Dumping Debt with Dave Ramsey/DECEMBER - Page 11

[SugarAndSun]

I was thinking of cashing in some simple IRAs and a 403b I have to pay down some debt. I would still have money in the teacher's retirement system. Why is this always bad? I have 30-35 years until retirement to put it back and I would still have the main retirement. I have credit cards with upward of 29% interest. I want to pay them off.

[~PurityLake~]

Originally Posted by SugarAndSun

I was thinking of cashing in some simple IRAs and a 403b I have to pay down some debt. I would still have money in the teacher's retirement system. Why is this always bad? I have 30-35 years until retirement to put it back and I would still have the main retirement. I have credit cards with upward of 29% interest. I want to pay them off.

Well, it sounds like in your case it wouldn't be all that bad because you would still have the teacher's retirement system to fall back on.

Me, the small $4,120 is ALL of my retirement and I'm currently a SAHM, and that 401 k was through a job from back in '98. I was working from 1988 through 2005 and that one job was the only job that offered a 401k, so if/when I ever return to the work force, there is no guarantee I would be able to get a job that offers a 401k plan.

[Red]

Dh's retirement comes with health ins too. Actually a better plan than they offer them while working!

Katreena, could you take the money out, and then hide it? So you could get food stamps? I don't mean, like hide it under the bed, but put it in a safe deposit box at the bank, or in an account under an alias?

When we were desperate, I never mentioned our annuity, and don't know if I should have. As I said, I didn't consider it real money. Till now.

What's a PFD?

[shanetedissac]

Originally Posted by Nolansmum

I have a complicated question to ask...

So here is my big question, I was thinking of sticking my bonus money in a savings account and telling DH that I will match each month the amount of funds he pays towards his students loans. I feel like it is just too easy for him to ride on my hard work. By the way I originally had $63K in student loans and I made big sacrifices to pay it off down to $8K.

I know Dave Ramsey's deal is to act as a couple, one unit. But I feel as if I am enabling his semi-laziness if I put my hard earned bonus into his student loans .
Good idea or no?

No, I do not think this is a good idea. Like you said it your self, being married is a group venture not individual. Marriage counciling would be helpful in helping the two of you get on the WE track. The way that you stated 'matching' him immediately made me think how I would treat my boys. From the husband perspective will he be empowered to win? Why is he reluctlant?

Be well,

Shane

[shanetedissac]

Originally Posted by Red

Katreena, could you take the money out, and then hide it? So you could get food stamps? I don't mean, like hide it under the bed, but put it in a safe deposit box at the bank, or in an account under an alias?
What's a PFD?

That would be fraud! Please don't try to skirt the government. If you have money use it wisely.

Be well,

[shanetedissac]

Originally Posted by SugarAndSun

I was thinking of cashing in some simple IRAs and a 403b I have to pay down some debt. I would still have money in the teacher's retirement system. Why is this always bad? I have 30-35 years until retirement to put it back and I would still have the main retirement. I have credit cards with upward of 29% interest. I want to pay them off.

It is bad because of the tax ramifications. You would need to set aside at least %40 of the money to pay the taxes and penatilies. Dave does not recommend cashing out retirement funds unless you are faced with forclosure.

Be well,

[Heather423]

Sugar and sun, can you take a loan out on your 403B's? I would do that if you are paying 29% interest on your credit cards. There will be no way to pay off CC's with that high of a percentage rate. If you cash it in, they hold back 20% for taxes then you automatically loose 10% in penalties. You claim it as income for that year, so what you actually pay in taxes is based on your income tax rate. So if you don't make that much money, you probably would come out ahead. Can you apply for a personal or consolidation loan that has a lower interest rate?? I would look into that option as well. 29% interest is just too much.

Education savings. I like the Coverdell ESA's better. From what i read they seem to have better flexibility, and you can use it preschool and elementary education now, but that may change if nothing changes in congress by 2010. I plan on sending my daughter to a Montessori preschool, so I would be able to use it for that, that is in 2010 so I hope they extend the bill.

[shanetedissac]

Originally Posted by Heather423

Sugar and sun, can you take a loan out on your 403B's? I would do that if you are paying 29% interest on your credit cards. There will be no way to pay off CC's with that high of a percentage rate. If you cash it in, they hold back 20% for taxes then you automatically loose 10% in penalties. You claim it as income for that year, so what you actually pay in taxes is based on your income tax rate. So if you don't make that much money, you probably would come out ahead. Can you apply for a personal or consolidation loan that has a lower interest rate?? I would look into that option as well. 29% interest is just too much.

This is so not what Dave Ramsey would recommend in his plan. This is all the 'math' talking. Yes, you can pay back your credit cards. Call them and negotiate a better rate or surf it to a lower interest card. This is not optimal. It took a while to get this debt it will take a while to get rid of it. You can do it!

Be well,

[Heather423]

Originally Posted by Red

What's a PFD?

I think it is a check from the oil drilling revenues that they pay to the residents of Alaska if I am not mistaken.

[Heather423]

Originally Posted by shanetedissac

This is so not what Dave Ramsey would recommend in his plan. This is all the 'math' talking. Yes, you can pay back your credit cards. Call them and negotiate a better rate or surf it to a lower interest card. This is not optimal. It took a while to get this debt it will take a while to get rid of it. You can do it!

Be well,

Well the math doesn't lie. Paying 29% interest is financial suicide. Yes, definitely try negotiating a better rate, or apply for lower rate cards. If that doesn't work, then try a personal loan or consolidation loan at a better rate. If you have bad credit and none of that works, then look into the loan from the 403B's as a last resort. But definitely exaust all other options first. I do have a lot of CC debt to the tune of $51K, but it is mostly all 3.9%, so about the same as inflation (unless we go into a recession in 2008 as they are predicting, then inflation would rise).

[shanetedissac]

Originally Posted by Heather423

Well the math doesn't lie. .

You are absolutely correct. the math does not lie. That is my Dave says that money is (may get the percentages a bit off) %85 emotional and %15 math. We need to change the emotional ahead of the math. I can't explain it well but that is what he says over and over when people try to argue the math.

Also, a debt CONsolodation is also not recommended.

Be well,

[Heather423]

I didn't mean going through a debt couseling agency, I meant getting a loan from a bank to consolidate all the cards into one loan. You are right, that would affect her credit badly. I was watching "all maxed out", and the financial counselor suggested a consolidation loan.

Emotions would be running pretty high for me if I was paying 29%. I would be extremely stressed.

[SugarAndSun]

I know Dave says consolidation and cashing in retirement plans are bad, but I just can't get past the 30%. It seems so crazy. FWIW, we have already changed the emotional quite a bit. We have literally been spending nothing on extras for some time. (See my post in the No Spending thread). I applying for jobs and will go back to work when I get one. I don't know if we should stick to Dave's plan so closely that we keep payng $200 a month in interest on $7k. Our goal is to be completely debt free (mortgage included) in the next 18 months. We are downsizing in order to be able to do this.

[shanetedissac]

Originally Posted by SugarAndSun

I don't know if we should stick to Dave's plan so closely that we keep payng $200 a month in interest on $7k.

Don't give up!!! The plan works, it takes time and sacrafice on the way. You sound like you are on the plan and are making the sacrafices that you need to. Call your cc company and demand a lower rate or surf to a lower rate card. That is awsome that you will be debt free in 18 months. You must have a huge income or ity bity mortgage.

Will you be getting your emergency fund in place, retirement investments, and college funding going before the house? I so want the house done but need to do a Bar Mitzva fund and then begin regular college. I forsee the house being done a bit early than the note, we are in year 4 or 15.

Live like now one else, so you can live like no one else!

Be well,

Shane

[~PurityLake~]

Originally Posted by Red

What's a PFD?

http://en.wikipedia.org/wiki/Permanent_Fund_Dividend

http://en.wikipedia.org/wiki/Alaska_Permanent_Fund

[starling&diesel]

RE: debt consolidation

Remember that while Dave Ramsey is a very smart man, unless he has your numbers in front of him, YOU remain the greatest decision maker in regards to your family. He even says that, to trust your gut.
For us, consolidation was a no brainer. We had a stupid debt on a truck we bought on impulse, so when the fog cleared and we realized what we'd done, we refinanced our mortgage and rolled the truck into it at a lower rate, while at the same time taking advantage of the the increased value in the house. Our total monthly payment is $940. That's it. Nothin' else. No cc, no student loan, no nothin'. Sometimes you gotta do what you gotta do.

[SugarAndSun]

Originally Posted by shanetedissac

Don't give up!!! The plan works, it takes time and sacrafice on the way. You sound like you are on the plan and are making the sacrafices that you need to. Call your cc company and demand a lower rate or surf to a lower rate card. That is awsome that you will be debt free in 18 months. You must have a huge income or ity bity mortgage.

The problem is, I closed the account already. How stupid! Actually we decided to move to a smaller home in a cheaper area... that's how we'll be debt free. So all we need to do is sell the house!

[mumkenna&lucas]

Wow! Our thread got buried..I am bumping it back up!!
Nothing fabulous going on here..other than I can't wait till Friday for payday! We have $20 left for gas and everything else..Luckily I think gas is all we will need!

[hattelatte]

Hi everyone. I'm new to posting at MDC.

I have just started to read Dave Ramsey's "Money Makeover" and "More Than Enough".

We are in some financial straits due to overwhelming medical bills.
My husband was burned badly a few years ago and required surgery and hospitilization....we had/have no insurance.

Despite paying as per the agreement (a small payment but still every single month), we have been sent to a lawyer for a settlement and collection.
This is when they choose to tell me that we have accrued 9% interest since the beginning of the account.

So we have always lived simply by choice (no credit cards, etc), and now are swimming in over 30K of debt with a judgement looming over our heads.
We have been advised to declare bankruptcy - but really, really don't feel that it is a good option.

I'm reading Dave's books and beginning to get excited, clinging to the sheer hope that this will be over some day and we will be free.

One good thing that has come of this - I am determined that our family will never be in this situation again. We are taking control.
New homeschool family project!

I'm enjoying reading everyone's successes. Big applause to everyone who is going for it and making their own financial destiny.

Warmly,
HatteLatte

[Heather423]

Originally Posted by hattelatte

Despite paying as per the agreement (a small payment but still every single month), we have been sent to a lawyer for a settlement and collection.
This is when they choose to tell me that we have accrued 9% interest since the beginning of the account.

Welcome. That stinks. Can they legally do that? Especially if you were honoring your agreement? Did you have that in writing? Well, since they are considering settlement, would they settle for a smaller payoff amount? Can't hurt to ask what it would take to make it go away. Maybe they can forgive the interest? Have you spoken with them? Maybe sending it to collections is just normal procedure for an overdue account, you may need to make a new payment agreement with the lawyer. If they do end up taking you to court, make sure you document every payment and show that you have a made a good faith effort to follow through with your agreement, they probably don't want to go that far, since it would be a large expense on thier part. Luckily it isn't tied to credit cards.