Christee Consumer Debt Quick Start

Consumer debt is defined as being any debt that is not secured by real property (a house). Unlike a mortgage, the interest on consumer debt is not normally tax deductible. The two most common examples of consumer debt are credit cards and auto loans. The interest rate on credit cards can be 2-3 times higher than mortgage rates.

This module will allow you to see the time required to pay off a credit card and the total interest to be paid. Additionally, this module will allow you to compare the credit card balance to same balance included in a mortgage loan.

Credit Cards

Far too many people fail to understand the financial harm they suffer by maintaining credit card balances. The negative financial impact is compounded by making the monthly minimum payment without understanding the time required to pay off the balance.

There are 5 Required Inputs for the Christee Consumer Debt Module.

  • 1. Mortgage Interest Rate. Enter fixed interest rate on the mortgage.
  • 2. Credit Card Rate. Enter the interest rate on the consumer debt.
  • 3. Credit Card Payment. Enter either the minimum required payment or the amount you pay each month.
  • 4. Credit Card Balance. Enter the credit card balance.
  • 5. Loan Term. Enter a mortgage term for comparison. This is typically 30 years.

There is 1 Optional Input

  • 1. Email Address. By entering a valid email address, you have the option to have the PDF report emailed to yourself or another person.

    Tip. If this field is blank, then you may download the PDF report.

    Tip. Make sure you hit the ‘submit’ button after entering an email address.

Example for Consumer Debt

  • 1. Mortgage Interest Rate- 6%
  • 2. Credit Card Interest Rate- 15%
  • 3. Credit Card Payment- $150
  • 4. Credit Card Balance- $10,000
  • 5. Loan Term- 30 years

Results and Explanation

  • Monthly payment of $150 will payoff Consumer Debt in 144 Months (12 Years)
  • Total Payments $21,600         Total Interest Paid $11,634.94

    Tip. In other words, if you pay $150 per month, it will take 12 years to pay off the $10,000 debt at 15%. You will make total payments of $21,600, of which, $11,634 will be interest. That means 53.86% of your payments go to interest.

  •  Option 1 : Include Debt in Mortgage at 6% for 30 Years

    Tip. There are two basic methods to ‘include’ a consumer debt in your mortgage at time of home purchase.

  • 1. One way is at time of home purchase. In this scenario, you could use less cash for payment and increase your mortgage amount or
  • 2. you could negotiate to have seller pay $10,000 of closing cost. In either scenario the concept is the same, you use the extra cash to pay off your credit card debt.
  • Monthly Payment will be reduced by $90.05 To $59.95 Total Payments $21,582
  • Total Payments Difference $18 Total Interest of $11,583.81

    Tip. This option is most appealing to someone looking to reduce their total monthly payments. In other words, you pay $90.05 less each month but over a longer period of time.

  • Option 2 : Include Debt in Mortgage Loan and Making Payment of $150
  • Extra Monthly Payment of $90.05 Will Pay off Debt in 81 Months (6.75 Years) Total Interest Paid $2,194.19

    Tip. In this scenario, you pay off the credit balance at time of purchasing a home (see 2 options above). However, you pay an extra principal payment each month of $90.05 which means your total monthly payment have not decrease, however, you retire the debt in 6.75 years and total interest paid is reduced to $2,194.19 as compared to $11,634 with credit card payment. This option saves $9,440 in interest.

We hope you enjoy your AskChristee experience!

Results will be displayed in your browser. Additional detail is available in the PDF file. Please review results with a recommended AskChristee Agent and Lender.

See the Resources tab for more Information. Visit Video tab for demonstration and greater insight.