Getting Out of Debt with DR, Oct 2009 - Page 3 - Mothering Forums

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Old 10-07-2009, 02:42 AM
 
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Please add me to the list! Working on BS1. We have a long road ahead!

mama to dd 2x Our sweet boy is here! 7/27
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Old 10-07-2009, 04:17 PM
 
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I just finished reading TMMO and we're ready to go. We're at the pre baby-step phase. I'm overwhelmed by the thought of doing a budget, but we're going to just sit down and pound one out and see how it works for this month and then improve upon it next month.

The good news is that I think we're in a pretty good spot and just by being a little smarter we should be in good shape. We have about $6k in debt, no current credit cards, no car payment, no personal loans, student loans or anything like that. The debt we have is from some outstanding medical bills and defaulted credit cards.

I'm really excited to build up (and keep!) our emergency savings. What a relief that will be!

In the end, only three things matter: how much you loved, how gently you lived, and how gracefully you let go of things not meant for you." Buddha

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Old 10-07-2009, 06:00 PM
 
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One more thing - did you really stop congtributions to your 401k? I just started a new job and they have a really good matching plan so I signed up right away (before I read the book). I think I have to wait until Jan to change the deductions and I just don't know that I really want to do that, anyway...

In the end, only three things matter: how much you loved, how gently you lived, and how gracefully you let go of things not meant for you." Buddha

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Old 10-07-2009, 06:12 PM
 
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One more thing - did you really stop congtributions to your 401k? I just started a new job and they have a really good matching plan so I signed up right away (before I read the book). I think I have to wait until Jan to change the deductions and I just don't know that I really want to do that, anyway...
Retirement is very personal. If you're getting matched, its worth contributing to get the match in my mind. It also depends on how long you're looking at for paying things off. If you can continue to save for retirement and be out of debt in 6-9 months, a year, then it seems more fiscally responsible to continue to contribute. Just my thoughts...Dave may vary
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Old 10-07-2009, 06:47 PM - Thread Starter
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Welcome Keeta, please do join in! I'd get Total Money Makeover out of the library but definitely not a condition of joining in! I agree with SarahJane, I'd pay off a chunk off that student loan but probably not bring down your 6 months to zero. What about compromising in the short-term and taking 3 months worth?

annettemarie, I'm sitting here giggling about your unicorn. Transfer that money over already. Living without an emergency fund is an invitation to trouble. We also don't do candy for halloween, we're in a condo and don't get anyone in. I like the mall idea.

kanga1622, how weird about the paint, any recourse with the original contractor?

_ktg_, I hear you on teh wanting the extra accounts open for the debt/credit ratio but I would really close a bunch of those zero balance accounts. These companies are experts at taking our money, don't let them have any opportunities. With your budget fairly tight, I might lower the two blow. Right now you spend more on extras then on your one cc. I'd use your transfer to savings (175) to add to your cc. Just think how much faster you could be out of debt if you sent an extra 200 or so a month to the cc?

Is there a reason you haven't transfered 3000 over to your credit cards leaving 1000 as your ef? I would really strongly suggest it, it will help you get through the ccs faster if you are motivated to get them done and up your savings again. Even 2000 over would be a great motivator if you are too uncomfortable with only 1000 in savings.

Weclome NWmt_mama, is there anything we can help you with to get you started? We've got some ladies who are great at helping with budgets and I'm a great nag if you want someone to check up on you.

greenmom4, welcome! Don't get overwhelmed by the budget. Just write down what you owe and what you have coming in to get started. You can do this. My budget was a mess the first 2-3 months.

My dh did not stop his retirement contributions, he wasn't comfortable doing so and he had a good match.
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Old 10-07-2009, 07:18 PM
 
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Greenmom4
We did stop the majority of voluntary retirement contributions for four months when we were working on BS3 (we already had 13% mandatory retirement contributions).

If you can't change your 401k election until January take the time now to get organized, get comfortable in your budget and figure out how much that 401k contribution would help you. If it would be a big benefit to stop it, stop it. But I wouldn't worry about right at the moment.

me, 28 & dh, 32.
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Old 10-07-2009, 07:59 PM
 
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Well, I transferred my fairy money... BUT I asked DH not to put it in the emergency fund. Here's why-- we have a little corner market down the street. Peachy, the lady who runs it, is a saint. She loves my kids. She gives them treats. When I lost my baby this summer and DH had to go away, she had the kid who works the counter deliver me subs and stuff at home even though they don't do deliveries.

She also has this little book where they write down what you buy and then charge you at the end of the month. We owe over $200. It feels ugly and wrong not to pay her. It's not some big corporation, it's a friend. Someone who cried with me when I lost the baby. Someone who loves my kids. So I insisted DH send the $100 to Peachy. Also, we're never using the book again.

I know Dave Ramsey might not see it as the right thing to do, but it feels right to me.

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Old 10-07-2009, 08:18 PM
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nah AM, I would count that as "getting current on bills". Probably not true in the strictest sense but I know what you mean.

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Old 10-07-2009, 09:48 PM - Thread Starter
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sounds right to me too AM, sorry to hear about your baby.
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Old 10-07-2009, 09:51 PM
 
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Thanks.

Medical bills are another question. We have a little over $1000 in bills from the miscarriage and D&E. There's no minimum, so DH was just sort of ignoring them, which is freaking me out. You can't just do that. He did budget $44 a month for medical bills, but it's just not enough. I'm thinking of asking him to call the different people and see if he can make payment arrangements.

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Old 10-08-2009, 04:39 PM
 
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I'm still here. It is great to see all the new faces. Welcome everyone.

We are still in BS3 - it seems like the hardest step to get out of. We get 'this close' and then something happens or we make a decision and it is back down. But I can not describe how nice it was to be able to pay for our (now second, 'new to us nice') car with cash. And you could just tell that it was not often that the dealership had people like us in.

My DH and I have a bit of a philosophical difference on what kind of debt to consider our condo mortgage. It is a second residence (now being rented out) and if we should have our FFEF or if we should throw a huge snowball at it and then consider it in step two. Or put it with our mortgage in step 6. We both agree that we need to get rid of it as soon as possible, just not quite on how much to keep in reserve while we work on it. And the other thing is, we are still doing step 4 and 5 in the meantime. So I feel like we should just really get and keep our FFEF first and then go after it. Can you tell that DH and I go round and round on this topic - lol. I guess there are lots more stressful money issues, I am happy this is our biggest bone of contention.

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Old 10-08-2009, 05:02 PM
 
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Weclome NWmt_mama, is there anything we can help you with to get you started? We've got some ladies who are great at helping with budgets and I'm a great nag if you want someone to check up on you.
Thank you At this point I feel overwhelmed and excited at the same time. We have just let our cc debt get out of hand by continually ignoring it. We have almost 23k (gulp). Fortunately they are low interest rates, but that is the only positive thing I can say. Saving 1000 EF just seem so out of the question right now, but I am going to stay committed! Baby steps.

The biggest task for us is sticking with not using credit - at all. We've already cancelled an unnecessary vacation and are thinking creatively for holiday gifts.

Thanks again for the support! Nag away!

mama to dd 2x Our sweet boy is here! 7/27
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Old 10-08-2009, 07:22 PM
 
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This might sound stupid, but what if your loan is more than you sell it for?
You need to pay the difference when the car is sold. This may require obtaining a new, smaller, unsecured loan.

For example, you have a sedan that is worth $5k but you owe $8k. You sell the car for $5k and pay $3k using a loan (or ef) to get the title released to the purchaser.

DR recommends going to your local bank and asking them for a personal loan.

me, 28 & dh, 32.
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Old 10-10-2009, 01:35 PM - Thread Starter
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MCsMom, yup, getting out of bs3 is tough. We're currently trying to decide between some much wanted renos (need hot water tank, want kitchen backsplash and a few other small things). Congrats on the car for cash, that's amazing! Re the condo, how is your job security? Any storm clouds? I'd be tempted to treat it as bs6 but DR would likely tell you to treat as bs2. Is there a compromise anywhere in there, maybe keep 3 months worth and throw the rest at it?

SimpleLittleThings, sadly, you will probably still owe some money after the car is sold but its still cheaper than big payment you have now, yes?

NWmt_mama, we were at a similar amount when we started too. Good job cancelling the vacation. Have you hidden/cut up/shredded your cards yet?

I got a scary email the other day, did you know its 11 weeks til Christmas I saw a sale in the window of the skateboard shop, have to go check it out as that is on older ds's list this year.
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Old 10-10-2009, 02:03 PM
 
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As for the 401K question- when we were paying off debt we reduced our 401k contributions down to the matching level, then bumped it up again to previous levels after the credit card was paid off. Not DR, but it was what we felt comfortable with.

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We are still in BS3 - it seems like the hardest step to get out of. We get 'this close' and then something happens or we make a decision and it is back down.
I agree, for me BS3 seems way harder than BS2 was. Perhaps it's just our personal situation, because BS2 was a drop in the bucket compared to BS3. I'm not motivated to be gazelle intense with saving the way I was with paying off debt. And it's going to take so long to get our 6 months of expenses in the bank. We also had a number of purchases that we put off until after we paid off debt that it's hard to keep putting off.

We've actually made the conscious decision to save a little less towards BS3 in favor of living more comfortably. We're also using 'extra' money each month to cashflow the mostly-DIY finishing of our basement (which we've been wanting to do since we moved in 2.5 years ago). We're still working towards our 6 month emergency fund, but we're not getting there as fast as we could if we funneled ALL of our money towards the fund. We're also contributing to our 401K and kids' college savings funds, as we always have.

New signature, same old me: Ann- mama of 2 boys and 2 girls, partnered to a fabulous man.
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Old 10-10-2009, 02:20 PM
 
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Dh got a promotion at work!!!!

He's now on salary and getting a raise of about $13k/year! We're super excited! I'm not sure what his actual paycheck will be yet - you know - once taxes and whatnot our taken out...but I know this is going to help us reach our financial goals SO much quicker! I'm *guessing* we'll be able to put about $900/mo in savings...

I am going to be adjusting our budget a BIT...but I'm not getting carried away. For the most part we're going to pretend he didn't get the raise.

I am upping our "fun" money to $100/mo instead of $50/mo, and upping the "misc" category to $100/mo instead of $30/mo. We ALWAYS overspent in those areas, anyway...so I'm hoping that by allowing extra money in those places we'll be able to stick to our budget PERFECTLY.

In case anyone is wondering - misc. includes clothes, oil for the car, prescriptions, doctors bills, hair cuts...the works!

Also, instead of putting money in our FFEF this time around we need to go get DH a new work wardrobe...he's going from a uniform of scrubs to "business casual"...and he's been in desperate need of new clothes (that fit) anyway.

So okay. Enough rambling from me for now!
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Old 10-10-2009, 04:39 PM
 
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Congrats, beansmama, that's fantastic!

Laurie, wife to guitar.gifDH (Aug/04), mom tobikenew.gifDS1 (Nov/05) and bfinfant.gifDS2 (June/12).

 

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Old 10-10-2009, 05:52 PM
 
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Congrats Beansmama!
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Old 10-10-2009, 07:21 PM
 
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Congrats Beansmama!!

We are looking at a house tomorrow. Hopefully I won't like it LOL

Our utilities would be lower ( wood and well) and the drive much shorter. We are on stand by with the snowball till we move. I'm thinking $1000 in moving / buffer fund on top of the $1000 EF we have this way if we get a truck , eat out , or need appliances when we move we have the money to buy ( well used stove ) and not stress...then start plugging away at the debt again!!

I know we arent following Dave's plan ( we have been such great converts of his LOL) but what a difference between me buying a house and my brother. He makes at least $15,000 ( plus self employment taxes) less then DH and is looking at houses from $130,000-$140. We are looking under $130,000 ( the house tomorrow is $119,000). I wish I could talk him out of it but there isnt any point really.
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Old 10-10-2009, 07:54 PM
 
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Dh got a promotion at work!!!!
That's fabulous news! Congratulations!

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Old 10-10-2009, 10:53 PM
 
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NWmt_mama, we were at a similar amount when we started too. Good job cancelling the vacation. Have you hidden/cut up/shredded your cards yet?

I got a scary email the other day, did you know its 11 weeks til Christmas I saw a sale in the window of the skateboard shop, have to go check it out as that is on older ds's list this year.
Yes, we have frozen one and hidden rest. We need to cancel one since it hasn't been used in 5 years. I've got an older one that I will keep for credit score purposes. We are going to stop paying into dd's college fund which will add 50$ to our savings and then snowball.

. . Wow! I can't believe that Christmas is that soon! eek! Need to get knitting!

Yah! Beansmama, Congrats! What a wonderful surprise.

mama to dd 2x Our sweet boy is here! 7/27
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Old 10-10-2009, 11:57 PM
 
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We went to see a DR ELP Financial Coach today! He really helped look at everything in a more objective way. We CAN do this!!!!
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Old 10-11-2009, 12:56 AM
 
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Put me down for accomplishing the EF.

I started that goal on the 1st and made a couple awesome craigslist sales and hit 1090.00 today!!! I had budgeted 240.00 per week for this month for the EF out of paychecks so I planned on having 1200.00 by the 31st of October. If I can stick to that budget then I'll have 1810.00 (instead of the 1200.00 that I would have if I didn't sell anything.

I've just finished posting my goats for sale (long story but I can't keep them right now) for another 1000.00, 2 used cars that were becoming horrible lawn ornaments for 1300.00 total and an antique that someone offered 200.00 if they can take it tomorrow. If all that sells it would total another 2500.00 but I doubt I would get asking price for everything....and that's if it all sells. I told the kids and DH that if it isn't nailed down it's going on CL.

It also helps that I typically hit this huge purge mode about this period in all my pregnancies but in the past I usually just toss half the stuff IN the house. This time I'm hitting both inside AND out.

Sorry to blabber but I'm so excited - I'm not only cleaning my driveway which is seriously starting to look like a car lot thanks to DH but it's a huge motivator to keep going.



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Old 10-11-2009, 02:30 AM
 
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It is great to just lighten the load of "stuff". I feel so much calmer and more organized without so much "stuff" everywhere. I think it really does reflect your inner state to a degree. It's great to have such momentum, I hope it works out wonderfully for you and keeps up.

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Old 10-12-2009, 01:04 AM
 
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OK, I haven't been in on this in months, but I'll join up again! Still on Baby Step 2 here.

I really, really need to start doing the full- fledged cash envelope system again. I have kept up with tracking spending, but slipped into using the debit card again, and found that I spend more that way for sure. This month I've paid cash for groceries thus far, but need to take out cash to use for the other spending categories.

BS1 $1,000 to start an Emergency Fund- DONE

BS2 Pay off all debt using the Debt Snowball
2.1- $577 medical bill (making monthly payments- need to just bite the bullet and pay the whole thing off this month- just hate the thought of withdrawing $ from savings for it )
2.2- $13,000 car loan (need to check with DH to see how much we still owe at this point)

BS3 Three to six months of expenses in savings
$4700 / $7000 (67%) - paused this when we took out the car loan in April

BS4 Invest 15 percent of household income for retirement
(5% currently, DH plans to keep this up for now)

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Freedom is slavery.
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Old 10-12-2009, 01:23 AM
 
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OK, question- anyone ever sold their wedding dress or similar sentimental item to put toward paying off debt?

I am not sentimental about this type thing, and don't see the point in my wedding dress sitting in my closet for 25 years, when someone else could get use out of it and I could get some $ for it!

I'm getting into a ruthless decluttering / selling mood...

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Freedom is slavery.
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Old 10-12-2009, 02:11 AM
 
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I have completed baby step #1 a long time ago, actually we have almost 3000.00 of what we have always called a "nest egg", which is for those big emergencies like the car broke down, or the washer, or whatever. My goal has always been to save this up to a 3-6 mo fund or build it up to 10,000, but it has never happened. I do have a saving account with some stuff like a minor car repair fund/oil changes, clothing, gifts, etc. as well. We use the Budget map to keep track of stuff http://www.budgetmap.com

Time to get started on the other steps, but I am a bit confused how to tackle in what order. I'll explain more below. First of all, I will share my debt...as of now almost 30k (eek!). I am so ashamed to admit that. This is a visa bill, and a line of credit. The credit line has a used car on it (we got 2 years ago when dh went to school, for only 5000.00), some school related expenses/small loans, and what was left of a past smaller visa bill and our truck payment. We wanted to lump everything to have one payment. In our stupidity we let the Visa get up again over the last year, so of course that has to stop and it is time to tackle this. We have not put anything on credit card in the last 6 mo that we have not had the cash to pay immediately (like that day) so I am proud of that.

We have been living on a budget and getting things like groceries under control and paring down nonessentials, I have been able to take extra shifts outside of my regular part time job and dh now works full time evenings, making it easier for me to take extra work (we homeschool and work around each other, we have always been adamant that hs'ing would be the last thing we would ever give up) but of course life gets in the way. Last Friday I rear ended someone, and may have to write off my 10 year old Dodge Neon! I have the money for the deductible, but I can't remember if the car is collateral, so we will see what happens. It would KILL us to have to make a vehicle payment on top of what we try to put on the line of credit, unless of course I ask for a small increase like 3000.00 for another second vehicle (we live rural and need two with our varying schedules). we were just about to ask to roll the Visa and LOC together but now that is on hold. AND the same day I did this the municipal office phones and says we owe 700.00 more on property taxes. (we think this is a clericial error and hope to get it straightened out). Believe me I was a bawling blubbering MESS that day.

I feel like I will NEVER be able to get ahead here with the other steps, and am confused as to how to do it....

For instance, we used to be able to make a 130.00 biweekly investment contribution before the Visa got a balance on it again, (RESPS, RRSP's...we do have 60,000 in RRSP's currently) and cannot do that now. Dh is 42, and I am 39, so it makes me nervous that our investing is so "on hold" at our ages. So do we contribute what we can, then how can we ALSO tackle the debt, and ALSO chip in to a 3-6 mo fund for BS #3 Do you do that all at once, a little bit to everything??? Or do I just go gung ho on this 30,000.00?? I worry about not having at least 10,000 saved up for that step #3, especially with our history of illness and bad luck Dh had almost a year of being very sick and working in a very limited capacity and is now dealing with a chronic illness (sarcoidosis...no acute flareups now thank god but you never know), and I was off with an injury for 2 mo this year which set us back more...gov't sick benefits did not pay me much believe me. AND THE CAR.....AAAAaagh! We had just hatched a plan about saving 50 bucks or so a month and tax refunds and whatnot to have a bit of cash for the next vehicle while we eeked out (hopefully) 5 more years on this car....and now it is most likely GONE.

We also have the great misfortune of living in an about 80 yr old house that needs alot more work than we thought. We have been able to do a fair bit (like insulating the attic and blowing it in the walls plus the furnace/water tank all done through the utlility company, the roof was a gift from the inlaws, etc), but I have basement that we need to gut due to mold (most appears to be surface due to not having things like proper venting for the dryer or a bathroom fan), probably 40 year old windows, only half the house is sided etc ad nauseum! I have posted about my house woes before. I can't be concerned about the hideous lino in my bedroom, and the painted plywood cupboards, but I don't want to still be sitting 5 or more years from now with that mold in the basement and my leaky leaky tin windows. And there's other little things like that rusty well/water pump that could quit any minute! We were so focused on how low the mortgage payment was compared to renting that we didn't stop to think how much the repairs would cost in the end. We just walked in thinking we would do just a bit at a time, but I feel so pressured about it now! I have played with an online mortgage calculator or two, and 30-40,000 more on the mortgage is only 100.00 or so more a month roughly, not bad, but with so much other $$ stuff in our life now....aaaagh! When do we do all this stuff for the house as well, cause it feels like it would never happen?!?!?! We crunched some numbers recently with our Investors Group guy, and if we just up and sold we would lose major money again...!

Well, that is our finances in a very long nutshell...if anyone has read this epic tale thus far! If anyone can give me advice on in what order/manner to tackle more steps I would appreciate it!!!

Tina, RN, wife-y to J, mom to dd (10) and ds (7)
"Beware the lollipop of mediocracy...one lick and you suck forever!"
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Old 10-12-2009, 11:25 AM
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Potentially good news!!!

I've really been sweating coming up with $8000 by November 15th and it seems like we might not have to.

Recap: We just moved to Switzerland and are in a sublet until Dec 1. I found *the* place but the rent is $2000/mo (cheap for here) and it is perfect for us. The problem is, it is standard to collect 3 months rent for deposit on top of first month's rent and we just don't have it. We could probably get it by dec 1 but the apt is available Nov 1 and the housing market is tight here. I'm afraid we'd lose the apt if we waited until Dec 1.

There is a sort of "deposit insurance" called SwissCaution that you can use instead of a deposit but I wasn't sure if we could use it because they require a certain type of residence permit and although we registered with the local authorities and applied for our residence permits, we haven't yet received our permanent ones. That takes up to 3 months.

I just made DH call SwissCaution and they said we could do it with our temporary contracts and employment contract.. I am cautiously optimistic.

This means I can buy DD a bike, which I promised her and didn't follow through on because I haven't been sure that we would have the money.

She brought almost no toys with her. Poor thing.
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Old 10-12-2009, 01:18 PM
 
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lalaland42- that is great news!! I feel for you daughter. We moved from the US to Europe when I was little and we each got to bring one toy with us. I still remember mine. A little bear in a train conductors outfit named "Choo Choo". I actually still have him
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Old 10-12-2009, 01:25 PM
 
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canuckgal- welcome!

So it seems like you have debt to pay off, a house to maintain, retirement that you are still contributing too, and an FFEF to build up. Is that right?

Since you already have the EF done for step one, I would focus now on the debt. You might want to introduce a savings envelope of a little each month to go towards the house repairs while you are focusing on the debt though, because some of that sounds like it is more than just cosmetic and needs to get done.
Since you are concerned about your history of illness, I might consider leaving the entire 3K in the EF instead of using some of it toward debt. But certainly don't put anymore into the EF until you've hammered out the debt.

Just take it one step at a time. If you try to throw a little money at each step simultaneously you will end up getting nowhere. Concentrate your resources on one step until you knock it down. THEN move on the next step.

HTH

edited for spelling.
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