My debt situation/ introduction

[Gailete]

That is why it is nice to have an even balance. I try to put 10% of my store net income into savings. Let us just say at times it is a a measly amount. But the majority of the 'spare' money we get goes towards those bills. No savings each month is stressful and well as only barely making minimum payments. Because of having lived a mostly frugal life all my life, when it comes to cutting things out of the budget, they have been cut or never got into the budget in the first place. I've found what works for me and hubby lets me go at it.

[Sammydabullz]

Let me take one more shot at this.

Your EF is BORROWED money.

Seriously??? Did you not read my post???? I am on my second mortgage. Let me go into more detail.....my wife and I purchased an Acreage for 39k. I spent my free time remodeling the house. Then we sold the house for 65k. After paying off the cost of remodeling and the cut that the agent gets we ended up with about 16k. We purchased another home 45k that was originally priced for 75k and sat on the market for months. Once that was finished. We had 12k left....I decided that would remain in savings as our EF so that we can keep moving forward and get out of debt. As I have seen others mention....12k is what I feel comfortable with...I don't feel safe by going below that threshold. How can you call it borrowed money when it is a result of turning a house into profits???? How can you judge me for keeping an EF and paying off my debts as well???? Does not the financial gurus recommend keeping an EF while paying off debts????

I think the biggest issue is that you forgot what it is like to start from the beginning of the debt paydown journey. Everyone should have an EF that they feel comfortable with and never allow themselves to use that money for anything else except what that money is intended to be. Your asking me to go against the traditional belief taught by financial gurus. Most people don't even have $500 in cash why should I put myself in that position when I do not know what will happen to me or my family tomorrow??? This is stupid...why are you still arguing with me over having an EF when it is a requirement to have an EF before you go into crazy debt paydown mode???

[Sammydabullz]

By the way, I get paid weekly and my wife is bi-weekly. I started checking my account balance on Saturdays and transferring everything over 12k to the 4k credit card. Today I transferred 995.49 over to the CC. I chose Saturday to allow my bill payments to get posted to give me a more accurate balance.

[disneysteve]

How can you call it borrowed money when it is a result of turning a house into profits????

If you had $2,000 in your EF and $3,000 in CC debt, would you take out a $10,000 cash advance at 20% interest in order to fund a $12,000 EF and $13,000 in CC debt? That's exactly what you are doing right now.

I promise this will be my last post to this thread because you clearly aren't here for advice. Go out and pick up a copy of Dave Ramsey's book "The Total Money Makeover." Read it and see what he says about emergency funds. If you follow his plan, you will be debt free way faster and you will save yourself thousands of dollars in interest charges.

Good luck.

[tripods68]

What you need is a Level Term Insurance not a decreasing Term policy.

[Randomsaver]

OP, first, welcome to the forum and I'm glad you came here for advice.

I could not tell you how smart you are already just by coming here. A lot of folks out there thinks it is an insult to be getting advice on money matters and hence they remain in debt.

If people have no debt, this entire website could get lonely .

But as you see, debt and getting rid of it, particularly credit cards is a key first step.

I have read the back and forth and I feel you. So how about this, compromise of say put 50% of your EF to card debt payment (knock off the $4K and reduce the other with $9K to just $7K). Still keep the remaining half or $6K EF intact. That way you get both worlds.

Would you be comfortable with that? Otherwise it's ok. I understand that the road to money management is also part behavioral adjustment, and not just about numbers adjustment.

[LivingAlmostLarge]

I think this is the time when reading Dave Ramsey will explain it more.

[Jluke]

I think this is the time when reading Dave Ramsey will explain it more.

I think emotions are getting in the way of the math. Which is normal but also can hinder progress in some cases.

[Gailete]

Today I went to make an extra payment on my Chase card. I have three of them. At the beginning of the year they all had amounts owing. Today was like a breath of fresh air as I got the first one paid off a month or two ago and another last week. Great to see those accounts at zero! It gives me lots of hope.

[sblatner]

Dave Ramsey Baby Steps/Term Life Insurance

1. Save $1,000 - he says this because most emergencies are less than $1,000. If you have an emergency, you stop any baby step you are on, use part of your emergency fund to pay it and then restore it back up to $1,000 and then get back to the baby steps. He also says $1,000 because a $1,000 emergency fund will make you feel uncomfortable and you will want to get rid of your debt much quicker because you are uncomfortable.

2. Pay off your debts using a debt snowball. Line your debts up smallest to largest. Pay off the smallest debt and then roll that minimum payment into the next smallest debt (along with any extra funds) and get that one paid off. Then roll the minimum payments from the two smallest debts that are paid off into the next smallest debt. Do this until all your non-mortgage debt is paid off. He says to do it this way instead of by the amount of interest rate because you will start seeing successes and will get gazelle intense. I have seen this work - it works!

3. Fully fund your 3-6 month emergency fund. 3-6 months of expenses.

4. Invest 15% of household income into retirement accounts - 401k up to the match, then a Roth IRA up to the limits and then back to a 401k. Do not fund retirement until you are on baby step four. Yes, you might lose a match but you will be more determined to get steps 1-3 done as fast as possible.

5. College funding for children if you want - this is optional

6. Pay off home early

7. Build wealth and give.

In regards to term life insurance, I'm not sure how old you are but someone in their mid-thirties in pretty good health can probably get $250k in term insurance for $300-400 per year. You should get term life insurance equal to 10 times your annual salary. If you make $50k per year, you should have $500k in life insurance. If your wife/significant other does not work, you still need life insurance on her to pay for childcare, etc., after she is gone.

Dave Ramsey has a class called Financial Peace University. You should see if there is one in your area. It is an amazing class and changes people's lives!

[Sammydabullz]

June 10th my checking balance showed $12,063.18 so I transferred $63.18.

June 17th balance of $12,720.54 transferred $720.54

The small credit card is down to $2515.00.

What most people here aren't realizing is that Dave Ramseys system is exactly what I am doing. Pay yourself first. I have done that by keeping my 12k. Then put everything above your threshold balance into debt after paying bills. In the process of doing these things the person is also learning a valuable lesson in becoming a better saver. Married couples learn how to communicate to each other about financial decisions and needs. Paying off the debt today will only Rob me of learning more about my financial decisions, spending problems, and income deficiencies. I've actually graduated from college last year so I'm technically fresh out of college. Been married six years, spent 5 of those years working through college. I'm 27 turning 28 soon.

[Randomsaver]

June 10th my checking balance showed $12,063.18 so I transferred $63.18.

June 17th balance of $12,720.54 transferred $720.54

The small credit card is down to $2515.00.

What most people here aren't realizing is that Dave Ramseys system is exactly what I am doing. Pay yourself first. I have done that by keeping my 12k. Then put everything above your threshold balance into debt after paying bills. In the process of doing these things the person is also learning a valuable lesson in becoming a better saver. Married couples learn how to communicate to each other about financial decisions and needs. Paying off the debt today will only Rob me of learning more about my financial decisions, spending problems, and income deficiencies. I've actually graduated from college last year so I'm technically fresh out of college. Been married six years, spent 5 of those years working through college. I'm 27 turning 28 soon.

You're right that discipline is key. Having debt problems can be an emotional one for most of us and it is the discipline that shall keep us trudging along. Rooting for you man!

[disneysteve]

What most people here aren't realizing is that Dave Ramseys system is exactly what I am doing.

I know I promised not to respond again but I feel obligated to correct misinformation when it gets posted so as not to mislead anyone else who may be reading this.

Sammydabullz, you can handle your debt however you'd like but what you are currently doing is NOT Dave Ramsey's system at all. I'm not sure why you think that.

sblatner already posted Dave Ramsey's Baby Steps on the previous page (post #40) so I won't repeat them, but take another look.

I'm not saying you need to follow his plan but please don't say you are following it when you aren't.

[LivingAlmostLarge]

Dave Ramsey would yell at you and tell you $1k EF. LOL. He's a big proponent of debt is hair on fire emergency. But if it makes you happy to keep $12k do it. I don't know what I would do. I guess it depends.

[Sammydabullz]

Today June 24th, balance 12,304.33. Transferred 304.33 to small card. card balance is 2219.68.

My required expenses:
Mortgage/Escrow $400
Small Credit Card, $92
Big Credit Card, $250
Big Medical bill $139
Small medical bill $55
smaller medical bill $50
Amazon Prime Subscription $99/12 = $8.25
Netflix Subscription $11.99
Ford Fiesta Gas $100
Gas Guzzling Ford Windstar $200
Car Insurance $116.33
Internet $64
Two Republic Wireless Cell Phones $48
City Bill $150
Gas Utility Bill Between $30-150 depending on winter/summer/fall/spring
Prescriptions $20
Car Payment $292
Wife's Student Loan Payment $10.90
My student loan payment $0.00

About $2157.47/ Month Required

I am still waiting on a medium medical bill from the baby to go through insurance
I now have a bill for me for a surgery, shouldn't be too big since the baby caused us to reach the deductible.

Varied expenses that I am working on making them into reasonable expenses:
Food
Doctor visits
Vehicle Maintenance-since I work at a dealership I get discounted service and I have the bills deducted from my check. So I don't count this as part of my net income.
Remodeling-I only buy supplies on a as needed basis, I do as much manual labor as possible so I don't have to buy expensive pre-made junk.
Travel costs not related to gas

I am left with about 1350 each month split between debt payoff and varied expenses.
Grandma is watching our son while we work, so no childcare costs.

edit: made a calculation error, forgot a couple expenses