Dumping Debt and Building Wealth with Dave Ramsey~ FEBRUARY - Page 12

[bc1995]

Thanks for all your hard work, Jaime!

We are on hold more or less until we figure out the whole lawn mower situation. I can't wait to start snowballing one of my credit cards. My interest this month was $100. What a waste!

[Purple*Lotus]

Ugh, February was a bad month in our house, apparantly I don't have any money left to snowball Oh well, next pay check I will.

I am not going to let it get me down

[kittywitty]

I just paid off $2500 of the credit card and all of our hospital bills (almost $2000) from our federal tax returns! Yay!

I wish I could've paid off more, but we needed some clothes and stuff and our carpet cleaner just died which is a must with my dog's GI issues and constant puking.

I can't wait to get that stimulus money and put it all towards the credit card. But my state tax returns will all go towards emergency savings. IF they finally send me baby's social security number!

[Guinevere]

Hi, everyone! Sorry I haven't posted much lately, but I've been reading and cheering along quietly. No real new changes on any of our steps, although I'm cautiously optimistic that we are going to come in several hundred dollars UNDER budget this month : (two more days until I'll know for sure) and if so, I'm totally excited to snowball that $$ into our cc debt. I've cut WAY back on our food budget this month, we've done a lot of eating from the pantry-or-freezer-type of meals, and it's really empowering to see in $$$ signs how much that is benefitting our family. So I just had to share my excitement about that.

Originally Posted by Red

Also, how do you manage funds you're savings for future expenses? Where do you keep it? Should I have an envelope for each thing, stuff like eye appointments which happen every other year, or oil changes which we need every three months? If it's in the bank, after a few months, I don't know what the heck the $$$ still in teh checking is there for, and have to look up every penny. I know I won't be able to keep up with it.


So, how do you?

Red, for stuff like that, we've been using a tip from Mary Hunt (Tightwad Gazette lady) for years that has really, really helped. I like it better than an envelope system b/c it earns you interest on your $ and you don't have to have large amounts of cash hanging around your house for long stretches of time. She calls it a "Freedom Account", I believe, and the whole idea behind it is to have a place to save up for all those things that don't come due or happen every month, but which are bound to happen eventually (home repair, auto repair, medical bills, taxes and insurance.)

We opened a secondary interest-bearing checking account at our bank (we don't pay fees on it b/c our mortgage payment comes out of it, but I'm sure there are other deals out there, too, to reduce/eliminate fees. A money-market account that has limited check-writing would work fine, too). We specifically asked that the account NOT have an ATM/check card attached to it. We do have a checkbook just for that account, though. And I can transfer money back and forth on-line between that account and our primary checking. Anyway...

Every two weeks (when DH "pays" us -- he's self-employed), I transfer a certain amount from our primary checking into that secondary checking account. That's where $ goes for our life insurance (paid 2x/yr.), homeowners insurance and property taxes (our house isn't escrowed, so we need to save up for those, paid 2x/yr.), auto repairs, medical bills, clothing, home repairs. I think those are the basic things. Obviously, you can save up for whatever you want/need. To figure out how much to put in there, I calculated our yearly insurance/tax bills or how much our deductible was for medical or how much we spend on clothing in a year, etc. and divided that number by 12. And that's how much goes in there monthly (well, divided again by 2, since we do it twice a month.)

For some things that are non-negotiable (like the insurance), it's obvious how much needs to go in. For other things, like clothing, I usually make up a figure based on what we can afford, so there's more wiggle room. For things like the medical deductible, once I get enough saved up in there to cover it, I stop funding it and put that $ on something else instead. Then, when these bills come due or the car breaks down, etc., instead of freaking out about how this is going to destroy my monthly budget, I just write a check out of this account to pay for it.

Ah, you may be thinking, but what if I have a bill for more than is in your "fund"? At least that was MY first concern with this idea. And this actually happened to us a lot when we first started and the funds were still really small, and it can still happen when things are really tight or the bill is really, really large. What you do is write a check for the amount you DO have saved up in that fund, and then you pay the rest out of your primary checking account.

That may not seem all that helpful, but I have to say, even having a 1/4 or 1/2 of the bill already saved up for has really, REALLY reduced our stress level about unexpected crises that have come up. Now we're not forced to eat beans and rice for weeks on end to afford that emergency trip to the doctor or to fix our leaking hot water heater. We argue a lot less, too, over where the $ is going to come from.

I just thought I'd throw that idea out here, in case it would benefit anyone else.

Guin

[Red]

Guin, I was wondering about doing something like that. I like envelopes, but I don't like having a bunch of them and hte money hanging around the house. Thanks for a great idea!

kittywitty, good for you!

Jaime, hang tough!


Ok, I lost someone. Is it Barb who's been having health problems? Haven't seen her for a while. (chiari, tumor) Anyone know how she's doing?

[Galatea]

Yes, our fund is in a bank account, not envelopes. I should change it to interest-bearing checking, though.

[bc1995]

I haven't seen Barb around in a while. I hope all is ok.

I think we may have figured out finally how much we will have to pay for a mower and how much we will have to pay towards the cc's. The mower is going to slow us down a little on my original goal of cc's being paid off by June, but the economic stimulus with really help to keep us on track and we should still be able to have them paid by September. Then we can start working on my van.

[TanyaS]

Hi, all! It's been busy around here lately and I haven't posted. I have been reading along and cheering for successes, encouraging those who are feeling discouraged, and just enjoying the support here!

I was feeling a little discouraged after a lump sum payoff and BEF funding with tax returns. Dh and I are working on selling things to go to our debt snowball. It is truly amazing what happens when you catch up your bills and cut up your cards. Balances start dropping because 1) you're not charging and 2) you're not late/over the limit/ or otherwise stacking up fees.

On the income front, dh works for telecom and there is a union contract about to be approved. He will get a $500 bonus, 3% increase effective last week, and increase in his on call pay and a guarantee of a minimum 1 hour's pay if he is called out for an outage. We also got word on his bonus. We can expect it the first week of April. Two bonuses and a check from the government will help our snowball tremendously!

I'm also considering summer child care for a school-aged child. Trying to convince dh, though, is tough. I think it would help out our snowball a lot and be temporary so that dh wouldn't have to worry about it not working out.

[Maggi315]

HI,
I'm still around! I have been dealing with the normal sick kids this time of year, my son's eardrum ruptured this weekend. I swear, I feel like just giving up sometimes when our medical bills just keep coming, one thing after another. he has had problems in the past, so we are getting hearing tests done and possible surgery this friday. I am scheduled for another MRI to see if my tumor grew and if I need radiation (in about 2 weeks or so). We paid some of the smaller medical bills and set up payments for the larger ones, right now we're still paying over 2K in medical expenses (including insurance) each month! That's crazy!!!

Anyway, we are getting back a federal refund, but need to use it to pay our state and local, I'm not complaining, though, at least we'll come out even!

my husband had a big case this month which is great because I have no one due on march, so very limited income for me, but a nice break!

I do read the thread and it's very encouraging to hear others successes! Even though we don't have extra money to snowball, just reading this thread has helped us keep from going further into debt and not using credit cards, which is a great victory.

[Girl In The Fire]

This thread is great for motivation when you need it the most... Thnx Jamie for keeping it going


This month hasn't been great but it has not been horrible either.

We have had a few steps backwards:

We went way over budget on food I was budgeting $300 a month for food but this month ended up being about $500

We ate out way too much, we have been sick off and on most of the past month and most nights I was too wiped out to even think about cooking.

DH aka Mr. Leadfoot got a speeding ticket that cost us $115

I had DH's credit card mostly paid off, $200 left that could have been paid off with the most recent pay check... We do a sort of side business picking up antique tools and restoring them and selling them. There was a very promising estate sale and we didn't have cash avaliable. I didn't want to dip into the emergency fund so I dug out DH's CC to use. I figured it would be OK, whatever he spent plus some would be recouped quickly.

He went to the the estate sale and it was a treasure trove of antique machinist tools... Not only does he restore and sell, he collects tools and couldn't resist buying new toys for himself. After all was said and done he charged up almost $300, $200 on stuff for him to keep :

An argument ensued (and we haven't argued about money in ages) and I ended up cutting up the credit card. It was a blessing in disguise though, after things calmed down we were forced to devise a battle plan together so we would be ready for the next time there was an opportunity to buy some tools for restoring/reselling. We decided to start an account strictly for buying/restoring/selling expenses which probably should have been done a long time ago.

Some of the positives this month:

Paid off our car

Paid off our couch

Paid of most of DH's CC (again) - $250 left to go

Paid off a chunk of my credit card - $1700 left to go

$1950 until we are debt free, should be taken care of by mid April, two months sooner than expected.

Yesterday I got an unexpected bill from the doctor for $150, several months ago if we got this bill I would have freaked out wondering how I was going to pay for this. The old me would have tossed it on what was once the unholy mess that was supposed to be my desk and do the good old "Out of sight out of mind" trick. I might have dug it out a couple of days before it was due and grudgingly wrote a check, if I happened to remember it in the first place.

Instead it didn't even phase me, last pay period I set aside $300 for the car payment that at the time I didn't know would be paid off. So I had an extra $300 and even if I hadn't, because we have been budgeting, we have extra money I throw into the snowball but could have easily used to pay the doc bill. I went to my now organized desk, sat down, wrote a check, put a stamp on the envelope, and put it in the mailbox.

It may sound kind of stupid and seem rather insignificant, but it really is an accomplishment for us. It is a whole new attitude, outlook, and respect for our money and ourselves.

[Red]

Barb, sorry to here the kids have been sick! If your medical bills are over a certain percentage of your income, you can apply for Medicaid (or Medicare, I can't keep them straight), even if you're not income eligible. Call your local Welfare office and ask.

I think about you often, so keep posting. And you're right, NOT racking up more cc debt is really going to help in the long run.

[Mama Rana]

APBTLuv, making a separate saving goal for that sounds like a good idea. Honestly, to me, it doesn't make sense to charge things that you're going to turn around and sell. Even if you make a profit (which I assume you do), to me it feels like working to pay off the card rather than because you enjoy it or to earn extra. kwim?

congrats on the new attitude!

[bc1995]

APBTLuv, sounds like you have had a great month! What a relief to be able to check that many things off the list as paid in full!!

I had a bit of a light bulb moment for myself today. I have been feeling really frustrated and grumpy for the last month or so in large part due to finances. Seems silly since we are in a better place than we have ever been financially thanks to starting this plan. Anyway, it hit me today. It is my problem with instant gratification. That is what got us into this mess racking up cc bills and buying my van. I want to pay everything off immediatly which of course is not even an option, but I can't stand not being able to do something immediatly. Guess I need to work on that, huh?

[kerc]

Originally Posted by bc1995

APBTLuv, sounds like you have had a great month! What a relief to be able to check that many things off the list as paid in full!!

I had a bit of a light bulb moment for myself today. I have been feeling really frustrated and grumpy for the last month or so in large part due to finances. Seems silly since we are in a better place than we have ever been financially thanks to starting this plan. Anyway, it hit me today. It is my problem with instant gratification. That is what got us into this mess racking up cc bills and buying my van. I want to pay everything off immediatly which of course is not even an option, but I can't stand not being able to do something immediatly. Guess I need to work on that, huh?

nods.


I did just do the finances for the next two weeks and we'll have some snowball leftover. Which is fun. AND we're able to get our shower fixed before MIL comes to visit. (it's functional, but the faucet leaks -- you have to go out into the hallway to turn on/off water at the shutoff valves). I just bought the replacement faucet online (vs. heading out to the home depot, where I might as well just empty my pockets before i go in).

Garage sale sat morning with friends. If I can spend this evening pricing stuff I should be able to make enough to pay cash for my dd1 and dd2 to get new beds. yay! see ya crib! (dd2 has been sleeping in the crib with the side-off, not ideal for parents to go to her and cuddle back to sleep).

[Einley]

Originally Posted by bc1995

I want to pay everything off immediatly which of course is not even an option, but I can't stand not being able to do something immediatly. Guess I need to work on that, huh?

Yup- having the same problem here. I'm trying to focus on what we have accomplished instead of what more we need to do.
I would love to have a windfall and be able to pay everything off. I don't think that is going to happen though.

[mommyjoy7021]

Originally Posted by bc1995

APBTLuv, sounds like you have had a great month! What a relief to be able to check that many things off the list as paid in full!!

I had a bit of a light bulb moment for myself today. I have been feeling really frustrated and grumpy for the last month or so in large part due to finances. Seems silly since we are in a better place than we have ever been financially thanks to starting this plan. Anyway, it hit me today. It is my problem with instant gratification. That is what got us into this mess racking up cc bills and buying my van. I want to pay everything off immediatly which of course is not even an option, but I can't stand not being able to do something immediatly. Guess I need to work on that, huh?

Oh my gosh...that is totally me...instant gratification. I want to pay everything off NOW, but there is NO way.That is how I live my life...I want it now...I want it now...now, now, now...

So, you and I can work on that together!!!

Mjoy

[JackieR]

I haven't checked everything to see how we've progressed this month, but I'm looking forward to tomorrow evening when I'll have some time to do it. I know some of it won't be pretty (like clothing spending!), but I think I'll be happy about other things. I think the most exciting thing will be that I'm pretty sure we've lived under our means this month. I've tracked every penny spent in a notebook - every transaction goes on my list. I'm going to put it in Excel by category to see where things went. I'm going to do this every month until I'm back to having a good handle on what we're spending & why we're spending it.

[lalaland42]

I found some money today. On a lark, I visited the unclaimed property website and found out that 2 separate states are holding money (and stocks) for me. All of that money is going toward my student loans. I estimate that the states have about $1000 of my money and that will pay off almost 1 (of 8) loans. Woo hoo. So excited.

[CeciMami]

Instant gratification...that's me too! Sometimes I'll get ahead of myself and pay more to the credit card than I should of and then have to eat out of the pantry and the freezer for a couple weeks until we recoup!

We put all our debts into a snowball calculator and we're currently set to be debt free in May of 2010...wahoo!!!! This is what we have left:

$13K on the CC (we just have one now)
$23K on the van (love, love, love our Odyssey...just hate the pricetag! )
$16.5K in student loans (*sigh*)

Wow...when I type it out like that, I get depressed! But I try to keep in mind that it just takes work...little by little...we'll all get there eventually!!!!

[Purple*Lotus]

I am leaving a trail of debt snowballs to lead you to March's thread

http://www.mothering.com/discussions...7#post10658637