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Getting out of Debt in JULY!!

post #1 of 30
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, http://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 30
Thread Starter 

OK guys, we are now a solid week into JULY! Time to declare our independence from the debilitating effects of Debt!

 

How is everyone doing so far?

 

I managed to find a VERY last-minute Summer job that I'm really really happy with and excited about. I'm hoping that this job can help to build my resume and provide networking possibilities for me, as well as making us some good money. They are paying me more than I expected, and close to $4/hour more than I make at my regular job. So that is a nice surprise!

 

I'm not sure what this will do to the unemployment that I was receiving while working part-time at my regular job. I'm not even 6 months into my EDD claim, and I really NEED that extra boost to our income during the school year. I'm making too much to get any benefits over most of the summer, but I'm hoping that once summer is over I can re-open my current claim (if it closes due to high earnings, it has not yet.) The Summer job hired me on as a seasonal employee, so I don't think that should be a problem, but we will see.

 

Savings is currently at $5,500 and we are hoping to have it close to $7,000 by September, when we start TTC #2. I can't believe that is right around the corner already! We are hoping to have between 10k and 12k in savings by the time that #2 is born.

 

Oh, and I also took and passed a bilingual oral exam for my job at the school, which could potentially open up some opportunities for more $$ at my regular job, fingers crossed.
 

post #3 of 30

I'm on bs2, but really sucking at the gazelle intensity.  My husband is on board in theory, but when we work out our budget we don't really have a ton that we have left over, despite making a fairly good amount.  I need to be in here and also on the no-spend one, I suppose. 

 

I listen to dave daily, though...

 

I should also probably go through our actual situation.  We moved to a new house in February.  It's kind of a fixer upper (had some definite MUST-DOs before we could move in) we had our last house about half paid off, so we had a fair amount of equity, so we ended up putting down less so that we could cover the necessary fixes.  We should have about $5k left after we have those desperate fixes done, so before doing the "would be nice" fixes (like, the rusting out bathroom sink and tub), we're going to pay off the camper we bought last year, which will leave us a $1k "emergency fund" while we pay down the minivan (which is about $14k left on it, I think?).  Our only other debt is the house, but at the rate we're going, with the lack of intensity, it'll take us about a year to blow through that $14k on the van.  *sigh*  We have some dietary needs (gluten is a no-no, here, for instance, along with a lot of other things), so that makes our costs go up, but I'm trying to finagle our food budget down as far as I can.  My husband's autoimmune disease makes us worry about giving too much on our food, though.

post #4 of 30

Hi! I am new to this thread, and actually haven't been in the forums for a while.


So here's our story:

 

Most of our debt stems directly from my husbands choice of work. 4 years of medical school and 5 years of surgical residency...equals a lot of debt! Of course, job stability and decent income (and the fact that he LOVES what he does) all make up for it. I follow some of Dave Ramsey's tips (especially the snowballing and building an emergency fund), and deviate in other areas (I don't sacrifice everything to pay off debt faster, we still take vacations at least once a year).

 

Exactly one year ago, he finished residency. The last 12 months of residency, our credit card really took a hit with flying to job interviews, the cost of taking the boards, getting a new state medical license, etc. This is where our finances were then, in the order that we are targeting them:

 

Debt 1: $7,000 on credit card

Debt 2: $7600 left on car loan

Debt 3: $180,000 in DH student loans

Debt 4: $9,000 left on my student loans

Debt 5: mortgage

 

$2,000 left in savings, after shelling out the downpayment on our first home!

 

One year later, I am happy with our progress:

 

Debt 1: PAID

Debt 2: $23.12 remaining (woohoo!)

Debt 3: $175,667 remaining (ugh, this one makes me ill!)

Debt 4: not sure right now, I make minimum payments that come out automatically, this student loan is the lowest interest rate, and therefore lowest priority

Debt 5: mortgage still there, no extra payments

 

Savings: $8,374, close to our goal of $10,000.

Retirement: added an addition $4,000 since January.

 

My goal this month? Pay off the rest of the car loan when the next paycheck comes in. Then we tackle the monster. I'm not looking forward to that. It is so huge that I'm afraid it will take a long time before it looks any smaller.

post #5 of 30

I'm still here. Still in the midst of trying to figure out our budget since we've moved (waiting for the first month's utility bills so we know how much we can expect to pay) and also waiting for Employment Inusrance to be processed so I can know how much I'll be bringing in on Mat. Leave.

 

In the mean time, we're trying to be good (and are doing much better this month than last so far).

post #6 of 30

I should probably confess that after being on BS3 for a couple of years, putting DH through school on cash and paying for 2 cross-country moves, we're now back to BS2.

 

We had to borrow some money from my dad in order to make this house happen (since we were planning on staying in our 1BR apartment for another year, but this house came on the market at a good price in the neighbourhood we wanted). So, the plan was to save over the summer and pay him back by August, but we'll have to see if we make that goal and if all of our "IFs" fall into place for the fall (i.e. we rent out a room and do some childcare on the side) so we can come out in the black and survive our year of living on only 55% of an income.

post #7 of 30

Summer is such a hard time to stay on the debt snowball.  That and wanting to start IVF treatments as soon as possible.  We made a trip to Wisconsin in May for a family baby shower, another trip to Wisconsin for a family wedding/camping weekend in June, trip to Canada in July for a visit with MIL/FIL/SIL (MIL has recurrent cancer and SIL is telling DH that MIL wants to see him more often and we live 9 hours away), another trip to Wisconsin for huge family reunion next weekend, and DH wants to go back to Canada again at Labor Day weekend to see him mom while she is still doing well/not bothered too much by her recurrent cancer.  So far we have been able to cash flow all of the trips because of my extra work this summer but I was hoping to get that money in the IVF fund.  But being with family is important too.  At least we had no new debt.

 

Looks like DH will finally get reimbursed from work for the coursework he has taken over the last 1.5 years.  Yeah!  Should be enough to pay for IVF fees that we have to pay upfront.  Thankfully our insurance is going to cover most of the procedures and meds so we need about $2300 out of pocket. 

 

Keeping inspired is what I need and keeping DH focused as well.  I want to see our lives free of debt and it is hard with so much between us and the end.  Every little bit helps.

post #8 of 30
Quote:

One year later, I am happy with our progress:

 

Debt 1: PAID

Debt 2: $23.12 remaining (woohoo!)

Debt 3: $175,667 remaining (ugh, this one makes me ill!)

Debt 4: not sure right now, I make minimum payments that come out automatically, this student loan is the lowest interest rate, and therefore lowest priority

Debt 5: mortgage still there, no extra payments

 

Savings: $8,374, close to our goal of $10,000.

Retirement: added an addition $4,000 since January.

 

My goal this month? Pay off the rest of the car loan when the next paycheck comes in. Then we tackle the monster. I'm not looking forward to that. It is so huge that I'm afraid it will take a long time before it looks any smaller.

 

Debt 2 is now paid off! We are officially car loan free. :-)

post #9 of 30
Quote:
Originally Posted by nyssaneala View Post

 

Debt 2 is now paid off! We are officially car loan free. :-)

Congratulations! That is a wonderful feeling.

post #10 of 30
Quote:
Originally Posted by nyssaneala View Post

 

Debt 2 is now paid off! We are officially car loan free. :-)

 

That is excellent!  I am so looking forward to having DH's car paid off. 

post #11 of 30

Hello, I am new here. Is there any possible way to skip the baby step one for a bit while I pay off debt to be able to get to baby step one? I know it sounds backwards but we are about to be between 300-500 in the hole each month possibly more because there is a 95% chance my husband is going to lose his 2nd job at the end of the month. We have 10 credit cards that need to be paid off, if I can pay just half of them off we will be able to buy food and put money into savings, but there is no way I can put money into savings and pay for anything else like food. I would like to keep my credit score as high as I can because within 5 years we are going to need to sell our house and buy a new one. My credit score is at 710, or I would just quit paying some of the cards (like walmart - I HATE the company as it is, I hate even more that I owe them $1500!) But that will trash my credit score.

 

 

Pre-Step 1: Get current on your debts and do a budget
0.1 No new borrowing. - I wont lie, I was hoping to get a 2nd mortgage or a debt consolidation loan but it looks like we wont be able to do this so we will have to dig our way out of debt instead of taking the easy way out buy getting a loan to pay off all the credit cards
0.2 Talk with spouse and get him/her on the same page as you concerning finances. - This will never happen, but I am going to do my best to get it done anyway, my DH HATES Dave Ramsey - he says he is the devil and well he just hates him
0.3 Do a written budget - I have done this, but the problem is there is not enough money at the end of the month to pay all the bills, let alone food and gas money (we live way out in the boonies so gas is a huge cost for us)
0.4 Temporarily stop all retirement contributions - Never have done this anyway.
0.5 Get current on all the basics (Shelter, Food, Utilities, Basic clothing) - All bills are current - we do have enough food to last a few weeks then I will need to figure out how to get food for next month, but I am working on it.
0.6 Amputate "toys" (bikes, boats, ATV's etc) to help snowball - We don't own any of these anyway - I do have 2 trailers, 2 water tanks and some wheels and tires I need to get sold though.
0.7 Cut lifestyle (Cut cable, cell, extras, eating out) and/or get a second job to raise $1000 EF. - We have no way to get home phones so we have cell phones that are $179 a month for both of them. DH uses one for his business and we are on a family plan. But we cant get phone where we live without paying almost $900 for lines to be run to the house. 
0.8 Get current on ALL bills - Right now no bills are past due, but they will be soon unless I figure out how to do this.

BS1 $1,000 to start an Emergency Fund - This is where my question comes from, can I skip this until I can get my 5 smallest credit cards paid off? The 5 smallest ones equal somewhere close to $1,530 by then I can either put money away hopefully each month into a Emergency Fund, OR it will be tax time so that I can just take $900 from that and put it into the fund, we had a $1000 fund but its now down to $100. 
1.1 Chop up/freeze CC's (You have an EF now) - Most are maxed out so we cant use them anyway, but I did get DH to agree to not use them until they are paid off, and the ones in my name will be cut up and canceled as soon as they are paid off.
1.2 Get Health insurance NOW if in the US - I dont even know how to do this. We are on a local indigent program right now, DH has a pre-existing condition so I don't know if anyone will insure him for anything we can afford at all. My in laws pay all our dental bills, and my pregnancy and birth is already fully paid for.
1.3 Get Life insurance NOW if you have considerable debt/your family couldn't make it financially if you died. - We do have life insuarnace, $175,000 each. I got this last time we did Dave Ramsey a few years ago.
1.4 Amputate cars that you can't pay off within 24 months - we only have one car payment left and have 15 more payments on it, I would like to pay it off quicker, but first I need to get 10 credit cards paid off.

BS2 Pay off all debt using the Debt Snowball - This is the step I feel I need to take before I can save money, we have 10 Credit Cards right now with balances from $80 (hopefully can pay off when bill comes in mail next) all the way up to $3,710ish
2.0 Do the debt snowball, paying all your debts from lowest BALANCE to highest.

post #12 of 30

Welcome, Pogo!

 

Have you read Total Money Makeover? DR addresses the "can I skip BS1" question. ...and his answer is NO!!

 

I have to admit, I agree with him. This is an issue i fought with DH over because it does seem so ass-backwards when you just want to make headway and move forward. This is where DR is so much more than financial advice. He takes into account the psychology and behavioural aspects. That never-going-to-borrow-again-because-it's-bad-and-evil-and-I-freaking-hate-debt-and-debtors-are-slaves-to-their-lenders mentality is necessary. Knowing that you CAN handle what life throws your way on your own, with your own money is POWER and security and awesome.

 

Save your BEF first and keep it all yours.

 

With your DH losing his second job, is there any way else you can bring in extra money? Child care? You get a second job? Sell stuff (DR says "everything but the kids")?

 

....may I ask what your DH dislikes about DR? I know my DH wasn't his biggest fan, but I asked him to give me a month since it couldn't do any harm, and clearly his (dh's) methods weren't getting us anywhere.

post #13 of 30
I have read it, although it was a few years ago so I should probably reread it, I have a log thread posted about debt consolidation or a 2nd mortgage that e,plains everything but I just don't see how I am going to be able to save any money when everything plus money we don't have goes to bills and that's before food. It's not just the 2nd job he is losing but also the 3rd that he was making a few hundred dollars a month from (the person he was helping works for said company that is closing, and I was cleaning his house every once in a while for extra money also) and also we sold a car to pay for a car, we were using the payments that we were getting for old car to pay for new car and that person also will lose his job if the company closes. It's a huge mess all around. DH has a computer repair business that he puts a lot of time into trying to get clients, the business that was closing used him the most out of anyone so he is trying to find people to replace them but its slow going. I make and sell stuff at flea markets for my second job because we live so far away Rom town I can't do child care or a garage sell or anything like that for extra money. I do think I might have an order that will make me around $100 in a week or so though, probably less because I will need to buy materials for it. And DH possibly has a lead on a part time job that an out of state uncle is trying to get him so we will see.

I honestly don't know the real reason why he hates him so much other than he likes to buy thugs NOW not wait a week for payday, not wait a month to save for it he wants its now. I joke with my brother that he is like that because he is an only child and he has always got his way. If he wants something he calls his mom and she struggles to find a way to get him money even though she is on a limited income herself. We got in a huge fight today and he told me we can't live without credit cards because all I'm going to do is spend more on groceries and I will never save any money at all. It really hurt my feelings because I really want to get out of debt and do this. If we could pay off the credit cards and the tahoe we would have almost $700 extra dollars a month. Yes I plan to put some more in our groceries because I would like to actually be able to go to the store and buy what we need not just say ok we have 50 what can we not live without. But I don't plan on spending an extra 700 a month. Its not helping that I am 4 months pregnant and freaking out about how I'm going to get the few things we are going to need for this baby. I just don't really know what to do about any of it. I know I would have a better chance of success if he were on board but he is just so different in the way he deals with money than I am. He also feels he deserves to get money every week for him, it has caused a lot of fights because here I am thinking we have like $300 in the bank to last 2 weeks and he has a few hundred stashed away in his wallet that I don't know where it came from or when but then I start feeling like he is lying to me and hiding things. Sorry for the rant I just hate being so stressed over money and how to pay bills.

Sorry for any typos on my phone
post #14 of 30

Pogo, I agree with eiraul you need that $1000 first in the bank for emergencies so you don't see the credit cards as the salvation when the emergencies come, and they will! Even if you are just putting in $1 per pay period, you know you are getting closer to your goal of $1000.  Having that $1000 psychologically has helped me to cut the credit cards from my life, even though they are still intact, frozen into a block of ice in my freezer.  I hear you about getting that money there though.  It was really tough for us.  If it hadn't been for our tax return it likely would have taken us a year to save that money. I am a teacher and can't really take an extra job and my DH was already working 10 hours a week overtime.  Any more work would have put us over the edge.

 

I need to get on the "sell everything" plan again.  I have some items I could sell on ebay that need to go.  I sold a couple hundred dollars worth of clothes online back in Jan and Feb when I started DR's plan.

 

My DH sounds a bit like yours in the "let's buy it now!" attitude.  He has gotten more on board over the last 7 months with, "okay we don't have to buy it today, but I worked overtime so I deserve something extra." We have finally gotten to an agreement that $20 every two weeks for "wallet cash" is sufficient but that has been particularly hard.  We both work and get our checks directly deposited into our bank accounts so we rarely see the "cash".

 

I need to get back to paying cash for gas and food.  When I got my enveloped wallet out (I sewed it together with different zippered compartments instead of the paper envelopes) and I knew I only had $50 for groceries, it made me use my calculator to determine if I had money for that food item, or was it going to have to stay at the store.  A pad of paper to write a list for the grocery store, a calculator, and a pencil have gone a long way in helping me fight the food budget monster.

 

AFM, thankfully DH and I were able to cash flow our family reunion this last weekend because I got my cell phone reimbursement and my pay increase this month.  Except for the unexpected $40 toll replenishment for my RFID car toll transponder, we did excellent - staying on budget for gas, food, and lodging.  Had a blast with the family and a bunch of people I had never met before.  I am hoping that my DH gets his reimbursement for last year's educational expenses next week.  I really want to get the IVF ball rolling faster, but we need $978 to book our month of treatment plus some other fees that they require up front before they will start the procedures or give us the meds. Bummed that our BS2 goal is getting pushed back a month because of our saving for IVF.  I want a baby but I also want to be out of debt.  It is so hard for me to see two things I want so much that both involve a lot of money.

post #15 of 30

My husband and I are finally ready to get serious about this.  Scary!  I've read Dave Ramsey a few years back, and Suze Orman more recently.  I think I'm more on Suze's page, but DR has some good thoughts too...

post #16 of 30

I find listening to the Dave Ramsey show helps me remember to not spend.  I listen to it on his website (daveramsey.com) and there's tons of archives there.  I feel like it's sort of easier to hear his voice in my head saying "Why are you buying that on credit?  You don't have any money."

 

Re: the baby emergency fund.  DR's usual advice if you KNOW there's going to be a job loss is to put your debt snowball on hold and just stockpile money because that *IS* the rainy day and you know it's coming.  During that time, you stop paying on your credit cards if you have to.  He always says this: your first responsibility is a roof over your heads, utilities, food, clothing (and gas so you can get to work).  During an emergency (i.e. job loss) everything else has to go until you get back on your feet again.  That said, if he's expecting a job loss, looks like it's time for him to start looking for a second job (dave always suggests delivering pizzas...)

 

If you don't know, you  just think there'll be a job loss somewhere down the line, you keep working on the baby steps (1. emergency fund of $1000, 2. debt snowball), and start looking for a more stable job.

 

I may be a little addicted to that show, but really, it does help to have an idea of which direction is the right direction... or you could call in and ask him what he thinks!  It's a free call :)

post #17 of 30

When I had to drive to work (I now work from home 3 days a week) I listened to him all the time, but now that im home I dont and cant listen online because I have wild blue internet and have a very limited connection. 

 

The job loss is up in the air still, a week ago there was no doubt they were closing, now they are going to try to restructure and try to stay open. I really really hope they can restructure and stay open, but only time will tell.

 

I am still trying to figure out how to figure out how to make it all work to put money in the savings first, but I just dont see how its going to work right now. I am still keeping my fingers crossed that we can sell the trailers, water tanks and wheels on craigslist. And am hoping the lady that told DH she wanted 2 websites will hurry up and get on it so he can make them and get money for them. He was nice enough to work with her but its going on over a month now that she said she would get him what he needs and she wont return his calls or anything so I dont know whats going on. I dont care if she changed her mind but tell him so that he can move on and work on another project. So I am working on it as much as I can, if I do get the order for $100 all of what I make off it in the end will be put into savings, but that might only be $80-90 dollars, but its something I guess.

 

Next months bills are starting to come, so I am going to start the budget today for next month so I know whats due when and we can see what we can do. 

post #18 of 30

There's a downloadable podcast, too...

 

And $80-90 is better than nothing :-D

post #19 of 30
Quote:
Originally Posted by Pogo0685 View Post



1.1 Chop up/freeze CC's (You have an EF now) - Most are maxed out so we cant use them anyway, but I did get DH to agree to not use them until they are paid off, and the ones in my name will be cut up and canceled as soon as they are paid off.

 

I like Dave Ramsey, but I disagree with him on a few points. One is in regards to cancelling credit cards. You mention that you are trying to keep your credit score as high as possible, cancelling them could lower your score slightly. The best option IMO is to keep them open, but at a zero balance. If you want them out of sight, you can always hide them somewhere, or cut them up but don't actually cancel them.

post #20 of 30

Hi,

 

I know it's late in the month, but better late than never, huh?

 

I'm Anka, wife of my wonderful DH and mother of my now 1 year old.  We paid off >70% of our >100k student loan debt over the past year, but moved last month and totally lost all our focus -- eating out, frivolous spending, etc.  The thing is, we're taking a huge income hit at the end of the year, so we really need to power through the rest of our debt before then.  At the same time, I just became eligable for matching for retirement from my employer, so I think I'm going to max that out, even though it's not strictly DR style.  I'm not turning down free money.  Another thing we deviated on was we put aside our FFEF because I'm trying to get pregnant and am the only source of income for our family.  While I'm hoping to work through pregnancy, we all know that stuff happens.

 

Anyway, here's to getting gazelle intense again!!!

 

Anka

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