Were you in debt? What worked for you?

[claricem75]

Hi everyone

I'm semi-new to the boards... been reading them for a few weeks from work and finally got the time to register and respond. I was curious about something. I was in pretty poor financial state a few years ago but managed to scrape myself slowly but surely out of it. I wanted to see if anyone else did the same and what worked for you. My own nosiness, but I guess I also think it could help out others. So, if you have ever been in debt and made it out, what was your strategy?

Thanks, I already enjoy the advice I'm getting from these posts!

Clarice

[jhd815]

Well, okay I'll bite!

The first thing I did was to track my spending for month. Then I created a budget, compared that to what I was spending and made some drastic changes. Amazing how quickly those fast food lunches can add up without even realizing it.

Secondly, I paid off the balance on my lowest credit card and put that away to be used only for emergencies. Then, I stopped using my other credit cards. I also used the "snowball method" to pay off the balances.

I also used any extra money whether it was $5 or $50 to put toward paying down my credit cards. It started out slowly but I was thrilled to see my total credit card debt balance going down each and every month. I also used tax refunds to help pay down balances. I would also find ways to reward myself with something small such as a new CD or book ($10-15) - this helped to keep me motivated.

And then just when I had them almost all paid off - BOOM - an emergency. Car repairs, appliance repair, or medical needs. I tried to pay off my credit card balances TWO DIFFERENT TIMES but it seemed like something major always came up just as I was near my goal.

FINALLY, in January of this year I became credit card debt free! And the feeling is wonderful! And this time no major interference to keep me from my goal.

I still use my credit cards, but I'm able to pay off the balances each month. Along the way I've also learned how to make value judgements as to whether what I was buying was a NEED or just something I WANTED.

I am now able to contribute more to my monthly savings, my retirement plan, and to my emergency house funds.

[mom-from-missouri]

I just quit spending it. Pretended I had none. I only paid bills. I even quit buying food, except for milk until the pantry and cabinets were empty. Ever do that? Found food I forgot I had, and I did not realize how much I had. No soda or chips, no vending machines, walked, no videos or movies, (used the library). Keep the AC off and when winter hit kept the heat lower. I paid off what the x left me when he left in a little over a year. Now I do have a credit card, but only use it once a year (to keep my credit history going) and pay it in full. I will not allow myself to get into that situation again. After I paid off one, I moved on to the next one.

[terry1156]

We made a lot of changes over a long period of time, but the thing that got us started in the right direction was our decision to stop buying a new car every 3 to 4 years. We had been doing this on a regular basis. Once we had paid off the car loan, we'd start shopping for a new car. We decided not to do this and keep the car we had and it lasted 10 years. That was out first big step to get our finances under control.

[34saving]

My husband and I did all sorts of things to make extra money (and obviously not spend what we had.) We had another couple live in the lower floor of our house. I took on coaching responsibilites as well as did prep coverage and homebound tutoring. My husband coached with me and took on an extra job at church as well as his full time job. We even went to timeshare presentations! It seems like a lot now (would have been impossible with kids), but it let us pay off our $119,000 mortgage (we bought in 1997 -- now you couldn't buy a good spot in a culvert for that, but I digress) in 7 years. With that out of the way, I can be a stay at home mom now that we have a baby . . .and since a lot of my income was going to extra payments on the mortgage we don't really miss my income very much at all.

[Tree0164]

We paid off over 20k in credit card debt in few years. We stopped used the credit cards and used the snowball method which does work. I enjoy reading books like Dave Ramsey to keep me motivated and coming to boards like here to keep myself on track.

[sunnysamantha]

good job to everyone who paid off those debts. I was just saying in another post how I did the same...after I left college a few years ago, I found myself in some serious credit card/loan debt. tough when you get into the 'real world' and realize deferrment won't save you anymore. Anyway, I got out soon after by talking to a credit counselor. I never had much luck with financial aid at my school... seems like they always had more impt things to do. I had a friend that used In Charge. Forgive me if this is the wrong link , but I believe it's something like www.incharge.org. It was nonprofit so i didn't even have to pay anything to be involved in the program. With that and A LOT of discipline and research, i made my way out of debt. I also read Dave Ramsey's books to keep me inspired.

[obi_positive]

Since I have a mortgage, I consider myself in debt today and work toward paying it off as soon as possible with extra payments. Haven't had a new car in 7 years, the other car is 12 years old.

My wife and I started a home business years ago and never borrowed to expand or buy new computers and software. We only grew if we had the money or if the jobs we were working on could cover the costs.

Had some emergency and non-emergency medical bills come up 3 years ago. Negotiated one out-of-network doctor into letting me pay the in-network price. Some bills I fought with insurance to get them to cover more. Other bills I just paid in installments (no interest either).

Our kids wear hand-me-downs from their older cousins and friends at church. (Children under 5 yrs old don't stay in their clothes long enough to wear them out, so all the borrowed clothes look new.) Diapers bought in bulk at warehouse club.

[Lennyburger]

Yup! Huge debt. Unfortuntely beacuse we got pregnant, my wife stopped working, we had to move into more expensive rental accomodation and both vehicles we had got repo'd, I had no alternative but to declare bankruptcy. Free financial aid didn't help us at all because I was overcommitted way too far. After both vehicles were gone and monies recouped I still owed a total of around AU$20,000. With a new baby and no vehicle 'cept for a beat up ol' Datsun, we struggled on to get back a reasonable living standard. The next family car [ bought with money borrowed from my boss ] lasted a year before dying, too costly to fix. It's replacement was made up mostly from spares of the first and eventually it too died. This occurred 2 years after the bankruptcy and just as after i started a new job, so to get another family vehicle I had no alternative but to go into debt, again. Black listed, it took a while but someone came to the rescue but with strict lending criteria which put us into $13,000 of car. I didn't want to borrow that much but that was the stipulation, else I'd be walking to work or be out of a job [ public transport doesn't exist at 3am ] .
Now we've got 2 kids, managing the car payments okay but even with a tight budget, the weekly expenditures eat up almost everything. Now we have to move house in the next 4-8 weeks, with no bond saved up and nothing to save with. We're just above the means test for government assistance, but not high enough to survive the higher rent we're facing soon.
Is this a sign we need to move away from this city, to more affordable housing, start afresh? I can't earn anymore without getting university education [lots of $$$$$ outlay ] and we can't cut the household bills [ food,rent,gas,elec,car,petrol use up 90% of take home pay ] so has anyone some good idea on making a quick couple of $K before we are out on the street???
Budgeting,budgeting,budgeting is what we all keep hearing, but with the cost of living nowadays, unless you're in the "rich" class of society, it's not looking too promising.

[PrincessPerky]

Well I am still on my way out, but I made a lot of small changes, little things that add up to me living under budget again, and having extra to send to the CC each month (well except this month car insurance is due, but it will NOT go on the CC)

First one was not using the CC except for medical bills, which is what started the whole truble! (DD was an expensive baby)

Then I researched little things I could do I aimed to find a new one each day, and use one a week, sounds slow, but I didn't throw up my hands and quit or anything, slow and steady wins the race. (half way to the goal line now). In no particular order:

1. All electric stuff except the stove and fridge and washer/dryer and clocks are on outlet strips, one per computer and one for the tv system. So I honestly plug in my microwave everytime I use it. And since I have to reach around back to flick the computer or TV on, I honestly don't tend to do it as much, Ok my computer is on EVERY morning .

2. upped/lowered my standards on heat and air. so winter it was 65 degrees, summer no air till July and then 80 degrees.

3. Ask myself for EVERYTHING if I would be willing to ask for tax money for it? if not it was a LUXURY, now I do still have some, I could quit the net, but I would rather figure out how to get it to pay for itself. (I am a libertarian and I do not belive life, liberty and the persuit of happiness included micydees everynight nor enough clothes to sink a ship DH and I were talking the only thing left to give up before asking the govt for help is cable internet, the phone, and some food, trade medium cost food for cheaper food)

4. Find ways to reduce the car use, funny in a family that already walked anywhere less than a mile, but we added the grocery store to DHs trip home form work 1ce a week, and then BJs the next day, trying to stuff all errends in one of those two days to keep down the car use.

5. Decluttering, less stuff in the house, means less stuff I want, why buy something that I will have to box up to give to the good will in 2 months? Really changed my perspective on gifts and such. If I am tired of boxing up (or dusting and moving) stuff from other people, why would I give it to them?

6. Misc odd stuff like curtains for insulation and keeping the sun out, fortunatly DS likes black so his room now has a black curtain to keep the sun out in the afternoon. and we got the car in the garage, which will make the most difference in the winter, and other little minor things like that, so long as I am in the right mindset I am not pestering DH ot go take me out to eat, or buy me ok the kids, new stuff. (cept shelves, I really want shelves!)

[jmjj215]

Budgeting,budgeting,budgeting is what we all keep hearing, but with the cost of living nowadays, unless you're in the "rich" class of society, it's not looking too promising.

You certainly don't have to be rich to have a nice standard of living. But the reason you hear everyone talk about budgeting, budgeting, budgeting is because the budget is the bedrock foundation of your finances. If you aren't doing that, you can pretty much throw everything else out the drive-up ATM window.

[jmjj215]

My wife and I have never been in debt. But we will go into debt for a house next year. Once I graduate we're going to begin looking in Dallas TX for something we can afford on a 15 year fixed, w/ the payment no more than 25% of our take-home. I want to put down at least 25% - maybe more.

We plan on throwing everything we can at the house - side business money, and anything extra we can pull together. I want to have it paid off in 5 years or less. Then the fun will begin!

[34saving]

Hey Lenny. Welcome to the board I think almost all of us have felt the way you do at one point or another. Trust me, you're not alone. Is your wife still a stay-at-home-mom? If so, has she considered some stay at home work options? I know taking care of kids is hard, but usually they give you a nap or something, lots of SAHMs here make a little bit here and there doing all sorts of different things. . . .let us know . . .

[cicy33]

The best way for us has been to write down everything you spend money on. There is no way that you can try to change your spending until you see what you are spending it on. Even if you buy a newspaper, soda, whatever, write it down and look at how much and where you are spending it. It is easier to put it in an Excel spreadsheet. then you can auto add the lines. I was amazed how much we spent on eating out. didn't seem like it. I was also surprised about the convenience store purchases. running out of a loaf of bread or whatever does add up. On the question of making more money quickly, some areas allow you to sell your plasma. You won't get rich but you can make about $150 a month sometimes. not one of my personal choices, hate needles! Also, seriously consider moving into the country. The savings on the rental can make up for the extra fuel. Try to accomplish everything every time you have to drive. dont' make extra trips if possible. That will actually take planning but you will get the hang of it!

[Lennyburger]

Originally Posted by 34saving

. Is your wife still a stay-at-home-mom? If so, has she considered some stay at home work options? .

Yes, she looks after our 8month old and 4 year old at home. She can't look after them at home because here in Australia you need so many things to do home child care, firstly a university degree, LOL , nah, but you do need tertiary college training. You also have to do certain modifications to your house like shatterproof the glass but because we're renting that makes it impossible. If we owned our own place , great , yeah. Not in the current housing market though. If we even had enough for a house deposit and my credit rating was okay our mortgage repayments would be about 75% or more of my income. Another dead end there.

[jmjj215]

Originally Posted by Lennyburger

Yes, she looks after our 8month old and 4 year old at home. She can't look after them at home because here in Australia you need so many things to do home child care, firstly a university degree, LOL , nah, but you do need tertiary college training. You also have to do certain modifications to your house like shatterproof the glass but because we're renting that makes it impossible. If we owned our own place , great , yeah. Not in the current housing market though. If we even had enough for a house deposit and my credit rating was okay our mortgage repayments would be about 75% or more of my income. Another dead end there.

There are other work-at-home options besides just daycare though!

[Lennyburger]

Originally Posted by cicy33

The best way for us has been to write down everything you spend money on. There is no way that you can try to change your spending until you see what you are spending it on. It is easier to put it in an Excel spreadsheet. then you can auto add the lines.
On the question of making more money quickly, some areas allow you to sell your plasma. You won't get rich but you can make about $150 a month sometimes. not one of my personal choices, hate needles!
Also, seriously consider moving into the country. The savings on the rental can make up for the extra fuel.
Try to accomplish everything every time you have to drive. dont' make extra trips if possible. That will actually take planning but you will get the hang of it!

We've already got the budget on a spreadsheet, every little thing is on it, Xmas presents, Holidays, Snack foods. Well, they used to be on it, I don't buy take away food anymore [ nothing to buy it with ] . We are down to the basics now, plain brand food, bulk buying to save etc. I don't remember the last time I spent money on something "luxurious" on myself.
We haven't got a plasma or an LCD, just an 8 year old picture tube type T.V. no money selling that. LOL. Just kidding.... I don't think they buy blood here, just rely on donations. Maybe a kidney on the black market would do the trick....?
Moving into the country is not viable, at least in a 60mi radius, as the rural property prices have been driven up by hobby farm enthusiasts. moving further puts us out of the state, and therein lie many more complicated issues, with registrations, my sons schooling shortly to commence, work. I don't know if you realise that fuel here in Oz costs roughly US$4 a gallon, how much is it there? We only make one trip a week if we can help it, just to do the groceries. everything else is unplanned, like doctors etc.
Unfortunately, I've been there and tried that, still not getting anywhere.

[Lennyburger]

Originally Posted by jmjj215

There are other work-at-home options besides just daycare though!

Yes, but most require an initial outlay of some sort, or going door to door, or inviting friends over to continually order stuff from you. she used to do a letterbox drop with our son in the pram, but the only person making money out of that was her contact whom she got the papers from. She tried Betterware, but there just wasn't enough interest to make it viable. Anything she does earn, eats up our family benefits from the government too, so it's better if I do the extra money earning, if there was time for me to do it.

[34saving]

I've started a new thread to hopefully give you some income ideas. Check out SAHM income options. I know this group will have lots of ideas!

[cicy33]

Our fuel in the states is roughly $2.30 a gallon in the central area. don't know about California. I love the tv thing!!! that is so funny. We don't sell our blood here either, only plasma. or at least some people do. I don't, like I said I am a chicken. I am personally trying to earn a "little" money doing paid emails. won't be much but hey if it is $50 a year I would be happy. and I mean with all the programs. not each. I don't know the first thing about Australia, but think that it is really cool to talk to someone from "down under". I am going to also go look at the site mentioned above about SAHM working.