Dumping Debt with Dave Ramsey/FPU Club - Page 2

[Denvergirlie]

Just for everyone's reference. I did add in pre-baby step 1 - which I called baby step "0" and also added in BS 3b for those of us that do not yet own homes but want to.


Dave Ramsey - Baby Steps

0-- Get current on your bills
1 -- $1,000 to start an Emergency Fund
2 -- Pay off all debt using the Debt Snowball
3 -- Three to six months of expenses in savings
3b --- If you don't have a house and want to buy one, this is where you save for the downpayment
4 -- Invest 15 percent of household income into Roth IRAs and pre-tax retirement
5 -- College funding for children
6 -- Pay off home early
7 -- Build wealth and give! --- Invest in mutual funds and real estate

[rosie_plus_one]

That's great Denvergirlie! Thanks.

I added our two new-comers, and if anyone wants to give me new balances on their emergency fund or amount of debt paid off/left to pay off, I'd love to add it!

DP started a great full-time position last Thursday, so a lot of stress has come off my shoulders. He also got some grant money for a treatment program he needs to go through, so it cut the bill by about 75% and I think we can make payments on it.

The only thing about the new job is that they pay on the 5th and the 20th. We've only ever gotten paid each Friday, so I'm not really used to budgeting this way. I wrote out a zero based budget for October, and I'm hoping to go over it with DP tonight or tomorrow night.

Financial Peace University tonight! Week 4, which I think is Dumping Debt!!

[phathui5]

Tell us all about the class tonight, Rosie.

[angela1435]

Just checking in!! Ok, so I guess I am in pre-babystep 1. I am bahind on a few bills so............... But I am going to add the collections to the snowball so it shouldn't take me long to get the bills current. Then I can start saving for the baby emergency fund!! I can't wait. I am so excited. I just need to get my hubby on board......haven't talked to him about it because he is in the navy and out to sea for a few more weeks. I think this is mostly going to be on me because he is gone a lot.

Ok, I have a question.............we are expecting a baby in January and we have things that need to be bought......it is hard to save and then pay off debt when we have big things we need to buy......any advice on that??

[rosie_plus_one]

Originally Posted by phathui5

Tell us all about the class tonight, Rosie.

Turns out I got my dates wrong, and last night's class was on "Buying Big, Big Bargains," which though it was interesting, was NOT what I was wanting to hear about!! I'm not buying anything until we get the emergency fund up to a grand and get a few personal loans paid off.

Originally Posted by angela1435

Ok, I have a question.............we are expecting a baby in January and we have things that need to be bought......it is hard to save and then pay off debt when we have big things we need to buy......any advice on that??

Dave generally advises that you put your debt snowball on hold, and build a huge savings account instead. He calls it a "storm on the horizon." When I was pregnant, I estimated how long I would be out of work for, and figured out how much money that was, and decided I wanted to save a little more than that. Well, that's assuming you are a WOHM I guess. If you aren't, then I would save for any insurance bills you will have and your purchases.

Save extra though!

[Adamsmama]

I think we are on BS2...need to go check. We have the EF, budget and our starting the snowball. We are so happy about it, too!!!

[aircantu1]

We're big Dave Ramsey fans. We're in BS2 (again ) and have $16,591.54 to go. We've paid off $51,075.74 so far. The remaining debt is my husband's car loan -- I'd just assume we sell the darn thing and be done with it but we're pretty upside down on it and it's a Honda with only 45,000 Miles so it should last another million years. It makes sense to keep it -- I'm just impatient and want to be done with debt!

[guest^]

Feeling hopeless, so am subbing and :.

Thanks,
mp:

[beansmama]

Well, i don't think i'm at baby step 3b anymore...we are now focusing ALL of our savings towards being able to survive next year...so the savings for the house are on hold. I want to save enough to not have to eat into the measly $8k we have for the house fund so we still have SOMETHING saved for it!

So um, i don't think i'm technically ON a babystep, lol...but i still feel like i'm following the "plan" (not getting into debt/living under my means!).

So i'm in baby step 3b "limbo"

[rosie_plus_one]

Originally Posted by mamapoppins

Feeling hopeless, so am subbing and :.

Thanks,
mp:

Do you have his books? It is incredibly empowering to just develop a plan! Whenever I start feeling bummed about our money, I look at our budgets, or write out what I think is going to happen over the next week or two, and it really makes me feel better to at least *know* what's going on.

You can also go to his webpage and listen to his daily show live - it's great!

[angela1435]

I am so excited!!!! I am now on BABY STEP 2!!!!!

My husband got a bonus so we had enough to catch up the bills and get the baby emergency fund set up. So for the first time in a long time we have 1000 in savings!

Now on to paying down debt. We will be a little slow on this I think because we have baby things to buy but I still think we can do some serious debt payments in the next few months.

Ok, just wanted to gloat, lol. And bump up this thread because we are getting lost!!

Angela

[rosie_plus_one]

Pre Baby Step 1

evansmama
Sara Badger
mimie

Baby Step 1

rosie_plus_one (500/1000)
Miasmamma
Nitenites
phathui5

Baby Step 2

Denvergirlie 30K by July 2008
mtm 4K to date, 12-18 months left
aufilia (BS3 completed - TTC)
alleyoop 2500 CC to go!
excitedtobeamom
angela1435
aircantu1 $16,591.54 left!!
Adamsmama
dealic $21,000 left!

Baby Step "Limbo"

beansmama

[phathui5]

Did BS0

Income: $4060

Living expenses

$1642 Mortgage
$ 265 Van payment
$ 448 Truck payment (+ back due so we're current)
$ 177 Insurance
$ 90 Gas/van (he has a gas card through work)
$ 200 Electric & gas
$ 25 Water bill
$ 48 Verizon (phone & internet)
$ 52 Life insurance
$ 400 Groceries & household stuff
$ 60 Church

Optional

$ 19 Blockbuster online
$ 40 My allowance
$ 200 Dh allowance (lunch at work, tolls, parking)

Debt payments

$ 50 CC payment (min.)
$ 30 Best Buy account (min payment)
$ 80 Room Store account (min.)
$ 30 Midwife

Savings

$204

Now you can move us to BS1!

[phathui5]

Also, I was thinking that it would be a good idea for me to have our EF at a different bank so it's less tempting to spend it when it seems like we have a "good reason" that isn't an emergency.

[rosie_plus_one]

Originally Posted by phathui5

Also, I was thinking that it would be a good idea for me to have our EF at a different bank so it's less tempting to spend it when it seems like we have a "good reason" that isn't an emergency.

I think there's pros and cons to that. I have ours in a savings account that is linked to our checking account, so that in case a huge error happens and we overdraw our account, we have back up funds immediately available. I can also transfer from the savings into checking and have the funds immediately - so like if I need to use my debit card to pay for my car being towed or something, it would be there right away.

I do think I am going to set up a "house/wedding" account at ING Direct though, because once money goes in there it shouldn't come out until we start building or start buying dresses and balloons.

ETA - where's savings in your budget?

[phathui5]

Added the Savings category to our budget. Also going to be selling stuff and trying to pick up extra babysitting to fund the EF.

[dealic]

Hi!

Can I join if I haven't read his book/course thingie at all? I am doing a similar plan, but I made it up myself.

We are on BS pay off debt (I think it was BS2?) I was going to say we don't have $1000 emergency fund, but our bank account zeros at $1000, so I guess we do.

We started 2 years ago when I lost my job, Shawn didn't have one, we broke our lease and moved into my parents' basement apartment. Every card was maxed and we couldn't pay the break lease amount. It took 4 months to get current on our bills (including paying off the break lease), then we began to pay debt off. We had $30 000 in debt, from university. We paid $1000 a month to debt, CC's first, then my student line of credit, then his OSAP, paying over the minimum to all from the start, then snowballing. At the same time, we saved $1000 a month for our wedding. A year later at our wedding, our debt was down to $8 000 and our wedding paid for in cash. We didn't have any credit card debts after the first 6 months.

Then, that $1000 wedding fund moved over to debt payments. We would have been debt free by now. BUT (there always is a but) we needed to buy a car. We were going to wait until we were debt free, but circumstances changed and we needed it sooner for me to get to work. So we got one, and got a high monthly payment on it because I want it to be paid off by the time we have kids. Its $500 a month, and we but $1500 a month to debt.

Just last week, we paid off his student loan. It was a bit ahead of schedule as its interest rate is slightly less than my line of credit, but it only had $1000 left, and my LOC had $2000, so we are close enough to the end anyway. It was the hardest to pay because the payment comes out of a bank we don't use right now, and so we have to physically drive money over.

So we now have $3000 left on my LOC and $19000 on my car. When the debt is gone we will be stockpiling money. Differing from Dave here though, we are then saving for a downpayment. But its not really a big difference, because my parents plan on giving us $10 000 towards our downpayment, so if they do, that will become our emergency fund. If they don't, well then our downpayment just may be smaller.

We plan on keeping the car payment as is for now, though I hope to drop around $6000 on it to cut the repayment by a year. This is because (if my master plan works) it will coincide with my income dropping by 50% when I go on mat leave. But if we have everything covered when we get the house, I will likely drop money on it regularly.

[mimie]

Subbing... very discouraged and upset. I've got the book on order from Amazon.

Does anyone else have tremendous anxiety about money that makes it really, really hard to sit down and work things out? Even just paying bills upsets me so much I have to go lie down afterwards and I get an upset stomach. How do you get over the emotional reaction to be able to put in the necessary work (like making a budget and getting current on bills)?

Thank you, and I look forward to being about to join you on Baby Step 0!

[BrooklynDoula]

Can someone explain the logic of tghe $1000 emergency fund before pying dow debt? I have everything current and we are payin down debt but no EF right now so I wonder if instead of $1000 to the cc this month I should save it?

Thanks!

[dealic]

Originally Posted by mimie

Does anyone else have tremendous anxiety about money that makes it really, really hard to sit down and work things out? Even just paying bills upsets me so much I have to go lie down afterwards and I get an upset stomach. How do you get over the emotional reaction to be able to put in the necessary work (like making a budget and getting current on bills)?

Yes. I have an anxiety disorder, and when we were having financial problems I couldn't even bring myself to think about it. It got much better when everything began to come together though. Now, my OCD tendencies just spur me on to meet my goals.

How did I get over the reaction? Hmmm.... Well, I started by making Shawn do the actual paying of bills. I couldn't bring myself to do it. Now I do it again, because I am better at remembering to pay them. And, I didn't develop a budget until I was current on everything. I couldn't have, because we had both just got jobs, and Shawn as a Temp, so I had no consistent reliable income. Then I did, but based it only on my income, because his was unreliable, and made sure my income covered ALL the basics. His went to debts. Psychologically this helped me feel safe. In your case, a budget will hopefully show you you CAN pay for all the basics. Everything else will come, but you won't starve now. That is powerful. Then we cut our expenses down to nothing. Besides moving home, we didn't eat out, go anywhere, etc for almost a year. Even now that we do again, sometimes he needs to remind me that its ok, we aren't in crisis mode and every last penny doesn't need to go to debts.