Financially smart mamas...can you advise?

[Momof6]

I posted this on the marketplace also...just so hopefully I can get some input and adivse. (the fed is meeting tomorrow on raising the % rate again...so dh and I are thinking about doing this today)


Anyway, here is what that post on the marketplace says...hopefully someone can help. If I am not clear, feel free to ask questions. Other than these debts I'm talking about below, we just have the main mortgage and a small student loan (now under $5K and at 2% to 4% interest rate), and the two vehicle loans.

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I tend to distrust bankers so I'm asking here.

We have a home equity line of credit (not a home equity loan) that we had to take out to purchase our home three years ago because we did not have 20% down. (that is what the loan amount is)

It is variable rate and we have seen it just jump higher and higher every month in the past couple of years. With huge increases in the last year.

We called about locking the rate in. (dh called) The rate went up again and is now at 10.25% interest. (It was at 7% when we took it out) We can lock in at 10.75% and it would be a 5 year loan (so it would no longer be interest only).

We also have $10K on one credit card. That rate is skyrocketing faster than the home equity line. The cc is now at nearly 13% (it was at 8% a year ago). We could put that onto the home equity line and have that locked in at the 10.75% for five years.

The payment for doing that would be the same as what we are currently paying between the two. (cc and home equity line) Here in September my paychecks will also start being added onto this debt from my new teaching job. (so we'll be paying about $1800 a month on this if we do this)

Is this a good idea considering the % rate going up and up and our economy as it is? Take into consideration how we are putting all my pay onto this debt reduction also, before you answer. (we do not live off my salary at all...it is all for debt payment)

It sounds great to us....but neither dh nor I trust bankers.

Michelle

[Momof6]

Oh, we are going to cancel the cc if we do this.

We just feel with a debit card linked to our checking account that we don't need the temptation of a cc in our lives. Plus I have heard of people consolidating things like we are considering (isn't that basically what I'm talking about?) and then they charge their cc back up again and are in worse shape than before.

We figured with the debt snowball...if we do this....and with my paycheck going towards the debt snowball; we'd be out from it in 2.5 years. (sooner if we get unexpected money like the one mom did who posted a couple weeks ago about paying off all that debt in 10 months!)

Michelle