time to crawl out of debt....

**PRICEPLUS** · 12-23-2006, 09:50 PM

Re: time to crawl out of debt....

Welcome frontplayer! Please post total bills and debts as well as monthly income from all sources. You are anonymous here! If we know what your situation is we can better give advice!

**frontplayer** · 12-23-2006, 10:05 PM

Re: time to crawl out of debt....

Here we go, these are all min. payments:
motorcycle: $100/mo (~9,000 balance)
utilities: $250/mo
credit cards:$500/mo (~13,000 balance)

after rent, i have about $1300 to play with, not counting food etc.
i hope this is enough info. what im actually worried about is im going into a police academy. the wife will work, but ill catch about $4000 in min. payments.......not even counting the cost of going to the academy.

thanks much for everyones help.

**Diolla** · 12-24-2006, 05:08 AM

Re: time to crawl out of debt....

I would list all the different CC's and tackle them one at a time. If there were any I could pay off in a month or two I would get them out of the way first just cause it would simplify but the most advantageous way as far as the amount of interest would be to pay the highest interest rate first.

In my opinion you need to budget out the $1300 so you know how much you have for food, gas etc. Budgeting with a lump sum left over for spending is fine if you aren't trying to pay off debt but you need to have a more specific plan so you don't end up just 'throwing whats left' at the debt. In my experience that is a great way to stay in debt not get out of it.
If you focus hard on getting out of debt you could drag yourself out from under the CC's within 16-18 months.

I would also suggest that you put all the CC's away and vow not to use them except dire emergencies, (does not include McDonalds LOL)

Without specific numbers (income/outgo) that is about the best I can do. I don't really understand the comment about the $4000 min. after you start at the academy.

**disneysteve** · 12-24-2006, 05:33 AM

Re: time to crawl out of debt....

I agree that you need a clear budget for that $1,300. Food, car expenses, clothing, insurance and anything else that needs to come out of that $1,300 on a regular basis. Then see what you are actually left with for debt repayment and/or savings.

Then list all of your debts, one by one, not just lumped together as "credit cards." List the amount owed, the interest rate and the minimum payment.

You will get two conflicting bits of advice. One group, the Dave Ramsey fans, will recommend the "snowball" method. That is to pay the smallest debt first. Once that is paid off, put all the money toward the next smallest and so on.

The other group will explain that the maximum savings will come from paying the debt with the highest interest rate first, regardless of the balance owed. So you would put all extra money toward that loan. Once that was paid off, you'd redirect the money toward the next highest rate and so on.

Of course, as Diolla pointed out, you need to no longer use your CCs for anything from here on out. If you don't have the cash, you can't afford the purchase.

And finally, you need to be keeping close watch on your spending. Even small leaks can sink big ships. Look for little luxuries that you can give up until you are debt free. This would be things like eating out, buying a lot of convenience foods, buying coffee in the morning, having anything beyond the most basic cable tv package, Netflix, extra phone services (caller id, call waiting, voice messaging), same for cell phones, magazine subscriptions, etc. Many people can scrape up a couple hundred per month by cutting out a bunch of little extras.

**Ima saver** · 12-24-2006, 09:08 AM

Re: time to crawl out of debt....

You do need to take some of your money to open an emergency fund so that you do not have to use the credit cards again.

**froggie** · 12-24-2006, 10:15 AM

Re: time to crawl out of debt....

Some people advocate tackling the highest interest rate debt first and working your way down to lower interest rate cards. For us, we needed to see our debt decreasing to keep us motivated so we began paying off our smallest balances first and then working toward the higher debts. We still have a long way to go though!!!

Best of luck to you!

**Diolla** · 12-24-2006, 10:28 AM

Re: time to crawl out of debt....

Originally posted by froggie

Some people advocate tackling the highest interest rate debt first and working your way down to lower interest rate cards. For us, we needed to see our debt decreasing to keep us motivated so we began paying off our smallest balances first and then working toward the higher debts. We still have a long way to go though!!!

Best of luck to you!

It really depends on your style, I did a little of both because I had a couple of little ones ($100 & $300) I wanted to kill first. The important thing to me is focusing on one at a time. When you throw a little extra at this one and that one I think you don't feel like you are getting anywhere.

I am divided on the emergency fund when you are trying to get out of debt. I kept a small cushion ($500) and defined emergency as something I literally couldn't live without. It took me 13 months to clear all my debt and I didn't have a real emergency during that time (although the microwave dying felt like one)

**scfr** · 12-24-2006, 02:39 PM

Re: time to crawl out of debt....

Welcome to the forums!

Oprah did a series of programs about 3 families trying to get out of debt called "The Debt Diet." On her web site, there is a step-by-step plan from financial experts for getting out of debt that you may find helpful:

Access Denied

http://www.oprah.com/money/debtdiet/steps/debtdiet_steps_main.jhtml

[Since you are going to be a cop, if you find it too unmacho to visit Oprah.com, ask your wife to do it!

]

The most important piece of advice I can give you is for you and your wife to sit down and come up with a plan together, so that you two are working together as a team and don't end up sabotaging each others efforts.

Good luck and please keep us posted how it's going.

time to crawl out of debt....