This financial guy is my dh's hero I think. Dh has been talking about his ideas for a year now adn all I hear is blah blah blah. I hate finances. Dh loves them. the man is seriously deprived if we don't get any bills in the mail (I am not kidding). Anyway, I have finally agreed to do this program and I'm interested to know if anyone here is doing it. Basically, it is a system that is completely debt-free. Never ever buy on credit ( a house is the only ezception and then only at 15 yr mortagage). Also he has baby steps. i can't remember what they alla re but here are some:
1. Save 1000.00 for a shor-term emergency.
2. Pay off ALL debt including car (cut up credit cards)
3. Save 10,000 $ in a long-term emergency fund (more if your dh's job is not stable- 6 mo of expenses in that case)
4. I think #4 is to pay off your mortgage.
Anyway. Dh has ben working on this without my help and he has done really well. i feel guilty for being so negative about it- I just hate to be so dang focused on money.
We have #1 done and are almost done with # 2. We have no CC and we have been chugging away at the van payments. If dh can keep his job (another long story) then we will have the van paid in 5 mo. That is by making over double payments on it! He has made out a detailed plan on getting # 3 done. We will have 6 mo of our expenses in a savings fund in 20 mo, from the time we pay off the van. Whew. i am exhausted thinking about it! I feel like I have to put my life on hold for 2 more years so we can follow some system. Does anyone else have problems going alnog with finacial plans? We have been living with a budget for a while now...I am just now getting to where it doesn't make me mad to even hear the word budget. I have a bad attitude. anyway. Just rambling cause I am bored and lonley and was curious if anyone else knew of this plan.
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We do something kinda like the Dave Ramsey Program. DH only makes 22k a year, so saving 10k is a big feat... We save about 10-20 a week (pay yourself first) and we use the "snowball" method on the bills. Pay the smallest bill off first, and snowball that payment with the minimum on the next smallest, and so on and so forth. It's worked very well for us. This month we will pay off our car (gift from family), and two credit cards, leaving us with only one credit card, our mortage, and a home equity line of credit. I'm really starting to feel good about our situation! Finally picking up the pieces. We finally broke down and applied for food stamps, too. We were spending about $50 a month on food, and $50 to buy dipes, HBC products, etc. With the foodstamps, we're now able to put that $50 towards bills. I would much rather only put about 5k in a savings account, and use the other to pay off high interest debt, but that's JMO, ya know? That's kinda how we modified it. But we're in a worse situation, because we don't have much in savings. You are a lot better off if an emergency were to arrise! But I totally understand being frustrated with it. BTDT, and still am! lol
I would much rather only put about 5k in a savings account, and use the other to pay off high interest debt...
It is my understanding that you are supposed to have the debt pais off before the 5K in savings. that just 1K first, then debt. I could be wrong though. I will ask dh later. he has done some modification as well.
BTW, just curious, do you still have a CC that you use. We actually canceled ours and are using just a debit. i am curious because I am also wondering if anyone who has gone completely credit card free has ever run into probs. Dh says there is no way we can since we have our savings and any emergency debit (like a car prob while traveling) will just be deducted from that account. It makes me nervous though not having a credit card AT ALL.
It has been a REALLY long time since I have read his book, but I THINK it was first save 6 months worth of pay, in case somebody lost a job or a medical leave, or something of that nature, then pay off debt. Then a second savings. I had checked it out of the library, so I don't even have it to refer to now.
As far as the credit card aspect, We do keep one credit card. If you have good self-control, it is a good idea to. Reason being, when/if you reserve a room/car/etc., those funds are put on hold from your account. So, if you use a debit card, they reserve that amount in your account, you can't use it. So it acts likes it's been debited, even though it hasn't. I have bounced checks because of this, it is NOT pleasant. Everytime you pay at the pump for gas you know how it "pre-authorizes" before it will reset? It does the same thing. Same with restaurants. When they run your card, they usually "pre-authorize" up to $10 extra, so there is money for a tip if they customer wants to leave one. These really add up. I just like to keep reservations on credit cards so that I don't have to worry about a "hold" on money in my checking that I need for other things!
Make sure you check into what your bank charges for any "emergency" debits... My bank will withdraw money from my savings to cover any extra charges to my account, BUT they charge a 29.95 fee each time they do it! So while it SOUNDS good that you have savings "just in case" the 29.95 fee is a real kicker, especially since it's the same amount as the overdraw fee.
Dave Ramsey is one of my personal finance heros too. The first baby step is to save up $1,000 an emergency fund and then focus on paying off your debt. The $1,000 is so that if something unexpected comes up, you won't need to keep falling back on the credit cards. We had just finished the first step one a month ago and then the heater in DH's truck went out and we discovered tonight that our toliet had a crack all the way down the tank and we had to replace it. So there goes our emergency fund. But we can repay it after we get our tax return. Anyways, here's a list of the baby steps for those who are interested:
Originally posted by maryalene The first baby step is to save up $1,000 an emergency fund and then focus on paying off your debt. The $1,000 is so that if something unexpected comes up, you won't need to keep falling back on the credit cards.
Wow, good thing you had that money! Thanks for the link, what I was thinking of was definitely the big savings then. Makes a lot more sense only $1000.
OMG, I think this guy is my new hero. I just went to our library link and put all his books on hold. I guess he's popular cuz they were all out.
I'm going to discuss this with dh. I've been trying to talk dh into selling the house and renting until I'm done with nursing school. This would pay off all our debts plus give us about 30K into savings. He was open to it.
Originally posted by MamaWolf Wow, good thing you had that money! Thanks for the link, what I was thinking of was definitely the big savings then. Makes a lot more sense only $1000.
Yea, that's what I keep telling myself, but it really hurts to drain that account. Thank goodness it is tax time!
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Cool! I was just wondering whether I should drain my account constantly to try to pay off the cc, or save up a cushion first. My thought has always been, why pay $30/mo in finance charges so money can sit in the bank just in case. But it has contributed to putting *more* on the card rather than getting them paid off...I can see how $1000 in the bank would prevent that.
That is what we will do w/our tax return. I hope it is that much at least.
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Okay, I pulled out my books to see where in the world I came up with saving 10k first... It's from Mary Hunt's Book, Debt Proof Living. She says to save 10% (pay yourself first) of income every week in a "contingency fund" and keep adding until it gets to 10k. However, that is while at the same time doing the Rapid Debt Repayment Plan (Dave Ramsey's Snowballing technique essentially putting any extra overtime/bonus/refunds to it). Knew I saw it someplace! She also says to keep a Freedom Account for intermittent expenses like Car Insurance, car repairs/maintanence, etc. I like Dave Ramsey's better, though. I think Mary's version of a freedom account is something that should be set aside as a normal "monthly bill". You know it's coming, might as well save a little aside each month for it.
Everytime you pay at the pump for gas you know how it "pre-authorizes" before it will reset? It does the same thing. Same with restaurants. When they run your card, they usually "pre-authorize" up to $10 extra, so there is money for a tip if they customer wants to leave one. These really add up. I just like to keep reservations on credit cards so that I don't have to worry about a "hold" on money in my checking that I need for other things!
The first baby step is to save up $1,000 an emergency fund and then focus on paying off your debt. The $1,000 is so that if something unexpected comes up, you won't need to keep falling back on the credit cards. We had just finished the first step one a month ago and then the heater in DH's truck went out and we discovered tonight that our toliet had a crack all the way down the tank and we had to replace it. So there goes our emergency fund. 
But we can repay it after we get our tax return. Anyways, here's a list of the baby steps for those who are interested:
Thanks for the link, what I was thinking of was definitely the big savings then. 
Makes a lot more sense only $1000.
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