money in our ING savings account.  We have no money in savings, and I know the importance of an emergency fund.  I also know that we are going to need some cash for expenses related to moving into a new home whether we buy or rent.

I think that for now I will just transfer it to ING until we decide what to do with it.  It might get spent if I leave it in my checking account:)

I was reading CNN.COM this morning and I came across an interesting article that I thought I would share with everyone.  The article talks about the rising cost of metal and the cost of making U.S. coins.

As of Tuesday, it costs 1.26 cents to make a penny, and it costs 7.7 cents to make a nickel.  Now there are talks of either changing the composition of pennies and nickels or eliminating the penny all together.  Personally, I would like to bills and coins go away completely.  Everyone should have universal debit cards for their spending needs.  This will probably happen in the future, but I don’t see it happening any time soon.  The implementation costs would far outweigh the savings from coin and paper money production.

Click here if you are interested in reading more.  The title of the article has changed 3 times so far this morning.  I would love to hear your comments on this topic.

Lately I have been very motivated to pay down our credit cards.  I have been doing anything I can to make extra money.  I have always been a believer in the sayings “It all adds up” and “Every penny county.”  Here are a few things I have recently started doing to earn some extra cash:

1. Ebay.  I have been trying to list 2-3 items a week on Ebay.  I have been digging through boxes in the garage to find things to sell.  I have some old Boy Scout Memorabilia from the 60 and I have hundreds of Hotwheels to sell.  Depending on the item, I try to sell it on Craigslist to avoid the fees from Ebay and PayPal.  When it gets closer to moving time, my wife and I are going to have a big yard sale for the other items.
2. Cans and Bottles.  I have even started saving Cans and Bottles.  Most people just throw these away.  I used to until I realized how much we pay out in CRV.  My wife and I drink a lot of water.  The last time we went to the recycling center, we earned $70.
3. I am part of programs like MyPoints and Wellness360.  It took me over a year to earn a $50 gift card from MyPoints though.  Now that I have the gift card, I feel that I need to spend it wisely to make it worth all of my time.  By far, I earn the most from Wellness360.  In 3-4 weeks I have earned $59.  I earn money my inputing what I eat everyday to keep track of calories and stuff.  I also earn money off of referrals.  Every quarter I plan to cash out and put it on a credit card.  Please let me know if you are interested in signing up under me.  There is no limit as to how many people I can refer.  The program is also completely free to join and is actually a very useful program for the health conscience.
4. Overtime.  Unless it takes too much time away from my family, I try to work as much overtime as my manager will let me.  I make $36/hr so an hour of overtime equates to $54 before taxes.  Last weekend I was able to work 8 hours of overtime because of being on call.  This widely varies.  An entire month can go by where I do not work any overtime at all.
5. Carpool.  Even though my work is only a 10 mile commute, I carpool with someone when I can.  With unleaded running just under $4 a gallon, this is the least I can do to try and offset the rising cost of gas.  We have a Chevy Tahoe and a Pontiac Vibe.  We try to drive the Vibe as much as possible because it gets much better mileage.

I’m sure there is a lot more, but this is all I can come up with at the moment.

A lot of people question why our mortgage payment is going to be going up an additional $1200.  It was originally going to be an additional $1400/month but they lowered our interest rate.  As of April 7th, we owe exactly $318,830 on our first.  The interest rate is 7.375%  The type of loan we have has 4 different payment options.

Option 1: Minimum payment Due $1037.29
Option 2: Interest Only: $1,959.48
Option 3: Fully Amortized: $2236.27
Option 4: 15 Year Amortized: $3124.66

We have been paying Option 1 because that is all we can afford.  The problem with option 1 is that there is $922.19 of deferred interest each month.   Basically our mortgage balance grown each month.  To make matters worse, our house is worth less and less each month because of the current market conditions.   We originally got this loan because we thought it would free up more money each month to pay down credit cards.  We thought we could just refinance out of it before our term was up.  Unfortunately that did not happen and now we are stuck.

I have been on the phone with several lenders and agencies so see if there is anything they can do.  Because we are upside down in our loan, we can’t refinance.  I even called our current lender and explained that when our mortgage resets we will not be able to afford the payment.  I was told that there was nothing that could be done.  I estimate that I have 3-4 months before our mortgage resets.  Our Realtor said that most lenders do not modify loans until a payment or 2 has been missed.

Because our credit scores are still high, we are trying to buy another house before we loose this one.  We were approved for $240,000 on a 30yr fixed loan.  We just need to find a home that is in a decent area for our kids.  We found a Bank Owned property that we liked in our price range, but they were not willing to cover any of the closing fees.  We are getting 3% of our closing fees through the HART program.  The other 3% we need to have the seller cover.  We have nothing in savings, so this is the only way we can get a home.  If we cannot find a home, we will rent.  There are tons of nice rentals in the area.  When the time comes, our lender is going to help us do a short sale because it is not quite as bad as a foreclosure.

In addition to our 1st Mortgage, we are paying $295/month on a 2nd and $380/month in property taxes and insurance.  Even with my Wife working, there is no way we can swing that payment.  We can barely make ends meet as it is making the minimum payment.  My wife just started working again.  For the first time in several years, we have finally gotten to the point where we do not use our credit cards each month.

Unfortunately, I made a bad choice when I registered the mydebtblog.net domain name.  My Blog name and domain were very similar to another site.  In order to be fair and avoid conflict and confusion, I have decided to change my domain name and title.

I decided to purchase www.mydebtjourney.com.  For those of you that subscribed to my RSS feed, you may need to re-subscribe under mydebtjourney.com

As soon as I figure out how to do it, I will set up a forwarder to the new domain.  I will leave the forwarder up for a short period of time until I am sure that everything has transfered over.

I am excited that I found an easy way to earn some extra cash on the side. It is a program called Wellness360 that I leanred about at work. You earn money by doing various things on the site like viewing articles and keeping track on the food you eat and stuff. I have already earned almost $45 and my plan is to put any earnings towards our credit cards. They are currently running a promotion over the next few days. I earn $7.50 for everyone that signs up under me. It is free to sign up and only takes a second. If you are interested in helping me out, please sign up here

https://www.mywellness360.com/enrollWB.aspx?&source=ahm&broker=811719