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Dumping Debt and Building Wealth with Dave Ramsey ~ May - Page 11

post #201 of 309
Quote:
Originally Posted by StrawberryFields View Post
I can only speak for myself when it comes to the retirement contributions. While it is true that we are still working on paying down our debts (car loans), I just can't agree with Dave Ramsey if he suggests postponing ALL contributions at this time. We are continuing to make our pre-tax contributions to our 401 (k) in order to get the maximum employer match. I don't see how passing up "free" money in order to get a much smaller, taxed amount to put toward debt would be the better choice.
I totally agree. I joined this list not because I'm a Dave Ramsey fanatic, but because he's got clearly defined goals and this is a group of wonderful people who are working toward something positive (and all of you help me work toward something positive, too!). His steps work for a lot of people, but not for everyone. We don't view credit cards as awful as long as they're paid off every month, and we are generally disciplined enough to do it. Since joining this thread, we've done it. As far as skipping ahead to retirement savings, we get 100% employer match up to 10% so it would be idiotic for us not to take advantage of that. Add the compound interest factor that we'd lose out on if we waited and this is a no brainer for us. My husband feels better about putting $100/mo into college savings for our kids (even though I financially disagree with this choice, like Jaime said, pick your battles, ha ha). So I don't think that any of us need to do everything in order to keep supporting each other on our own paths to financial freedom and wealth!
post #202 of 309
So I just sent the last payment to our WaMu card. This payment will make us Credit Card debt free. But I do not feel excited at all. DH wants to buy a scooter and put it on a CC. First he thought that it was 0% APR I told him no it is only 0% that was for balance transfer. Now he is thinking we should get a NEXT CC with a 0% intro just to buy a freaking scooter that we can raise the money in a month and a half for:. I just don't get it. He thinks it is worth it in the long run(yeah a month and a half) and there is no difference between putting it on a 0% CC and saving up. The thing is that he was agreeing w/ what I was saying about no CC only in Emergencies and to save up for what we need. Know all of a sudden, I am in a bubble and in this instant it is better to do.

Am I missing something. Is it worth it, with gas prices and stuff?

How do you keep motivated with crap like this keep happening. I just feel like NOT paying his family as soon as I planned since he seemed to not care. Maybe I should just pay my student loans and let him decide were his family fit in.
post #203 of 309
Thread Starter 
How much is the scooter? Have you talked to him about setting aside money and paying for it in cash? Maybe even put the snowball on hold and use that money (while still paying the minimums) to save up.
post #204 of 309
you can easily trick him! (not meanly) say "OK! we'll get you a scooter for fathers day!" course then he has to wait for it but it gives you about a month before you have to buy it and then you can put the rest on the credit card and that gives you another 30 days of no interest. VOILA everyone gets what they want.

honestly if MY dh were to say he wanted a scooter (or any other super gas saver) i would jump for joy. i suggested a scooter but no go. he spends about $250/mo on gas (possibly more) and i would be so happy to spend $100 or less.
post #205 of 309
Quote:
Originally Posted by phathui5 View Post
How much is the scooter? Have you talked to him about setting aside money and paying for it in cash? Maybe even put the snowball on hold and use that money (while still paying the minimums) to save up.
It is $1500. Yes I talked to him about setting the money aside. He thinks it is better to get it now. By tommorrow we will be CC debt-free. Only the Student loans will be kept on a min. payment. And we was already not making payments to his family, I was going to start that w/ my next paycheck.

I am just stunned that he would want to get a NEXT CC just to get a 0% APR for this scooter which will only take us a month and a half to get.

Quote:
Originally Posted by dhinderliter View Post
you can easily trick him! (not meanly) say "OK! we'll get you a scooter for fathers day!" course then he has to wait for it but it gives you about a month before you have to buy it and then you can put the rest on the credit card and that gives you another 30 days of no interest. VOILA everyone gets what they want.

honestly if MY dh were to say he wanted a scooter (or any other super gas saver) i would jump for joy. i suggested a scooter but no go. he spends about $250/mo on gas (possibly more) and i would be so happy to spend $100 or less.
Dh wouldn't buy the father's day thing and he would know what I am trying to do. He is not big on ANY of those types of holidays or birthdays. It is a good thing is mother is born on Christmas day or he would forget that just like he does his brother own(Every year I have to tell him his brother birth day, yes he forgets what day his brother was born on EVERY YEAR).

But in his defense I do see where he is coming from. We spend about $70 a month for the metro. I also have to get up every morning to drop him to the metro and pick him up(it is about a 5min drive). And he also was taking a class on Tuesday nights(he will resume in the fall).
post #206 of 309
Hi everyone. I just finished reading TMMO a few days ago. I'm itching to be able to sit down with DH and create a zero balance budget.

The zero balance budget kind of scares me though because we have such a high food expense (due to laziness and eating out) I'm not sure how to budget that line item.

BS0: Need DH to come back into town, but I'm working on a outline. Including all the things we should have like wills, life insurance, etc..
BS1: $1,000 to start an Emergency Fund
I think we have the money, need to find a safe place to put it.
BS2: Pay off all debt using the Debt Snowball
84/84 CC1 PAID
184/184 CC2 PAID
196 CC3
1766 CC4
2094 CC5
2883 CC6
6641 CC7
4463 Loan
16736 Car
BS3: Three to six months of expenses in savings
BS4: Invest 15 percent of household income into Roth IRAs and pre-tax retirement
BS5: College funding for child
BS6: Pay off home early N/A
BS7: Build wealth and give!
post #207 of 309
Thread Starter 
althara
post #208 of 309
I was in no way trying to say that any of you were doing this "wrong" - you're paying down debt, that's AWESOME!! I had just noticed it quite a few times on people's "reports," and wanted to clarify the idea behind the steps - finish one completely before moving on to the next.

With that said, if I contribute $25 a week to my Roth, my boss gives me $50. Like many of you, this deal is too good for me to pass up, so I spend the $25 while I am still working on paying down my debt.

I could also see that if we were saving for a downpayment on a house, we may do half to that and half to the debt.

For the "storm on the horizon" situation - like at the end of a pregnancy, when you know you are going to have some time off work - I would save every penny and go back to making minimums on CCs.

On the scooter issue - we are dealing with the EXACT same debate in our household right now! "But I'd be saving so much in gas it would make the payment each month." UUUUGGGGHHH. I'd honestly rather pay for the gas for his commute right now and experience the value of paying CASH for something and actually owning it when you use it for the first time. We finally *own* our vacuum cleaner, our chest freezer, and our laptop.
post #209 of 309
Quote:
Originally Posted by rosie_plus_one View Post

..........................

On the scooter issue - we are dealing with the EXACT same debate in our household right now! "But I'd be saving so much in gas it would make the payment each month." UUUUGGGGHHH. I'd honestly rather pay for the gas for his commute right now and experience the value of paying CASH for something and actually owning it when you use it for the first time. We finally *own* our vacuum cleaner, our chest freezer, and our laptop.
That is how I feel too. Oh well...tommorrow he and a co-worker is going to buy one.
post #210 of 309
I've lurked on this thread for a while. I have his book on hold at the library but I'm hoping you can answer a few questions for me about the BS so I don't have to wait for the book to be available.

What should the $1000 emergency fund be used for and where should it be kept? It seems our monthly budget is always shot by unexpected expenses. We have the money to cover them but it is at the expense of paying down debt. For example, the toilet breaks, the garage door opener breaks, an unexpected medical bill, etc. (that was just this month).

Also, I'm not sure how to budget for all the unbudgeted things that come up - "oh, it's time to renew the museum membership - $75. Oh, it's time for the car registration - $75. Oh, it's time for the summer pool membership -$100".

I think we'd eat through our emergency fund in one month!

On paper, we should have enough money to put a good chunk down on debt every month. But, then all these things come up and I don't know how to deal with them. And then I get in the "oh, screw it" mode and get take out for lunch every day.

Also, is a home equity loan in the category of debt or mortgage?

I'd really appreciate some advice.
post #211 of 309
Quote:
Originally Posted by mackysmama View Post
I've lurked on this thread for a while. I have his book on hold at the library but I'm hoping you can answer a few questions for me about the BS so I don't have to wait for the book to be available.

What should the $1000 emergency fund be used for and where should it be kept? It seems our monthly budget is always shot by unexpected expenses. We have the money to cover them but it is at the expense of paying down debt. For example, the toilet breaks, the garage door opener breaks, an unexpected medical bill, etc. (that was just this month).

I'd say things breaking are an emergency. Same with unexpected medical expenses.

Also, I'm not sure how to budget for all the unbudgeted things that come up - "oh, it's time to renew the museum membership - $75. Oh, it's time for the car registration - $75. Oh, it's time for the summer pool membership -$100".

I take the amount of my regular but not monthly expenses and break them down into a monthly amount. I'll transfer that amount into a savings account and then when the payment is due, transfer it back. So if the museum is 1x/year for $75 and car registration 1x/year for $75 then I'd transfer $12.50 per month (150/12) so that I am allowing for them in my monthly budget. If you don't have twelve months before the first payment is due but have five, then I'd divide it by five. Does that make sense?

I think we'd eat through our emergency fund in one month!

On paper, we should have enough money to put a good chunk down on debt every month. But, then all these things come up and I don't know how to deal with them. And then I get in the "oh, screw it" mode and get take out for lunch every day.

Also, is a home equity loan in the category of debt or mortgage?

I've heard Dave say that if the HEL is 50% of your annual income then it goes into the mortgage category. Less than that then it will be in baby step 2 which is the debt snowball.


I'd really appreciate some advice.
I've put my answers in purple above. I'm fairly new to this as well so if I'm wrong someone chime in and set me straight!
post #212 of 309
Thread Starter 
Quote:
Also, I'm not sure how to budget for all the unbudgeted things that come up - "oh, it's time to renew the museum membership - $75. Oh, it's time for the car registration - $75. Oh, it's time for the summer pool membership -$100".
Those things should be part of the budget if you're going to be spending money on them.

Quote:
Also, is a home equity loan in the category of debt or mortgage?
It's debt.
post #213 of 309
We keep our $1000 in a ING saving account that is linked to our checking account in case I have to transfer some for an emergency. We haven't touched ours since we established it so it has been growing. If we did have to dip into it, we would replenish asap. For the few unexpected things that have come up, we have thankfully had the cash to cover them without it effected our debt payoff.

We have an item in our budget we call the 'slush fund' for events like you talked about (memberships, insurance renewels, etc) that only come along every once in a while. We took the amount we figured we averaged over the year and set that amount back each month to help cover those expenses when they do come along.
post #214 of 309
Quote:
Originally Posted by mackysmama View Post
I've lurked on this thread for a while. I have his book on hold at the library but I'm hoping you can answer a few questions for me about the BS so I don't have to wait for the book to be available.

What should the $1000 emergency fund be used for and where should it be kept? It seems our monthly budget is always shot by unexpected expenses. We have the money to cover them but it is at the expense of paying down debt. For example, the toilet breaks, the garage door opener breaks, an unexpected medical bill, etc. (that was just this month).
In the book he talks about having $1,000 in cash waiting for emergancies, he doesn't spell them out, but I would say something like a root canal that just sprang up, your child breaks the neighbors window, etc. Stuff that can really just comes out of the blue.

In your case for house repairs, I would think you should budget a certain amount each month for just those things (maybe take an average of the last 6 months of housing expenses and build that into your budget)

Quote:
Originally Posted by mackysmama View Post
Also, I'm not sure how to budget for all the unbudgeted things that come up - "oh, it's time to renew the museum membership - $75. Oh, it's time for the car registration - $75. Oh, it's time for the summer pool membership -$100".
I have a number of things like this also in my budget, for us it is about $1,000 of fees usually around the same time each year. I use quicken and enter those in as expenses at the applicable times and that way I don't forget about them. For your memberships, you could save a little in cash each month, hide it in an envelope and then you would have the money when they come up--just find an average amount/month and save that for those things you actually can pay for in cash. Even if you aren't fully "funded" in your envelope it can help you not feel overwhelmed to have at least some of the fees "paid for" ahead of time.


Quote:
Originally Posted by mackysmama View Post
I think we'd eat through our emergency fund in one month!

On paper, we should have enough money to put a good chunk down on debt every month. But, then all these things come up and I don't know how to deal with them. And then I get in the "oh, screw it" mode and get take out for lunch every day.

Also, is a home equity loan in the category of debt or mortgage?

I'd really appreciate some advice.
He does talk about how over time he found less and less to be actual "emerganies", and got a better handle on these things that weren't monthly expenses but did tend to reoccur over time.


I just skimmed the whole housing part, as we are renters for the long term--maybe someone else can help with the HELOC?


Good luck, I think the most important part is to start, and you get to decide what constitutes an emergancy in your life!
post #215 of 309
Quote:
Originally Posted by rosie_plus_one View Post
I did want to make sure that you know that Dave Ramsey does not advocate jumping ahead. He recommends postponing retirement contributions until you are completely out of debt.
I think he slips into his book at some point that any non-matched contributions should be halted until debt is paid off, but don't pass up the "free" money.
post #216 of 309
Quote:
Originally Posted by mackysmama View Post
What should the $1000 emergency fund be used for and where should it be kept?
It can be well hidden cash, a savings account not linked for overdraft protection on your checking account, or a money market account. Anywhere you put the money should be liquid, so no CDs or anything else with penalties that will cause you to hesitate to use the money for emergencies.

Quote:
It seems our monthly budget is always shot by unexpected expenses. We have the money to cover them but it is at the expense of paying down debt. For example, the toilet breaks, the garage door opener breaks, an unexpected medical bill, etc. (that was just this month).
Those are perfect examples of emergencies. If it breaks and you have to fix it now then it's an emergency. If it breaks and you can wait to fix it for a few months then change your budget instead and save up for the expense.

Quote:
Also, I'm not sure how to budget for all the unbudgeted things that come up - "oh, it's time to renew the museum membership - $75. Oh, it's time for the car registration - $75. Oh, it's time for the summer pool membership -$100".
As others have said those are expected infrequent budgetary items, so you can divide by however many months you have until it's due and add it to your budget. Just make sure you take the money out of your checking account (cash or transfer to savings).

Quote:
Also, is a home equity loan in the category of debt or mortgage?
If it's less than 50% of your annual income it's debt, if it's more then it gets categorized as mortgage.
post #217 of 309
Well we will be back next month!

We sold our home ( that got us out/back into debt ( old debt into a refi) but our rent will be 1/3 of our house payment...and no water bill so we should dig out pretty fast...I hope!
post #218 of 309
Quote:
Originally Posted by mackysmama View Post
What should the $1000 emergency fund be used for and where should it be kept?

Also, I'm not sure how to budget for all the unbudgeted things that come up
We also keep our $1000, plus the bigger emergency fund we're working on in an ING account that is linked to our checking. If we needed any money out of it, it takes like 2 days to have it transferred. Others have given good advice on what it should be used for. The best is when there are months you don't have to use it for anything.

For the things that you know come up throughout the year like memberships, I enter it as a monthly bill and make it look in the check register like it was taken out. For example, we have a utilities bill that is due every three months so each month I subtract in the checkbook "$40 - save for village" and then when the bill actually comes I "deposit" back in that money I had set aside for those three months and pay the bill. So it's actually always there in my checking account, I just don't see it in the balance total if that makes sense.
post #219 of 309
Hurray! We are now debt free except for our car thanks to being economically stimulated! hehe
Here's our plan from here on out:
BS2: Pay off all debts: Pay extra $200/month from previously snowballed debts to pay off our car 2 years early and save over $1000 in interest! We even filled out the paperwork to have the extra principal payment drafted from our account each month so we can't decide we "need" the money for something else, hehe.
BS3a: 3-6 month em fund: 3,000/10,000 currently, we're going to add $2000 in the next month & a half, which will put us at 3 mo's expenses, and after we get our house we'll go full-force into saving the full 6 months expenses.
BS3b: Save for down payment for a house: When our 3-mo EF is saved, we're going to save 1200/mo for 8.5 months & buy a house! YAY!
(Yes, we know we're SUPPOSED to pay off the car first, but we're living with my in-laws right now, and even full focus on the car would take over a year to pay off, and trying to sell it & pay cash for something else would take just as long since we're upside down on the loan. We need to get our own place sooner than that, so this is really the best option for us. BUT we won't finance a car ever again! NO NO NO! hehe)

Thanks to recent conversation on here about budget software, I started looking at using Microsoft Money, which was already on our computer. I must say I'm pretty excited about it! To me, it's so much easier to put all of your bills in the computer to see when they're coming up, and I also love being able to categorize expenses as I enter them, to see how we do on our budget. It's so much easier to just run a report instead of putting it all down on paper by hand!

One question, though. When you set up a budget, it automatically makes it for one whole month. Is there any way to change this to budget for just 2 weeks at a time? And can you make new budgets for each time period, rather than one generic budget for every time? If not with Money, then is there another program that HAS this capability? That would be great! If not, I can make do, though. Having SOMEthing is better than what I was doing on paper!
post #220 of 309
Congratulations HappyHelpmate on getting down to just the car payment! I believe that in Money you can specify a time frame for the budget but I'm not 100% sure. I used Quicken for about 8 years and then Money for the past year. I had a heck of a time with Money's Home and Business program so I'm back to Quicken. If you click on the help and then type in budget, it might show you how to do it.
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