Getting out of debt in AUGUST!!

[eirual]

Do you want to get out of debt? Start living on a budget? Be able to start saving? Then 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 are welcome!

Here's DR's plan:

Pre-Step 1: Get current on your debts and do a budget
0.1 No new borrowing.
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) to help snowball
0.7 Cut lifestyle (Cut cable, cell, extras, eating out) and/or get a second job to raise $1000 EF.
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
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

BS2 Pay off all debt using the Debt Snowball
2.0 Do the debt snowball, paying all your debts from lowest BALANCE to highest.

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 Others like Suze Orman or Mary Hunt, really doesn't matter whose method you use, just start the process to getting out of debt.

[mylilmonkeys]

Thank you, eirual!  I agree, July slipped by too fast, and I'm afraid August will fly faster!

Our progress:  In July we completed BS1.  We are about 2-3 months from completing BS2, except for my dh's student loan which I'm sort of ignoring for now.  We need to replace our vehicles before they die, so I have started on BS3.1.  My goals this month are another $330 in our car fund and tie up as many of our house projects as possible since DH goes back to school this month.  He's starting his last year, and thankfully has managed to get four needed classes for his degree, and please God, will finish the spring semester if the classes fall in the right timing.  It's been difficult since he only can use after work hours.  

I have one kid's back to school clothes purchased, the oldest and most expensive.  I'm planning to buy material and sew pants for my younger boys, for their uniforms and my daughter is staying home doing a virtual charter, and always has an abundance of hand-me-downs anyway.  School supplies will be shopped for in a few weeks.  

[PPK]

Congrats on completing BS1!

Sadly, I need to get bumped to PreStep 1:(  Hope to get some good progress between now and Thanksgiving/Christmas time though..

[honeybunmom]

Happy August everyone!!! Yesterday I sent off payment for two of the three special assessments on our condo, which is currently rented.  Very happy about that!  Later this month, I expect to pay off the balance owed on the 401(k) loan I have.  This is what debt we had (not included our mortgages) as of the beginning of July:

B of A Credit Card: $3,971.75

Amex Credit Card: $5,552.60

Chase Credit Card: $2,000.00

401(k) Loan:          $2,341.09

School Loan #1:   $19,256.13

School Loan #2:     $3,743,89

Plumbing As'ment: $3,729.88

Window As'ment:   $842.89

Boiler As'ment:      $1036.09

We also switched to an envelope system last pay period and that helped immensely with our overspending.  We had money left over in the Kid Activity, Kid Treats and Dining Out envelopes!

Additionally, we received the return of my overpayment into FICA (I switched jobs last year and the withdrawals had to start all over).  With that, we bought tickets for the kids and I to go on vacation with my mom - she pays for the house (and sent me $200 to help with our expenses.  Love her!!), put money aside for the balance of their tuition due in August and money aside for my husband's tuition which will also be due in August.

We also changed our mobile phone plan, which we consistently went over on, sometimes to the tune of $225 total.  Now we're on the unlimited data and phone package for $140.

Getting better!

[Siennaflower]

Jumping in.

We are back to BS1 this month.  Dh's family has had a lot going on so he's been traveling back and forth from VA to SC pretty much every other weekend the last couple months and that has eaten into our budget quite a bit.  Hopefully things will be back to normal soon and we can get back on plan.  I have a job interview tomorrow and I'm crossing my fingers that they can give me nights and weekends so I can work opposite dh and we won't have to put dd2 in day care.  We really need the extra $$ to go towards paying off debt.  We could be on BS3 in under a year if everything works out!

[trekkingirl]

it feels like we are so past the point of not making it..... my DH is so frustrated he wants to let the car get repo'd and stop paying the cards. We are still paying $200 a mo to our smallest card and it should be paid off by Feb. I had to use some of our BEF because I only had 30 hours on my last paycheck instead of 50 because business has been so slow. To make matters worse, I injured my back and am now out on disability and who knows how long or when they will decide to pay me. I might have to get surgery, but at least I have health insurance so that should only cost $100 co pay. My BEF is now down to $100 and I think I just entered emergency mode w the disabilty and being out of work.

the real problem is that our rent is way more than we can afford, but it really is the cheapest aound here. At least I have my faith and despite all of what I'm going through, I'm sure we'll make it.

[imamomx2]

I feel like since we got out of baby step 2 things have been slow moving.  I think part of that was due to lack of desire.  Also because we splurged on some things to celebrate being out of debt.  Now we're realizing it's time to get serious again.  As of right now, we have about $3500 in savings.  I was hoping to get kinda crazy with our savings this month - much like we did when we were paying off my student loans, but then our car required a $500 repair.  Ugh.  I am hoping that we will still be able to put $600 in savings, but we'll see.  Thinking that we might be saving for a car sooner than I was hoping to...

[mylilmonkeys]

Originally Posted by imamomx2 
 Thinking that we might be saving for a car sooner than I was hoping to...

Yeah, having to save for a vehicle really slows down progress!  My financial tracking program projects that we'd be through BS3 in a year if we continue saving what I have been the last couple months.  Sad fact is, most of that is going into the new car fund for now.  I'm also worried about dh's vehicle which is acting like the transmission may be failing.  I really didn't want to have to replace two vehicles next year!

[mylilmonkeys]

Originally Posted by trekkingirl 

At least I have my faith and despite all of what I'm going through, I'm sure we'll make it.

We've lived through many years where it seemed we only got by on faith and hope.  Take heart in the progress you're making on that one card.  It seemed like the first one was the hardest!  We only really got going when we could use our tax refund to pay one card off, and then we could snowball.  Now, we are so used to living on so very, very little that saving a large chunk of our income is fairly easy.  No one misses it.  We're living better now than we ever have.  You'll get there, just keep making baby steps.  

I hope your back feels better soon!

[trekkingirl]

thanks mylilmonkeys

how long have you been pluggin away? I was thinkin we had started our out of debt journey around the same time? I've only been at it for a few months.

[imamomx2]

Originally Posted by trekkingirl 

it feels like we are so past the point of not making it..... my DH is so frustrated he wants to let the car get repo'd and stop paying the cards. We are still paying $200 a mo to our smallest card and it should be paid off by Feb. I had to use some of our BEF because I only had 30 hours on my last paycheck instead of 50 because business has been so slow. To make matters worse, I injured my back and am now out on disability and who knows how long or when they will decide to pay me. I might have to get surgery, but at least I have health insurance so that should only cost $100 co pay. My BEF is now down to $100 and I think I just entered emergency mode w the disabilty and being out of work.

the real problem is that our rent is way more than we can afford, but it really is the cheapest aound here. At least I have my faith and despite all of what I'm going through, I'm sure we'll make it.

I really feel for you.  My husband and I were in very difficult times five or six years ago - and I remember feeling like the stress and financial burdens were suffocating.  I'll be praying that a breath of fresh air will come your way soon.

[imamomx2]

Originally Posted by mylilmonkeys 

We've lived through many years where it seemed we only got by on faith and hope.  Take heart in the progress you're making on that one card.  It seemed like the first one was the hardest!  We only really got going when we could use our tax refund to pay one card off, and then we could snowball.  Now, we are so used to living on so very, very little that saving a large chunk of our income is fairly easy.  No one misses it.  We're living better now than we ever have.  You'll get there, just keep making baby steps.  

I hope your back feels better soon!

Originally Posted by mylilmonkeys 

Yeah, having to save for a vehicle really slows down progress!  My financial tracking program projects that we'd be through BS3 in a year if we continue saving what I have been the last couple months.  Sad fact is, most of that is going into the new car fund for now.  I'm also worried about dh's vehicle which is acting like the transmission may be failing.  I really didn't want to have to replace two vehicles next year!

At few years ago we were saving and saving for a down payment for our house when suddenly my saturn broke in our daycare worker's driveway, and it was beyond repair.  And then our sebring needed a new transmission.  Ah!  We emptied our savings buying a car and repairing our other.  It was so frustrating, but at least we had the cash in the bank!  Good luck.  Let's hope and pray our cars last longer than we fear. :)

[trekkingirl]

thanks Imamomx2

[mylilmonkeys]

trekkingirl - It's a rather complicated answer.  My husband was in charge of the finances for many years, and really didn't know what he was doing.  He didn't want to communicate about it either, so while I knew we were in a bad place, I didn't know the details or amount, but I was sick and tired of the phone calls on late bills, and threats of utility shut offs, etc.  I finally insisted strongly enough that we sit down and look at everything together and then took over the management of it about 2 years ago.  It was a bumpy few months since more was going out than coming in, until our tax refund that following winter.  I took half of that and was able to pay off our two medium sized balances and the rest went to the house.  From there, I took everything we had and put it towards the debts, probably too much on some occasions, but we made it work.  Then I started snowballing.  I got the lowest balance paid off next, a month or two later.  I just did what looked like it would work, mostly trying to free up the greatest amount of cash the fastest I could.  I didn't know about Dave Ramsey's method until coming here several months ago, so I didn't start an EF.  I put money into savings when I could, but it would often come right back out the next month.  We had the advantage of finally both being on the same page, and I made sure to communicate everything as I went.  Also, since our CCs had been maxed or nearly so for so long, we had also gotten used to living without charging stuff.  I started posting here when we got down to the last card and I was trying to figure out our next step.  Then I decided to focus more on the EF.  DH did not get any sort of raise for about the last three years, and then they recently rewrote their employee contracts and fired a couple employees.  He drives routes and earns partial commission, so his income has gone up a few hundred dollars a pay check the last couple months.  All that went straight to the EF, so it didn't take too long to build.  Plus we still have a ton of work to get this house up to saleable condition.  We're trying to move in the next 1-2 years.  So currently, I have one balance left at 0%, and just completed our EF.  We just finished reading TMM so we'll try to stick to that plan for the most part.

We don't have a lot of income, since we are a family of 10 on a single income.  But the advantage of having lived on such a tight shoestring for years means that we're used to having no spending money and making due.  So the little bit I budget for spending goes a long way and I'm now saving what used to go to CC payments.  It really does get easier once you make headway on that first one.

[trekkingirl]

Oh ok, I see why it seemed things were going a lot smoother and a lot faster in your neck of the woods. Wow, a family of ten! That must be hard on the pocketbook. My DH is helping me with getting out of debt but I haven't been able to get him to live on a budget. Things are real tight, and I guess that's why I'm not pushing the issue. It's not like there is anything to blow money on. He called me to apologize for spending $10 on his lunch at work the other day. I told him it was fine and he said no I was only supposed to spend $6

[eirual]

Trekkingirl, I wish you all the best- it does seem like a lot to trudge through. I hope some major "ah-ha!" moment is quick to come your way and be your light at the end of the tunnel.

For us, we're still far from stable financially-speaking. I've been out of work this summer, and come September I'll return to work and DH will be starting back to school (again). I have a rough idea of what my income will be, but until you see what you net, it's hard to feel comfortable in your projected budget. Things are going to be tighter than what I was hoping for- there will be NO wiggle room. We'll have to play it smart and both look for ways to bring in some extra income. We'll have to see what DH's schedule is like too, he's hoping he'll have the time to work part time which would make a HUGE difference. 

I'm super happy we've opted for our tiny 1BR apartment though- any higher rent and we'd have to borrow to make it work.

I've made it my goal to "find" more money and so far, so good. We've ditched our phone ($20/mo) for Magic Jack ($30/yr), we've switched auto insurance companies ($104/mo to $87/mo.) and are looking to switch over home, and life insurance as well (which are both cheaper through this new insurance company, not to mention discounts for having more insurance with one company)....so that should hopefully save another ~$20ish/mo. I paid to cancel my gym membership which I haven't used in 3 mos ($40/mo...and believe you me, I am DONE with ANYTHING that requires a contract!!). Next up: cheaper cell phone option ($15/mo, but some how I keep going over, even though I feel I hardly use the thing so it ends up being $30-$45/mo which is flaming ridiculous!). Total monthly savings to date: $75/mo...

[_ktg_]

jumping back in and re-subscribing to get back on the bandwagon of savings and moving ourselves out of debt!!

[eirual]

, ktg!

Today I set up automatic savings deposits for the $75 we'll be saving so it doesn't flutter away.

[eirual]

Oh, and a little VENT!!

When calling the phone company to cancel our service (after multiple price increases and crappy call quality and customer service) all of a sudden they're saying they'll try to improve their service and will put us back down to the $9.99/mo yadda yadda yadda...

When companies take you for a ride, then want to please you only when you threaten taking your business elsewhere, it drives me batty! Why not offer your customers the best only because it's fair and it's what they deserve? This whole, take 'em for what they've got, and only cave when they threaten to walk thing irks me....makes me wonder how much of my money they've already taken if they can offer me the same thing for significantly less once I raise a stink. argh....

Goes to show it NEVER hurts to ask for price reductions or if that's the best they can offer and to stay on top of/protest price increases. I was actually kind of okay with the price increase because they said they were upgrading their equipment to provide better service, but I never noticed any improvement, which was the breaking point for us and lead us to take our business elsewhere.

[trekkingirl]

I had the opposite experience!

I canceled my cable because I don't like what they offer and it costs way too much. It was starting to have a negative impact on my kids. Anyways, so I called and took off the $40 per mo for my cable and the woman on the phone says....that's fine but your $25 internet is now going to cost you $47 for the same service.

I laughed and said wow you guys are really funny. 12 years of being a good customer without one late payment and that's the thanks I get? Good riddens. Now I need to find a better internet provider with a decent price. Any ideas?