Getting Out of Debt with DR, Oct 2009 - Page 4

[NWmt_mama]

Please add me to the list! Working on BS1. We have a long road ahead!

[greenmom4]

I just finished reading TMMO and we're ready to go. We're at the pre baby-step phase. I'm overwhelmed by the thought of doing a budget, but we're going to just sit down and pound one out and see how it works for this month and then improve upon it next month.

The good news is that I think we're in a pretty good spot and just by being a little smarter we should be in good shape. We have about $6k in debt, no current credit cards, no car payment, no personal loans, student loans or anything like that. The debt we have is from some outstanding medical bills and defaulted credit cards.

I'm really excited to build up (and keep!) our emergency savings. What a relief that will be!

[greenmom4]

One more thing - did you really stop congtributions to your 401k? I just started a new job and they have a really good matching plan so I signed up right away (before I read the book). I think I have to wait until Jan to change the deductions and I just don't know that I really want to do that, anyway...

[RoadWorkAhead]

Originally Posted by greenmom4

One more thing - did you really stop congtributions to your 401k? I just started a new job and they have a really good matching plan so I signed up right away (before I read the book). I think I have to wait until Jan to change the deductions and I just don't know that I really want to do that, anyway...

Retirement is very personal. If you're getting matched, its worth contributing to get the match in my mind. It also depends on how long you're looking at for paying things off. If you can continue to save for retirement and be out of debt in 6-9 months, a year, then it seems more fiscally responsible to continue to contribute. Just my thoughts...Dave may vary

[mtm]

Welcome Keeta, please do join in! I'd get Total Money Makeover out of the library but definitely not a condition of joining in! I agree with SarahJane, I'd pay off a chunk off that student loan but probably not bring down your 6 months to zero. What about compromising in the short-term and taking 3 months worth?

annettemarie, I'm sitting here giggling about your unicorn. Transfer that money over already. Living without an emergency fund is an invitation to trouble. We also don't do candy for halloween, we're in a condo and don't get anyone in. I like the mall idea.

kanga1622, how weird about the paint, any recourse with the original contractor?

_ktg_, I hear you on teh wanting the extra accounts open for the debt/credit ratio but I would really close a bunch of those zero balance accounts. These companies are experts at taking our money, don't let them have any opportunities. With your budget fairly tight, I might lower the two blow. Right now you spend more on extras then on your one cc. I'd use your transfer to savings (175) to add to your cc. Just think how much faster you could be out of debt if you sent an extra 200 or so a month to the cc?

Is there a reason you haven't transfered 3000 over to your credit cards leaving 1000 as your ef? I would really strongly suggest it, it will help you get through the ccs faster if you are motivated to get them done and up your savings again. Even 2000 over would be a great motivator if you are too uncomfortable with only 1000 in savings.

Weclome NWmt_mama, is there anything we can help you with to get you started? We've got some ladies who are great at helping with budgets and I'm a great nag if you want someone to check up on you.

greenmom4, welcome! Don't get overwhelmed by the budget. Just write down what you owe and what you have coming in to get started. You can do this. My budget was a mess the first 2-3 months.

My dh did not stop his retirement contributions, he wasn't comfortable doing so and he had a good match.

[Sarah8Jane]

Greenmom4
We did stop the majority of voluntary retirement contributions for four months when we were working on BS3 (we already had 13% mandatory retirement contributions).

If you can't change your 401k election until January take the time now to get organized, get comfortable in your budget and figure out how much that 401k contribution would help you. If it would be a big benefit to stop it, stop it. But I wouldn't worry about right at the moment.

[annettemarie]

Well, I transferred my fairy money... BUT I asked DH not to put it in the emergency fund. Here's why-- we have a little corner market down the street. Peachy, the lady who runs it, is a saint. She loves my kids. She gives them treats. When I lost my baby this summer and DH had to go away, she had the kid who works the counter deliver me subs and stuff at home even though they don't do deliveries.

She also has this little book where they write down what you buy and then charge you at the end of the month. We owe over $200. It feels ugly and wrong not to pay her. It's not some big corporation, it's a friend. Someone who cried with me when I lost the baby. Someone who loves my kids. So I insisted DH send the $100 to Peachy. Also, we're never using the book again.

I know Dave Ramsey might not see it as the right thing to do, but it feels right to me.

[lalaland42]

nah AM, I would count that as "getting current on bills". Probably not true in the strictest sense but I know what you mean.

[mtm]

sounds right to me too AM, sorry to hear about your baby.

[annettemarie]

Thanks.

Medical bills are another question. We have a little over $1000 in bills from the miscarriage and D&E. There's no minimum, so DH was just sort of ignoring them, which is freaking me out. You can't just do that. He did budget $44 a month for medical bills, but it's just not enough. I'm thinking of asking him to call the different people and see if he can make payment arrangements.

[MCsMom]

I'm still here. It is great to see all the new faces. Welcome everyone.

We are still in BS3 - it seems like the hardest step to get out of. We get 'this close' and then something happens or we make a decision and it is back down. But I can not describe how nice it was to be able to pay for our (now second, 'new to us nice') car with cash. And you could just tell that it was not often that the dealership had people like us in.

My DH and I have a bit of a philosophical difference on what kind of debt to consider our condo mortgage. It is a second residence (now being rented out) and if we should have our FFEF or if we should throw a huge snowball at it and then consider it in step two. Or put it with our mortgage in step 6. We both agree that we need to get rid of it as soon as possible, just not quite on how much to keep in reserve while we work on it. And the other thing is, we are still doing step 4 and 5 in the meantime. So I feel like we should just really get and keep our FFEF first and then go after it. Can you tell that DH and I go round and round on this topic - lol. I guess there are lots more stressful money issues, I am happy this is our biggest bone of contention.

[NWmt_mama]

Originally Posted by mtm

Weclome NWmt_mama, is there anything we can help you with to get you started? We've got some ladies who are great at helping with budgets and I'm a great nag if you want someone to check up on you.

Thank you At this point I feel overwhelmed and excited at the same time. We have just let our cc debt get out of hand by continually ignoring it. We have almost 23k (gulp). Fortunately they are low interest rates, but that is the only positive thing I can say. Saving 1000 EF just seem so out of the question right now, but I am going to stay committed! Baby steps.

The biggest task for us is sticking with not using credit - at all. We've already cancelled an unnecessary vacation and are thinking creatively for holiday gifts.

Thanks again for the support! Nag away!

[Sarah8Jane]

Originally Posted by SimpleLittleThings

This might sound stupid, but what if your loan is more than you sell it for?

You need to pay the difference when the car is sold. This may require obtaining a new, smaller, unsecured loan.

For example, you have a sedan that is worth $5k but you owe $8k. You sell the car for $5k and pay $3k using a loan (or ef) to get the title released to the purchaser.

DR recommends going to your local bank and asking them for a personal loan.

[mtm]

MCsMom, yup, getting out of bs3 is tough. We're currently trying to decide between some much wanted renos (need hot water tank, want kitchen backsplash and a few other small things). Congrats on the car for cash, that's amazing! Re the condo, how is your job security? Any storm clouds? I'd be tempted to treat it as bs6 but DR would likely tell you to treat as bs2. Is there a compromise anywhere in there, maybe keep 3 months worth and throw the rest at it?

SimpleLittleThings, sadly, you will probably still owe some money after the car is sold but its still cheaper than big payment you have now, yes?

NWmt_mama, we were at a similar amount when we started too. Good job cancelling the vacation. Have you hidden/cut up/shredded your cards yet?

I got a scary email the other day, did you know its 11 weeks til Christmas I saw a sale in the window of the skateboard shop, have to go check it out as that is on older ds's list this year.

[annethcz]

As for the 401K question- when we were paying off debt we reduced our 401k contributions down to the matching level, then bumped it up again to previous levels after the credit card was paid off. Not DR, but it was what we felt comfortable with.

Originally Posted by MCsMom

We are still in BS3 - it seems like the hardest step to get out of. We get 'this close' and then something happens or we make a decision and it is back down.

I agree, for me BS3 seems way harder than BS2 was. Perhaps it's just our personal situation, because BS2 was a drop in the bucket compared to BS3. I'm not motivated to be gazelle intense with saving the way I was with paying off debt. And it's going to take so long to get our 6 months of expenses in the bank. We also had a number of purchases that we put off until after we paid off debt that it's hard to keep putting off.

We've actually made the conscious decision to save a little less towards BS3 in favor of living more comfortably. We're also using 'extra' money each month to cashflow the mostly-DIY finishing of our basement (which we've been wanting to do since we moved in 2.5 years ago). We're still working towards our 6 month emergency fund, but we're not getting there as fast as we could if we funneled ALL of our money towards the fund. We're also contributing to our 401K and kids' college savings funds, as we always have.

[beansmama]

Dh got a promotion at work!!!!

He's now on salary and getting a raise of about $13k/year! We're super excited! I'm not sure what his actual paycheck will be yet - you know - once taxes and whatnot our taken out...but I know this is going to help us reach our financial goals SO much quicker! I'm *guessing* we'll be able to put about $900/mo in savings...

I am going to be adjusting our budget a BIT...but I'm not getting carried away. For the most part we're going to pretend he didn't get the raise.

I am upping our "fun" money to $100/mo instead of $50/mo, and upping the "misc" category to $100/mo instead of $30/mo. We ALWAYS overspent in those areas, anyway...so I'm hoping that by allowing extra money in those places we'll be able to stick to our budget PERFECTLY.

In case anyone is wondering - misc. includes clothes, oil for the car, prescriptions, doctors bills, hair cuts...the works!

Also, instead of putting money in our FFEF this time around we need to go get DH a new work wardrobe...he's going from a uniform of scrubs to "business casual"...and he's been in desperate need of new clothes (that fit) anyway.

So okay. Enough rambling from me for now!

[eirual]

Congrats, beansmama, that's fantastic!

[RoadWorkAhead]

Congrats Beansmama!

[p1gg1e]

Congrats Beansmama!!

We are looking at a house tomorrow. Hopefully I won't like it LOL

Our utilities would be lower ( wood and well) and the drive much shorter. We are on stand by with the snowball till we move. I'm thinking $1000 in moving / buffer fund on top of the $1000 EF we have this way if we get a truck , eat out , or need appliances when we move we have the money to buy ( well used stove ) and not stress...then start plugging away at the debt again!!

I know we arent following Dave's plan ( we have been such great converts of his LOL) but what a difference between me buying a house and my brother. He makes at least $15,000 ( plus self employment taxes) less then DH and is looking at houses from $130,000-$140. We are looking under $130,000 ( the house tomorrow is $119,000). I wish I could talk him out of it but there isnt any point really.

[annettemarie]

Originally Posted by beansmama

Dh got a promotion at work!!!!

That's fabulous news! Congratulations!