Debt help

[Billinsd]

Dave Ramsey

 

[Bubblehide]

If you can, Chapter 7. There is no better resolution if you qualify.

 

[MattB]

Can’t argue with the results. You don’t have to agree with them, but can’t argue them. It is psychological, not financial. So I would agree with you, not the best financial advice, but it gets the best results the quickest.

Actually, it would get the same results (becoming debt free) more slowly. By paying of highest interest rate debt first, you minimize the amount of interest you pay during the course of paying off the underlying debt. It's all dollars.

But if that works better psychologically for some people, so be it. The best diet in the world is worthless if folks are unwilling to follow it.

 

[cjdewese]

I would agree with most everyone else DAVE RAMSEY. My wife and I went through his program before we were even married. We had 49K in debt between us when we took it and were debt free in 5 years with her working at Starbucks (not a ton of $) and me just starting my career. Just have to stick with it and anytime you get a bonus or a large sum of money sink it into your debt rather than buying the next best thing. My favorite quote from him is "Live like nobody else today so you can live like nobody else later."

Reduce your car payments as quickly as you can or buy a car you can pay cash for with the equity of your Tacoma to get rid of a payment completely then apply that to your lowest balance credit card to pay it off as soon as you can.

ONLY buy things with cash from this point on. If you have to put it on a card you cannot afford it. Of course there are emergencies but he talks about how to free yourself from those as well, I highly recommend it, complete life changer.

It takes time and a complete mindset change but once you do it just plain makes sense. I have given the gift of the class to my wife's sisters so they can learn when they are young.

 

[Evol]

I don't know your savings situation but I'd build an emergency fund first then start paying off debt aggressively. Work more, side jobs, etc.

It's a nice feeling having 10, 25 or 50k in the bank account and I think will give you some peace of mind.

I remember when I was 22-23 thinking it would be crazy to have 10k in a bank account, I'm well past that number now and I sleep much easier.

I own my own business so it's a little different for me, I have lean months and great months but it all evens out in the end.

I think that cutting out netflix or stopping going out to eat is kind of stupid IMO unless it's out of control. Bottom line is you need to make more $, cutting expenses isn't fun but pulling in an extra 2-300$ a week is.

Hey Honey, we stopped netflix and I paid 8 dollars off the credit card extra this month or I busted my ass and paid $1500 off the credit card this month. The second is much more reenforcing and satisfying.

 

[maddmartagan]

Take 30 minutes and go complete a free consultation with a bankruptcy attorney. They are always free. They will be able to let you know your options and if you qualify for a Ch. 7, or even if a Ch. 13 is a better in your specific situation, which could allow you to lower the interest rate on your vehicles.

A lot of people are recommending Dave Ramsey, who is vehemently against filing a bankruptcy despite the fact that he did it...His stance against filing is especially odd considering he is a huge proponent of never taking on debt. So why wouldn’t you exercise your right provided to you by Congress and file a bankruptcy and then just manage your budget better moving forward?

IF it’s a good option, file bankruptcy and learn from your mistakes. Take the money that would have been used to pay off your debts and start putting it into retirement and actually enjoy your life while managing your budget better. No need to be miserable for even 1 year, let alone 5-10 that it could take to pay off your credit cards.


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[MattB]

So why wouldn’t you exercise your right provided to you by Congress and file a bankruptcy and then just manage your budget better moving forward?

Morals?

 

[Evol]

Morals?

Yeah bankruptcy is a bad idea for a lot of reasons. There are times when it's called for but yours doesn't sound like it.

 

[Ross]

Create a Budget and review everything monthly to make adjustments and targets as needed....I view it like using a scale to manage your weight...burying your head in the sand to hide what is occurring does no good, own it, manage it and be diligent towards your goals....good luck it feels very nice to not have to worry about money related issues and can go along ways to helping many things in life if you don’t have to worry about making payments when over extended

 

[Spoonbill]

Take 30 minutes and go complete a free consultation with a bankruptcy attorney. They are always free. They will be able to let you know your options and if you qualify for a Ch. 7, or even if a Ch. 13 is a better in your specific situation, which could allow you to lower the interest rate on your vehicles.

A lot of people are recommending Dave Ramsey, who is vehemently against filing a bankruptcy despite the fact that he did it...His stance against filing is especially odd considering he is a huge proponent of never taking on debt. So why wouldn’t you exercise your right provided to you by Congress and file a bankruptcy and then just manage your budget better moving forward?

IF it’s a good option, file bankruptcy and learn from your mistakes. Take the money that would have been used to pay off your debts and start putting it into retirement and actually enjoy your life while managing your budget better. No need to be miserable for even 1 year, let alone 5-10 that it could take to pay off your credit cards.


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There is also the issue of having a bankruptcy in your background, which is why (iassume) Dave Ramsey says to avoid it.

Listen to what others have said and get rid of the car’s with payments. Get something that is reliable and you can afford to drive. There are a lot of reliable cars out there that are easy to work on and cheap. Cars are a depreciating asset and if it is causing you financial stress then get rid of them.
Remember, it is just temporary.

 

[maddmartagan]

Morals?

Might not be able to hear me way up on that high horse, but hey if you feel your "Morals" outweigh paying thousands of dollars to a credit card company that most likely knew you couldn't pay the debt back (because that is their whole business model), is already taking advantage of you with 30% interest rates, that will charge the debt off to a collection agency as a tax write off, and could care less that you filed bankruptcy because they've already calculated it into their cost of business, all because you think its immoral, then be my guest and pay it back.

And if your "morals" are coming from the bible, then here's a quote or two for you:

Nehemiah 10:31b: “Every seven years we will let our fields rest, and we will cancel all debts.”

Deuteronomy 15:1-2: “At the end of every seven years you shall grant a release of debts. And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the Lord’s release.”

 

[tuffcity]

A quick comment on student loans... and this might not be applicable in the US but...

My daughter funded her own degree (Nursing) through student loans and grants. Here the loan repayment didn't kick in until she finished school. When she got her first statement she was horrified at how much interest she would be paying over the life of the loan. She calculated it at about $5/day. I suggested she find out how many transactions per month her bank account allowed before charging- turned out it was unlimited. So I told her to set up an auto payment schedule that sent the loan company $5 every day and pay the monthly amount when due. Told her it was probably going to cost the company more than that to process it every day (even if it didn't the thought it might made her happy) . So she did. The end result was knocking a couple of years off the student loan and paying less interest because the principle amount was chipped away at faster.

So even chipping away on a regular basis can ultimately make a big difference.

 

[maddmartagan]

There is also the issue of having a bankruptcy in your background, which is why (iassume) Dave Ramsey says to avoid it.

Listen to what others have said and get rid of the car’s with payments. Get something that is reliable and you can afford to drive. There are a lot of reliable cars out there that are easy to work on and cheap. Cars are a depreciating asset and if it is causing you financial stress then get rid of them.
Remember, it is just temporary.

Well that's kind of the point I am trying to make. Why would it matter if there is a bankruptcy on your background? Let's just pretend that having one on your credit report is as bad as most people think it is (its really not). How do you think it would affect you? You won't be able to get a loan, or higher limit credit card? Won't be able to finance a car, or house? Well according to Dave, you shouldn't be doing that anyways because its all just a form of incurring debt. So why would a bankruptcy matter if you aren't doing those things anyways?

 

[PAhntr91]

Well that's kind of the point I am trying to make. Why would it matter if there is a bankruptcy on your background? Let's just pretend that having one on your credit report is as bad as most people think it is (its really not). How do you think it would affect you? You won't be able to get a loan, or higher limit credit card? Won't be able to finance a car, or house? Well according to Dave, you shouldn't be doing that anyways because its all just a form of incurring debt. So why would a bankruptcy matter if you aren't doing those things anyways?

I mean you got a point there.


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[EastMT]

I sold my new fancy black truck after we got married and paid cash for Ol’ Blue. The old 7.3 IDI rattled me around for 5 years. Gave me the chance to pay everything off, save for a newer one. Only reason I sold was because it was getting hard to start in the cold, cutting into certain hunts. Needed a injector pump, more than the truck was worth so sold it to a mechanic. It’s kinda nice not worrying about scratches too haha.

I always wanted a bumper sticker on it that said I took financial peace university and all I got was this beater!

You can do it!

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[Squincher]

Might not be able to hear me way up on that high horse, but hey if you feel your "Morals" outweigh paying thousands of dollars to a credit card company that most likely knew you couldn't pay the debt back (because that is their whole business model), is already taking advantage of you with 30% interest rates, that will charge the debt off to a collection agency as a tax write off, and could care less that you filed bankruptcy because they've already calculated it into their cost of business, all because you think its immoral, then be my guest and pay it back.

And if your "morals" are coming from the bible, then here's a quote or two for you:

Nehemiah 10:31b: “Every seven years we will let our fields rest, and we will cancel all debts.”

Deuteronomy 15:1-2: “At the end of every seven years you shall grant a release of debts. And this is the form of the release: Every creditor who has lent anything to his neighbor shall release it; he shall not require it of his neighbor or his brother, because it is called the Lord’s release.”

You left out the part about people willingly spending/borrowing the money knowing everything you typed above. Willingly borrowing money from a thief then rationalizing not paying it back only because they are a thief.......makes you a thief.

 

[cjdewese]

I am definitely a Dave Ramsey guy since it worked for me but @maddmartagan makes very valid points and only you know your situation. A free consultation from a bankruptcy attorney isn't the end of the world. My philosophy is the more you know the better more informed decision you can make. You know what is best for you and your situation and your family.

You probably came here for ideas or thoughts you may have never heard of or thought of yourself and you most likely have some already. Just stay positive whatever decision you make and learn to spend within your means from this point on, be creative to what you want to do and go get it.

Ever thought of relocating to a more affordable place if your jobs allow for it. I have a great friend that moved from California to Alabama because he could just never get ahead financially. 2 years later they are closing escrow on 10 acres and a bigger house than they were renting in CA with no savings to speak of when they left.

 

[maddmartagan]

You left out the part about people willingly spending/borrowing the money knowing everything you typed above. Willingly borrowing money from a thief then rationalizing not paying it back only because they are a thief.......makes you a thief.

No I didn’t leave it out. I’m aware that happens, but pointing out the exception to the rule is not something I usually do in my arguments. But sure there may be people that attempt to do that. Then there’s the majority of people that have unexpected events (medical issue, loss of income, really anything) that happen and it makes it difficult or near impossible to pay the debts back that they expected to be able to pay. Even a small hiccup (for example, paying for a relative’s funeral) can then cause a snowball effect due to the interest charged on credit cards. So our country has decided to give those people the opportunity to file a bankruptcy if that is their best route.

But yea, go ahead and continue to push that narrative that filing a bankruptcy means you are a thief...lol.


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[Squincher]

No I didn’t leave it out. I’m aware that happens, but pointing out the exception to the rule is not something I usually do in my arguments. But sure there may be people that attempt to do that. Then there’s the majority of people that have unexpected events (medical issue, loss of income, really anything) that happen and it makes it difficult or near impossible to pay the debts back that they expected to be able to pay. Even a small hiccup (for example, paying for a relative’s funeral) can then cause a snowball effect due to the interest charged on credit cards. So our country has decided to give those people the opportunity to file a bankruptcy if that is their best route.

But yea, go ahead and continue to push that narrative that filing a bankruptcy means you are a thief...lol.


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You didn't reference any other scenario in your post, you only made a case for not paying them back because you don't like their business practices. If you think I said merely filing bankruptcy makes one a thief you should go back and re-read. There is an "only" in there that is very important.

Looking forward to see where you place the goalposts now.

 

[Mt Al]

Step 1: Get rid of the vehicles with payments. That's where most of your extra income will come from.
Step 2: Put your old car payment money towards your CC and pay it off.
Step 3: Don't worry about consolidation. It isn't a silver bullet if you don't take care of the other steps and you'll spend more time and aggravation working on that.

Solid, basic, simple^^^^^. Consolidation is often a diversion that keeps you from addressing the real problem. Only do that long after you've changed habits and only if the math works out. Consolidation is the wrong focus.

Follow. Dave. Ramsey. His work has created more free people, more wealth, more saved marriages and fulfilled lives than most.

Car payments suck by themselves, but they don't take into accounting higher insurance, licensing and depreciation. There are excellent, reliable, good looking used cars that will save you a bundle, actually many bundles. If you use the vehicle for work, whole different story.



My vehicle story isn't the answer key, it's just what I've done that works for me. My family buys cars/trucks with about 100,000 and dig into the carfax report on number of owners, wrecks, clear title, etc.. before buying. We keep them for approx 10 years, then maybe put a few thousand $ into them if they still look good, then put another 3/5 years on them. Then sometimes just give them away. I've gone far and wide, two states away, even had a vehicle for my wife delivered from Jacksonville, FL. That one had 60,000 on it and we drove it until it had 230,000. The whole time we put about $2,000 into it, it was an Acura. They work. My truck has about 190,000 on it, just put in about $5,000 and hoping for 2/3 more years. Way cheaper than payments, further deprecation, licensing, insurance. All those other expenses keep going down down down as time goes on.

You can do this and it will feel awesome when it's under control.