It's How He Rolls

Derrick has a plan of attack for his debt and wants to know if Dave agrees with it.

QUESTION: Derrick in Knoxville still owes $98,000 on a home and is looking to refinance. He also has a $30,000 home equity line of credit and $10,000 in credit card debt. He wants to know if he should roll his credit card debt into the new mortgage. Dave doesn't think it's wise to add the debt to a 15-year mortgage.

Dave's ANSWER: I'd rather you just pay it off out of your $70,000 income. That would be a better plan, and certainly you can do that with the credit cards. You may be forced to roll the home equity line of credit into the refinance just to get rid of it to be able to get clean title for the new mortgage holder.

I wouldn't roll the credit cards in because you need to cut them up and plow your way through them. You don't want to refinance the stuff you bought on credit cards over a 15-year mortgage. And be sure you put this on a 15-year fixed note. Don't go anything more than that, because you have the income easily to do this. You have a very conservative situation here, and you can really rebound and get this under control. No doubt about it.