A 41-year-old physical therapist with a group practice has $575,162 in total debt and a $575,000 house with a $545,000 offer. The debt includes a $338,000 first mortgage at a 3% rate, a $51,000 HELOC, $74,175 in credit cards, $53,000 in student loans, $27,700 for a roof not covered by insurance, $18,000 owed to the IRS for the business, and $7,176 in custody battle costs. Her personal take-home is about $65,000 while the business grosses $385,000 annually. Keeping the mortgage ignores the blended cost of other debts, especially credit cards above 20% and IRS penalties that accrue monthly. Selling the house and paying off balances would leave about $30,000 in remaining debt, which can be attacked quickly.
"I'm wondering if I should sell my $575,000 house to pay off a total debt of $575,162."
"Julia's debt is seven problems stacked together: a $338,000 first mortgage, a $51,000 HELOC, $74,175 in credit cards, $53,000 in student loans, $27,700 for a roof the insurer refused to cover, $18,000 owed to the IRS for the business, and $7,176 in custody battle costs. The house has a $545,000 offer on the table and a 3% mortgage rate locked in back in 2021."
"The trap in "but my interest rate is so low" thinking is treating the mortgage in isolation. Julia carries a weighted blend that includes $74,175 in credit card balances, which routinely carry rates above 20%, plus IRS debt that compounds penalties and interest monthly. Carrying $74,000 on cards at 22% costs roughly $16,000 a year in interest alone, before touching principal."
"Ramsey walked her through cleanup. Sell at $545,000. After closing costs and clearing the mortgage, HELOC, and other balances, roughly $30,000 in debt would remain. That is a number a working physical therapist can attack inside a year. $575,162 in debt against a"
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