Debt Dumpers - 2015

[dayvewc]

Just think of the money you will be saving with him gone! Your utilities will go down, food bills, etc!

Yeah, it's about $100 a month + for cigarettes, $50 for car insurance, another $50 - $100 for gas, on top of the utility bills. At least he paid about half the food bill, so may not save much there. The biggest thing is his smokes and gas I was putting on the CC's, so in addition to paying those off I SHOULD be in a position to not run them back up.

Dump the DVC. DVC is a luxury and should not be financed. I would not do the refi unless you know you can control yourself and not run up the debt again. If you can, then do the refi and pay off everything but the auto. What is the % on the auto loan? I expect it is low. I would keep paying on the car and put the extra $450 into an emergency fund and pay the extra $230 back onto the mortgage, so you can pull in the loan.

Once you get ~$5000 in your emergency fund, then either start or up your retirement savings (Roth IRA, Roth 401K, 401K, SEP, 503B, etc.) to $250 and save the other $200 into your emergency fund until you get to 6 months of living expenses. Then add the $200 to your retirement. When you get the raise, then put 1/2 into your retirement saving and save the rest for a vacation or other want.

I mostly agree with this. Financing time share is seldom a good idea. That being said, DVC tends to have the best resale value, and depending on the equity you have in it, something to consider. Opposing that, though, if you are committed to yearly vacations, timeshares are a good way to do them cheaper.

I'd vote additionally that you have to be self controlled enough to not run up the credit again. It's doable, but does require a change in habits. I know, changing that impulse to just add it to the card was the hardest thing I had to learn how to do, and I'm still not great at it, just much better than I used to be.

 

[ruadisneyfan2]

I don't know if I'm making a good decision or not....any advice would be welcome. Just don't be rude about it please.

I've been trying to dump debt over the last year or so. I did have a little sucess in 2014. I managed to pay off a $100 per
month bill that I was making payments on and paid all of my other bills on time. (Yea Me!!) I'm looking forward to even more progress
in 2015.

Problem is I'm not a very patient person, and would like to speed up the process. I'm looking into doing a refi at 4% and pulling 12K out
of the equity in my home. This would lower my mortage by $230 per month and the 12K I'm pulling out would pay off other bills and reduce my monthly bills by an additional $450 per month. (total savings of $680 per month) I hate the fact that I would now start back to square one on a 30 year mortgage. I may opt to pay $200 per month extra on my mortgage to lower the number of years I will need to pay on my home and apply the rest to my car note.

Additional info. After my refi I would still have about 17,500 of debt to pay on...(I owe about $7500 on my auto loan and 10,000 to DVC) I plan to use the extra cash to pay that off. I will also be getting a $300 per month raise in August which will also be used to pay down my debt. I figure I could get all of the debt paid off in 2 years by doing this.

What do you think? It looks like the refi will go through later this week...Is it the right thing to do? OR??? Advice?

I don't see why not refinancing - as long as you don't rack up the debt again on top of the new mortgage. Since you will be saving that additional amount each month you can apply that to your outstanding debt like the car loan or dvc to get them paid down faster. Once everything is paid for you can tackle paying extra each month on the mortgage to knock down the years. I throw extra on my mortgage each month - not much but it does add up!

The bolded parts concern me. jmho. It's exactly what we did. We had already refi'd once from 30 to 15 yrs. Then refi'd again & took out a lot of equity to pay off debt. I promised myself I'd be good but slowly it crept up again. Not nearly as high as before but still, enough to be mad at myself for letting it happen. (Refi'd 3rd time for 3% x 15 yrs.) Still our balance is more than what we paid for our house 18 yrs ago. 2 of my coworkers just paid off their mortgages this year. That was supposed to be us too when we first refi'd from 30 yrs to 15 yrs. I wanted it all gone by around the time ds started college which will be this fall. We're 13 yrs behind our original plan.

So actually, doing it the quick/easy way doesn't really teach any lesson. I often say paying off debt is like dieting to lose weight. People who do it the old-fashioned way of changing eating habits and exercise stand a much better chance of keeping the weight off compared to someone who got liposuction. They are committed to making sometimes painful, lifestyle changes. With liposuction, someone else did all the work and you still look good. No change in lifestyle. No sacrificing takeout Friday night so you could throw an extra $30 at the bill your currently attacking. No keeping your old sneakers another 3-4 months just because your so close to paying down this one bill and you really just want it gone.
I don't know. This slow pay down is torture but it's also teaching my dumb self a lesson on how to really stop spending. This time I'm learning the hard way. Like when my kids were 3 and want to help stir the pot and I'd tell them 50x be careful the stove is hot. Nothing sinks in like learning the hard way.
Again, jmho.

 

[jenrose66]

I don't know if I'm making a good decision or not....any advice would be welcome. Just don't be rude about it please.

I've been trying to dump debt over the last year or so. I did have a little sucess in 2014. I managed to pay off a $100 per
month bill that I was making payments on and paid all of my other bills on time. (Yea Me!!) I'm looking forward to even more progress
in 2015.

Problem is I'm not a very patient person, and would like to speed up the process. I'm looking into doing a refi at 4% and pulling 12K out
of the equity in my home. This would lower my mortage by $230 per month and the 12K I'm pulling out would pay off other bills and reduce my monthly bills by an additional $450 per month. (total savings of $680 per month) I hate the fact that I would now start back to square one on a 30 year mortgage. I may opt to pay $200 per month extra on my mortgage to lower the number of years I will need to pay on my home and apply the rest to my car note.

Additional info. After my refi I would still have about 17,500 of debt to pay on...(I owe about $7500 on my auto loan and 10,000 to DVC) I plan to use the extra cash to pay that off. I will also be getting a $300 per month raise in August which will also be used to pay down my debt. I figure I could get all of the debt paid off in 2 years by doing this.

What do you think? It looks like the refi will go through later this week...Is it the right thing to do? OR??? Advice?

I would not refinance my home under any circumstances to pay off debt. It's just too risky.

 

[dayvewc]

Well, the roommate has left. Vamoosed. Departed. Searching for greener pastures. Hasta la vista. GONE.

Now, to try to get everything back in order and shaped up. Or at least what I can, quickly.

Sorry, just not entirely sure how to deal. This has been a long, long, LONG 4 years.

 

[Gr8t Fan]

Well, the roommate has left. Vamoosed. Departed. Searching for greener pastures. Hasta la vista. GONE.

Now, to try to get everything back in order and shaped up. Or at least what I can, quickly.

Sorry, just not entirely sure how to deal. This has been a long, long, LONG 4 years.

Have a nice cup of coffee (or tea) and enjoy the solitude while you map out your strategy. It's a lot easier to budget and plan to pay down debts when you're the only variable in the equation. Look for the silver lining that every cloud has.

 

[dayvewc]

Ok, on another topic. This may not be specifically "dumping" debt, but I'm taking an overall view that my total financial outlook should, WILL, decrease my debt. Preferably faster than through minimum payments.

One of the things I am looking at, is that I own timeshares, including a DVC. I'm not discussing whether buying or not is worthwhile or not, nor on the benefits or drawbacks of financing one (not recommended IMHO).

What I have realized is that IF I take at least one vacation every year, then (for me) they are cost effective.

Since I have started going to Disney, I have been going at least once a year. I normally go for 5 days during a week-long stay. Looking at current pricing, and buying my tickets through UnderCover Tourist, then I am looking at spending $366.05 for a 5 day park-hopper pass, plus $17 a day for parking for a total of $451.05, or a daily rate of $90.21

What I'm looking at instead, is buying an Annual Pass, which with the DVC discount is $516.53 (after tax), so if I only go for the same 5 days I will not have to pay parking so the daily rate becomes $103.306 rounded to $103.31. The advantage comes in the 2nd year, when the renewal is $435.58 after tax, which means a daily rate of $87.116, rounded to $87.12.

So, from the 2nd year out, I am "saving" $3.09 a day, but I had to pay an extra $65.48 the first year, so it will take 21.2 "days" to hit the break-even point. Or, somewhere in the 5th renewal year (6th year counting original purchase).

The biggest advantage will be if I have another year like 2013, when I was able to go multiple times in a year, in which case the AP is much more cost effective than buying tickets, and the break-even point pretty much occurs happens on the first park day, and all other days become bonus.

Granted, Disney pricing changes yearly - which will change some of the fine points of the calculation, and there is no guarantee that the DVC discount will continue - which would pretty much negate any savings, and this is dependent on me going to Disney every year for my vacation (I can deal with that and I have to go somewhere, and due to owning multiple timeshares I'd still be able to go other places with them), and I ignored all the other "advantages" that the AP gives (discounts, magic bands, etc., - most of which are the same as the DVC perks). Does it sound like an overall winning plan?

I've pretty much convinced myself that this is what I plan to do, actually starting 2016. I have 5 days left on a single-park non-expiring ticket that I plan to use this summer. I'm just not sure if I'm not seeing all the downsides to this that could change the ultimate outcome.

 

[Gr8t Fan]

I've pretty much convinced myself that this is what I plan to do, actually starting 2016. I have 5 days left on a single-park non-expiring ticket that I plan to use this summer. I'm just not sure if I'm not seeing all the downsides to this that could change the ultimate outcome.

The only downside I can see is that you'll plan more trips to get the best value you can out of your pass . We got APs last year for the first time ever because our middle DD was invited to go with a friend in April, 2014 and we were already scheduled to go all together as a family in August, 2014. Originally we only bought her an AP. Then we decided that we'd all get APs, but they'd have different expiration dates because DD's would expire in April and ours in August. Before we knew it, we planned an April, 2014 trip for the rest of us. And we've used the APs to take 4 trips (April, August, November, December) and we'll take 1 last trip before they expire. Pretty sure we're not going to renew them, but our oldest DD has just applied to DCP for the Fall Advantage Program. If she gets in, we're going to renew them!

 

[dayvewc]

There is that. I did an AP for 2013-2014 because due to a job change, I actually had a couple of extra chances to go, the first one being on Halloween. Then, once I had decided to go down for the MNSSHP, it just made more sense to add in the spring trip, and move the summer trip up by 2 weeks so I could get in before it expired.

That's actually one of the things about my timeshares. I really, REALLY hate not using all my points and weeks, so I wind up rolling them over and hit a year every 3-4 where I have enough stored to do 4-6 weeks in a year. Which works out nicely for the occasional "year of Disney", but would also work well with doing Disney every year and "somewhere else" also.

Decisions, decisions, decisions.

Actually, the biggest downside I see, is after I realized that long-term the Disney AP would be cheaper, I started pricing the US AP as well, just in case, ya' know.

 

[AuntieMina]

So actually, doing it the quick/easy way doesn't really teach any lesson. I often say paying off debt is like dieting to lose weight. People who do it the old-fashioned way of changing eating habits and exercise stand a much better chance of keeping the weight off compared to someone who got liposuction. They are committed to making sometimes painful, lifestyle changes. With liposuction, someone else did all the work and you still look good. No change in lifestyle. No sacrificing takeout Friday night so you could throw an extra $30 at the bill your currently attacking. No keeping your old sneakers another 3-4 months just because your so close to paying down this one bill and you really just want it gone.
I don't know. This slow pay down is torture but it's also teaching my dumb self a lesson on how to really stop spending. This time I'm learning the hard way. Like when my kids were 3 and want to help stir the pot and I'd tell them 50x be careful the stove is hot. Nothing sinks in like learning the hard way.
Again, jmho.

THIS! my mother bailed me out the first time, and I didn't learn my lesson. So now I'm in deeper and am NOT going to take the easy way out. Unless I win the lottery of course! I need to learn from this as I didn't learn my lesson on my first go around.

 

[momtosam]

I don't see APs and DVC to be really worth it for one five day trip per year. You would have to be able to do better by taking advantage of discounts and free dining offers.

 

[ilovemk76]

Why are you including paying for parking if you have a DVC that you are using on that trip?

 

[dayvewc]

I don't see APs and DVC to be really worth it for one five day trip per year. You would have to be able to do better by taking advantage of discounts and free dining offers.

Why are you including paying for parking if you have a DVC that you are using on that trip?

I have minimal points on DVC, so it only is usable for about 1 trip every 3 years. Most of my trips are on my other time shares, which let me get 3-4 weeks a year, most of which I roll over, which means that about every 3-4 years I have to take either really long trips, or go several different trips, or what I've done in the past is take the entire extended family somewhere for a week.

Since I'm not staying on property most of the time and I'm using my time share for the rooms, I don't get discounts on the rooms, and not staying on property I can't get the dining plan, and also don't get free parking.

Though, the fact that parking on DVC trips is free is something I didn't consider. It would move out the break even point quite a bit. But if I ever make 2 trips in a single year (on those years I have to take multiple trips) the savings on the ticket will be much more than the cost of parking for a week.

 

[minnie45]

THIS! my mother bailed me out the first time, and I didn't learn my lesson. So now I'm in deeper and am NOT going to take the easy way out. Unless I win the lottery of course! I need to learn from this as I didn't learn my lesson on my first go around.

None of my bills are due to credit cards. I only use one credit card and pay it off monthly. Debt is/was due to not having enough of an emergency fund set aside. I was involved in a freak accident and out of work for around 5 months, insurance didn’t cover all of my medical bills. So, 12K debt I’m using to pay off with the 12K is going to take care of that bill.

 

[minnie45]

I would not refinance my home under any circumstances to pay off debt. It's just too risky.

I put my numbers through a mortgage calculator and found that if I continue to pay my current mortgage amount on new mortgage at a 1.5 percent lower fixed interest rate, I’ll pay my house off 8 years earlier (in 22 years). Three years earlier than if I don’t refinance my mortgage . The icing on the cake is that I get 12K to pay off other bills with it! (win win)

 

[minnie45]

Dump the DVC. DVC is a luxury and should not be financed. I would not do the refi unless you know you can control yourself and not run up the debt again. If you can, then do the refi and pay off everything but the auto. What is the % on the auto loan? I expect it is low. I would keep paying on the car and put the extra $450 into an emergency fund and pay the extra $230 back onto the mortgage, so you can pull in the loan.

Once you get ~$5000 in your emergency fund, then either start or up your retirement savings (Roth IRA, Roth 401K, 401K, SEP, 503B, etc.) to $250 and save the other $200 into your emergency fund until you get to 6 months of living expenses. Then add the $200 to your retirement. When you get the raise, then put 1/2 into your retirement saving and save the rest for a vacation or other want.

Thank you so much for responding! You got me thinking about my emergency fund and I think it is underfunded. My goal will be to save a years worth of living expenses.

Also, none of my bills are due to credit cards. I only use one credit card and pay it off monthly. Most of my debt was due to not having enough of an emergency fund set aside. I was involved in a freak accident and out of work for around 5 months and insurance didn’t cover all of my medical bills. So, 12K debt I’m using to pay off with the 12K is going to take care of that bill.

Boy did I learn the hard way. I’m going to figure out how much my family needs for a year and aim to save up that amount. Currently I only have about 4-6 months of emergency money.

When you say dump DVC do you mean sell, pay off ??? I absolutely love DVC and would NEVER part with it.

As far as my decision to finance DVC, I know it’s not a good financial decision, but I have no regrets. I think forcing our family to travel together once a year has kept us happy and marriage in tact. If it wasn’t for DVC, we would not have gone to Disney yearly.

However; I discussed this with my family and we decided that we can pay it off within the next 6 months. (Husband has a couple of thousand coming in from overtime, a couple thousand from income tax returns, taking 1500 from vacation fund, and I’ll take a summer job to make the rest. So, should be able to pay off around August…or be very close. )

 

[dayvewc]

*grumble grumble grumble grumble*

Just got my email notification from my bank. Each month I meet certain criteria, I get in increased interest rate and refunds on all my ATM fees. Basically, I have to make 10 debit transactions and at least one automatic EFT transaction each month. The EFT is not a problem, but I've been trying to not spend anything I don't have to, and didn't have 10 debit transactions this month. ARGHHHH.

 

[gracie1]

*grumble grumble grumble grumble*

Just got my email notification from my bank. Each month I meet certain criteria, I get in increased interest rate and refunds on all my ATM fees. Basically, I have to make 10 debit transactions and at least one automatic EFT transaction each month. The EFT is not a problem, but I've been trying to not spend anything I don't have to, and didn't have 10 debit transactions this month. ARGHHHH.

Doesn't your bank have anything with no fees? I have m&t bank and I know citizens bank also has the same. Or maybe just start doing cash back when you grocery shop!

 

[dayvewc]

It's pretty much fee-free. Just if I have at least 10 debit transactions, 1 EFT transaction, sign-on and view the website, and sign-up for paperless statements each month the interest rate is (I think) 2% and all the ATM fees are refunded. I almost never use the ATM, and had 9 debit transactions this time, so I'm not missing out on the ATM refund fee, but it does mean my interest for the month will only be (I think) 0.5%.

Just as part of my "reduce debt and control finances", I only go shopping about once a month. I pretty much get all my grocery and household shopping done in one visit to the grocery store, after I've gone to the wholesale warehouse. Buy in bulk, and only 1 trip has helped me to reign in my spending. Just, normally, I'll have 10-12 debit charges for paying for gas - but I've been using one of my CC's to do that since I get it at $0.05 off, then pay the gas charge immediately. (I do have a balance on that card, but not from gas, from other things I've 'had' to buy for ex-SO).

Moving away from using my debit card for gas meant that I also moved away from getting the increased interest.

*sigh* just can't seem to win for losing.

 

[nkereina]

Late to the game here! Saw the thread and was hoping someone could point me in the direction of a web site that provides a credit card payoff calculator.

CNN used to have a great one where you could enter your balance, APR, and minimum payments and you could enter how many months you want to pay them off in and it would generate a payment schedule for you. For instance, month one you pay X amount of dollars on Visa card, X amount of dollars on MC, etc. It took care of cards with the highest APR first, and told you exactly what to pay on each card each month. Anyone know of any sites that have something similar? I've found the basic ones that show "if you pay X, it will take you X months to pay it off" or "if you want to pay it off in X months, pay X dollars" but they're not as helpful.

 

[gracie1]

Late to the game here! Saw the thread and was hoping someone could point me in the direction of a web site that provides a credit card payoff calculator.

CNN used to have a great one where you could enter your balance, APR, and minimum payments and you could enter how many months you want to pay them off in and it would generate a payment schedule for you. For instance, month one you pay X amount of dollars on Visa card, X amount of dollars on MC, etc. It took care of cards with the highest APR first, and told you exactly what to pay on each card each month. Anyone know of any sites that have something similar? I've found the basic ones that show "if you pay X, it will take you X months to pay it off" or "if you want to pay it off in X months, pay X dollars" but they're not as helpful.

Did you try bankrate.com? They have every kind of calculator you can imagine!