I have amassed serious debt:
- $28,798 in outstanding credit card bills (not counting balances on cards I pay off each month).
- $96,832 owed on my house.
- $33,883 owed on a HELOC used to purchase a rental property.
- $39,185 owed on my car (the bane of my existence).
- $17,725 owed on student loans.
- $181,274 owed on 2 other rental properties.
- $40,000 in other obligations related to rental properties.
- I am purchasing another rental property in October which will add to this debt.
- I own a total of 6 rental properties (about to be 7), conservatively valued at $450,000.
- My primary residence is worth at least $125,000.
- The interest rate on my student loans is a paltry 1.6%.
- The HELOC, though variable, is currently at 4.5% and is tax-deductible.
- The credit card debt consists of the following: $5,150 at 0% through June 2010; $23,648 at just under 4% for the life of the balance.
- The Good: It's a sexy car.
- The Bad: The interest rate is 3.9%.
- The Ugly: I owe $39,185. I have 54 payments remaining at $785 per month.
I will focus on long-term debt. If I have a short-term obligation (something which will be paid off in less than a year), I won't spend much time talking about it. It is still a debt and something that needs to be paid off, but it is a more manageable one. Long-term debt - mortgages, student loans, car loans, large credit card balances - these are the debts that get consumers (you and me) in trouble.
My dad would roll over in his grave if he knew how much debt I have. His philosophy was that the only debt you should acquire should be a mortgage on your primary residence. My #1 financial goal will be to pay off my debt as fast as I can. That'll make Dad happy!