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Ask Dave

Cut Your Lifestyle...Get Gazelle!

Kevin and his wife make decent money and wonder what's the best way to use their big shovel to beat their debt!

QUESTION: Kevin and his wife have a home worth $160,000.  Their first mortgage is $132,000, their second mortgage is $18,000, and they have $13,000 in credit card debt.  They also have car and student loans.  They’re just getting started on the baby steps.  They make $85,000 a year.  Should they sell their house and pay off all their debt?

ANSWER: Do not sell your house - your house payment is not the problem.  You should be able to pay off about $30,000 in one year.  You need to cut your lifestyle and get on a budget.