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    Climning out of debt tips wanted

    I'm facing an enormous debt challenge. I wanted to ask, of those people that were in heavy levels of debt and managed to climb out of it, what did you do that worked and what would you do differently?

    Last year I made a budget and stuck to it rigidly. That really helped.

    I also post-dated my budget which helped me see where my money was going over the last 3 months - that provided a few shocks. Just 1 coffee every morning on the way to work was costing me $1200 a year at least!

    #2
    Snag a coffee maker at your local thrift store- today!!

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      #3
      Making a plan and sticking to it was the biggest factor for me.

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        #4
        If you find yourself in a hole ...... Quit digging !

        In other words, cease any and all activities that are creating debt for you right away.

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          #5
          Originally posted by Fishindude77 View Post
          If you find yourself in a hole ...... Quit digging !

          In other words, cease any and all activities that are creating debt for you right away.
          I'd like to add that after you quit digging, you should throw away the shovel. I'm guessing credit cards caused the mess. Cut them up or lock them away. Don't use them again until you can do so responsibly.

          Look for ways to change your behavior. Cutting out coffee is a good start. Look for other areas to cut back as well.
          Brian

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            #6
            Originally posted by theextraincomeproject View Post
            I'm facing an enormous debt challenge. I wanted to ask, of those people that were in heavy levels of debt and managed to climb out of it, what did you do that worked and what would you do differently?
            Assuming this is a real concern...

            Establish an Emergency Fund of $1000.

            Make more than the minimum payment.

            You have no extra money to spend on new, unnecessary items. All $ goes to debt.

            Give yourself a small reward when each debt is paid in full - perhaps a cup of coffee.

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              #7
              extrain, kudos for realizing your debt level was too high, making a plan and sticking with it. I suggest you use years end to get a free credit report from one of the agencies. How much were you required to pay in interest in 2015? Have you asked your credit grantors to reduce their interest rates given your effort in reducing debt since bank rates are extraordinarily low?

              Have you been able to establish an Emergency Fund to avoid more credit? I suggest selling items no longer used or needed to add it to add to income that pays down debt. Are you able to get overtime or a part time job to increase income available for debt reduction?

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                #8
                Budget and Plan

                Is $85K of debt an enormous challenge? That's what I finally realized I was faced with in 1999. Putting a real budget together gave me a plan to get out of it. Unfortunately my monthly payments on my DMP (Debt Management Plan) to my credit counseling company kept increasing so I ended up filing Chapter 13 BK in 2001.

                Fast forward to 2010. This time I was at $20K but got it paid off in less than two years by (again!) creating a budget and then an attack plan to get my four accounts paid off. Then we applied the plan to our mortgage and paid it off in 2014.

                So create an accurate budget ASAP. Otherwise you're just guessing on a plan.

                What would I do differently? Face reality earlier! I thought I could "earn" my way out of debt but with no real idea of my debts, I continued to spend more than I brought in.
                Phil Danley
                100% Debt Free since 2014
                http://www.ConsumerDebtCoach.com

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                  #9
                  Set a target of money you want to spend and make a note of every sale and purchase so that you know where your money was going?

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                    #10
                    Originally posted by theextraincomeproject View Post
                    what did you do that worked
                    1. Web bill pay. That ensures that you'll pay every card on time. Once companies see you doing that, they'll throw at you:
                    2. 0% transfer offers. That was a HUGE help. The drop in interest payments from 24% a rate to 0% is truly shocking.
                    3. Spreadsheets are your friend. Learn to use them and keep track of things.
                    4. Debit cards.
                    5. Spreadsheets are really your friend. You know when you get paid, and you know when your bills are due. Use a s/s as your "check register", and "work it forward": don't just record what happened in the past, but what will happen in the future.
                    6. Online banking.
                    7. A wife who's on the same page.


                    and what would you do differently?
                    Not much...

                    Last year I made a budget and stuck to it rigidly.
                    That's the sine qua non of debt relief.

                    I also post-dated my budget which helped me see where my money was going over the last 3 months - that provided a few shocks. Just 1 coffee every morning on the way to work was costing me $1200 a year at least!
                    You performed an OODA: observe, orient, decide, act. Loop through that as many times as is necessary to find your proper balance between "life enjoyment" and debt elimination.

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                      #11
                      Many people tell us that they would love to pay down their debt or get rid of it altogether, but they aren’t quite sure of the best way to do it or where to start. There really isn’t any one “best way” that works perfectly for everyone. So here are a dozen suggestions to get you started. The more of these you can apply, the faster you will get out of debt.

                      1. Pay More Than the Minimum

                      Make sure that you always pay more than your minimum payments. If you only make your minimum credit card payments each month, it can take forever to pay off your balance. If you want to pay off your balance quickly, pay as much extra as you can afford. Even an extra $50 each month will help. Try using a financial calculator to see how much you can save like this!

                      2. Spend Less Than You Plan to Spend

                      Most of us have wishes and wants that are bigger than our pay cheques. You might have heard the great saying that, “You can have almost anything you want; you just can’t afford everything you want.” Many people get into debt and stay in debt because they tend to buy what they want, when they want. Not even millionaires can afford to buy everything they want. If you want something, don’t buy it unless you have the money. If you can be satisfied with less than you would ideally want, even temporarily, you can use the money you save to pay down your debt. By the time your debt is paid off, you’ll probably have adjusted to your new priorities, and you can use the money that you are saving to put towards other financial priorities.

                      3. Pay Off Your Most Expensive Debts First

                      One of the smartest strategies for getting out of debt is to make minimum payments on all of your debts and credit cards except for one. Chose the one debt that is charging you the most interest and focus all of your extra payments on paying that one off first.

                      Once your first, most expensive debt is paid off, take all of that money that you were paying on that first debt and focus it on the next most expensive debt. Continue this method as you pay down each of your debts, and you will be left with your least expensive debt to pay down last.

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                        #12
                        Originally posted by Momunist View Post
                        Snag a coffee maker at your local thrift store- today!!
                        Haha, much better for my health to just quit coffee!

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                          #13
                          Originally posted by bjl584 View Post
                          I'm guessing credit cards caused the mess.
                          No. Well, partially. The bulk of it is lawyers fees. Going through a divorce - we were in debt before we separated and we just weren't on the same page in paying it off. I wanted to get it paid down fast. Since seperating I've had issues seeing my kids and had to turn to the courts. Legal fees hit $350k - the cost has wiped out any equity I may get. It's a long story.

                          I'm trying to get in control of the debt now. I feel like I am, I have a plan and have spending tightly under control.

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                            #14
                            Originally posted by theextraincomeproject View Post
                            Haha, much better for my health to just quit coffee!
                            Coffee really isn't bad for you. Expensive, though...

                            Comment


                              #15
                              We were in over $70,000 at one point. It took me 5 years to pay it off. There are so many things I would have done differently. I would have taken control sooner. Actually, if I had any inkling of just how ignorant my husband is regarding money matters, I never would have let him have any control in the first place.

                              Don't do anything to compound your problems. People can sense your desperation and take advantage. We were desperate to unload our timeshares (yes, I know) and one of the timeshare employees agreed to buy from us. Then she refused to pay anything once my husband put the units in her name. So I had to add lawyer fees on top of the other debt. I would like to say it worked out in the end, but not really. At least we don't own them anymore. Also, don't forget to make payments, which can be harder than it sounds when you have several different payments to make each month. Late fees can add up.

                              Make sure you give yourself enough spending money each month so you don't have to add anything more to the credit cards.

                              Negotiate your debt. I didn't negotiate the credit card debt because I didn't want anything negative on my credit report, but I was able to get favorable terms with the IRS, increase my credit limit and lower the transfer fee on a credit card, and our attorney decided to charge us a flat fee in exchange for writing some reviews to increase his presence. It is a good thing for him that he was a good attorney, because I write honest reviews! Your attorney might be willing to lop off some fees or take less if paid within a certain time. My sister was able to do that with her divorce attorney.

                              Watch out for credit card offers. They are not as good as they sound. I can't think of one instance where I wasn't charged a transfer fee right off the bat, and it was usually 4%. Balance transfers are not 0% even when they say they are, and then seeing that there is an extra $400 you have to pay to transfer $10,000 can feel defeating. If you apply for a new card just for the transfer, make sure it doesn't have a yearly fee, which only adds to your debt.

                              Pay off all the smaller balances first. I know a lot of people say to pay off the one with the most interest, but the more balances you have, the more likely you are to miss one and get charged with late fees. And I know from experience that it is very stressful to sit there day after day, checking to make sure you didn't miss any payments and thinking to yourself, "I owe this bill, and this bill, and this bill...).

                              Good luck, and try not to get stressed out about it. That only leads to health problems and then you start missing work!

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