Commonsense is not always enough.
It’s 1.25am, and I’m sat here, having a crisis of faith and being unable to sleep.
Why?
Because common sense doesn’t appear to be my strong point.
Instead of having debt on various credit cards and overdrafts, I’ve finally seen the light and consolidated against the large amount of equity we have in our cottage. The rate is 7.7% with no early repayment penalties and a whole bundle of other good benefits. I have arranged it with our existing mortgage lender with whom we have worked for 7 years, and never been anything other than delighted with the service.
So why am I awake? Because The Stupid Voice at the back of my head tells me that a loan takes forever to pay off, whereas I could pay off a credit card as soon as I liked! The Stupid Voice doesn’t appear to be listening to the greatly reduced interest rates, or the repayment terms which will enable us to massively overpay and have it paid off quicker than any darned card could be.
Time to go to sleep, Stupid Voice, really.
If you found this post helpful, please consider helping me to pay my hosting costs... Or a Nice Cup of Tea!
Comment by Jane
Hey, Stupid Voice. You do realise that this is a MORTGAGE, don’t you? Not a loan? The whole point is that it takes a near-infinite amount of time to pay off! It doesn’t even count as “being in debt”, because everyone’s got one. This is a Good Thing, and very sensible if you can manage to arrange it, which takes some doing when you’re self-employed. Now be thankful you’re living in such a clever head, and go to sleep!
Comment by glblguy
Well, don’t lose sleep, just make sure you pay it off. You can pay it off early, just like a credit card, just make higher payments. Benefit is while you pay it off, you are paying a lower interest rate allowing you to pay it off sooner.
Now to Jane’s advice. It is debt, don’t be fooled. A mortgage is debt, just because everyone has one, doesn’t mean it isn’t debt, that’s just silly. Now, as debt goes, mortgage debt is probably the best (or what I call the least bad). The trick is, can you sell your home and payoff the first and second mortgage? If so, than your in good shape, and your risk is low.
Just don’t make the mistake on not paying on it quickly or even worse, thinking you are now out of debt and then going back in by continuing to use the credit cards. Treat that second mortgage like credit card debt, and get rid of it.
Don’t loose sleep, probably not a bad decision, just stay focused, and don’t look back!
Nice blog, added you to my reader list.
Comment by JW Thornhill
Don’t feel bad I’m up at 9:53pm and doing the same. Good Luck.