Attacking the second mortgage – part 3
We are currently hacking away at our second mortgage debt to get it to a reasonable size to which we can transfer it to a credit card offering 0% interest to facilitate the paying off of the remaining balance next year.
Thus far we’ve been able to direct whatever available cash we have on hand toward the principal balance in addition to our normal mortgage payments. In October we paid an additional $650 and this month we paid an additional $3,000.
The outstanding loan balance now stands at $15,402.58. By the end of the year we plan to have it down under $10,000 and transfer the remaining balance to a credit card offering a no-fee 0% interest rate. We’ve been on the lookout for any such deals and have found the pickings rather slim nowadays, especially if you’re hoping to avoid any balance transfer fees. But we were able to find a deal from Citi that is very similar to what we took advantage of last year to facilitate the paying down of some student loan debt.
Citi is currently running a promotional signup offer on the Diamond Preferred Rewards American Express Card where you get 10,000 bonus ThankYou Points after making your first purchase within 3 months of receiving the card and offers a balance transfer APR of 0% until December 1, 2007 which is also free of any balance transfer fees. A discussion over at FatWallet explains the details for those interested.
Essentially, Citi is going to give us $100 to take out a free, 0%-interest loan for almost 12 months during which time we will be able to completely pay off the balance at a more leisurely pace.
We applied for the card and the husband was accepted with an initial credit limit of $6,500. Since the balance transfer amount will be around $10,000 we will need to beef that credit limit up a bit. We’ll discuss that little detail later on.
So, when we receive the card the plan is to:
Thus far we’ve been able to direct whatever available cash we have on hand toward the principal balance in addition to our normal mortgage payments. In October we paid an additional $650 and this month we paid an additional $3,000.
The outstanding loan balance now stands at $15,402.58. By the end of the year we plan to have it down under $10,000 and transfer the remaining balance to a credit card offering a no-fee 0% interest rate. We’ve been on the lookout for any such deals and have found the pickings rather slim nowadays, especially if you’re hoping to avoid any balance transfer fees. But we were able to find a deal from Citi that is very similar to what we took advantage of last year to facilitate the paying down of some student loan debt.
Citi is currently running a promotional signup offer on the Diamond Preferred Rewards American Express Card where you get 10,000 bonus ThankYou Points after making your first purchase within 3 months of receiving the card and offers a balance transfer APR of 0% until December 1, 2007 which is also free of any balance transfer fees. A discussion over at FatWallet explains the details for those interested.
Essentially, Citi is going to give us $100 to take out a free, 0%-interest loan for almost 12 months during which time we will be able to completely pay off the balance at a more leisurely pace.
We applied for the card and the husband was accepted with an initial credit limit of $6,500. Since the balance transfer amount will be around $10,000 we will need to beef that credit limit up a bit. We’ll discuss that little detail later on.
So, when we receive the card the plan is to:
- Immediately make a small initial purchase;
- Completely pay balance as soon as it appears online;
- Get a suitable credit line increase;
- Request a balance transfer check for the outstanding amount of the second mortgage;
- Redeem the bonus points for a $100 check payable to our student loan provider;
- Completely pay the balance off by the end of November 2007 (roughly $1,000 per month).
posted by Brian at
10:02 AM
3 Comments:
I just ran across your site, primarily because I was looking for information on Gexa energy, in particular, customer service experiences, etc. I'm very impressed. A comment and a question:
1. Keep up what you are doing. My wife and I did something similar staring about 8 years ago, tho not as rigorously disciplined, but basically focused on the get out of credit card debt cycle. About 5 years ago, we got the credit cards completely paid off, as well as the student loans, etc. Now, we only owe on one car (at 1.9%) and on the house (at 4.75%). It is a great feeling to divert approximately 50% of your pre-tax income into investments, 401(k), etc. and still have discretionary money left over. You will get there, and when you do, the momentum to keep out of debt will continue to grow.
2. How are your experiences with Gexa? One trick of the monthly payment gotcha gods is to sneak around and incrementally move your due date up a day or two a month so that over time, if you do on-line banking and set up a monthly payment as I do, paying it "on time" will become late. TXU just did that, and since they will not remove the late fee, it is time to switch. Incidentally, credit card companies are the worst at this; knowing that many people now do on-line banking and just set up the autodraft, they are doing it to increase fee revenue.
By
Big George, at 11/15/2006 2:04 PM
Thanks Big George - appreciate the positive feedback.
When we switched from TXU to Gexa we were primarily focused on cost savings. Customer service is probably not as important to us because, in all honesty, we never really have the need to contact our electric provider.
Now saying that, you will most likely be disappointed with Gexa’s customer service because, from experience, the few times we have had to call the hold times have been a minimum of 10 minutes or more. However, all bills have been accurate thus far and payments have been processed as expected.
The billing dates do fluctuate a bit, but our automatic payments are set up with Gexa directly, so there should not ever be an instance of a late payment. I prefer to pay all our bills manually when they come due, but they offered additional miles to set up a credit card for auto deduction which I elected to do. We still keep careful tabs on what is being charged and always keep a look out for better rates from other providers.
To sum it up – there have been no ugly surprises thus far and the only reason we would make another switch would be if we could find additional savings elsewhere.
One thing to keep in mind is that Gexa, like most other providers, now have minimum term agreements which penalize rather heavily if you decide to cancel your service early.
Good luck and thanks for reading!
By
Brian, at 11/15/2006 3:03 PM
Brian,
Thanks for the tips. Actually, it sounds like it would be OK since they do an auto-pay. TXU refuses to do that unless they direct debit (have had an issue with that...at least against a credit card, you can go to the CC provider and dispute the charge).
Good luck with everything. Again, quite impressed with your site.
By
big george, at 11/16/2006 5:53 PM
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