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Getting Out of Debt, December Edition

5K views 115 replies 34 participants last post by  Softmama 
#1 ·
Brr, baby its cold outside. Lets get moving on that debt reduction. We had some good success last month, we had a car paid off, some credit cards paid off and a lot of people snowballing like crazy.

Its december which is notoriously a bad month for falling off the wagon. Lets keep each other on the straight and narrow. 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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#54 ·
Quote:

Originally Posted by Maluhia View Post
Yay mtm - wills rock!

A&A - I assume he uses it for his own mailing lists, but just read the fine print - I'm sure they say

I did. It was still a bit unclear to me.
 
#55 ·
Quote:

Originally Posted by p1gg1e View Post
Well there goes $800 ish bucks


We had not heard from the bank ( they would not talk to me and DH was working OT) about the loan , they said they had not gotten the appraisal. Some one sat on it at the bank. Well today we get a list of like 20 things we need to do to get our loan and ONE is fix the roof on the barn . the Sellers are getting upset and we are upset that we were not told sooner. We knew the roof was bad but didn't think it would effect the loan.

SOoo we are asking them to pay for the shingles and we will have it replaced..in a week. Ugh so now I have to drive around amish land and find a team to fix it... in this bad weather


Otherwise no house...at least its a triple paycheck month right?

Aww p1gg1e! Here's good vibes in finding a team to fix the roof
.

Is there someone maybe the seller knows or could suggest, especially if you're not familiar with the area. Or get a recommendation from your home inspector? Mine gave us a huge list of contractors & such he works with and recommends to all his clients. I have to say it was a handy list to have, given we were not from the area to start with.
 
#56 ·
Quote:

Originally Posted by _ktg_ View Post
Aww p1gg1e! Here's good vibes in finding a team to fix the roof
.

Is there someone maybe the seller knows or could suggest, especially if you're not familiar with the area. Or get a recommendation from your home inspector? Mine gave us a huge list of contractors & such he works with and recommends to all his clients. I have to say it was a handy list to have, given we were not from the area to start with.
We asked the sellers to put the new roof on first to test the waters..have not heard back yet...
 
#57 ·
I think I've mentioned earlier that DH is planning on going to university this Fall, out East. Well, I just drafted up a plan to get us moved out there and manage tuition WITHOUT USING LOANS/CREDIT!!!


It is just a PLAN, but at least that's something. It looks like this:

Goal: $8,000 by August 1st. I have the numbers worked out, but not sure I want to share the world wide web.
  • Fix up and sell our VW Van
  • Sell our mini van (parents' old one)
  • Our debt snow ball will be done, so we'll save those contributions....sorry FFEF, but we've got to get ourselves above water first!
  • I'd have to do childcare over the summer and take in 2 kids.
  • I won't be commuting through the summer so there's gas savings
  • Sell furniture we don't want to take across the country with us
Some variables are:
  • extra work/less work through the summer....I supply teach through the school year- I'll have to do more of it before june if I want to keep up with our current income through the summer. DH can sometimes get extra work as can I through childcare and tutoring.
  • The amount we get for renting out our current house
  • The amount we have to pay in rent out East
  • The bottom line of moving expenses
  • I need to be sure I get a FT job once we're out there so we can actually live and handle month to month expenses/carry on with our DR plan
  • Renovation costs to get our house rentable- we should re-do wiring, and put down flooring.
DH's plan is to use OSAP (gov't student loan) and not worry. I like this one better.
 
#59 ·
Yes, it would be to Dal. I've heard nothing but great things about the city and university since we've been sharing our plan. I'm excited for a new adventure. I'm trying not to get too far ahead of myself as he hasn't been accepted yet, but from talking with admissions it's looking very likely.
 
#60 ·
ahem, you're not all hiding b/c you're out being bad I hope? I'm down to stocking stuffers and packing before we head out for the holidays on Friday night. Stockings are my worst expense killer but I think I'm doing good so far this year, a couple lip balms for the kids and some Christmas beer for dh and I'm good to go.
 
#62 ·
thanks MCsMom, we'll be plugging away here for a good long while!

mtm, good job on those stocking stuffers

I have finished up all the buying for presents, just need to get the kids together over the next two weekends and have them do some of the handmade/baked goods to go into our little gift baskets for aunts/uncles that we will be seeing on Christmas day.
 
#63 ·
I've been with SIL at the hospital, poor thing has kidney stones at 33 weeks!

I've got the last box to send and I'm DONE for Xmas
I'm being really really good - I keep looking out for Murphy.
 
#64 ·
I'm feeling much better about this Cristmas than previous Christmases (obviously!). My first outting I ended up getting things I didn't feel great about by the time I got home, so I realized I needed to make a concrete list and have a plan. I can't be trusted to go by my gut while I'm out.

It's actually great 'cause I've been able to price compare and check stock online before heading out to the store- no mess, no stress. There were a few instances where I realized our local store didn't have an item I wanted, but a store closer to where I work did, so I saved myself a bunch of time knowing where I was best off going. I head out with a plan and stick to it and it's delightful!
 
#65 ·
I'm feeling much better about this Cristmas than previous Christmases (obviously!). My first outting I ended up getting things I didn't feel great about by the time I got home, so I realized I needed to make a concrete list and have a plan. I can't be trusted to go by my gut while I'm out.
I agree with this 100% I feel so much better about this holiday season, because we have a set amount for gifts, lists for the gifts we want to get for the kids, family and etc. (well except for us), and we've planned ahead enough that we are actually enjoying the season instead of stressing out about trying to find that gift!! for someone. Also DH & I now have a plan to set up an account to let us plan for the holidays, and birthdays so we don't have to worry where this $$ is coming from to cover gifts and etc.

I can't wait till January where I will feel super awesome because I won't have added to our cc debt at all for the holidays. Not 1 cent!

I just want to say thank you to all you ladies for this thread and helping me get a better grasp on how to manage money, instead of it managing me.
 
#66 ·
Quote:

Originally Posted by mtm View Post
ahem, you're not all hiding b/c you're out being bad I hope? I'm down to stocking stuffers and packing before we head out for the holidays on Friday night. Stockings are my worst expense killer but I think I'm doing good so far this year, a couple lip balms for the kids and some Christmas beer for dh and I'm good to go.
Um, maybe?
I got carried away with stocking stuffers for my 12-year old dsd. I kept finding little things I knew she'd like. I sorta got a hole in my pocket this month. The worst since I started keeping track back in the summer!


Gotta get back to a normal routine come January.
 
#67 ·
Still here :) the end of this pregnancy is starting to really get to me.....mainly because it's so close to Christmas and I just don't know how to schedule anything!

DH has been home more which is nice but it's lowers the paycheck We've cut costs so we aren't overbudget which is great.

I have over 1000.00 set aside for either an emergency when the baby comes or to throw at debt if we don't need it plus any paychecks for the rest of the year.

The bad news is I haven't gone Christmas shopping for my family so I'm planning that for tomorrow. I had to borrow a car to do it so my mom is staying with my kids while DH and I go in her car. I'm taking cash and no backup. The hardest part is buying for my 4 siblings and their DH/DWs my parents, my MIL, FIL and niece for about 300.00 plus all the stocking stuff for my 4 and 1 gift each for the 2 I haven't bought for yet. Yikes that's a lot I still have to do! I hope this baby cooperates LOL
 
#69 ·
We are back on track with the house so far. The contract was extended. The sellers are paying for the roof
and its triple paycheck month followed by tax return and bonus....So we should have our last debt paid off in a couple months and I get a new washer
 
#70 ·
Be proud of me! I've been doing this pantry challenge thing and blogging about it (here, if you're interested) and last night I was feeling crampy and crabby and DH wanted to go out and buy a rotisserie chicken and I was all "NOOOOOO!!!!!!!!!"
I made a pretty yummy chili. I'm hoping to eat mostly from the stockpile for the next week or so and have a really nice Christmas dinner.
 
#72 ·
I haven't updated in a while, but we've made a good bit of progress. I'm doing FPU online with DH, and it has helped get us on the same page.

Pre-Step 1-Done!

BS1 $1,000 to start an Emergency Fund-Done!


BS2 Pay off all debt using the Debt Snowball-So that moves us to Baby Step 2. We have paid of all of our medical bills now and one of three credit cards. We have paid off most of CC number 2. DH has been able to land some free lance work that has enabled us to to do this. Once he finishes and is paid for some of these jobs, we'll be able to eliminate the CC #2 and a good chunk of #3. By some time in January we should be debt free!
I'm so excited to be so close.
 
#73 ·
eirual, list is the key, I'm a tad obsessive these days, I make a list, check sales, remake the list, then buy. We cut our budget down a lot so its really paid off. I'm a sucker for online shopping esp with free shipping so I don't have to go to the post office.

_ktg_, no december debt is so liberating, you rock!

sweetjasmine,
I wanted a spanking smiley but apparently you can't use a spanking smilie or the gentle discipline people will smack you. Don't wait til January to get back on your routine. Start now.

Hedgehog Mtn, late pg is tough enough without Christmas stuff added in. All cash is a good idea, hope it goes well tomorrow, you can do it!

lactivistmama, good job starting the january budget, I've been puttering with my year long big sheet so haven't tackled January yet. Sigh, maybe I'll do that New Years eve.

p1gg1e, you and the house. We're going to pop a
when you are finally in the house. Awesome that they're paying for the roof.

annettemarie, great job! I fell to the pleadings of my falafel loving kids and we did 2 for 1 takeout last night.

MamaPam, thats fantastic progress! What a relief to start 2010 with a couple of the debts already knocked out.
 
#74 ·
OK so I'd like to start tackling our horribly high HEL in January, maybe using the DR system. We don't have any CC debt but does a HEL count as "BS2 Paying off debt"?

Or would you see it as "Paying down the mortgage"?

So I guess my question is: in the DR system would you prioritise paying down a HEL (because I view it as debt, especially when your house is worth less than the mortgage + HEL combined
) or starting a 3-6m EF?

Thanks for the advice
 
#75 ·
hi, i haven't been posting much at all, but i read a lot posts


we are just starting this program so we are on babystep 1. so far $400/$1000. i hope to have the EF fully funded by the end of next month.

i have a question about the budgeting, how many different categories do you have? so far this is what i've come up with:

food/household
gas
clothing
work expenses (like boots, etc.)
haircuts
birthdays/christmas
car expenses (oil changes, registration,etc.)
kids activities
entertainment/fun

and how do you organize this in envelopes? do you use regular envelopes? i was thingking about maybe using a coupon organizer. what do you guys use?
 
#76 ·
hjrowan- I believe the "official" answer is that if the HEL is more than 50% of your annual income you move it to BS6 (lump it in there with the mortgage).

Personally, we are paying our HEL now in BS6 even though it didn't qualify for that in the official sense (it wasn't over 50% of our income) because I was not comfortable going that long (2 1/2 years) without a fully funded emergency fund.

I think it's a personal decision and you need to look at the % of your income that your HEL represents as well as how long it will take to pay if off before you get your answer as to when to tackle it.

I hope that was clear, it all sounded much less muddled in my head!
 
#77 ·
Quote:

Originally Posted by RainbowSprinkles View Post
hi, i haven't been posting much at all, but i read a lot posts


we are just starting this program so we are on babystep 1. so far $400/$1000. i hope to have the EF fully funded by the end of next month.

i have a question about the budgeting, how many different categories do you have? so far this is what i've come up with:

food/household
gas
clothing
work expenses (like boots, etc.)
haircuts
birthdays/christmas
car expenses (oil changes, registration,etc.)
kids activities
entertainment/fun

and how do you organize this in envelopes? do you use regular envelopes? i was thingking about maybe using a coupon organizer. what do you guys use?
In my accordian file folder (small enough to fit envelopes perfectly) I have the following which I set up monthly:

Tutoring Income
DS Allowance
Gas wk. 1
Gas wk. 2
Gas wk. 3
Gas wk. 4
(ocassionaly gas wk.5)
Clothing
Gifts
Oil Change
School Prizes
(Suppliments)
un-expected food purchases

and I take a look at the month ahead and see what other random things I'll need cash for that month. This month included Christmas envelopes (gifts and accessories). Other months have included library fees, sport registration, DS birthday party, petty cash (bad idea for me- it went way too fast and frivolously!)

This is our 5h month doing the enevlopes and it changes every time. I think I am going to add: Family Activity and Personal Care to the regular regime.

For me, if I have them in broad categories it's easier to justify a purchase willy-nilly-ly ...(?) and for the money to disapear. If I know it's set aside for a specific item or purpose than it's easier for me not to touch it.

DH isn't doing the envelope system, but he has much more self control with his debit card than I, so he takes out the grocery $$ and his own $20 of spending each week, otherwise I'd have an envelope for that as well.

ETA:: I'd love the envelope thing for sale on DR's site. I feel a little....I don't know what....when I pull out a typical white mailing envelope to pay for things. However, I like that you can take out only what you need, and you don't have to take $700 with you when you want to go spend $3 on socks.

I'd love a more cash-friendly wallet too...the design of mine is very plastic-oriented, even so for the time when I used plastic more frequently it drove me crazy that the cash-area was so poorly set-up.
 
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