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  1. #41
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    Another Ramsey idea with merit is to create an emergency fund of at least $1000. It sound counter-intuitive, because you could use that money to pay down debt, but Ramsey's theory is that people get stuck in the cycle because they don't have anywhere to turn when the car breaks besides the plastic. If you have some cash on hand for those occasions, you can more easily get to the point where you do not have any credit card debt or even use.

    My hubby and I paid off about $6K in credit card debt after our college days. We didn't formally budget (we do way more now) but we decided that my hubby's paychecks would suffice to pay all our bills and spending money. The money I made temping was entirely allocated to eliminate that debt. It worked for us. That's not always possible, especially when you're not right out of college, but I'd consider looking for extra streams of income to throw at the debt if you can't get your expenses down to one salary. You can sell stuff on craigslist etc.

    As far as staying out of debt, I pay off the credit card every week. Just never let it accumulate.

  2. #42
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    Here is the resources page on the website for the woman on the show I mentioned earlier in the thread. She's Canadian so you may see some different terms (like RRSP instead of 401(k) ) but the general advice is good. She's got some tools for building a budget as well as some other tips.
    "The Devil is joining in, and that's never a good sign." Phil Liggett

  3. #43
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    Also look at the interest being charged on each credit card. Pay the most toward the highest interest card, obviously. If that means just paying the minimum on a few, and the rest on the high card is helpful.

    For instance, hubby has a card that is charging 29.99% interest a month (due to his sending in his payment late a time or two). He was sending in a huge chunk on the second mortgage (which is at about 3.5% a month). I asked him to send in the minimum on that, and send the rest to the high card. Does he listen, though?

    I used to clip coupons, try to save on grocery specials, buy clothing on sale or only buy what I exactly need. It doesn't help the budget when you got another one who impulse spends at the drug store for instance, buying expensive bottles of wine, air fresheners, Enquirer type mags, candy, just whatever catches his fancy.

    I give up.

  4. #44
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    Quote Originally Posted by Cupid View Post
    It doesn't help the budget when you got another one who impulse spends at the drug store for instance, buying expensive bottles of wine, air fresheners, Enquirer type mags, candy, just whatever catches his fancy.

    I give up.
    I was (and sometimes still am) the impulse buyer. Clothes were my biggest impulse buy as well as the Bath and Body Works stuff. I had to pull out clothes from the closet to actually see what I had. And quit saying, I am saving ___ by buying this item at 50% off. If I didn't need it and didn't buy it I am saving 100%

  5. #45

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    Quote Originally Posted by Garden Kitty View Post
    Do you ever watch the show Till Debt Do Us Part on CNBC at 10? .
    I am strangely attracted to this show, even though I have no debt. I would recommend this show because you look at how horribly bound to money these folks are, and afterward, you don't feel like buying anything for the rest of your life.

    I am even more strongly drawn to the Suze Orman show on that precedes Till Debt on CNBC. She is overbearing just like my mom, so for me it's a bit like going home, but better because you can turn her off

  6. #46
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    I haven't read the thread yet, but I went with one of those consolidation services. I know that some economists think it's not a good idea, but it worked for me. I consolidated about 6 credit cards (mostly cards I used to pay for tuition and living expenses) into one consistently monthly payment. I also set up a direct deposit for an ING account that I try never to touch. Even $50 a month makes a difference over the long run. I also set up a vacation and Christmas Club account with small direct deposits each month that add up so that I have that money allocated for those things without resorting to my credit card.

    As my salary increased each year, I made sure to take that extra money and increase the amount I was paying down debt and increased money into my savings. That way I didn't raise my standard of living because of a raise. I would love a flat screen TV and some other luxuries, but I'm going to wait until the perfectly good non-HD console TV I have goes kaput. I still eat out and will splurge on smaller things, but I'm definitely on the slower end of consumer purchases.

    I don't have a written budget per se, but I do write down the dates that I'm scheduled to get a pay check (I get paid bi-weekly) and assign which checks are going to be used to pay my monthly mortgage, insurance, utilities, etc.

    I am happy to say that I'm down to one credit card and I pay off the balance each month. I'm focused on increasing my 401k deductions and saving a bit more each month. I still could do a better job of trimming my expenses, but all in all, I got through the process and am in a much better financial place than I was 10 years ago.
    Last edited by Bostonfan; 09-22-2010 at 09:06 PM.

  7. #47
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    Quote Originally Posted by Cupid View Post
    It doesn't help the budget when you got another one who impulse spends at the drug store for instance, buying expensive bottles of wine, air fresheners, Enquirer type mags, candy, just whatever catches his fancy.

    I give up.
    This is exactly why we went to cash, except I am the impulse buyer. It's easy to do when you are just swiping that plastic, but when you have to look the cash in the face, so to speak, it does tend to make me put "that whatever it is I don't really need" back on the shelf.

  8. #48

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    I was kind of skimming through quickly so if anyone suggested this already, sorry for the repeat.

    Check with your bank to see if they have free financial planning for account holders. My sister kept asking me for specific personal planning advice and I didn't have the answers. I knew my bank offered that service and I told her to check with hers. You would be surprised how many will do that for you.


    ETA: I just saw that genevieve mentioned financial planning through her employer. It's also a very good place to check for that sort of thing.

    Quote Originally Posted by genevieve View Post
    They emphasized building savings OVER paying off the debt. Not that they thought I shouldn't pay down the debt, but when I wondered if I should throw all my extra money at my CC debt, they said no. I found that surprising. Their take was that building savings WHILE paying off debt puts you in a much better position for that next emergency.
    Planners usually recommend building at least 6 mths savings. I am aiming for 1 year. After 18 years of savings, I am proud to say I have my 6 mths now. Those darn emergencies kept getting in the way. So don't feel discouraged if you can't get that 6 months anytime soon. The attempt to save did exactly what it was supposed to do. I had my emergency money available to dip into.
    Last edited by mpal2; 09-22-2010 at 10:13 PM.
    "Half the harm that is done in this world is due to people who want to feel important. They don't mean to do harm -- but the harm does not interest them. Or they do not see it, or they justify it because they are absorbed in the endless struggle to think well of themselves." – T.S. Eliot

  9. #49

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    Quote Originally Posted by genevieve View Post
    I know this is getting away from CC debt and into general money management, but I'd also like to advocate for credit unions. I opened a checking/savings account combo with a credit union that was offering a 7.25% return on balances up to $500 - I only had to get electronic statements and make one electronic deposit a month. I have the money deposited straight from my paycheck so I don't miss it, and the only think I ever spend the money on is once I reach the $500 threshold, I make an extra payment to a CC (see it is related to this thread ). Having a small amount of money going into accounts that I don't use is a really fast way to accumulate savings (something else that was problematic for me in terms of getting rid of debt).

    On another note, last year I got a free financial planning consultation thorugh my workplace. I told them about my debt issues and trying to build savings. They emphasized building savings OVER paying off the debt. Not that they thought I shouldn't pay down the debt, but when I wondered if I should throw all my extra money at my CC debt, they said no. I found that surprising. Their take was that building savings WHILE paying off debt puts you in a much better position for that next emergency. As someone who was trapped in the revolving door of getting debt down and then getting hit with a large expense that I had no choice but to pay with a CC for several years, this really resonated.
    This is what a credit counselor told me too, and it's working. Always pay yourself first, even when you have big debt. Even $20 per month squirreled away will add up, esp. if you use a credit union.

  10. #50

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    Quote Originally Posted by Aceon6 View Post
    One more thing, possibly more in line with the OP's needs. For separating needs from wants, calculate how many hours you'd have to work to pay for the want.

    When my niece who has a minimum wage job after school was asked "If you worked 3 days and they handed you those jeans instead of a paycheck, would you feel it's fair?" she had the "ah ha" moment. Now, she does a lot of "how many hours would I have to work to pay for..." calculations. It's changed her whole relationship with money.

    That's a really helpful visual.

    The other thing that I heard, long ago, was that the single most important thing you could do to decrease debt (or increase savings) was to revisit your biggest expenses, which are usually the ones we consider to be "fixed", and not as much trying to pinch and pare every last bit out of the discretionary expenses. Living in a less expensive house or apartment can have a huge impact on your budget -- rent/mortgage is cheaper, taxes are cheaper, insurance is cheaper,...all these things that you'd assumed weren't up for consideration turn out to have huge impacts.

  11. #51
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    Quote Originally Posted by attyfan View Post
    Also, I have heard that taxing authorities have been known to treat the amount "written off" as income. I'm not sure about this, so please check with someone knowledgeable.
    YES, they do, and it irks me to NO END that Dave Ramsey never mentions this. I also don't agree with not paying your cards while accumulating that lump sum that he teaches. That will ding your credit, although according to Dave, that won't matter because your score doesn't matter.

  12. #52

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    Quote Originally Posted by Stormy View Post
    YES, they do, and it irks me to NO END that Dave Ramsey never mentions this. I also don't agree with not paying your cards while accumulating that lump sum that he teaches. That will ding your credit, although according to Dave, that won't matter because your score doesn't matter.
    It most certainly does matter.
    "Half the harm that is done in this world is due to people who want to feel important. They don't mean to do harm -- but the harm does not interest them. Or they do not see it, or they justify it because they are absorbed in the endless struggle to think well of themselves." – T.S. Eliot

  13. #53

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    Quote Originally Posted by Stormy View Post
    YES, they do, and it irks me to NO END that Dave Ramsey never mentions this. I also don't agree with not paying your cards while accumulating that lump sum that he teaches. That will ding your credit, although according to Dave, that won't matter because your score doesn't matter.
    Eek -- does he really advocate not paying even the minimum cc payment each month? If you didn't do that you'd often have really awful penalty interest rates that would kick in, not to mention late payment fees.

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    Quote Originally Posted by Cupid View Post
    Also look at the interest being charged on each credit card. Pay the most toward the highest interest card, obviously. If that means just paying the minimum on a few, and the rest on the high card is helpful.

    For instance, hubby has a card that is charging 29.99% interest a month (due to his sending in his payment late a time or two). He was sending in a huge chunk on the second mortgage (which is at about 3.5% a month). I asked him to send in the minimum on that, and send the rest to the high card. Does he listen, though?

    I used to clip coupons, try to save on grocery specials, buy clothing on sale or only buy what I exactly need. It doesn't help the budget when you got another one who impulse spends at the drug store for instance, buying expensive bottles of wine, air fresheners, Enquirer type mags, candy, just whatever catches his fancy.

    I give up.
    I'd be temped to give up too -- his approach is incredibly destructive. Would he be willing to give you his credit card(s) for a month and start living just on a weekly cash allowance with you paying the bills? Somebody's got to be the adult.

  15. #55
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    Quote Originally Posted by mpal2 View Post
    It most certainly does matter.
    Oh, I know that!! According to Dave, you don't need a credit score after you've paid off your debt, so it doesn't matter. After you get out of debt, you'd never use credit cards again or even credit in general. You'd pay for everything in cash or debit card.....cars, clothes, food, everything. If you can't afford it in cash, you don't buy it....which I admit, is a very good way to live. However, sometimes that's not realistic. Dave says there are some mortgage lenders that will not pull your credit score, so you don't need a credit score to get a mortgage. Whether that's really true, I don't know.

    Some of what he says makes a ton of sense and does have merit. Some is so pie in the sky I can't believe it.

  16. #56

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    Dave sounds scary.

    I try to have cash already saved before I buy anything big or go anywhere. I also keep my loans to house, equity line of credit and car. But, just wow. He's very extreme.

    Is his target audience people who have more extreme debt issues? Because that might make some sense then.
    "Half the harm that is done in this world is due to people who want to feel important. They don't mean to do harm -- but the harm does not interest them. Or they do not see it, or they justify it because they are absorbed in the endless struggle to think well of themselves." – T.S. Eliot

  17. #57

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    Quote Originally Posted by barbk View Post
    Eek -- does he really advocate not paying even the minimum cc payment each month? If you didn't do that you'd often have really awful penalty interest rates that would kick in, not to mention late payment fees.
    Dave states that you should take care of your own first, food, lights & water, house payment, transportation. If there is money left after that, then prioritize your bills and pay what can get paid. But if Bank of America gets paid before your house payment that is ridiculous. If you lose your job or catastrophic medical event happens, who cares if Chase throws a fit? At the point you recover you can find a mortgage company that does Manual Underwriting and doesn't base your ability to qualify for a mortage based on your FICO score. When Citi ups your penalties and interest that's when the negotation process starts.
    "awwww....shades of Janet Lynn" - Dick Button on anyone who makes more than one mistake in their program.

  18. #58
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    I don't have any helpful hints for paying off debt that haven't been listed already, but I have one for not accumulating more.

    Don't invest any more in a car than you absolutely have to, or at least always buy a lot less car than you can afford; go for reliable but as stripped down as you can get. I've read several personal finance articles lately that say that the spiral of debt can nearly always be traced, not to credit card purchases, but to car debt. In some cases, the car purchase starts the dowhnill slide. In others, everything is fine until the car breaks down and that sets off a chain of events that creates debt.

    Oh, I do have one more--make it a point to have fun. Find free things to do or very cheap things to do or make fun up at home. But don't let yourself start feeling deprived, because as soon as you do, you will either become depressed or you will feel that you deserve a treat because you've been so good, and neither helps you out.
    "The secret to creativity is knowing how to hide your sources."-- Albert Einstein.

  19. #59
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    Quote Originally Posted by Prancer View Post
    Oh, I do have one more--make it a point to have fun. Find free things to do or very cheap things to do or make fun up at home. But don't let yourself start feeling deprived, because as soon as you do, you will either become depressed or you will feel that you deserve a treat because you've been so good, and neither helps you out.
    I think this is important. It's kind of like dieting - if you go on a diet, and the focus is on what you no longer can have, you start craving those things. Sometimes you binge. If you change your diet, and focus on the enjoyable foods that you can and do eat, you are more likely to feel satisfied. And probably can eat the occasional piece of chocolate cake without repercussions.
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    After you get out of debt, you'd never use credit cards again or even credit in general.
    Credit cards offer relatively easy charge-back protection. This can come in very handy when you've been ripped off on car repairs, faulty dental work, a Caribbean hotel that advertised itself falsely, or some other bad service that cannot just be returned like merchandise can. Debit cards, cash and checks do not offer charge-back protection, which means to recover the money you're likely looking at legal action. Just don't use credit cards if you can't pay off the entire bill at the end of the month, and you should be fine.

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