March Getting Out of Debt - Page 4

[Turquesa]

OK, confession time.  Ahem!! (Tugging collar, blushing....)  I'm technically on BS3, but I've been doing it wrong.  I mean reeeeeeeaaalllly wrong.  (Where' the little smiley with the bag on the head?  I LOOOVE that smiley!) 

So you know how you have to save up 3-6 months of expenses?  I saved up 6 months of INCOME!  (Ah!  There it is!!) 

I guess that's, um, good news.....right?  I've been done with BS3 all along and didn't know it. 

I never thought I'd be in the delightful position to ask this question, but seeing as I have twice what I need, what should I do with the surplus?  I have enough to open a money market account, which won't let me dip below a certain amount that is twice what we need for our EF.  If the account balance goes below that, the worst that happens is that we stop accruing interest until we can replenish that money.  It wouldn't be the end of the world if that happened.  So should I move it to the money market?  It would keep the EF liquid, but at least we'd be earning more than a few pennies in interest. 

Otherwise, since we have twice what we need for the EF, would there be a better way to spend that money? 

[MyTwoAs]

Hey Turquesa - that's a good problem to have.  =P  I'd either leave it in your FFEF, earmark some of the funds for sinking funds (car replacement, etc) or do a little lump-sum investing (Roth IRA if in the US).

[chely7425]

First, not all of us are hardcore DR followers.  Second, we do what works for us.  Most of us do NOT kill our credit cards, we simply do not use them, except for planned reasons.  We have CC, but we carry no balance and only put specific things on them.  If what you did works for you, that is great!  But I really don't see the point in coming on this thread and bashing the method that is helping so many of us get debt free and have a better life for ourselves and our families.

It should also be noted, some of us do NOT want debt, of any kind.  You can save for land, build your own house, do the work.  You can live debt free, it is simply a lifestyle choice that is not for everyone.

[eirual]

I have a sneaking suspicion this is to drum up some blog traffic, but I'll reply here in the event this is an honest question.

A lot of those questions are answered in his book Total Money Makeover. If you're confused about it all and truly want to understand the methods behind the madness, you should pick it up! :)

I'm not sure about the credit rating and mortgage thing (he does state his opinion on this in the book- I just don't recall it). 

The idea behind paying down debts according to balance is entirely behavioural. There's no math involved. He wants you to experience quick success and to focus your efforts, since often times people will try for extended periods of time to pay off a large debt that has a high interest rate, whereas once you knock out the little one, you take what you'd be paying on that and you put it towards the next, then the next, then the next. It's about experiencing quick success and wanting to do it again (and to mentally take things off your list- one less thing to think about, on to the next vs. battling the large one while the rest sit and wait)

We worked on paying off debts the logical way (i.e. highest interest rates) for years and got no where. We used the snowball technique for a year and got debt-free.

For me, it lit a fire under my butt to DO something about our debts, and it gave a clear path on how to get there. Before that we had willy-nilly goals and no real plan to do anything about them. 

[eirual]

Quote:

Originally Posted by Turquesa 

 I saved up 6 months of INCOME!   (Ah!  There it is!!) 

Awww...life is hard! lol

CONGRATS!!! That's a fantastic problem to have.

.....as for what you should do with I haven't a clue- something to make it grow! Keep what you need fluid, but if you're not sure what to do with it, start learning and speaking with someone who can help you decide (financial advisor). Dave has a list on his website if you're in the States (here?).

[sarah1122]

Hi All,

Been off of this thread a couple of months, but just checking back in...so fabulous to read so much good news!

We're hanging in and rolling along

I looked at our budgets for the last seven months and I revised my 3mo FFEF goal from $18,000 to $15,000.  Right now I've got just over 13.2K saved, so my goal of having 3mo in the FFEF by May 1 before the baby comes looks like it is most certainly going to happen.  Pretty exciting!  Things have been pretty tight between winter heating bills and socking all of that money away ($1500 - $2000 a month put into the FFEF), but it is so worth it!

We'll have extra money in the months to come.  Now that winter is (almost, hopefully) over our heating bill will decrease and we'll be eating from the garden.  Our renter on our land also started paying again (after being incommunicado for eight months), so that helps as well.  Some non-paying clients of mine recently sent me checks and we've still got a tax return coming...all really good news as we need some bigger things for the new baby (like a car seat) and will need to pay our midwife out of pocket.

We still have almost 40K in debt (land and student loan...both at low interest rates) and I'm about ready to put the one remaining student loan into deferment (with no accrued interest) for a year while our new babe is young, just in case I need to leave my practice completely at some point and money gets really tight.  My plan is to sock a whole bunch more money away for the year it is in deferment and then just (hopefully) pay it off in one lump some when the deferment ends.  We'll see what happens.  I'm just trying to make our monthly expenses as low as possible for the next year while I'm working less.

Hope you all are doing well! And happy spring!

[moonlitemama]

I'm so excited!!!!  I had to share that I just paid off cc#1 and paid 38% of cc#2 (and payment of another 21% as soon as the other tax return comes).  The only thing left after cc#2 goes is student loans and mortgages, so I'm going to count that as finishing BS2. What a boost!  Now I'm wondering how I can get that last bit paid off cc#2, rather than waiting it out with monthly snowball payments.

[seashells]

I just returned from our annual visit to my parents. My mother happened to be hospitalized before we got there, and it got serious enough that I bought a one way ticket down to get there early.

So, on top of the regular airfare (we had saved up for that, so no problem with those) - there was the extra one-way ticket that we paid through the nose for since it was last minute. Then we had to pay the airline a fine because I didn't cancel my original flight but intended to take the return flight (they canceled my round trip and we had to pay for me to take the flight I already paid for). Then the usual expenses but they were just a lot more than I had hoped. Airport parking. Extra gas to drop me off at the airport early (2 hours and 15 minutes each way, so it was about a tank for the round trip). Bought dinner out for everyone one night (my parents eat out so much, but while we kind of can't afford to spring for dinner, it's like we have to - hard to eat dinner out night after night and not pay for one). Some groceries while we were there. We put some gas in my parents' car - wow, that was $40 all by itself (our usual gas budget is $65/month, but my parents were putting $40 or $50 into their car every 2-3 DAYS - horrible mileage). Oh, just all kinds of things and I'm super stressed. On top of that, my husband is pretty irritated at me for being stressed about it. "It costs money to travel, get over it." Sigh. "Well, if we can't afford it, then we just won't visit them next year." Jerk.

Anyway, the upshot is that this month will be about paying bills and nothing else. No savings. No sinking funds. Oh, and we'll have to fill up our oil tank (heat) in a few weeks, and we have only $200 saved up, and won't be able to save any more this month. Need about $600 so that means next month there will be no savings or sinking funds either. Gulp. I try so hard and everything just keeps getting in the way!!!

[seashells]

Oh, I should mention, that my mom recovered, thankfully :) That's the important thing.

[mtm]

Turquesa, what a great dilemma. I'd be tempted to most of it in there as I'm starting to lean to 8-9 months expenses. Do you want to fill a few sinking funds or are you ready to transfer some of it to bs4/retirement? In Canada I'd put it into rrsps or tsfas which I think are similar to your iras/roths.

sarah1122, nice to see you checking back in. You are so close on the ffef! 

moonlitemama, great job paying off one and a big chunk of cc2! What a great feeling.

seashells, I'm glad to hear your Mom is doing better, how scary for you. Any chance the airline will forgive the fine if you call and explain what happened? I'm sorry to hear you are so stressed out about it, just think though, if you start a sinking fund for these trips, by the time next year's trip rolls around, the money will be there and the stress will be gone. I really felt similar to you at one point, that so many things were interfering with our progress but you are moving in the right direction.

 

[Ldavis24]

ok, update time...seashells, I am glad your mama is recovered and doing well! Stressful..

So I had experienced an MC which has caused quite a bit of stress in household, going from being shocked and not entirely thrilled at being preggo, to being really excited to not being preggo anymore has made us all a little crazy in this house. I'm "ok" with it I guess, it's just not fun and I was really getting into the idea of a little number 2...We are young though so we will continue to plug along and if another LO comes along then yay :)..

As far as finances go, I want to puke. Ugh is all I can say..You all are so good at this whole DR game it is impressive and inspiring but I still haven't managed to get DH to crack total money makeover. He keeps promising, tonight, tonight, tonight...yeah whatever babe. Sooo we are going along though. I sold our Wii and all it's accessories for over 250 and that went straight into the EF fund. 

DH is doing something he literally has not done in like 2 years and has worked 2 full weeks in a row nearly 40 hours. He is currently working, in the rain. I cannot believe it. He is more motivated in that regard than I have seen him in a long time. It is awesome and that particular area of stress is so much better. As far as spending goes, I am having a hard time with him in areas where we can cut out money. He doesn't want to change his lifestyle TOO much, where I am happy to get rid of nearly everything and downgrade the cell phones, cable etc to save a few bucks...

We are still working on the EF fund but it will be finished sooner than I thought thanks in part to DH finally working his bum off. 

Now as to the car situation, we are back here again. Not preggo, I am still debating if just selling both vehicles and getting a decent reliable family vehicle is the best bet. I really want to be a 1 car only family and this is the best way I think to go. I am fortunate in that before we bought anything it would get a really really thorough inspection and test drive. I am confident in our ability to not get ripped off at this point. So I think that is where I am leaning...Any additional input added on to the wonderful advice I have received here is always welcome!

 I told my mom all about DR, she is someone who could really really benefit from his plan and she just laughed and said, I quote, "what a cute idea"...Ugh disgusted. This women is crawling in credit card debt...buys a new car every 3 years and is just a shop shop shop kinda lady. Oh well, each to their own. I don't think I'll be mentioning our plan to any more family members until we have some real success to show for it!

[ArtsyMomma]

Originally Posted by eirual 

 you could colour in a square using the appropriate colour each time you contribute in order to know which money is for what in a little less obsess-over-every-number kind of way.

This is exactly what I just started doing for my 'sinking funds'. I used graph paper, each little box is equal to $25. Each fund is represented by a larger square or rectangle with the savings goal written below it. When I add money to a sinking fund, I color in the box. I have a 24 pack of sharpies, so this is turning into a lot of fun.

[seashells]

Thank you all for the well wishes about my mom.
 

Originally Posted by mtm 
seashells, I'm glad to hear your Mom is doing better, how scary for you. Any chance the airline will forgive the fine if you call and explain what happened? I'm sorry to hear you are so stressed out about it, just think though, if you start a sinking fund for these trips, by the time next year's trip rolls around, the money will be there and the stress will be gone. I really felt similar to you at one point, that so many things were interfering with our progress but you are moving in the right direction.
 

Just wanted to mention that we have a sinking fund for it, but it just did not cover the cost of an extra plane ticket (at an ugly cost due to being last minute) or a fee or anything like that. And as a result, our sinking funds overall are falling further behind since we'll have to pay these bills rather than contribute.

We already called the airline and spent over an hour on the phone with them, talked to supervisors and everything. We apparently did not follow the terms of agreement, and they have a right to cancel my return flight if I don't show up for the first. I simultaneously take responsibility for it AND feel really frustrated by it. It did not occur to me to cancel my original flight, because I was not looking for my money back. So I just ate the cost of the new ticket AND the old ticket and figured I'd use the return flight I already paid for. But apparently they have the right to cancel my return flight and resell it, without giving me any money back (also I think their terms say I have to pay $100 or something to do the cancellation). Anyway, I just felt like they had me in a corner (this happened when we were just confirming our seats the night before the morning flight and - oops - my name was gone). So we paid their stupid extortion fee. (And to make matters worse, I had booked my last-minute ticket with the same airline, so they totally took me to town on the whole trip).

Next year's trip will be better than this, no doubt... but our sinking funds are not fully funded so we're not on easy street and have no particular hope of getting there. Haven't had a raise in 3 years so what with inflation we make less and less each year.

And the PP whose mother said this all was "cute"? Yeah, your mother and my mother. We're in this weird position of my parents being major spenders, and my father (not my mother, only my father) has a thing about mooches. No, he's never complained to us about us mooching, but he talks about mooches in the extended family, so obviously he's keeping score. DH and I have no control over how much they spend (eating out, etc) when we visit. Seriously, I BEG my parents to stay at home to eat but they don't care. So we are obligated to spring for a dinner but we just can't afford it. One single $100 dinner is like a third of our monthly eating budget, you know? One stupid lousy dinner that is done and gone and will never be enjoyed again. My parents always fill up our gas when they visit, which is nice, so we wanted to do a tank while we were there. But that's the same thing, we don't have control over how much gas they spend. They drive a tank (basically) with 3 miles to the gallon, and it's all just shopping here, shopping there, dinner here. When they come to visit us, we plan things to do that are very local, often walking distance. Of course they hate that, but it's what we can afford. Oh, don't get me started I might cry again :)

[Ldavis24]

Originally Posted by seashells 

Thank you all for the well wishes about my mom.
 

Just wanted to mention that we have a sinking fund for it, but it just did not cover the cost of an extra plane ticket (at an ugly cost due to being last minute) or a fee or anything like that. And as a result, our sinking funds overall are falling further behind since we'll have to pay these bills rather than contribute.

We already called the airline and spent over an hour on the phone with them, talked to supervisors and everything. We apparently did not follow the terms of agreement, and they have a right to cancel my return flight if I don't show up for the first. I simultaneously take responsibility for it AND feel really frustrated by it. It did not occur to me to cancel my original flight, because I was not looking for my money back. So I just ate the cost of the new ticket AND the old ticket and figured I'd use the return flight I already paid for. But apparently they have the right to cancel my return flight and resell it, without giving me any money back (also I think their terms say I have to pay $100 or something to do the cancellation). Anyway, I just felt like they had me in a corner (this happened when we were just confirming our seats the night before the morning flight and - oops - my name was gone). So we paid their stupid extortion fee. (And to make matters worse, I had booked my last-minute ticket with the same airline, so they totally took me to town on the whole trip).

Next year's trip will be better than this, no doubt... but our sinking funds are not fully funded so we're not on easy street and have no particular hope of getting there. Haven't had a raise in 3 years so what with inflation we make less and less each year.

And the PP whose mother said this all was "cute"? Yeah, your mother and my mother. We're in this weird position of my parents being major spenders, and my father (not my mother, only my father) has a thing about mooches. No, he's never complained to us about us mooching, but he talks about mooches in the extended family, so obviously he's keeping score. DH and I have no control over how much they spend (eating out, etc) when we visit. Seriously, I BEG my parents to stay at home to eat but they don't care. So we are obligated to spring for a dinner but we just can't afford it. One single $100 dinner is like a third of our monthly eating budget, you know? One stupid lousy dinner that is done and gone and will never be enjoyed again. My parents always fill up our gas when they visit, which is nice, so we wanted to do a tank while we were there. But that's the same thing, we don't have control over how much gas they spend. They drive a tank (basically) with 3 miles to the gallon, and it's all just shopping here, shopping there, dinner here. When they come to visit us, we plan things to do that are very local, often walking distance. Of course they hate that, but it's what we can afford. Oh, don't get me started I might cry again :)

that was me! don't cry about it though. Just think how good you will feel when it all "pays off" in the end you know!

Also I totally know the feeling of being like wtf when you are EXPECTED to shell out cash that you don't have.

Dh's family is huge on Christmas gifts and I felt so humiliated on Christmas morning there when we were given tons of presents from everyone including DH's 3 adult step brothers who really didn't have to but did....We didn't get a single gift for ANYONE. We did a few pictures for our parents and that was it. I was so embarrassed but at the same time it was like, "well we told you guys we weren't doing gifts"...We told them not to get us anything...it is such a status thing with them all. Ugh, dreading next Christmas where we get to do the same thing again.

[Ragana]

Seashells and Ldavis24 - Sorry to hear about your mother's health issues and MC. Take care of yourselves and put off the DR plan for a little while if you need to. He does always tell people to take a little bit to breathe after a traumatic experience. You will get back to it soon.

As for myself, I'm getting impatient about paying off debt, but have vowed to stick with our snowball. In the past I have tried to put too much toward debt repayment, causing cash flow problems. That's no good either. Slow and steady, I have to remember. The good news is that potentially I have a job in the pipeline that could give us a bit of a boost. I have my own business and although things have stayed steady pretty much, I did lose one of my biggest customers this year due to budget cuts there. Thankful to have new clients coming along!

PS Turquesa - funny mistake! I wish I had made that one - LOL

[beansmama]

Ldavis - why not read TMMO together? Dh is a big reader, but not a big "finances" reader, lol! So we read a chapter or whatever each night after Ds went to bed...it was nice doing it this way because we could discuss topics as they came up - and make sure we're both on the same page (or willing to compromise, at least!). Good luck!

FFEF update:

Today was a totally crappy day...I'll just say...I hate Dh's "boss". Gr. Anyway, I went to check the mail and we got a refund check for a co-pay in the amount of $90!!! Woot! I shuffled less than $5 from the gift fund into the savings to make is an even number (the number in our FFEF was already odd...if that makes sense...anyway!). So I got to color in two more squares! Thank you co-pay refunds! Definitely put a smile on my face on this gloomy, grumpy, rainy day. Okay...off to cook dinner!

$5750/10000

[Ldavis24]

Originally Posted by beansmama 

Ldavis - why not read TMMO together? Dh is a big reader, but not a big "finances" reader, lol! So we read a chapter or whatever each night after Ds went to bed...it was nice doing it this way because we could discuss topics as they came up - and make sure we're both on the same page (or willing to compromise, at least!). Good luck!

FFEF update:

Today was a totally crappy day...I'll just say...I hate Dh's "boss". Gr. Anyway, I went to check the mail and we got a refund check for a co-pay in the amount of $90!!! Woot! I shuffled less than $5 from the gift fund into the savings to make is an even number (the number in our FFEF was already odd...if that makes sense...anyway!). So I got to color in two more squares! Thank you co-pay refunds! Definitely put a smile on my face on this gloomy, grumpy, rainy day. Okay...off to cook dinner!

$5750/10000

That is a great idea beansmama! I love it and then we can chat about it if one of us is confused or something. Thank you! I will suggest that to him tonight when he is done getting DD to bed...

Also if anyone will show me a picture of their little color coded charts or something I would love to see it! I get a bit meticulous and it sounds like something I would really enjoy doing.

[eirual]

DH still hasn't read TMMO (or Taking Charge of Your Fertility for that matter- even after my attempts to flag and highlight only the big ideas). He doesn't care enough to read them- I read them and am in charge of the finances for the most part (keeping them organized anyway...and the fertility thing, but that's a whole other thread).

I would just encourage him to take a read, but otherwise continue on without him and give him the Coles Note version as things come up.

[eirual]

I was just thinking....

We haven't had a car payment in well over a year. We were paying $350/mo for ours. At the time, I was also making significantly less money. I have no idea HOW we did that since having paid it off we haven't been sinking the same amount. ....I guess we used credit a lot more!

It's just interesting how you make things "work" when you have to. I definitely don't feel ready to put that kind of money into a sinking fund for car-replacement while we're still working on BS 2. Actually I also remember that time in our lives being a lot more stressful- I cried every payday when I realized it just wasn't enough and was already gone. Nevermind, I forgot how horrible having that payment was and how much it DIDN'T work for us. Ugh, I don't miss those days....and if I want to avoid them in the future I guess we better start that car-replacement fund sooner rather than later....Sinking funds come after BS 2, yes? Given we can hammer BS 2 out in the next few months and our car's still in fine shape, I think I'd rather focus my energies on debt-repayment then lay into the sinking funds.

[RoadWorkAhead]

Joining in, though not strictly a DR follower.  We're in a weird spot right now, and I think we're basically not in a step? 

Right now, we have $$ in savings (~$3200) but $1500 is going to fixing up our main family vehicle and the rest is in a marked fund for a possible SSA overpayment (I strongly suspect they overpaid, but I'm not sure what our repay penalty will be, etc.). We have slightly more than half of what the maximum penalty could be, so we may have to work on this as a debt depending. 

So technically, I consider us to have no real BEF right now, meaning back to BS1.  We have only 1 *sure* debt though, my student loans taken for this semester ($2750).  *If* all goes as planned, we should be able to pay cash for books and remainder of my tuition for this summer and fall.  We're trying to sell our small, old camper right now to re-fund our BEF, but we'll also be using anything saved heading towards tuition time. 

I really wish I knew what was coming with the stupid SSA stuff (DD previously qualified for SSI, but we make too much right now and they kept on paying so we thought we still qualified) - it's what keeps me from feeling like I know where we stand otherwise.  LIke, if its a reasonable amount, and they take payments, then we'll keep back the BEF and give them lump sums as they come in plus a monthly payment.  Argh.  Its just a frustrating situation. 

Anyways, approximately

BS1: Restarting here 0/1000

BS2: $2750 SL deferred until school is finished; possibly $1600 SSA

BS2b: School funding 0/1800 Summer tuition and books and fees

BS2c: School funding 0/2500 Fall tuition, books and fees

BS3a: FFEF 0/6000

BS3b: Moving expenses 0/3000

BS4: Pension - DH, otherwise nothing doing until we're moved and have an FFEF/no SL

BS5: 1 down, 2 to go

BS6: Roughly 85k remaining

BS7: One day, once school is done.