[USER]

In my early 30’s, (45 this year) I inherited my family home (paid off) after losing my parents.

I had planned to sell it, as I am single, don’t have a high salary (60k), nor the knowledge or ability to maintain a home.

However, emotions won out, my immigrant parents worked hard for our home and I felt it was our legacy, I didn’t want to lose it.

Home is currently valued at $275k.

I have sadly developed several health issues over the years.

I am still able to work, thank god, but I did take out a HELOC for 100k to cover medical expenses.

77k of the 100k has been utilized.

The APR has increased to 9.75 percent since opening the line 2 years ago (was around 4% back then).

Here is where things get even worse.

I have around 20k in credit card debt.

That’s all the debt I have, I have no auto loan or anything else.

Half of me is thinking, pay it off with the HELOC, as the APR on the cards is 25-30%, and dump the majority of my paychecks into paying down the balance.

The rest of me is terrified to have nothing available on the line of credit, as I know I will need a new roof soon and I have absolutely no emergency fund.

I’m hopeful at 45 years old I can turn this around, my salary will likely increase to 70k next year.

I had a lot of rough years that included escaping domestic violence, and homelessness for a period of time.

I feel that, if I could make it this far, surely there’s a way for me to get out of this.

I appreciate any tips on what would be the best move for me at this point.

If I’ve left out any important info please feel free to ask.

I truly value all of your knowledge.

[Greg]

Rates are dropping now, look into a first mortgage to pay off debt but don’t use the cards again

[Stacey]

Can you get a roommate? Pay off the credit card. Pay down the HELOC. There are other ways to finance the roof.

[Megan]

I’d look in to just getting a conventional mortgage for 100k and pay off the line of credit and your cards.

[Jamie]

Don’t feel shame. This wake up call is the first step! Take a peek at Dave Ramsey’s debt pay down method.

I don’t agree with everything DR says) but he’s good at boiling down how to get out of debt and build an emergency fund.

First step.

This wake up call.

second step. Get serious.

And I mean Serious.

Forget about keeping up with the joneses.

Sell everything you don’t need in your house.

He calls it getting “gazelle intense”…

Change your mindset, bust your butt, and knock out this debt.

You can do it!!

[Jamie]

FIRST, I applaud you for all you’ve survived and the hard work you’re putting in.

But you need to be more organized in your approach because those rates are so high you’ll never get caught up.

Call HUD for help. Get a credit counselor.

Do not use your home as collateral by transferring credit cards, medical, or auto loans to a HELOC.

At this point, it sounds like you have more house than you can afford because of the debt and lack of savings.

But first, can you work another job part time to earn enough to establish a small emergency fund ($2k), and/or cut back to bare essentials to free up money, and make mega payments on the debt?

Second, my sister recently passed and this was the exact same mess she was in.

She encountered two serious medical events in 5 years that took away her ability to work, bank was foreclosing on the house b/c she couldn’t afford the HELOC payments, and she’d totally given up on the rest of the debt.

She wasn’t paying property taxes either.

This is the important part: if she’d told me this was going on, I would’ve helped her.

If you have family, ask for help.

Third, if there’s any option to get the CCs to a lower interest option, do it.

Call them and try to negotiate a lower rate or lower balance or both.

Be wary of debt settlement and debt consolidation companies. Again, try starting with the dept of housing and development (HUD)to see what they recommend.

Finally, there’s bankruptcy.

Court and attorney fees but if you stick with the payments, the debt could be wiped out after 3-5 years (chapter 13) and you keep your house.

Throughout this, be careful of falling for scams. You are in a stressful situation and that makes you vulnerable.

Get someone you trust to walk with you through this who can listen for things you aren’t hearing and help you slow down and read the fine print.

Find someone smart and savvy.

I don’t care if you like them.

At first I wanted to tell you to sell the house, but renting or buying smaller is going to be just as expensive.

But do consider if the relief of paying all that debt off is worth having to start all over.

And finally, medical debt is the “best” kind.

They can’t come at you like a bank who has your house as collateral.

They offer payment plans with little to no interest.

Don’t ever transfer that debt to a cc or HELOC again

[David]

Do the cards first. Look at everything you are spending money on and cut everything you can.

Build an emergency fund.

Attack the HELOC last, but do it until it hurts.

Using the HELOC to pay off medical debt is not something I would suggest.

You’ve put your house on the line for what?

Once you get out of debt, stay out.

Not even credit cards.

I hope things turn around for you.

[Ella]

My first question would be : what is your monthly interest on the 20K$ credit card loan?

[Author]

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