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Climning out of debt tips wanted

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  • KevinLars
    replied
    Creating a budget and sticking with it is probably the best thing that you did for yourself.

    You need to know where your money has gone so you can plug the leaks. If you can stick to a budget then that means you know where your money is going before it's a leak. Such as spending 1200 on coffee.

    That said. Just because you spent $1200 on coffee that doesn't make it bad. Maybe it's great coffee. Maybe it's the highlight of your day. $1200 is how much you pay, but it might be worth more than that to you. Then again there might be better places to spend that money that are of even greater value to you. It's not that you spent $1200 it's whether you got the most value for yourself out of it.

    ________________
    KevinLars
    stressnut.com
    Last edited by KevinLars; 02-08-2016, 04:08 PM. Reason: Signature didn't appear

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  • Gailete
    replied
    I was at $40K+, plus car payment ($400+), house payment ($900+) with the minimum monthly payments on the credit cards at over $1100/month! First I told the husband who had gotten us in this fix that I wanted a divorce. He seemed to think that if he had any credit left on a card that he should spend it and if I took his cards away he would complain that I had emasculated him! I could not reign in his spending at all. I canceled all credit cards that were in both our names, paid on each card monthly including ones that were in his name only until he was out of the house and they were now HIS responsibility and no longer mine, and those that were in our joint name or mine only I paid more than the minimum and by that at first that meant rounding up to the nearest dollar. 34 cents or whatever may not have actually helped the bills but it gave me a feeling that I was working on it. I also tried to stash the occasional $1 or $5 bill so that by the end of a year I had enough CASH to pay for glasses instead of putting them on a card. He was stunned when he saw me pull out that cash, but that was a trick I knew I couldn't pull again (if he had known I had cash he would have gotten it off me) and he was gone a few months later. Our house went up for sale and with the proceeds I gave him exactly the amount that had been owing on his credit cards at the time we separated, but while we waited to cash the real estate check at the bank instead of saying how excited he was about paying off his cards he was telling me about the motorcycles he was going to buy for $800. Obviously a guy that didn't learn. With my share of the proceeds I paid off the rest of the credit card debt and was left with around $1000. Considering that 4 years prior I had put $20K of my OWN money into the down payment for the house (he didn't put anything in) I came out at a loss but learned a good but very expensive lesson. I was then able to take up my frugal lifestyle again

    So while not the solution for most nor would I recommend it, getting rid of the spouse that was addicting to spending and selling a house that was much more than we could afford was how I got out of that huge debt.

    Even when we go through financial rough patches now, I always round up on any payment that I make to credit cards if I can't pay in full, same with the house and car insurance. Now rounding up means going to at least the nearest $5 or $10 if not a whole lot more. My business card which takes a hit during November and December since they are slow months for income, but big months for expenses, I pay a chunk weekly on line so that there is less to have interest charged on it. Generally I have the card paid off or nearly so after 4 weeks. I also time purchases like postage for the business. Usually if the card has no bills on it, I buy $200 worth of postage at once but only after the new billing cycle starts, but if it is a day or two before a new billing cycle then I buy just what I need and when the new cycle starts I buy what I need so have longer to pay. However if I didn't get the card paid in full, I buy just a weeks worth of postage at a time so interest isn't accruing. That is something to remember that if you can't pay off a card in full each month interest starts to accrue and by paying off the card during the month as much as possible will lower that tab a bit. When it comes to paying off debt every little bit helps. It may not seem like much financially but it is good emotionally to know that you are attacking the bills and being conscious of them.

    So stop using your credit cards, sell of whatever crap that you bought with them if you can, make a partial payment weekly which means you are staring those bills in the face weekly and it will remind you that you really can't afford to pull that card out of your pocket and you will save on interest as well. Round up to the closest $1, then the closest $5 and then the closest $10 for all your bills and attack the highest interest bill first and put any extra you can spare onto that card as well as paying on it weekly. Pay bills weekly so you stay on top of everything like utilities, etc. plus the credit card bills.

    Hope this helps and is encouraging to some. Obviously in my case a divorce was more than just because of the money, but it was a huge part. When I would come home from work and saw he was home as well, I would get a pain in my gut and my heart would sink. Right after he finally moved out, I ended up in the hospital with 2 bleeding ulcers from the stress.

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  • LivingAlmostLarge
    replied
    Get a second job if you have time.

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  • msomnipotent
    replied
    Originally posted by Nutria View Post
    The bank will do it for you. Just type everything in at their website, and they'll automatically send it every month.




    It's all spelled out in black and white.



    They never say that. It's the interest which is 0%, not the transfer fee.



    $400 in transfer fees are much better than $2,000 in interest payments.



    Computers are your friend. I never miss bills because the computer automatically pays them on the same day every month. Most are always the same, so I just tell the computer once what to do and it just sends out the payments every month.

    Another technique is to sign up for your bill to automatically be put on your credit card. Then you just need to pay the credit card bill.
    I stand by everything I posted. My bank didn't do bill pay at the time I was going through this, and I don't think they do now. And it is a little hard to do automatic bill pay with no money coming in and I needed to juggle where I was getting money from and where it was going. We didn't have an income for almost 2 years, so my experience and advice is going to be different than someone just had to debt to clear up.

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  • Nutria
    replied
    Originally posted by msomnipotent View Post
    Also, don't forget to make payments, which can be harder than it sounds when you have several different payments to make each month.
    The bank will do it for you. Just type everything in at their website, and they'll automatically send it every month.


    I can't think of one instance where I wasn't charged a transfer fee right off the bat, and it was usually 4%.
    It's all spelled out in black and white.

    Balance transfers are not 0% even when they say they are
    They never say that. It's the interest which is 0%, not the transfer fee.

    and then seeing that there is an extra $400 you have to pay to transfer $10,000 can feel defeating.
    $400 in transfer fees are much better than $2,000 in interest payments.

    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
    Computers are your friend. I never miss bills because the computer automatically pays them on the same day every month. Most are always the same, so I just tell the computer once what to do and it just sends out the payments every month.

    Another technique is to sign up for your bill to automatically be put on your credit card. Then you just need to pay the credit card bill.

    Leave a comment:


  • msomnipotent
    replied
    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!

    Leave a comment:


  • Nutria
    replied
    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...

    Leave a comment:


  • theextraincomeproject
    replied
    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.

    Leave a comment:


  • theextraincomeproject
    replied
    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!

    Leave a comment:


  • jamiesmaoneyadvice
    replied
    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.

    Leave a comment:


  • Nutria
    replied
    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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  • Jovanny
    replied
    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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  • PhilDanley
    replied
    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.

    Leave a comment:


  • snafu
    replied
    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?

    Leave a comment:


  • Jluke
    replied
    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.

    Leave a comment:

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