Monday, March 1, 2010

Bad Good news and I need help with a decision

Your prayers were answered.
Remember that credit card that I was offered that gave me 10% discount on fuel and restaurants? Most of your comments were against me having taking it and were warning me to pay it in full every month.
Well worry no more! I was turned down by the credit card company, wohoo!!! Really i'm happy about this. I called customer service today because I hadn't heard from that card anymore. They told me my application was rejected. I wasn't even sad, well a little but mostly I was relieved of the temptation of having it.
So I request to be transfered to the collections department. I recently made payment #19 out of 36, meaning that I had paid more than half of the debt. It was originally 181,685.27 and according to the payment schedule I owe them now 107,673.92. As with most leveled payment types of repayment the first part of the schedule is very interest heavy so most of the payment goes down to pay just interest. It's my "punishment" for having gotten into the situation i'm trying to get out of.
Anyway, I asked the collections guy if I could refinance my payment schedule to increase the term. He checked and said that he dealt with people that were behind in their payments and I wasn't showing up on his screen, so I was probably on schedule. However he had me wait on the phone and went to talk to the ones that deal with people on schedule that want to reorganize their debt, I figure not too many. He came back a few minutes later and told me that I could in fact do that since I was more than halfway done with my current payment plan. I could probably add another 12 months to it, I just had to go to the same office when I went to do the first payment schedule and request the extension. He said I would probably need to make another payment of the current schedule as a down payment on the new one.
So, my question to you is? should I try to keep paying with my current payment schedule which is a monthly payment of L 8,020.00 (about $400) or should I try to reduce it by extending the term, thus being in debt for a longer period but improving my monthly cash flow ?
In my current state I still have 17 payments to go at L 8,020.00 to go from 107,673.93 to zero with a interest rate of 33%
If I were to refinance and if the interest rate were to stay the same I would have 28 payments to go (17 of the current plan minus one taken as down payment on the new one plus 12 months on the new one) at 33% to pay about 100,000.00. WIth my loan calculator this comes one to a monthly payment of L. 5,404.01
Honestly I have thought about this and have considered toughing it out until I really couldn't pay anymore at the current values. Mostly because right now i'm on the side of the payment that would put more money towards capital than to interest and would end this debt it about a year and a half. While if I refinance I would obviously pay more interest because I would keep paying for another two years and a half, almost back to where I started although at a lower debt amount.
The reasons i'm considering a refinance now are the hope of a lower interst rate, less pressure on me to work enough hours each month to make the payments, and more opportunities to save money now that i've learned to do that.
Right now i'm usually able to cover this payment at the current value, although sometimes it's straining because I don't have enough money in my emergency funds to comfortably cover one of those payments if my paychecks are late.
I did learn one thing, they do refinance payment schedule for people that are behind on their payment, so I could wait until I'm really behind and request a refinance until then, hopefully it won't get to that but that's one ace up my sleeve if it's still available in the future.
On other news, my Citibank card (also on a repayment plan) charged me the yearly membership of their credit card, about $70. I tried as last year to have them reverse that but this time I got a negative. They said I should pay up the full amount I owe them and then they could reverse the charges. Sure I can come up with Lps 90,047.00 by the end of this month (no not really, unless I did something very drastic!!). So with them I plan to reach a good point on my coop loan when I can take some 100,000.00 lps out and just blast my Citibank debt and close that account. They have nothing i'm interested in and they have been very tricky ever since I remember.
My HSBC debt would've been the one I would've prefered to pay first because it's at a higher interest rate but I have to take one or the other. It is one of my goals for this year to be able to pay one of those high debts. I think that would really make a different in my snowball repayment plan.
I hope to hear what you have to say about this.


La Gringa said...

I look at this a completely different way than you do. Do you have L. 44,000 to throw away? Because if your payment calculation is correct, that is what it will cost you.

You would be increasing your debt from L.107,000 to L.151,000 with nothing to show for it except for some extra (borrowed) money during the month which would probably just "blow away". Does that sound like a good idea?

Even if the bank reduced the interest rate, it doesn't help you, it helps the bank because you've already paid a big chunk of the interest, and now you are considering paying it all over again for the same loan.

I know that's easy for me to say since I don't have to come up with L.8,000 every month, but I hope you will think about the above.

My advice: Your wife needs to get a job -- any kind of job -- to take some of the pressure off you, even if she thinks the job is beneath her. Is she still going to school? Do you still have a maid? Does your wife have a car that you could sell?

Sorry I'm being such a you-know-what, but it's time for your wife to grow up and assume part of the burden that she is responsible for. She is the one being selfish. She's willing for you to work 12 hours a day and for your kids to go without what they want so she can have what she wants! A life of leisure and a maid to do the work she should be doing. If she doesn't "get it" then it appears that all of those years of school haven't taught her anything and were just another waste of money.

AJ said...

I assume you mean I would be increasing my debt due to the added interest in the additional 12 months? right?

I'm not getting any more money if I do this. I would be taking the current balance (not the starting balance) and adding more months to it. I know it means more interests to pay total and so that's why I'm hesitant to refinance it unless I suddenly find it hard to get those 8000lps every month. THanks for your input on this.

About the wife. She's still going to school finishing her master's this year. We have new maid arrangements and she still have a car.

My wife still evades the situation and either blames me, says she will find a way to work it out or something to keep things the way they are right now.

My wife's problem to finding a job is that she is behind the curve. Too old and no experience, just a college degree and soon a master's.

I've been looking for jobs for her but the ones that are beneath her are also behind her (in age requirements). And the ones in her age range are above her in experience requirements. So unless a friend of her finds her a job or a miracle happens I don't see her finding a job.

Oh and she hates it that I work so much. She would like that I wouldn't work that much because i'm not home enough time. Yet the bills have to be paid and she doesn't understand that.

Seems like the issues with my wife would make for a long post!

La Gringa said...

Yes. You would be increasing your debt to L.151,000 (if your payment calculation is correct). So while it would be a little easier on you now, it's just increasing the debt and dragging the debt out further into the future.

I realize that you wouldn't be getting any cash out of this. What I meant was that you would have L.2,600 monthly (8,000-5400) that would not be going to pay that loan. Presumably, it would go to pay another loan, BUT how realistic is it to assume that 'things' wouldn't come up and that money wouldn't be spent elsewhere?

I think I had better not say more about your wife! I just can't comprehend her selfish thinking.

I saw that Diputado Mario Barahona (the good-looking guy) is looking for an assistant. Check it out.