Best financial advise you will ever hear. PERIOD.

[phyregod]

And I missed it. Bummerage.

 

[phyregod]

So, just to bring this thread back from the dead..

I've knocked out over $13,000 in debt in the past 5 weeks. Its amazing what you can do with "Gazelle like intensity" Working extra hours, selling off items that you dont need, etc.. This is coming from being totally negative. Our minimum payments were $200 more than we were pulling in in a month. We now have over $1000 per month extra to pay toward other debts. Plus a few bucks in the bank.

Yeah, 13k is only a small piece of my overall debt, but damn it feels good.

This class is awesome.

 

[Black Widow g2]

you must teach me how to use the force, obi wan.

 

[phyregod]

Up to $16,000 paid off now. All of my bills for April are already paid. My budget is for the most part worked out. I still have alot of debt, but its shrinking every week.

This guy is awesome.

1. Make minimum payments on all your bills. Squeeze your budget until you've accumulated $1,000 cash. This is your beginner emergency fund.
You'll never make headway in your quest to get out of debt if you don't have at least a little something to fall back on. That "little something" is called an Emergency Fund, and that's what this first $1,000 is for (or $500, if you make less than $20,000 per year). Put everything else on
hold. Make only minimum payments on all your debts; take on a second job if necessary; forego retirement-plan contributions (temporarily) if you can. Get your emergency fund together first. Get it together fast.
If you already have more than $1,000 in savings, and in anything other than a retirement account, withdraw everything except the $1,000. Use these proceeds for Baby Step #2, regardless of penalty (if the money were in CDs, for instance, there would like be a penalty for early withdrawal).
Once you have accumulated the $1,000 (or $500), keep it someplace where you cannot easily get at it. It must be available, but not easily available, and not easily spendable.
"Sometimes," Ramsey instructs, "you have to protect yourself from you."


2. Pay off your debts, smallest to largest. "Snowball" the payments.
Write down all your debts except your home. (If you're into spreadsheets, something like my DebtTracker spreadsheet will come in really handy here!) Arrange them in order from smallest balance to largest. Do everything you can to pay off the smallest debt listed (take on a second job, or sell stuff if you have to!) while making minimum payments on everything else. Once that first debt is paid and gone, then "snowball" that monthly payment money over and apply it to the next-smallest debt (in addition to that debt's normal payment). When that one is paid off, then take that monthly payment amount and start applying it toward your next debt. Get the picture? The more debts you clear off, the more your "snowballed" payments are increasing, and the more headway you'll make — faster — on your larger balances.
Ramsey writes: "The reason we list the debts from smallest balance to largest is to have some quick wins. This is where behavior modification is more important than math."
One important caveat: If you're working on this second Baby Step and some emergency arises which forces you to spend any part of your emergency fund, immediately stop this step and return to Baby Step #1 until you've refunded your emergency fund in full.
Check my "Debt Snowball" page for a more thorough discussion of this part of the Baby Steps.


3. Create a full-fledged emergency fund containing 3 to 6 months' worth of expenses.
Bad luck and rainy days are a part of life. Expect them. Prepare for them.
If you'll keep three to six months' worth of bills and living expenses in a savings or money-market account, then you'll have gone a long way toward erasing the "what if" stress from your life. The emergency fund allows your family to always be ready for whatever life hurls at you. Sure, that Murphy guy might still stop by your residence every so often, but he won't be able to run roughshod over your financial life the way he used to. Ramsey takes the analogy a step further: "Don't forget that the emergency fund actually acts as Murphy repellant."
You must also flip a mental switch regarding your e-fund: It is there for bonafide emergencies. Nothing else.
Ramsey elaborates: "Beware not to rationalize the use of your emergency fund for something that you should save for and purchase. Something on sale that you 'need' is NOT an emergency. Prom dresses and college tuition are NOT emergencies," he says. [Aside: This, of course, is where Mary Hunt's Freedom Account concept enters the picture.]
In any event, get your full e-fund together, and you'll be in a financially-elite class. You won't need your credit cards any longer ... even for emergencies. And the next time your car's alternator detonates?
"What used to be a huge, life-altering event," Ramsey says, "will now become a mere inconvenience."


4. Fully fund 15% into pre-tax retirement plans and Roth IRA, if eligible.
Now it's time to get your retirement funds in shape. Contribute the maximum amount you can, your target being contributions of a full 15 percent of your household's gross (pre-tax) income. If you have tax-advantaged plans (401k or Roth IRA, for example) available to you, then exploit them to their fullest extent. If your company matches any part of your contributions, do not consider this as part of your 15 percent. Additionally, do not include expected Social Security benefits in your retirement calculations. "I don't count on an inept government for my dignity at retirement, and you shouldn't either," Ramsey says.
At this point, if you haven't already done so, it is time to begin seriously educating yourself about mutual funds, stocks, and the financial markets.
"Getting older is going to happen," Ramsey says. "You must invest now if you want to spend your golden years in dignity."


5. Take care of college funding.
If you have kids, then you'll have college to worry about. The earlier you start, and the more attention and funding you're able to give to it, the better off you and your kids will be. Since college tuition inflation averages around 7 to 8 percent per year, your investments will need to (hopefully) do better than that. Always use tax-advantaged accounts (such as 529 plans or Education Savings Accounts) to their fullest extent to assist with this. These plans do have certain income limits and other restrictions and/or fees, so be sure to check the fine print before diving in.


6. Pay off your home . . . early.
For most people, the mortgage payment is the single largest monthly payment they will ever have. Just imagine what you can do with that money when you've paid it off. Imagine how you'll feel when you make that last payment. Round up every spare dollar you can find and put it toward your mortgage, regardless of all the oft-quoted benefits of mortgage-interest tax deductibility. (How wise is it to continually pay, say, $5,000 in interest to a bank each year, just so that you won't have to pay $1,500 in taxes to the government? The small minority of folks who own their homes debt-free probably don't mind paying that $1,500 a bit.)

For more comments regarding home, home loans, and their affordability, you might refer to my "Home, Expensive Home" article from Aug. 30, 2002.


7. Build wealth (mutual funds / real estate) and give!
With every bit of your debt zeroed-out and your savings tanks on the full mark, you can finally reach for the "pinnacle" — that point where your money works harder than you do. Invest more so that you can continue to grow your wealth. Give more so that you can continue to grow your self.

 

[Bob Vila]

How are you paying off close to 20k in only ~8 Weeks? Are you selling yourself for extra cash? lol

good job regardless.

 

[phyregod]

Sold the harley (5k) and bass boat (3.4k). Then got 3.5k on an income tax return that I tossed straight at the debt. Had a garage sale. The rest has been leftovers from paychecks.

I also did what I call "trimming the fat" on my monthly expenses. closed the web-sight, killed a pair of email accounts that were costing me $5/month, reworked my telephone contract to save myself $27 a month, sold the harley which was costing 187 + 17 in insurance, Put the kids life insurance into a rider on mine that saved $14 a month.. The list is endless, but saving a couple of bucks here and there, many many times over, has reduced my monthlies significantly. Not to mention the minimum payments on a few credit cards that are now dead. Also, for the first time in the history of me, I'm allowing the wife to buy "store brand" food. Tastes like crap but hey, I'm getting out of debt, and that tastes good.

The harley I didnt need. I got a very nice 21' 10 man ski boat to replace the bass boat (It was free, father gave it to me, he was tired of maintaining it) Much more room for bouncing ta-tas in the ski-boat.

It was money I had just sitting around (in the form of needless toys and expenses). Might as well make it work for me.

If everything goes the way I think it will, I will have paid off 17.5k by May 1.

 

[totalburnout]

Nicely done.

Millionaires don't become millionaires by spending like them, they become millionaires by saving like them.

 

[Bl6CRX]

Congrats man, personally I wasn't too impressed by what you orignally posted, but its obviously worked great for you and you should be proud of your acomplishments here.

 

[MXDesa]

Anyone invest in a ROTH ira? What do some of you suggest and what are some of the interest rates?

 

[phyregod]

Nicely done.

Millionaires don't become millionaires by spending like them, they become millionaires by saving like them.

In the book, "The millionaire next door", They study the habits of millionaires. The author went out in his inital search, hit the rich neighborhoods and knocked on the doors of the nicest houses. After interviewing several at these places, he realized that most of the people in those houses were flat broke. Deep in debt.

Then he found that MOST millionaires live in middle class houses and drive cars that are a few years old. Most dont own gold cufflinks or rolexes.

They live well below their means, and invest their money, instead of blowing it.


Dave Ramsey says, and I love this quote, "I dont sell microwaves. I sell crock-pots."

Anyone invest in a ROTH ira? What do some of you suggest and what are some of the interest rates?

A Roth IRA is just a type of investment. You can plug in 3k a year, or 6k if you are married, and it will grow 100% tax free. What you invest it in (and its rate of return) is entirely up to you.

 

[posol]

^ its 4/8 for 2006 +

 

[phyregod]

P.S. I kicked the crap out of my goal of $17,500.00 paid by May 1st.

Currently $19,078.00 paid off.

 

[JDMPlaya]

I don't understand how you paid that much off.. how much money do you make?

 

[phyregod]

This is being done on a 45k/year income, And "Gazelle Like Intesnisty".
Selling off the toys (boat, harley, etc), stopped eating out, stopped blowing money on crap. Its amazing how far you can stretch your money when you have a cash flow plan. (aka budget)

Every dollar has a name, every penny is accounted for. No stopping by the convenience store for a 44oz coke and a $2.00 chunk of beef jerky. We have eaten out maybe twice since this thing started, and we ate cheap both times. Our minimum payments (credit cards only) have gone from $1300/month to $250/month. And that number falls every week. We just took care of the last paycheck of the month, and all the bills we have left to pay in May are Gas and Phone, and that is because those bills haven't come in yet. We've both been putting in alot of extra hours, personally, I've been logging an average of 56 hours/week since this course started.

I'm tempted to deliver pizza at night. Easy temp job, and would help knock out those debts that much faster. Because the faster I can scrub off this debt, the faster I can start investing and building wealth.

 

[nootrac22]

Myself or B will offer a class if you guys want. we'll only charge $50.00 a head, and you wont have to go to a church. =)

My class will be, learn how to handle money, play in stocks and buy an asian wife.
Bs class will be learn how to redo a condo, out class your neighbors and buy a M. =)

sign me up for the how to buy an asian wife

 

[Celerity]

I'm tickling with how to make this plan work for me. Just moving into the house I racked up a few bills that I want to shake. I'm so upset about spending money that I'm having someone come by to look at the Vega this weekend. Not because I want it gone, but because I appreciate killing another bill THAT much.

The bike thing has been working out great. $12 a week in gas.

 

[JDMPlaya]

So does he mention anything about Balance transfers? Good or bad?

 

[reckedracing]

balance transfers are good to get rid of high interest, but they always tack on a balance transfer fee, which is $50 or a percentage and gets thrown in at the cash advance %rate and doesn't get paid off till the whole balance transfer is paid off

so it could end up fucking you in the long run

 

[JDMPlaya]

Well, from a credit stand point, Will your score go down because you are opening an additional card? I found a credit card deal with No annual fee, 0% APR on balance transfers for 12 months, and No balance transfer fees for initial balance transfer. $50 Gift Card after first purchase as well.

The amount I owe is about 3700.00 Just pondering on what the best route to take is.

 

[reckedracing]

another card might drop your score a bit, but your debt to equity is going to stay the same so it should have a minimal impact