Here is the background info. I have two remaining credit card debts, one at 0% apr, and one at 1.87% apr as of this month. They will remain that way til Feb 2009. My lease on my current place is up in February. I guarantee our rent will go up, if we rent for less than a year, it will go up by at least $300 per month (don't ask about month to month, the fee alone is 400 plus an increase in the rental rate itself and we will not sign a lease for one more year.)We want to buy something small and equivalent to our current rent or not much higher.
With the market changing dramatically, we will be in a better position if we have the ability to put 20% down and have closing costs covered. Our current plan of pay everything off then saving the money will make things tight and most likely won't allow 20% down. If instead we just pay the min payments on the last two cards, we will definitely have the cash on hand we need.
By keeping the debt we are keeping our options open. The increased debt will not affect our ratios because we want far less than they would willingly loan us.
So we are going to save like mad and start househunting in the fall. If we do go with a loan product that doesn't require all our cash or we get some assistance from the seller, we will use the remaining cash to pay on the credit cards. If not, we can pay the remaining debt with 3 months of our closing.
What you can't see from my ticker since I joined here after I paid the first part off is that we have actually paid off over 32,000 in debt over the past 2 years.
As much as I want the debt gone, I want a home far more, especially at those interest rates. There is only one other way of doing this that might be more financially reasonable and that is signing another year long lease (at a different place) and that is just not something we are willing to do.
That said, the plan could always change again as circumstances change but unless I am missing something, this is the best plan in the long run.
Okay, so lay into me. What do you think is wrong with my current plan and why? I am at least willing to listen.
Newest Plan - You probably won't like it.
June 3rd, 2008 at 10:45 pm
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