How about another Debt is Killing me post?
DravenStone
about two years ago (to the tune of 10K out of the blue) which also
ended up on CC's. Here I am 33 married with a son and a decent job.
Between my wife and I we actually pull in a decent income, though
nothing spectacular.
44K is what we are carrying in CC debt! This does not include the low
interest student loans for both of our degrees AND her masters, but
those payments are not killers and the interest is low. The CC debt is
just a nightmare.
For the last two years we have not charged ANYTHING, I have one card
that I keep in my wallet in case something goes very very wrong
somewhere but if we buy it, it comes from the debit card not the DEBT
card, so that is under control. Fortunately, we've had no major
emergencies, since we have no savings.
Also have two car loans, each with payments to be made, they are both
"cheap" but reliable cars, and in another 18 and 22 months respectively
these will be paid off and we will have another $600 a month we don't
have to pay out. I hesitate to sell the cars to get out from under the
payment as in a relatively short time they will be paid off and will
have reliable transportation for a number of years. Further I doubt we
would get enough over the loan balance to purchase particularly
reliable used vehicles with cash (though I am certain we are not upside
down on either of them), so I *think* this is the correct call.
I put 5% of my salary in my 401K every month, and get some matching
from my employer, she does the same, so my LONG TERM outlook is decent.
I suspect in another 2-3 years or so, with the car payments gone the CC
debt will start to go down and sooner or later we will get out. I admit
I'm just getting tired of it. Two years ago we made drastic changes in
our life to stop buying like we made 6 figures. I can't remember the
last time we went out to dinner but every month everything that comes
in, goes out again. I take heart in the fact that the 401K is building
up, and that we are still relatively young. But I just can't help
feeling that if it wasn't for this freaking debt we accumulated when we
were silly and younger that we would really be a LOT more comfortable.
I know two years is nothing, considering the debt took 10 to build, but
I still must ask....
What to do? There is not a single "blemish" on either of our credit
reports, just maxed out CC's. We have bought and sold two homes, and
never (ever) missed a payment on anything. Currently we are renting at
a very reasonable rate. I hesitate to buy a home now as I may be
transferred (AGAIN!) in another couple of years and I'm sick of going
through the buy and sell routine every three years.
It's a long story, sorry about that... I wonder if anyone has any
advice on how to proceed. I transfer to lower interest rates when I
can, but I no longer play the CC switcharoo game every 6 months, as I
just don't have it in me anymore. A second job is out of the question
(I already do 50+ hours a week, and I'm very active in youth activities
in my neighborhood). Aside from winning something that pays 50K
(unfortunately free online poker doesn't pay that :) I just don't see
getting out for another 10 years or so, and that's a long time.
Is debt consolidation via an agency an option I should even consider?
Chapter 13? Anything? Or do I just keep plugging away dollar by dollar
and wait it out?
thanks very much for your thoughts in advance.
-ds
John A. Weeks III
"DravenStone" <chipt...@gmail.com> wrote:
> But I just can't help
> feeling that if it wasn't for this freaking debt we accumulated when we
> were silly and younger that we would really be a LOT more comfortable.
> I know two years is nothing, considering the debt took 10 to build, but
> I still must ask....
You should ask. You are absolutely right...if it wasn't for
bad decisions, you would be far more comfortable. But that is
life. You play the hand you are delt, even if you mess up that
hand.
> What to do? There is not a single "blemish" on either of our credit
> reports, just maxed out CC's. We have bought and sold two homes, and
> never (ever) missed a payment on anything. Currently we are renting at
> a very reasonable rate. I hesitate to buy a home now as I may be
> transferred (AGAIN!) in another couple of years and I'm sick of going
> through the buy and sell routine every three years.
A home is the last thing you need. With that kind of debt load,
you don't have the spare cash to take care of the normal repairs
and upgrades that a home needs. The blessing of a house would
quickly turn into a bigger nightmare.
> It's a long story, sorry about that... I wonder if anyone has any
> advice on how to proceed. I transfer to lower interest rates when I
> can, but I no longer play the CC switcharoo game every 6 months, as I
> just don't have it in me anymore.
Well, you are going to have to continue to play the swtich-a-roo
game a little longer. If you behave, credit card companies might
offer you a 1.9% or 3.9% rate on a balance until that balance is
paid off. That would be a sweet deal compared to the normal
rate.
The bottom line is that you have X amount of debt, and N dollars
of income. You have to maximize the use of those N dollars in
order to pay down the debt. The harder your money works, the
quicker you get out from under this nightmare.
Here are some suggestions:
1) get on a written budget, and track every dollar spent
2) don't spend a dollar unless someone's life is at stake
3) fight or find creative ways to avoid spending every dollar
4) look into car pools and see if you can park one of the cars
5) consider suspending payments to your 401K, other than what
your company matches.
6) ask your wife to become the neighborhood queen of coupons.
Don't buy anything unless you can use a coupon, get it on sale,
get a quantity deal, or get it tax free.
> A second job is out of the question
> (I already do 50+ hours a week, and I'm very active in youth activities
> in my neighborhood).
No, it isn't out of the question. The only asset of value you
have is your time. Every hour you spend doing non-income activities
costs you hundreds of dollars in compound interest. You owe it to
your family to act like a man and put your family first. Other
stuff is important, but no were near as important as your family.
There will be plenty of time later on to do charity work and
volunteer once you get out of debt.
Right now, you need to consider picking up a paper route, delivering
some pizzas, or doing some courier work. And extra $500 or $1000
a month would make a real serious difference right now.
> Aside from winning something that pays 50K
> (unfortunately free online poker doesn't pay that :)
Don't even joke about this. That is fantasy thinking, not something
a rational person considers. Things like this only happen to
Cinderella, a she isn't even a real person.
> I just don't see
> getting out for another 10 years or so, and that's a long time.
> Is debt consolidation via an agency an option I should even consider?
> Chapter 13? Anything? Or do I just keep plugging away dollar by dollar
> and wait it out?
Yeah, but the trick is to plug away harder. Plug like a mad man.
You are kind of in a state of shock over this having woke up and
found that you did this to yourself. You need to face reality,
and start treating this debt like an enemy rather than a family
pet.
I'd suggest picking up the Dave Ramsey book called "Financial
Freedom". Dave has a plan for folks who find themselves in
your situation. The trick is to attack it like you make a
snowball. You start small, and roll the thing downhill. As
you do that, it picks up speed and the snowball grows. In
your case, you pay off the smallest items first. That frees
up cashflow to pay off bigger and bigger debts.
I don't know where you get 10 years from. I think you can
(1) cut $500 in monthly expenses, (2) earn another $500 a
month, (3) sell $500 of stuff on E-bay, (4) raise your income
$500 a month by suspending the 401K, and (5) you have
another $500 a month once your cars are paid off. With your
$500 jump start and $2000 a month, you are looking at less
than 2 years. Granted, 2 years of living like a mad man,
but then again, look at how mad you will be if you wake up
15 years from now and still have this debt hanging over you.
Debt consolidation is out of the question. That is the same as
filing bankruptcy as far as your credit record goes. Doing
bankruptcy will solve your short term problem, but it will screw
you long term. More and more companies are checking your credit
and adjusting fees and terms accordingly. If you have bad credit,
your car insurance will go up, a home will not be possible for at
least 5 years, you may not get future jobs or promotions, and if
you move, every utility is going to want a huge deposit. That
isn't a good plan.
-john-
--
======================================================================
John A. Weeks III 952-432-2708 jo...@johnweeks.com
Newave Communications http://www.johnweeks.com
======================================================================
Ram Samudrala
> In article <1107375407....@l41g2000cwc.googlegroups.com>,
> "DravenStone" <chipt...@gmail.com> wrote:
>> A second job is out of the question
>> (I already do 50+ hours a week, and I'm very active in youth activities
>> in my neighborhood).
> No, it isn't out of the question. The only asset of value you have
> is your time. Every hour you spend doing non-income activities
> costs you hundreds of dollars in compound interest. You owe it to
> your family to act like a man and put your family first. Other
> stuff is important, but no were near as important as your family.
> There will be plenty of time later on to do charity work and
> volunteer once you get out of debt.
I agree with most of John's advice except this one. I think money is
overvalued by humans, and now is the time you should be doing things
you enjoy to do. Who knows, you could die tomorrow, and besides if
you're not happy with your lifestyle, your family won't be either.
Only time I'd suggest John's advice in this specific regard is when
the debt has become such a burden that you feel it significantly
hinders the enjoyment of your other activties, and or is a burden on
people who care about you. It doesn't sound like that from your
post.
A thing you should also consider whether you take my advice or John's
is what will happen to your future income. If your income is going
rise dramatically in the next few years, I'd live with the debt but be
disciplined about adding more.
Also, if your employer is matching the 401K completely, no need to
stop making payments to it.
Also would emphasise (in agreement with John) to avoid debt
consolidation.
I think even without that, you should be out of debt if you follow the
rest of John's plan in 4-5 years.
--Ram
John A. Weeks III
Ram Samudrala <r...@sp1.compbio.washington.edu> wrote:
> John A. Weeks III <jo...@johnweeks.com> wrote:
>
> > In article <1107375407....@l41g2000cwc.googlegroups.com>,
> > "DravenStone" <chipt...@gmail.com> wrote:
>
> >> A second job is out of the question
> >> (I already do 50+ hours a week, and I'm very active in youth activities
> >> in my neighborhood).
>
> > No, it isn't out of the question. The only asset of value you have
> > is your time. Every hour you spend doing non-income activities
> > costs you hundreds of dollars in compound interest. You owe it to
> > your family to act like a man and put your family first. Other
> > stuff is important, but no were near as important as your family.
> > There will be plenty of time later on to do charity work and
> > volunteer once you get out of debt.
>
> I agree with most of John's advice except this one. I think money is
> overvalued by humans, and now is the time you should be doing things
> you enjoy to do. Who knows, you could die tomorrow, and besides if
> you're not happy with your lifestyle, your family won't be either.
I would agree with Ram here, except when it comes to debt. Perhaps
if I elaborate a bit, you can understand where I am coming from.
First off, I think debt sucks the life blood out of a person.
The only thing asset most of us have is time. We trade time for
money. When we pay interest, we are spending irreplaceable time
from the best years of our life, and handing it over to some
blood-sucking finance company that cares nothing about anyone.
I would suggest that this is neither a good financial strategy,
nor is it a way toward fulfillment in life.
Note that when I say debt and interest, I am talking about the
kind that comes from consumption. I have no problem with debt
and interest when it is used for capital goods, which are goods
and services invested in with the intent of turning a profit.
But one needs to have a sound home base built that is debt free
before they start taking flyers on more risky capital ventures
(at least if you have responsibilities to a family and kids).
Second, there is the concept of profit. Most people sell their
time for money. To do that, we need a few pieces of life
infrastructure. That includes a home to live in, utilities, a
car to get to work, money for food & lunch, clothes, etc. We
also have families, so we have to take care of the spouse, provide
healthcare, educate the kids, save for retirrment, etc. When the
average person gets done doing all of that, there is very little
money left over at the end of the month. Lets call this left-over
the monthly "profit" or "free cash". When you add it up over a
year, I would suspect that the typical $50K a year guy ends up
with maybe $2000 a year in profit.
So, if you have $44,000 in credit card debt, and are paying 15%
interest on it, that is like $6500 a year in interest fees. That
means that each year, this person is spending 3 years worth of
profit on interest. Even if this person can pay that debt off
in 3 years, they will still have spent over a decade worth of
everything they earn and all of their profit just to cover that
interest.
So, while it is good to enjoy life when you can, that year of
fun can lead to a decade of indentured service to the finance
company. I don't think anyone would enjoy that.
> Only time I'd suggest John's advice in this specific regard is when
> the debt has become such a burden that you feel it significantly
> hinders the enjoyment of your other activties, and or is a burden on
> people who care about you. It doesn't sound like that from your
> post.
If the original poster was ready to show his dirty underwear in
public for us to pick at, I think you can assume that his debt
has gotten to the point where it is huge burden.
> A thing you should also consider whether you take my advice or John's
> is what will happen to your future income. If your income is going
> rise dramatically in the next few years, I'd live with the debt but be
> disciplined about adding more.
One key factor is how comfortable people are with debt. I have
a friend that runs a business that is capital intensive. He
often invests his house payment money to expand the business,
and then gambles that cash flow will come in soon enough for
him to cover that house payment. He is perfectly happy doing
this since he has a vision for the future. His wife is going
out of her mind each month when she sees the house being put
at risk. He is comfortable with debt, she is not. Neither am
I. I get physically sick and throw up when I am in consumer
debt. For me, life has no enjoyment when I have those clouds
hanging over my head.
Jesse Meyer
> Don't buy anything unless you can use a coupon, get it on sale,
> get a quantity deal, or get it tax free.
I'm going to question the advice on coupons.
I find the savings provided by coupons are marginal, at best.
The savings by shopping certain stores (Big Lots, dollar stores)
gives me more savings than clipping coupons.
I find that a major cost savings is shifting my diet to more
economical foods: rice, beans, potatoes, pasta, etc.
Don't get the wrong impression, I'm not talking about a
college student's diet of ramens -- there is plenty of
good food out there that can be easily made with a crock pot
or pressure cooker.
- Jesse
--
With sufficient thrust, pigs fly just fine. However, this is
not necessarily a good idea. It is hard to be sure where they
are going to land, and it could be dangerous sitting under them
as they fly overhead. -- RFC 1925
herlihyboy
John A. Weeks III wrote:
> I'd suggest picking up the Dave Ramsey book called "Financial
> Freedom". Dave has a plan for folks who find themselves in
> your situation. The trick is to attack it like you make a
> snowball. You start small, and roll the thing downhill. As
> you do that, it picks up speed and the snowball grows. In
> your case, you pay off the smallest items first. That frees
> up cashflow to pay off bigger and bigger debts.
> Yeah, but the trick is to plug away harder. Plug like a mad man.
> You are kind of in a state of shock over this having woke up and
> found that you did this to yourself. You need to face reality,
> and start treating this debt like an enemy rather than a family
> pet.
There are two of his books I would recommend. One is Financial Peace
(I think this is what meant, John). The other, and this is what I
would start with, is called The Total Money Makeover.
DravenStone - I'm not sure what your household income is, but you
mentioned that you and your wife both earn an income, so I'm guessing
you're above the national average of about 40K/year. The budget is a
great place to start. At the least, you'll be able to tell your money
where to go every month instead of it telling you where to go. At
most, you'll hopefully find categories in your budget that need to be
slashed and you'll free up more of your income to attack your CC debt.
Check out Dave Ramsey's books. Also, he's on the radio every day in
many cities across the U.S. Check out his website
http://www.daveramsey.com to get a list of radio stations near you
(provided you're in the U.S.).
Sandra Loosemore
> I find that a major cost savings is shifting my diet to more
> economical foods: rice, beans, potatoes, pasta, etc.
> Don't get the wrong impression, I'm not talking about a
> college student's diet of ramens -- there is plenty of
> good food out there that can be easily made with a crock pot
> or pressure cooker.
Another way to save money on food is to watch out for how much you
spend on incidentals and take-out food. You can save a pile of money
if you simply forget about buying coffee or soft drinks at work (buy
yourself a box of tea bags instead, or drink water). Instead of
spending $3/day at Starbucks, put that money into retiring your debt
instead.
-Sandra
DravenStone
I'll be honest with you when I say I am unlikely to get a second job,
at least anything that takes regular hours, because I really do value
my time with my family. I recognize the point John is making, and it's
not lost on me, but I think it's a decision I can live with.
Last night, my wife and I discussed doing a budget. I've been keeping a
spreadsheet of all the bills I pay every month for the last year or so,
so it should be a simple matter to start collecting what we spend
elsewhere so that can be fine tuned. FWIW, I already bring coffee in a
thermos, make all our meals at home (including lunch for everyone to
bring to work), and shop with some frugality. However, we also believe
in fresh and healthy food, so that costs a tad more... Worth it in my
opinion.
I will head to the library this weekend and check out a few of the
books you all have recommended, was heading there anyway so that won't
be much trouble at all.
Responding generally to the points about being comfortable with debt,
and the fact that in time, it will go away... I am not *uncomfortable*
with debt at all, but I am all to aware of how deeply in we are. That
part is, for lack of a better word, scary. What is nice is that my wife
is a teacher (award winning at that!), and so is almost always
guaranteed a job, and I have a contract that comes as close to a
guarantee of employment that anyone can have in this day and age (I'm
in IT and basically am a line item in a five year contract, that is
just now starting its second year). The 401K is matched to 5%, which is
why I put exactly that into it, and I am looking to the long term
there. I hesitate to pull it out, because I know that I may be
inclined to buy myself a treat if there is any breathing room.
I think ultimately, and I'm just trying to be honest about who I am and
how I live my life, the big win for us will be really getting a handle
on the budget, so we can see exactly where everything is going and cut
out whatever stuff that is not necessary and consciously trying to
attack the debt more so than just trying to pretend it isn't there and
go on making those just over min payments...
I will also start moving CC debt around as I can to save on interest
payments, as I know first hand how effective that can be. That's
basically a restatement of several of Johns suggestions, minus one or
two for realism ;)
Thanks again to you all for some really lucid responses to what I am
sure is the all to typical plight of those who bought into the new
American dream of consumerism as life.
-ds
Andy
>
> It's a long story, sorry about that... I wonder if anyone has any
> advice on how to proceed. I transfer to lower interest rates when I
> can, but I no longer play the CC switcharoo game every 6 months, as I
> just don't have it in me anymore. A second job is out of the question
> (I already do 50+ hours a week, and I'm very active in youth
activities
> in my neighborhood). Aside from winning something that pays 50K
> (unfortunately free online poker doesn't pay that :) I just don't see
> getting out for another 10 years or so, and that's a long time.
> Is debt consolidation via an agency an option I should even consider?
> Chapter 13? Anything? Or do I just keep plugging away dollar by
dollar
> and wait it out?
Although John Weeks has given you some very good advice I am going to
add my two cents for emphasis.
Right now you are like a deer in the headlights. You wandered into the
road of debt by buying things you couldn't afford on credit. Then you
recogized that racking up debt was a bad idea and stopped in your
tracks. Now you are frozen in place, neither incurring more debt nor
really paying it down, while interest expenses bear down on you,
destroying your family's financial future. You need to save yourself
by making a radical turn and running the opposite way; not just
standing there passively watching your financial future get wrecked.
How is your financial future being wrecked? When you are in your
thirties every dollar you spend is, conservatively estimating, costing
you at least three dollars of net worth when you are in your fifties
because with compound interest that dollar would probably have tripled
over 20 years. So, that $10,000 you spend on interest this year is
being paid for by taking $30,000 away from your middle-aged self. Do
that for 10 more years, and you have cost your future 53 year old self
around $300,000. Or, to make it more depressing, your 70 year old self
$900,000.
In other words, by choosing to not aggressively attack your debt now
you are choosing to not be a millionaire when you retire. Is that
really what you want?
If you want to aggressively attack your debt rather than continue
muddling along, you need to forget about consolidating loans and other
gimmicks, and focus on the only recipe that works: Radically cutting
expenses and raising income.
Most middle-class people have trouble seeing the huge amounts they
spend each month on things that are not essential. People tend to
unconsciously assume that if everyone around them spends money on some
good or service then it must be a necessity. Here is a simple list of
changes you can make that will free up hundreds of dollars each month:
1. Immediately sell the two new cars and buy used cars. New cars are
only for people who can afford them; you can't. All your reasons for
not selling your new cars are rationalizations; they don't make
financial sense.
2. Cut out all meals purchased outside the home, including lunches
while at work.
3. Ditch your cell phones as soon as possible and replace them with
inexpensive pre-paid phones that you only use for emergencies and
family coordination, not chatting with friends and family.
4. Ditch your cable service; its expensive and the time you spend
watching TV should be spent either earning money or interacting with
your family. For entertainment check videos out of the library for
free.
5. Ditch broadband and go to inexpensive dial-up.
6. Lower your thermostat in the winter to 65 and raise it in the summer
to 80.
7. Carpool or take the bus for your commute. Commuting expenses add up.
8. Never ever buy anyhing on impulse. Make it a rule that you only buy
things that were placed on a list while at home.
9. Eliminate soda and snack foods like potato chips from your grocery
shopping. They are expensive.
10. Stop buying CDs, electronic gadgets, furnishings, fashionable
clothes.
Andy
BMS
you save 20-30% of your bill.
I figure ittakes me 20-30 minutes to clip and write a shopping list and it
will save me $25- 35 per week.
Elizabeth Richardson
> If you clip coupons and combine them with proper planning before you shop,
> you save 20-30% of your bill.
>
I see coupons on name brand items only, so clipping coupons wouldn't do a
good shopper much good. Buy the store brand on a regular basis and you'll
save a bundle. Watch sales, though, and don't be afraid to buy something not
on your list if its something you use frequently and its an unadvertised
special - stock up on these items. It's important to know the usual price of
the things you buy frequently.
Elizabeth Richardson
Elizabeth Richardson
"Andy" <idontcheck...@yahoo.com> wrote in message
news:1107441800....@o13g2000cwo.googlegroups.com...
>
> 1. Immediately sell the two new cars and buy used cars. New cars are
> only for people who can afford them; you can't. All your reasons for
> not selling your new cars are rationalizations; they don't make
> financial sense.
>
They already have used cars. They may have been new when purchased, but as
the loans have less than 2 years to go, the cars are now used cars. These
are cars the OP has a history with, the cars have been driven according to
their needs, and will likely serve them well.
I respect the many thoughtful posts on this thread. I might observe, though,
that the OP didn't say he was unable to make any of the debt payments, nor
did he say he was making the minimum payment on the CCard debt. This family
sounds very much like the sort you'd want living next door: pays the bills,
involved in the community, cares about the society in which they live. I
think they just need a little encouragement to try to carve out a bit more
cash from their budget and plow every dime possible into paying off the debt
as quickly as possible. The best advice I saw was for them to continue to
switch to low interest cards. I hope this poster will get back to tell us
his success story.
Elizabeth Richardson
pat
www.cheapskatemonthly.com.
she is the best in the country at planning debt reduction
Will Trice
Andy wrote:
> 8. Never ever buy anyhing on impulse. Make it a rule that you only buy
> things that were placed on a list while at home.
Andy,
This is a really slick suggestion. I haven't seen this one before, but
this is a great psychological crutch for those impulse buyers.
Good one,
-Will
Brent D. Gardner, ChFC
news:n7mdnXhOiuF...@comcast.com...
I watched a woman in front of me in the grocery store buy an overfilled
buggy of food. Her total outlay was $77.
Her cash savings, from coupons (at double discount), was $90.
She even got a raincheck for an item they had run out of, so that her coupon
expiration was extended, and her purchase qualified her for a tank (up to
$32 worth) of gas at 10 cents BELOW market, if she paid at the pump that
week.
The 5% cash back I get using some plastic didn't seem like much, after
watching that. =)
Brent D. Gardner, ChFC
Chartered Financial Consultant
http://www.brentdgardner.com/
http://www.gardnerfinancialgroup.com/
http://www.topgunproducers.com/
http://www.creditfixinc.com/
Si vis pacem para bellum!
"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships
The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
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signify the highest standards of academic study and professional excellence
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Vincent
>There are two of his books I would recommend. One is Financial Peace
>(I think this is what meant, John). The other, and this is what I
>would start with, is called The Total Money Makeover.
I agree and would also add John Cummuta`s
Are You Being Seduced Into Debt? : Break Free and Build a Financially
Secure Future
And
Transforming Debt Into Wealth by John Cummuta is an extensive guide to
getting completely out of debt. Through his simple-to-follow system for
prioritizing and then paying off every penny of your debt --- in the
shortest possible time, Using the money you already earn!
Vincent
FREE: Reviews, Articles, And Tips On Debt Elimination!
http://www.debt-elimination-program-reviews.com/gg
Andy
> Last night, my wife and I discussed doing a budget. I've been keeping
a
> spreadsheet of all the bills I pay every month for the last year or
so,
> so it should be a simple matter to start collecting what we spend
> elsewhere so that can be fine tuned. FWIW, I already bring coffee in
a
> thermos, make all our meals at home (including lunch for everyone to
> bring to work), and shop with some frugality. However, we also
believe
> in fresh and healthy food, so that costs a tad more... Worth it in my
> opinion.
A little over a year and a half ago a co-worker of mine with two
children and one income (his wife stays at home) told me about his
financial position, which was similar to yours: two car payments,
credit card debt over $15K, and student loans. I gave him the same
advice I have you in my other post (sell the cars, eliminate cable,
etc. etc) and he actually followed it. He sold the cars and got a 1983
Toyota wagon, moved from a rented house to a cheaper apartment, turned
off cable TV, stopped eating out, and put himself and his wife on a
weekly allowance of $50 for all discretionary expenditures (incl
clothing etc). All this allowed them to put about $1500 a month
towards paying down debt. Now they are just 3 months away from being
completely debt free (inlcuding paying off student loans) and they are
very very pleased that they chose to aggressively pay down their debts.
In a few short months they will be able to save $1500 a month and have
no bills other than utilities and rent.
If you could find a way to pay $1500 a month towards your $44K credit
card debt you could have it paid off in 36 months (Assuming 12%
interest rate) with a total interest expense of about $8300. For
comparision, if you pay only $600 a month towards the CC, it will take
11 years to pay it off with a total interest expense of $35,700.
When it comes to budgeting, the expenses that really get you are the
ones that regularly recur on a daily, weekly and monthly basis.
Something that "only" costs $20 a month adds up to $240 a monthly.
Something that "only" costs $2 a day costs $730 a year. If you can
eliminate a monthly expense of $20 and instead apply it towards paying
down your $44,000 credit card debt, that additional $20 a month will
result in you paying the debt off about 9 months earlier (assuming 12%
interest and current payments of $600/mo) and lower your total interest
expense by $2,700. Even eliminating an expense of "only" $10 a month
and applying it towards CC debt paydown moves the debt-free date 5
months earlier.
Andy
norepl...@hotmail.com
DravenStone wrote:
>
> Thanks again to you all for some really lucid responses to what I am
> sure is the all to typical plight of those who bought into the new
> American dream of consumerism as life.
> -ds
extra income helps, not charging things helps, and debit card is a
CHARGE CARD. Have you added up all your debits each month?
My immediate suggestion is to PAY CASH for everything. Groceries, gas,
hair appointments, movies, whatever. You will know exactly what you
spend if you pay cash.
a debit card can trick you into thinking the money is gone immediately
from your account, when the reality is you are spending more than you
budget for things but because no "cash" was involved, it may not appear
as much.
I get paid twice a month and withdraw $240 cash each time I get paid.
This money goes to groceries, gas for two cars and hair appointments
(out budget), the rest stays in the account and my wife asked me where
that $500 came from in November when I gave her momey to spend on x-mas
gifts.
Find a way to pay something off- then use the leftover funds to pay
down other debt. Work hard to pay off the debt with the smallest
balance, then use that money to pay down other debts. This lowers the
amount of time you have to be a "madman" as John Week's suggested and
still helps fix the problem quickly.
Tad Borek
> I'm going to question the advice on coupons.
>
> I find the savings provided by coupons are marginal, at best.
>
> The savings by shopping certain stores (Big Lots, dollar stores)
> gives me more savings than clipping coupons.
When I was a kid my dad had the great idea to let me keep all the money
I could get through coupons, as long as it was for things we already
used at the house. Back then it added up.
I think the basic point here is that you can scrape up a lot of extra
cash with the mind-set that you want to get your life "on sale." It's
not difficult to cut 20-30% out of most day to day spending just by
timing purchases right, avoiding the convenience store, going to the
cheap gas station, not using other-bank ATMs, and if it pays off, yes
clipping coupons. I've given that up but still refuse to buy cereal
unless it's on sale - easily saves an extra couple hundred bucks a year
at SF prices, for essentially doing nothing. And my credit card, I put
everything on it, get a cash rebate at year end. Add a few of those
things together and next thing you know, you've got an IRA contribution.
All that free money sitting around, not many people actually chasing it.
One comment regarding the OP: I can't help but look at that scenario and
see the extra cost of the new cars as being more or less equal to the
entire amount of credit card debt. I think it's worth harping on that. A
new car (or 2 or 3) really seems to be the financial ball & chain of so
many households, but somehow people just keep buying them. There's
nothing else like it really - plunking down $30k for something that does
the same thing a $3k thing can do. No problem if you have the $30k but
of course most people don't. So that really can make a dramatic
difference, going forward anyway. You might not even need to ratchet
back spending all that much on the other stuff.
-Tad
BMS
generic. It is often designed that way to keep product moving off the
shelves. Otherwise the grocer boots it to put something else in.
"Elizabeth Richardson" <eric...@worldnet.att.net> wrote in message
news:W7xMd.1405$Th1...@bgtnsc04-news.ops.worldnet.att.net...
DravenStone
Thanks for your post, it's gives me a chance to clarify some stuff
about our situation, and give some early reaction to the advice we've
been given and how we will proceed.
I'm aware of the huge hole we are in for sure, and there has been some
very great advice here, much of which will definitely impact the next
several years of our life. But it is true that I am willing to make
certain concessions in order to not reduce the quality of life too low.
Some might find this irresponsible, and I am certainly capable of
understanding the argument, and since I asked the question I'm grateful
for the fantastic responses. However I'm inclined to be honest when I
say that some of the measures suggested are just a tad too extreme for
us. While I am looking for ways to actively reduce our debt load, I am
simply unwilling to do it at a *massive* expense to quality of life.
We've already made some substantial changes, which clearly have kept us
from utter financial ruin, a path of destruction we clearly were on.
(see notes about bring own coffee to work, no eating out, NEVER (EVER!)
using credit cards. Fortunately, there still are changes that allow us
to progressively and systematically reduce our debt instead of just
treading water.
Your point about our cars for instance is one that I agree with. Others
have called it a rationalization, but I tend to feel that going ahead
and finishing the loan and owning the reliable (less than 20K each new)
cars is a better LONG TERM move than selling them now and getting a
2500 dollar used car that *could* have more problems over the long haul
then our well maintained current vehicles.
One thing that we did this weekend was look very carefully at our
finances, what's coming in, what's going out, and where the heaviest
interest is. I'm not done crunching the numbers, but in the next few
days I will have a spreadsheet that clearly outlines where the money
should go first and when I can expect to be paying off X & Y and where
the money should go after that.
So the whole budget idea is something I really expect to help us in
both the short and long term. The simple, yet clever, ideas of only
using cash, and only buying things that are on a list at home are both
things we can easily incorporate into our lives to assist with the
every dollar counts philosophy being put into practical application.
Things I won't do is move from our current home to an apartment, the
school district I am in alone saves me 10K year as that was what I used
to pay for private school until we moved into this district and he was
placed in the AP classes with only 6 other students. That's important
to me. I won't cut out little league baseball as the social and
physical attributes far out weight the extra month of debt the 150
bucks represents.
And to speak to a separate point someone else made a few days back. We
are not actively suffering under the weight of the debt. I mean, I do
always know it is there, hence the motivation to make greater headway
into it, but it doesn't keep me up at night, my wife and I don't fight
about it or any of that horrible stuff. We've never (ever) been late on
a payment. Since I was 17 years old, I've not once missed a payment on
anything.
So, I'm hopeful that when we finish crunching numbers on the budget and
make a few more changes to where the money goes out I will see some
light at the end of the tunnel. I think that Elizabeth said it well
when she posited that I was seeking
" a little encouragement to try to carve out a bit more
cash from their budget and plow every dime possible into paying off the
debt
as quickly as possible."
Thanks to all for giving me that. I will indeed update this thread or
at least reference it in a new post somewhere down the line to let any
interested parties now how things are going.
Regards,
-ds
Elle Navorski
speaking, you may very well be better off keeping the cars you have, for
the reasons you give. As they were cheap to begin with, you won't get much
for them used. You know their condition; you won't with a used car you buy
tomorrow. Your current cars are simply a great bargain as is.
Good luck.
"DravenStone" <chipt...@gmail.com> wrote
Ram Samudrala
> In article <ctrnu1$dau$1...@gnus01.u.washington.edu>,
> Ram Samudrala <r...@sp1.compbio.washington.edu> wrote:
>> John A. Weeks III <jo...@johnweeks.com> wrote:
>>
>> > In article <1107375407....@l41g2000cwc.googlegroups.com>,
>> > "DravenStone" <chipt...@gmail.com> wrote:
>>
>> >> A second job is out of the question
>> >> (I already do 50+ hours a week, and I'm very active in youth activities
>> >> in my neighborhood).
>>
>> > No, it isn't out of the question. The only asset of value you have
>> > is your time. Every hour you spend doing non-income activities
>> > costs you hundreds of dollars in compound interest. You owe it to
>> > your family to act like a man and put your family first. Other
>> > stuff is important, but no were near as important as your family.
>> > There will be plenty of time later on to do charity work and
>> > volunteer once you get out of debt.
>>
>> I agree with most of John's advice except this one. I think money is
>> overvalued by humans, and now is the time you should be doing things
>> you enjoy to do. Who knows, you could die tomorrow, and besides if
>> you're not happy with your lifestyle, your family won't be either.
> I would agree with Ram here, except when it comes to debt. Perhaps
> if I elaborate a bit, you can understand where I am coming from.
> First off, I think debt sucks the life blood out of a person.
I totally agree with you. There are many places in the world where the
societies are not structured based on debt (i.e., you pay cash for
everything or don't get it). But America isn't one of them. Your
distinction about consumption-based debt and secured investment debt
is a good one and that's the kind of thing I'm alluding to also when I
say "disciplined debt". However, no matter what, I don't think you
should let debt control your lifestyle, and since I felt the OP could
get out in a reasonable time (3-5 years), a second non-enjoyable job I
think would bite into his happiness. I would be in favour of something
where he turned a hobby into something that also generated income. I
guess that's a fair compromise.
I like everything you wrote BTW. Just a matter of perspective. I'm
more tolerant of people taking a year or two longer to pay off debt
and have a more relaxed, happier lifestyle. The judgement call of
course depends on the individual.
> The only thing asset most of us have is time. We trade time for
> money. When we pay interest, we are spending irreplaceable time
> from the best years of our life, and handing it over to some
> blood-sucking finance company that cares nothing about anyone. I
> would suggest that this is neither a good financial strategy, nor is
> it a way toward fulfillment in life.
It depends--suppose I borrowed $10,000 to travel the world at the age
of 30, and I couldn't pay for it until I was 60. I'd be okay with
that. It's better to do that I think than to be frugal and then travel
at 60. This is where I'm coming from. But it does require a special
situation, one where by the time someone's 60, they do have the
ability to pay off the debt.
> So, if you have $44,000 in credit card debt, and are paying 15%
> interest on it, that is like $6500 a year in interest fees. That
> means that each year, this person is spending 3 years worth of
> profit on interest. Even if this person can pay that debt off
> in 3 years, they will still have spent over a decade worth of
> everything they earn and all of their profit just to cover that
> interest.
If someone's paying 15% interest, I agree you should be a madman in
terms of getting rid of the debt. In today's climate, you can easily
get a 0% temporary rate for 2-3 years or a 1-4% fixed rate for the
life of the balance if your credit is good.
> One key factor is how comfortable people are with debt. I have
> a friend that runs a business that is capital intensive. He
> often invests his house payment money to expand the business,
> and then gambles that cash flow will come in soon enough for
> him to cover that house payment. He is perfectly happy doing
> this since he has a vision for the future. His wife is going
> out of her mind each month when she sees the house being put
> at risk. He is comfortable with debt, she is not. Neither am
> I. I get physically sick and throw up when I am in consumer
> debt. For me, life has no enjoyment when I have those clouds
> hanging over my head.
Yep, so I think the OP has a lot to chew upon between our two sets of
posts. (:
--Ram
======================================= MODERATOR'S COMMENT:
Please trim the post to which you are responding. "Trim" means that except for a few lines to add context, the previous post is deleted.
Ram Samudrala
> Your point about our cars for instance is one that I agree
> with. Others have called it a rationalization, but I tend to feel
> that going ahead and finishing the loan and owning the reliable
> (less than 20K each new) cars is a better LONG TERM move than
> selling them now and getting a 2500 dollar used car that *could*
> have more problems over the long haul then our well maintained
> current vehicles.
Yep. People don't realise that cars (or most things) can be an
"investment" in terms of time and stress. I am one of those people who
never buys things used since I find the hassle of things breaking down
to be detrimental to my well-being (which not only impacts me, but all
people who rely on or use what I do).
We also don't have any real unsecured debt (at least nothing that
can't be paid off at a moment's notice--I can't resist the 0% interest
rate offers) which I've found is good for my well-being also (but when
I was a student I did have a lot but I always knew I could pay it
off). The key here is whether you control the debt or whether debt
controls you. I can tell you some interesting (and personal)
stories--I got my first credit card (an American Express, I still have
it) on my 18th birthday. The representative wished me a happy
birthday. I don't regret my decisions, but I definitely didn't know
what I was getting into. But experience is what leads to wisdom, and
it's a good way to learn some or most lessons in life (as you seem to
have). I've now learnt to use credit cards to maximise their utility
in terms of serving me instead of me paying interest to a financial
institution and not having control.
I wish you the very very best getting out of debt. From your posts, it
doesn't sound too out of control and I think you just expressing it in
the newsgroup is good for you and all the great advice you've gotten
(you can pick choose from all this based on your personal situation)
will serve you well.
--Ram
John A. Weeks III
Ram Samudrala <r...@sp1.compbio.washington.edu> wrote:
> Yep. People don't realise that cars (or most things) can be an
> "investment" in terms of time and stress. I am one of those people who
> never buys things used since I find the hassle of things breaking down
> to be detrimental to my well-being (which not only impacts me, but all
> people who rely on or use what I do).
I don't know if I can think of a new car as an investment. When
you buy a new car, it goes down in value 15% to 20% per year, and
after a few years, it isn't worth squat. I see that more as an
expense.
As far as a new car being less prone to a break down? I don't
know if I can buy that, either. A new car has no track record.
New cars often have all kinds of things go wrong with them, and
some are even lemons. A used car has proven itself, and has
stood the test of time.
I have done something unusual with vehicles...I get the same
make and model every time I buy. I am on my 8th Ford Ranger.
I get a new one ever 3 years, and put 120,000 miles on it.
I have bought some new, some used, and I have leased some
2 and 4 year old Rangers on gap leases. With one exception,
each Ranger has required an average of $600 in non-warranty
repairs. The only exception was the first one--it did not
have a stainless steel exhaust, and the exhaust rotted out
twice on me, so it cost an extra $250 or so. I haven't seen
any different on average between new and used.
Statistics prove this out. The Car Talk guys point this
out in one of their books. You will never, on average, spend
more per month fixing a car than what payments are on a new
car.
As a result, I think it is OK to buy a new car if you can
pay cash. If you have to borrow, then you shouldn't get
a new car. A well maintained used car will do to avoid
taking on excessive debt.
DravenStone
get a 0% temporary rate for 2-3 years or a 1-4% fixed rate for the
life of the balance if your credit is good. "
How about some pointers on how to get this 1-4% fixed rate?
My credit is good, would be absolutely excellent if my debt load wasn't
so high.
Putting everything at even 6% would make a world of difference, and
getting everything consolidated into one loan would be fantastic, but
since I don't own a home I've not found anyone that will give me a 40K
loan at these kind of rates.
thanks,
-dm
SD
> " In today's climate, you can easily
> get a 0% temporary rate for 2-3 years or a 1-4% fixed rate for the
> life of the balance if your credit is good. "
> How about some pointers on how to get this 1-4% fixed rate?
Any credit card you have will send you checks that you can use for the
1-4% rates. Opening many new credit card accounts will get you 0APR with
no balance transfer fees for 6 months to a year (check out citibank,
chase, bankone/firstusa, providian)
norepl...@hotmail.com
and eventually bank the payment in the years we have no payment to pay
cash.
first car in college was financed for 66 months, next car was for 48.
next car will be for a max of 36, we may be able to do less considering
the current payment is complete in May and we won't have need for
another car for about 18 months, repairs willing.
Ram Samudrala
> " In today's climate, you can easily
> get a 0% temporary rate for 2-3 years or a 1-4% fixed rate for the
> life of the balance if your credit is good. "
> How about some pointers on how to get this 1-4% fixed rate? My
> credit is good, would be absolutely excellent if my debt load wasn't
> so high.
What is your credit score? I constantly have gotten offers of this
sort (and I've taken a couple of 0% ones--one until 2007) in the last
few years. My guess is that it'd require a score around 700 (which I
consider to be good).
The problem is that for a good credit score, you should never carry
more than a 50% on a given card. Adding cards gradually doesn't seem
to make a difference: I saw another post somewhere where someone
claimed they had a score of 800 with 24 open accounts (zero balances).
--Ram
Ram Samudrala
> In article <cu9tob$46e$1...@gnus01.u.washington.edu>,
> Ram Samudrala <r...@sp1.compbio.washington.edu> wrote:
>> Yep. People don't realise that cars (or most things) can be an
>> "investment" in terms of time and stress. I am one of those people who
>> never buys things used since I find the hassle of things breaking down
>> to be detrimental to my well-being (which not only impacts me, but all
>> people who rely on or use what I do).
> I don't know if I can think of a new car as an investment. When you
> buy a new car, it goes down in value 15% to 20% per year, and after
> a few years, it isn't worth squat. I see that more as an expense.
> As far as a new car being less prone to a break down? I don't know
> if I can buy that, either. A new car has no track record. New cars
> often have all kinds of things go wrong with them, and some are even
> lemons. A used car has proven itself, and has stood the test of
> time.
This is the part I wouldn't agree with (I could make a converse
argument, but there must be statistics on this for equivalent
models). I could agree with your point below that used car repairs may
cost less over some number of months/years compared to new car
payments. However, I'm saying the hassle isn't worth it, and the
value you get from reduced stress is an investment. We had one car for
a while and we got two: I'd say the value to me in terms of not
thinking so much about our different schedules was worth the expense
of the payment. It freed up some of my time to think more about
science for which I can't place a monetary value, but if I did, it
would be much much much more greater than car payment.
> I have done something unusual with vehicles...I get the same
> make and model every time I buy. I am on my 8th Ford Ranger.
> I get a new one ever 3 years, and put 120,000 miles on it.
> I have bought some new, some used, and I have leased some
> 2 and 4 year old Rangers on gap leases. With one exception,
> each Ranger has required an average of $600 in non-warranty
> repairs. The only exception was the first one--it did not
> have a stainless steel exhaust, and the exhaust rotted out
> twice on me, so it cost an extra $250 or so. I haven't seen
> any different on average between new and used.
> Statistics prove this out. The Car Talk guys point this out in one
> of their books. You will never, on average, spend more per month
> fixing a car than what payments are on a new car.
Possibly. But fixing a car is a lot of hassle. In terms of lifestyle,
I structure it so that I deal with the day-to-day minutae as little as
possible. This has been good for me.
--Ram
DravenStone
If I can find a good deal with someone willing to extend me even more
credit, I'll try and move some stuff around a bit.
I finished working out the budget, and did some other numbers today.
If I could get everything at less than 10% we can be completely out in
5 years with almost no change to our current lifestyle (it's pretty
lean to at the moment...)
With a small change, and one I think we can make, we could even do it
in 4. Further, I expect some raise in salary over that time so it
should shorten down. Unfortunately getting all the numbers together
shows me that my balances are all over the place, from 0% to 26! I
called the 26% folks and asked for a better rate. They gave me 22, but
holy cow, wish I had checked that particular stat earlier. I told them
I would have the full balance paid off in a couple days if they didn't
get into the low teens. They didn't budge. So I am definately moving
everything out of that account to others.
Since we don't own a home, a loan is out of the question (was kind of
hoping the post above was going to have an idea on where to get some
big time unsecured loans, but I'm magic bullet dreaming again I guess).
I've got to keep moving stuff around to keep us around 10% total and
we'll be out in a few more years.
Listen, thanks again for all your advice everyone. If nothing else you
should at least know that talking about publicly was really the last
straw that got me motivated and rolling towards actually knocking this
out instead of just burying my head in the sand.
-ds
John A. Weeks III
"DravenStone" <chipt...@gmail.com> wrote:
> Since we don't own a home, a loan is out of the question (was kind of
> hoping the post above was going to have an idea on where to get some
> big time unsecured loans, but I'm magic bullet dreaming again I guess).
> I've got to keep moving stuff around to keep us around 10% total and
> we'll be out in a few more years.
Try calling each and every credit card you have, and ask if
they have any balance transfer deals. Ask them if they would
consider increasing your credit line. I don't like to play
this game long-term, but do anything you can to get those
interest rates down or transferred onto cheaper cards.
22% is indentured service in my book, with 26% being slavery.
Andy
> Your point about our cars for instance is one that I agree with.
Others
> have called it a rationalization, but I tend to feel that going ahead
> and finishing the loan and owning the reliable (less than 20K each
new)
> cars is a better LONG TERM move than selling them now and getting a
> 2500 dollar used car that *could* have more problems over the long
haul
> then our well maintained current vehicles.
Your reasoning here sounds plausible, but unless and until you actually
crunch some numbers its all just casual speculation.
Try this exercise:
1. Figure out your per mile capital cost for owning your current 2
vehicles from this day forward, assuming they last until 150,000 miles
(or 200,000; whatever). You do this by adding up the total cost of the
remaining payments and then dividing by the remaining miles to go to
150,000.
2. Now look online to find out the used price of the exact same make
and models of the cars you own, but with 80,000 miles on them. Take
that price and divide by the remaining miles to 150,000 (70,000). How
does that compare with the per mile cost of your current cars?
Since we are dealing with the same make and model of cars, and since
you are planning to keep your existing cars through the same point, say
150,000 miles, and will experience roughly the same repair costs, this
shows you the premium you are paying to drive a newish car. Is it worth
it for that new car feeling?
Many people who drive newish cars exaggerate the horrors of having a
car break down on you, or of repair expenses. If a car breaks down you
get it fixed and rent a car while its in the shop. Its not the end of
the world; and as hassles go its relatively minor. People who
cheerfully plunk down $600 a month on new car payments act like its the
end of the world to pay that amount once or twice a year for a
repair/rental car. As if somehow having a regularly scheduled expense
is cheaper than a lower expense that occurs at random.
Andy
Andy
> I finished working out the budget, and did some other numbers today.
> If I could get everything at less than 10% we can be completely out
in
> 5 years with almost no change to our current lifestyle (it's pretty
> lean to at the moment...)
I don't think it is realistic to plan on being able to get credit card
rates of 10% on a 44K balance for 5 years. That is wishful thinking.
The fact is that credit card companies can and will change rates at the
drop of a hat, and they are also checking your credit report regularly
for any signs of financial distress so they can jack your rates up to
25% if they see you are in trouble.
Reading between the lines, it seems that you are looking for ways to
rationalize not changing your current lifestyle. Which is
understandable. But really, giving up some more middle-class
conveniences and comforts will not be nearly as stressful as juggling
this debt for 5-10 years. When you give up something there is a
relatively short period when you miss it and mourn your loss, but after
a month or so you move on and get back to the same level of happiness
you had before. Whereas juggling credit card debt remains consistently
stressful over time.
Andy
m...@privacy.net
>possible. This has been good for me.
Can you explain the above?
What do you mean exactly?
How do you structure things so as to deal with less
minutia?
SD
In my case it all starts with paying most of my bills electronically,
some automatically :). Getting cash back is just icing on the cake.
Now if I could have home delivery of groceries, delivery and pickup of
laundry, depositing checks electronically and a few other things here
and there my day to day life would be more than just great!
And in the car case, what Ram meant was knowing when to service the new
vehicle and getting it done is better than having on your mind the
thought of the used vehicle failing randomly just when you need it most.
And in modern times, buying last years model brand new costs as much as
buying last years model used or sometimes even less (from experience)
with a much better loan interest rate.
DravenStone
700's.
I went with an offer today from AMEX for 3.9% for the life of the
balance transfer with no transfer fee and got the 2 highest interest
rate cards completed transferred there (nearly 20K all told...)
Everything else is currently on cards between 0&12%... I'll go on and
get another deal next time it arrives in the mail.
I can see how some would call the moves I am doing rationalizing, and
that may be true to some extent. I certainly asked for and got good
advice from some clearly knowledgeable people. I hope those that made
suggestions that I don't follow realize that the individual needs of
each person in these situations may be different. For me, I reached a
point where I made a post with a title of "Debt is Killing Me" so you
clearly I was reaching the end of my rope. Now even though I'm not
giving up every comfort (my reliable car and little league) doesn't
mean that I'm not already significantly better off than I was before
making the OP.
And I mean it sincerely when I thank you all for your incredible input.
Regards,
-ds
Ram Samudrala
>>I structure it so that I deal with the day-to-day minutae as little as
>>possible. This has been good for me.
> Can you explain the above?
> What do you mean exactly?
I mean that there are some day-to-day minutiae which can consume your
entire day leaving you very little for focused
self-introspection. Cars breaking down is one example (the new car
strategy has worked for me). Computers crashing is another. People
hassling you with questions they can answer is yet
another. Unnecessary meetings where people just ramble on without a
point, and so on.
> How do you structure things so as to deal with less
> minutia?
In my somewhat unique situation: Let all your administrative
assistants shield you, have a schedule where you don't come in until
very late (to avoid talking to people), avoid going to as many
meetings as possible... essentially attempt to cut through the
bullshit and get to the point whenever possible. Also, have redundancy
built in for important things so when things go wrong, you have 2-3
backups.
--Ram
DravenStone
I just want to go on record as saying I COMPLETELY agree with you here.
I've made in the last several years a conscious decissions to keep as
much *gunk* out of my life as possible.
Honestly, ATM I think my debt load is the last thing that I need to
"simplify"
(I've given up thinking I can simply parenting an 8, nearly 9! year old
boy)
I try not to do anything that will get me "in trouble" always get my
work done when I say it's going to get done.
I won't even download MP3's because I don't want the hassle of a MPAA
lawsuit, and yes today... I served Jury Duty!
Keeping things simple, like paying your bills on time, updating your
address when you move, keeping your drivers license valid, all those
little things, when done proactively make life so much simpler. The
last year and a half I've had a colleague who I've listened to deal
with insane problem after insane problem, typically because he didn't
get something done he was supposed to do, something no doubt trivial
(see change address above)... Your point about reducing the trivial
things as much as you can leaves you more capacity for the trivial ones
that you still have to do. The rest of the stuff runs on auto-pilot
leaving your life to be your life. It's the tank home point of some
many of the debt threads that you need to reclaim your life from the
debt. And what you're writing about is a life reclaimed (though perhaps
not from debt, but from the "grind")...
Regards,
-ds
m...@privacy.net
>assistants shield you, have a schedule where you don't come in until
>very late (to avoid talking to people), avoid going to as many
>meetings as possible... essentially attempt to cut through the
>bullshit and get to the point whenever possible. Also, have redundancy
>built in for important things so when things go wrong, you have 2-3
>backups.
I see
Excellent food for thought for me. Thanks!
can you perhaps give me some real life "solutions" that
you've enacted?
Example.... on the one above abt not coming in til
late. You mean late to work?
m...@privacy.net
>another.
This is a good one above
How have you solved this one?
Will Trice
SD wrote:
> And in modern times, buying last years model brand new costs as much as
> buying last years model used or sometimes even less (from experience)
> with a much better loan interest rate.
Indeed, this is how I bought my last new car. I got a 36 month note
with 0.9% interest, and I haggled like crazy to get the price of the
vehicle down. Why pay cash when I can get that kind of interest rate?
This amounts to ~$300 of interest over the life of the loan. And I see
this kind of deal all the time from various car manufacturers.
-Will
Ram Samudrala
> I see
To me there is no distinction between "work" and "nonwork" (in other
words, I "work" 24/7 or don't work 24/7 since what I do is my
passion). I've chosen a particular passion of mine to generate income
that is not based on a schedule. But if you are doing something that
requires a schedule, then I'd look into things like telecommuting or
doing things from home (so I technically work from home almost always
until late in the evening). Or you could start your own business (a
friend of mine, who used to work for a landscaping company on a 9-5
schedule, just did--he landscapes people's homes on his own time and
schedule which has made him happier). It depends on your skills and
passions and what you want. Some people do like structured schedules,
so if you're missing that, then you can find ways to do that too.
I posted this message to this newsgroup, but I also put it up on the
web:
http://www.ram.org/ramblings/philosophy/financial_plan.html
which may shed some light on where I am coming from.
I believe all people can find ways to structure their life so their
life becomes less complicated. The initial barrier might be high, but
it's worth it in the long term. Like with finance, unfortunately, most
people don't think 10-30 years ahead. Kids should be taught when they
are five that when they are teenagers or 25 or 50, they can plan ahead
and have the kind of life they want.
Other real life solutions: trying to buy only new items (which has
worked for me personally); preventive health care (especially if you
have kids who have teeth :); lots of good insurance; building a lot of
redundancy in what you do; etc.
--Ram
Ram Samudrala
Yep, pretty much. One simple way is to avoid such people or situations
(which works sometimes). At other times, this is not a proper
solution: people who pester you with questions that you know they can
answer CAN answer it for themselves. They just need to be told to do
so. And I do, quite directly. I say, "I can answer this for you, but I
feel you won't learn what you would if you figured it out by
yourself." (Even to my wife, BTW.)x
This is going away from financial planning a little, but really I
think financial planning is about solutions for the long term and
extends to all walks of life; not just money. In fact the PURPOSE of
financial planning is to make your desired lifestyle possible or more
secure. I think a lot of things other than money are more important in
making this happen.
--Ram
m...@privacy.net
>financial planning is to make your desired lifestyle possible or more
>secure. I think a lot of things other than money are more important in
>making this happen.
Great point!
Can you give some examples?
m...@privacy.net
>passion
Mind if I ask what your passion is? What you do for
work?
This has been a very thought provoking conversation!
m...@privacy.net
>redundancy in what you do; etc.
Can you explain this redundancy concept?
Ram Samudrala
a T but it doesn't matter really. To respond to all your questions:
1. One of my passions is science. I'm a professor at a University who
doesn't really teach (just research) in computational biology. Thus
I can do a lot of stuff from home and aside from spending time with
my students and post-docs, I don't have to be in. This helps me
avoid a lot of people who'd bother me otherwise.
2. Redundancy is to have plans A, B, and C when something important is
going to happen. I gave a talk at a conference last week. When I
started my laptop (where the talk was), it said "hard drive
failure". I had a CD with the talk on it (so I used the next
speaker's laptop). I also had it available on the web for
download. So when my laptop crashed, I didn't stress at all. I
usually plan things out like (it's like second nature to me) for
most things.
I'm sincere in my belief however that most people can do what they
want to do only and not a lot else if they can structure their
financial and other life.
--Ram
JamJ...@yahoo.com
short of bankruptcy is to live for the debt. That is to say. Every
minute of every day you dedicate that short of your job and family.
You think and act on every way possible to whittle down your debt.
Start simple by sacrificing something. Start small and keep a journal
of what you have done to help stop the bleeding and get ahead of the
debt. Kool-aid in stead of soda. Downgrade of cable. No more Showtime.
Cell service with less minutes. Small things mean a lot. You have to
let go of some of the things you at this time won't do without. Thats
the lock into debt attitude that will keep you stuck, unless you work
to earn it back. This is where the journal will help you keep track.
Write your feelings and dreams in the book, draw and make a volume of
your journey and after you have filled it; get another one and continue
till you have paid 25% of the debt down. Then go back and read the 1st
pages of the journal. You will see in a short time what changes you
have gone through and the rest of the debt will be easy to manage down.
Sell something every week. A Bike, A book, use Ebay. Just think
everyday about how you can dime and nickel your way out from THE DEBT
just like you were dimed and nickeled into it.
Robert
PS. Its slow and useless in the beginning, but change is always hardest
the first twenty-one days into it. The Journel is the secret and silent
weapon. Set your goal now and write it down. It should be your only
goal. Short of trying to quit smoking, its the most difficult habit to
break in these times. Good Luck.
Elizabeth Richardson
> Kool-aid in stead of soda.
We drink water. It's free, it's good for you. What's good for you will cut
down on your medical problems, thereby reducing any doctor's visits, thereby
reducing your co-pay or out-of-pocket medical expenses.
> Cell service with less minutes.
A cell phone is not a necessity. Get rid of it.
Elizabeth Richardson
John A. Weeks III
<H_%Td.286431$w62.1...@bgtnsc05-news.ops.worldnet.att.net>,
"Elizabeth Richardson" <eric...@worldnet.att.net> wrote:
> > Kool-aid in stead of soda.
>
> We drink water. It's free, it's good for you. What's good for you will cut
> down on your medical problems, thereby reducing any doctor's visits, thereby
> reducing your co-pay or out-of-pocket medical expenses.
That is kind of a leap of faith. Water contains no nutrients, no
vitamins, and no anti-oxyadents. From that standpoint, it is at
the very best neutral. Water can also be a carrier of contamination
and disease. Hundreds of people died in Milwaukee a few years ago
when the public water system got contaminated. Most pre-packed
beverages are either processed or preserved in such a manner to
prevent this kind of contamination.
I don't have a problem with someone who drinks water, but you are
fooling yourself if you think that water has medical effects.
> > Cell service with less minutes.
>
> A cell phone is not a necessity. Get rid of it.
I think that a cell phone is getting to be an essentail tool
these days. The key factor is as a safety device. A cell
phone can save your life if you have a flat tire on the
freeway or run in the ditch on a snowy day. In addition,
if you are easy to get in touch with, you may be called on
for extra work shifts and overtime. For folks with debt
issues, I would suggest a pre-paid cell phone that is used
only for emergencies and work purposes. Picking up just
one extra shift a year can more than pay for the cost of
the cell phone. The savings multiply if you are able to
ditch your expensive home telephone in lieu of the cell phone.
zxcvbob
> " In today's climate, you can easily
> get a 0% temporary rate for 2-3 years or a 1-4% fixed rate for the
> life of the balance if your credit is good. "
>
> How about some pointers on how to get this 1-4% fixed rate?
> My credit is good, would be absolutely excellent if my debt load wasn't
> so high.
> getting everything consolidated into one loan would be fantastic, but
> since I don't own a home I've not found anyone that will give me a 40K
> loan at these kind of rates.
>
> thanks,
> -dm
>
Look at all the preapproved credit card offers you get every week. Some
of them have 0% or 1% interest rates for a year or sometimes even 18
months on balance transfers. What they are trying to get you to do is
transfer a large balance onto the card and make minimum payments and
still have a large balance when the introductory rate expires -- and if
you are a day late with any of those payments, they hit you with a $29
late fee and more importantly the rate jumps to 24% or sometimes as high
as 30% "default" rate.
Use one of these offers as your own debt consolidation loan. The way to
play the game is to transfer the balance from your highest interest rate
cards onto the new introductory rate card AND CANCEL THE OLD CARDS. Pay
off the entire balance before introductory rate expires, unless the
regular rate is stil lower than other cards you haven't transfered.
Make all the payments a week early or set up an electronic payment at
your bank or credit union; you don't want to make a payment just barely
in time and have the CC company to sit on it until it is a day late so
they can screw you.
This only works if you stop making new purchases on the old cards (or
the new one, for that matter.)
Good luck, and best regards,
Bob
Elizabeth Richardson
"John A. Weeks III" <jo...@johnweeks.com> wrote in message >
> That is kind of a leap of faith. Water contains no nutrients, no
> vitamins, and no anti-oxyadents. From that standpoint, it is at
> the very best neutral.
Actually, you do not process your fat intake efficiently without water.
Water keeps your system flushed. You cannot live without water. How about
those few reasons why drinking water is good for your health? In addition,
kool-aid has refined sugar which is bad for you (like cookies, candy, etc.).
Colas and coffee are hard on your kidneys. Recent research shows that a cup
of green tea may be good for you, but, again, if you drink very much of any
tea, your kidneys will suffer.
So, again, please drink water, and plenty of it for your body's health, and
your financial health. Watching out for your physical health is definitely a
way to protect your financial health.
Elizabeth Richardson
Elle
so financial value of drinking water:
John A. Weeks III
"Elle" <elle_n...@nospamearthlink.net> wrote:
> Two of many web sites backing up Elizabeth's statement on the physical and
> so financial value of drinking water:
I don't think the moderator intends to turn this into a food
channel, but keep in mind that water is in everything. If you
drink grape juice or wine, you get the water, plus you get
some vitamins and anti-oxyadents. Plus that stuff has been
processed, so you don't get sick from contamination. You
cannot assume that water is good for you, that water is
automatically pure, or healthy. A person can only drink
so much during a 24 hour period. If you waste that opportunity
drinking water, you give up the ability to drink something that
is potentially even better for you.
Elle
me. Also, by drinking water, I give up drinking something potentially
worse. We have an obesity problem in this country, ya know, and obesity
correlates to worse problems down the road.
"John A. Weeks III" <jo...@johnweeks.com> wrote
> You
> cannot assume that water is good for you, that water is
> automatically pure, or healthy. A person can only drink
> so much during a 24 hour period. If you waste that opportunity
> drinking water, you give up the ability to drink something that
> is potentially even better for you.
======================================= MODERATOR'S COMMENT:
Thread closed.
DravenStone
me.
FWIW, I'm in agreement that drinking water is good for you, but not the
water they pipe into Phoenix (where I live)...
Anyway.
I've just about finished getting ALL my CC debt locked in for the life
of the balance transfers below 4%.
20K @ 3.9 with AMEX blue, and ironically, the rest of it is about to be
transferred BACK to the high interest rate card with an offer of 1.9
unitl paid off. I love this, since I just moved 15K out of that account
to the 3.9 when they wouldn't lower the rate on the purchases.
This should make a very large difference in the amount each month that
goes towards paying off instead of maintaining due to high interest
payments.
Is there any logic to keeping the other accounts open, or should I
close everything that I no longer have a balance on? I know my credit
score will suffer because I am going to be basically completely maxed
on these two accounts that are carrying everything for the first little
while, but after that's paid down, it should bounce back up, but I
think I've read that having some available credit on other accounts
(particularly ones you've had for a while) is actually beneficial to
you in the long run. Please take on faith that their use will be
avoided in your answers.
Regards and thanks,
-ds
John A. Weeks III
"DravenStone" <chipt...@gmail.com> wrote:
> Is there any logic to keeping the other accounts open, or should I
> close everything that I no longer have a balance on? I know my credit
> score will suffer because I am going to be basically completely maxed
> on these two accounts that are carrying everything for the first little
> while, but after that's paid down, it should bounce back up, but I
> think I've read that having some available credit on other accounts
> (particularly ones you've had for a while) is actually beneficial to
> you in the long run.
If you have the discipline to not run up more bills, then I would
keep these accounts open. The reason is that these "fixed for
life" and other credit card low interest plans are mostly a
game. The game is that the credit card company does everything
they can to get you violate the terms of the agreement so they
can jack back up to a sky high rate. They do things like throw
your payment into the "hold" bucket, and not process it until
the day after the due date. In the event that this happens,
you want other options to transfer back to a lower rate. Keep
these cards in reserve for that battle.