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April Get Out of Debt

post #1 of 37
Thread Starter 

I can't believe it's April already. So many great updates in March, lots of people moving into bs3. If you want to get out of debt and start saving this is the thread for you.  Some 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: 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 deductibles 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: http://www.daveramsey.com or if you want a good DR discussion forum, www.llnoe.com is good but hardcore. Gail vax Oxlade's Til Debt do Us Part is great tv show, very motivating. Her website is: http://gailvazoxlade.com/blog Please join us!

post #2 of 37

Wow, April!  Crazy... I guess we are technically somewhere around BS2?  We have 1 CC with a balance (a planned balance, 0% interest on a large appliance purchase, as well as an additional discount for using said store card) that will be paid off in a few months.  We have my student loans but they are on the IBR plan and our current "payment" is 0 dollars a month. Our $1000 dollar EF should be finished in the next few weeks, tho that is kind of dependent on how much we spend during DH's RnR... and I am not going to put a cap on that right now though we obviously won't go crazy. We will be spending a lot on gas visiting family and stuff tho.

 

Anyway... We are moving in a month (ACK) so after that I will reasses finances and make some new goals.

 

post #3 of 37
Woo hoo! Dh and I are officially on board. Although not exact to DR, we put $500 in EF with $500 to go in next paycheck since rent is due. We also just paid off our first CC!!! (posting from phone or else there would be lots of smiley faces!) As a symbol of our joint responsibility, we chose to pay this card off first since it was only in my name. In other words, we both accrued the debt but only I was taking the hit on my credit report. Now we are both equally sharing all the debt. I figured it was a small deviation for something that was really important to dh.

Also super exciting is that DH now has health insurance for the first time in years!!!! It's such a huge relief!!! It really frees up mental space to focus on reducing debt (instead of hopelessly fearing all the what ifs).

This is the first time in our 15 year relationship where I've really felt we are on the same page. It's amazing what a kid can do for your marriage ;0). Snowball mode in full effect!
post #4 of 37

Trying to get out of debt but we are really feeling the pinch now. DH does not have a job yet and things are piling up. I am focussing on the main areas first as per DR since we are in crisis mode. Funnily I am not panicking yet (I would have before). I am realizing how wasteful we were before this financially. It is new for me to not be able to pick up/do little things. My DS's end of year hockey party has been changed to a restaurant and we have been told that what little money is left from fundraising will be divvied up to help offset the cost. Unless it is free we cannot afford it right now. But the person who set it up has spent 10000 dollars on vacations internationally in the last 3 months. Sigh. Just needed to vent. We are keeping up and I have paid off a credit card and closed the account. Yahoo!

post #5 of 37

Hello!  We are on baby step 3.  We're hoping to have close to five months of expenses saved by the end of the year, though I'd really really love to have it done before then.  I feel like we've lost some of our gas, and it's hard finding it again, you know?  Anyone else experience this?

 

Here are our goals for the next year or two:

 

1.  Get as much 3 - 6 months worth of expenses as the rest of this year will allow.

2.  Assuming there is a 2011 raise at the end of the year, bump our 401k up to 10% from 8%.

3.  At beginning of 2012, pay down mortgage to get rid of PMI.  Cannot wait to do this.

4.  Spend rest of the year saving for vehicle.

5.  Max out 401k

 

Lots of things to be spending our money on in the next couple of years.  I'm praying that we can remain focused.  Assuming nothing major changes in our finances, I am confident we will be in a much better place financially in a couple of years.  Looking forward to it. :)

post #6 of 37

I'm loving small-apartment living!! It's so simple in so many ways (financially, materialistically, and it's nice to be busy doing your own thing, but still be together). We've cut our living expenses in half. Once I start working full time permanently in the fall (with DH going to school) we'll be spending 25% of our income on housing (which is the best ratio we've ever had- we've always stretched ourselves thin)

 

post #7 of 37

Happy April to y'all!  Our house hunt continues.  We have a sizeable down payment and are excited to stop paying rent and get back out on our own ( we rent one of my mil's homes, and yes, we pay rent with no break).  I am thinking since our debt is dh's student loans, and they are quite large, I may consider us in a different baby step.  When we get the house, we will get that paid off before the student loans because we live in a low COL area and we want to make sure our housing is secure.  I am going to start our 3-6 mos. FFEF and we have our vacation for the summer funded already!  Anyways, input on our bs??? would you move on?  I just think since the loans are more than what our mortgage would be and will take longer, might as well.  I hate the thought of being stuck on a step for a really long time, and I am not strict dr anyways. 

 

I am really looking forward to getting out of this house though.  We looked at a house sat. that comes with 4 acres!! The house is in great shape and comes with a wood furnace and we have our fuel on the property, which would save us so much in heating costs.  I am hoping to get an offer in this week!  With our down payment, our mo. mortgage would only be around $300/mo!!!  For a family of 8 that is really awesome! 

post #8 of 37

Hello, I'm Amber SAHM to 4. I'd like to jump on board this month. I'm excited to be making progress to become debt free! For the first time ever I earned interest in my savings account last month! Yay!!! I figure I'll just let that $0.50 keep on growing! In addition to funding my EF last month, I started sinking funds for all the major upcoming events I can think of for the year. It's not much, but I'm really glad to be making progress.

 

BS0: We already live very frugally, and all the bills are on time/paid ahead!

BS1: $1000 EF : Complete!

BS2: I have two old credit card debts, in collections (For what it's worth, I used them to pay for basic necessities after my ex-husband moved in with another woman, leaving me with a 6 week old and two preschoolers about 3.5 years ago). I've been trying to settle/negotiate these debts as the collection costs have just about doubled both of them. They are currently at 1800 and 1500. I was able to negotiate and settle other debts, but I'm not having luck here. Until these companies will work with me, I'm concentrating on paying down my student loans (4,800 and 2,200). I'd like to get the smaller loan paid this year. It's not fast progress, but I have a very limited income to work with.

 

Good Luck Everyone!

post #9 of 37

 

Happy April!

 

chely - Enjoy your husband's RnR!  When does it start?  Good luck on the upcoming move.

 

Sfcmama - Welcome, some folks here follow DR strictly and some do a modified plan.  Support towards meeting our financial goals is the common theme, though, so welcome!  Yay for your DH getting insurance and being on the same financial page.

 

Mamatowill - Good luck to your DH in the job search.  How long has he been out of work? Is he receiving unemployment?  

 

Imamomx2 - I like the goals you've laid out, this should help keep you on track and prevent that running out of gas feeling again.  We're new to BS3 so I still feel like we're charging forward.  

 

eirual - Great to hear that the transition to the smaller place is going so well!!  Amazing that you were able to cut your expenses in half - woo!!

 

Stanleymama - Good luck on your house hunt!  I see people move student loans to DR's Baby Step 6 - of course the die-hard followers don't but many people consider student loans to be like a mortgage so continue on to BS3 while still paying minimums on the student loans.  If you kept the student loans in BS2, how long would it take to pay off?  It sounds like it would be many years so I'd probably consider myself in BS3+.  

 

ArtsyMomma - Welcome!  Good luck getting those two old companies to settle - sounds like you know what you're doing with regards to negotiations, hopefully they will come around soon!

 

This is our first month without BS2 debt and it was fun to make the budget, yes I said making a budget was fun.  LOL  I'm still trying to figure out what amount I want to have in my FFEF.  Once I figure that out, I'll start tracking it monthly with percentage towards goal, etc.  I know the recommendation is 3-6 months of expenses - I just need to figure out what I'm comfortable with.  Right now we have almost 3 months of expenses because I paused the snowball in late 2010 to pile up some cash (security gland issue).

 

I'm also looking forward to BS4.  My husband contributes 6% to his 401k already but I'm not sure how to progress towards the Dave Ramsey recommendation of 15%.  If he maxes out his 401k and then maxes out an individual IRA account then we still don't reach the 15% mark.  That means we'd need to put the remaining 3-4% into a non tax-preferred account and just call it "retirement" savings.  I don't know how to do this, though.  II think I need to consult with a professional so I don't mess it up.  

 
post #10 of 37

MytwoAs-- it would take a long time to pay off all the loans.  they equal around $150k ( law school and masters degree).  We have one on IBR that is $0 and are looking to put another one on IBR which would make it $0 also.  We are currenlty paying on the private loans and if we didn't buy a house, we could pay them off in 5 years.  BUT I do not want to rent my mil's house for the next 5 years where, I can not make it my home.  I can't even turn a bedroom into a room for my boys.  She won't let me move any of her stuff.. so frustrating.  We have a large down payment and could buy a house and have it paid off in a few years.  I would like to do that and then pay down the private loans after we have the FFEF in place.  I think this is best for us because if we ever went through another hardship, those student loans could be put on hold, but our mortgage couldn't.  So consider me BS3+ and our ffef is around 30% funded.  This will be a slow haul because we may have to dip into it and I will focus more on paying off the mortgage than fully funding it.  But hey, we are getting somewhere :D 

 

OH and house hunting is oh so frustrating!!!  The home we found on the 4 acres.. well, they showed us the wrong map and the 4 acres are not the nicely wooded ones that we saw, but ones that are prone to flooding... So now we need to find out if this house has a history of flooding and if so, how bad.  We found a short sale, but it needs a new well.  We may wait for that to go into foreclosure and see if it goes for cheap.  Decisions, decisions. UGH!

post #11 of 37

Oh and Chely...emjoy your RnR with your hubby!!!

post #12 of 37

Stanleymama - That's right, I remember discussing this before.  Yes that is mortgage-sized debt IMO and if it were me I'd put it in BS6.  Frustrating about the house situation - at least you learned about the flooding acres vs. wooded acres before you'd closed on the deal.

post #13 of 37

Hi!

I posted at the very end of March.  I've been looking, trying to find a copy of Total Money Makeover, with no luck.  It is checked out of all the area libraries, the book store only had the workbook (and I'd rather not pay full price either), and the two I tried to buy through half.com got canceled due to not actually having the book in stock.  Geez.  We're on a hold list at the library, so who knows how long it will take to actually get a book.

 

Anyway.  We are down to paying off our last cc with a balance of $900, from having a total of 7 with balances averaging around $2000 each last year.  I expect to have our EF, finish off the CC and start working increasing our savings by August, but hopefully sooner depending on how dh's variable income works out.  We should also be able to drop our PMI just as soon as we finish up some DIY projects so we can get a new appraisal on our home done.  Mostly it is drywall finishing, trimwork and painting, with some flooring in the kitchen.  It will be DH's second job this summer, while he is off school.  We do have one school loan (just under $6000) and a second mortgage that I haven't quite decided when to tackle.  I think we need to save up for a new (to us) van purchase next year, as ours is 16 yo and slowly expiring, and our roof needs to be done before worrying about these rather small monthly payments.  

 

So, we are very close to BS3.  I'm excited to get there, as I like to save money but we have never been in the position to be able to do so in our whole marriage until now.

post #14 of 37

Well... our finishing the baby EF plans have come to a halt as we are only getting paid half a pay check because the powers that be can not agree on a budget.  Hopefully they figure it out in the next week and a half so we get paid the first... if not we are SO screwed.


 

post #15 of 37
Quote:
Originally Posted by chely7425 View Post

Well... our finishing the baby EF plans have come to a halt as we are only getting paid half a pay check because the powers that be can not agree on a budget.  Hopefully they figure it out in the next week and a half so we get paid the first... if not we are SO screwed.


 


Do y'all work for the federal government?  wink1.gif  Seriously, I'm sorry you've been thrown this curve ball.  Let us know if you need any help getting through the "so screwed" part.  greensad.gif

 

post #16 of 37

I'm starting BS4 and have been lagging.  I don't have a first clue about shopping for a Roth IRA.  In my mind, a good IRA means as few fees as possible, but obviously I also want to get one that's reputable and without any other "hitches."

 

The other thing I struggle with is the investing angle.  I can be really critical of a lot of corporations and their practices.  I know from various anecdotes that "ethical," "green," and "socially conscious" investing hasn't yielded good returns.  (For example, I'd love to invest in wind power, but for all of the high-sounding optimism about it, it hasn't really taken off in the past few decades).  I have heard that sometimes investing in the crappier corporations can be a good thing because as a shareholder, you can call for change.  Something like this, maybe? 

 

Anyway, it seems that most of our posters are in BS 1-3, but I thought I'd ramble a little.  lol.gif

post #17 of 37

Thankfully it sounds like we *should* be getting our full paycheck on the 15th.. And as long as they approve the budget that is on the table we are good for now.  My husband is Army and he is our sole paycheck so... yeah, him not getting paid would be really problematic!!  Still not sure if we will be adding anything to savings this pay period due to some extra RnR expenses but at least nothing is going on a CC!!


 

post #18 of 37

I'm assuming no news is good news with everyone.

 

Not much going on here. We're spending like crazy as we settle in, but thankfully it's also been a month with lots of extra income coming in. I'm certain things will slow down in May (April saw a move, a change in weather, and a new job!).

post #19 of 37

I just joined last month, but wanted to say that I sent in the last car payment last week, so we officially own our 2 cars free and clear! Moving on to the last debt in the snowball, before the big one (student loan). Yippee! Another positive note is that we have saved enough at the same time for our summer activities, including a road trip. I know you're not supposed to do stuff like that in the DR plan, but we've modified it to suit our needs/wants.

post #20 of 37
Quote:
Originally Posted by chely7425 View Post

Thankfully it sounds like we *should* be getting our full paycheck on the 15th.. And as long as they approve the budget that is on the table we are good for now.  My husband is Army and he is our sole paycheck so... yeah, him not getting paid would be really problematic!!  Still not sure if we will be adding anything to savings this pay period due to some extra RnR expenses but at least nothing is going on a CC!!


 



Glad to hear this! My bro is NG & was concerned about this due to the many families he knows that would be affected.

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