Yay for me....the balance on my Lowe's card should be paid off within in the next week...ahh...sweet relief. Thanks to Rick's year-end bonus, this is our 2nd credit card to be paid off. 3 more to go and 2 car loans- feels like it's taking so long but obviously we're making progress!
Viewing the 'Debt' Category
Yes, I mean Dave Ramsey. If you're reading blogs about debt I'm going to assume you may have already heard of him. But for those who have not, Dave Ramsey is a financial author, tv host (his show is on Fox Business News channel) and motivational speaker of sorts.
Ok before you judge me too much, it's not a cult or some fad. I get it, he's an entertaining TV personality. However, as I've mentionned before, I have spent months researching debt reduction strategies, I've read every blog, watched every personal finance show on TV. What I like about him is that he went through financial ruin and came out alive. He knows what he speaks!
Dave's approach is mostly common sense, with some direction and strategy put to it. He doesn't believe in credit cards AT ALL and he gives a good, do-able approach to getting rid of the debt.
So hubby & I are taking his approach in our journey. Before getting our emergency savings started, or saving for a home, or retirement, we are getting rid of the debt first. It's not wrong to do all the above at once, but I agree with Dave in that if you try to spread your efforts around, the results maybe be weaker. When I look at the interest rate I'm paying for these dang credit cards...I don't want to spend a minute longer than I have to paying for them! What's the point of saving for retirement (at say, an estimated annual 8% stock market return), when I'm paying minimum payments on credit cards with a 22.99% interest rate? I'm still losing money.
Check out the "Credit Card Interest Calculator" at www.consumercredit.com. All you need is the basic info from your credit card statement (balance, APR, minimum payment amount). Plug in and voila! It gives you the staggering news of how long you will be paying that credit card and how much in interest you will pay. It's a sobering exercise.
I feel it necessary to expound a little of my husband's & my family background, so you'll know a little about how our money habits formed.
When I was growing up my parents were the epitomy of the financially saavy. My dad was the sole bread-winner and worked for the same company for almost 35 years (it's pretty much unheard of these days). He never had a car payment & saved regularly. My parents were fairly frugal but saved for what they wanted- they lived within their means! I would get an allowance growing up and worked summers every year. But when I got out on my own, I didn't really understand interest from credit cards, how mortgages work, or how important credit scores were. I couldn't fault my parents for not explaining car loans...they had never had one! Good for them...but a little bad for me. I think I was naive when I set off to college & started getting tons of attractive credit card offers!
My dear husband...his family was a little on the opposite spectrum. His parents had credit cards and car loans, but they worked really hard to pay for everything. They spend a lot of money on their kids, because that was their way of showing love. When his mom was laid off from her prestigous job they ended up in financial ruin, with no savings, nothing. Hubby grew up without being taught much about personal finance either. He moved out on his own after high school, but like me, didn't know much about retirement, savings etc....
This post isn't a blame game! Hey, we're parents and none of us are perfect! As a parent, it's hard to teach your kids something you may not fully understand yourself. Or maybe you just assume your kids "know" that it's good to save $. Or sometimes if you've made a mistake, it's just plain embarrassing to explain it to your kids of all people.
If I can get on my soap box for a minute, I can't think of anything more important to learn in school than personal finance. I look back on those 4 years of French classes that I took and think hmm....if that had been a Money 101 class...would the last 10 years have been different?
I know, how can nickles and dimes amount to a lot of debt? I don't know how, I just know it does. Hubby and I have no really expensive hobbies or vices, no smoking, no drinking, we don't really collect anything. Geez, we don't even travel! We should have debt from amazing adventures, but sadly not.... We have almost $20,000 of credit card debt from "stuff". Granted, a bunch of it is for hubby's small business-related expenses, but much of is just the pissings of family togetherness.
Mexican restaurants, lattes, energy drinks, snacks for the school parties, gas, groceries, blah, blah. All things that we should have BUDGETED for but never did. When you swipe the 'ol plastic devil, you've sold your soul to him. Everytime we'd think, oh it's only a couple dollars, or, I deserve it- I worked really hard this week! It's so easy to rationalize things.
For a good period of time last year, our job situations were changing and in peril. Depression & anxiety were an every day occurrance. As immature as it was, we got a case of the "f*** its". When you don't know where the next paycheck is coming from, you start to think, who cares what I buy now, I'll never get out of this debt! We were the loudest guests at our own self-pity party.
Now begins the embarrassing disclosure of who my creditors are and what I owe them for. I'd love to say that all of my debt is from student loans because hey, who can blame a girl for wanting an education. But no, sadly NONE of it is from student loans. My financially savy parents paid for my college education (Note to self: write Congress and tell them that FINANCIAL education should be a regular part of high school and colleges).
About 1/2 of my debt is for 2 car loans. Get this- for any of you feeling down on your financial pitfalls, this next tidbit should make you feel a financial God. Two years ago my husband & I traded in 2 cars for ONE car, creating a mountain of negative equity and a lovely monthly payment of about $461. Wow, you must be thinking, that woman must be driving a hell of cool ride. No, it's a 2007 Dodge Caravan. That I bought for $30,000. That should have been bought for like $15,000, except for that little thing called negative equity.
I still look back on that and think....what in the heck!!??? I had 2 cars before that I couldn't afford the payments on, so I traded it in for the one car, which resulted in 1 payment, lower than 2 separate ones. And at 0% interest...that may be the only silver lining.
We've been paying on it for about 2 years and still owe $18,000. Why don't we sell it you ask? God bless, I wish I could. It's only worth about $6,000 right now. Oh yes, hubby and I have learned the extreme hard way, that cars loans are MUCH easier to get into, than to get out of. I'd take a beater car in day of the week....
Oh yeah, my husband has a little pick up truck that we owe about $4,000 on. It can't fit the whole family in it, and it's a stickshift which can be a pain in the rear when you're in traffic...but the story behind that is for another day.
Onward and upward, there's no way out of this loan, so it's a part of my debt and I will drive the car until it dies.
I don't know if this blog will see many eyes, but if nothing else I want to journal my family's experience of getting out of debt. We're the typical suburban family- we have 2 kids, we both work, and we've accumulated a lot of debt, without much to show for it.
My husband and I are in our early 30's. We've been married for a little over 10 years, and amazingly enough in that time, never developed a good financial plan or "budget". Over this time we've had all sorts of changes...one of us working, both of us working, working commission-only jobs, any scenerio you name it. A few years ago we were doing really well by all accounts. We would buy a small house, live in it, renovate it, and flip it. We'd put all the money we made from it into...another house! A few years ago we put money into a house that was potentially a great flip, but it was sort of large, "sort" of beyond our means, and definitely a money pit. Fast forward 2 years- we lost money on the flip (ahhh....didn't we all love the bubble of 2008?), we moved into a small rental home, and we're faced with $45,000 of debt.
I will be blogging for fun, for accountibility, and for, well, inspiration for anyone else in this situation who stumbles upon my little story.