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Getting out of debt in SEPTEMBER!!

post #1 of 41
Thread Starter 


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

post #2 of 41
Thread Starter 

I'm loosing my $h*t over here...I find it hard to stick to a tight budget (when money's good and we have everything covered I can stick to the plan and save. When it's tight and we don't have enough to cover everything it blows up to "well, we had to bend the rules for this, so might as well get this, this, and this too while we're at it!") ....not to mention seasonal/life transitions always strain the budget without the decreased cash flow (as a teacher returning to a job there are lots of supplies and wardrobe pieces to consider). DH quit his job this week (because he's starting back to school) and my job is starting next week....unfortunately I don't see a paycheque until the END of September...it's going to get ugly before it gets better...(I just have to remember we're borrowing from our own savings at least, not going into debt, but I still don't like it!)



post #3 of 41

I'll join you!  I am following the Financial Freedom plan from the Millionaire Mind.  


My challenge this month is that I have a big ticket payment due in early October and I have been meaning to save a bit at a time and it just hasn't happened...so I am going to be scrounging, pinching, and saving to come up with the cash and may have to go a bit in debt to make it happen....


My goal for not getting into this predicament again is to continue to follow the FF steps (send 10% of money to retirement, long term savings, charity, and education) so that I won't get in this mess again.  If I had been putting away 10% in the long term savings all this time, I wouldn't have this deficit with respect to the big ticket item- I could just take it from there...so...in order not to find myself here again in 6 months...I am making myself put that money away.  But it is challenging for me because my instinct is to spend now and not worry about later..


I am working to change my financial blueprint and change these habits.  Yay!!

post #4 of 41

wave.gif  Still trying to get current on bills and setting money aside for heating as the colder weather will be here before we know it.  Not a ton of progress but hopeful that the extra shifts I've been working will help.  Happy September everyone!

post #5 of 41
Thread Starter 

Welcome love.gif


leomom, I haven't heard of that resource- I'll have to check it out!


Have you considered automatic transfers, so that on payday that 10% is already gone before you even know it's there? I'm trying that this month in hopes that it makes paying me first actually happen!


dziejen, yay on increasing income instead of having to borrow! 

post #6 of 41


I'll make a longer post when I get a free moment.  Happy September everybody!

post #7 of 41

We wrote out a Budget till Oct and think we can live by it . We put everything in it we could thing of . It will be super tight ! I have starting taking up babysitting jobs and will be putting money aside for food and gas  for the end of sept as if we pay the bills  due at that time we would have no food or gas money . This is the first time we are thinking ahead and know we need to start saving in order to get through the month .   If we make it this month a Debt of 540.00 will be paid !!!! And 225.00 of a 550.00 debt will be paid . Its money we bowwored from family and they are not being nice about it so we need them off our case !


Hope everyone has an amazing month !!

post #8 of 41

We're not following DR strictly, but the basic precepts really strike a tone with both dh and I. We've had an updated written budget for years, have cut just about everything down to the essentials, and have periodically gotten current on all bills. Because I've been ill and have had to stop working while incurring some pretty high medical debts, we keep cycling back to owing money every time we pay everything off.


However, September sees things turning around a bit! We lucked out in the hurricane and didn't experience any major damage to our house or property. We did lose most of our cold food. With a chest freezer of stored meals and homemade freezer jam, etc., that hurt -- I estimate we lost about $1000 in food, but I feel good that we were able to give a lot of it to friends who got power back sooner than we did. And we took advantage of the chance to really, really clean the frig and freezers and are slowly restocking.


By luck, I ran into one of dh's coworkers at a neighborhood board meeting over the summer and she mentioned a surgery she had recently and how glad she was that there was secondary insurance to cover the deductible. !!! It took some digging because this wasn't mentioned in any of dh's paperwork from his hiring or the current year's stack, but when asked directly, the HR head explained that the company offers a program to reimburse most of the deductible for hospital expenses since the deductible is so high. We've gotten hit with this every year he's been there. It's a $5000 deductible per individual family member *and* a $10,000 family deductible. He got the paperwork and I filled everything out, and we just got a check for nearly $5000 from my surgery earlier this year. Now we can pay off the latest round of hospital bills and get back on track with paying down our credit cards (which contain mostly medical debt at this point, too, and a couple large car repairs). I'm so stoked about this. Our goal is to get another $4000 paid off (the smallest credit card debt right now) and start snowballing the next one.

post #9 of 41

Question for your DR experts: Is there any reason we couldn't do Baby Steps 4 and 5 together, in one fell swoop, opening both accounts at once?  Provided that I have a good idea going in on how to budget it, I think we could swing it. Or is that a bad idea?

post #10 of 41

I'm not a regular but would enjoy writing out an update.


I consider myself on BS3 - debt is mortgage and student loan that can't be knocked out within whatever period DR says.


What we're doing:

- Building sinking funds

- Building fully lunded emergency fund

- Making some extra payments to both mortgage and student loans, but nothing (yet) that will exactly get us out of debt anytime soon.


I have been thinking about this for a while, and I've decided that once we have $10k in combination of FFEF and sinking funds, I will move to the next step. I know this isn't precisely DR because he wants you to have 3-6 months expenses in the FFEF alone, but I think getting the combination to 10k (and of course continually refunding the sinking funds) will satisfy my security enough to then put more effort into paying off the big debts plus starting to fund retirement again a little bit.


Right now we're paying about $25 a month extra into student loans and about $50 a month extra into the mortgage. DR likes to roll everything into one basket, and I totally get it and even agree when the loans are smaller, but I do not see us paying them off anytime in the foreseeable future, and I find I am "unable" to not contribute a bit to both. It just feels wrong. We're putting a variable amount per month into sinking funds, but it's in the "hundreds of dollars" range. We have a bit over $1300 in the emergency fund and it's not being funded as rapidly, but I like prioritizing the sinking funds so that I know that the emergency fund is almost untouchable. Some of my sinking funds are kind of emergency funds - like if the car breaks down, we have a fund for that. Or if we need to call the plumber, I've goot that too. Anything I can foresee happening is covered under the sinking funds except for job loss, which I consider under the emergency fund (which is obviously not nearly well enough funded for that, but we're making progress).


We've historically used the tax return every year to make a home improvement for long term savings - last year it was a wood stove, the year before that it was new windows, stuff like that. I've been thinking about solar hot water heating but DH decided this year to just put it all in savings. Therefore, I am confident that next February we'll be at the point where we can devote a lot more money toward debt repayment and also put a small amount into retirement too. (We have a very small retirement portolio but have stopped contributing for quite awhile).


Anyway, I'm a lot more optimistic about our plan than I used to be. I see our funds growing. Our net worth, as I've calculated it (I had to just pick a number for the value of our home, and I picked one that is less than the last appraisal given the market) is negative $500 today. We are so close to being in the black! That's maybe meaningless in a way but it's just a nice little milestone to pass. We'll pass that milestone in the next month I'm sure.

post #11 of 41
Originally Posted by Turquesa View Post

Question for your DR experts: Is there any reason we couldn't do Baby Steps 4 and 5 together, in one fell swoop, opening both accounts at once?  Provided that I have a good idea going in on how to budget it, I think we could swing it. Or is that a bad idea?

You can always of course do whatever you like, but yes, DR says a lot of people manage to work on these simultaneously. Go for it!


post #12 of 41

The posts here are so inspiring and I think it's great to see people at so many stages.  We are very slowly making progress around here.  Daily bills are getting paid, dh is on cooperating with me on buying only necessities and setting goals, and we are getting current medical bills taken care of rather than adding to the pile of unpaid bills that we have.


We have a long way to go but I am able to have a necessary dental procedure Thursday and pay the dentist outright and we have almost enough in the bank to pay for our wood pellets.  Our next goal is to pay for a full tank of oil since the weather here will be cold before we know it.  Those were the most important things on our list after basic food/shelter/bills. After that, we will keep continuing to put money towards an emergency fund.  I need to review Dave Ramsey's steps, this time with dh, but I am more optimistic than I have been in awhile.


Hope you all have a great weekend!


post #13 of 41

Bitter sweet that I feel the need to join again.


We have been on step 3/4 for a few years now and are back on step 2 at the moment.


Moved again, to Germany and we have had a super hard year as a family and financially. For medical reasons we have had to live separately from my husband for 7 months and he has made less than ideal financial decisions by himself. This has been a real wake up call that he really needs to understand finances in general in case I die, I have tried to school him in our specifics, because he still misses sweeping general idea. (For instance he did not get the difference in monthly payments from financing the whole car, or figuring out how to pay the $15,000 I wanted him to pay for the car and financing the rest)


So at this point we owe:


IRA Loan at 3%:  $20,000 (took out to buy a home in America, but never did so we are still technically saving this money)

New Car at 2.6% $38,000


Since we are now locked into the almost $800/month car payment (so many shades of yikes are going off in my mind right now) I am thinking of spending $5000 of what we were going to put on the car and maxing out his work retirement for the year. Then spending $3000 or much less on a commuter car and putting the other $10000+ toward our IRA loan. These are all still rough numbers as I am not yet where we will live.


What are your thoughts?

post #14 of 41

Another blow to the snowball this month:  opened the bill from dd's allergy test . . . our share, a whopping $1300!  And that's right after the $1100 we paid out of this paycheck for repairs to dh's car.  Mine goes in tomorrow and I'm shuddering at the thought.  The upside is that some portion of that bill will be covered by HSA contributions.  I just need to check and see what the balance in that account is.  I was so hoping to have the balance of the 401(k) loan paid off this month.


ETA:  Good news!  I went online to check the HSA account and saw that there was another beneficiary report regarding my daughter's visit. It was showing a much lower bill than was sitting on my desk.  It was dated 9/9.  I called the hospital and confirmed that on 9/11, the hospital received another payment from the insurance company lowering our bill to $257.70.  I was so happy to learn that, I paid the bill over the phone out of the HSA account! 


Back on track! Hopefully the car service won't bring me back down.

Edited by honeybunmom - 9/12/11 at 1:34pm
post #15 of 41

Hey everyone, I've been subbing for a while, but I figured I'd say hello.  We just got current on our utilities and I have another $500 in medical bills I need to catch up on, and then we need can move onto starting a EF (again, for about the 10th time.....)  I've used the snowball before to pay down credit cards, but we still have some loans from family, school loans, and the mortgage hanging over our heads, and have never had more then a month or two of living expenses saved.

post #16 of 41

We are upto date with bills and paid off the 499 loan to a friend!  Excited to get this off my back .


We have also not taken out anymore debts ! Witch is huge for us !!! And we paid off  late fees to 2 diffrent bills as well .



post #17 of 41

Wooohoo!!!  I just completed the transfer to pay off our last CC.  I had to pull a little out of our sinking funds to do it, but I just don't want to have another payment next month.  I want to be done.   (course there's always that extra little bit of interest the following month) We have more than double the EF in savings anyway, and what I pulled out is the same as our debt snowball for next month, so that will just go back in then.  We are officially on BS3!!!!


We already have started our sinking fund for vehicle replacement.  We will start looking to replace our family van next Feb/March when the tax refund rolls in.  If the numbers play right, we will hopefully also have enough to replace DHs commuter car, but that might take a few more months depending on how much we actually spend on the van.  These purchases should last us the next 10-15 years, because we drive until the wheels fall off.  The doors literally fell off the van we are currently driving, and have been replaced with junk yard doors. lol


We are less than $1000 away from being able to drop PMI.  I am going to push our snowball in this direction next.  We also still have a small education loan, but I'm not going to worry about that right now.  We are planning to sell our house in the next year and then we'll work on that loan.  We possibly will have enough from that sale to pay it off.  If not, the following tax return will take care of it.


One question for you finance wizards out there.  My sleep deprived brain cannot properly analyze this myself right now, and I have little experience with these things.  This was our first home we ever bought.  We have a second mortgage which just got refinanced because it hit the end of it's term.  The payment on this doubled, which will wipe out any savings from the PMI being dropped.  We're not talking huge amounts.  The PMI is $44.  The second mortgage payment was $36 and is now $65.  Our principal mortgage is currently $58,360 at 5.5% interest.  The second is $19,414.  I can't find the interest rate on that right now, but we're basically making interest only payments.  That last fact is what frustrates me.  Dh and I have been discussing whether it would be a good idea to roll these into one mortgage and refinance.  Our credit scores are good to excellent, we have little debt to income so we could probably get a lower rate and payment.  If we were staying in this house I would do it in a heartbeat.  But we are possibly moving in a year, so I doubt it would be wise.  What say you?  Is it worth looking in to, or should we just stay on track?  I assume there would be fees attached to refinancing which would wipe out any short term benefits, but maybe there is a way around that?  We belong to a credit union, but I don't know what they might offer.


ETA: I've been playing around with some calculators and our current payment comes out right if you plug in 6% rather than 5.5%.  

Edited by mylilmonkeys - 9/16/11 at 11:44am
post #18 of 41

congratulations mylilmonkeys on becoming debt free!!!!!!!!!!!!!!!!!!!!


I haven't chimed in yet this month because I don't have much to report. I'm still on disability, unfortunately. I hope to go back to work at the end of the month.

post #19 of 41
Originally Posted by trekkingirl View Post

congratulations mylilmonkeys on becoming debt free!!!!!!!!!!!!!!!!!!!!


I haven't chimed in yet this month because I don't have much to report. I'm still on disability, unfortunately. I hope to go back to work at the end of the month.

Thanks!  Dh's check was $200 less than last paycheck, so we are officially entering the belt-tightening portion of the year (he delivers bottled water, semi-commission).  A week after we turned off our AC, we are needing to turn on the furnace.  Ack!  Another reason I needed to pay off the CC sooner rather than later.


Hope you can get back to work soon!  We've had a lot of stops and starts in our process, too.  Keep being as persistent as you are able, and you will eventually see progress.  It all really starts in your attitude about money, so that you are no longer digging a deeper hole than necessary.  



post #20 of 41

So I mentioned a while back that I would be getting paid to be watched on MDC by the company that redesigned the forums. they did their field test today in my house. My last post earlier today was part of the study. They paid me nicely for just an hours work. If any of you are in the San Francisco bay area I would look into doing the study. Really, you get paid to be on MDC. How awesome is that. The person doing the study said he has had a hard time finding people that are interested. I was shocked! Who wouldn't want to get paid to go on MDC?

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