What It Feels Like to Be In Debt (And How to Get Out From Beneath It)

The post What It Feels Like to Be In Debt (And How to Get Out From Beneath It) appeared first on Penny Pinchin' Mom.

This is a sponsored post on behalf of Mr. Cooper. 
All opinions are my own and were not influenced by any parties.

Consumer debt has just hit an all-time high.  It now tops more than $3.8 trillion.  Not million. Not billion.  Trillion. Being in debt can make you feel as if you are completely alone.

But, you aren’t alone.  There are thousands of people feeling exactly like you do right now.  I say this because I used to be one of them.

 

When I was in my 20’s, I racked up a lot of debt.  I was drowning, and I thought there was no way out for me but to declare bankruptcy.  At that time, it was all I could see in front of me.  It was all I knew, and I thought it was the life preserver I needed.  Turns out, that it saved me from drowning, but it did not teach me to swim.

But, that didn’t fix anything.  The reason was that I did not take the time to get to the root of my problem, which was how I looked at money.  So, wouldn’t you know it, several years later, my husband and I built up nearly $37,000 in debt.  And once again, I felt like I was drowning.  But this time, I did not use the life preserver.  This time, I stopped treading water and learned to swim.

My husband and I worked together and developed a plan and began the hard work of paying off our debt.  We sold things.  For a while, we did not eat meals out.  We cut back our spending.  For us, it worked.  We were able to pay off that mountain of debt.

I still remember sitting at the dining room table that February night in 2010.  We’d done it.  We’d actually done it!  $37,000 gone in a little more than two years!!  The minute I hit send to pay off the loan, I felt instant relief. It was as if a weight that had been pushing me down all of these years was instantly lifted away.  I was able to float and catch my breath.

For me, it wasn’t just the fact that I paid off the debt. I’d taken the easy road and done that before.  This time, it was because I did NOT do it in the same way. I learned a lot about myself and made changes so that I would not find myself taking this path ever again.

YOU AREN’T ALONE

More than 32 million consumers have higher-interest debt, an average of $8,600 per U.S. household to be exact!  And, a recent survey conducted by Mr. Cooper found that 68% of Americans are concerned about their debt.

If you find yourself unable to sleep because of your finances, you aren’t alone. I recall many sleepless nights worrying about how I was going to pay the bills and feed our family.  In fact, did you know that 33% of people with debt also lose sleep?  See, you really aren’t alone!

During our journey, there were many times we both agreed that we’d have done just about anything to get out of debt.  And, some of our ideas were pretty extreme!  When YouGov asked those in debt what they would do to have their credit card debt forgiven, 31% said they’d give up social media for a year!!  But, then again, there are times I’d be willing to give up social media just not to have to deal with social media. 😉

That makes me wonder, what would you do if you could no longer have to worry about your credit card debt?  Maybe you would do one of these:

  • Would you give up your favorite sweet or savory treat for a year?  32% of people surveyed said they would.
  • How about getting a tattoo of their favorite preteen musician?  14% would do this if they could be debt free.
  • Maybe relocate to Antarctica for two years?  If you’d do this, you are among the 8% who’d do this.

TAPPING INTO YOUR HOME’S EQUITY

There are options, and one of the simplest ones may be staring you right in the face.  While consumer debt has continued to rise to more than $3.8 trillion, so has home equity.  Home equity values continue to climb and are up by 100% since 2000! In fact, the average homeowner has an average of $90,000 in home equity.

Before you think I am talking about getting a home equity loan, let me stop you right there.  That’s not what I am referring to at all – there are other options.

This is where Mr. Cooper comes in. Mr. Cooper, the nation’s largest non-bank mortgage servicer and a leading mortgage lender, is reimagining the homeownership experience to make the home loan process more rewarding and less worrisome. . A loan expert can walk both existing and potential homeowners through their financing options, along with all the pros and cons of refinancing so customers can make the right decision for themselves, and the home loan process is more rewarding and less worrisome.

What people don’t realize is that you may be able to tap into your home’s equity and reduce those high-interest credit card payments.

Homeowners make monthly mortgage payments and slowly pay down the balance that is owed on their loans. At the same time and in many cases, the value of the home continues to increase.  The difference between what a homeowner owes and the appraised value of a home is home equity.

For example, if you owe $150,000 on your house and it appraises for $250,000, you would have $100,000 in equity.

HOW DOES THIS WORK?

The idea is pretty simple.  You are going to take out a new loan on your house.  But, rather than doing so for the amount you currently owe on your mortgage, your new loan will include the amount you owe on your home, plus cash to take out to apply to other non-mortgage debts.

When you tap into home equity, you can use the additional funds to pay down your loans and credit cards.  Imagine: making just ONE payment each month!  Using home equity through a cash-out refinance could not only lower your monthly payment, but could also eliminate the payments on high-interest credit card balances that never seem to decrease.

I’m one who loves examples, so let me show you how this works.  Let’s say your mortgage balance is $125,000 and your house appraises for $200,000, meaning you have $75,000 in equity you would take out a mortgage for $160,000, of which $125,000 is for the house and $35,000 is an equity withdrawal (lenders usually allow you to borrow up 80% of the home’s value).  You then use that $35,000 to pay off your credit card balances.  Slick, huh?!

WILL IT REALLY IMPROVE YOUR CASH FLOW?

A lot of people will find that going through a cash-out refinance with Mr. Cooper helps them reduce their monthly debt payments.  Check out some of these results (actual results may vary).

Think about what you could do with another $500 a month.  If anything, imagine what it would feel like not to stress about paying your bills and finally being able to sleep at night.

ARE THERE ASSOCIATED COSTS?

As with all loans, there are origination fees and closings costs for a cash-out refinance. However, I’ve got a unique way you can save $500! (Of course, I have a way to save – that’s the way I do things)!

Mr. Cooper is offering all Penny Pinchin’ Mom readers the opportunity to get a $500 loan discount!!  Just head to https://homeloans.mrcooper.com/pennypinchinmom/ to submit the form, and a Mr. Cooper Mortgage Professional will reach out directly to talk to you.  That is all you need to do to claim this offer!

There is no reason to keep living like this.  If your debt keeps you awake at night or you find that you’re willing to give up a kidney to ditch it (yes, 7% of people would do this to get out of debt), there could be options.  You may not be able to do it as I did, but using your home might be a perfect way to help you finally catch your breath.

Important disclosure from Mr. Cooper: A debt consolidation refinance increases your mortgage debt, reduces equity, and extends the term on shorter-term debt and secures such debt with your home. The relative benefits you receive from debt consolidation will vary depending on your individual circumstances. You should consider that a debt consolidation loan may increase the total number of monthly payments and the total amount paid over the term of the loan. To enjoy the benefits of a debt consolidation loan, you should not carry new credit card or other high interest rate debt.

Nationstar Mortgage LLC d/b/a Mr. Cooper, 8950 Cypress Waters Boulevard, Dallas, TX 75019, (888) 480-2432, NMLS Unique Identifier #2119 (www.nmlsconsumeraccess.org). ©2018 Nationstar Mortgage LLC. Mr. Cooper is a registered service mark of Nationstar Mortgage LLC.

 

The post What It Feels Like to Be In Debt (And How to Get Out From Beneath It) appeared first on Penny Pinchin' Mom.

Source: pennypinchinmom.com