It sounds like you have an income of around 60K/year. It also sounds like you need to have a discussion about your spending habits. You are like so many others, overspending to have the nicer things you "want". This type of choosing is the problem. Borrowing more on the Heloc will most likely reduce your interest payments, if you pay down the credit cards, but it will also open the credit cards for more use, and the hole gets deeper. The only way this might help is if you cut up the credit cards after the payoff, and don't open any new ones. Live on cash (or a debit card). This will force you to make better decisions.

If that is not enough, get rid of that pricey car you are driving. You can get something nice for half or one third that amount.

If these recommendations do not seem plausible or reasonable, you are not yet in enough pain to want to change, but you will get there eventually.

I completely agree with Dru. Come up with a plan to pay the cards and then stop using them. I also second downgrading the car if need be. What are you driving, a tank?!

I think maybe increasing the line in your Heloc could be beneficial - use that money to pay off the credit cards and then pay off your Heloc - it's probably at a much lower interest rate.

One thing that helps us stay out of debt is coming up with a monthly budget. I structure ours in an Excel spreadsheet - list the income you're making, added to the money you currently have in the bank. List everything that NEEDS to be paid, THEN list the stuff you WANT. For the wants, set aside money each month as you can to save up for it and stop falling back on the cards for impulse buys.

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-Crystal-
Our financial motto: Needs vs. Wants

We have two cars. I drive a Hyandai Accent. Paid off. The family car my wife drives my kids around in was a Montero Sport. But it finally died and we had to get a new vehicle last year. Hence the big car payment for 2005 GMC Yukon.

You definately have to change your spending behaviour and Dru made some realy good points.

If you get an increase in your HELOC to pay off your credit cards then make sure that you won't use those cards anymore for anything. I agree that you should come up with a monthly budget plan. It is very simle but hard to execute for the majority.

I think you should have gotten a smaller family car and not load up on that much debt considering the heavy deb load you had before that.

You have to find ways to free up cash and trust me you can free up cash. Cut out the wants for a while until you get a grip on the situation, set short-term goals and reward you and your family with small things once you reach them.

Assets buy liabilites. Keep that in mind. All you have (and the majority of the population has a similar problem) are huge liabilities and no assets at all. You can change that but it will take a lot strong will by you and your wife.

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The Pegasus Letter
It is not smart to play it safe but it is safe to play it smart.

Hello, Great to see that you recognize the red flags. Debt is a miserable life. The guys before me have recommended some great advice for you to follow. Realize that you are only a couple of missed paychecks away from a serious situation if one of you were to get sick. You can turn it around, it just takes time. All the luck, Robert debtamendment dot com.

Lots of good advice here.

I believe that good habits are formed by developing a "system". Whether it be a spreadsheet, budget, software, etc. Make sure you pay yourself first, and be knowledgeable about how much (what percentage) of your monthly budget is going towards car payments, mortgage, etc.

Could you have made wiser decisions? Maybe. But how enjoyable is it to drive a rundown car as opposed to new?

Maybe because I've had a lot of tragedy in my life... but also because I talk to people (mostly middle to upper class) every day about their dreams... but I think it is very important to not lose sight of "living". I don't know how long I will be on this earth, so I'm going to take every day and live it to the fullest I can. If I keep putting everything off until "tomorrow", what happens when tomorrow never comes?

Just like you don't put off chores and responsibilities, not to mention saving. You shouldn't put off enjoyment that comes from some of the benefits of our society. But you ABSOLUTELY need to Balance the two. Problems occur when you focus too much on living for today, and end up living way beyond your means in the process, while not saving for tomorrow, too. In an ideal world, you'd take 50% of your income and save for tomorrow, and take the other 50% and put it towards living today. Problem is, incomes are not high enough across the board to ideally only live on 50% of your income. A close friend of mine couldn't even afford an apartment, let alone food and travel expenses to get back and forth to work, on 50% of his income.

(Being frugal isn't for everyone. But it sure makes financial planners rich.)

Wonderful argument. I completely agree 100%. But with that you need to remember this...

__________________
-Crystal-
Our financial motto: Needs vs. Wants