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Getting out of Debt in April - Page 3

post #41 of 62
laohaire - I think that is what I would do in your situation but I totally understand about the disappointment at having to "slow down." Once things even out and you make that big lump sump payment you'll get a big rush again. I do love your outlook though, you can be just as motivated socking it away!

proudmamanow - It is definitely convenient to be able to download transactions into an application - that is what drew me to Quicken years ago. I just started a bit of a hybrid system myself. Since our biggest budget buster is groceries and dining out, we decided to go cash-only for that. It just started with our 4/16 paycheck but so far, so good. Talk to me in a few weeks and see if I'm still feeling that way, though hehe.

Off to look for your other post.
post #42 of 62

Baby Step #1

So far my husband and I have saved $75. That's such a low amount, but it's a great start for us. In May, we should have $150. We've also made payment arrangements with some long ignored creditors.
post #43 of 62
I am so glad to see a thread like this one!

My husband and I are expecting our first baby in 2 weeks and we will be going down to just his income, which will cut our income in half, just about. We have beed following Dave Ramsey's Financial freedom plan since January 2009 and this is the first time our debt-repayment snowball will have to slow down a bit, which makes us a little bummed, but we know we can handle it.

As an encouragement to others, let me say this. In January 2009 we started out with $53K in student loans. We make a combined $60K per year. As of January 2010, we brought our debt down to $23K. It is so encouraging to see this kind of progress and know that- unlike most Americans- we will not have to live with debt forever!

That being said, I would love to hear from others who have had their debt repayment process "interrupted" by a baby. To complicate matters, in order to keep his job, my husband will have to take summer courses at a local community college. I am hoping we can pay entirely in cash, so no more loans. We shall see!
post #44 of 62
Congrats vnmommy! Savings and snowball amounts are all relative to income, etc - so $75 is a great start, it is $75 more than you had before. Are you aiming for the $500 or $1000 BEF?

kat - Wow what a great year you have had! I've not had a baby interrupt the snowball but I did have a couple of kids have chronic health problems come up. We had barely started though so it was very easy to fall completely off track. You have had a great year and sound way more motivated than I was so I'm sure you are all set. Grats on the upcoming baby.
post #45 of 62

talk me down...just venting really...

By the end of the month, we'll have a total in our savings account equal to that of our LOC. I'm starting to get giddy and thinking "we're out of debt!" but we're not yet. That money we have saved has a purpose (BEF and moving expenses). We still need to build our moving-expenses fund AND takle the remaining LOC balance. Even just saying that has helped- dang, still a ways to go!!

I guess I need to remember too though, that there is no finish line. It's a way of life and we're in it for the long haul. It's just nice to reach your goals...

Off to colour in the top part of our chart for some motivation (the moving-fund part), even if there is still a gap of debt undernieth....
post #46 of 62
hello again
Haven't posted in a long while and need to get remotivated.
We are still plugging away at our HEL. I am hoping to put tax return towards that, but as of yet we STILL don't know if we are getting one (the company is filing our taxes this year due to dh's expat assignment needing to follow laws form both sets of countries. and the company filed an extension, so taxes STILL NOT DONE )
we forgot/procrastinated/put off making a budget for this month. sigh. I have just run some numbers and will sit down with Dh tonight to go over that.
Just haven't been in the swing of things. Need to jump back in!
I will go back and read through this thread now
post #47 of 62
Thread Starter 
annethcz, I think as long as you budget your renos and don't let them get out of hand that that is a valid reason to stop the ffef and concentrate on that for a while. When we started bs3 I had a vacation fund and ffef out of our bs2 money.

laohaire, that sounds like a solid plan. With any luck you'll be able to throw the whole amount at Sally Mae when things settle.

proudmamanow, I never mastered envelopes beyond groceries, gas and blow so I hear ya.

vmommy, welcome! Let us know if you have any questions, its daunting when you first jump in to DR.

welcome kat.c.stevens, you have been doing great! Will you still have a snowball when you're home with the baby? It may slow you down but the no spend challenge thread and the frugal mavens here can help.

eirual, I'd be itching to hit the line of credit too but it will be gone soon and its a good idea to save your moving fund.

Softmama, nice to see you back! Fingers crossed you get a good return. Get that budget done, its amazing how it helps us stay on track.

We did our taxes and will be getting a small return which will hopefully top off our vacation fund which means any extra is adding to bs4 for us
post #48 of 62
We paid off the car!

We hopefully will be moving on the BS#3 here soon..just a $1400 student loan to go but all the payments are principle so we may just let it ride.

Rev. My list is like your we need so much and could have put a big chunk on our last bill but needed a new mattress and DH needed to go to the dentist.

SOooo BS#3 will likely be slow for us also.
post #49 of 62
Wow you ladies are inspirational! I would like to join if it is OK.

We are in BS#2.
post #50 of 62
Hi just to update this month we are still paying down CC debt & trying to save for the EF in the meantime. I'm just coming out of my very slow time at work I had several month swith no work actually, but things should start picking up & money should start coming in! DH has a 2nd job lined up for the summer again this year!!! It makes a huge difference, but I still need help. We paid off one Cc with tax return money, but needed the rest to live off of so that we didn't get behind!!! Do I keep saving toward the EF? I also want to start saving for up coming expenses. My car needs $700 in repairs, our fridge is getting older, we will need a new roof, want to make a patio & the driveway is in rough shape! Also every winter we need extra money to make ends meet, I'm actually interviewing for a job in DD's school this week which will make me a little extra money. But I'd like to have at least $3000 for winter time. I'd like help to make this happen!

So we have 2 CC's left and $600 in the bank for EF.
$1700 at 18.99% min payment $46
$8150 at 9.24% min payment $143
post #51 of 62
The DR plan would have you paying the minimum on your cc's until you have a basic emergency fund of $1000 built up. So that would be your first priority.

Next, you do have to save up for any NEEDED expenses you foresee - like if you NEED to repair the car (and, hey, I'm not doubting you do, just sayin'), make sure you have the CASH for it. Do not put it on your CC. Also don't take it out of your emergency fund as it's apparently a foreseeable expense.

However, I feel safe in saying a patio is a want and can be deferred until you're debt-free.

New roof? You have to decide. Obviously there is a point where a roof is needed. Is that point this year or next year? I can't tell you. A new fridge sounds like a want to me based on you just saying it's "getting older" - though obviously if it's not working and spoiling your food, you should indeed address it. (Try craigslist first, a lot of rich folks like to upgrade their appliances long before their last legs, and are happy to sell a working fridge for cheap).

Anyway, the point of the plan is to immediately stop going into debt, don't charge a penny more as of today. Pay in cash for anything you buy from now on. Build up the emergency fund and use it for unforeseeable emergencies (and a new patio isn't an emergency). Then do the debt snowball, then finish funding your emergency fund (3-6 months living expenses). There's a few steps after that, but that's the immediate future. Good luck!
post #52 of 62
CookiePie - Ditto laohaire. I wanted to add that since you need extra money every winter then you may need a "Hill and Valley" fund - as Dave Ramsey calls it. It is for those with unpredictable or irregular incomes (which it sounds like you guys have).

Here's a link with more info: http://www.daveramsey.com/article/ho...ney_budgeting/

So you'll need to only pay minimum payments on all debt until you get $1000 into your Basic Emergency Fund (BEF).

Then you start setting aside cash and put it in a separate "Hill and Valley" fund. This is for the leaner times.

Once all that is done, then you start the debt snowball. You should include expected expenses in your budget - car repair/replacement, tire replacement, appliance replacement, home repair, etc.
post #53 of 62
New tab in Firefox w/Google

MSIE

p1gg1e - Congrats!!!

wife & mommy - Welcome to the group.

mtm - yahoo!!! Congrats. Did you mention before where you are going on your vacation?

Softmama - welcome back. Frustrating situation with the taxes. Are they going to pay any penalties/interest for the extension?

eirual - That is awesome! I think that when it comes time to move you'll be thankful to have that cash flowed. It is definitely nice to reach your goals but your POV is perfect - it is a way of life. I keep telling myself that.
post #54 of 62
Ok, thanks laohaire & MyTowAs! No I don't need the fridge yet, but I want to plan for it in case this one dies. Same with the roof it's not leaking or anything yet, but I want to have a plan in place so that we are saving for it & don't breakdown & put it on cc because we have a leaky emergency on our hands, yk? My car needs work but I've been putting it off until I've saved up for it. I have a small hole in the exhaust in my 10 year old car. I don't want to dump too much money into repairs on an older vehicle, but we cannot afford a car payment right now so I'd like to milk it for as long as I can. So yes it needs work but I told my mechanic I'm saving up for the repairs & he said that was ok because the hole is small right now. The patio isn't necessary but when we had to replace the rotting sill on our house we had to remove the deck which was deteriorating anyway. So we were planning on doing a stone patio at some point. This will be our 2nd summer with a patch of dirt & weeds in that spot. So no not an immediate need but a want for sure, that side of the house also has tyvek paper & no siding, quite the eyesore, but it's luckily the back of the house. The driveway is a major pain in the winter to shovel because of the dips in it but we have lived with it for the 5 years we've owned the house so we can live with it longer. I just get overwhelmed thinking of the long list of things that are both needs & wants & wondering how long it will actually take for us to pay off the debt, get the funds in the bank both EF & PV & then start to save for house needed house projects before we can get to the fun ones! It seems like a daunting task, but I'm excited not to live paycheck to paycheck.

If I just pay minimums I should have a good fund set up by the end of the summer. The only thing is I was hoping to have the debts paid off first & if I do it the DR way, I won't. This is where my brain doesn't like the DR approach. I want to incur as little interest as possible! Since my smaller debts are paid off now, I've been attacking the highest interest first & snowballing it, even though I don't have all the savings. When I get extra money I put it into savings for the EF. Do according to DR I should wait to snowball until I have $1000 saved, or am I also supposed to have the peaks & valleys fund set up? I have to go read that link now! I'm half way to my $600!
post #55 of 62
Quote:
Originally Posted by CookiePie View Post
The only thing is I was hoping to have the debts paid off first & if I do it the DR way, I won't. This is where my brain doesn't like the DR approach. I want to incur as little interest as possible!
There was a quote in TMM that really spoke to me since wanting to get rid of the debt that is costing you money is the OBVIOUS common-sense priority to just sitting on a lump sum. It goes something along the lines of: if it was only math and numbers, then why aren't you debt-free yet? It's true. Of COURSE it makes the most logical sense to pay off interest- but that's only one piece. What setting up an emergency fund does is cover your back while you commit to breaking the cycle of debt and NEVER borrowing again. It's the behaviour that needs to change and to do that you need to make sure you have yourself paid first and your own back covered.

If you've been at the getting-out-of-debt for a while now, I say just give it a try. Jump in and just follow the plan. Do it kicking and screaming if you'd like, but humour me (us?) and just give it a try. If you don't like it after a month of having an EF, then take the total and fire it at debt if you must, but I can almost guarantee it will relieve the stress and tension of constantly thinking "what if" or "oh s#!t" if something does go wrong. It's about taking back power and holding your own.

I say, try it before you knock it.
post #56 of 62
To expand on what eirual wrote...

Let's say you just do the debt snowball first and you have no emergency fund.

Next week your car completely dies and you need it for work (rides are not possible, etc.). Or your boiler goes kablooey. Or something like that you really truly need to fix.

Now what?

You go back into debt. Apparently DR found it happened all the time, as he says, Murphy will show up when you don't have an emergency fund. Apparently it's so completely demoralizing to put something on credit two weeks or two months or a year after you completely swore off of it (because you have no other choice), that most people just give up.

I hope this doesn't come across wrong, it's not intended to at all, but I assume that if it will take you months to build up the $1k emergency fund, you are unlikely to have paid off your debt in that time. Unless your debt is very small, you have a while left. Something WILL happen during the time you are doing your debt snowball. Guaranteed. You need the EF so you don't go back into debt again.

The thing is, DR understands that you don't want to spend however much time gaining a full emergency fund (3-6 months expenses) while your debt just keeps eating up interest. That's why the fully funded emergency fund is step 3, AFTER you pay off the consumer debt.

So if you have $1k and you get to the point where you HAVE to do the $700 work on the car - fine. You have $700 and you can pay cash. Of course you'll also have to stop the debt snowball and work up to the $1k fund again before continuing your debt payoff again, but that's fine. You will have managed to deal with it with CASH and be in a much better position for it.

The roof obviously won't be covered with the $1k fund. Can you estimate how long it will take you to pay off the debt after having $1k EF saved up? Obviously it's just an estimate, but I mean are you looking more at 9 months or 4 years, you know?
post #57 of 62
Hi all, haven't posted in a while, but did want to say that I am pleased that our new arrangement (me working 5 days, dp taking in daycare kids) has allowed us to pay off $500 in debt in the past two weeks!! So while the day to day of this is hard, it does feel good to be in a better place $$. It also feels good to be living within our means & keeping track of our spending!
post #58 of 62
Thread Starter 
Alright everyone, its the last week of April. Lets try and end on a high note!

p1gg1e, great job paying off the car! Get that student loan paid off and out of the way.

wife&mommy, welcome! Jump right in with any questions or let us know if you need any help with anything.

CookiePie, good to hear things are looking up for you at work and for dh with a second job! That will really make a dent in the ef and ccs. I think your other questions were answered already so I won't repeat the wise ladies. I would make sure you're caught up on all the overdue stuff before you worry about the fridge. I'd make a list of what needs to be saved for now (a need) vs what can wait til you have paid off some debt (want) and then start slowly plugging away at it, it will feel great to get some crossed off.

MyTwoAs, our planned vacation is to see my brother who lives in St. John's, NL. We're lucky once we do airfare, its pretty cheap as we stay with him and grocery shop etc. I'm stoked as we don't get to see him often and I adore St. John's. I also have to go to Seattle in a month to see my sister unexpectedly but luckily we got points to do that one and other costs should be low.

proudmamanow, great job! That's a great snowball.
post #59 of 62
Hi mamas! I really want to join this thread, because I am just now starting the DR program. I have only listened to the CDs (book on CD) so far.

We already have 1k in savings, but I would feel more comfortable with 2k. If something goes wrong, it's usually pretty big like that. heh.

I did a quick written budget (scary)

Our debt is out of control, IMO. We owe in the ballpark of 20k. I homeschool my daughter, so I am trying to figure out what I am going to do in order to get more income going. I work from home, but it's slow going, bringing in an income that way is really hard. I may have to put her back in school and go get a full time job. --- but I don't know. I'm going to give it until close to the end of summer and see how I'm doing.
I'm planning on having a garage sale in order to jump start things
I'm selling off a great portion of my fabric in order to jump start things
I'm cutting the grocery budget painfully low (family of 4, down to $75/week)
(we already don't have cable, etc. We do have phone and internet, but need that because dh works from home a few days per week - and my business is online) Our cell phones are the pre-pay ones where we purchase $25 of minutes and use those until they run out. I'm forcing myself to stop grabbing a drink while I'm out - that's expensive, and am going to keep snacks in the car so I don't run through a drive-thru while out.

In the meantime, has anybody gone ahead and done 2k in savings before starting the debt snowball?

I'm open to any suggestions

Teri
post #60 of 62
CookiePie - I don't know much about the hill & valley fund but from what I've heard on DR's show. He says to set up the BEF and the hill & valley fund before starting the snowball. If you don't, and you are in a valley month cash-wise, then you'll not be able to meet your financial obligations without tapping the BEF or worse credit cards. Another thing DR talks about is personal finance being more about behavior than purely math. I'm an analytical gal so I was trying to figure out why I should pay off the $1k balance at 4.99 instead of the $2200 balance at 13.99 (made up numbers). However, the big rush I got when I paid off that first debt was awesome. I've paid off a second CC and a third will be paid off by the end of May. The feeling, alone, is amazing.

proudmamanow - I'm glad that it is working well and yay on the new snowball, that is fantastic!!!

mtm - How exciting! I know it will be great to see your brother again and gotta love the bonus of staying with family and being able to buy groceries and cook. That saves a lot of money right there.

Rising Sun - Welcome to the thread. I think that a $2k BEF is perfect. That's the "personal" part of personal finance. If it makes you feel better then go for it. I, too, work from home so I can appreciate the looking for extra ways to get income coming in. However my kids go to school and so that gives me a bit more time to be productive. I think that your plan for jump starting the snowball and giving yourself until the end of summer to get things moving income wise is great. The wonderful folks on this thread will help you hold yourself accountable and even come up with some great ideas.

I'm staying positive as April is coming to an end. I graduate in a couple of weeks so I'm busy with finals. I've got about $50 in my food and dining envelope that has to last until Friday. This is my first time doing envelopes and I'm surprised that I'm managing to stay in-budget. I don't foresee us spending more than that before Friday - woo!
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