I'm getting out of debt, with the snowball method. Wanna play?

[Red]

What have ya got to lose? A few bills?

Ok, I'm willing to honestly give some personal info, like the fact that at 48 I'm still trying to get out of debt, well, really to get out AGAIN. ANd we need to hurry, dh will retire in 4 years!

In return, I'd like some get outta debt buddies. I'm GOING to do this. I mean, pay off the credit cards, the mortgage, all of it. And I'm not borrowing or using another credit card. Ever.



(Uh, but one of YOU has to tell dh about his plans for a two yo car being put waayyyy on the back burner, ok?)


So, here we go. The snowball method, which I just read about in a Dave Ramsey book, works because you pay off the smallest bill first, and use that money to pay more on the next bill, therefore paying IT off much sooner. When you add that bill's payment to the next bill, your making a BIG extra payment every month.

(BTW, this method wasn't created by Dave Ramsey, he got it from reading other books, so it's ok to post about it.)

Interested? I'm impatient to start and am going to organize things tomorrow. READ some of Dave Ramseys stuff. He doesn't recommend the SAHM's going off to work! Something I was just about to do. But he's right, I never make much after expensesa and save loads by planting a garden, cooking from scratch, etc.


Oh, please, come play with me?

[alamama]

We're in! We've been working on a snowball plan that will have us free of all debt except the mortgage by ds' 3rd birthday in April 08. We don't have cc debt or car payments, but will be paying off a home equity loan and two student loans. We are psyched to get rolling!

[Mizelenius]

Very cool. That is what I was planning on doing but I didn't know it had a name!

For this past week, for the 1st time in my life, I have been tracking EVERY PENNY. I know exactly what we've spent at every moment. Just by doing this, we have stopped spending on anything extra. Because the budget is being tracked so closely now, it is getting easier to make frugal choices. Before I felt overwhelmed and now I feel like I have a real goal!

Today, I made my menu for the next 10 days. I knew my grocery store budget. I went shopping when it was quiet, without the kids, and I actually managed to get everything and have $30 left (which I'll use for more fresh stuff as needed). We NEVER usually stick to our grocery budget, so I will be amazed if we do it-- after all of these years.

I have been wanting to take these steps for a long time and wanted to get DH on board. He wasn't into it. Now, I have taken charge. I don't nag him at all, but I do (1) ask him what he's spent (not to judge, just to track) and (2) send him an e-mail daily as to the status of our budget. (He always knows how much is in the bank, but he doesn't keep track of exactly where it goes). I don't know if it will last, but he has been fine with it!

I am realizing that with money (for me) it's all about baby steps. In the past, saving a $1 here or there didn't matter to me. Now I realize it does-- every little bit helps.

[Ravin]

I am starting a get-out-of-debt plan as soon as I am gainfully employed after graduating this fall. My only sore spot in the plan is that several of the items on my recently acquired credit report are DH's. Things like credit cards he had when I was overseas in the Navy. : There are a few things that he doesn't know what they are any more than I do, but because a few payments were made on them, the collections people don't believe me when I say it was fraud or identity theft or something.

So, I'm doing the pay-off-the-debts-I-know-are-mine-first method, with weighting for working with the collections people who aren't mean to me. Also, some of the older debts say they'll be gone from my credit report within the year, so they're my last priority for paying off.

Currently, the only things I'm paying on are a cc and a loan that went to collections some time ago. They've frozen the interest as long as I keep making small payments. Once I have a job, I'll toss any extra money at paying off the smaller of those 2 first. Then the other one. If I find a job quick, I should have the smaller one paid off by the time I have to start paying on my student loans. Then, I'll pay minimum on the student loans until I pay off that other old debt, and attack the student loans with a vengeance.

Somewhere in there I may need to save for and buy a car. With cash. Winters in my hometown are not terribly bicycle-friendly, and long-term not being able to get out of town (like to the nearby city with a farmer's market, etc.) without the goodwill of relatives is likely to become a hardship.

But I plan to have one less debt owed by the end of 2007. We're going to be getting a very small place and living frugally, and I've applied for subsidized housing. The plan is, move into housing and take the difference between rent in the unsubsidized place and the subsidized one and put that to debt payoff. I'm also going to apply for food stamps and WIC, even if I think I could manage to buy groceries without aid. The difference will go to paying off debt.

For this fall, my last semester of college, I have at least managed to turn down any further student loans to add to the pile.

[LEAW]

My dh (who hates to read) is currently being badgered one page at a time through Dave Ramsey's book. Last night while he was reading I took our savings acct. and paid off the 2 smallest cc bills - $500 and 1700.

Now the hard part is going to be sticking to the budget.. if we actually stick to it we should be able to send at least $500 a month to the next cc and then to my student loans...

If we keep going, we should be debt free and have a nice savings in 2.5-3 yrs!

[Mizelenius]

Originally Posted by lisa2976

Now the hard part is going to be sticking to the budget.. if we actually stick to it we should be able to send at least $500 a month to the next cc and then to my student loans...

I think if you do 2 things . . .(1) make a realistic budget and (2) track every penny, you will be able to do this! I am far, far, far from being an expert but that is what has helped me very recently. We've had a budget in place for a long time but had trouble sticking to it because we weren't tracking well. (For example, DH would take out cash and we wouldn't know where it went!)

[SleeplessMommy]

Just a comment ... check out the interest rates and monthly fees on the cards (or other debt sources) THis can be an important factor in paying off!

[Starr]

We're in, right now we printed off sheets keeping track of interest rates, min monthly payment, and total amount. Once we get all that in order we plan to sit down and make a list of what to pay off first.

[mama kate]

I'm in - I am just getting back to WAH fulltime so our income allows to pay a little bit more. Thank minimums. Are we going to post actual #'s or just be vague? I'm open to either. We have too much CC debt after buying/renovating the house & me not always working. But I really want to be CC free in the next 18 months. BUt like I said we have a LOT of debt so I'm not sure how do-able that is.

[LEAW]

Sleepless, yep, the interest can be a big factor... lucky for me our biggest card is the one with the 2.99 balance xfer rate on it...

BUT the whole point of "snowballing" is that it's motivating to SEE debt go away - if you start by listing all your debt from smallest to largest, and then you attack them one at a time and cross them off until there are none left...

It's much easier to scrimp and save and work hard at the smallest debt first, as it's much more motivating to make ONE DEBT go away than to chip away at the big one forever...

[broodymama]

I read Dave Ramsey's book too, it was a big help for me! I have my nest egg in savings now, which was an important step for me, and our car is paid off. I have a few thousand on a credit card that we are working on now and then it will all be gone. I can't wait!

[Laurel723]

I'm in I'm in!

We are just starting out on our get out of debt asap plan...
After we pay bills and buy groceries, we have somewhere around $25 left. That's paying minimum payments on everything and no savings. (DH took a major income cut-to a 1/3 of what he used to make in the space of about a year and a half....)

So. That being said, I'm due at the end of October. When I started my new job, I had them withhold in a pretax acct $750, which is my maternity deductible. I'm thinking that we should put that money in an emergency account and add the hospital bills to our snowball....because otherwise, we will seriously never, ever get there. (Unless DH gets a different job, which is likely to happen before long but I'm not counting any chickens, kwim?)

What do you think? good idea?

I haven't gotten the book yet-I'm saving my lunch money for it (instead of buying it with a credit card....I don't think he'd approve of that! ) but trying to do what I can with what I know commonsensically (no it isn't a real word...)

Lisa-short of reading it out loud to your hubby, how do you get him to read it? Mine hates reading-unless it's a hunting mag.....

[Kleine Hexe]

Magster, started a thread sort of like this. I guess it's buried. I revive it now and then.

DH and I are totally snowballing. It's great. We're not approaching paying off the highest interest rate first because like it's been pointed out, you may lose motivation fast. We have our debts lined up how we want to pay them off. First, we decided on the truck loan because it was the smallest. We just paid it off last month! Now we are adding the truck payment to the first cc we're paying off. Our car insurance is less now as well so we're adding that extra money to the cc payment too.

[Mizelenius]

This is just awesome! Thanks for starting this thread, Red!

Tonight I am going to come up with some ideas of what I can sell-- little things-- to put towards our first cc debt. Once that's paid off, it will be one down and one (much bigger one) to go. Maybe with the big one I'll mentally divide it up into smaller goals. But, first things first-- gotta get rid of the first one!

[Kleine Hexe]

If feels *so* good when you finally pay something off....no matter how small. It gives me a thrill of excitment to send that extra $250 a month to the cc.

[USAmma]

We are doing this now. I didn't know there was a name for it. The priority is the one with the most interest, which thankfully is the smallest. When that one is paid off in about 10-12 mos (depending on any emergencies) we will pay off the next one using the same money.

[LEAW]

Got my book at the library.. had to wait a few weeks for my turn (it's popular!) but it was worth it. Actually got email from the library today that the dvd is in too, maybe I can get dh to watch that instead of reading?

Laurel, it's like a bad cartoon of the nagging wife. I hand him the book when he goes into the bathroom, I hand it to him at dinner time when he's done eating (right now we eat in our living room, we're uhm remodeling the dining/kitchen area the long/hard way), and sometimes it gets interesting and he reads a bit more...

I know the biblical references are a big turn off for him, so I gently remind him to just ignore the BIBLE and read the quotes as if they were just some smart financial guy spouting them off... and once in a while I read little bits to him, like today I read about 2 paragraphs from the college savings part (dh didn't go, thinks it's a waste of time/money) and philosophically he and Dave Ramsey are almost on the same page, so he's now a bit more interested.

He hates reading though... reads airplane books and technology stuff for work, and generally avoids books beyond that. Hopefully by the time my3 weeks with the book is up, he'll have read it.

I told him to skip the personal stories too if he felt like it, once you read one or two they are all the same anyway, just different names and amts of money that got paid off.

[Laurel723]

double post.....

never mind me.

[Laurel723]

Originally Posted by lisa2976

I hand him the book when he goes into the bathroom, I hand it to him at dinner time when he's done eating (right now we eat in our living room, we're uhm remodeling the dining/kitchen area the long/hard way), and sometimes it gets interesting and he reads a bit more...

I guess I'll have to get a bookshelf installed in the hooter......now if I could just get the fundage to get the darn book......all in good time I guess...

I amgoing to go home tonight and sit down w/ dh and make a list of what we're paying off first. If I could get rid of the stupid cell phone and dish bills, that would open up close to $200 a month: there's nothing on dish that's worth watching anyway and cp's are a pain in the rear...(as I wrote that mine started ringing. Go figure!)

IF I'm figuring right, (and that's a big if!) We should be out of debt in about 5-6years-not bad considering we're about $90K in the hole now, including a 2nd mortgage, but not including the first....It'd be quicker if I was completely in charge, but I'm a scrooge by nature and dh likes to buy stuff......*sigh.
Better late than never right?

[Red]

Originally Posted by lisa2976

BUT the whole point of "snowballing" is that it's motivating to SEE debt go away - if you start by listing all your debt from smallest to largest, and then you attack them one at a time and cross them off until there are none left...

It's much easier to scrimp and save and work hard at the smallest debt first, as it's much more motivating to make ONE DEBT go away than to chip away at the big one forever...

Also, it's quicker to pay off a small one and then you have that money to put toward the next one. I didn't see the wisdom in this till I read his book. I've been fighting to pay down the one with the highest interest first, as that made more sense to me. But now I see his point.

Laurel723~ GO TO THE LIBRARY! Do NOT go out and buy a book to help you get out of debt! If your library doesn't have it, ask themn to order it for you. I couldn't remmeber the name of the one I wanted, so they ordered EVERY book he'd written! WOW!


Kleine Hexe, I saw Magsters thread, but I felt like I was starting out so far behind everyone else! You guys can be our inspiration!

Ok, so I'm getting personal, and giving specifics. Partly because it will help me andpartly because I think it will help some of you.

First, we're OLD. I'm 48, dh will be 56 in Oct. He retires at 60. (Not exactly mandatory, but strongly suggested, and financially rewarded by his union. ) So I need to have most of our debt gone is the next 4 years!!!

In going over our stuff tonight I found a huge BOO-BOO! I got a washer and put it on a 90 day same as cash deal. Planned, of course, on paying it off in the 90 days. HA! THe interest rate is, are ya ready....22.98%!!!Screw that! I'm transfering THAT balance to our biggest card, which I just got. It has no interest till Oct of 2007.

I'm starting with our credit cards. Smallest first. Here's my list:
Walmart, $15 a month, $40 left on it. I'm going to pay the whole $40 this month. THen I'll add that $15 to the next one....which is...

Discover, $18 a month $577 balance
Capitol ONe (what's in YOUR wallet? ) $30 a month, 965 balance
Chase (no interest!) $51 a month, $2852 balance

I usually put an extra $10 to $20 on each card, every month. Instead, I'm going to trust this snowballing thing and pay the minimums, and try for an extra $40 on the card I'm working on at the time.

I also owe back taxes on the house. I need to get my home equity line (variable) switched to a fixed rate mortgage. I might have to put the taxes for this year on the loan...or maybe I can slide by!

No car loans.

Once I pay these off, ( and the money I owe the electric company ($800 freaking bucks!) it's on to the mortagage. ($85,000) I'll have about $200 a month more than I do now to put on it.

Can I do it in 4 years?????


Goddess I hope so! I'm sure gonna try. We'll have considerably less after we retire to live on. (And if you aren''t bored with me by now, you could all say a prayer that I become a PUBLISHED author THIS year. I NEED to make some money.

How are we managing Christmas? Oh, and dd18 starts college in 2 weeks.

So, play with me!: