Here's DR's plan:
Pre-Step 1: Get current on your debts and do a budget
0.1 No new borrowing - doing this wrong, went and got car payment, then swapped and got a new car payment (even trade, newer same model car), and contemplating swapping again next summer for another new car. They took cruise out of my manual car and I miss it for long drives. I could pay cash, but i'm trying to rebuild credit and carrying a car note is part of that plan. I just opened and got approved for a secured CC for the same reason. Going to buy some things and pay same day to rebuild credit for awhile.
0.2 Talk with spouse and get him/her on the same page as you concerning finances. - Kicked him to curb. Problem solved.
0.3 Do a written budget - haven't done that since stopping all my travel. I'm just starting to get better about paying bills on TIME vs 3m at a time. Oops.
0.4 Temporarily stop all retirement contributions - nope, 15K in 401k at old job, contribution matching at new job (only been here 6m)
0.5 Get current on all the basics (Shelter, Food, Utilities, Basic clothing) - just finished going through clothes for kids and we are pretty much set in clothes/shoes/et for awhile.
0.6 Amputate "toys" (bikes, boats, ATV's etc) to help snowball - been considering buying a toy but keep waffling. Really want a stella scooter.
0.7 Cut lifestyle (Cut cable, cell, extras, eating out) and/or get a second job to raise $1000 EF. - I have pretty basic stuff now. we have tv and internet (i'm computer nerd and need inet for job), and DVR. no phone or cell (work provides), and don't eat out much because kids stress me out when eating out. easier to eat at home and relax. plus I can't abide paying 3 bucks for a drink. I used to be able to take the three of us out to say olive garden tho, and we'd all eat and incl tip was 15 bucks. Same with ihop another favorite. I have free kids meals coupons for chilis and i'm promising the kids we'll go soon. incl chips and salsa (I love them, normally won't do an app) a drink for me, and dinner for me the bill for all of us should be 15ish.
0.8 Get current on ALL bills - more or less. i'm really bad about checking mail and paying bills on time. doh.
BS1 $1,000 to start an Emergency Fund
1.1 Chop up/freeze CC's (You have an EF now) - going from no CC for last 5yrs to having one again
1.2 Get Health insurance NOW if in the US - ex is supposed to cover kids but adding them to my dental this week, I have full med and dental through work but not vision because I found what they covered for ME wasn't helpful and I won't do the paperwork and submit claims. my glasses end up running 300+ a pair generally. my last set cost me like 400 for two tho. cheapest i've had!
been thinking about lasik for awhile however, it would just be nice to see my alarm clock or goto pool and see kids w/o glasses. my vision is REALLY bad. they didn't even make contacts in my script until about 10yrs ago, and last I asked only one brand and they were yearly and crazy expensive.
1.3 Get Life insurance NOW if you have considerable debt/your family couldn't make it financially if you died. - had it for free, declined the extended at new job since it's expensive.
1.4 Amputate cars that you can't pay off within 24 months - LOL....keep adding them, but I could pay them off or pay in cash if I needed to.
BS2 Pay off all debt using the Debt Snowball -
2.0 Do the debt snowball, paying all your debts from lowest BALANCE to highest. Actually, you should pay the debts with highest interest rate first, vs largest balance. Less interest $$ going up in smoke.
Other than car and house I have no debt, and I plan on carrying car for awhile to rebuild credit so I can eventually buy a new house of my own. Same with applying for CC.....don't want it or need it, but trying to rebuild credit so I can eventually get mortgage when I am ready to move.
BS3 Three to six months of expenses in savings - I have roughly 1+ years of expenses in savings, I did math and with potential unemployment and child support payments I could probably live on current savings for 3ish years. I should have my entire salary saved by 1/2014 (more than double my expenses)
3.1 Start car replacement fund - carrying note again just to rebuild credit. I am not sure if I should do a big down payment when I buy new car tho, because i'll want to keep payments....
after this however i'll probably keep car for 10+ years and put car payment $$ into savings once paid off so I can pay cash for my next car after that. Bugs me carrying note, but it's all for the sake of possible new home.
3.2 Save up 20% for home purchase OR pay down existing mortgage to the point you can drop PMI. - not paying down current as i'm 50/50 with ex, eventho we lived there jointly for 3yrs and i've been there alone for 5. house is upsidedown and ex wants me to pay HIM 20K. fat chance! I didn't even like the house, it was just the only one ex would consider after looking at over 150 homes. I'm hoping to fix credit enough to get loan for a new house and rent the joint home. Mortgage is 800 (ish, i don't have prop tax escrow, but I estimated like I did) and rental for a house like mine should bring in 1200-1600. the houses I LIKE don't sell for squat around here because everyone wants open concept brand new homes. I like old houses. I should be able to get home I LOVE for 100-120 depending on market, making new payment lower than existing. = profit! lol. Also why i'm trying to grow savings ASAP. I want to make sure I have a year of expenses (30-40) plus 20% down (20-30k) plus enough to cover intial repairs for both homes to make them livable/rentable (another 20 i'm thinking) plus atleast 3 mths mortgage saved (5k) meaning i'll need 90+ which i think will be doable by 1/2015 give or take. So I have about 3 years to fix my credit up like spanky new!
3.3 Start furniture or other non-essential stuff replacement fund - I don't have a FUND, but I've been allotting 3-4 larger purchases a year. this year was dyson, freezer, new pots, and lovesaq beanbag thingy. I've been able to do this without dipping into savings really. I need to find out a way to connect another acct to my current bank acct, and auto xfer over like 100 a mth towards "misc purchases" type thing perhaps.
BS4 Invest 15 percent of household income for retirement - i'm saving about 50% of my takehome right now, and investing to matching # (6% i believe). in a few years i'll probably consider rolling into a roth IRA, but right now my fear is something bad happening and not being able to get to my savings since i've had a hard life and no cushion. I'm enjoying being able to breathe and be less scared of losing job all the time.
BS5 College funding for children - yea, nope. I saw way too many kids get free rides and learn to drink heavily on parents dollar. and I'm the exception to every rule having no degree and pulling down almost 6 figs after busting my butt working 3 jobs and 120hr work weeks to get to my current skill level. I will be encouraging my kids to follow in my family's long long long military history when the are older, or figure out how to fund their own way. I'll give them money to help a bit i'm sure, but I firmly believe that free rides in life end up making you feel like you deserve it. So no cars when they turn 16 (they will be paying gas and insurance money and borrowing car i own) and no free rides to college here.
BS6 Pay off home early - I plan to get new house someday down the road and then work on rebuilding savings acct, starting some retirement $$....and i'd like to move out of texas as soon as I'm able but scared kids will stay behind. So if I am able to I won't be paying off new texas home early....i'll be buying my (last!) home and paying THAT off early. but it's on the back burner for sure.
BS7 Build wealth and give! Invest in mutual funds and real estate - hey! i'm actually doing this!
So yeah, i'm going against ALL of this, but in fairness I payed off debt and put 30K into my divorce coughing up 3K every few months when I was making about 40/yr. how I did it, i'll never know. Turned off everything, ate ramen or pbj nightly....now i'm living on roughly 40-50k a year and i feel quite wealthy!
I pretty much did all of those things above, but had to do a lot more juggling to keep coming up with 3K when my takehome was less than 3K every few months. always several months behind on bills...etc. But I did it :)
I'm going from no debt to creating debt merely for purpose of rebuilding my ex-destroyed credit. blech.
I'm just hoping that by the time 2015/2016 rolls around i'll have over 100 in bank, have repaired my credit to the point where I can buy a new home and rent (or sell, if i can break even) the existing home and get ON with my life. I really want to nest and do home improvements but I hate the house and I don't want to benefit my ex in that manner either. Plus i feel like i'm just squatting.