I ran the numbers on my credit card debt. It’s crazy low. Between balance transfer special offers and low rates on my HELOC (where I have some transferred), I don’t have ‘toxic debt’. I’m in a hurry to pay it off because I really just want to get rid of it, but all things being equal, i.e. the APR, I’m paying less for my credit card debt than I am for my mortgage!
How did I do that?
1. My mortgage is at 5.75% with a 7.18% HELOC. The mortgage is an ARM that ends in 3 years. The HELOC is fixed with another 6 years to go.
2. There is a portion of my HELOC that was a balance transfer from my credit cards. That is at a variable rate sitting at 5.38% right now. Soon to go up if the Fed moves rates.
3. There is some debt on a balance transfer special offer at 2.99% till January 2010, which is the bulk of my credit card debt.
4. There is some debt at 11.42%, but not a lot.
So the debts are at 2.99%, 5.38%, and 11.42%. I calculated the blended rate to be about 4.28%.
I remember a time in my life crying over $15K in debt at 18%. But now, I’m doing ok with debt that isn’t poisoning me. Frankly, the only reason I’m paying it off so quick is that I lost so much money last year in the stock market so it’s really my best financial move to pay it off and guarantee myself a ‘return’ of interest I don’t have to pay.
The plan is to pay off the 2.99% debt before January, then the 11.42% debt. They’re on the same credit card and once that stuff is paid off, I’ll move some of my HELOC to my credit cards with another balance transfer for 2.99% for about 12-18 months if I can get another offer.
The only wrench in the works is some condo renovations I want to get done before the end of the year and financing that. (oh but that’s another post…)
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