It's July and we're getting out of debt with DR - Page 4

[Softmama]

ahem. I am going to have to do some creative rebudgeting.
My SIL came to visit and brought her two black labs who are extremely old (14 and 16 years). One can barely walk so often didn't signal a need to go out until too late and the other has a leaky bladder issue. They were here for a week and left yesterday. She did her best to clean up after them....but....I had the carpet cleaners show up today. House looks and SMELLS great : I just have a thing about nasty carpets. I can cover the expense, but it makes the rest of the budget way tight

[Contrariety]

Ho-hum, ho-hum.

I've had zero movement so far this week. We took a planned family trip last week, so that left nothing extra, and this week we're paying for some concert tickets we committed ourselves to months ago (crap!). Next week, I should be able to get moving again.

[Thing1Thing2]

Originally Posted by tryingforbaby

$20 a year? What kind of internet phone is that? I thought mine was cheap at $30 a month.

Its called magicjack. You have to leave your computer on all the time if you want to recieve calls. You hook a device up to your computer and it runs through your phone line. So far it's been awesome, except dh and I keep shutting off the computer to save electric costs... but at least we can call out whenever we want!

[akichan]

Routine car maintenance put me back $800 this month. Grrrrr

[mommytoavery]

We have been trying to do DR for 2 years and I always find excuses. Well we just had to buy a minivan for safety reasons and I told dh we wouldn't get it unless we became serious and did DR. So here we are.

Pre-Step 1: Get current on your debts and do a budget
0.1 Commit to NEVER borrow $$$ again - Done - really really Done with this one!
0.2 Talk with spouse and get him/her on the same page as you concerning finances. Done
0.3 Do a written budget Been doing this for years just need to get serious about the other parts
0.4 Temporarily stop all retirement contributions Cannot do this - dh's work requires it - I mean you can not opt out or anything - it is crazy
0.5 Get current on all the basics (Shelter, Food, Utilities, Basic clothing)Done
0.6 Amputate "toys" (bikes, boats, ATV's etc) if they will keep you from completing the snowball within 12 months We don't have any big toys - just some small ones that we have already listed on craigslist
0.7 Cut lifestyle (Cut CATV, Cellphone, Regular phone "extra's", Internet, Eating out, etc) and/or take second job if $1000 EF will take more than 30-90 days. Will have EF by 60 days if not a lot sooner
0.8 Get current on ALL billsDone - Just need to get EF and then move on to the next step

[laohaire]

We're joining now. Baby Step 1.

The pre-steps have always been done, we've never had a problem with those. We have a budget and we stick to it pretty well (the only thing we're not great on is sticking to our food budget, but that ends now). We have no credit card debt. Which is probably why it took us so long to see how deep in the hole we are. We always figured we were ahead of others. We started putting money in our retirement in our mid-20s. Paid off our previous car in 2 years instead of 4. Our yearly spending on haircuts is $0, for clothing is $0, for DVDs is $0. We have no cable and not even Netflix (just borrow movies from the library for free, that's it). We are sooooo frugal, right?

But we are soooo in the hole. We have $23k in student loans (down from $26k, oh, 7 years ago - in other words hardly touched). We have $7k left on our current car, which we only prepaid just a little unlike our previous car. And $107k on a mortgage. Sigh. We are deep in the hole.

I regret buying the car we did, though the car is actually great. We didn't buy it for prestige but strictly for reliability and good mileage etc. All the responsible reasons. And the reasons were really good. Only we couldn't afford to buy that car. We thought about buying a $1.5k clunker but ultimately chose the car we got. I am thinking that selling it would not be smart, but I don't know. We can pay it off in about 18 months so probably doesn't make sense? I've considered just not having a car at all, for a while at least, but we would have no way to get to our CSA farm to pick up our groceries for the rest of the year.

Rather than being excited about the DR pledge, I'm really bummed. Admitting we're in terrible shape is not easy, since we had this self-image of being SO GREAT with our money. Probably we USED to be good with our money, but since having a house and a kid that just went out the window. Hardly anything goes into retirement anymore (seriously, like $25 a month I think). We get excited if we send $10 extra on our car. That's how bad we've gotten. We just really blew it

I know DR says everyone should get their $1k EF in less than a month, but we have to save $450 more to do it and I don't know how in the world we can do that in a couple of weeks. Obviously we'd have to sell something but I don't know what. We already live frugal lives. DH does have a cell phone, but it costs him $8 a month and I think it's worth that for the safety value. I have no cell phone. We have no landline phone and pay only another $8/month on a VOIP line for the house. My point is, we've long since done all the stuff to trim our lifestyles, and I just don't know how to go forward. The one thing I did think of was we can sell my coin collection but I have no idea how much (or little) it will net us. Guys, we don't even have a sofa.

Sigh, I should be elated to start this but I'm really not. Which probably doesn't spell well for our success. By every calculation we will be far, far behind everyone else, it will take us probably twice the time for us to do every step (and probably more, for the 1st step - I don't know how to come up with $450 in less than maybe 3 months). I still want to do them - hell, I don't want to be enslaved forever - but it's just really daunting.

[mommytoavery]

laohaire - I can understand where you are coming from. We are pretty frugal and have always lived by a budget. But when we realized we had too much stud loan debt and the mortgage, we decided to start DR. The problem we have is that we don't have any huge amounts to be discovered to save each month - no $5 a day latte that we can give up to save $150/month. So it is frustrating. It will take us longer than average to save the EF and to get started paying more toward our debt. I was really frustrated last night with this but woke up this morning realizing that this is my life and if it takes us a little longer than other people - so what - at least we are still getting on a plan to make our lives financially better. Most people don't even have a plan. So yes we aren't going to get there as fast as the others that have joined the DR plan - but we are going to get there faster than the majority of the people in this country who never save and just keep getting deeper in debt.

Set your goals in writing - and post them where you keep the motivation to do it. And maybe focus less on the "timeframe" that Dave suggests and focus more on the fact that you have realized things need to change and now you are changing them and in the long run your life will be so much more peaceful financially.

Oh and I wanted to tell you that DR plan really is geared more for those that have never done a budget and don't even know where to start. But that doesn't mean that you can't tailor it to your situation and just use the basic principles to get back on track and get out of debt. Like for us, we don't have a lot of little debts so we will pay off our highest interest rate debt first. But for a lot of people, DR plan regarding debt is awesome!

[Sarah8Jane]

Originally Posted by mommytoavery

Oh and I wanted to tell you that DR plan really is geared more for those that have never done a budget and don't even know where to start. But that doesn't mean that you can't tailor it to your situation and just use the basic principles to get back on track and get out of debt. Like for us, we don't have a lot of little debts so we will pay off our highest interest rate debt first. But for a lot of people, DR plan regarding debt is awesome!

I want to echo this. DR's plan is full of common sense. You already have a budget and live frugally - that makes you that much further along in the plan. You can do this, it may be hard, but it's hard for all of us.

[laohaire]

Thank you for the previous posts, I really appreciate them. Yes, we're not a latte family.

While DH and I would know what to do without DR, I do like having the instructions all laid out. We used to discuss all the time strategies - oh, here, we have an extra $100, what do we do with it? Pay it toward the car, savings, retirement, what? So while we were responsible we never really had a consistent plan. DR's map seems as good as any, so it's nice not to have to keep discussing every step.

DH hasn't read/listened to DR yet but he's totally onboard for being ultradisciplined about money again, so that's good.

[MamaPam]

It seems like a read or heard Dave Ramsey say you could do a $500 Emergency Fund instead of $1,000 at first if you were below a certain income or something. Anybody know what I'm thinking of?

[laohaire]

Yeah, he does say that for people with incomes under a certain amount - maybe 20k or 24k or something.

Our income is 42k (gross) but I guess we've managed to have a lifestyle that exceeds our income anyway, even living frugally. It's just the big stuff that's got us - mortgage, student loans and the car.

Good news is DH mentioned (I had totally forgotten) that we had some savings in other currencies : so we are discussing converting some or all of it back into dollars to deal with step 1 and maybe even a bit of step 2. So we might have step 1 almost tackled after all!

[excitedtobeamom]

laohaire-Dave says that if you can pay off your car in 18 months then you can keep it. Actually that might be if you can pay off your car and all other debt besides your primary mortgage in 18 months you can keep it. His goal is to get you out of debt in 18-24 months.

I really got our debt snowball rolling by throwing newspapers and I just took the kids with me. Any chance of doing something like that or babysitting etc.?

[Kyamo]

Originally Posted by laohaire

Good news is DH mentioned (I had totally forgotten) that we had some savings in other currencies : so we are discussing converting some or all of it back into dollars to deal with step 1 and maybe even a bit of step 2. So we might have step 1 almost tackled after all!

Be careful doing that - you lose money every time you convert money between different currencies because the bank takes a cut. So if you are going to be needing money in that currency, it might not be a good idea to convert to US dollars now.

[laohaire]

Originally Posted by excitedtobeamom

laohaire-Dave says that if you can pay off your car in 18 months then you can keep it. Actually that might be if you can pay off your car and all other debt besides your primary mortgage in 18 months you can keep it. His goal is to get you out of debt in 18-24 months.

I really got our debt snowball rolling by throwing newspapers and I just took the kids with me. Any chance of doing something like that or babysitting etc.?

The way we're rolling now we can pay off the car but not the student loan in 18 months. I've figured what we can do if we DON'T increase our income:

Car paid off ($7) - 17 months
Student loan paid off ($23k) - 51 months

If we don't prepay the student loans, we'd have 128 months left on it as of today, so even though it's too long for DR it's still a pretty accelerated payoff.

That's honestly the best we can do right now assuming we don't increase our income (assuming we don't sell anything, get another job, get a raise that does anything more than meet inflation, etc.). So we should probably think about increasing income somehow as well.

Originally Posted by Kyamo

Be careful doing that - you lose money every time you convert money between different currencies because the bank takes a cut. So if you are going to be needing money in that currency, it might not be a good idea to convert to US dollars now.

Yeah, np, if we convert it we won't convert it back. We will probably at least break even this time given the way the currencies have gone (i.e. US dollar down).

[laohaire]

Oh, and the above scenario also doesn't really work because it assumes our car will be fine for the next 51 months as well. Which of course we are hoping it will but if we have to buy a clunker in the meantime or even have some major work done that will obviously set us back a bit.

[Leav97]

Originally Posted by Leav97

I'm going to join. I'm pre-step 1.

We are Currently behind on Student Loans, cell phone, Direct TV, internet and electric. One month ago I was 3/4's of the way to having an emergency fund. Now my emergency fund is empty, I'm behind on bills, and my CC balance grew. : I should be caught up on all bills by mid August.

PS .7 I don't have a home phone. Internet access is required for my job. We have a contract with Direct TV for another 6 months.

BS #1
1.1 12/1000

BS #2
CC 1 - 477
CC 2 - 1475
CC 3 - 3250
Signature loan - 2092
Car Loan - 15122
SL 3 - 19352
SL 2 - 19399
SL 1 - 24872

I'm almost done with pre-step 1. Only the garbage bill is behind.

BS #1
87/1000

BS #2
CC 1 - 440
CC 2 - 1400
CC 3 - 3250
Signature loan - 2025
Car Loan - 14950

I'm trying to consolidate the student loans and will move them down and pay them after the mortgage. I've paid off almost 350 this month. 22,060 to go.

[Sarah8Jane]

Originally Posted by laohaire

The way we're rolling now we can pay off the car but not the student loan in 18 months. I've figured what we can do if we DON'T increase our income:

Car paid off ($7) - 17 months
Student loan paid off ($23k) - 51 months

If we don't prepay the student loans, we'd have 128 months left on it as of today, so even though it's too long for DR it's still a pretty accelerated payoff.

That's honestly the best we can do right now assuming we don't increase our income (assuming we don't sell anything, get another job, get a raise that does anything more than meet inflation, etc.). So we should probably think about increasing income somehow as well.

Have you considered rolling the Student loan to step 6? It looks like the loan is a bit more than half your annual income (you said 42k right?), so it could technically qualify for step 6, if you wanted it to. Have I mentioned this before? Sorry if I have.

[laohaire]

Originally Posted by Sarah8Jane

Have you considered rolling the Student loan to step 6? It looks like the loan is a bit more than half your annual income (you said 42k right?), so it could technically qualify for step 6, if you wanted it to. Have I mentioned this before? Sorry if I have.

Ah, no you didn't. I seem to have missed that in the book. That's certainly a consideration. Fortunately the interest rate on that loan is pit-bottom - I think it's 2.125%. (Obviously that doesn't mean I want to keep it forever, but at least I'm not paying an extra arm and a leg for it!)

[Maluhia]

We are back from our vacation and doing well - readjusting to eating at home and cooking again - made super frugal "sushi bowls" last night (sushi rice, toasted nori and seasoned veggies from the fridge and leftover salmon from the night before).

I also had my : of the month where I put a big chunk into savings every month on the 2nd paycheck - gosh it feels good to see those savings #s jump! YAY us

[hollytheteacher]

sorry not to have posted much this month...

still here and doing well...lessened the snowball a tad this month to pay for a tux for my dh (he is a best man in a wedding) and I had to buy a dress.

It's so great to know i can just lessen my snowball a bit this month to cover it as opposed to just sticking it all on a credit card like I would have done before i discovered DR.

I think our bs2 is now down to 6,120 of the original 9,000 (started in March)