Debt Dumpers - 2015

[ruadisneyfan2]

David Ramsey is the snowball guy but I don't follow him.

Most people do it one of 2 ways. the card with the highest interest rate goes first. Then you pick them off from there.
What I do is the card with the lowest balance first, it's more obtainable to me.

Basically I pay the minimum balance on every other card, bill, etc. Then when I have money left over after bills are paid, I will pay any extra I can muster up on the lowest balance card. Once that is paid off I add the minimum balance from that card and add it to the minimum balance of the next card. (Plus anything else I can scrounge up if I can). Same with the third card. Minimum balance from card 1 & 2 go towards card 3.

This is what I do too. It's kind of a modified DR. I just can't follow his advice to a T. He suggests getting rid of every single unnecessary thing: cable, cell phones, etc. and even stop contributing to our retirement accounts. I just can't do that. I can't strip us down so bare that we're all miserable.

I think a very similar analogy is dieting. I could cut out unhealthy snacks and walk more after dinner and lose some weight or I could fast for a month and lose a lot of weight quickly but I'd be psychotic/miserable.
I'd rather start by being smarter/more aware of where our $ gets spent, and constantly plug away at it, even if it takes a little longer than the DR method.
I have paid off 8 bills in 15 months so I know from experience that it works when you're determined. I had a little setback over the summer with some extra expenses but I'm back in full swing and refuse to give up.

 

[bcwife76]

Joining in! We need to concentrate paying down our HELOC.

 

[SirDuff]

Ok so I downloaded the trial for YNAB. Now I'm struggling with assigning a dollar amount to each item. So many things vary in dollar amounts, how do you decide how much to put in?
I plugged in the upcoming credit cards, monthly bills, etc.
The only thing I didn't plug in was DHs income for JAN 1. I don't know what that will be because we maxed out SS for the year in July, around the time he started his new job.

So do I wait until he gets paid to start plugging stuff in?

Your credit card shouldn't not be an item. It should be an account. The things that go on your credit card (food, clothes, furniture, etc.) are the things that go in your budget.

Most of the things in my budget are variable and some don't occur every month.

Almost nothing in my budget is totally consistent.

For things like my hydro bill (electricity), which I have every month but varies, my budget is the upper end of the normal range. That way, I create a buffer in case I have a month that is over the normal range.

For things like clothes, which I don't buy every month, I put in what I thought would be an average monthly value (i.e. how much I'd spend in a year, divided by 12). In some cases, this might mean that some months go over budget, but that's okay (it just means that I start the next month with less than my normal budgeted amount - the software does this automatically (though there are other options)).

For things like eating out, which I could spend a huge amount on, I budget how much I want to limit myself to spending. If I go under one month, I have more the next month.

There was definitely a lot of changes in the first few months - I really didn't know how much I was spending on what! No worries about changing the values around (though the ideal is to get to the point where you don't have to).

 

[karliebug]

I use whatsthecost.com. It allows you to make a snowball where you list all your debts and how much you have to put toward them each month. Then it gives you an overview and tells you how much topay toward each one each month. I should be paid off in 25 months if I follow the plan.

 

[Silvana]

Still in from 2014, rolling into 2015. I started this owing 10k, in collections and about to be garnished for my student loans. 700 to IRS, 2200 to the car payment, 8k to the bank loan, 1400 to the little credit card and 4900 to the big one. I had been out of work for about 6 months (looking but no luck) and knew that with the new job I wanted to work towards a new, debt free life.

Now I have 2 payments that if I make on time (and I have them set up as auto payments so I don't miss) my student loan will come out of collections with the reports to my credit score removed. I still owe them 9k but that will change. IRS and my car are paid off, bank loan is at 6k, little card is down to 800(which gets paid off in January), big one is about 4800. Minimum payments just don't seem to be moving it much.

Also, because of you great DISers, in October when my DH's car needed repairs my Murphy's money covered it, no new debt. Christmas was budgeted as well so it was really nice and everyone loved what they got(went a bunch of littler things for each person instead of one or two items that would have taken their budgeted prezzie amount), dinner was awesome and no new debt!

Going forward I plan to pay off both credit cards, save for the craziest, longest vacation we have ever gone on (which we will be spending in WDW), and take out the bank loan. All paid in full by this time in 2015. Bonus is, because of owning last year I didn't count on taxes, we will get taxes back this time. My plan is to splurge and get some new tires for my car and then split the rest with DH. My part is going into more Murphy's money.

 

[ruadisneyfan2]

Still in from 2014, rolling into 2015. I started this owing 10k, in collections and about to be garnished for my student loans. 700 to IRS, 2200 to the car payment, 8k to the bank loan, 1400 to the little credit card and 4900 to the big one. I had been out of work for about 6 months (looking but no luck) and knew that with the new job I wanted to work towards a new, debt free life.

Now I have 2 payments that if I make on time (and I have them set up as auto payments so I don't miss) my student loan will come out of collections with the reports to my credit score removed. I still owe them 9k but that will change. IRS and my car are paid off, bank loan is at 6k, little card is down to 800(which gets paid off in January), big one is about 4800. Minimum payments just don't seem to be moving it much.

Also, because of you great DISers, in October when my DH's car needed repairs my Murphy's money covered it, no new debt. Christmas was budgeted as well so it was really nice and everyone loved what they got(went a bunch of littler things for each person instead of one or two items that would have taken their budgeted prezzie amount), dinner was awesome and no new debt!

Going forward I plan to pay off both credit cards, save for the craziest, longest vacation we have ever gone on (which we will be spending in WDW), and take out the bank loan. All paid in full by this time in 2015. Bonus is, because of owning last year I didn't count on taxes, we will get taxes back this time. My plan is to splurge and get some new tires for my car and then split the rest with DH. My part is going into more Murphy's money.

Great job Silvana! You're making wonderful progress!
It's so motivating to watch the numbers drop down. I love it.
I also love looking ahead to a much larger snowball and seeing how much faster bills get paid down when the weekly payments are huge.

 

[BernardandMissBianca]

Your credit card shouldn't not be an item. It should be an account. The things that go on your credit card (food, clothes, furniture, etc.) are the things that go in your budget. Most of the things in my budget are variable and some don't occur every month. Almost nothing in my budget is totally consistent. For things like my hydro bill (electricity), which I have every month but varies, my budget is the upper end of the normal range. That way, I create a buffer in case I have a month that is over the normal range. For things like clothes, which I don't buy every month, I put in what I thought would be an average monthly value (i.e. how much I'd spend in a year, divided by 12). In some cases, this might mean that some months go over budget, but that's okay (it just means that I start the next month with less than my normal budgeted amount - the software does this automatically (though there are other options)). For things like eating out, which I could spend a huge amount on, I budget how much I want to limit myself to spending. If I go under one month, I have more the next month. There was definitely a lot of changes in the first few months - I really didn't know how much I was spending on what! No worries about changing the values around (though the ideal is to get to the point where you don't have to).

So I shouldn't put credit cards down into debt category?
I haven't used any credit card except for AMEX (work expenses that get reimbursed) in a year. I just put the monthly payment down in the debt category along with my cars and tuition for the younger 2 kids.
I have my savings goals entered but no amounts.
I have a lot of rainy day funds like oil, AAA card, car insurance. RV storage, etc. They are seasonal or once a year bills. I only have 3 things filled out there, something I know will be $250 in January and the car insurance that's paid once a year.

Monthly bills are the easiest. The only 2 that vary are the electric bill and the HELOC. But that's not by much.

I have no idea how to even start assigning a dollar amount to things like gas and food and clothes. When we need it, we just buy it. But that's where I want to rein it in the most. Our food bill can be ridiculous sometimes. And DH and I have put the kibosh on eating out. We want to reduce that to twice a month not twice a week.

 

[SirDuff]

So I shouldn't put credit cards down into debt category?
I haven't used any credit card except for AMEX (work expenses that get reimbursed) in a year. I just put the monthly payment down in the debt category along with my cars and tuition for the younger 2 kids.

When you do "add account", it asks you for the current balance (it assumes that you owe, so do not make it negative). You want to leave the default of "Budget Account" (so it affects your budget). You'll get a new budget category of "Pre YNAB debt" and an item showing the balance you just typed in. Then, when you do your monthly payments, you do a "transfer" - from your bank account to this credit card (I'm assuming that is how you make your payments). That way, you don't "double count" any money - your net worth doesn't actually change when you make the payment since your net worth is all your assets minus your debts.

I have my savings goals entered but no amounts.
I have a lot of rainy day funds like oil, AAA card, car insurance. RV storage, etc. They are seasonal or once a year bills. I only have 3 things filled out there, something I know will be $250 in January and the car insurance that's paid once a year.

Monthly bills are the easiest. The only 2 that vary are the electric bill and the HELOC. But that's not by much.

I have no idea how to even start assigning a dollar amount to things like gas and food and clothes. When we need it, we just buy it. But that's where I want to rein it in the most. Our food bill can be ridiculous sometimes. And DH and I have put the kibosh on eating out. We want to reduce that to twice a month not twice a week.

Honestly, this is the hardest part - if we really knew how much we were spending everywhere, we likely wouldn't need this program! Just guess for now. Use the first few months to figure out your spending habits - then work on changing them.

Also, in your previous post, you said something about not entering the January income because you don't know exactly what it is. You shouldn't be entering it now anyway. You do NOT project your income - only enter income when you actually get it.

The YNAB forum boards are really quite helpful (with some very nice people who know a heck of a lot more than I do). I really suggest checking it out.

 

[BernardandMissBianca]

When you do "add account", it asks you for the current balance (it assumes that you owe, so do not make it negative). You want to leave the default of "Budget Account" (so it affects your budget). You'll get a new budget category of "Pre YNAB debt" and an item showing the balance you just typed in. Then, when you do your monthly payments, you do a "transfer" - from your bank account to this credit card (I'm assuming that is how you make your payments). That way, you don't "double count" any money - your net worth doesn't actually change when you make the payment since your net worth is all your assets minus your debts.



Honestly, this is the hardest part - if we really knew how much we were spending everywhere, we likely wouldn't need this program! Just guess for now. Use the first few months to figure out your spending habits - then work on changing them.

Also, in your previous post, you said something about not entering the January income because you don't know exactly what it is. You shouldn't be entering it now anyway. You do NOT project your income - only enter income when you actually get it.

The YNAB forum boards are really quite helpful (with some very nice people who know a heck of a lot more than I do). I really suggest checking it out.

Thanks. I will check it out.

I think I will try to sign up for a webinar too. I like when people can talk me through the steps.
I figure if I can't make it work, I at least tried for free.

I am lucky in the fact that DH's income doesn't change until we max out SS. So entering that in, is not difficult except for the fact that we had already maxed out SS when he changed jobs in 2014.

 

[SirDuff]

I am lucky in the fact that DH's income doesn't change until we max out SS. So entering that in, is not difficult except for the fact that we had already maxed out SS when he changed jobs in 2014.

Mine is steady as well - expect for CPP/EI (our equivalent of SS) and the fact that our salary changes occur 1-April rather than 1-January. However, the point of YNAB is not to pre-fill in your salary. You only do it when you get the money - it is not designed for be a forecasting tool. When you enter income, you can assign to this month or next month (the goal is to be able to fund next month with this month's salary). You cannot assign it any further (and it shouldn't be a line item in your budget).

 

[alabamagirl]

I'm in! Going to pay off the last credit card and make a dent in student loans!!!

 

[Ava]

Okay debt dumpers, I need some advice on how to get started.

In addition to my 3 CCs on which I have been carrying a balance, I have a few other CCs that I use for everyday purchases. Up to this point, I have been paying these cards in full each month. I set the due date to the last possible day of the month, charge all my purchases throughout the month, then *usually* I have enough cash to pay off the cards when they come due. (I have had to take from savings enough times recently that my savings is down to nearly nothing, which is part of what made me realize I need to make a change.) BUT if I stop using the CCs now and pay cash for all my everyday purchases, I still have last month's purchases sitting on those cards that will be due on Jan 28th and I won't be able to pay them in full.

So do I still stop using the "everyday" CCs now and let those turn into yet more debts to pay off once Jan 28th rolls around and I can't pay in full? Or just do everything I can to reduce spending and make extra money, and still use the CCs for my everyday purchases? What would you do?

 

[dayvewc]

Okay debt dumpers, I need some advice on how to get started. In addition to my 3 CCs on which I have been carrying a balance, I have a few other CCs that I use for everyday purchases. Up to this point, I have been paying these cards in full each month. I set the due date to the last possible day of the month, charge all my purchases throughout the month, then *usually* I have enough cash to pay off the cards when they come due. (I have had to take from savings enough times recently that my savings is down to nearly nothing, which is part of what made me realize I need to make a change.) BUT if I stop using the CCs now and pay cash for all my everyday purchases, I still have last month's purchases sitting on those cards that will be due on Jan 28th and I won't be able to pay them in full. So do I still stop using the "everyday" CCs now and let those turn into yet more debts to pay off once Jan 28th rolls around and I can't pay in full? Or just do everything I can to reduce spending and make extra money, and still use the CCs for my everyday purchases? What would you do?

Just me, I'd cut back as many expenses as possible and make extra money. Try to save to have enough to pay what's on the CC, then use cash for the rest of the purchases. Lowering the overall balance on the CC so (hopefully) in a couple of months you don't need to use it at all, but can simply pay cash for the everyday items.

 

[gracie1]

Okay debt dumpers, I need some advice on how to get started.

In addition to my 3 CCs on which I have been carrying a balance, I have a few other CCs that I use for everyday purchases. Up to this point, I have been paying these cards in full each month. I set the due date to the last possible day of the month, charge all my purchases throughout the month, then *usually* I have enough cash to pay off the cards when they come due. (I have had to take from savings enough times recently that my savings is down to nearly nothing, which is part of what made me realize I need to make a change.) BUT if I stop using the CCs now and pay cash for all my everyday purchases, I still have last month's purchases sitting on those cards that will be due on Jan 28th and I won't be able to pay them in full.

So do I still stop using the "everyday" CCs now and let those turn into yet more debts to pay off once Jan 28th rolls around and I can't pay in full? Or just do everything I can to reduce spending and make extra money, and still use the CCs for my everyday purchases? What would you do?

It sounds like your going over what your income is on the everyday cc. If I were you, I would stop using them and go to an all cash method. Even if you have to carry a balance on them for 1 or 2 cycles and get them paid off. Once you get yourself used to an all cash method - you will eventually be able to go back to using those cc for everyday expenses and pay them fully off at the end of each month. I am assuming you use them for rewards? If not - then you could stay on an all cash method.

 

[roadtripper]

I usually lurk here, but I am in this year. We have legal bills from an ongoing lawsuit wreaking havoc with our usual fiscally responsible budget, and DD's college fund is nearly depleted with one more year of college to go.

We also have 3 foster kids living with us (and their sister when she is home from college) and even though we get money to help with their support, it never seems to cover all the additional expenses of having 4 more teenagers in the house. Some of that is my fault--I already had a Disney trip planned when they were placed with us, so they are coming too, of course. Hoping to be back on track by April or so.

Looking forward to the support here!

 

[SirDuff]

Okay debt dumpers, I need some advice on how to get started.

In addition to my 3 CCs on which I have been carrying a balance, I have a few other CCs that I use for everyday purchases. Up to this point, I have been paying these cards in full each month. I set the due date to the last possible day of the month, charge all my purchases throughout the month, then *usually* I have enough cash to pay off the cards when they come due. (I have had to take from savings enough times recently that my savings is down to nearly nothing, which is part of what made me realize I need to make a change.) BUT if I stop using the CCs now and pay cash for all my everyday purchases, I still have last month's purchases sitting on those cards that will be due on Jan 28th and I won't be able to pay them in full.

So do I still stop using the "everyday" CCs now and let those turn into yet more debts to pay off once Jan 28th rolls around and I can't pay in full? Or just do everything I can to reduce spending and make extra money, and still use the CCs for my everyday purchases? What would you do?

I agree with the other posters who have commented. Since you have had to take from savings fairly often (I'm not sure how often, but it sounds like it was enough to deplete your savings), it does sound like you need to reduce spending and/or make extra money.

If you were to stop using the card and move to cash, how long would it take you to pay off the money currently on the card?

 

[jenny105]

Ok I always start out strong on these threads and then fade but 2015 is going to be different. My goals are to pay down at least half my CC debt (right now at around $5500) and put at least $1,000 in an emergency fund because I don't have one! $1,000 is definitely better than $0.

As you can see we do have a vacation planned but that's going to be paid for in cash. No CCs!

Is it weird I'm looking forward to getting paid on the 2nd so I can get this started?

 

[Eureka]

Ok I always start out strong on these threads and then fade but 2015 is going to be different. My goals are to pay down at least half my CC debt (right now at around $5500) and put at least $1,000 in an emergency fund because I don't have one! $1,000 is definitely better than $0. As you can see we do have a vacation planned but that's going to be paid for in cash. No CCs! Is it weird I'm looking forward to getting paid on the 2nd so I can get this started?

Not weird at all. I feel this sense of satisfaction every payday when I have finished paying bills and see that we're on track.

 

[Ava]

I agree with the other posters who have commented. Since you have had to take from savings fairly often (I'm not sure how often, but it sounds like it was enough to deplete your savings), it does sound like you need to reduce spending and/or make extra money. If you were to stop using the card and move to cash, how long would it take you to pay off the money currently on the card?

Honestly, I'm not sure. I'm on my way home from holiday visiting right now but tomorrow evening once we're home and our last guest (my MIL) is gone, I'm going to sit down with DW and figure it all out. Between us we got $500 for Christmas, so I'm going to stretch that as far as I can to cover our groceries and any other household needs for January.

I have to say, I really appreciate the advice without judgement that people give on this thread. DISers are the best.

 

[AlohaNow]

Is it weird I'm looking forward to getting paid on the 2nd so I can get this started?

No. It just means you're one of us now.
Welcome to the club. (Mwahhh ha ha ha ha!)