Getting Out of Debt, Feb 2010 Edition - Mothering Forums

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#1 of 118 Old 01-31-2010, 09:27 PM - Thread Starter
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Alright everyone, its February. We're a month into 2010 and getting our finances in 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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#2 of 118 Old 01-31-2010, 09:27 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
Gray's_Mommy
greenmom4
kittywitty
lactivistmama
lakeruby
luckybamboo
madsommer
MamatoWill
Miasmamma
papayapetunia
proudmamanow
Stephenie

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

BS#2: Pay off all Debt (except the mortgage)
100%Mom
AFwife
AllieFaye
astar326
Belia
Bluegoat
canuckgal
claddaghmom
Cody'smomma
ColoradoMama
Contrariety
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eirual
excitedtobeamom
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HappyMommy2
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indie
jeliphish
jjawm
kavita
Keeta
killick
kings5queens4
KnittingKara
ktg
lalaland42
laohaire
LittleBirdy
lizziebits
Livi's_Mama
llamalluv
LZP
major_mama11
mamabain
MamaPam
mamimapster
mich
MomtoWilmo
MyTwoAs
my2girlz
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okapi
onlygirls
onthemove
Pernillep
p1gg1e
PluggingAway
PPK
RoadWorkAhead
samandhenrysmom
shllywlly
smallmama
stellarae
sweetjasmine
thenaturefreak
Tradd
tricia80
triscuitsmom
tynme
twin_mama
whiddle
willew

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
sparkprincess
Stone_Fence
yasinsmama

BS#4


BS#5
Maluhia

BS#6
kanga1622
rebeccalynn
Sarah8Jane
Softmama
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#3 of 118 Old 02-01-2010, 12:28 AM
 
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Happy February.

BS2 Progress - 5.7%/100%

This is only a 2% increase in the past month however we put everything extra into an air conditioning replacement sinking fund. If I'd paid that sinking fund onto BS2, we'd be at 9.2%/100%. We're getting an unexpectedly large tax refund and that will top off our sinking fund so we'll be able to get back to the snowball with more intensity in February.

My husband's first commission check is this month - 2/19 I believe. It is only for half of a quarter (or something close to that, the company has an odd fiscal year). Although I'm going to be picking up extra writing work this month, I won't get paid until March. My goal is to be at 9% of BS2 payoff as of 2/28/10.

Wishing everyone a productive month.
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#4 of 118 Old 02-01-2010, 04:56 AM
 
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Wow, it is February already! I'm still working on a FFEF. It's coming along SLOWLY. I'm still at about 71% FFEF.

I sat down with my January spreadsheet today. I've gotten rather complacent and I splurged on several items that I didn't need this past month. We don't do cash envelopes, and I went over on almost every budget category this month. Oops. I am just feeling so unmotivated about BS3 right now.

Oh well, onward and upward. February budget is done. I don't have much going into savings, but we'll be paying our 6 month car insurance premium this month, in addition to continuing our basement remodel. I didn't include our tax refund in my budget projections for this month; we should be getting several hundred dollars, and those funds will be going straight into savings.

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#5 of 118 Old 02-01-2010, 12:29 PM
 
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We are still on BS#2...but not for long!

Closed on our house on the 28th of Jan ( we call it our Dave house because of how cheap it should be , well , wood stove , land, low taxes). Realized we get the long term home buyers credit since we sold our house of 7 years in 2008. Our motivation for buying was not because of the credit I figured it out after reading more about last week ( before I thought we would not qualify) that it applied so that is $6500 that we otherwise would have had to pay Uncle Sam .

Our Tax return is over $3000 so we will pay off the Van. That leaves the SL debt of 1900 so we should have that knocked out in less then 3 months ( esp IF dh gets a bonus this year, I hear it will be 1/4 of the other bonus he received but hey thats ok we need it less then EVER!)

We then after we pay off debt will add more sinking funds. The Tax Credit will finish the FFEF and top off the car replacement fund for DH who has been driving my Van and I have been driving the "dave car".

I'm way to excited in 2010 LOL As 2009 was boring

Now to get back to packing!

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#6 of 118 Old 02-01-2010, 01:07 PM
 
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mtm - please bump me up to bs2.

Well gals - debt #1 might be going bye-bye via this tax refund + work bonus + insurance on broken tv.

We may possibly get more than we anticipated/estimated and that is thrilling. I'm crossing my fingers as its not final until I finish the taxes but wow - it has made DH whistle a different tune and start to look at which debt we'll knock out next. I believe he is a believer now in this budgeting, planning & money management stuff.

Unfortunately we do have our eyes peeled & on the lookout for murphy. He always seems to be right around the corner when these things start to happen.

treehugger.gifAnd you who seek to know Me, know that the seeking and yearning will avail you not, unless you know the Mystery: for if that which you seek, you find not within yourself, you will never find it without.treehugger.gif

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#7 of 118 Old 02-01-2010, 01:31 PM
 
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last month we got back on the bandwagon with the zero budget and I am proud to report that we only went $21 over. YAY us

This month we might not get to throw much extra at our HEL. We have to replace our washing machine and keep up the sinking fund for our furnace (which is hanging in there, but on it's last leg). so some major expenses coming up. We also have a sinking fund going for some major yard work (we have a drainage problem that is going to start affecting the house foundation) that will need to happen in the spring. I feel good that we've got a plan for it all

Happy February to everyone
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#8 of 118 Old 02-01-2010, 02:33 PM
 
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I lost this thread last month, but am signing on for February!

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#9 of 118 Old 02-01-2010, 02:34 PM
 
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Still here...still on BS2. I had originally figured out taxes wrong so we'll be getting back much more than I thought. Yay! I'll add that to savings/paying off bike. In April we should have enough to pay off the bike, so as soon as I hear that DPs job is safe for at least another year, I will be sending the $$ to that debt. Then that just leaves the student loan.

So right now we are at about 53.5%/100%.

I like how you did that MyTwoAs with the percentages, it helps to see progress. I also made a pie chart on my excel spreadsheet where I keep my checkbook and other expense/debt spreadsheets so I could have a visual of how much we are saving.

I have another question, when you are saving for the FFEF, how do you figure that? I mean, if DP were to get laid off, he would get unemployment. So do I figure that in? Or do I figure in the LOWEST amount we would need to survive? I mean I know I could cut back in several areas if DP were to lose his job. Cancel some stuff probably. Anyhoo, just wondering how you come up with a number.

I really want to try and stick to a two week cash budget, I think I'll try that again this month. Don't know why it's so hard to do!

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#10 of 118 Old 02-01-2010, 02:45 PM
 
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mtm- please add me to pre-step!

I am working on my budget for this month and have gotten rid of my debit card, and am planning to leave my checkbook and credit card at home. (I do have $100 in cash hidden in my car, for emergencies.) I need to file my taxes this week, use my refund to pay down my student loan, and then figure out where we are at with all of our other bills. I think I'm on my way to BS #1!

Thanks!

 Married to my sweetie and enjoying life with our fabulous dog.  Expecting #1 in August 2012!!!!

 

 
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#11 of 118 Old 02-01-2010, 03:24 PM
 
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As far as the FFEF, I've seen people do it differently. I've seen people plan for keeping their current lifestyle without any additional income (including unemployment) and I've seen others that set aside money for their four walls (food, clothing, shelter/utilities, transportation).

My plan is to have six months of our current budgeted expenses, minus BS2 debt payments, into our FFEF. This way if I decided to cut back on my cell phone, cable, internet, etc it is "extra" savings.
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#12 of 118 Old 02-01-2010, 04:15 PM
 
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You can move me to baby step 2 as we're (finally) rolling our debt snowball (again - but hopefully for the last time)

We got a good chunk of debt paid down last month, but still have so far to go. I know the light at the end of the tunnel is there ... I just can't see it right now. I sure could use this thread in February for the encouragement

knit.gifKara~ Rockin' Granola wife to Christopher and mama to J (Nov. '01), M (June '06), L (May '08) and stork-girl.gif (edd 8/3/11)
2011:  a year to Make Do, Do Without, or Do It Ourselves 
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#13 of 118 Old 02-01-2010, 04:32 PM - Thread Starter
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I love moving people to the next category, good job!
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#14 of 118 Old 02-01-2010, 04:50 PM
 
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Quote:
Originally Posted by cody'smomma View Post
I have another question, when you are saving for the FFEF, how do you figure that? I mean, if DP were to get laid off, he would get unemployment. So do I figure that in? Or do I figure in the LOWEST amount we would need to survive? I mean I know I could cut back in several areas if DP were to lose his job. Cancel some stuff probably. Anyhoo, just wondering how you come up with a number.
Different people do it different ways. I have NO idea what unemployment would be, I just hope that it would be enough to cover some of COBRA in the event that DH was to lose his job. When we figured out a rough amount for our FFEF, we started out with a monthly amount that would cover all of our needs and some of our wants. It's less than what we normally spend each month, but not significantly so.

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#15 of 118 Old 02-01-2010, 05:56 PM
 
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joining again, and I had a question, I raised my deductable but the price of the policy seems to have gone up. Does anyone else have increases on their auto insurance of a few dollars?
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#16 of 118 Old 02-01-2010, 06:37 PM
 
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joining again, and I had a question, I raised my deductable but the price of the policy seems to have gone up. Does anyone else have increases on their auto insurance of a few dollars?
Mine did, right after I switched I called them up to see what the problem was and apparently something about WA state something, something, something...I wasn't really understanding the gal. I was miffed cause it was like $20 more and nothing had changed on our policy. I need to shop around now...

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#17 of 118 Old 02-01-2010, 09:30 PM
 
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I'd love to join in, too. I am currently 66 percent done with BS2 and I am scheduled to finally be done in Dec. We've been working the plan for two years and have decided to really get crazy with it and finally be done!
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#18 of 118 Old 02-01-2010, 10:30 PM
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I'm still on BS#2, and aim to be done with it by the end of this month..

The only thing missing is Life Ins., but we don't have much debt and have only ds. I will look into this this month though.

Question regarding health insurance:

I'm self-employed and DH's employer only offers outrageously expensive health insurance. So, all DH and I have is 'catastrophic' with a 5K deductible and pay $75/month each. Is there any other way I should go on this? I had surgery in Dec. that was costly and took me out of work for 3 weeks

DS is pretty cheap at $136/month and he's covered for everything.

Happy progress wishes in February everyone!
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#19 of 118 Old 02-02-2010, 02:40 PM
 
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Still plowing away on BS#2. I am trying to get the car loan payed off before the end of the year but unfortunately we will be trading it in for a new car whenever we do that. Hubby doesn't want a used car or to have to wait and save up for another car while our current one begins having problems. Anyway, $522 left on remaining cc and medical bills paid off.
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#20 of 118 Old 02-02-2010, 02:41 PM
 
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HI!

I'm still here. I took part my emergency fund to start the process on refinancing my home loan. Assuming the apprasal comes back ok I'll be lowering the interest by 1.875% and dropping 12 years off the loan.

BS #1
1.1 170/1000

BS #2
CC 1 - 433
CC 2 - 3300
CC 3 - 5050
Med Bill 2 - 2350
Signature loan - 950
Car Loan - 1250
Medical bill 1 - Done

BS #6
SL 1 - 11851
SL 2 - 13151
SL 3 - 64212
Home Loan - 165,535
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#21 of 118 Old 02-02-2010, 04:40 PM
 
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Quote:
Originally Posted by PPK View Post

I'm self-employed and DH's employer only offers outrageously expensive health insurance. So, all DH and I have is 'catastrophic' with a 5K deductible and pay $75/month each. Is there any other way I should go on this? I had surgery in Dec. that was costly and took me out of work for 3 weeks

DS is pretty cheap at $136/month and he's covered for everything.

I have a policy that is similar. My out of pocket max is 4.8k. Can you save the deductible in a Health savings account?
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#22 of 118 Old 02-02-2010, 06:02 PM
 
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I have a policy that is similar. My out of pocket max is 4.8k. Can you save the deductible in a Health savings account?
I'm in this same situation and my plan is "HSA compatible", but I'm not really sure what that means....?

 Married to my sweetie and enjoying life with our fabulous dog.  Expecting #1 in August 2012!!!!

 

 
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#23 of 118 Old 02-02-2010, 08:18 PM
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I have a policy that is similar. My out of pocket max is 4.8k. Can you save the deductible in a Health savings account?
I have no idea what an HSA even is...off to Google it, I will return....
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#24 of 118 Old 02-02-2010, 09:44 PM
 
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I have a car loan left, with a balance of around $4400! I can't wait to get rid of that!

J, mom to my baby girl born January 22, 2012!  babygirl.gif

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#25 of 118 Old 02-02-2010, 10:44 PM
 
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I have a car loan left, with a balance of around $4400! I can't wait to get rid of that!
Congrats! You're really close.
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#26 of 118 Old 02-03-2010, 03:38 PM
 
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I lost this thread last month, but am signing on for February!
Welcome Back Annettemarie!! I missed your inspirational DR drinking games last month

treehugger.gifAnd you who seek to know Me, know that the seeking and yearning will avail you not, unless you know the Mystery: for if that which you seek, you find not within yourself, you will never find it without.treehugger.gif

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#27 of 118 Old 02-03-2010, 04:40 PM
 
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Welcome Back Annettemarie!! I missed your inspirational DR drinking games last month
DR drinking games? I'm intrigued. Do tell.
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#28 of 118 Old 02-03-2010, 05:13 PM
 
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oops. read the question wrong.

New signature, same old me: Ann- mama of 2 boys and 2 girls, partnered to a fabulous man.
I'm an unintentional weasel feeder and I suck at proofreading.
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#29 of 118 Old 02-03-2010, 09:46 PM - Thread Starter
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annettemarie, I wondered where you went! Glad to have you back.

cody'smomma, yay on getting back more money. For our ffef we saved 5 months expenses or 6-7 months bare bones. We did not count unemployment.

Welcome willew, it will be a great way to end the year with getting out of bs2.

PPK you are so close! Can't help with the insurance, I'm in Canada and ours is different.

sweetjasmine, oh how frustrating that your dh wants to trade in for a new car. Will he read tmmo?

Leav97, dropping 12 years sounds fantastic! Now rebuild that ef before Murphy finds out its low.
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#30 of 118 Old 02-04-2010, 09:59 PM
 
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Hey mamas,

I've been following this thread for a while and learning and trying to figure things out, so sorry I haven't introduced myself before.

I feel like we are in a boat I'm trying to get back on an even keel. The last few years have been rough with little income and lots of various things (home repairs, helping sick family members, etc).
As of last Sept, dh has a full time job after years of self employment, and I want to start getting a grip on our finances.

Here's my current semi-urgent question:
Should I take out a loan from our credit union to pay off our credit cards?

We have :
CC#1 6,000 at 18.9% (Ugh!)
CC#2 3,000 at 24.9% (Wah!)

So is it a crazy idea to take out a personal loan from the credit union, which would be 5 years at a set 12.9% interest rate? Also getting us away from the credit cards, which we would then cut up. Our income is now greater than our expenses, which wasn't the case last year, and we can get away from the credit cards completely. Also we can start building up the savings account - but not if we keep throwing money at the credit cards because we hate that big balance being there.

Any thoughts? Is this a good thing or dumb somehow to just transfer the debt over. I like the idea of a set monthly payment right to the credit union.

Thanks ladies!

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