# Debt Consolidation - Anyone ever take advantage of this? **URL:** \ **Category:** Shift518 Off Topic\ **Created:** [February 26, 2010, 8:25am UTC](https://forums.speedlife.net/t/debt-consolidation-anyone-ever-take-advantage-of-this/250555 "2010-02-26T08:25:27Z")\ **Posts on this page:** 1\ **Showing post:** 9
**Author:** ![KrazyKid](https://yyz2.discourse-cdn.com/flex034/user_avatar/forums.speedlife.net/krazykid/32/6371_2.png) [@KrazyKid](https://forums.speedlife.net/u/KrazyKid)\ **Post date:** [February 26, 2010, 11:09am UTC](https://forums.speedlife.net/t/debt-consolidation-anyone-ever-take-advantage-of-this/250555/9 "2010-02-26T11:09:08Z")
> [@\*\*\*3rd annual upstate Honda-tech Meet!\*\*\*](https://forums.speedlife.net/t/3rd-annual-upstate-honda-tech-meet/29145/18): > > OK so since it’s a home equity loan (and not home equity line of credit (HELOC), I’m assuming this is for a fixed amount (adding up all the $ you owe, plus your mortgage) at a FIXED rate. If it’s a HELOC, the interest rate can usually vary, especially if it’s open ended (where you have the option choose when and how often to borrow against equity). Either way, BEWARE and read EVERYTHING, like three times. Very good to know. Thanks! > [@\*\*\*3rd annual upstate Honda-tech Meet!\*\*\*](https://forums.speedlife.net/t/3rd-annual-upstate-honda-tech-meet/29145/18): > > “Embrace” Home Loans? Yeah, more like embrace your lawyer 'cause you and him are gonna be real tight… :lol > > Anyways, I’ve had a relative and couple of close friends burned by a home equity loan, but in these cases the fine print is really what killed it, as the interest rate crept up and things got out of control quickly. You don’t mention what the actual rate is, but I assume it’s somewhere better than those credit cards and maybe slightly better (or maybe worse) than your car payment rate. This is kind of beside the point but I’ll throw it out there. The rate was 5%. Which is the same as my mortgage. > [@\*\*\*3rd annual upstate Honda-tech Meet!\*\*\*](https://forums.speedlife.net/t/3rd-annual-upstate-honda-tech-meet/29145/18): > > The way it sounds, your outstanding debts right now are unsecured, meaning that the bank is kind of lending you money in good faith with no collateral attached to the debts. I’m referring to your car payment, your credit cards, school loan, etc. > > When you take out equity against your own home, you turn that equity (and therefore part of your home) into collateral, turning this unsecured debt into secured debt. For me personally this kills it right there, because should you default on any payments, now this lender can go after you for the collateral (your home). That I was not aware of. Like you said that right there will stop me with this plan. Just the risk involved, that I didn’t know of is not worth it like you said. > [@\*\*\*3rd annual upstate Honda-tech Meet!\*\*\*](https://forums.speedlife.net/t/3rd-annual-upstate-honda-tech-meet/29145/18): > > For the next part, don’t take this the wrong way as it’s just an opinion and none of my business really, but you put it out there so here goes… > > If you do not have an extremely stable job and don’t have at least an “emergency” fund worth a couple months living expenses, it sounds like a risky proposition to me. I am not taking it anyway buddy, I asked the questions and put myself out there because I am looking for answers and have no problem sharing some personal information to get on the right track… Plus it might help others out that might be in boat too, who knows. My job is rather stable. And you’re correct, I spent a lot of money poorly this year. A lot of things came up rather quickly and I should have thought more before I jumped on some stuff. It’s a learning experience and I am working on that now. > [@\*\*\*3rd annual upstate Honda-tech Meet!\*\*\*](https://forums.speedlife.net/t/3rd-annual-upstate-honda-tech-meet/29145/18): > > As for the other stuff I highlighted above (lower half really), it sounds to me like you don’t have tremendous discipline financially, especially if you have credit cards at high interest rates with balances on them and have to pay back taxes on “money on the side”. > > I am going out on a limb here and assuming you don’t have a lot of $ put aside for an eventual emergency because if you do, why is it not being used to pay off the other debts at relatively high rates? (You don’t have to explain, this is just me thinking out loud) Your correct. I spend money sometimes like it’s going outa style! I am not ashamed of it, it is what it is. I ran into some bad luck and had a lot of things break that needed fixing all in a short period of time. The money I did save got blown to keep up. I am working on digging myself back out. The biggest thing was a job change, that I stepped backwards a little in pay, but made up for it with stability. > [@\*\*\*3rd annual upstate Honda-tech Meet!\*\*\*](https://forums.speedlife.net/t/3rd-annual-upstate-honda-tech-meet/29145/18): > > The way this is written it sounds like you’re tricking yourself into thinking you are “saving” $600 per year with this home equity / consolidation deal but the truth is you have certain wants (who doesn’t?), but are describing a nice garage and extra tools as a need, and then thinking this will help you better “afford” them? > > You NEVER save money by spending money. > > I would vote totally against buying these niceties and for not turning unsecured debt into secured (where your home becomes collateral), primarily for the reasons mentioned above, not to mention your spouse is against it. My opinion is, borrowing against your home equity is something to be done only when it’s a total emergency and/or you are doing it for future financial gain (i.e. you already maxed out student loans but are borrowing money for another degree that will help you earn more in the future) > > Again, you put it out there so I’m going to comment, but are these things really worth arguing with your wife about at the end of the day? That’s on you to decide I guess… > > You’ve done a good thing keeping your payments up to date and stepping up and buying a house and all that… I would just hate to see a bunch of ill $hit happen just because of some mail solicitation and a desire for a garage, and some fancy tools. I am not trying to trick myself into getting what I want, and can’t afford. I am thinking in the long run actually, and making sure I can do what I want to do. I understand that the $600 less a year in apr isn’t squat in the big picture. I was looking at it, thinking that being able to pay off my debts to the lenders would lift some pressure from my shoulders. I have 2 years left on the current auto loan, the school is pushed out for a long time and the credit card could technically be indefinite. If I put it all into a loan that was 5 years or so, it would even out I think, and even with the extra 3 years + on say the balance of the auto loan and my projected payback on the credit card. The convenience of paying all those bills off with a single payment would be helpful to me because I haven’t had a good track record of planning in advance for things. I think the best thing I can do at this time is pay off the small balance on the 24% card… its only $255. Then ask them to reduce that APR just because. The best thing I did was destroyed the 2 credit cards I have open. That way I can’t possibly put any more debt on them. If for some reason I had major problems and needed to I could ask for a replacement card. The second card at 9% I will call up to see if there is a way I can drop it a bit more. I have made some good progress in the last year or so with my debts. A lot of the money I made on side projects and what not I put %100 into paying down my debts. I will continue to do that too. I will just keep paying my personal debts as they are, and just do the garage between Steff and I under the mortgage. Like you said the lift, and tools are wants, your correct. But all of those things are long term investments. The major tools I purchased in the last few years, I will keep for a long time. The side work I do, pays for them. Each one I purchased was used with money I made from a project, there was very little out of my paycheck going into them. The only thing I need to pay for to build the garage is the materials and the concrete slab… the excavating and construction will be done by myself. All the remodeling to the house was done at a materials cost also, and because of that I am way ahead on that. I want to give you a big thank you for the time you put into that reply. I really appreciate that. --- _[View the full topic](https://forums.speedlife.net/t/debt-consolidation-anyone-ever-take-advantage-of-this/250555)._