Feb Get Out of Debt Thread - Mothering Forums

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#1 of 80 Old 01-31-2011, 09:42 AM - Thread Starter
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Brr, its cold and I can't wait to get through Feb.  If you want to get out of debt and start saving this is the thread for you.  Some 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 deductibles 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 or if you want a good DR discussion forum, llnoe.com

 

Gail vax Oxlade's Til Debt do Us Part is great tv show, very motivating. Her website is:

http://gailvazoxlade.com/blog/


Please join us!

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#2 of 80 Old 01-31-2011, 09:55 AM - Thread Starter
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I don't know why the formatting is so wonky, sorry! I'm looking forward to february. If all goes according to plan I should be able to send money to my tsfa (bs 4). I've got to keep ds's bday stuff under control though and get through a long weekend away.

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#3 of 80 Old 01-31-2011, 09:59 AM
 
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Happy February!  I am still in BS2 but we are making progress!!  Just paid off DP's student loan this month, and I am working pretty hard on paying mine off (still owe $6K, but that's down from $14K since late 2008)!

 

We did okay over the holidays this year, but spent some of our savings on a new (chemical free) mattress that I have been wanting for about 10 years.  I'm okay with that, but really happy to welcome a frugal new year.  It is so freeing to think that possibly by this time next year I will have my student loan paid off!


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#4 of 80 Old 01-31-2011, 11:58 AM
 
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Found out last week at work that things are going well enough that they're talking about us "sharing in the success." I hope that means a bonus, since it seems to be a bit much to expect a pay increase.

 

CC is down to $3500. I've got a few things to return to Land's End to get a credit of about $50 to cc. I'm also waiting on the credit to go through for something I returned I ordered online - about $75.

 

Just continuing to throw money both at CC and to put aside for my teeth.


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#5 of 80 Old 01-31-2011, 12:41 PM
 
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It looks like we are going to have a decent February also.  We got a very decent bonus this month.  In addition to tax return money coming and my paychecks for the month (all of our bills have been paid), we should be able to knock down our student loan from $7950 to under $3000!  We are so close to being debt free, I can hardly stand it. :)

 

Question to you mamas out there though: I'm thinking about staying home after student loans are paid off.  Just a little nervous to give up all of our extra cash flow, but I'm really aching to be home with my kids.  Any one else done this?  Sooooo nervous.

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#6 of 80 Old 01-31-2011, 12:50 PM
 
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I think February is going to be a good month around here too :)  We should be getting our tax return within the next week after which we will be CC debt free!!  Once that is paid off I can throw all our extra money into savings for a few months then re-evaluate.  The only debt we will have left is my student loans and the car.  We are going to refinance the car (hopefully) in March thru USAA where we do our banking to make things more convenient and hopefully lower our payments a bit.  I am not really worried about the student loans, we are doing the IBR plan and our payment is 0 so yeah... I think we will tackle the car first.  We also need to buy a second car in the next year but are planning to use next years taxes for it.


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#7 of 80 Old 01-31-2011, 03:34 PM
 
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Congratulations on everybody's steady and winning progress!!

 

We're rapidly nearing the end of BS3.  I'm actually saving a little more than necessary because I want to put it in a higher interest-earning money market account.  Then I have to pad some more on to cover property taxes and insurance (we don't hold an escrow with our mortgage).  Our tax refund should fill in most of the missing gap, though.  Until now, I hadn't realized what a big deal it was to finish BS3.  We can start wealth-building and future-saving in earnest.  joy.gif


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#8 of 80 Old 01-31-2011, 05:44 PM
 
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Happy February!  We're still trucking ahead - I had to open a new business checking account so I have a hold still on a big client check.  We ended January with 76.2% paid off instead of the 76.6% goal I had set.  My goal for March 1 is 88% paid off!  

 

It looks like February is looking good for the lot of us - yay!!  

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#9 of 80 Old 02-01-2011, 12:50 PM
 
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I'd like to join, I think. I like DR's plan, but here's my "problem".... our only debt is our car loan and mortgage. $17k or so left on the car... sooooo... not much of a snowball, I guess. Anyone have a good suggestion for another plan to look at? DR is always talking about how his plan is mostly psychological and paying off small debts gets you pumped and all that... I'm wondering if there's something else that would fit our situation better?

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#10 of 80 Old 02-01-2011, 01:22 PM
 
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Happy February everyone!

 

We're still paying our debt snowball and will be for some time (my guess is around 2 years) even though we don't have much debt. We are paying off student loans but things are fairly tight for us right now so we are only putting about $1000 extra down each month. We're not drowning in debt, but really want to be debt free ASAP!

 

Also we are having a kind of vacation this month. DH needs to go to NYC for work (paid for by work) and I had enough FF points to get the rest of us there so we are going as a family! We have set aside plenty of money in our budget this month so it will be paid for with cash once we are there.

 

I've also had a small windfall and have decided not to do the sensible thing and pay down our snowball, but I am buying some wants - a stand mixer, new winter coats, and a chair.

 

So...this month is not by the books, but you've got to have some fun, right?


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#11 of 80 Old 02-01-2011, 01:28 PM
 
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I'm back!  And we are plugging away in February with a bang and some re-financing which turns out to be very well-timed by DH & I.

 

We have opted to do our own debt consolidation with a personal loan through the bank at an outstanding fixed rate (8.5% over 5 years) vs. the 10%, 11% and now 24.99% we were being charged through our 3 CC.  Cards are paid off, and several of them cancelled/closed to avoid any further temption or spending, and DH & I are going to be aggressive in paying it off well before the 5 year mark.  I'm sticking with the goal of trying to pay down over half of the loan by the end of 2011 (10K)

 

We are balanced very precariously with 1k EF, 1k in Savings and everything else... into our loan payments for 2011 including our entire tax refund.  Now to cross my fingers for another pay bump in July and hopefully that will bring my salary close to or back to where it should have been before the economic meltdown of 2008 and pay freezes.

 

Yippeee February!


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#12 of 80 Old 02-01-2011, 01:42 PM
 
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Quote:
Originally Posted by Juvysen View Post

I'd like to join, I think. I like DR's plan, but here's my "problem".... our only debt is our car loan and mortgage. $17k or so left on the car... sooooo... not much of a snowball, I guess. Anyone have a good suggestion for another plan to look at? DR is always talking about how his plan is mostly psychological and paying off small debts gets you pumped and all that... I'm wondering if there's something else that would fit our situation better?



I've had that issue because our only debt is student loans (about the same amount as your car) and mortgage.

 

I think DR's larger plan still works for me, it makes sense. Just that step 2 (debt snowball) is a little more monotonous than for most people, I guess.

 

One motivating thing is to calculate how much I save in interest payments if I throw $X extra into a payment. As well as how many months earlier we pay it off and are free of the darn thing.


Homeschooling mama to 6 year old DD.

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#13 of 80 Old 02-01-2011, 04:18 PM
 
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After our CCs are paid off (this week! YAY!!) we will be in basically the same place... just the car and student loans.  The students loans are on the IBR plan tho so techincally we are paying them even though our payment is 0 dollars a month.  We are splitting any extra we have each month between savings and the car.
 

Quote:
Originally Posted by laohaire View Post



Quote:
Originally Posted by Juvysen View Post

I'd like to join, I think. I like DR's plan, but here's my "problem".... our only debt is our car loan and mortgage. $17k or so left on the car... sooooo... not much of a snowball, I guess. Anyone have a good suggestion for another plan to look at? DR is always talking about how his plan is mostly psychological and paying off small debts gets you pumped and all that... I'm wondering if there's something else that would fit our situation better?



I've had that issue because our only debt is student loans (about the same amount as your car) and mortgage.

 

I think DR's larger plan still works for me, it makes sense. Just that step 2 (debt snowball) is a little more monotonous than for most people, I guess.

 

One motivating thing is to calculate how much I save in interest payments if I throw $X extra into a payment. As well as how many months earlier we pay it off and are free of the darn thing.




Rachel, proud Army wife to my superhero.gif and SAHM to my crazy boys jumpers.gif... Trevor 4/08, Trenton 6/09 and Travis 10/10
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#14 of 80 Old 02-01-2011, 05:20 PM
 
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I'm here. Working on BS1, i.e. emergency fund. I need to get my butt in gear and do our taxes - that should take care of that and then some. smile.gif

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#15 of 80 Old 02-01-2011, 05:40 PM
 
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Quote:
Originally Posted by Juvysen View Post

I'd like to join, I think. I like DR's plan, but here's my "problem".... our only debt is our car loan and mortgage. $17k or so left on the car... sooooo... not much of a snowball, I guess. Anyone have a good suggestion for another plan to look at? DR is always talking about how his plan is mostly psychological and paying off small debts gets you pumped and all that... I'm wondering if there's something else that would fit our situation better?


If DR's point is to do something psychologically motivating, then do just that. 

 

For BS3, which is building an emergency fund of 6 months income, I drew a little thermometer and added little incremental numbers to it.  Each time I reached an increment, I took DD's red crayon and colored it in.  It's still on my refrigerator with one little increment left....joy.gif

 

You don't have to do exactly that, but concoct your own plan, your own little way to recognize and celebrate the increments that you pay off on your car. thumb.gif


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#16 of 80 Old 02-01-2011, 05:41 PM
 
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Quote:
Originally Posted by Motivated Mama View Post

I'm here. Working on BS1, i.e. emergency fund. I need to get my butt in gear and do our taxes - that should take care of that and then some. smile.gif


I hope that BS1 goes quickly for you!


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#17 of 80 Old 02-01-2011, 09:09 PM
 
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Hi everyone! I would like to join, although I am a lot like you, Juvysen, in that we have no credit card debt. Here are our debts:

Student loan (a parent plus loan, in my parents name but I have to pay it): $8k
Car loan: $13k
Student loans: $55k
Mortgage: $170k

But I still think I have a lot to gain from following the DR plan! My first priority is to pay off the car loan, even though the parent plus loan is smaller, because the pp loan is much lower interest. I guess you could say I am on BS2 because we already have a $1,000 EF. We have more than that in savings but I hate to part with that just to make a tiny dent in a loan. Our savings is about $3k. We will get a large tax return this year but I plan to save that, too. Should we be applying all of this savings to loans?

As far as BS1, I do want to get more life insurance. I just went back to work and we can now afford it. Also, I am not willing to get rid of the car because it is our only one and its nothing extravagant (4 years old) but we got it when I still owed on my previous car that was too small for 3 carseats.


Anyway, looks like most everyone is going to have a great February, way to go! joy.gif

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#18 of 80 Old 02-01-2011, 10:01 PM
 
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Happy February everyone! We're still on baby step 2, but getting to the point where there really is an end in sight- hooray!

 

Only debt other than the house is the car loan, and I called the credit union yesterday and found that there is $2487 remaining. More than I thought, but I'm still hoping I can pay enough extra on it to pay it off by April. I think that's doable, if DH and I both get enough work at our jobs. I recently took my hours at work down to per diem, and I think I may have to pick up hours in a second department in order to get the amount of hrs a week that I need to pay our bills. The good thing (for me) is that my original dept is *majorly* short staffed right now, several vacant positions, and the hospital is not hiring new nurses at all, so I should be able to get as many hrs as I want.

 

After we get the car loan paid off, we need to buy a new roof for our house, then pay for an appraisal on the house, then redo our home loan. So this year will probably be a tight year financially. I'll be happy as long as we have enough money to do what needs to be done.

 

It's funny, we both got our W2's this week, and we were staring at the numbers, wondering where all that money went (more than we've made any previous year). Then we added it up, and realized that ~25% of our net income went to debt payoff! Yeesh- no wonder things felt so tight!


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#19 of 80 Old 02-02-2011, 06:05 AM
 
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Okay,....this was supposed to be in reply to Turquesa....I still manage to mess up quoting in this new format.

 

 

A-MAZING!!! 

 

I can't wait 'til it's my turn to write that post. I have dreams of the freedom that comes from all this hard work (even if the hard work sticks around- I get that it's never over) and hitting, let alone round the bend on BS 3 - Congratulations!!!


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#20 of 80 Old 02-02-2011, 06:12 AM
 
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Quote:
Originally Posted by laohaire View Post



Quote:
Originally Posted by Juvysen View Post

I'd like to join, I think. I like DR's plan, but here's my "problem".... our only debt is our car loan and mortgage. $17k or so left on the car... sooooo... not much of a snowball, I guess. Anyone have a good suggestion for another plan to look at? DR is always talking about how his plan is mostly psychological and paying off small debts gets you pumped and all that... I'm wondering if there's something else that would fit our situation better?



I've had that issue because our only debt is student loans (about the same amount as your car) and mortgage.

 

I think DR's larger plan still works for me, it makes sense. Just that step 2 (debt snowball) is a little more monotonous than for most people, I guess.

 

One motivating thing is to calculate how much I save in interest payments if I throw $X extra into a payment. As well as how many months earlier we pay it off and are free of the darn thing.


Breaking your large goal of 17K into smaller ones is great too....figure out your ideal monthly sum you can throw at debt, and give yourself a timeline.....something like getting it down to $15,000 in the next 3 months, or creating some kind of graphic (a car?) with 170 little squares each representing $100 and start colouring in that car. Keep your eye on the prize!

 

....or if you want to gain momentum quickly, sell off your newer, more expensive car and get something that will be decent for half the price and knock out $8,000 right off the bat. 


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#21 of 80 Old 02-02-2011, 07:34 AM
 
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Question to you mamas out there though: I'm thinking about staying home after student loans are paid off.  Just a little nervous to give up all of our extra cash flow, but I'm really aching to be home with my kids.  Any one else done this?  Sooooo nervous.

We are actually trying to redo our budget so DH can quit his part time job. We are living off everything but his part time income right now to see if it is doable before he actually quits. Can you finish paying off the student loans and then work a few months living as though you didn't have your income coming in (other than to pay for daycare)? For us, it is easy during the school year but DH is a teacher's aide so he gets no income in the summer. We're working hard to save up during all the months of school so he can totally take the summers off and be home with DS.
 

 

Quote:

Originally Posted by Juvysen View Post

I'd like to join, I think. I like DR's plan, but here's my "problem".... our only debt is our car loan and mortgage. $17k or so left on the car... sooooo... not much of a snowball, I guess. Anyone have a good suggestion for another plan to look at? DR is always talking about how his plan is mostly psychological and paying off small debts gets you pumped and all that... I'm wondering if there's something else that would fit our situation better?

Our only debt in our mortgage. We started the DR plan this way. For us (mainly me), it was motivating to see how much money we could save each month by following a strict budget and putting money aside for the future. It is great for me to see the savings balances rising!
 

 

Okay - it has been awhile since I posted so I should probably reintroduce myself. We are a family of 3 (DH, DS, and me) with a small dog. The dog has allergies and other health issues so he's an expensive little guy. DH and I both WOH and DS goes to a home daycare where he adores his caregiver.

 

We are debt free except our mortgage and that seems to take forever to reduce. We bought our house 3.5 years ago and have always paid a little extra every month to make the payment a nice round number and chip away a little bit at the principle.

 

DH is really getting burnt out chasing after preschoolers all day and then working weekends in retail so our new mission is to cut back enough to save a "summer budget" so he can quit the retail job. We'll miss the discount but know that having family time and feeling less stressed will be worth it. DH may go stir crazy this summer if he doesn't work at least part time but hopefully he will be so busy with DS that he won't miss it. We've been fine during the school year living off his teacher pay but since we get no paycheck for him in the summer we used the part time retail income to round out the edges. It will be an adjustment for us to spend our savings in the summer but I feel it is worth it for household harmony and maybe both of us getting a little "me" time back.

 

We are expecting a tax return this year for the first time since we got married. We had extra taken out every year and still owed so having DS made a nice difference for us. We are not getting a ton back but I had been saving in case we owed so that makes it feel like a lot of money. We decided to spend the saved money to purchase a new range as our oven doesn't really work and one burner died. I am looking forward to enjoying cooking knowing I can plan things to actually cook in the oven. The actual tax refund will go directly to the mortgage. Our next goal is to get the mortgage under $100,000.


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#22 of 80 Old 02-03-2011, 02:57 PM
 
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We got our taxes back and I paid off all our CC!!!  I won't take them off my budget until I get a statement with a zero balance on it but still... super exciting!!!  I don't think we are doing things QUITE in the "right" order according to DR, because we are now throwing all our extra in savings instead of into paying off the car.  But we have a bunch of big expenses coming up, like a cross country move and some house things so we need to make sure we have cash for that stuff :)


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#23 of 80 Old 02-04-2011, 06:50 AM
 
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We need oil again. Oil and gas are killing us this winter. I need to do vehicle maintenance (90k miles) this month as well and we could really use a new washing machine as ours keeps failing. I really have to get on our taxes and hope for a good return. We're swimming in debt and expenses currently.

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I'm in again.  I'm Sara, SAHM to two boys, one in K and one 2yo.  My DP works out of town every week and has been for about 6 months now.  I'm getting used to it but it is hard.  The only good thing is that he is making good money right now.  We finally paid off the motorcycle and my DP has agreed to sell it.  So our only debt is one small student loan at about $5,500 and a mortgage at about $214,000.  We are also contributing 3% to a 401k to get the match.  We should have at least $1,000 leftover each month but lately I have been spending on some things that I had put off when we didn't have the money.  Therapy for DS, counseling for us, Y membership for my sanity!  Anyhoo, I want to get back to having a goal and sticking to a budget.  With extra money it's been easy to go out to eat more, spend more $$ than I normally would.  

 

So with that said, I think my current goal is going to be calling around to some reputable mortgage loan places to find out how we could go about refinancing.  I know we owe more than the house is worth and I want to know how much $$ we would have to bring to the table in order to refi.  If it is more than a reasonable amount then I think I would like to make my goal to get the loan under 200K.

 

I also want to keep about 10K in my emergency fund.  I'm going to hold off on paying the student loan for now just because I really want to knock off some of this house thing first.  The SL is a low interest rate so I don't feel bad about that.  I like the idea of making a chart or something and coloring in a little bit as you get to your goal.  


                                       DS 7 ~ DS 3

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#25 of 80 Old 02-05-2011, 12:39 PM
 
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We need oil again. Oil and gas are killing us this winter. I need to do vehicle maintenance (90k miles) this month as well and we could really use a new washing machine as ours keeps failing. I really have to get on our taxes and hope for a good return. We're swimming in debt and expenses currently.



hug.gif .... hopefully you can get caught up come summer time and budget for all the oil you'll need next winter. Have you had someone look at the washer? We had ours fixed and it was only like $50 vs. new....or get one used for just a bit more.


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

 

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#26 of 80 Old 02-05-2011, 02:33 PM
 
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For those of you a little more adavanced on the Baby Steps, where on God's green earth do I get started on learning how to invest?  I got a "dummies" guide from the library and still felt like a dummy.  duh.gif Ramsey tells you not to be intimidated by investing and to LEARN more.  But where?  Can somebody please recommend a source that will talk to me like I'm in Kindergarten?  I feel like such a dolt, but some of these "beginner" guides don't even define the terms for you.


In God we trust; all others must show data. selectivevax.gifsurf.gifteapot2.GIFintactivist.gif
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#27 of 80 Old 02-05-2011, 08:58 PM
 
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I was looking forward to hitting 4 months emergency fund this month and then starting to attack my car loan with my tax return this month.  Unfortunately, the bills from the divorce attorney are starting to hit.  So, that is where my money is going.  We are down to a bare bones budget.  The only luxury I am still paying for is my twice a month violin lesson.  I have even been going to bed early to save some electricity.  I really want to build back up that emergency fund.  After being debt free for years and years, I hate having the car loan and also a student loan I am building up.  I guess I will have enough cash when all is said and done to either pay off those two loans or put a down payment on a house.  I can't decide which.  Buying a small house will save me money in the end because rentals around here are very expensive and house prices are down.  The car loan should be done by the time the divorce is final and I am just going to move the payment into a separate car fund.  Hopefully I will get a decent job before I graduate next year.  I am starting to look seriously around April/May this year.  That gives me a year to find something that works.  I abhor debt.  Not too thrilled about those attorney fees, either!

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#28 of 80 Old 02-05-2011, 11:57 PM
 
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I want to join in here although I don't think I'll necessarily be following DR's plan quite the same way. I am really trying to rework our budget and get things done though so some accountability would help. Right now I'm trying to rework our budget to lower our bills so we'll have more extra money each month. Dh is our only income but he gets paid per diem plus his income. We're hoping to get our bills down to where we can live on his per diem (or close to it at least) so that we can save more and get more done. We have some major expenses right now that need to be taken care of. We have to get another car ($2000) and a camper ($4000) then we have expenses for the new baby coming. I'm hoping to take care of the car and camper with the tax return may need to add a little to it though. Once that is done I want to get some of our bills lowered hopefully making the switches by the end of March at the latest. These are: pay off small finance note ($400 after this month's payment), switch cell phone providers to lower bill (this will cost a bit to switch but will help in the long run. don't have an exact estimate on it yet). We also have a land note that I'd love to get rid of but it has quite a bit left owed right now. I'm listing our other property for sale this week and hope it'll sell soon (looks good as we've had a bit of interest already). That should be enough to get the land paid off and then I'll have to look at our budget at the time to figure out the rest of the money. So we'll see how it goes... 

 

I'm also in the No Spend Challenge and Home Cooking Challenge to help me spend less!


Michelle mom to DD , DS , & lil DD plus and spending my days
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#29 of 80 Old 02-06-2011, 09:54 AM
 
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For those of you a little more adavanced on the Baby Steps, where on God's green earth do I get started on learning how to invest?  I got a "dummies" guide from the library and still felt like a dummy.  duh.gif Ramsey tells you not to be intimidated by investing and to LEARN more.  But where?  Can somebody please recommend a source that will talk to me like I'm in Kindergarten?  I feel like such a dolt, but some of these "beginner" guides don't even define the terms for you.


I'm clueless when it comes to investing and have all the sames questions as you do....and finding financial advice or an accounting service that isn't self-absorbed/biased....do accountants give financial advice? That's one thing I'm nervous about in preparing to enter BS 3.

 


 


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

 

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#30 of 80 Old 02-06-2011, 07:26 PM
 
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" hug.gif .... hopefully you can get caught up come summer time and budget for all the oil you'll need next winter. Have you had someone look at the washer? We had ours fixed and it was only like $50 vs. new....or get one used for just a bit more.

I spent $60 on a new door latch which seemed to be the problem, but we are still getting failures with the door lock and others. I'm starting to get around them by using only cold water and a slower spin cycle, but it's a lot of finagling. It will work until we can afford a new one anyway.

 

 

 

 


* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Plus DH & DD1(8) & DS(6) & DD2(5) & DD3(2)
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