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Old 05-26-2017, 07:10 PM
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Default My debt situation/ introduction

3 months ago I finally got a full-time job after 3 years of having to stick with part time jobs and my wife's full time job. Now we can get even more serious about debt paydown with a total net take home of 3.5k/month.

We are on our second mortgage. We sold our first house for a profit. 45k is the mortgage we have now with $400 monthly payments and I'm remodeling one room at a time.

Less than 12k car loan at $292. /month

About 4k on one credit card and about 9k on a second credit card.

We have medical bills from our baby being born recently. Over 4k still waiting on more bills to come.

We both have student loans under the income driven payment plan about 50k total.

We have 12k cash emergency fund. I setup monthly payments on the medical bills since they are interest free. I have been putting all extra cash on the credit cards. Without going under 12k savings.

I know I'm moving the Right direction, but debt paydown down is so slow and boring.

Any thoughts and lectures you have for me bring it on.
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Old 05-26-2017, 08:05 PM
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What are the rates on your debts?

What are your personal and financial goals?

Have you started saving for retirement?

Do you have a written budget?

Congrats on both the new full-time job and the new baby.
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Old 05-27-2017, 05:59 AM
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Thanks.

Well medical bills are interest free as long as I keep paying on them.

Car loan is 4.25% Mortgage is 4.125% student loans are 3.5% to under 5%..

4k credit card is 21.65% 9k credit card is 20.1%.
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Old 05-27-2017, 06:11 AM
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Focus your efforts on the 4K credit card.

Once that is paid off move on to the 9k credit card.

Make regular payments on everything else.

Don't acquire any more debt, if possible.
*******

Now if this were me I would payoff the 4K credit card today using money from the EF.

So I would say think long and hard about the 12K EF. Could you get away with 8k? 10k? That would speed up the 4k payoff and you could build your EF back up again. The interest rates are killers.

Read up on Dave Ramsey plan for debt payoff. Ignore his investing advice.
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Old 05-27-2017, 08:25 AM
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Debt pay down doesn't have to be boring when you an run scenarios about 'if I pay this much how soon with it be gone' type things. Your credit card bills should tell you how long and how much it will cost you if you just pay the minimum due. The also show the savings and what you have to pay each month to have them paid off in 3 years. If you can at least pay the 3-year plan amount instead of the minimum, you will make great progress. If you can pay that amount, round up to at least the next highest dollar amount and see even that amount get smaller each month. Have substantial plans for what you want to do when the credit card pay down money has been freed up. I know when I have my mortgage and rental property paid off we will have over a $1000 freed up and available for savings, investing, not such a bare bones lifestyle, etc. Same with those student loans. Make goals and write them down to keep you on track with the pay offs.

Congrats on the new job and the new baby. If you are still in the probationary period of the new job, I wouldn't use your EF to pay off the bills. You want to be sure that the job is 'permanent' or as permanent as any job can be. If you don't have any yet, you might want to think about a term life insurance policy if you can afford one on you or your wife. Theyyounger and healthier you are the cheaper they are, but you don't want something to happen to you or your wife and leave the other in a financial calmity.
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Old 05-27-2017, 10:42 AM
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Quote:
Originally Posted by Jluke View Post
Now if this were me I would payoff the 4K credit card today using money from the EF.

So I would say think long and hard about the 12K EF. Could you get away with 8k? 10k? That would speed up the 4k payoff and you could build your EF back up again..
No thanks, I am not interested in blowing my liquidity just so I can brag about paying off a card. 12k is my EF and it's staying that way.

@Gailete, my wife and I both have a life insurance policy that will cover the funeral costs. And by keeping 12k in my EF will help that situation out as well.

I'm definitely going to focus on my 4k credit card first though.
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Old 05-27-2017, 12:21 PM
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Quote:
Originally Posted by Sammydabullz View Post
No thanks, I am not interested in blowing my liquidity just so I can brag about paying off a card. 12k is my EF and it's staying that way.

@Gailete, my wife and I both have a life insurance policy that will cover the funeral costs. And by keeping 12k in my EF will help that situation out as well.

I'm definitely going to focus on my 4k credit card first though.
But what about the mortgage, the debts, and living expenses? The person who is left is now a single parent with one income.

Term life insurance is cheap.
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Old 05-27-2017, 01:01 PM
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Quote:
Originally Posted by Sammydabullz View Post
No thanks, I am not interested in blowing my liquidity just so I can brag about paying off a card. 12k is my EF and it's staying that way.
What good is having 12K sitting in a savings account when you are going to spend almost $3,000 this year on credit card interest charges? That makes no sense. Get rid of the credit cards and then you will be able to pretty quickly rebuild the EF.
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Old 05-27-2017, 03:36 PM
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What good is having 12K sitting in a savings account when you are going to spend almost $3,000 this year on credit card interest charges?.
It sure does make sense. Do you not realize your saying the exact same thing as saying what's the point of having Dave Ramseys 3k.... might as well not have an EF??? And yes it does make sense because in today's world if I lose my job it is difficult for a white male to get hired. It could easily take a year or more to find another accounting job. The accounting job I have right now, I am the first male in 25 years to work it. I don't have the advantage of being a so-called minority that allows me to get hired on the spot.
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Old 05-27-2017, 03:38 PM
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Term Life isn't as great as the sales people say it is. It loses value over time. So your payout decreases over time.
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Old 05-27-2017, 03:53 PM
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Quote:
Originally Posted by Sammydabullz View Post
It sure does make sense. Do you not realize your saying the exact same thing as saying what's the point of having Dave Ramseys 3k.... might as well not have an EF??? And yes it does make sense because in today's world if I lose my job it is difficult for a white male to get hired. It could easily take a year or more to find another accounting job. The accounting job I have right now, I am the first male in 25 years to work it. I don't have the advantage of being a so-called minority that allows me to get hired on the spot.
Why is it hard to find a job? I'm a white male and I have 3 of them. Finding work is easy
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Old 05-27-2017, 04:35 PM
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Quote:
Originally Posted by Sammydabullz View Post
It sure does make sense. Do you not realize your saying the exact same thing as saying what's the point of having Dave Ramseys 3k.... might as well not have an EF??? And yes it does make sense because in today's world if I lose my job it is difficult for a white male to get hired. It could easily take a year or more to find another accounting job. The accounting job I have right now, I am the first male in 25 years to work it. I don't have the advantage of being a so-called minority that allows me to get hired on the spot.
Quote:
Originally Posted by Sammydabullz View Post
Term Life isn't as great as the sales people say it is. It loses value over time. So your payout decreases over time.
Number 1, please take your racism and sexism somewhere else. If you make any more comments like that you will be banned from this site.

Number 2, what the heck are you talking about regarding term life? The payout does not decrease over time. If you have a $100,000 policy, it will always pay out $100,000.
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Old 05-27-2017, 04:45 PM
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I came here for advice and encouragement to keep me moving forward. But it seems all you people want to do is to discourage me for going a step further by having a larger EF just in case I run into another 3 year disaster of relying on part time jobs until I get another accounting job. So far the only reasonable advice was suggesting term life insurance it will be something I will research some more to decide if buying a policy that decreases it's payout over time is worth it. Get over it.....I am keeping a 12k EF and I'm not going backwards and end up having to save up an EF again.
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Old 05-27-2017, 04:55 PM
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Quote:
Originally Posted by Sammydabullz View Post
I will research some more to decide if buying a policy that decreases it's payout over time is worth it.
I'm not understanding this comment. I've never heard of a term policy that decreases it's payout over time.

As for the advice and encouragement, that's what we're all trying to do. The fact that you don't agree with it at the moment doesn't make it bad advice. I've been here a long time and I can tell you that coming here looking for validation and support for bad decisions just isn't going to happen. That's not the crowd that hangs out here. We focus on the numbers because the numbers never lie. Keeping a 12K EF while simultaneously keeping 13K of 20+% interest credit card debt is a bad idea.
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Old 05-27-2017, 05:04 PM
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Steve I think the 'decreasing over time' is that the $100K policy in 10 years won't be worth the $100K it is now. But since nobody pays $100K for the policy, that is practically a moot point.

One of my hopes is to have ALL credit card and mortgages paid off before my husbands term life policy hits its end, so that even if he dies without a policy the monthly expenses would be minimal. The reverse isn't true though as we have no, and couldn't get term life on me and as most of the money coming in is through me it is a touchy spot. But is for some reason I become a widow, I want more than to cover funeral expenses.
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Old 05-27-2017, 05:08 PM
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Quote:
Originally Posted by Gailete View Post
Steve I think the 'decreasing over time' is that the $100K policy in 10 years won't be worth the $100K it is now.
That's not what he said, though. He said "a policy that decreases it's payout over time". If he's talking about the effect of inflation, sure, that's true of any insurance policy unless it has some sort of inflation adjustment each year (which typically comes with a premium adjustment as well).
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Old 05-27-2017, 05:18 PM
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That was the only thing I could figure out about why a term life policy would 'decrease.'
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Old 05-27-2017, 05:29 PM
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Like I said I need to do more research on term life. Just a simple Google would reveal that there is a term life policy that will decrease it's payout over time....called decreasing term life. There must be more than one type of term life.
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Old 05-27-2017, 05:50 PM
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http://term4sale.com/

You can try that one to get some idea of cost.

20-year term might be a good choice.
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Old 05-27-2017, 06:27 PM
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Quote:
Originally Posted by Sammydabullz View Post
decreasing term life.
My apologies. I didn't know that was a thing.

It makes sense, though. Ideally, your need for insurance should decrease over time, so actually having a policy that factors that in could work.

Let's say you buy a house. You want insurance to cover the mortgage in case you die. With each passing year, the amount owed is smaller so the coverage you would need would be smaller.

I've never had decreasing term coverage but I have reduced the amount of coverage I carry a couple of times. As our debts decreased and our savings increased, the amount of insurance I needed to carry lessened. By the time my current policy term ends, I shouldn't need insurance at all.
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Last edited by disneysteve; 05-27-2017 at 06:42 PM.
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