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Getting Out of Debt in October

post #1 of 64
Thread Starter 
Get out of Debt, October edition

I don't know where Sept went but October is looming. Lets make this the month we get our finances in order. If you want to pay off your credit cards, start savings or get budget help, this is the thread for you. 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!
post #2 of 64
Thread Starter 
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
chistinawc
dfunk98
Gray's_Mommy
kittywitty
lactivistmama
luckybamboo
madsommer
Miasmamma
papayapetunia
punkrawkmomma27
redvlagrl
Stephenie
waldorfknitmama
Zamber

BS#1: Save up $1000
2lilsweetfoxes
annettemarie
Contrariety
CookiePie
crunchymomof2
dex_millie
Evenstar
fairydust020409
greenmom4
hadleys_mom
ILoveMyBabyBird
JamieB
JenniferH
JustKiya
Kaitnbugsmom
Krisis
Ksenia
lj2blessed
ltlmrs
mamabain
mommaknowsbest
mommyto4grits
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
dagny.galt
Deir
dkenagy
eirual
excitedtobeamom
FeelingBlessed
FiveLittleMonkeys
goldfishkate
hadleys_mom
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
PPK
proudmamanow
Resque
RisingSun
RoadWorkAhead
samandhenrysmom
scrandall1173
Shellie
shllywlly
smallmama
Softmama
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
Rev1053
rionnhannah
sarafi
sparkprincess
Stone_Fence
Turquesa
yasinsmama

BS#4
mtm

BS#5
Maluhia

BS#6
kanga1622
rebeccalynn
Sarah8Jane
post #3 of 64
We aren't really ON a step... but I want to join anyway! My hubby is deploying in a few weeks so our goal is to pay off EVERY penny of CC debt while he is gone (currently a hair under 12,000). We will put his bonus and some taxes in savings this year but we can HAVE to pay off our CC debt because we can barely pay our bills. I have a plan worked out tho and with me staying with my parents and the extra deployment money we can pay it all off in 9 months. Plus save around 6,000... though 4000 of that needs to go to a car for him when he gets home. Anyway... so that is what we are working on!
post #4 of 64
Hi! BS3 here.

It occurred to me last night that once I save up 6 month's worth of DH's salary, there's really no reason to have comp/collision coverage on our cars, right? One of them is 12 years old, and the other is 5 years old. Is it a smart strategy to dump the comp once we know we'd have enough to get a new car in an emergency? Or am I missing something??

I sort of see insurance as an emergency fund of its own kind, only I don't get to keep the money. . It would be nice to lower what I pay.
post #5 of 64
Subbing.
post #6 of 64
Turquesa - Good question on the insurance. I'd say once you have a car repair/replacement fund in place you can probably drop the comp/collision coverage. I honestly don't know enough about auto insurance to be confident in my answer though. LOL

Welcome chely and good luck with your debt paydown/savings goal!

My update: Looking back at the beginning of September I wanted to reach 48.2% for my debt payoff and I ended up hitting 48.4% paid off. We're doing things a little differently for the next two months as we need to save up a few thousand dollars by 12/1 (not touching the BEF) so I'm going to track my progress towards that goal. Right now we are at 13% of that goal. By the end of October I would like to be at 68% of our savings goal. In that time our debt paydown will only be about 50.5% for our BS2 paydown.

Thanks everyone for your input on the housing situation. Our neighbors do rent their house out as a vacation rental and it is pretty solidly booked October through May. We live in Arizona, have 6 golf courses within a 4 square mile radius, and a massive retirement community about a mile away. The population in our area triples every winter so I'm hopeful that we would be able to do short term rentals (more money per month and they seem to take care of the place better). However, I won't be counting on any income when we do our budget should we go ahead and move. We can't sell because we're upside down - yay housing market. LOL
post #7 of 64
Please count me in! My husband makes WAAY to much money for us to not have money in savings. A lot of our debt is from a business that I had with a friend (don't go into business with a friend), and we are still paying off the last of that. We have $14,000 in c/c debt, manageable on our income but I want it GONE NOW!! We need to build our savings back up, so that is my goal this month. I will pay extra on c/c's when I can, but I am determined to get savings going strong!
So Baby step 1 for me.
post #8 of 64
Still paying off debt over here and trying not to acquire any new debt. We took a pretty solid hit last year with over $20,000 in medical bills that insurance wouldn't cover. We figured this year would be better.

I've been diagnosed with fibromyalgia after four months of extensive (and expensive) testing. I've had to stop working, so I added medical bills to our debt load and decreased our income.

Umm. Awesome?

However, we have not used the four credit cards we paid off earlier this year and we're about to pay off another small one ($1000) this month. It's been on a no-interest period that ends in November, so we're paying it off before any accumulated interest hits it and we will not be using that one again. We still have our big "medical" credit cards to take care of, but after this month we'll have another bit of money to snowball into them.

Onward and upward.
post #9 of 64
BS#2 here. We just sent in the last payment to pay off our first CC!!! i'm very excited. It feels so good to have a budget, have some money is savings and now to see that we are making progress on our credit cards. It all makes so much sense and feels so good, I don't understand why it took me 15 years to get my act together! My DH, who usually has his head in the sand about our financial life, has step up big time and is an active participate in working on the budget each month and paying bills.
post #10 of 64
Jumping in after a good September, hoping October is just as good. We paid off $1400 in debt last month, and we're in good shape starting out this month despite some unexpected expenses (HOA special assessments, baseball-sized hail damaging our roof, etc).

At the end of this month or early next month, DH will be receiving a layoff. We'll be "piling up cash" until then, minimum payments on everything, etc. Until DH has actually received a paycheck at the next company, my entire job is to save up money and spend as little as possible. Tough to do with holidays and birthdays coming up, but I think I can manage!
post #11 of 64
well september was a decent month for us, we payed back a 2000$ loan to dh's friend. I know DR says to pay people back last, but dh would not have that. We no longer have a car payment, so that will be freeing up 400$/month. Unfortunately we need quite a bit of $$ for other things. We had hail damage on our roof back in june and got a claim for the insurance company, but we still will have to pay out money b/c our deductible is 1%, and we really need to get the work done before winter. We are hoping to have a friend or family member do it as a side job so we can save money there. We also need new tires for the van and a few other odds and ends. But dh and I have to decided we will put a little extra to debt, and still try to work on the 1000$ emergency fund inspite of all that. I am a bit disapointed, I tried to get a lower rate for 2 of the cc's yesterday and was shot down both times. They are really high rates at 25.99%, so I really wanted to get them down even a little. But the other 2 cards are pretty good, one is one of those 0% until x months, so all the money we pay is going straight to the balance, and the other we closed and is at a fixed 10% rate, unless we default. So i guess we will start chucking a little extra at the smallest card with 25.99% and keep on saving. I feel we need a miracle right now, but ultimately I am staying optimistic, because I feel like since I am staying on top of the budget/debt etc. money seems to leave less and come in more, ie, I watch my spend more and find ways to bring in extra money, by selling items etc.
post #12 of 64
Quote:
Originally Posted by Turquesa View Post
It occurred to me last night that once I save up 6 month's worth of DH's salary, there's really no reason to have comp/collision coverage on our cars, right? One of them is 12 years old, and the other is 5 years old. Is it a smart strategy to dump the comp once we know we'd have enough to get a new car in an emergency? Or am I missing something??

I sort of see insurance as an emergency fund of its own kind, only I don't get to keep the money. . It would be nice to lower what I pay.
Quote:
Originally Posted by MyTwoAs View Post
Turquesa - Good question on the insurance. I'd say once you have a car repair/replacement fund in place you can probably drop the comp/collision coverage. I honestly don't know enough about auto insurance to be confident in my answer though. LOL
Hi! I am totally forum crashing but I used to sell insurance so I thought I could clarify on this question, since I have no vested interest in your premium being higher! (which is why you don't ask your agent this question - they will tell you that you need all the coverage in the world!)

You could drop both coverages if you have a car replacement fund, but the reality of the situation is that collision coverage is fairly cheap - depending on your driving record, of course. Comprehensive coverage is the one that is expensive, because your claims department can't argue with, say, a deer in the road, or a hailstorm. Whereas, if you are in an accident (collision coverage) and you have a good record, from an insurance company stance it's likely that you weren't at fault, and therefore a better (read - cheaper) risk for them than comprehensive coverage, which is completely out of anyone's control.

I would advise you to drop comp coverage, but do the math on how much collision coverage is actually costing you. I mean, if it's pretty cheap - and you have to decide how cheap is cheap enough - then why go through the stress of having to buy a new car or replace the fender when the insurance will do it for you? Isn't that what you pay them for?

On the other hand, if it's not that cheap, you don't need it and you can just pay for liability only. Also consider that if your car is 12 years old, and if you do have a situation where you have to replace the whole thing, with comp/coll you have a replacement value ceiling. So consider whether, should an emergency happen, if you wouldn't rather just get a new car with your own funds instead of another 12 year old car. Because that's what the coverage actually covers - a replacement, not a new car. As in, another 1998 Explorer, not a 2010 Explorer.

Whatever you do, DON'T scrimp on your liability coverages, though - have 100/300/100 minimum! You definitely don't want to pay out of pocket for damage you caused to someone else - that's why you pay insurance in the first place!

Hope this helps.
post #13 of 64
Just posting so I can track the thread.
post #14 of 64
Ahh two little murphys (or is it murphies heh) today. The bulb on our DLP TV blew out - $150 to replace and the garbage disposal motor died and is leaking. We're skipping the bulb replacement but are going to buy a new garbage disposal tomorrow since it is leaking into our cabinets. I'm pretty sure DH and I can figure out the install on one. =P
post #15 of 64
I am in! I just got DH on board with the whole DR plan, I have wanted to do it for over a year but DH would hear nothing of it, and he paid all the bills out of his account (I gave him my check to help with bills) so what he said went. BUT then about a month ago he came to me and told me that we had $40 to our name and that was it, we took a huge cut in pay back in June and we just kept spending like we had never taken the pay cut. Up until then I had no clue about anything to do with our money, DH wanted to control the money and I suck with money so I didn't care to know. Well now I know that that was a horrible idea and we sat down and went over everything. As it sits right now we have just under $10,000 in credit card debt, we make $2,080 a month and just our house payment and utilities are around $1,900 a month so we have no money left for credit card payments and no money for food, but we make to much to qualify for any assistance. So he is now looking for a 2nd job, I am in the process of getting everything in the house that is not nailed down sold and his mom is trying to cash in one of her annuity funds to get us the money we need to pay off all of our credit cards. But even with the credit cards gone we still wont have enough money for food and soap and stuff so we are really hoping he gets another job soon. We have already canceled our internet and cable, netflix and Sirius radio. I feel like I am ranting to I will just say im in and I look forward to reading everyone's progress!
post #16 of 64
Thread Starter 
chely7425, please do join! You sound like you have a good plan in place. Let us know if you need help with budgets or anything.

Turquesa, we kept our comp/collision coverage on our 5 year old car. I'd hate to use up my ef for that. Really, how much more is comp/collision vs the cost of a repairs? I see MovnMama has weighed in with some insider advice, thanks MovnMama.

MyTwoAs, great job making your debt payoff! You are so close to the halfway mark. Good luck with your rental.

mommyto4grits, welcome! I hear you on make too much to not have anything, that was our wakeup call, well that and a 15,000 cc debt. If its any motivation to you, we are now on bs4/5 and our money is working for us instead of going to the cc companies. You can do this.

earthmama369, ouch on the medical debt. Great job though in not using your paid off cc's and getting another paid almost off.

hadleys_mom, great work paying off your cc and getting your budget started. That's fantastic news that your dh is on board too, it makes a lot of difference.

dagny.galt, I'm glad to hear someone had a good Sept, it wasn't the kindest month to me. I hope your dh's layoff is short lived.

ILoveMyBabyBird, yay on paying off the friend. I would have thought DR approved of putting family/friends first, I remember something about turkey tasting better without a loan between family or something along those lines. If you can, try and get that 1000 filled and then worry about extra to the bills, its somewhat of a psychological issue, knowing the money is there helps you from reaching for the cc. Did you ask if you could get locked in to a lower rate if you closed the cc down? I've heard of people having more luck with that. Ouch on the 25%.

MyTwoAs, murphy go away please.

eirual, ahem, how are you doing? How is the new job going? How is the spending?

Pogo0685, welcome! yay for having your dh on board. You're in a tough place, you either need to up your income or decrease your housing costs. Would you be able to get a roomate or anything like that? Consider selling the house? I've got my fingers crossed for a second job for your dh.
post #17 of 64
I think we have a pretty solid budget right now.. mostly because we have an allotment set up for our bills and debt pay down money so the only money that really comes into our normal bank account is money for groceries and gas! I am anxious to see what our paychecks look like once DH deploys and we start getting separation pay and hazard pay and that kind of stuff. Plus we are hoping to trade our Jeep in come February with our taxes for a vehicle that is better for a family of 5 and has a lower car payment! I have until August to get all this done because that is when me and the kids are moving back to Louisiana and we will be paying rent and all that again.
post #18 of 64
Hi! I am a SAHM and a full-time student. I would love to join this thread! (first timer here). Lately, our financial situation has been unstable. So, I bought a copy of TMMO and very much liked Dave Ramsey's plan. Although I am willing to try his system, my husband is not onboard with the program. I know it is going to be tough with us not being on the same page, but I am convinced that our situation has to change one way or the other. I am going to try to make it work and maybe show him that this is a good plan to get out of our debt and start building savings. I know that I will need all the support that I can get. Thank you for listening.....Pre-baby step #1 here I come!
post #19 of 64
I want to join this, we need to get out of debt. I am the money manager in the family, and I always feel like I can't get ahead. I too feel like we make too much money for us to feel broke a lot.

We are caught up on bills aside frm one which will be paid on the 15t. I am working on funding BS1, but it feels like every time we have some saved up, something happens (heat or a/c dies, water leak and ceiling repair etc) and it's all gone again. Still, I need to keep a positive attitude about it, I suppose.
And I need to stop spending money..

Right now I am getting some of DS old clothes together to sell at a local consignment shop, hopefully will earn some cash there.

I am a SAHM, but I can work some from home, so I will be starting that as well to add to our savings and later for BS2.

I want to do Christmas debt free this year, so I am trying t save up some Christmas money along with the BS1 money (separate funds). No extravagant Christmas, but a few gifts and some holiday stuff. I am going to try and shop thrift/consignment for most of the kids gifts to keep costs down.

Sorry for the long rambling post, I am excited to be here!
post #20 of 64
Thread Starter 
Luckymommyof3, welcome! Its harder not having an onboard spouse but a lot of spouses seem to come around when they see the debt going down even without their full support. Someone had success asking for a couple months to try it and then if it wasn't working, would back off on it but by then the spouse was on board.

jellybeanandkids, welcome! Good luck selling the clothes and getting a wah job, I think a debt free Christmas sounds lovely. What a great way to start the new year, with no Christmas bills rolling in.

I need a smack, I'm eying my october paycheck (paid once a month for my part time job) and keep thinking of things we "need". Someone remind me that its more important to fund bs4. I need to get back to putting extra towards retirement before it becomes a habit to put it on wish list stuff.
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