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

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Old 10-01-2009, 10:40 PM - Thread Starter
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BOO!

It's October, lets get out of debt!

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Who is in for a month of getting out of debt and getting into financial shape? Most of us use Dave Ramsey's method but please join us even if you're following someone else/your own plan. All welcome!

Here's DR's plan:

These are the Baby Steps:

Pre-Step 1: Get current on your debts and do a budget
0.1 Commit to NEVER borrow $$$ again
0.2 Talk with spouse and get him/her on the same page as you concerning finances.
0.3 Do a written budget
0.4 Temporarily stop all retirement contributions
0.5 Get current on all the basics (Shelter, Food, Utilities, Basic clothing)
0.6 Amputate "toys" (bikes, boats, ATV's etc) if they will keep you from completing the snowball within 12 months
0.7 Cut lifestyle (Cut CATV, Cellphone, Regular phone "extra's", Internet, Eating out, etc) and/or take second job if $1000 EF will take more than 30-90 days.
0.8 Get current on ALL bills

BS1 $1,000 to start an Emergency Fund
1.1 Chop up/freeze CC's (You have an EF now)
1.2 Get Health insurance NOW if in the US (chances of getting sick w/ major medical bills are larger than that of death)
1.3 Get Life insurance NOW if you have considerable debt/your family couldn't make it financially if you died.
1.4 Amputate cars that you can't pay off within 24 months
1.5 Consider raising insurance deductables to $500 or $1000

BS2 Pay off all debt using the Debt Snowball
2.0 Do the debt snowball, paying all your debts from lowest BALANCE to highest.
2.1 You can take your first vacation since finding Dave if you can pay cash for it (no using the EF !!!)

BS3 Three to six months of expenses in savings
3.1 Start car replacement fund
3.2 Save up 20% for home purchase OR pay down existing mortgage to the point you can drop PMI.
3.3 Start furniture or other non-essential stuff replacement fund

BS4 Invest 15 percent of household income for retirement

BS5 College funding for children

BS6 Pay off home early

BS7 Build wealth and give! Invest in mutual funds and real estate



Here's the link to Dave Ramsey's website:

www.daveramsey.com

Please join us!
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Old 10-01-2009, 10:41 PM - Thread Starter
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If you need added or removed from the list, or I got your details wrong just let me know and I'll fix it.

Pre-Step 1
anstar
BelovedK
BonnieNova
dfunk98
eirual
greenmom4
ktg
madsommer
Miasmamma
Stephenie

BS#1: Save up $1000
2lilsweetfoxes
annettemarie
Contrariety
crunchymomof2
dex_millie
Evenstar
fairydust020409
Hedgehog_Mtn
JamieB
JenniferH
JustKiya
Kaitnbugsmom
KnittingKara
Krisis
Ksenia
Leav97
lj2blessed
mamabain
MamaPam
mommaknowsbest
neveryoumindthere
NWmt_Mama
Sihaya
teenyToona
Tryingforbaby

BS#2: Pay off all Debt (except the mortgage)
100%Mom
AFwife
AllieFaye
astar326
Belia
Bluegoat
claddaghmom
ColoradoMama
Contrariety
cymbeline
Deir
eirual
excitedtobeamom
FeelingBlessed
goldfishkate
HappyMommy2
herwitsend
hollytheteacher
indie
jeliphish
jjawm
kavita
Keeta
killick
lalaland42
laohaire
LittleBirdy
lizziebits
llamalluv
major_mama11
mamabain
mamimapster
mich
MomtoWilmo
my2girlz
Nickarolaberry
okapi
onlygirls
onthemove
Pernillep
p1gg1e
PluggingAway
RoadWorkAhead
samandhenrysmom
smallmama
stellarae
sweetjasmine
thenaturefreak
Tradd
tricia80
triscuitsmom
tynme
twin_mama
whiddle

BS#3: Build up to 3-6 months of savings
akichan
annethcz
beansmama
Crunchy*VT*Mom
Denvergirlie
mammamo
maryjane
MCsMom
mtm
Nora_SEA
phatui5
phillytwinmama
Rev1053
sarafi
Stone_Fence
yasinsmama

BS#4
Maluhia
Softmama

BS#5

BS#6
kanga1622
rebeccalynn
Sarah8Jane
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Old 10-01-2009, 10:44 PM - Thread Starter
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We had some great successes last month and are gearing up for a few more this month. I still need to review my October budget, shouldn't be any surprises this month so I'm hoping for a good month for adding to the ffef. What's your goal for Oct?
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Old 10-01-2009, 10:45 PM
 
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Subbing! We're on Baby Step 1.

Flowers, fairies, gardens, and rainbows-- Seasons of Joy: 10 weeks of crafts, handwork, painting, coloring, circle time, fairy tales, and more!
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Old 10-01-2009, 10:59 PM
 
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I'll be a regular around these parts I think. Please add me to BS2.

Looking forward to Murphy staying away for October and throwing snow at our car. It should in theory be snowed under by next month!

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

 

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Old 10-01-2009, 11:13 PM
 
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Subbing. We'd be Pre-step 1. I'm on board with most of what Dave Ramsey says, but we have no desire to ever own a home again. All about getting out of debt though!

Stephenie, Wife to Nick partners.gif 9/3/05 Mama to Keagan treehugger.gif autismribbon.gif 4/12/07, Eden dust.gifhomebirth.jpg3/29/09  3rdtri.gif Someone new coming in July and two angels 6/06 and 10/10. Check out my blog! blogging.jpg

 
 
 
  

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Old 10-01-2009, 11:46 PM
 
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I'm in. Still on BS1 but we're set up to get to BS2 befor the new year so I'm happy
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Old 10-01-2009, 11:58 PM
 
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Hiya!

I'm currently at:

$2,1071.67/$8,000 FFEF

It feels great to be a quarter of the way finished! I hope to still accomplish a lot over these next few months in spite of the holidays!!
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Old 10-01-2009, 11:59 PM
 
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Still in BS2 but we are doing great! Last month I was not able to put as much of a snowball on our debt as I'd hoped due to a large water bill but, as always, I'm just happy when we can stay within our monthly budget.

This month my goal is to put the full $350 I alloted towards the cc. Then next month I can put $1000 (extra paycheck that month) towards the cc and cross if off my list!
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Old 10-02-2009, 12:00 AM
 
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This month is time for me to review budget and try to cut more to save more. We are in BS4 and saving up for a down payment so it's hard some months to remember the big goal....

Your User Agreement here at MDC, read it and make it your friend and read the FAQ to answer all the questions of the (MDC) world.
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Old 10-02-2009, 12:26 AM
 
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We are still on BS2 here, technically, but we paid EVERYTHING (5 credit cards, auto loan, three private creditors) except mortgage and student loans!!! W00T!!

Trying to figure out now how much to budget to paying off the student loans. We put away 3 mos. savings b/c DH's job looks a little unsecure. More worried about that than the student loans. But we should be able to pay off the student loans aggressively now! So excited!

Mom to : DS1 (11), DS2 (8), DD3 (4), : DS4 (1), and : : :
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Old 10-02-2009, 12:29 AM
 
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Please add me to step 2. I paid off my car on Friday and only have $1400 left to go - one cc. Will be debt free by year's end, if not sooner!

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Old 10-02-2009, 12:32 AM
 
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I feel stupid but can someone explain to me "1.4 Amputate cars that you can't pay off within 24 months "? If you have a loan...how do you 'amputate' it?

Sahm to 2 girls (17 & 15)& Cody (7/09).
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Old 10-02-2009, 05:59 AM
 
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We're still hanging out in BS#2. Have paid off $2,775 out of $45,000 so far and closed the 3 smallest accounts . Now we're entering into the longer, harder stretches. The credit card we're currently snowballing on won't be paid off for over a year so we have to work hard to keep the motivation going.

The goal this month is to put some $$ away for Christmas, not overspend when my best friend is in town visiting next month, not treat my birthday as a time to go overboard, and get stuff together to sell at a kids' consignment sale (hoping to get another 2-300 to throw onto the snowball).

Quote:
Originally Posted by KarlaC View Post
I feel stupid but can someone explain to me "1.4 Amputate cars that you can't pay off within 24 months "? If you have a loan...how do you 'amputate' it?
Sell, baby, sell. If you owe more than it's worth, Dave would say to sell it privately (NOT to a dealer), get a personal bank loan for the difference, drive a beater, and treat the bank loan as your "stupid tax" for buying an expensive depreciating car in the first place.

This is from http://www.daveramsey.com/etc/cms/faqs_91.htmlc#50:
Quote:
What do I do when I’m “upside-down” on my vehicle?
You need to try selling it yourself. If you are upside-down on your vehicle and can't pay it off within 18 months, then sell it. You can start it off at your loan amount. If there are no “bites” on it, then knock off a couple hundred. Continue to pay it down as you sell it. Do not go any lower on the selling amount than the Kelly Blue Book value.

In order to turn over the title, you will either have to get intense and pay out of pocket for the difference or get a small loan to make up the difference between the loan amount and the Blue Book value amount. In this case, you should try to borrow enough from your credit union to pay your vehicle off and get an extra $1-2,000. That extra money goes toward the purchase of a used, yet reliable, vehicle until you clean up some of your debt. (This is one of the ONLY times that Dave would recommend borrowing money to get out of debt. This is because you are normally reducing the amount of debt by a drastic amount in just a very short period of time.)

* Why buy a used car?
* Car Shopping Dos and Don'ts
* Drive Free... Retire Rich!
* Q&A from "The Dave Ramsey Show"
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Old 10-02-2009, 06:13 AM
 
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Quote:
Originally Posted by KarlaC View Post
I feel stupid but can someone explain to me "1.4 Amputate cars that you can't pay off within 24 months "? If you have a loan...how do you 'amputate' it?
You sell it and pay off the loan.
Even if you sell it at a loss - you have LESS debt to pay off and won't be paying insurance, gas, etc. on it once it's sold.

Your User Agreement here at MDC, read it and make it your friend and read the FAQ to answer all the questions of the (MDC) world.
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Old 10-02-2009, 09:39 AM
 
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I'm here and plugging away. I know I have an entire paycheck to put towards debt, and I'm aiming for a $1600 "snowball" this month in addition to the normal snowball. However, I am trying to get ahead on bills so I may put off throwing part of the snowflake until the 11/13 check. So far, I'm 1 day into my Don't Eat Out challenge this month and considering what a day yesterday was, that feels like a major feat!

Oh, and we're on our last debt. AmEx, just under $2250. I *might* have enough to pay it off completely this month, just all about when the checks fall
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Old 10-02-2009, 09:47 AM
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Add me to the list! We are in BS #2.

Here is my thing. Since the last time we were working on BS #2, we sold our car with the loan and paid it off but we also spent almost everything moving to a different country and added to our cc debt. Now we are currently in a sublet looking for a new apartment but with apartments here, we need to have 3 months rent for deposit! (is there a panic smiley?) So although we are technically in BS2, we have a few expenses that are coming up that will require all of our EF and then some.

Oh, and rent? Minimum $2000/mo. That is $8000 we need to come up with in the next couple of months. (is there a panic smiley?)
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Old 10-02-2009, 09:48 AM
 
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We figured out our Oct budget and got ourselves refocused. We are now attacking the HEL. For dh, that means putting off a list of home improvement projects. For me, that means really combing everything and going back to a stricter budget. If we do that, we can pay it off in 2 1/2 years. Which seems a bit daunting. But I'm determined to take it one day at a time.

Happy October everybody!
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Old 10-02-2009, 09:51 AM
 
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Oh, and rent? Minimum $2000/mo. That is $8000 we need to come up with in the next couple of months. (is there a panic smiley?)

yikes! where did you move?
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Old 10-02-2009, 10:25 AM
 
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OMG lalaland! I knew that Switzerland wasn't cheap but man, that's huge!! I thought it was going to suck if we had to come up with a sudden $2400 for move in during our brief, now aborted move to Virginia.
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Old 10-02-2009, 10:28 AM
 
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Quote:
Originally Posted by Softmama View Post
We figured out our Oct budget and got ourselves refocused. We are now attacking the HEL. For dh, that means putting off a list of home improvement projects. For me, that means really combing everything and going back to a stricter budget. If we do that, we can pay it off in 2 1/2 years. Which seems a bit daunting. But I'm determined to take it one day at a time.

Happy October everybody!
Good for you! Our mortgage is actually in 2 pieces, but is lumped all in one right now in my mind. Once I finish school (again), we'll be attacking them big time if we don't sell the house when school is done.
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Old 10-02-2009, 12:33 PM
 
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Goals for Oct:
  1. Stick to our revised & more thought out written budget I'm tempted to post it to make sure we're covering everything..
  2. Climb from pre-step 1 to bs1 (and get life insurance)
  3. Get the most of out using the envelope system (see goal #1)

Yay for October!!

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Old 10-02-2009, 01:08 PM
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yikes! where did you move?
Zurich, Switzerland. I am feeling kind of sick about having to come up with that much $$. I had to prepay 2 months on our sublet and that was hard. They do have a deposit insurance that costs 5% of the deposit annually and I am looking into that but we have to get our immigration stuff done first.
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Old 10-02-2009, 03:55 PM
 
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Yay! I'm excited because I'm actually going to be doing the cash envelopes this month for the very first time! (sorry, I'm scared of cash, especially since in Sept. I lost $300 when my wallet got stolen)

Murphy has already visited me this month. I have to pay $500 deductible because yesterday I reversed into a palm tree (who wants to live in "paradise" now?) and there's a huge dent in my car and broken taillight.

On the upside, I have only $7000 to go in FFEF and hope to dump $500/month in there for the next couple of months if I can stick to the budget! I guess that means it will still take me until 2011, but at least I have a solid goal (save $500/month). I'm also going to call to meet with a financial advisor next week and see what else I can get going (life insurance, a bit of investing, etc).

Akie, single mom to M (02/18/06), E (08/04/07) and Z (06/22/09)
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Old 10-02-2009, 04:00 PM
 
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I'd love to be added to BS 2 (i think....that's the 1,000 savings right?) I've listed to DR for about 4 weeks and have some of his books. We are new to the MDC part of this so excuse my confusion.

I hope to have 1,000 by the end of Oct and start my debt snowball within a week of that.

Thanks,
Sara
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Old 10-02-2009, 09:40 PM
 
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Quote:
Originally Posted by Hedgehog Mtn View Post
I'd love to be added to BS 2 (i think....that's the 1,000 savings right?) I've listed to DR for about 4 weeks and have some of his books. We are new to the MDC part of this so excuse my confusion.

I hope to have 1,000 by the end of Oct and start my debt snowball within a week of that.

Thanks,
Sara
BS1 is $1K for baby emergency fund.

BS2 is the snowball.

If you have to get current on stuff, that's BEFORE BS1.

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Old 10-02-2009, 09:43 PM
 
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Sorry - I need to be added to BS1 then. I forgot in between the time I hit reply and started typing LOL.

I just have it written down on my DR notes as "goal #1"

Sara
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Old 10-03-2009, 01:02 AM
 
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So, I'm contemplating this all. It's starting to feel doable. We're almost done with our credit card debt. We did CCC before Dave Ramsey, and are down to the last few months. I know that's not really part of the DR system, but we've been paying this off for years now, and aren't going to stop now that we're in the home stretch. What this means, though, is we have this huge advantage-- our credit cards will be paid off and we're used to living without them.

For the first time, this is feeling doable. DH and I actually asked the unaskable question-- what would we do if it wasn't all going straight out the door? I don't want to be rich. I want to be comfortable. DH pointed out that you have to be rich to be comfortable. He said once we're debt-free, he wouldn't care if half our income went out to charity, as long as we could pay our bills and put enough away for our needs. How amazing would that be?

What I really want to do is take a trip to Disney with all our kids. It's a little wild to think this may actually be possible one day. It's hard to dare to believe it could happen.

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Old 10-03-2009, 11:44 AM
 
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Still on baby step 2 here. We are pausing to sav eup for a house as we have moved 2x in a year..I'm done and its to much of a disruption for DH. We are looking at places under $125,000 and DH makes about $60,000 so don't worry we aren't going to go buy a huge place.

I keep forgetting DH has stocks in Metlife...Wondering if we should cash them out.. Its only $300 but it would be one more drop in the bucket.
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Old 10-03-2009, 12:52 PM
 
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Woot! Just got notice form the car insurance tht this months payment is going down by 7$ and then next 5 will be 14$ lower. I'm shooting for May to start paying it in full for 6 months as it comes up, so I better add a sinking fund when the debt is gone.
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