Mortgage Debt

The word "Mortgage" is derived from an old French word Mort meaning 'death' and gage meaning 'pledge or agreement'. So literally, death pledge or agreement until death.
source: WikiAnswers

Now I am sure most of you have heard this before, but it makes you think doesn't it? Beholding to the banks for most of your life to put a roof over your head. And to add insult to injury we are at the mercy of interest rate fluctuations of which we have no control.

We have a mortgage and in Australia you are considered lucky to have one, due to the ridiculous price of real estate in this country and the difficulty getting a foot on the property ladder. We jumped in head first and while we can afford the repayments, I often wonder if it's the wisest choice.

Plenty of financial commentators have advocated renting instead of buying property and investing the savings made as a viable financial choice. The idea is save and/or invest the difference between a mortgage payment and the rent payment. Nothing new there...

But according to a recent news report Australians are the worst savers in the world. IN THE WORLD! So unless you are diligent you can end up in retirement with nothing, and possibly be in debt. This to me is a scary thought.

The report does go on to say interest rates are up for debts but not for savings accounts in this country at the moment, but that is a topic for a future post.

Most Aussies tend to view the dreaded mortgage as a form of forced savings, a necessary evil. When we retire we (hopefully) have the mortgage paid and (again hopefully) have a huge amount of equity in the property so you can downsize and use that money to enjoy the twilight years... that's my hope anyway.

As I mentioned, we have a mortgage and paying through the nose at the moment with Australian interest rates on the rise, but plodding along regardless. I will be writing about our plan to dispatch the mortgage shortly.

So what about you? Do you think a mortgage is a good thing? Do you have one? What's the consensus where you live?

I'd love to hear your comments on this post

The Dreaded 'B" Word - BUDGET.

It strikes fear into the bravest of us especially when we have been living outside our means and racking up the credit card balances.

I am trying to put together a workable budget to achieve our goals. It's hard!

We get paid monthly so monies hit our bank account on the 15th of each month. Luckily, my DH is in a vocation where he can earn extra money freelancing.

This is what I have got so far:

Monthly figures

• credit card payments & snowball amounts $700.00
• food/groceries $350.00
• entertainment $200.00

This is the discretionary spending I have some control over and can save a few bucks here and there.

The rest of our income goes toward mortgage repayments and utility bills. These are fixed costs which I cannot change at the moment.

We have stopped putting anything on our credit cards so everything is strictly cash. No cash left - can't have it! Tough love alright but I am determined to do it. DH is on board as well so makes life so much easier when we are both moving towards the goal together.

Any amounts left over at the end of the month and any extra income coming in will go directly towards snowflaking the CC debt.

I am not going to disclose our income at this stage as my DH would be mortified if I did, even though I am writing this anonymously. He's funny like that...

I'd love to hear your comments on this post

Plan Going Forward Part 1 - Snowballing!

Hopefully it's as much fun as snowboarding but I highly doubt it!

Once I made the decision to get out of credit card debt once and for all, I started surfing the net and found some interesting personal finance (PF) blogs which got me inspired.

One of the earliest ones I began reading was "I've Paid For This Twice Already..." - the name really struck a cord with me as I had just finished looking at the interest change on one of my credit card bills and had a similar 'ah haa' moment myself.

Anyway, paidtwice wrote about "Snowflaking" a method of debt reduction advocated by a fellow named Dave Ramsey. I had never heard of this before but it seemed perfectly reasonable to me and I have decided to use this method to whittle away our debts as well.

I have created a personal snowball calculator at "What's the Cost" another of paidtwice's recommendations. I have opted to pay out the smallest first. See my post about my current situation.

For any of you out there who haven't heard of this method before I strongly recommend you read the article written by paidtwice. She explains it much more succinctly than I could.


I'd love to hear your comments on this post

How much do I Owe?

This post is just to get the figures out there. I am trying to get the credit cards and loans paid off as quickly as possible.

There is a mortgage and quite a sizable one at that but I have a different outlook on mortgage debt and will write about it in a future post.

Here is the list from the smaller debt to the largest as of:

Saturday, 23rd February, 2008:

• Visa Credit Card $ 902.75 16.25%
• Amex Credit Card $1885.32 16.49%
• Line of Credit $3000.00 14.75%
• Master Card $9829.02 20.39%

That's a total of $15,617.09

By paying the minimum payments plus an extra $305 a month these debts will be paid in full by June 2010. That's 28 months but I would like to do better if I can and get the time down by about a year.

So having these paid out in 18 months instead of 28 months will be the goal I will aim for. Wish me luck!

My Debts and I are Parting Ways!

How did this happen?

One day we were humming along nicely - paying off our credit cards at the end of each month with no debt other than the mortgage, next thing we are thousands of dollars in debt. BAD debt at that!

It happened because I got complacent, thought I knew it all, made some bad decisions and lost the plot completely.

Well, reality came knocking on our door ( not literally) and gave me the wakeup call I needed to really take a long hard look at our finances and DO something about it.

So this blog was born. I am committed to paying off our credit card debt in the fastest possible time and this blog will help me stay on track.

I have been reading some great PF blogs over the last couple of weeks and they have really inspired me to get my house in order. Hope you can join me for the ride.