So much good info here! Haven't updated in awhile and things are looking up - we got our taxes back and were able to pay off a sizeable overdraft loan we had at our bank, pay off a credit card that was in collections, and another card with a pretty small balance. We also were able to open a savings acct and put enough money in so that we aren't charged the $7 a month we were being charged for our checking acct having a low balance. That savings acct is our emergency fund. We are current on our bills and other than our utilities/monthly expenses we have our mortgage, a car payment, and one more sizeable credit card that has been in collection for a long time. We just received some unexpected cash and I would like to take it and see if we can settle with the creditor who owns our debt for the credit card. Is this a smart move? Why or why not? I figure this is the last time for awhile that we will have a sum of cash and would like to see if we can close this debt out. Also, dh feels we can refinance the car loan if we take out a loan together (right now the car and the loan is in his name) and in doing so can lower the payments (our loan payment for our 2008 vehicle is at 10% for 72 months which is not great at all). I don't know much about this at all and don't know where to start with this. I would love any thoughts or experiences you might share. I am anxious to make some more progress with these things. Other than old medical bills we are working our way though our debts this month - I never thought this day would come!
Getting out of debt in FEBRUARY, 2012!!! - Page 5
The kicker is that in a year we'll be fine to manage it on our own.
We'll meet with the bank and see how numbers work out, but I've decided I won't be heart-broken if they don't. It really would take a bunch of pieces falling miraculously in place in order for this idea to actually work.
So, we're biting the bullet and taking a risk and getting messy. It will be official as of tomorrow. The home we own was assessed significantly higher than what we paid for it, so we're able to us the equity from that as a down payment. I know it's not very DR of us, but I really do think it's a good move. The quality of life will just be exponentially greater and we'll be paying off our mortgage vs. paying rent in the mean time. Even if some poop hits the fan this year we'll be able to recover quickly next year. So, we're jumping in and keeping our fingers crossed that we'll take care of what we need to take care of (keeping our house rented out as well as renting out the basement of this purchase). So long as those two things stay consistent we'll be A-Okay!
Assuming that 1) you planned to pay the debt (which I think is a safe assumption, but just spelling it out) and 2) you have at least $1000 as a baby emergency fund and 3) you don't have a foreseeable emergency on the horizon, this seems like a very good move.
The car loan sounds terrible indeed. I don't have a lot of thoughts on the refi except - how much will it cost out of pocket, if anything, to do it? I assume there's a catch somewhere. Is the car too expensive for you, would you consider getting rid of it and buying a clunker until you can pay cash for a swank vehicle?
My doctor finally wrote me back to work! I'm hoping to get going and make way more money than I did last year with maternity leave and disability. I am signing up as an in home care worker for my step dad who has cancer. I'm starting back at my regular job next weekend! I'm really excited and ready to knock out this debt!
Just to round out the month, it's been one of up and downs. We went over budget in a lot of areas due to unexpected expenses (needed new brakes and rotors for the second year in a row because the mechanic last year put our tires back on wrong which ate through the rotors, FIL entered into a nursing home an hour drive away, and the transition has been rough, which means we're going out a couple of times a week... far more gas than budgeted for, plus all the misc expenses associeted with being away from home a couple days a week, etc.). Our debt snowball basically went to cover the difference, which was frustrating. On the other hand, I got some extra shifts at work, which did go to debt. So, some progress, but I think we're all pretty exhausted.
This next month we'll be a bit flush, because it's DH's last pay coming through after his layoff, but we don't have to pay for childcare because he's home. All of the extra will go to debt.
Again, I am so incredibly thankful that we started when we did -- what would have been a disaster six months ago was really just a bump in the road after months of aggressive debt repayment. I'm also thankful for how easy it has become to communicate about money now that we have a written budget. Conversations like we were having last month would have been so incredibly stressful if we weren't used to talking about money and didn't have a spreadsheet as a starting point. Now, we just sit down and figure out what needs to be cut back in order to do the things that we need to do.
Thanks ladies for all your support and encouragement!!!
Sorry, I don't remember (or didn't see) the back story - but seeing your DH is laid off, just questioning if you wanted to put the money toward debt instead of savings right now? Or do you have the income issue settled already?
We have the income issue settled pretty well -- I read the Two Income Trap a while back, and subsequently we reordered our finances to live off one salary with the other salary going to debt (we started in October). Plus, last month I got a raise at work. So we're okay. One of the reasons I think paying off debt with the DR style debt snowball (lowest balance to highest) is that if we hadn't done it in that order, we would be in real trouble now.... I just never thought of it before DH got laid off, you know?
You're totally right, though, if we weren't okay with just this one income I'd put the extra into an emergency fund and prioritize that over debts.