I watch your show faithfully and always look at the people and think well we don't spend like that yet here we are with a debt load that keeps me up at night. We have good jobs ($140,000 combined yearly) but just never seem to get ahead -- between the $1400 a month child care bill and the line of credit and student loans I feel like we will never get there. The positive thing is that we currently have about $200,000+ of equity in our home.  I am wondering if you would suggest refinancing our home to wipe out the line of credit and student loans as well as our vehicle lease.  I worry about adding these things to our mortgage as the equity we have in our house feels like a safety net to me. We are on a strict budget as it is. I can tell you where every penny goes, so there is not much more room to increase debt repayment. I wonder if we should hang in there for two more years when my oldest will start school and free up some childcare $$ for debt repayment and leave the equity alone. HELP!!

It’s hard to make the decision to use equity to refinance debt. I know it’s hard. That equity feels like a safety net. But you know what? With that debt hanging out there, it’s no kind of safety-net at all, because it doesn’t actually exist. That’s right. If you have $100,000 of equity and $100,000 of debt, you don’t have anything. And if your mortgage would cut points off your interest rate, making your debt repayment dollars go further in terms of paying off the principal you owe, how can that be a bad thing? I will say, this will only work if you promise you won’t go back into debt. PROMISE!

When your oldest starts school and frees up daycare money, you can apply that as an extra payment against your much-increased mortgage to pay it down faster and save on interest.