Official DIS Debt/Finance Support Thread

[dodukes]

Subscribing!...I am so excited to see a thread like this. I have spurts where I get excited about budgeting and such but then reality comes along and it get depressing when you dont have the money to "budget". I think if i keep readsing all of these posts I should do good. It doesnt help that DBF is not into budgeting as much as I am, it loks good to him on paper and in talk but when it comes time to doing it, thats a whole other story..lol

 

[donnajon]

I'm ready to get out of debt! Our goal is to pay off our debt and upgrade to a nicer house in 5 years. Our house now is nice but it would be nice to have our dream home. We would have a really good deal of equity in the house by then. My car will be paid for in two months but we have stupid CC debt. My DS9 just got his black belt in karate so that means we don't have to pay for classes anymore. That is an extra $70 per month. We go out to eat way to much and that has got to stop! I think I'm going to use the cash method and that will help. I have a ton of food in the house. I've been doing TheGroceryGame for almost a year and usually save about 65% on groceries. (DDs' chocolate milk addiction always skews my percentages as it is never on sale! Those girls can go thru a half gallon daily!) This includes makeup and cleaning supplies so I never have to go to Walmart or Target.
I have a question about the debt snowballing. Do you start with the lowest balance first so you can see a card paid off or do you focus on the card with the largest interest rate?

 

[jenr812]

You can do the snowball either way. Obviously it will save you more to start with the highest interest one, but some people get discouraged if that is a large balance. It may help to pay your smallest one first, just to get things rolling and get that satisfaction of paying it off. It gets addicting once you start It just depends on your personality. If it will be more encouraging to you if you pay them smallest to biggest, do it that way. If you think you are disciplined enough and don't need that extra boost, then start with the higher interest rate first.

I made a chart in MS Word with all my CCs, their current balance and interest rate, and due date in the rows on the left. Then along the top are the months. For each card, each month, I record the amount I pay, the date I plan to pay it, and the balance. I also put any confirmation # since I pay online. I have it figured out with the interest and everything so I know how much my balance will be each month. Once I make the payment, I highlight it in yellow. Once I pay off a card, I highlight it in purple (my favorite color!). It is a strange little system, but it keeps me motivated and it's nice to have everything right there and know when each thing will get paid. We've paid several cards off (and are paying them faster than anticipated ) so it's very nice to see the chart getting marked up in yellow and purple

Good luck! Eating out is our big downfall too...

 

[jenr812]

PS We designated an extra $150 monthly to the CCs above and beyond the minimums and then lump that extra amount on the card we're working on that month. Before we were just paying the minimums with no light at the end of the tunnel.

 

[jenr812]

PS Thanks Amy and Steve for answering my question

 

[jlw29]

Prompted by a Finance sermon series starting at our church, DH and I decided that we are going to try to get debt free as a long term goal. Most of our fights are about money and we want that to stop. They said that anyone can be completely debt free in 7 years, but we are setting 10 years as our goal, because our debt load is a bit (a LOT) more than the usual couple. In addition to a mortgage, car, truck and a few CC payments, I have a huge student loan ($270K -- yes, over a quarter million dollars! ). I went to a private medical school (still in residency now) that cost big bucks and had to take out loans above tuition to help pay for daycare / living costs because our expenses were based on including my former (good!) salary before I went back to school. All total (morgtage, student loans, vehicles, CC etc) we have over $500K.

One of the first things we are going to do is figure out what we can cut out NOW. We eat out way too often, get Dunkin' Donuts / Wawa coffee most days, have satellite radio, digital cable, our DDs have way too many "things". The good thing we have going for us is I'm done with residency next June and my income will go up significantly. We've been making it (barely) on DH's income and my residency pay. If we can put the increase in pay I'll get in July toward retiring our debt and building savings, we can knock those scary numbers down more quickly than our 10 year goal. For example, we've decided that we can stay in the house we're in now instead of going out and buying the "doctor house" next summer as we origially planned. We can drive our vehicles until they die. My car isn't pretty, but it runs, and it will be paid off in a few months. Another thing I can do is some locum tenens work since my hours will be so much better as an attending than they are as a resident. That can be extra money we can allocate as needed starting next summer. I'm teaching ACLS and PALS now to bring in a bit extra.

I'm mainly a lurker on this forum, but I figured that putting this goal down in writing makes me accountable to SOMEONE -- especially people who have a similar goal.

 

[corie161]

Glad you resurrected the thread. Many thought it was a great idea, yet it still fizzled.

I haven't been doing really well at widdling down the debt. DH hasn't been as busy this summer with the construction business so the checks don't go as far as they used to. My Dad did daycare for us, which we still paid him for, just not the going rate (It was the going rate when we started). Now he has decided to do something else. We were fine with that, he's a much happier person, but there isn't nearly as much left on my checks now that that started! Good thing school is starting and I have both of them going to school this year!

I get frustrated trying to sell on Ebay only to have my auctions close at teeny amounts. I guess I have to look at it more as decluttering.

 

[nightowlky]

Looks like I'll be debt-free (minus the car) in about 9 months.

Woo hoo!!


But, then I'll be looking to go deep in debt in purchasing a home (but I look at that as a source of retirement income in about 30 yrs )

 

[Mom2Ty&Lins]

I am glad to have stumbled across this thread. DH and I are always trying out one budget idea or another. Our biggest downfalls are us eating out and me spending way too much at the grocery store/WM/Target.

Today I went to the bank on the way to super WM and withdrew our bi-weekly allowance for grocery/household items. I was sweating bullets walking around that store! I was scared to death I wouldn't have enough money in the envelope to cover what I was purchasing. Not only did I have enough (with $40+ leftover), I stuck to my list buying only one item that wasn't on the list! That is soooooo unlike me. I usually spend a chunk of money on useless junk and forget to buy most things on my list.

It isn't much but it is a start and I am so proud of myself!

 

[mousefanmichelle]

I am in - I have been trying to budget this last month and I am excited to see something happen. I told my hubby that in 5 years we will be debt free and we can build that pole barn he wants for his business. I want to make that a reality and not a dream. I am sick of working my butt off for nothing it seems but debt! I have tightened the purse strings and I think I will see the pay off but I know we have a long road ahead of us with some sacrificing such as a low key vacation at the end of this month, smaller Christmas and birthdays for the kids. I want to be able to help them with college and I want to retire and not eat cat food!!!LOL.
Good luck to everyone trying to make a go of it!

 

[zalansky]

Dave Ramsey fans....can I buy a book of his that will give advice or do I have to sign up for the annual website help he has that costs $89 a year? I am confused!

 

[dvcgirl]

Prompted by a Finance sermon series starting at our church, DH and I decided that we are going to try to get debt free as a long term goal. Most of our fights are about money and we want that to stop. They said that anyone can be completely debt free in 7 years, but we are setting 10 years as our goal, because our debt load is a bit (a LOT) more than the usual couple. In addition to a mortgage, car, truck and a few CC payments, I have a huge student loan ($270K -- yes, over a quarter million dollars! ). I went to a private medical school (still in residency now) that cost big bucks and had to take out loans above tuition to help pay for daycare / living costs because our expenses were based on including my former (good!) salary before I went back to school. All total (morgtage, student loans, vehicles, CC etc) we have over $500K.

One of the first things we are going to do is figure out what we can cut out NOW. We eat out way too often, get Dunkin' Donuts / Wawa coffee most days, have satellite radio, digital cable, our DDs have way too many "things". The good thing we have going for us is I'm done with residency next June and my income will go up significantly. We've been making it (barely) on DH's income and my residency pay. If we can put the increase in pay I'll get in July toward retiring our debt and building savings, we can knock those scary numbers down more quickly than our 10 year goal. For example, we've decided that we can stay in the house we're in now instead of going out and buying the "doctor house" next summer as we origially planned. We can drive our vehicles until they die. My car isn't pretty, but it runs, and it will be paid off in a few months. Another thing I can do is some locum tenens work since my hours will be so much better as an attending than they are as a resident. That can be extra money we can allocate as needed starting next summer. I'm teaching ACLS and PALS now to bring in a bit extra.

I'm mainly a lurker on this forum, but I figured that putting this goal down in writing makes me accountable to SOMEONE -- especially people who have a similar goal.

This is pretty weird....I *just* listened to Dave Ramsey (finanical radio guy/author) and he had a caller who told him that they had $250,000 in student loan debt. 150K of that was the hubby, who became a Physician's Assistant, and she said she was a "therapist"....and she racked up another 100K. She was so happy and peppy....and Dave Ramsey sounded like he was going to vomit after hearing all of their debt, which included 60K in cc debt, a 275K mortgage, plus a couple of big car payments...one was a $600 a month Tahoe payment. The DH was working already....he makes 120K, and she became a SAHM who is starting a custom window treatment company (meaing...her 100K "investment" was down the tubes"). She just seemed so incredibly clueless as to how deep they were in it...and while the husband made a nice salary, it's not likely he'll go up much from there.

As Ramsey would say....you'll have a "big shovel" (meaning big salary), to dig out of that hole. The only place I see you potentially heading into trouble is when you mentioned buying the "Doctor House" down the road. That kind of thinking will get you into big trouble. People who live in the Doctor Neighborhoods are big players in the Keep up with the Jones game....and many of them are under-accumulators of wealth. They live luxury lifestyles and save far less than they should as a direct result. I've lived in a neighborhood like this....and have seen it firsthand.

I'd stay in the "Residents House" longer than you think you should...whack away at some of that student loan debt and really live beneath your means for a few years before taking that big step up. Trust me, your patients could care less what kind of a neighborhood you live in....they just want a good doc.

 

[disneysteve]

In addition to a mortgage, car, truck and a few CC payments, I have a huge student loan ($270K -- yes, over a quarter million dollars! ). I went to a private medical school (still in residency now) that cost big bucks and had to take out loans above tuition to help pay for daycare / living costs because our expenses were based on including my former (good!) salary before I went back to school. All total (morgtage, student loans, vehicles, CC etc) we have over $500K.

One of the first things we are going to do is figure out what we can cut out NOW. We eat out way too often, get Dunkin' Donuts / Wawa coffee most days, have satellite radio, digital cable, our DDs have way too many "things". The good thing we have going for us is I'm done with residency next June and my income will go up significantly. We've been making it (barely) on DH's income and my residency pay. If we can put the increase in pay I'll get in July toward retiring our debt and building savings, we can knock those scary numbers down more quickly than our 10 year goal. For example, we've decided that we can stay in the house we're in now instead of going out and buying the "doctor house" next summer as we origially planned.

Being the resident Budget Board physician, let me put in my 2-cents. It sounds like you've already realized this, but you have got to stop living the life you think a doctor is "supposed" to have and start living the life you can afford. When I finished residency in 1993 I owed $102,000. We bought a modest home with a 20% downpayment in 1994 and made a concerted effort to live below our means and put every extra dollar toward debt repayment. I repaid my loans in just over 10 years. Once those obligations were gone, did we start living it up and enjoying the "doctor" lifestyle? Not a chance. We remained frugal (ok, a bit less frugal than we used to be) and kept living well below our means. We now save 28% of our gross income.

Doctors are just like everyone else. They live beyond their means, rack up credit card debt, get divorced over financial issues, file for bankruptcy, etc. In fact, my spending habits were considered so unusual for a doctor that my family was featured in an article in a well known physician's financial magazine a few years ago.

It sounds like the light bulb has already gone on for you and you are on the right track. Cut back to limited basic cable ($10/month around here), cancel satellite radio, cut way back on eating out and hitting the convenience stores, and forget all about that "doctor" house until you have a big chunk of that debt repaid AND you can afford at least a 20% downpayment (and even then I wouldn't do it).

I thought 102K was bad. I can't imagine coming out with 270K to repay. I wish you luck.

 

[Stein]

Dave Ramsey fans....can I buy a book of his that will give advice or do I have to sign up for the annual website help he has that costs $89 a year? I am confused!

I read both books and prefer The Total Money Makeover. Buy it used, or if you are really hard up, just listen to the radio show. If you listen for 2-3 weeks, you will have it down. In a nutshell, here are the steps:

1. Save $1,000 in an emergency fund.
2. List all debts smallest to largest. Pay minimum on everything except the smallest and slam the heck out of that one with everything you can.
3. Bump your emergency fund from $1k to 3-6 months of expenses
4. Save for retirement and college (15% for retirement and whatever you think you need for college).
5. Pay off the house
6. Have a really, really good time.

We have been on it for 2 months now. Four debts down, 8 to go. Unfortunately they get larger as you go down the list.

 

[Texa]

We try to do Dave Ramsey and it's become kind of an office trend. Unfortunately we've all "Ramsey curse". As soon as someone decides to get serious or gazelle intense something large will occur. For us it was our air conditioner (in 107 degree heat!). So I was wondering what do you do when your unexpected expense is much greater than your $1000 emergency fund?

 

[babynurse1]

Dave Ramsey is my hero! I'm hoping for inspiration from this forum.

I guess my reply to the last post about the emergency being over 1000, would be-- is it really an emergency? I mean if my kid broke their leg and my copay was over 1000 dollars or something crazy, then of course I would put it on a credit card, and then pay it down.

Otherwise, I would try to shop the price and save up.

Thanks for everyone's tips and support!

 

[sorchamac]

I have a ton of food in the house. I've been doing TheGroceryGame for almost a year and usually save about 65% on groceries. (DDs' chocolate milk addiction always skews my percentages as it is never on sale! Those girls can go thru a half gallon daily!) This includes makeup and cleaning supplies so I never have to go to Walmart or Target.

What's the TheGroceryGame??? Tell me please - I've got to save more at the grocery store!!

 

[jlw29]

Being the resident Budget Board physician, let me put in my 2-cents. It sounds like you've already realized this, but you have got to stop living the life you think a doctor is "supposed" to have and start living the life you can afford... .

THe worst part of it is that it's my and DH's families that have convinced us. As far as they're concerned, med school was a great financial move. "Look at how much $$$ you'll make!" I tell them "I had 4 years of NO paycheck, 3 years of a smaller than I was making pre-MD paycheck, less time to put money away for retirement and DDs' education and a ton of debt! It was a HORRIBLE financial decision, but I love, Love, LOVE what I do!"

I'd stay in the "Residents House" longer than you think you should...whack away at some of that student loan debt and really live beneath your means for a few years before taking that big step up. Trust me, your patients could care less what kind of a neighborhood you live in....they just want a good doc.

It sounds like the light bulb has already gone on for you ... and forget all about that "doctor" house until you have a big chunk of that debt repaid AND you can afford at least a 20% downpayment (and even then I wouldn't do it)..

The lightbulb went on for both of us which is a great thing. DH and I have never worked together toward this goal before.

And I knew you would be appalled by the "doctor house" comment, disneysteve. You can be my Jiminy Cricket conscience! I like my neighborhood and would be content to stay here for a much longer time. I'm realizing that my last name isn't Jones, and I don't need to keep up with them!

I thought 102K was bad. I can't imagine coming out with 270K to repay. I wish you luck.

Well, part of that is DH's but I had a bit more than double yours. DH finished his BS while I was in med school (including 1 semester full time when he lost his job due to refusing a transfer to China my 4th year of med school -- no income for 6 months for either of us - great addition to our debt!). His graduation was 1 day before mine.

 

[disneysteve]

THe worst part of it is that it's my and DH's families that have convinced us. As far as they're concerned, med school was a great financial move.

The general public, particularly the older generation, still has the notion that doctors make a ton of money and it just ain't true folks. Yes, they make money, but in exchange they pay high malpractice premiums, ever increasing licensing fees, rising office overhead costs and, of course, there's that med school debt that people somehow overlook. And, as you mentioned, someone who goes to medical school sacrifices at least 7 years worth of earning and saving time. It is years into practice before the average doctor catches up with his/her peers who entered the workforce right out of college.

Add to that the fact that many of us are either self-employed or part of a small business and often don't have much in the way of benefits. I pay for my health insurance. I don't have a 401K or pension plan. I know lots of non-physicians in various fields whose total compensation package is comparable to mine. I may make more in salary, but they make it in overall compensation counting benefits.

I'm not complaining for a second because I've wanted to be a doctor since 4th grade and I love what I do (most of the time ). But a "great financial move"? Not a chance.

 

[jenr812]

I read both books and prefer The Total Money Makeover. Buy it used, or if you are really hard up, just listen to the radio show. If you listen for 2-3 weeks, you will have it down. In a nutshell, here are the steps:

1. Save $1,000 in an emergency fund.
2. List all debts smallest to largest. Pay minimum on everything except the smallest and slam the heck out of that one with everything you can.
3. Bump your emergency fund from $1k to 3-6 months of expenses
4. Save for retirement and college (15% for retirement and whatever you think you need for college).
5. Pay off the house
6. Have a really, really good time.

We have been on it for 2 months now. Four debts down, 8 to go. Unfortunately they get larger as you go down the list.

The last one is Build Wealth and Give Give Give!!