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Getting Out of Debt with DR, Oct 2009 - Page 3

post #41 of 219
Hi guys, can I join? We're interested in being more committed to saving our money wisely. I haven't read any DR books yet (is that a requirement of joining? ) but I am on the list for I think the newest one at the library.

Looking at the opening post, I guess we're somewhere between BS2 and BS3. Actually, we have 6 months of expenses in savings, BUT we also have DH's student loan to pay off. We're actually discussing this right now - can someone give me the Idiot's Guide to why we should worry about paying that off quickly? The interest is incredibly low (4% or something) and we're on a graduated payment plan, it's consolidated, and the interest on it doesn't compound. We definitely *could* pay (a lot) more toward it every month, but DH keeps saying things like "If we can find a bank with an higher interest rate of savings (i.e. 5%), we'd be better off keeping the money and paying it off at the current plan." That seems to make sense, but we still haven't gotten around to finding an interest rate that high for savings The studen loan is in the ballpark of $30,000 and our current payment plan is around $200/month, if that makes a difference. It's our only debt. We occasionally use credit cards, but pay the balance in full every month (usually for things like plane tickets, online shopping, etc).

Other than that, I guess we are aiming to start designating some of savings toward a car replacement fund. Our car is holding steady, but it's only a matter of time really.
post #42 of 219
Well we're officially starting the debt snowball. I wasn't expecting last night's video to be so "Rah! Rah!"

You know what's funny? If you look at the "crest" on the materials, the gazelle looks like a unicorn. I spent 4 weeks thinking it was a unicorn. I posted something on facebook about "debt snowballs, debt-free living, unicorns, and other mythical creatures."

Our leader agreed that we should stick out the last 5 months of CCC. For one thing, he pointed out that we have a contract with them. For another, that's going to free up over $500 a month to throw at other debt. How amazing is that? Then it's $2000 for Lowes, another $900 to Dell, and we're left with the car payment and student loans to deal with. How amazing will that be?

I do need a kick in my tushie. I have a Paypal account. In the past, it's been what I call my fairy money. It's money from my curriculum I write, and then I use it for ebay and the TP here. It's used for at least half of my kids clothes, pretty much all their homeschooling materials, and maybe a quarter to a half of their gifts. It's fairy money because I never touch it and it doesn't seem real.

I've been transferring any new money I make to our checking account, but right now there's $113 in it. I'm having a really hard time transferring it over. I know I should. We're at $500 for babystep 1. That $100 would really help push us towards the $1000. But I'm scared. It's scary not to have my money in my paypal.
post #43 of 219
Quote:
Originally Posted by mtm View Post
lalaland42, ooh Switzerland, i have travelust right now so don't mind me, I'm going to live vicariously through you. Are you there for work? How long are you there for? First impressions?
Well we are in Zurich, which I'd probably skip if I were on a whirlwind tour just because tourist-wise it is a boring (and expensive) city. But. They do have a lot of lifestyle choices here that I really like and I think it is a great place for young kids. We haven't been here that long though and I am still filling out mountains of paperwork. One thing I can say is there are babies in Moby wraps and Ergos everywhere.

We came here for a job that has a 3 year contract with an option to renew for 3 years. We'll see how long we stay though.
post #44 of 219
Quote:
Originally Posted by annettemarie View Post
It's fairy money because I never touch it and it doesn't seem real.
This is me! I totally feel that way! I've been selling some stuff online and I don't count it as "income" because it's only stuff I've been decluttering anyway. So I use it to buy frivolous things for myself but don't count it against myself.
post #45 of 219
Quote:
Originally Posted by Keeta View Post
can someone give me the Idiot's Guide to why we should worry about paying that off quickly? The interest is incredibly low (4% or something) and we're on a graduated payment plan, it's consolidated, and the interest on it doesn't compound. We definitely *could* pay (a lot) more toward it every month, but DH keeps saying things like "If we can find a bank with an higher interest rate of savings (i.e. 5%), we'd be better off keeping the money and paying it off at the current plan." That seems to make sense, but we still haven't gotten around to finding an interest rate that high for savings The studen loan is in the ballpark of $30,000 and our current payment plan is around $200/month, if that makes a difference. It's our only debt. We occasionally use credit cards, but pay the balance in full every month (usually for things like plane tickets, online shopping, etc).

Other than that, I guess we are aiming to start designating some of savings toward a car replacement fund. Our car is holding steady, but it's only a matter of time really.
Welcome!

Right now, I'd say it is next to impossible to find a bank paying a better rate than what you are being charged for the student loans. You also must consider that student loans are not bankruptable - they only go away if you die or pay them off. What happens if you become unemployed? Sure, you can put them on hardship deferral, but I've run across a few people who ran out of deferrals! You may be better served using some of your emergency money to pay part of the SL down.

DR is all about getting out of debt entirely because, being debt free lowers your financial risk and increases your ability to save and invest for today and your future. Most of us on this board aren't hard core DR followers, however, so join in and we'll encourage you to get moving at paying off that student loan, getting organized financially and living like no one else!
post #46 of 219
Ummmm....

It's October 5 and we've already spent $300 out of our $500 for groceries this month.


Can you tell we were part of the no spend challenge last month? Why do I have the feeling that we're going to be handing out toothpicks to Trick-or-Treaters on Halloween?
post #47 of 219
Just popping in to say hello. We're padding our savings now to help get ready for the baby and solve our newest dilemma.

We painted over the summer and either something was wrong with the paint or it had a reaction to what was already on the walls because we've been battling a horrible smell all summer. It looks like we're going to have to rip out and redrywall the guest room just to get rid of the smell. After that gets done, we should be able to start setting up the nursery.

I'm just very thankful that we have money available to take on this project and can hire a good contractor to be sure it's done right and quickly - the nursery and living room are packed with everything that belongs in the guest room and I just need to get this issue resolved.
post #48 of 219
Quote:
Originally Posted by Belia View Post
Ummmm....

It's October 5 and we've already spent $300 out of our $500 for groceries this month.


Can you tell we were part of the no spend challenge last month? Why do I have the feeling that we're going to be handing out toothpicks to Trick-or-Treaters on Halloween?
Belia - I'm in the same boat with you, except its pretty normal for us to have a huge buying spree in the beginning of the month (all the non-perishable items, costco stuff etc along with the produce we need for a week). Is this the same kind of process you have?

Good news though -If we bust - I'll be the other house handing out toothpicks this year with you
post #49 of 219
I know this is going to sound incredibly cheap but we're not handing out candy this year. Instead, we're dressing the kids up and going out to the Mall. It's warmer, and every store gives something, and it feels a little safer, too.
post #50 of 219
Quote:
Originally Posted by Sarah8Jane View Post
Welcome!

Right now, I'd say it is next to impossible to find a bank paying a better rate than what you are being charged for the student loans. You also must consider that student loans are not bankruptable - they only go away if you die or pay them off. What happens if you become unemployed? Sure, you can put them on hardship deferral, but I've run across a few people who ran out of deferrals! You may be better served using some of your emergency money to pay part of the SL down.

DR is all about getting out of debt entirely because, being debt free lowers your financial risk and increases your ability to save and invest for today and your future. Most of us on this board aren't hard core DR followers, however, so join in and we'll encourage you to get moving at paying off that student loan, getting organized financially and living like no one else!
Thanks so much for your explanation, SarahJane! That makes sense. And yeah, looking around online for a savings rate we're finding they're pretty dang low right now. DH wants to get to a nice round number in savings (which isn't too far away - this month or next) and then start paying extra toward the student loan. Now on to finding out *how* to pay extra every month...right now it's an auto-deduction from our bank account, so we don't even get a payment slip in the mail anymore...And it's through the Dept. of Ed, so I'm sure it's not going to be a bureaucratic nightmare or anything.

Another question: when you guys are saving for something specific (i.e. car replacement, vacation, etc) do you open a separate bank account for them or just keep track of it yourself? We actually have a separate savings account from our normal one (where, before the market crash, we were earning 5% interest) but now it's just sitting there...I guess we'll make that the car replacement! But just curious what ya'll do in general.
post #51 of 219
Wow I'm so nervous about posting this, but here's goes! Questions or suggestions are welcome!!

Background -
  • we own both our cars
  • we do not have a landline phone
  • We have several CC's open still with 0 balances to maintain a favorable credit/debt ratio, until we can pay off the CC balances
  • CC#1 - 12k
  • CC#2 - 6k
  • My student loan has been consolidated, and is currently being defered because of my schooling

Our Budget:
Monthly Salary: $4,272.0
Monthly expenses: $4,240.00

$1,350 Mortgage Payment
$61.00 Homeowner's Insurance
$36.00Home Warranty
$375.00Property Taxes
$75.00Water/Sewer Bill
$236.00Electric/Gas (this goes to a saving acct & we pull from it)

$171.00DH student loan
$0.00My Student Loan (being defered right now, normally 142.00)
$110.00DH Citi
$200.00My Citi
$0.00DH Discover
$0.00My WaMu
$0.00Alaska Air (this is now for business only!)
$0.00Discover
$0.00Gap
$0.00Home Depot
$0.00Wells Fargo
$0.00GE

$500.00Groceries
$75.00Cat Food/Litter
$56.00Car Insurance
$150.00Gas
$79.00Cell Phone
$37.00AT&T U-Verse
$100.00My Monthly Cash (covers yoga, haircut, and some lunches out)
$150.00DH Monthly Cash (covers kids activities, & some lunches out)
$175.00Savings
$10.00Netflix
$8.00WotC Account
$11.00AAA
$6.00Betty Brinn (we get a yearly membership)
$11.00Milwaukee Zoo (we get a yearly membership)
$8.00Checking Fee (this should be gone soon)
$100.00Repairs (both for house & cars)
$50.00Cat Maintenance (vet & dental stuff)
$75.00Target/NFCs
$25.00Health Saving Acct (until work one kicks in 01/2010)
post #52 of 219
KTG- Are those the mins. on your 2 CCs? What are the total amounts due? Looks like you need to cut the $ 175 to savings (assuming you already have the $1000 BEF), add the $32 already not accounted for in your budget, and anything above the minimums on whichever CC has the higher balance and throw it all at the lower balance and snowball. Then put all that savings (110+200+32+175=517, I think) to savings each month until you hit the FFEF mark which should realistically be somewhere between 11,100 and 22,200 (This takes into account that you'd have 500$ you could tweak right out of the budget in the way of savings)
post #53 of 219
ktg - if you have your $1000 ef, your smallest debt should be your focus (cc#2?).

Consider lowering the budget for the following items:
groceries/Target/catfood/litter, monthly cash, savings, reduce Netflix membership

I'm also tempted to suggest you eliminate WotC, Betty Brinn, Zoo membership, but I won't.
post #54 of 219
Quote:
Originally Posted by eirual View Post
Do you do the dairy and gluten free thing without trying to REPLACE dairy and gluten products with their high-priced alternatives? Like vegetarianism, gluten and dair-freeism can cost a pretty penny if you're always buying the replacement products, whereas if you stick to the basics with only the occasional treat, it can turn out to be quite cheap. Just curious what your strategy is and if you're buying fancy products if you'd consider just cutting them and learning to live without instead of trying to replace?
Not really. I buy 2 loves of bread and thats really it. Its just the kind of hot dogs I have to buy and the on the go food if I'm planning to leave the house. I do replace SOME things but not much . I was making GF pizza ( GF/DF for ODD) and so I trimmed that down with using rice tortillas instead of pizza crusts plus we get more in a pack. Other then that its DF icecream once a month ...I also buy GF pasta.

I make GF/DF cookies from scratch and we eat allot of eggs , beans, meat , rice etc. only 2-3 dinner meals every 2 weeks include a substitute.

I may have to bite the bullet and make a 1 hour plus drive to trader joes
post #55 of 219
Ktg - What kind of cat do you have that costs $125 a month? Can you cut that in half?

Ditto what others have suggested. If you have your emergency fund you need to focus that savings amount on your lowest debt.
post #56 of 219
Thank you so far for the suggestions!! A couple of things to clarify as they came up.

Roadworkahead - yup those are the minimums on the cards. We've done several rounds of balance transfers to get it all onto just those 2 cards, with low apr% (0-4.99%). Its just scary to have that much out on cards

Sarah8Jane - we have a $1000 EF, but that EF came from our general savings account (now at approx. 4k). So in a crazy sense - the $175 into savings is really being used to build an EF or pay it back to our original savings account (which used to be 10k), but house repairs & school have taken a toll on it. This is our first month with using the envelope system and we've cut our monthly $ by 1/2 already. If it doesn't start to work... well those are definately areas to cut. The zoo, betty brin (children's museum) we have already paid for and to get ahead for next year we're starting to save for them now. In my mind they are must haves for DH since he's a SAHD and the kids need a place to get out especially in winter. Its cold here in WI

p1gg1e
Oh man I wish we had some pampered kitties! We have 4 cats - though many days I wish we had only 1 especially in cleaning the litter boxes. These ladies (and I do love 'em) are no spring chickens by any means. They range in age from 5-8, so between vet visits, really over due dental cleanings, gah - $125 is necessary to keep these babies of ours in good health generally.

Oh finally DH just started a PT job (26hrs), so this budget is just based off of my paycheck. Our plans are - throw all his pay at our debt and just kill it... kill it good!
post #57 of 219
Well, technically, if you have a general savings account that has $4k, Dave Ramsey would tell you to:

1) Stop paying into it
2) Take $3k from that savings and throw it toward one of those credit cards.

Personally, I would do 1 but not 2. Also, when are you done with school? As soon as you have to start paying on those loans, you will be pulling out of savings every month just for the minimums (based on your current budget).

ETA: Once you get those cc's paid, if you stick to the budget and your DH keeps his PT job, you will have a great savings in no time.
post #58 of 219
Quote:
Originally Posted by kanga1622 View Post
Just popping in to say hello. We're padding our savings now to help get ready for the baby and solve our newest dilemma.

We painted over the summer and either something was wrong with the paint or it had a reaction to what was already on the walls because we've been battling a horrible smell all summer. It looks like we're going to have to rip out and redrywall the guest room just to get rid of the smell. After that gets done, we should be able to start setting up the nursery.

I'm just very thankful that we have money available to take on this project and can hire a good contractor to be sure it's done right and quickly - the nursery and living room are packed with everything that belongs in the guest room and I just need to get this issue resolved.
oh no! I've never heard of that!! Glad you are getting it resolved. I'd be really interested to hear what the contractor says was the problem.
post #59 of 219
Quote:
Originally Posted by Keeta View Post
Another question: when you guys are saving for something specific (i.e. car replacement, vacation, etc) do you open a separate bank account for them or just keep track of it yourself? We actually have a separate savings account from our normal one (where, before the market crash, we were earning 5% interest) but now it's just sitting there...I guess we'll make that the car replacement! But just curious what ya'll do in general.
We have two savings accounts with probably about 6 - 8 sinking funds that I track of on an excel spreadsheet.

We originally opened the second one because it had a better interest rate than the first, but rates dropped and are now the same. One is labeled "long term" and the other is "short term". Short term savings consists of items that I will pay out within 6 - 12 months. Longer term is 1 - 5 years.
post #60 of 219
Quote:
Originally Posted by _ktg_ View Post
Belia - I'm in the same boat with you, except its pretty normal for us to have a huge buying spree in the beginning of the month (all the non-perishable items, costco stuff etc along with the produce we need for a week). Is this the same kind of process you have?

Good news though -If we bust - I'll be the other house handing out toothpicks this year with you

Yeah, we usually do a bigger grocery trip each month, then several smaller trips. And when we did the "no spend" thing in Sept we really ran a lot of supplies down low. Plus, we've been passing this bug among the 3 of us, so we literally went through a dozen boxes of kleenex. Stuff like that.

I also have a bunch of old packets of soy sauce and Taco Bell hot sauce in the fridge. I can add those to the toothpicks on Halloween. And when our house gets tp'd by the neighborhood kids because we gave out such crappy treats, maybe I can salvage the tp from the trees and reuse it!!!
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