Debt Dumpers 2024

[trenty]

I don't know how many people here that have EF of only $1000, because in today's economy, $1000 is barely enough to do anything.

Just clarifying (not arguing): 1K is not enough for a true emergency fund. DR's advice is to start with 1K in the bank before paying off debt, so if a minor emergency comes up, you don't have to add to your debt. If OP had 1K, he would be looking at a $800 problem instead of a $1,800 problem. He would go back to paying minimum payments on all debt, save up the additional $800 and get his car fixed. I know I am writing this as if it is easy. This is hard. But the system works.
I agree - after one is out of all consumer debt, then the true emergency fund should be created.

I do not agree with everything DR advises. But I have used his babysteps, and they work if followed correctly. Part of it is committing to only spending necessary money during the first 3 steps: no eating out, no vacations, no frills. If one realizes this is a temporary sacrifice for greater gain, it can be done.

And yes - as @Nettlelondon reminded us - DW is not on the same page. This does make things even harder.

 

[ruadisneyfan2]

My advice is mixed and that is why I suggested talking to a financial advisor that can cater to his needs and put him on the right path.
It doesn't make sense to have an emergency fund if the credit card is carrying a huge balance with high interest rate.

I don't have a lot of credit cards, just like 6 cards with about $350K in available credits. I only actively use 2 of them.
I guess I might be doing something wrong with my strategy.

Using credit cards isn't against the idea of dumping debt if you know how to use it correctly.

Many years ago, I had $35K in credit card debt, plus $60K in student loans while making $41K a year in NYC where rent for a studio was $1600. I didn't have money to do an EF because it wouldn't make sense.
What I am suggesting is to focus on getting rid of the debt first and not worry about the EF.
What's the point of the EF of $1000 and you have $600 sitting in credit card debt and paying 5% above min. payment? Exactly, how is this getting rid of debt?

Once the debt is clear, all the money/income and less expense, you know how much you will have left over. I wouldn't necessarily say that's EF. Put in savings to make some interest, put it towards bonds, invest in it.

There are different types of debt. Credit Card debts are the worse, but if you know how to utilize the credit cards, you can benefit from it.

Someone here also mentioned if you the emergency funds is far less than what is needed, the difference needs to come from somewhere. So in this situatin, EF has been exhausted and need to borrow. I don't know how many people here that have EF of only $1000, because in today's economy, $1000 is barely enough to do anything.

I am not saying EF is bad but maybe it's better to save for an EF AFTER the debt is gone?

But what do I know...

https://www.ramseysolutions.com/dave-ramsey-7-baby-steps

 

[ruadisneyfan2]

Just clarifying (not arguing): 1K is not enough for a true emergency fund. DR's advice is to start with 1K in the bank before paying off debt, so if a minor emergency comes up, you don't have to add to your debt. If OP had 1K, he would be looking at a $800 problem instead of a $1,800 problem. He would go back to paying minimum payments on all debt, save up the additional $800 and get his car fixed. I know I am writing this as if it is easy. This is hard. But the system works.
I agree - after one is out of all consumer debt, then the true emergency fund should be created.

I do not agree with everything DR advises. But I have used his babysteps, and they work if followed correctly. Part of it is committing to only spending necessary money during the first 3 steps: no eating out, no vacations, no frills. If one realizes this is a temporary sacrifice for greater gain, it can be done.

And yes - as @Nettlelondon reminded us - DW is not on the same page. This does make things even harder.

I think we're in the same brain! Like we were separated at birth.

 

[trenty]

You need to speak to a financial advisor or someone that actually knows finance. You are getting good advice on here but it's mixed advice.

@WDW_fan_in_TX - I have never used this free service, so I don't know how good it is. But it is worth a try:

https://www.ramseysolutions.com/ram...18Z5Ih7RsMVsVDxJgPAsyocssCPVsu3emACycQqtvAwQu

 

[firefly_ris]

To me, a credit card purposely being an emergency fund would never be an option. Why put something on a card and pay over 20% interest on it until it's paid off instead of just having the cash up front and no interest and then work to replenish the fund? I have liquid funds in HYSA, money markets, etc. that earn a couple thousand dollars in interest each year.... or I can have no liquid funds and make nothing. Looking at the stats we have an insane credit card problem in the US so I guess not a lot of people agree with that. I prefer to keep and make as much of my money as I can, not make Chase richer. YMMV.

Regardless, the main thing besides any kind of gameplan is that both spouses need to be on the same mindset and gameplan and tackle it together, otherwise it's going to be really difficult to get out of the hole. That's something I don't know how to help solve here. My husband and I have always been on the same page since before we were married and had 2 nickels to rub together. We got to where we are now after years and years of hard work, sacrificing, being very frugal, and always openly communicating about purchases, budget, what we really need/don't need, how to make things work. It could be really different right now if one of us wasn't interested in being financially healthy.

 

[focusondisney]

Also depends on the area. In my area if you had an apartment or were paying a mortgage on a house pre-covid (the mortgage is the more likely scenario) then right now it's considerably cheaper to stay where you are than to move. Rents and property costs have skyrocketed in the last few years. I'd considered moving to a smaller place myself, but houses that are smaller are going for at least double what I'm paying for mine (not factoring in the interest rate hikes), and the cheapest rent I could find was 3x my mortgage payment with nothing included. I know there are extra costs with a house, but I couldn't take that kind of hit.

And leaving the town/city you're living in just might not be an option.

I'm sure that other places aren't like that, but it's certainly a consideration. Like I said, it's easy for us to judge without knowing everything.

I get all that. But if you can’t afford to pay your rent & have money to buy food for the next 2 weeks, you have to do something. Coz what you’re doing isn’t working. You either need more money & less expenses. Their rent seems to be their biggest expense & needs both of their biweekly pays. They’ve been there only 1-2 years, so not precovid. No financial adviser will say it’s ok to pay half your take home pay on housing.

Also worth noting, these aren’t kids just out of school or a single mom with kids. He’s mentioned they’ve been married 20 or more years. This is 2 grown adults, assuming in their 40s, both working full time. They don’t really have the luxury of time & mini steps. This is their life. The next 20 years will fly by. What they do now will determine how they live those years.

 

[simonsayz]

https://www.ramseysolutions.com/dave-ramsey-7-baby-steps

https://www.reddit.com/r/DaveRamsey/comments/sfhd9p/1000_emergency_fund_didnt_work_twice

He doesn't account for a lot of things. This $1000 EF was recommended back in 2003. It doesn't make sense to follow anymore. Potato Chips used to cost 25cents and now they are like $1.50. Time has changed and new strategies needs to be implemented.
Following a strategy that was 2 decades ago. I understand for it is for a starter.

At the end of the day, each individual will have their own type of financial struggles and they need to find what is the correct strategy/path they need to go with. Everyone here is trying to help and I am glad this is a community/forum that is willing to give solid advice. He needs to figure it out like how many people are stating they aren't exactly young, 20 years of marriage, and both are barely making rent. Something drastic needs to change.

 

[ruadisneyfan2]

https://www.reddit.com/r/DaveRamsey/comments/sfhd9p/1000_emergency_fund_didnt_work_twice

He doesn't account for a lot of things. This $1000 EF was recommended back in 2003. It doesn't make sense to follow anymore. Potato Chips used to cost 25cents and now they are like $1.50. Time has changed and new strategies needs to be implemented.
Following a strategy that was 2 decades ago. I understand for it is for a starter.

At the end of the day, each individual will have their own type of financial struggles and they need to find what is the correct strategy/path they need to go with. Everyone here is trying to help and I am glad this is a community/forum that is willing to give solid advice. He needs to figure it out like how many people are stating they aren't exactly young, 20 years of marriage, and both are barely making rent. Something drastic needs to change.

While this is true that $1000 wont cover everything but it covers a LOT of things. If your washer breaks down, you blow a tire, your dog has worms, your kid needs an ER visit with a $250 copay, etc.
The longer you spend paying down your debt, the less likely $1000 will get you through it.
A lot people feel like it’s not enough but just saving $1000 is hard for a lot of people. Dragging it out to $2000 or more would take much longer and a lot of people could end up giving up before they even start paying off debt.

 

[Nettlelondon]

I suppose early goals have to have some hope of being reached or they will not work.

In the UK there is a running programme called Couch to 5k - the aim is to get people running 5 kilometres (about 3 miles). A lot of people that follow the programme go from not running at all to running half or full marathons but I very much doubt that anyone would sign up to follow a Couch to Marathon programme as they would say it was unrealistic. Saving $1,000 is never going to be enough, but it is better than saving nothing at all because a requirement to build a $10,000 EF is just so extreme as to be pointless for the person who is trying to scrape together the funds to feed themselves today.

 

[barkley]

For everyone commenting - don't forget that WDW fan is also trying to sort this in the face of his DW who isn't necessarily in the same place mentally on the debt dumping journey which must make things a heck of a lot harder to deal with.

And yes - as @Nettlelondon reminded us - DW is not on the same page. This does make things even harder.

i strongly agree-unless both partners in the relationship are on the same page with their efforts it is difficult if not impossible to accomplish debt repayment/non aquisition of new debt. that said-

it's none of our buisness but i have to wonder if WDW fan and his dw combine their incomes to budget or do what i knew to be rare 'back in the day' but seems more common now (at least from what i read on the majority of debt stress posts on reddit and other sources) and operate on some kind of 'my income is mine, your's is your's-i will pay x% of rent/utilities/groceries, you pay...). i guess if it works for folks that's great but i see so many posts where there's allot of new and ongoing debt that's generated in one or BOTH party's names b/c one of the partners overspends/fails to pay their percentage in a given week or month so it falls on the other to try (and often struggle/outright fail) to meet the shortfall (and in many cases meet basic needs).

dh and i lived together before we married and operated financialy separate but i'll be honest-it was my apartment to begin with so i knew that i could afford the rent/utilities and my other expenses. when he moved in he became resposible for 50% (plus his food). i knew any debt that he might aquire was on him-not me so if he flaked it didnt sink me financialy. when we began considering marriage we combined our incomes and it became not a 'can I afford it but a can WE afford it' financial operation. that's not to say there have not been heated discussions and arguments on purchases, spending and financial decisions during the decades of our marriage. we've made some good decisions and plenty of bad (reason i'm on this thread-to stay on the debt free track).

just out of my own curiosity, for those willing to share-if you are on or have completed your debt dumping journey SUCCESSFULLY-

?do you comingle your income with your spouse/partner
?are you on the same page with your goals

 

[Nettlelondon]

We got married young, had nothing so just combined what little we had and went from there, following what our parents had done before - but both sets had very different reasons.

My father worked away from home so mum managed all financial matters as waiting for dad to be around could have left bills unpaid for weeks and weeks. OH's mum was a SAHM from not long after they got married so there was no income from her.

OH & I just decided we would muddle through together. The early years were not easy - we ate at his parents at least one night a week, and at mine at least one other night (they lived close by so not an issue) as that was a quick and easy way to squeeze the budget. We lived within walking distance of a major supermarket and became skilled at knowing when the yellow stickers would be going out reducing prices for things that had to be cooked that day and, whilst I say so myself, I have always been a pretty adaptable cook.

Part of the reason we just combined everything was that I knew that if we had children I would be taking time at home to be with them (we get up to a year maternity leave in the UK, but the pay can be minimal after the first 6 weeks) and I had too much pride to work on the basis of receiving "housekeeping" or an allowance from OH. If I was "working" looking after our child I was not "begging" for money from him for things I may need for either myself or the child.

At times my income was higher than his, at other times he was the higher earner but we just always viewed it as "our income". I had 6 months between jobs at one point due to some health issues and accidentally retired 7 years ago. An intended short gap between jobs grew & grew to the point that I have not really been economically active since. But this means OH can do all the work he can handle (he works for himself in a specialist IT field) and I do everything else to keep our lives ticking along.

But all of this only works because we agreed our money goals early on. And indeed we were pretty much aligned on other major life situations. And the bank balance reflects that we didn't end up having children - a major expense line avoided.

We are fortunate that the need to monitor every penny went a long time ago, but we are both still pretty careful about what we spend money on and tend to squirrel funds away to pay for larger ticket items.

And we still save any change we get - though as the world is moving to more and more cashless transactions this is much less of a thing than it once was.

 

[trenty]

i strongly agree-unless both partners in the relationship are on the same page with their efforts it is difficult if not impossible to accomplish debt repayment/non aquisition of new debt. that said-

it's none of our buisness but i have to wonder if WDW fan and his dw combine their incomes to budget or do what i knew to be rare 'back in the day' but seems more common now (at least from what i read on the majority of debt stress posts on reddit and other sources) and operate on some kind of 'my income is mine, your's is your's-i will pay x% of rent/utilities/groceries, you pay...). i guess if it works for folks that's great but i see so many posts where there's allot of new and ongoing debt that's generated in one or BOTH party's names b/c one of the partners overspends/fails to pay their percentage in a given week or month so it falls on the other to try (and often struggle/outright fail) to meet the shortfall (and in many cases meet basic needs).

dh and i lived together before we married and operated financialy separate but i'll be honest-it was my apartment to begin with so i knew that i could afford the rent/utilities and my other expenses. when he moved in he became resposible for 50% (plus his food). i knew any debt that he might aquire was on him-not me so if he flaked it didnt sink me financialy. when we began considering marriage we combined our incomes and it became not a 'can I afford it but a can WE afford it' financial operation. that's not to say there have not been heated discussions and arguments on purchases, spending and financial decisions during the decades of our marriage. we've made some good decisions and plenty of bad (reason i'm on this thread-to stay on the debt free track).

just out of my own curiosity, for those willing to share-if you are on or have completed your debt dumping journey SUCCESSFULLY-

?do you comingle your income with your spouse/partner - Yes, everything we have is OURS. If it is an account that can only be legally named for one of us - we have listed the other as a beneficiary (401K, for example). We both know all usernames and passwords for ALL financial accounts.

?are you on the same page with your goals - 100%, YES.

I would propose to add:
?do you create a budget each month - Yes. And we stick to it. If we overspend in one area, we take from another.

 

[huggybuff]

?do you comingle your income with your spouse/partner
?are you on the same page with your goals

Right now we're in the camp where we keep our individual paychecks in our own checking accounts and have another account where we each contribute to the household expenses. We haven't ultimately decided if we'll end up merging into a single checking account. We just started this method a few months ago. Before that we didn't have a joint checking account and I would just Zelle my husband money every month. I need to finish paying my debt off before we really consider joining our accounts into one.

We're on the same page. He knows I have some credit card debt left to pay off and then my car loan. My goal is to pay all of that off in two more years and then I'll help him tackle the solar loan, the home equity loan and ultimately the mortgage.

 

[pblack]

Do you comingle your income with your spouse/partner? - My DH and I have been together for most of our adult lives (started dating when I was 22 and he was 24, currently 34 and 36) and we combined finances as soon as we were married. For us it's just easier that way. I'm the one who keeps track of our money and pays the bills because he's the type who would wait until the due date to pay something and I'm the type to pay all the bills as soon as we get paid. I couldn't handle his way of paying things. While he couldn't tell you how much we have in our checking or savings at any time, he doesn't mind. I do the majority of the shopping and purchases anyway and if he wants or needs to buy something expensive he usually double checks with me just to be sure we have the money for it.

Are you on the same page with your goals? - Yes. It took some conversations when we first started our debt paying journey because I was really itching to pay all of our debt off and he was kinda relaxed about it. But once he realized how much more freedom we have with everything paid off he was completely onboard. We talk through any major purchases or major payoffs. Ex: when COVID happened and the government was giving people money we took the money we got and put it all towards my student loans because I wanted them gone. While it was tempting to use it for a vacation, we knew in the long run having them paid off was better. Especially if we could pay them off with "free" money from the government and not out of our own pockets.

We both grew up with parents that used credit cards, had debt, and just not really great with managing their money. So we had to figure out what worked for us and basically teach ourselves new money strategies. While his parents are somewhat better with their money now, my parents just don't make enough money to be able to do that and struggle with meeting their everyday needs. So we're at a point in our lives that we supplement a lot of things for my parents. Luckily my DH is ok with us and he knows we would do the same for his parents if they ever needed it. But luckily he has 2 other siblings that can also help out. I have 1 sibling and it's a toss up on whether or not he will actually help out half the time. We also don't want to be like his siblings, they both have bad money management skills and make some really poor financial decisions (in our opinion).

Do you create a budget each month? - Yes and no. I have a spreadsheet that lists out our bills for every month and which bill gets paid out of which paycheck. This spreadsheet also lists the amounts I transfer to savings every month. All of our every day purchases go on a credit card that then gets paid off before the due date. I don't track what we spend at the grocery store, on leisure, restaurants, etc. We tend to spend about the same amount of money each month so I know what to expect. I do check our credit card charges fairly frequently throughout the month to see where we're at.

I will say we don't have any credit card debt, our cars are both paid off, and the only major debt we have left is our home mortgage, home equity loan (used to re-do our pool), and solar loan. My focus lately has been on getting the home equity loan paid off sooner than our term (I forgot how many years it's for). But I'm also ok with redirecting extra money going towards that to fund any vacations we have planned when needed. It's a fine balance between doing what's "needed" and still living life while we can.

 

[Nettlelondon]

There is an advert running in the UK for one of the banks based on some research that shows our attitudes to money are largely formed by the age of 7. They have advisers in branches to help you change your thinking if you feel it needs a reset - with advice on budgeting, debt advice and so on and access to tools to help customers to a better situation.

 

[huggybuff]

Ex: when COVID happened and the government was giving people money we took the money we got and put it all towards my student loans because I wanted them gone. While it was tempting to use it for a vacation, we knew in the long run having them paid off was better.

Ok, this comment reminded me of a commercial I hear all the time on SiriusXM on the way to/from work. It's for a shady? online loan company where the narrator is talking about "Brian".

Paraphrasing:

Brian lives a moderate lifestyle but he's behind on his bills. Brian's been turned down for extra cash by banks, family and friends. Brian applied to (company name) and he got 5K the next day. Now he can use it to pay bills, rent, or take a vacation!

I was so taken aback the first time that I heard that. What are we doing here people?

But, to be fair, I was in that mindset about 7 years ago and I realize how far I've come to get out of it.

 

[Sportypyro]

Hey, thanks for starting this up! I’m pumped to join the 2024 thread. My main goal for this year is to knock out my credit card debt by mid-year and maybe start tackling my car loan. Excited to be part of the group and cheer everyone on!

 

[DanceDisney23]

Brian lives a moderate lifestyle but he's behind on his bills. Brian's been turned down for extra cash by banks, family and friends. Brian applied to (company name) and he got 5K the next day. Now he can use it to pay bills, rent, or take a vacation!

I was so taken aback the first time that I heard that. What are we doing here people?

Doesn’t everyone know a Brian?

My friend once came back from a trip with her then-husband to find an eviction notice on their door. She asked him if he didn’t pay the rent and his response was along the lines of “well no, the payment for the trip was due first and I didn’t have time to work overtime for the rent.”

Of course that wasn't the first time he skipped paying rent. Needless to say, he is her ex now and she is much better off.

 

[goofytinkerbell]

1

 

[ruadisneyfan2]

Hey, thanks for starting this up! I’m pumped to join the 2024 thread. My main goal for this year is to knock out my credit card debt by mid-year and maybe start tackling my car loan. Excited to be part of the group and cheer everyone on!