Debt help

[Marble]

I've heard a lot of people talk about the debt consolidation, or paying off higher interest debts first to save money, putting more money into investments (home) instead paying off debts. Logically it makes sense. But the wealth/debt delima isn't solved by logic. Its not a math problem. Its a behavior problem. That's why Ramsey recommends the methods he does.

There is no need to reinvent the wheel. The steps are there. It just isn't pleasant going through them when debt looms over someone. But when you do, and you've achieved all of your goals, you'll be a different person, your life will change.

You feel a sense of power and control over your life like you never have. Instead of dreams of bills and low accounts. You'll dream of living a lifestyle and achieve it.

What Ramsey teaches should be in every school in America.

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[Wisco2020]

Another group i found was FIRE Financial Independence Retire Early. A great podcasdt/website to start with is Choose FI. https://www.choosefi.com/ I did financial peace and read almost all of the Dave Ramsey books and he is good for getting out of debt and for short periods but the FIRE group has changed our life for the better! Definitely suggest looking into it!

 

[nrh6.7]

Interesting, I've not heard that before. Could you elaborate?

Debt consolidation/debt counseling generally has a negative impact on your credit for several reasons. Much like how a chapter 13 works, you are enlisting an outside party to help handle the repayment terms of your debt. The simple fact that a third party is helping to manage your debt load is enough to make many lenders issue a decline, or at best drop you to a lower approval tier, meaning shorter terms, higher rates and down payments.

While you will pay a lower interest rate on the debt, often times the balances are negotiated to a lower amount (bad because lenders know this), and depending on the type of counseling program you participate in, the creditors might even close your accounts after the counseling company has paid them off, which kills your utilization ratio. That is the biggest kick in the nutz, because after late payments...longevity and utilization are the two biggest factors affecting your credit score.

 

[wesfromky]

The YNAB app is pretty cool - they have some great videos to go along with it as well.

You might check the mr money mustache forums - lots of people there trying to lower bills / debt.

 

[peterk123]

Getting out of debt is one of my favorite subjects. We have a an interesting problem in this country. It is not an income problem, it is a spending problem. I had this pounded into my skull as a child because my parents were immigrants (legal) from a communist country. We never bought anything we did not need or could not pay for cash for. Need does include some things to have fun with.

I am self employed. When the mess hit in 2008, we depleted all of our savings, including IRAs. That included taking the 10% penalty (don't get me started on this). My home equity went through the roof. As soon as I started to make some money again, I focused on getting rid of the home equity. During this time frame, I never carried a credit card balance. I also never had cash; never. Every penny I made paid went to the home equity. Why? Reduced interest costs. Reduced interest costs meant more cash for me. More cash for me meant more cash toward the home equity. You get it..... diligence pays off. We never took fancy vacations. Only the past three years have I started to fly on a plane. And I'm 53. Only now am I willing to spend a week in places like Montana. Even those are done on the cheap because we like to camp.

My wife and I go out to eat maybe three times a year. We prefer our home cooked meals. People drop a couple hundred bucks a week on dining out. It is insane. Two drinks at a restaurant pay for a bottle of your favorite hooch in the liquor store. Do you go to Dunkin Donuts every morning for your coffee? Or maybe one of those fancy coffee shops? Guess what, that is at least $1500 of after tax money you just spent for brown water. My point is, it is the little things that really add up and get you. It is not necessarily the one time purchase. Be honest with yourself and find out the recurring "little things" you are wasting money on.

This Covid crap and lockdowns here in Massachusetts have been great. It let us test out what retirement would be like. I laugh, our lives have not changed at all because I do not hit restaurants, bars or stores. We hang around in the woods, ponds and rivers and cook our own food.

It takes discipline but it can be fun too. I rebuilt in ten years and I think my wife and I have enough to pretty much call it quits. We are not rich by any means but I think we will be able to get by. Health insurance is the killer though. It is a $30,000 per year problem. No worries though, I am sure Biden and Harris have my back (sarcasm). Actually, I probably will have to work part time but I am okay with that.

 

[DuckDogDr]

One of my co-workers did the dave Ramsey thing...her and her husband are 45 years old ...completely debt free..even have already paid off their house

 

[Chad-]

Here's another vote for Dave Ramsey's plan.

 

[fngTony]

One of my co-workers did the dave Ramsey thing...her and her husband are 45 years old ...completely debt free..even have already paid off their house

Got any more details on that? How long did it take them once they started the Dave Ramsey thing?

 

[isocyanate]

Another group i found was FIRE Financial Independence Retire Early. A great podcasdt/website to start with is Choose FI. https://www.choosefi.com/ I did financial peace and read almost all of the Dave Ramsey books and he is good for getting out of debt and for short periods but the FIRE group has changed our life for the better! Definitely suggest looking into it!

We got on this train in our late 20s. Weren't in bad shape, but definitely had some fun that was catching up with us. We aren't perfect, but the FI groups have pounded the idea of opportunity cost into my head. You have to find a balance between delaying gratification and living your one precious life right now.


Discipline is freedom, every time.

 

[mlevimadden]

One thing about Dave Ramsey is that he uses absurdly high assumed % returns on investment when he runs his hypothetical scenarios to illustrate principles. I agree with a lot of his principles, but 12% ROI? Really? Sign me up!

The S&P500 has done 30% in the last year, 22% annually for the last 5 years, and 14% annually for the last 10 years. 12% is pretty realistic for the overall stock market performance for the last 100 years.

I would echo everyone else's advice to start with Dave Ramsey's plan for the best first step to start working on your financial plan. Once you get rid of your consumer debt, I feel there are much better plans for building wealth.

 

[GSPHUNTER]

Dave is the man. The other option is bankruptcy, it's the American way. My wife niece and husband went that way twice before they were 40.

 

[HNTR918]

Student Loan, Car Loan, and Credit Cards had me in huge debt!

Changed my lifestyle completely!

No clubs, no bars, no restaurants, no coffee shops, no going out to lunch with co workers, no take-out or delivery food, no gas station food, no vacations, no shopping, no cable, cancelled subscriptions, sold motorcycle, sold project/fun/fast car, sold snowboarding gear, sold paintball gear, got a smaller and older apartment, no new furniture, and started shopping at discount grocery stores, etc.

In 4 years, paid off $93,000 in debt.

This fall, I'm spending 43 days in the field between Colorado, New Mexico, & Montana for Elk & Deer.
Going to POW Island for Black Bear this Spring.

It's all about priorities, and learning delayed gratification.

For those arguing about +8% to +12% returns being unrealistic...

I've been putting in to my employer sponsored Roth 401k and maxing out a personal Roth IRA every year. Haven't had a year below +18% return. I ONLY invest in index funds, and my total portfolio rate is +44.12% as on today at 8:30am.

 

[vicwoods]

Having debts is not the end of the world. I also had a period when I was full of debts, but now I can say that it is possible to get out of debt. I can share some suggestions that can help you. First of all, try to make a plan for paying the debts. Try to work as hard as possible, have a good source of income, and pay the maximum amount of money possible monthly. Start with small debts, and you get minimized faster the number of debts you have. These helped me to pay off all of my debts fast, and they will surely help you.

 

[awasome]

What's the best way to get rid of debt?

Look up Dave Ramsey Total Money Makeover. It is a great way to get out of debt. The wealth building aspect of his philosophy some people believe in some people dont. But most everybody will agree his way of getting out of debt is one of the best.

 

[Gamehearse]

Another vote for Dave’s strategy. Live off less than you make and have a plan for every dollar of income. My wife and I were debt free (including our house) at age 37 and three kids. Do it with gazelle intensity! Good luck

 

[UtahJimmy]

@PAhntr91 10 months after reaching out for help, how's the journey going?!?

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[CorbLand]

What's the best way to get rid of debt?

Stop trying to get your 10 posts to have access to the classifieds would be a good start.

 

[540-Virginian]

Mr Money Mustache is a good blog also. Dont buy any dave ramsey stuff just read his free stuff.

equation is simple no secret - its the behavior thats the challenge.

 

[Rich M]

I just saw a blurb about paying $170 extra a month on a 4% mortgage will shave 5 years and $28K off your expenses. The same blurb said that if you invested the $170/month in the stock market and got 8% that you'd have an extra $100K when your mortgage was paid off 20 years later.

Things to think about. Sure you can go for debt free, but then you are 5-10 years closer to retirement and haven't invested in anything except your house and cars. Investments need time for the compound interest to do its thing.

 

[UtahJimmy]

I just saw a blurb about paying $170 extra a month on a 4% mortgage will shave 5 years and $28K off your expenses. The same blurb said that if you invested the $170/month in the stock market and got 8% that you'd have an extra $100K when your mortgage was paid off 20 years later.

Things to think about. Sure you can go for debt free, but then you are 5-10 years closer to retirement and haven't invested in anything except your house and cars. Investments need time for the compound interest to do its thing.

Agree with this and I think that's where some of the people disagree with Dave. I'm definitely not in the pay off the house early camp at a 2.5% interest rate because I can crush that return in the market.

AND if you still have a 4% mortgage you should refi immediately!!

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