Getting Out of Debt, July 2010

[mtm]

Back from vacation to find no one started the new thread. Hope that's because everyone was working on their July budgets.... Speaking of, I need a good month, we may have overspent a tiny bit on holiday.


Anyhoo, its July, we're more than half way through the year. Lets make this the month we get back on track. Most of us use Dave Ramsey's method but please join us even if you're following someone else/your own plan. All welcome!

Here's DR's plan:

These are the Baby Steps:

Pre-Step 1: Get current on your debts and do a budget
0.1 Commit to NEVER borrow $$$ again
0.2 Talk with spouse and get him/her on the same page as you concerning finances.
0.3 Do a written budget
0.4 Temporarily stop all retirement contributions
0.5 Get current on all the basics (Shelter, Food, Utilities, Basic clothing)
0.6 Amputate "toys" (bikes, boats, ATV's etc) if they will keep you from completing the snowball within 12 months
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.
0.8 Get current on ALL bills

BS1 $1,000 to start an Emergency Fund
1.1 Chop up/freeze CC's (You have an EF now)
1.2 Get Health insurance NOW if in the US (chances of getting sick w/ major medical bills are larger than that of death)
1.3 Get Life insurance NOW if you have considerable debt/your family couldn't make it financially if you died.
1.4 Amputate cars that you can't pay off within 24 months
1.5 Consider raising insurance deductables to $500 or $1000

BS2 Pay off all debt using the Debt Snowball
2.0 Do the debt snowball, paying all your debts from lowest BALANCE to highest.
2.1 You can take your first vacation since finding Dave if you can pay cash for it (no using the EF !!!)

BS3 Three to six months of expenses in savings
3.1 Start car replacement fund
3.2 Save up 20% for home purchase OR pay down existing mortgage to the point you can drop PMI.
3.3 Start furniture or other non-essential stuff replacement fund

BS4 Invest 15 percent of household income for retirement

BS5 College funding for children

BS6 Pay off home early

BS7 Build wealth and give! Invest in mutual funds and real estate


Here's the link to Dave Ramsey's website:

www.daveramsey.com

Please join us!

[mtm]

If you need added or removed from the list, or I got your details wrong just let me know and I'll fix it.

Pre-Step 1
anstar
BelovedK
BonnieNova
chanibell
dagny.galt
dfunk98
Gray's_Mommy
kittywitty
lactivistmama
luckybamboo
madsommer
Miasmamma
papayapetunia
punkrawkmomma27
Stephenie
waldorfknitmama

BS#1: Save up $1000
2lilsweetfoxes
annettemarie
Contrariety
CookiePie
crunchymomof2
dex_millie
Evenstar
fairydust020409
greenmom4
JamieB
JenniferH
JustKiya
Kaitnbugsmom
Krisis
Ksenia
lj2blessed
mamabain
mommaknowsbest
neveryoumindthere
NWmt_Mama
prana
Sihaya
teenyToona
Tryingforbaby
vmommy

BS#2: Pay off all Debt (except the mortgage)
100%Mom
2Rubies
AAK
AFwife
AllieFaye
astar326
Belia
Bluegoat
canuckgal
claddaghmom
Cody'smomma
ColoradoMama
Contrariety
cparkly
cymbeline
Deir
dkenagy
eirual
excitedtobeamom
FeelingBlessed
FiveLittleMonkeys
goldfishkate
HappyMommy2
Hedgehog_Mtn
herwitsend
hollytheteacher
indie
jeliphish
jjawm
kat.c.stevens
kavita
Keeta
killick
kings5queens4
KnittingKara
ktg
lalaland42
lakeruby
laohaire
Leav97
leigh2006
LittleBirdy
lizziebits
Livi's_Mama
llamalluv
LZP
major_mama11
mamabain
MamaPam
MamatoWill
mamimapster
mich
mrstice
MyTwoAs
my2girlz
Nickarolaberry
okapi
onlygirls
onthemove
Pernillep
PluggingAway
proudmamanow
Resque
RisingSun
RoadWorkAhead
samandhenrysmom
scrandall1173
Shellie
shllywlly
smallmama
stanleymama
stellarae
sweetjasmine
thenaturefreak
Tradd
tricia80
triscuitsmom
tynme
twin_mama
whiddle
wife&mommy
willew

BS#3: Build up to 3-6 months of savings
akichan
annethcz
beansmama
corrie43
Crunchy*VT*Mom
Denvergirlie
HappyHelpmate
MomtoWilmo
mammamo
maryjane
MCsMom
Nora_SEA
phatui5
phillytwinmama
p1gg1e
PPK
Rev1053
rionnhannah
sarafi
sparkprincess
Stone_Fence
yasinsmama

BS#4
mtm

BS#5
Maluhia

BS#6
kanga1622
rebeccalynn
Sarah8Jane
Softmama

[eirual]

Clearly we're all out enjoying the summer (financially responsibly, I'm sure...)

I got about $200 for my birthday. I have no idea what to do with it. I'm thinking I'll save it for 'me' money once we get settled out East...maybe a new bed covering since I've grown to despise our current winter set? No point in accumulating more stuff before the big move. We'll see!

ETA: since I've been craving to skate ever since DS was born almost 5yrs ago, maybe I"ll save it for a season of skating? ...that sounds dreamy!

[sweetjasmine]

Still plugging away at BS2. Seems like I've been there forever!

[MyTwoAs]

Happy July!

I got a little off track in July but I was able to meet my goal of 29% of BS2 paid off by 7/1. We ended up at 29.8% of BS2 debt paid off. My goal for 8/1 is 32%. Not a big difference but I didn't make as much money as I could have in June. I got a little lazy and didn't take advantage of all of the opportunities I had before me and so made about half of the extra money I could have. Part of my income is going towards back-to-school shopping, as well. However, for the first time ever, we've set a budget for back-to-school shopping this year.

eirual - Happy belated birthday to you. I think that saving it for you is a great decision and a season of skating would definitely make that money go a long way. Have fun with your decision.

Sweetjasmine - How long have you been plugging away at BS2?

[stanleymama]

Still here, still plugging away. Dh has started the second job and this month means an extra paycheck from both jobs... yay! We put together our new budget and its so nice to see things being covered. This was our way of life for so long and its nice to be back. Our only snag though is that our previous landlord from CO is being a jerk and refusing to work out payments with us ( we still owe for a couple mos rent...we had to break lease due to job and move out of state). So he decided to serve us papers. DH is going to research and see if its even legal for him to serve us since we are not in the same state. I wish he would have just let us make payments. What frustrates me most is that he told us he would work our payments and totally understood our situation. And this is how he works with us!!! ARGHHH!! Thankfully for the budget though, we are not panicking.

[MyTwoAs]

Good luck with the CO landlord situation, it sounds frustrating but it also sounds like you guys are in a good place and aren't panicking about the situation. Perhaps that is part of the "peace" that DR talks about with regards to financial peace - we can have it even though we are still in BS2. Yay on the second job, too - woohoo!!

[redvlagrl]

Hi There!

Please add me to the list! We are kinda between pre steps and BS1. We have decided to change things a little.

Up until now we had paid our CC off every month in full, but used it for groceries etc. Now we have decided to go the cash way, but obviously don't want to have a cc debt wait until we do the snowball. And we don't earn enough to cover 2 mth's expenses in a month, so we're changing over to a cash system prior to the emergency fund. We should be on track to really go for it in a month or two.

I've been selling off things (baby carriers, our second piano is for sale etc) to try and get the CC paid off super fast. We are both really excited about the whole process and can't wait to be doing the snowball!

thanks!

[sweetjasmine]

Originally Posted by MyTwoAs

<snip>

Sweetjasmine - How long have you been plugging away at BS2?

Ugh, two years maybe? We have one cc and a car loan. The cc is an emergency card but I've racked up about $800 on it over the past year. My goal was to pay off whatever I charged but I haven't been doing that. Shame on me! And about 2 years ago I started making extra payments on the car but then quit and let it ride for months without making payments. So we had this extra cash each month and what did I do with it? I couldn't even tell you. It's due to be paid for next April but I could have been finished with it by now. Sigh.

[MyTwoAs]

Wow 2 years, that is good that you're still here - even with bumps in the road. I admire your persistence. I originally started DR back in 2008...I only lasted a few months. *blush* I'm seven months in this time, though.

[major_mama11]

Still on BS2 here.

We've had some financial setbacks this year. The good news is, I've finally worked enough extra hours to rebuild our savings fund. I do things sort of backwards from the official DR way- since we still have a huge deductible before our health insurance pays a dime, I don't feel safe paying extra on debt with less than the amount of our deductible in the bank. I now have enough socked away that I feel comfy with paying extra on debt again

I have been working prn for a while, but just a couple weeks ago, I scored a PT job with benefits in the same department, working less hours, only with access to good insurance, paid sick days, etc! The only downside is that it's night shift.

DH is not really on board with the Dave Ramsey thing, so I just do the best I can. DH doesn't carry a huge amount of cc debt, but pretty much always has a balance, since he's not so great at delayed gratification (ex. this month he decided we just HAD to have a new video camera, even though the old one works just fine. Never mind the fact that he barely made a paycheck for 3 months of this year, and that the coming winter will probably be similar. ). We have separate accounts, and DH refuses to combine them, probably because he knows I could keep a tighter leash on his spending.

Our debt, other than the mortgage and dh's perpetual low-level cc debt (~$800?), is the car loan, which is just under $10k. It's overwhelming to think that we still owe on it until March of 2012, even if I pay double payments every single month. Gotta start somewhere, though. The car loan is where I plan to throw any and all extra money (which I might not have much of starting next month, when the insurance premiums will start coming out of my paycheck).

Sorry for the novel- it just feels good to vent in detail about finances!

[major_mama11]

redvlagrl- Switching to cash for groceries, I think, really does make most people spend less. I did it for a while last year, and it really helped. Now I've slipped back into using the debit card, and I know I don't keep track of what I'm putting in the cart as closely.

eirual- A season of skating sounds awesome! I'm a big fan of spending money on things like that, rather than on something you buy and then forget about in a week.

MyTwoAs, sweetjasmine, stanleymama, everyone- I've been in and out of this paying off debt thing too. Here's to plugging away in July!

[sweetjasmine]

Originally Posted by MyTwoAs

Wow 2 years, that is good that you're still here - even with bumps in the road. I admire your persistence. I originally started DR back in 2008...I only lasted a few months. *blush* I'm seven months in this time, though.

I wish my persistence were a little more consistent! I'm glad I'm back in this thread, I really need the motivation and accountability. Mytwoas, seven months is very good! I'm afraid of Christmas coming up though. I have five stepkids, one daughter and three grandbabies!!!! My husband has divorced dad syndrome wherein he feels the need to overcompensate by purchasing nearly everything his kids put on their lists.

Originally Posted by major_mama11

<snip>
Sorry for the novel- it just feels good to vent in detail about finances!

It does, doesn't it? I suppose I could vent in more detail too. I'm ashamed at my bad financial habits, though. I have this sense of entitlement and I don't know why. It's ridiculous. I do so well for a few months then I fall off the wagon. Wash, rinse, repeat.

[applecider]

I'm back! I had to skip out on May and June cause DP was laid off and I just couldn't be reminded that we were going nowhere. Now he has a job, but it pays much less than what he was making. We have a good amount of savings, but we still have the motorcycle loan. After much discussion with DP he finally agreed that buying the thing was not the best idea and that if, at the end of the summer, he was not making much more or we needed to, we could sell it. I feel really good knowing that we are now on the same page. The good thing about his job is that they will be working a lot of prevailing wage jobs this summer which means he would get paid twice his normal wage. The bad thing about that is he would be gone for 4 days at a time. But the extra money would be spectacular.

I also put my student loans into deferrment for one year, I was trying to lower our bills as much as possible. My loans are only like 6k. As for the house, we have an interest only loan, but my goal was to pay some principal too. So now I am doing that. I really want to get rid of the bike, I'm just not sure how to convince dp to that.

Otherwise, we're kind of in limbo right now. I am having a really hard time reducing our spending. I am not in super frugal mode right now and I'm not sure how to make myself be. I know this sounds crazy but I almost feel like, well DP gets to have his motorcycle (that we pay every month) so why should I be forced to go without?? But we can't afford both and still save. Anyhoo, I guess we aren't exactly on the same page but I don't like to bring it up too much cause he gets super defensive. I think if I just told him I wanted him to sell the bike, he would be better with that. So I need to decide if that's what I want to do and not talk about it otherwise.

I'm glad to be back and hope that I can get some motivation from here!

[applecider]

Originally Posted by sweetjasmine

It does, doesn't it? I suppose I could vent in more detail too. I'm ashamed at my bad financial habits, though. I have this sense of entitlement and I don't know why. It's ridiculous. I do so well for a few months then I fall off the wagon. Wash, rinse, repeat.

I have that too! Mostly it's about food. I feel that we deserve the best, most nutritious food out there and I have a hard time not spoiling us.

[sarah1122]

Chiming in for July...and doggedly rolling my little itty bitty snowball along.

We're brand new to DR so we haven't had time to fall off the wagon yet. Last month was our first ever for tracking all of our expenses/income and trying to be a bit more frugal (we’re using mint.com to track and budget, which is amazing BTW). We did OK, but totally blew the budget in the restaurant/food department between our solstice party, a special Fathers Day meal at my husband’s favorite place and some friends who came into town unexpectedly and were treated by us to dinner out. Yummy, but pricey. I had no idea we were spending so much on food.

Cody’smama I totally agree with you….high quality food is a necessity for us too. I try to look at it as part of our health insurance policy.

Big news is that I was able to cash in some old savings bonds, sell some stuff and scrimp together enough cash during May/June to send a PAYOFF check for student loan #1!! Its only $2600.00 which is a drop in the bucket for the $55,000 in loans we're facing, but it felt good in any case. Now I'm going to tackle student loan number 2 (another small $2500 loan). Goal is to have that paid off by September 1st...we'll see what happens...DH's car needs a brake job, I have to take a week off from work in August and we've got to buy wood for the winter (stacking winter wood in July has got to be the biggest drag of all time) so I'm not completely convinced it will happen. Crossing my fingers.

Finally got some life insurance for me too and maxed out DH’s group policy at work….its amazing how much peace of mind that $30.00 a month is bringing me.

Keep rolling mamas.

[eirual]

Equal billing for utilities is cool as long as you don't move right after winter when you've paid less than you've used :....we've got some catching up to do. It's not an awful sum, but I can still think of better ways to have used that money...

[Softmama]

Just checking in to say I'm still plugging away.

We have stopped paying extra on our home equity loan for three months and have diverted that extra money to food (I am paying for a bunch of organic meat for my chest freezer and it will take me three months to save up for it). Then we should get back on track paying off the HEL early. It is finally below 20K and we started at 35K so that is pretty exciting!

DH would like to start taking "real" family vacations, so we have to figure out if we can start an envelope for that and how much we'll be able to save.

I feel a little out of focus though with the food, the HEL, and the vacation all pulling at our "extra" money......I like it better when I have one thing to focus on.

[dizzysmom]

Still treading water until DH is able to find a new job. He had an interview yesterday that sounds like it went pretty well, but it would be practically minimum wage. Still, he's been driving me crazy hanging around the house all of the time, and quite frankly any job is better than nothing right now.

It is *killing* me that our last credit card only has a balance of $215.00 left on it and I can't send the payoff. We were doing so well at knocking out debt before we got derailed by the layoff (killed DH's credit card and a small student loan, and paid the other credit card down from $9200). But with our new circumstances, I'm hesitant to pull the payoff out of our savings because we are short about $220.00 per month right now

Off to find more fat to trim from the budget!

[mtm]

dizzysmom, any word on the job for your dh? Fingers crossed for you. you're so close on that cc.

Softmama, we felt pulled by too many little accounts too when we were doing ffef, vacation, dental etc. We finally automated everything and its much better. We also pulled out a few of our funds and will cash flow them rather than feeling like we're not making progress.

eirual, when is the big move?

sarah1122, you are doing great! Great job paying off the first debt! Food was our big wake up call when we started budgeting, especially the last minute grab stuff from the store for dinner or eat out category. We're so much better about it now, took a few months though.

How is everyone doing? We finally won our argument with the canadian taxman. They claimed not to have received our tax money in april despite the fact we had the cancelled cheque so we had to pay it twice while they looked into it. Got the second cheque refunded plus interest this morning, what a relief.