Wednesday, April 06, 2011

Our Black Hole

Seeing as the health of my family is finally on an upswing yet we are still stuck at home, I have had time to go through the pernicious pile of papers (like the alliteration?) and try to streamline all the bills so they are being paid automatically in order to avoid late fees due to forgetting to pay a bill due to the general craziness and chaos that seems to permeate my family.  Because I work best when I can see the "big picture," I created a spreadsheet of every bill or debt source, the total amount due, what we pay monthly, when it is due, and how it is being paid.  In doing so, I discovered some rather nauseating news.

We have lived in our house since 1998.  We paid $xxxx when we bought the house.  Our current balance on our mortgage is . . . . $xxxx.  Note how similar those x's look?  That's because they are the exact same amount!  Yes, we have been making monthly payments on our mortgage every month for the last thirteen years and we have absolutely NOTHING to show for it!  "How does that happen, Miss Mommy?" you may ask, "How could you possibly owe the same amount that you borrowed thirteen years ago if you've been making payments all that time?"

A very good question.  You see, every so often we begin to get a little overwhelmed with debt.  It's not like we're going out buying cars and other fancy stuff (Puff the Magic Dragon reference - anyone get it?).  We use the credit cards in emergencies.  And a little bit here and there.  All with the intention of paying them off each month.  But then DH goes back to school, which ultimately will result in a significant pay bump for him.  So we put the tuition on the credit card.  Cha-Ching!  We decide to let the kids have their birthday party together at Chuck E. Cheese's.  We insist that all three have a combined party and limit the number of guests big time, but still - Cha-Ching! is pretty tight this month but we don't have any milk or bread.  Cha-Ching!  It all adds up.  So we refinance our mortgage, borrowing against our equity, adding in enough to pay off our credit cards.  And that's good - for awhile.  And then the cycle begins again.  So we refinance again.

This is very depressing.

I can understand why my parents often referred to their debt as "the black hole" - you keep throwing money at it and it doesn't seem to change.

And once again we're swimming in debt.  I refuse to refinance again.  Just can't do it.

But . . . I just discovered that the bank that holds our mortgage is offering  a Home Equity Loan with no application fees or additional costs for a fixed term APR of 4.24%, which is less than the rates of our credit cards.

Can you guess what I just did?
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