Debt Managment (or, how to keep from fucking yourself finanically)

[Supracentral]

In light of Theresa's Money Saving Thread, I thought I'd post something about debt management, and how I think you should look at your debts, and why you should work to eliminate them. I'm not a financial planner - this is just my experience, take it for what you think it's worth.

First, debt, especially in this economy, is one of the worst things you can have. If you have amassed debt, you really need to look at it from a logical perspective and determine what's the best path to take for your financial well being.

If your savings account is earning 3% and your credit cards are charging you 18% interest, every dollar you are putting in savings is losing you money, 15% to be exact.

So first you need to eliminate your debt, then you save, then you invest.

Let's start with the most common, and WORST kind of debt to have, credit cards.

Let's assume that you have a credit card with a 18% interest rate with a balance of $2000.

Odds are, your minimum payment is about $50 for that card right now. That minimum will go down over time, and most people just make the minimum payment requested by the credit card company. That's one of the worst things you can do.

If you were to make the minimum payments on that $2000 (usually about 2.5% of the outstanding balance), it would take you 222 months (that's 18 and a half years) to pay that balance off (talk about long term financing), and you will have paid out $4615.45 total in payments. This means you've paid your credit card company a $2,615.45 fee for the privilege of borrowing $2000 from them.

You're giving them a 130% return on their investment. This is a very good deal for them, and a very bad deal for you.

Here's what that payoff looks like:

Month	Minimum Payment	Interest Paid	Principal Paid	Remaining Balance
1	50.00	30.00	20.00	1980.00
2	49.50	29.70	19.80	1960.20
3	49.01	29.40	19.60	1940.60
4	48.51	29.11	19.41	1921.19
5	48.03	28.82	19.21	1901.98
6	47.55	28.53	19.02	1882.96
7	47.07	28.24	18.83	1864.13
8	46.60	27.96	18.64	1845.49
9	46.14	27.68	18.45	1827.03
10	45.68	27.41	18.27	1808.76
11	45.22	27.13	18.09	1790.68
12	44.77	26.86	17.91	1772.77
13	44.32	26.59	17.73	1755.04
14	43.88	26.33	17.55	1737.49
15	43.44	26.06	17.37	1720.12
16	43.00	25.80	17.20	1702.92
17	42.57	25.54	17.03	1685.89
18	42.15	25.29	16.86	1669.03
19	41.73	25.04	16.69	1652.34
20	41.31	24.79	16.52	1635.81
21	40.90	24.54	16.36	1619.46
22	40.49	24.29	16.19	1603.26
23	40.08	24.05	16.03	1587.23
24	39.68	23.81	15.87	1571.36
25	39.28	23.57	15.71	1555.64
26	38.89	23.33	15.56	1540.09
27	38.50	23.10	15.40	1524.69
28	38.12	22.87	15.25	1509.44
29	37.74	22.64	15.09	1494.34
30	37.36	22.42	14.94	1479.40
31	36.99	22.19	14.79	1464.61
32	36.62	21.97	14.65	1449.96
33	36.25	21.75	14.50	1435.46
34	35.89	21.53	14.35	1421.11
35	35.53	21.32	14.21	1406.90
36	35.17	21.10	14.07	1392.83
37	34.82	20.89	13.93	1378.90
38	34.47	20.68	13.79	1365.11
39	34.13	20.48	13.65	1351.46
40	33.79	20.27	13.51	1337.94
41	33.45	20.07	13.38	1324.56
42	33.11	19.87	13.25	1311.32
43	32.78	19.67	13.11	1298.21
44	32.46	19.47	12.98	1285.22
45	32.13	19.28	12.85	1272.37
46	31.81	19.09	12.72	1259.65
47	31.49	18.89	12.60	1247.05
48	31.18	18.71	12.47	1234.58
49	30.86	18.52	12.35	1222.23
50	30.56	18.33	12.22	1210.01
51	30.25	18.15	12.10	1197.91
52	29.95	17.97	11.98	1185.93
53	29.65	17.79	11.86	1174.07
54	29.35	17.61	11.74	1162.33
55	29.06	17.43	11.62	1150.71
56	28.77	17.26	11.51	1139.20
57	28.48	17.09	11.39	1127.81
58	28.20	16.92	11.28	1116.53
59	27.91	16.75	11.17	1105.37
60	27.63	16.58	11.05	1094.31
61	27.36	16.41	10.94	1083.37
62	27.08	16.25	10.83	1072.54
63	26.81	16.09	10.73	1061.81
64	26.55	15.93	10.62	1051.19
65	26.28	15.77	10.51	1040.68
66	26.02	15.61	10.41	1030.27
67	25.76	15.45	10.30	1019.97
68	25.50	15.30	10.20	1009.77
69	25.24	15.15	10.10	999.67
70	24.99	15.00	10.00	989.68
71	24.74	14.85	9.90	979.78
72	24.49	14.70	9.80	969.98
73	24.25	14.55	9.70	960.28
74	24.01	14.40	9.60	950.68
75	23.77	14.26	9.51	941.17
76	23.53	14.12	9.41	931.76
77	23.29	13.98	9.32	922.44
78	23.06	13.84	9.22	913.22
79	22.83	13.70	9.13	904.09
80	22.60	13.56	9.04	895.05
81	22.38	13.43	8.95	886.10
82	22.15	13.29	8.86	877.24
83	21.93	13.16	8.77	868.46
84	21.71	13.03	8.68	859.78
85	21.49	12.90	8.60	851.18
86	21.28	12.77	8.51	842.67
87	21.07	12.64	8.43	834.24
88	20.86	12.51	8.34	825.90
89	20.65	12.39	8.26	817.64
90	20.44	12.26	8.18	809.46
91	20.24	12.14	8.09	801.37
92	20.03	12.02	8.01	793.36
93	19.83	11.90	7.93	785.42
94	19.64	11.78	7.85	777.57
95	19.44	11.66	7.78	769.79
96	19.24	11.55	7.70	762.09
97	19.05	11.43	7.62	754.47
98	18.86	11.32	7.54	746.93
99	18.67	11.20	7.47	739.46
100	18.49	11.09	7.39	732.06
101	18.30	10.98	7.32	724.74
102	18.12	10.87	7.25	717.50
103	17.94	10.76	7.17	710.32
104	17.76	10.65	7.10	703.22
105	17.58	10.55	7.03	696.19
106	17.40	10.44	6.96	689.22
107	17.23	10.34	6.89	682.33
108	17.06	10.23	6.82	675.51
109	16.89	10.13	6.76	668.75
110	16.72	10.03	6.69	662.07
111	16.55	9.93	6.62	655.45
112	16.39	9.83	6.55	648.89
113	16.22	9.73	6.49	642.40
114	16.06	9.64	6.42	635.98
115	15.90	9.54	6.36	629.62
116	15.74	9.44	6.30	623.32
117	15.58	9.35	6.23	617.09
118	15.43	9.26	6.17	610.92
119	15.27	9.16	6.11	604.81
120	15.12	9.07	6.05	598.76
121	14.97	8.98	5.99	592.77
122	14.82	8.89	5.93	586.85
123	14.67	8.80	5.87	580.98
124	14.52	8.71	5.81	575.17
125	14.38	8.63	5.75	569.42
126	14.24	8.54	5.69	563.72
127	14.09	8.46	5.64	558.08
128	13.95	8.37	5.58	552.50
129	13.81	8.29	5.53	546.98
130	13.67	8.20	5.47	541.51
131	13.54	8.12	5.42	536.09
132	13.40	8.04	5.36	530.73
133	13.27	7.96	5.31	525.43
134	13.14	7.88	5.25	520.17
135	13.00	7.80	5.20	514.97
136	12.87	7.72	5.15	509.82
137	12.75	7.65	5.10	504.72
138	12.62	7.57	5.05	499.67
139	12.49	7.50	5.00	494.68
140	12.37	7.42	4.95	489.73
141	12.24	7.35	4.90	484.83
142	12.12	7.27	4.85	479.98
143	12.00	7.20	4.80	475.19
144	11.88	7.13	4.75	470.43
145	11.76	7.06	4.70	465.73
146	11.64	6.99	4.66	461.07
147	11.53	6.92	4.61	456.46
148	11.41	6.85	4.56	451.90
149	11.30	6.78	4.52	447.38
150	11.18	6.71	4.47	442.90
151	11.07	6.64	4.43	438.47
152	10.96	6.58	4.38	434.09
153	10.85	6.51	4.34	429.75
154	10.74	6.45	4.30	425.45
155	10.64	6.38	4.25	421.20
156	10.53	6.32	4.21	416.98
157	10.42	6.25	4.17	412.82
158	10.32	6.19	4.13	408.69
159	10.22	6.13	4.09	404.60
160	10.12	6.07	4.05	400.55
161	10.01	6.01	4.01	396.55
162	10.00	5.95	4.05	392.50
163	10.00	5.89	4.11	388.38
164	10.00	5.83	4.17	384.21
165	10.00	5.76	4.24	379.97
166	10.00	5.70	4.30	375.67
167	10.00	5.64	4.36	371.31
168	10.00	5.57	4.43	366.88
169	10.00	5.50	4.50	362.38
170	10.00	5.44	4.56	357.82
171	10.00	5.37	4.63	353.18
172	10.00	5.30	4.70	348.48
173	10.00	5.23	4.77	343.71
174	10.00	5.16	4.84	338.86
175	10.00	5.08	4.92	333.95
176	10.00	5.01	4.99	328.96
177	10.00	4.93	5.07	323.89
178	10.00	4.86	5.14	318.75
179	10.00	4.78	5.22	313.53
180	10.00	4.70	5.30	308.23
181	10.00	4.62	5.38	302.86
182	10.00	4.54	5.46	297.40
183	10.00	4.46	5.54	291.86
184	10.00	4.38	5.62	286.24
185	10.00	4.29	5.71	280.53
186	10.00	4.21	5.79	274.74
187	10.00	4.12	5.88	268.86
188	10.00	4.03	5.97	262.89
189	10.00	3.94	6.06	256.84
190	10.00	3.85	6.15	250.69
191	10.00	3.76	6.24	244.45
192	10.00	3.67	6.33	238.12
193	10.00	3.57	6.43	231.69
194	10.00	3.48	6.52	225.16
195	10.00	3.38	6.62	218.54
196	10.00	3.28	6.72	211.82
197	10.00	3.18	6.82	205.00
198	10.00	3.07	6.93	198.07
199	10.00	2.97	7.03	191.04
200	10.00	2.87	7.13	183.91
201	10.00	2.76	7.24	176.67
202	10.00	2.65	7.35	169.32
203	10.00	2.54	7.46	161.86
204	10.00	2.43	7.57	154.28
205	10.00	2.31	7.69	146.60
206	10.00	2.20	7.80	138.80
207	10.00	2.08	7.92	130.88
208	10.00	1.96	8.04	122.84
209	10.00	1.84	8.16	114.69
210	10.00	1.72	8.28	106.41
211	10.00	1.60	8.40	98.00
212	10.00	1.47	8.53	89.47
213	10.00	1.34	8.66	80.81
214	10.00	1.21	8.79	72.03
215	10.00	1.08	8.92	63.11
216	10.00	0.95	9.05	54.05
217	10.00	0.81	9.19	44.86
218	10.00	0.67	9.33	35.54
219	10.00	0.53	9.47	26.07
220	10.00	0.39	9.61	16.46
221	10.00	0.25	9.75	6.71
222	6.81	0.10	6.71	0.00

Now let's say you can up your payment just $25 more to $75 per month, and you stick to that payment until your balance is paid off. Maybe you skip eating out a few times, give up the Starbucks, the quick stops for junk food, whatever it takes.

Now it will only take you 35 months (that's less than 3 years) to pay that payment off, and you will have paid out only $2573.36. This means you've reduced the amount you paid your credit card company from $2,615.45 down to only $573.36.

For an extra $25 a month, you've saved yourself over $2000...

I don't care what financial league you are in, that's serious cash.

Now the credit card company is making a 28% return on their investment. Still a damned good deal for them, but a much better deal for you, not a good deal, it's still "expensive" credit, but it beats letting them earn 130% off of you.

Here's what that payoff looks like:

Month	Minimum Payment	Interest Paid	Principal Paid	Remaining Balance
1	75.00	30.00	45.00	1955.00
2	75.00	29.33	45.68	1909.33
3	75.00	28.64	46.36	1862.96
4	75.00	27.94	47.06	1815.91
5	75.00	27.24	47.76	1768.15
6	75.00	26.52	48.48	1719.67
7	75.00	25.80	49.20	1670.47
8	75.00	25.06	49.94	1620.52
9	75.00	24.31	50.69	1569.83
10	75.00	23.55	51.45	1518.38
11	75.00	22.78	52.22	1466.15
12	75.00	21.99	53.01	1413.15
13	75.00	21.20	53.80	1359.34
14	75.00	20.39	54.61	1304.73
15	75.00	19.57	55.43	1249.30
16	75.00	18.74	56.26	1193.04
17	75.00	17.90	57.10	1135.94
18	75.00	17.04	57.96	1077.98
19	75.00	16.17	58.83	1019.15
20	75.00	15.29	59.71	959.43
21	75.00	14.39	60.61	898.83
22	75.00	13.48	61.52	837.31
23	75.00	12.56	62.44	774.87
24	75.00	11.62	63.38	711.49
25	75.00	10.67	64.33	647.16
26	75.00	9.71	65.29	581.87
27	75.00	8.73	66.27	515.60
28	75.00	7.73	67.27	448.33
29	75.00	6.73	68.27	380.06
30	75.00	5.70	69.30	310.76
31	75.00	4.66	70.34	240.42
32	75.00	3.61	71.39	169.03
33	75.00	2.54	72.46	96.56
34	75.00	1.45	73.55	23.01
35	23.36	0.35	23.01	0.00

Start with your highest interest rate debt, and make the largest payments possible, then the next, then the next.

By making extra payments you'll find that your debt probably isn't insurmountable, and you'll soon find yourself in a position where you can SAVE money.

 

[suprahero]

Thanks Mike. I knew this already since I'm old, but a few of the others may not have known. I only have one credit card but I pay $400.00 a month on and my minimum payment is like $90.00. I never looked at the savings account like that though where you're actually losing money to put it in there instead of paying off your debt.

 

[Supracentral]

Thanks Mike. I knew this already since I'm old, but a few of the others may not have known. I only have one credit card but I pay $400.00 a month on and my minimum payment is like $90.00. I never looked at the savings account like that though where you're actually losing money to put it in there instead of paying off your debt.

Since Theresa is so much younger than me (15 years), she sometimes can give me a different perspective. In this case she pointed out to me that they didn't teach this to her in high school like they did when I went. In fact she said that that college is the first time they bring this stuff up these days, if at all. To me, that's far too late and it's a critical failure on the part of our schools. This is information you need to know in a capitalist society. This should be part of the very basics we teach teenagers. Since we have so many young people here at SM, and a good number of them who aren't in, or don't plan to go to college, I thought this was really important.

And yea, in general money in savings is losing you money if you have high interest debt. Remember you've still got the cards to fall back on if you have an emergency, so taking $500 out of savings and applying it to a credit card still leaves you with the money available if it comes down to it.

You should also have some cash on hand in a small fireproof safe, just in case as well, but that's a different topic.

 

[fixitman04]

great thread, and great plan. im currently on this program. in two years i have paid my 3500$ cc debt down to 400$. made a bunch of extra $$$ on this check.. think im just gonna write them a check... thanks for the inspiration

 

[Who]

I would like to add a tip if I may. Take note that you must be very careful when using this plan. If you do not have the discipline you could sink yourself into further debt. Be very aware that 0% balance transfer cards are designed to put you into more debt. The credit card companies have no interest in your well being and they are not trying to help you get out of debt. If you have any doubts about controlling your spending habits with credit cards this plan is not for you.

Use credit cards to pay off your credit cards and raise your credit rating at the same time.

Transfer your credit card debt and take advantage of low or 0% interest rates. Be careful with hidden or transfer fees. Take note of how the interest is figured out at the end of the introductory rate if you still have an unpaid balance on your 0% card. If you do transfer the balance from one card to the next your payment plan does not change. DISCIPLINE! You must make the same extra payment towards your new 0% card but now the entire payment goes to the principal. Take the card that just got payed off and lock it away. Do not add any more debt to your new 0% rate card. Lock your new 0% card away as well. Plan ahead for the next balance transfer. Write it on a calender, put a note under the hood of your supra. Discipline!

Before you transfer or if you have no offers for balance transfers call your credit card company and try to bluff them. Ask your card company what the procedure will be to transfer your balance to the new card. They might call your bluff or they might not. Many times the credit card companies will lower your interest rate or match the other cards plan to keep you as a customer.

Some might tell you that opening more lines of credit will lower your credit score. Roughly your better off having less credit cards with higher lines of credit limits for each card. Try to consolidate your debts and close the credit cards that have low lines of credit.

Make sure you raise your credit score during this time of economic crisis. When the banks and institutions loosen the hold back on credit they will be tripping over each other to give credit (low interests and perks) to credit worthy customers.

Discipline yourself and use your head not your emotions.

 

[IJ.]

1 card (got it late in life as I didn't/don't believe in credit) I use it like a debit card and just transfer $ from my savings account to cover all purchases the day I make them.

0 interest paid on that card for as long as I've had it.

I see far too many people get in the shit putting things on plastic they could have waited for, these days it's all instant gratification.

 

[Clueless]

1 card (got it late in life as I didn't/don't believe in credit) I use it like a debit card and just transfer $ from my savings account to cover all purchases the day I make them.

0 interest paid on that card for as long as I've had it.

I see far too many people get in the shit putting things on plastic they could have waited for, these days it's all instant gratification.

I've been waiting since before jan to get my mk3 on the road...now if I just had me a credit card.

 

[iwannadie]

I have a perfect credit history, I used my family as an example what Not to do. Its sad how people get a magic card and just max it out the first month. They go on to make the min. payment with no thought to how long it will take to pay off the debt.

I know a bunch of people who get hooked into those 0% offers(bestbuy and plasma tvs!) only to find a year later they are paying some 20-30%. The idea of paying $11,000++ for a $2,000 Tv is just sad to me but its happening.

I do believe you have to have credit and have a good credit score. People argue all the time they dont need or want any credit/debt. I think thats a mistake to have none at all. I moved a few years ago and the Gf wanted to put some bills in her name, they all wanted Huge deposits because she has no credit history. I put my name on them and suddenly no deposits needed, that made moving a whole lot cheaper and easier.

Having a good long standing history with a credit card company really helps with online shopping too. Places like paypal dont care about you once they have your money, your CC company wants your business and will do whats right for you(usually). I like having a CC when traveling too. You can rent cars(I still havent seen places that rent without them?), if an emergency comes up your not trying to contact your bank/family to wire transfer money etc.

Having a $1,000 emergency fund for anything that might come up is a great idea. Having a CC to back that up helps alot as well. If something comes up and you have no credit and NEED money right away a bank loan will rape you on interest if you get it at all without hassling someone for a co-sign. Im not sure how many people can say they will never be in an emergency situation and need money while having zero in a savings account. Maybe Im just unlucky and dont have family/friends to go to, so I have amex/visa as my piece of mind backup source.

Whatever I put on my credit cards I make sure I have the money in my Checking to pay it off instantly if need be. I dont like charging stuff I would need to dip into savings to cover. I started out on a prepaid $500 visa through my bank and now 10 years later still with them they treat me great, keep lowering the rates over time. I got in with capital one and hated them, horrible customer service so I went to amex and been with them a few years, no problems.

/opinions

 

[Clueless]

I'm stuck in my own little rut...I don't have established credit, can't get a credit card, and parents are 6 figures in medical bills. My grandparents can't help cause w/e and my rich uncle and aunt are the type who believes in doing things yourself. I want to buy a house or land at least but I need a co-signer for anything that needs/requires financing. Last job of mine, I've been loyal for 4 years, current job it's been 2.5 years... :1zhelp:

 

[iwannadie]

I'm stuck in my own little rut...I don't have established credit, can't get a credit card, and parents are 6 figures in medical bills. My grandparents can't help cause w/e and my rich uncle and aunt are the type who believes in doing things yourself. I want to buy a house or land at least but I need a co-signer for anything that needs/requires financing. Last job of mine, I've been loyal for 4 years, current job it's been 2.5 years... :1zhelp:

Pre-paid credit card, establish you can handle it, dont miss payments and dont max it out. Do that for 6-12 months then go back to your bank and ask for a real line of credit. Other things like cell phones, cable, utility bills all help too from what I understand. If you never miss payments those will all work towards your favor.

 

[Clueless]

Pre-paid credit card, establish you can handle it, dont miss payments and dont max it out. Do that for 6-12 months then go back to your bank and ask for a real line of credit. Other things like cell phones, cable, utility bills all help too from what I understand. If you never miss payments those will all work towards your favor.

I've been told that cell phones and cable doesn't help, but utility bills might.

 

[trucker]

Start with your highest interest rate debt, and make the largest payments possible, then the next, then the next.

May i offer an alternative here?

Like i pointed out in DT's thread, personl finance is 80% personal, 20% finance.How about instead of starting with the highest interest, why not start with the lowest balance?

Here is why i say this.

On my fidge at the house, i have a "kill" list of all my debt.It provides a small moral Victory to be able to put that big red x thru an account when you pay it off.I know in my head that it isn't 'correct' thing to do math-wise. But you get stoked to see accounts that you have eliminated from your life dead on the list.

Besides the mentality of this way, you now have the money you used to be making on those payments to throw at the next debt, making it disappear even quicker.Then there are now two payments you can throw at the next debt, and so on.It's not really about the math, it's about taking control of your life, and seeing results quickly.

Every week every penny of my check has a name befor any money is spent, and it goes in this order, every time.

food
child support
utilities
communication
insurance
house payment
transportation
debt reduction
play

i go down the list every week, and pay these "accounts" in the order that they appear.If i have a shitty week, i gotta eat, and that's covered.Everything else can wait a week.Then after i eat, child support.then if and only if i get those done, i pay the light bill.and so on, and so on. it'll take em a few weeks to turn the lights off if all i can do is eat, that gives me time to work on them. You see the pattern i think.

that is my tactic...here is my long term strategy.

1000 dollar emergency fund
An intense no holds barred debt reduction plan that i have described already
6-12 month emergency fund, saved as intensely as debt was paid.
if you have no debt, that ammount was smaller than it was a year ago
15-25% of your gross income invested for retirement
once you are at this level,
Throwing everything into paying off your mortgage

Once paid off, the old house payment goes into your retirement/investment portfolio as well

when you rinvestments make more per year than you make working...you win! go play shuffle board on a cruise ship somewhere.



These ideas are not entirely my own, some of them i have seen in the Ramsey book i have mentioned before, and i have seen similiar plans laid out in religious writings, from faiths like the baptists, and mormons....

 

[Supracentral]

I'm stuck in my own little rut...I don't have established credit, can't get a credit card, and parents are 6 figures in medical bills. My grandparents can't help cause w/e and my rich uncle and aunt are the type who believes in doing things yourself. I want to buy a house or land at least but I need a co-signer for anything that needs/requires financing. Last job of mine, I've been loyal for 4 years, current job it's been 2.5 years... :1zhelp:

Pre-paid credit card, establish you can handle it, dont miss payments and dont max it out. Do that for 6-12 months then go back to your bank and ask for a real line of credit. Other things like cell phones, cable, utility bills all help too from what I understand. If you never miss payments those will all work towards your favor.

This helps. Start small, establish good history, there's really no other way. All the "quick credit fix" schemes I've seen are scams, illegal or both.

May i offer an alternative here?

Of course.

Like i pointed out in DT's thread, personl finance is 80% personal, 20% finance.How about instead of starting with the highest interest, why not start with the lowest balance?

It's a valid approach, it all depends on the reasoning.

Here is why i say this.

On my fidge at the house, i have a "kill" list of all my debt.It provides a small moral Victory to be able to put that big red x thru an account when you pay it off.I know in my head that it isn't 'correct' thing to do math-wise. But you get stoked to see accounts that you have eliminated from your life dead on the list.

Besides the mentality of this way, you now have the money you used to be making on those payments to throw at the next debt, making it disappear even quicker.Then there are now two payments you can throw at the next debt, and so on.It's not really about the math, it's about taking control of your life, and seeing results quickly.

Whatever works for you. I go for the highest rate debt as that's the one that's costing the most over time. If the little moral victories make it easier for you to do this, and make you feel like you've accomplished something, that's a valid tradeoff.

Every week every penny of my check has a name befor any money is spent, and it goes in this order, every time.

food
child support
utilities
communication
insurance
house payment
transportation
debt reduction
play

Good prioritization, I might shuffle a few around, but you've got a plan, and that's a better than most.

i go down the list every week, and pay these "accounts" in the order that they appear.If i have a shitty week, i gotta eat, and that's covered.Everything else can wait a week.Then after i eat, child support.then if and only if i get those done, i pay the light bill.and so on, and so on. it'll take em a few weeks to turn the lights off if all i can do is eat, that gives me time to work on them. You see the pattern i think.

that is my tactic...

Like I said, whatever works for you. However I'd suggest every once in a while you move play up the list, on a rare occasion, so you get something too. All work and no play can really wear you down.

long term strategy
1000 dollar emergency fund
An intense no holds barred debt reduction plan that i have described already
6-12 month emergency fund, saved as intensely as debt was paid.
if you have no debt, that amount was smaller than it was a year ago
15-25% of your gross income invested for retirement
once you are at this level,
Throwing everything into paying off your mortgage

Once paid off, the old house payment goes into your retirement/investment portfolio as well

when you rinvestments make more per year than you make working...you win! go play shuffle board on a cruise ship somewhere.

Good approach. It's a hell of a lot better than most people have, and if you stick to it, you'll retire well.

These ideas are not entirely my own, some of them i have seen in the Ramsey book i have mentioned before, and i have seen similiar plans laid out in religious writings, from faiths like the baptists, and mormons....

Successful capitalism isn't rocket science, and, as you said, it's been covered by a lot of different people. Too many people walk around like a leaf in the wind, just letting life blow them wherever it takes them. Taking control is far more important than the details. Just doing it is worth a lot. Doing it well (like the plan above) is worth a lot more.

 

[flight doc89]

Here's my biggest tip on credit card use: put your credit card(s) in a checkbook. Treat it just like a checking acct and write down every purchase in the register.

I Currently have a 3300 credit balance on my Visa, but it is on a 12month zero interest acct. I make $400 monthly payments and this baby will be paid off with time to spare. I've never paid interest and I don't intend to. You know where that card is every day? Inside an envelope pinned to corkboard in my kitchen (it is for business use only)

My Mastercard credit card is for Sam's Club and for occasional use to buy food when I'm waiting on a paycheck to clear (Sam's doesn't take Visa credit cards, so i need this one primarily for business use in case I go to sam's), otherwise it stays in the back of my checkbook. 99% of living expenses come direct from checking.

Buy one of those dry-erase calender boards and put it in your kitchen or wherever and mark down balances and statement/due dates. Mine doesn't have a month or weekdays on it, i just write down important days of the month. Put any debts/expenses in sight; the more you look at them, the more you'll think about them when you are deciding what you wanna do with your cash.

 

[Supracentral]

Here's my biggest tip on credit card use: put your credit card(s) in a checkbook. Treat it just like a checking acct and write down every purchase in the register.
<snip>
Buy one of those dry-erase calender boards and put it in your kitchen or ...

Or use a piece of software like Quicken (that's what Theresa and I use) - you can even download transactions into it, set reminders, schedule payments, etc.

 

[irocznissan]

gotta say that this is prob one of the best threads out there. i am 21 and i am a fiancial advisor. credit is bad but good if u can handle it. U actually need credit. they reel u in knowing ur young and pretty much rapes u in a dark alley. but if people would educate u early u can really piss the credit companies off. not gonna use any companies names but "whats is your wallet" charges u to have the card. "so im not using the card but paying for it to take up space in my wallet?" YES!!!! watch out for that.

get cards with limits u can cope with when ur young its a great way to not only build credit but disipline. if u have a 300$ card for ur first card and your makin 10 bux an hour and workin 30 hours a week due to school. thats 300 bux a week (no tax) lets say u want that aem tru boost thats 275 from me. u just spent most of one weeks pay. do u think an 18yr old is gonna take their check and pay a bill off in one shot. NOPE!!! "hmmm i can pay 50 bux a month and be good" looks tempting huh. "man my payment went down next month, i can really fix my bhg cuz i overboost with the tru boost now" oh man....

well my point is that i doubt they make an "understanding credit" ps3 game thats why schools, parents friends and yes forums need to educate eachother. a good friend told me "everybody is dumb when it comes to what they dont know"

 

[iwannadie]

Here's my biggest tip on credit card use: put your credit card(s) in a checkbook. Treat it just like a checking acct and write down every purchase in the register.

Ive had my checking account for over 11 years, never once owned a check book. Never wrote out a single check either, I hate checks and never saw the need for them. Debt card for everything ;p

 

[Shytheed Dumas]

I've been told that cell phones and cable doesn't help, but utility bills might.

Not quite. I've been helping my step daughter look into buying her first place; a cheapish condo with a second bedroom she could rent. Since she is in the same situation as you, I personally spoke with a real estate friend and one of his trusted mortgage people. She told me that credit cards are definitely NOT required by the right lenders. It's called 'manual underwriting', and she said the requirement is at least 3 bills, paid on time or early every single month for one year, minimum and a letter of recommendation from whoever you pay the bills to. Who counts? I do as her current 'landlord' (yes, around here an adult 'child' pays rent ). Our insurance company since she has paid her own insurance for the past 4 - 5 years, even though she's covered under our combined policy. And now the cell phone she just put in her name, complete with $150 security deposit since she has no credit.

That amount of 'credit' history qualifies her for the best rates available, and that came straight from a lender, herself. I didn't get to her this way, but I know Dave Ramsey's website lists his "ELP's" in various areas and might help you find a lender who will do manual underwriting.

 

[Clueless]

Not quite. I've been helping my step daughter look into buying her first place; a cheapish condo with a second bedroom she could rent. Since she is in the same situation as you, I personally spoke with a real estate friend and one of his trusted mortgage people. She told me that credit cards are definitely NOT required by the right lenders. It's called 'manual underwriting', and she said the requirement is at least 3 bills, paid on time or early every single month for one year, minimum and a letter of recommendation from whoever you pay the bills to. Who counts? I do as her current 'landlord' (yes, around here an adult 'child' pays rent ). Our insurance company since she has paid her own insurance for the past 4 - 5 years, even though she's covered under our combined policy. And now the cell phone she just put in her name, complete with $150 security deposit since she has no credit.

That amount of 'credit' history qualifies her for the best rates available, and that came straight from a lender, herself. I didn't get to her this way, but I know Dave Ramsey's website lists his "ELP's" in various areas and might help you find a lender who will do manual underwriting.

good news for once!! Mind if I nag you for any question I might/may have? :icon_bigg

 

[Shytheed Dumas]

Nag away. Shoot me a PM any time or catch me at the meet on the 2nd.