This thread is so fascinating! I've heard of David Ramsey, but never really looked into his method. It sounds very similar to what I have been doing, which has worked out really well for us. I just ran the numbers, and we have paid off $11,265 in cc debt since Jan '10 on a single income of roughly $35,000 gross (very gross ). Now, about half of that came from last year's tax refund, which gave us the jump start by paying off two cc, and using those payments to add to the next targeted card. I didn't always pay off the smallest balance cards first, but sort of did my own assessment including the minimum payments and interest rates when deciding which card I'd pay off next. So, I might hold onto a smaller balance card if I could free up a larger minimum payment to be able to use on the next, etc. We also ran into an unexpected expense when we discovered our surprise pregnancy was TWINS! and were able to pay our midwife fully in cash, as well as some necessary related expenses (new infant car seats...).
I have a few questions for the experienced here:
1. We have one card left, with a $4400 balance, and $4000 left from this years' refund. I'd like to keep $1000 for savings. We are also fixing up our house to hopefully be able to put on the market so that we can move closer to dh's work/school. He won't have time to work on the house until summer when he is off of school. I'm nervous about the money just sitting there, but if I put $3000 towards the card, I'm not certain we will fully pay off the card by June and be able to buy supplies with the extra money from the freed up payments. We could probably get by with $500 in savings, putting $3500 to the card which would allow me to pay off the thing in time. Then I'd refund our savings starting in Aug when the fall semester starts. What would you do?
2. Which of DR's books would you start with? Being so close to having eliminated all this CC debt, I am now starting to think about how much we should be saving. I'm excited to see a plan to work from rather than figure it out by myself!
3. I don't really have a budget. Dh's income fluctuates with him being on an hourly plus commission wage. Every check is kind of a surprise, sometimes good, sometimes not. LOL He delivers water and we should be moving from the low commission time of year into a higher commission, provided he doesn't lose more accounts in this economy. I've done amazingly well without a strict budget, but I need some help to work one out. I'd like to be able to know that school supplies and clothes for the kids are not going to be big hits to the finances, etc. I've been tracking our expenses with our credit union's finance software, which does include a budgeting tool, but every budget we've tried to work out in the past has been a massive fail. Where do I start?
I am so addicted to all the new little $0 balances in my accounts. Nice to find a group of people who understand!! We don't have a whole lot of wiggle room, but finally we are spending less than we make, and soon will be saving! Woohoo.