..and so it's on!

[RoadToRiches]

This month, it's my official "dumping debt plan" start. I am pretty excited. I am finally at the point, where I will start making my payments to credit cards according to my plan. I was working really hard to catch up on every bill, save up little EF in case something happens, and on top of that, I had to use my EF because stuff happened.

I am ready now! On track. My total credit card debt is 16k. My plan is the fastest way possible to pay that off. I didn't go "lowest balance card first" because it just would make it longer by 3-4 months. I am going "higher APR first". According to my plan, I should be debt free by December of this year.

I had to make some sacrifices. I cut my TV and went with roof antenna. That cut my bill from $140 to $30 a month (I need internet for work) I also put myself on envelope system and stopped using my debit card. Every payday (twice a month) I go inside my bank and take cash out to put in my envelopes. I been doing this since January 1st and I have to say, it's AWESOME. I thought budget would be my enemy, but I have to say, I can't believe why I didn't do this before.

So, first card to be victim of my plan is GE Money Bank card. Balance of $2600 at 24.99% with $79 minimum payment. On March 15th, I will be making $1700 payment to it. April 15th, the rest. I can't wait to get that POS card out of my spreadsheet I been paying on it and paying on it and paying on it.. but balance never would go down. Time to get that thing out of here.

So here it is, I will keep you guys posted if you are interested in my progress. I am very excited about it. I keep looking at my spreadsheet where I pretty much have my budget setup and amounts that will go to each card monthly. I copied that spreadsheet and removed all credit cards just to see, what life will be like next year without credit card payments...oh wow...I can't wait for that moment!

This is really urgent and I need to keep on track. Next year, my goal is to max out my retirement plans. But without paying off this debt first, I can't get to my second goal!

Just thought I would share because I am super excited and as funny as it sounds, I can not wait for March 15th to make that payment!

[Urban Chicago]

Congrats and keep it going!

[reader79]

karma for you!

[Savoir Faire-Demogague in NJ]

I agree with the Karma.
Great to hear success stories...

[RoadToRiches]

WOW thank you! I am far from success story YET lol...

I am actually doing this with my friend that has some credit card debt as well. We both were just sitting one time and talking money and I don't even know how we got into the subject of just getting that stuff paid off. We talked little Dave Ramsey, little budgeting. We keep each other in check with daily emails, just to make sure each of us is on track and not spending money on stupid stuff. It really helps to have a friend do the same thing. It's kind of like competition now lol...Funny thing, when we talk, I would say like "So, I was looking at my budget and I think I will do this and that... " lol.. he says the same thing sometimes...

I been waiting for this day to come since January 1st. I knew I had some things to take care of first, but I stayed on track and didn't spend money on stupid stuff. It's amazing how much money I found once I put everything on paper! I figured out, that last year, I spend... ready for this? ... over 14k on gas and food. FOURTEEN THOUSAND! I know where it all went. It went to eating out, going out, ordering stuff in, just in general not looking where my money was going. That's no way to live and become wealthy and financially responsible.

All I have to say is that I really can't wait and I am looking forward to next year! I will be maxing out my 401k at work and I will setup Roth IRA and max that out too! I will have sooooo much money free to save!!! WOHOO!!!!

I started to read financial books, thinking, that I have a year to learn about what I will invest in so I understand everything. When my day comes when I am debt free, I will have all this ammunition in my brain that I packed through out this year, ready to be used! Can't wait!

[Clifford]

Wow. With your energy, you better go ahead and start thinking about what your new member name will be.

[phil5185]

When my day comes when I am debt free, I will have all this ammunition in my brain that I packed through out this year, ready to be used! Can't wait!

Here is an exercise for you - make an annual budget on excel, use your gross income. Ie, list your income tax (say 12,000 after refund), rent (maybe 12,000), payroll tax, health insurance, etc. Transportation (maybe $18,000 counting depreciation, gas, tires, insurance, synthetic oil, washes, etc). SB coffee twice a week, $350, and so on. Then do a descending sort - your cars, tax, rent, will be near the top. And the $350 SB will be near the bottom.
Note that the top 20% of the items on the list account for more than 80% of your costs. (Pareto's rule).
This exercise will separate "the significant few from the insignificant many" - and it is enlightening to realize that the latte factor has almost no effect on your wealth, that is not what caused you to borrow $17,000 from banks. And the $1200 that you will save by cutting cable is a help - but not a big part of the $17,000.

[Tiny]

Yes, you are successful - you made the decision to get rid of your debt (and have a better future!), you did more than just 'lipservice' and came up with a plan. You then started working the plan - you got caught up on your bills and saved up some EF money. You decided which CC debt to tackle first and even figured out when all the debt would be paid off. You even set up a budget and made the change over from using CC/Debit card(s) to using cash for everything stuff.
You're even thinking ahead to what you will do when the debt is gone (retirement savings).

You've got some 'success' at this point! Now you're going for the next level of success! You GO!!

Here's something fun to think about if you haven't thought it already: You've actively been changing (and influencing) your future! Think about that for a little bit. Pretty powerful heady stuff that is...

Congratulations!

[RoadToRiches]

hahah! Thanks! I am just sick of paying! I have to say, Automatic Millionaire really scared the hell out of me and made me think different. I am 35 years old and no savings. That's BAD. First time in very long time I have couple grand in my savings for rainy day. I tell you, it's awesome to have that blanket. My water heater went down so I had to replace it. Luckly I had my EF so I just drew from there. Took some time to rebuild it again, but I am back on track now. At first, I was on 18 months plan. But after doing some number crunching, cutting little here and there (like TV for example), canceling hosting for my domain name just so I could receive email to it (I switched to gmail), cutting out my AMEX credit monitoring, which was like 12 bucks a month, every little thing I could find to cut out, It helped. I stopped my 401k contributions. I know I know.. it's bad, but it will be for 9 months. I just want to get out of this rat hole debt. I am so sick of paying it. I looked at my statements and it makes me sick. I always would make minimum payments, just paying it every month and paying it and paying it. Out of 80 bucks that I would pay on my Amex, 46 of it would go towards interest! It's like throwing money away.

I noticed that my way of thinking started to change too, which is VERY important for people who are in debt and trying to get out of it. Unless YOU don't realize that there is a problem and something needs to be done, there is no way to get out of that debt then. YOU have to decide, Is this how I want to live? What about savings? Do I want to give carts away at WalMart when I am 70? Where am I now with my money? Unless person who is trying to get out of debt REALIZES that something is a problem, then it's a lost cause. I used to read Suzie Orman books where she talked about it, but I really didn't "get it". It's really hard to explain. It's almost like something just hits you hard and you realize ENOUGH OF THIS ALREADY! Time to get something done. I was doing same thing over and over and over again. Can't do same thing and expect different outcome. One thing that motivates the hell out of me and pumps me up is when I look at the possibilities in year 2012. That is my debt free year. That is the year, when I will allocate money FOR ME, instead of thinking WHO I have to pay. One of my paychecks, will be ALL FOR ME.

Another thing that hit me was thinking... look at all these housing opportunities. If I was smart with my money years prior, saved and not "living Amercian Dream" that is going on right now (I want it I want it I want it!) I could buy a very nice property somewhere, capitalizing on this market. But I can't. Why? Because I am in debt! I also realized, which strangely, before I didn't think about it. You really have opportunities if you have nice chunk of money saved up and don't owe anyone any money. You can open your own business, do what you love to do, you just have options. You don't have to worry if you lose that job, because you have nice EF setup. You will be OK. I am sick of thinking "Man, if I lose my paycheck, I would be SCREWED!"

I am done with all this. 9 months of focus and steady progress. My plan is not all that difficult. I am not on "rice and beans". I am ok. I allocated plenty of money for food, car gas, fun and household. This way I don't feel like this is suffering. It's going to be fun actually! To see those cards drop off one by one from my "pay off" spreadsheet.

I have a full time professional job. I also applied to UPS for work unloading trucks after my work. They don't have positions open here by me, but I am in the system waiting to be called when one opens. If they call me, I am there. They say, you can make 120 bucks per week after taxes, working 3-4 hours Mon-Fri. That's 480 bucks per month. In 9 months, that's 4300 bucks...that's one of the cards paid off.. or two small ones...

I put everything on hold. I was going to remodel my bathroom which really needs it. It's on hold. I will do my bathroom next year. CASH MONEY and buy what I like, instead of skimping on stuff because I don't have enough saved for it.
Luckly, my car is paid off and I think I will be good for 4-5 more years with it. My mortgage is 1/4 of my take home pay, so I am good there. I just want to get out of this rat race that all my friends are in!

[RoadToRiches]

Mar 4, 2011 12:15:19 GMT -5 phil5185 said:

When my day comes when I am debt free, I will have all this ammunition in my brain that I packed through out this year, ready to be used! Can't wait!

Here is an exercise for you - make an annual budget on excel, use your gross income. Ie, list your income tax (say 12,000 after refund), rent (maybe 12,000), payroll tax, health insurance, etc. Transportation (maybe $18,000 counting depreciation, gas, tires, insurance, synthetic oil, washes, etc). SB coffee twice a week, $350, and so on. Then do a descending sort - your cars, tax, rent, will be near the top. And the $350 SB will be near the bottom.
Note that the top 20% of the items on the list account for more than 80% of your costs. (Pareto's rule).
This exercise will separate "the significant few from the insignificant many" - and it is enlightening to realize that the latte factor has almost no effect on your wealth, that is not what caused you to borrow $17,000 from banks. And the $1200 that you will save by cutting cable is a help - but not a big part of the $17,000.

Oh believe me Phil, I know "latte factor" Red Bulls everyday. That's 4 bucks daily. I am not doing that anymore. I didn't have one since January 1st. That was my latte factor. Hey, it's ok if I want one though. It's not a crime. It will just have to come out of one of the envelopes LOL. Hmm... 4 bucks for a can of redbull or eggs and bacon for a whole week for bfast? lol Those are the decisions which are obvious what I would pick to buy with that 4 bucks. (I must eat my bfast! ahhaa)

[RoadToRiches]

Mar 4, 2011 12:19:33 GMT -5 Tiny said:

Yes, you are successful - you made the decision to get rid of your debt (and have a better future!), you did more than just 'lipservice' and came up with a plan. You then started working the plan - you got caught up on your bills and saved up some EF money. You decided which CC debt to tackle first and even figured out when all the debt would be paid off. You even set up a budget and made the change over from using CC/Debit card(s) to using cash for everything stuff.
You're even thinking ahead to what you will do when the debt is gone (retirement savings).

You've got some 'success' at this point! Now you're going for the next level of success! You GO!!

Here's something fun to think about if you haven't thought it already: You've actively been changing (and influencing) your future! Think about that for a little bit. Pretty powerful heady stuff that is...

Congratulations!

Looking ahead at the possibilities and options that will come up is what keeps me going. It takes that mentality of "This sucks, I have to blow $1700 on my card! I don't wanna... wah wah wah.." NO! Snap out of it! If you DON'T then that light at the end of a tunnel will never show up!

If you think about it, it's like guarantee that I will win a lottery next year. I mean, it's GUARANTEE. All I have to do is stick to the plan. If I do, I will have all this extra money next year.

I mean, it's almost silly not to do it. "Hey, if you stick to this plan, I GUARANTEE YOU that you will have over 2k a month cash in your pocket.. every month..starting next year " Who wouldn't take that deal?

[Savoir Faire-Demogague in NJ]

Oh believe me Phil, I know "latte factor" Red Bulls everyday. That's 4 bucks daily. I am not doing that anymore. I didn't have one since January 1st. That was my latte factor. Hey, it's ok if I want one though. It's not a crime. It will just have to come out of one of the envelopes LOL. Hmm... 4 bucks for a can of redbull or eggs and bacon for a whole week for bfast? lol Those are the decisions which are obvious what I would pick to buy with that 4 bucks. (I must eat my bfast! ahhaa)

There is a flaw in Phil's post. He is suggesting rent at $12,000 is an expense that should be looked at. He is making the invalid assumption that this expense item can be drastically reduced.

You are on the right track. You've reduced and/or eliminated numerous small expenses that have totalled a significant amount each month, ie: cable bill cut by $110 per month.

[mtntigger]

Congratulations! You have made a very important step into your future. And the support that you are going to get from your friend is super!
Although it sounds like you don't need it now, I suggest that you look into the Women In Red board and race your debt for the year. Why? Because then you have 30 other people (men and women) cheering you on a routine basis and are just as committed to getting out of debt as you are right now. They all want you to stay on your current financial high.

[RoadToRiches]

Hmmm.. never knew what that Women in Red thing was... I thought it was something for women lol where they get together and talk lol

I might have to check it out!

[phil5185]

There is a flaw in Phil's post. He is suggesting rent at $12,000 is an expense that should be looked at.

A flaw that might make you very wealthy? The idea is to look at the items at the top - cutting 10% from a top item is more important than cutting 100% from a bottom item. Eg, cutting 10%from rent is bigger than cutting the entire $350 lattes. And cutting your income taxes by $4000 (via 401k). And cutting car depreciation - and so on.

[DVM gone riding]

come and join us over on women in red (it doesn't matter that you aren't a women) we will help keep you motivated. We are divided into divisions-four for the us and international. just pick the right one, post your total debt and that you are new and a captain will help walk you through any questions.

and then you get smileys for paying it off ;D

[Savoir Faire-Demogague in NJ]

A flaw that might make you very wealthy? The idea is to look at the items at the top - cutting 10% from a top item is more important than cutting 100% from a bottom item. Eg, cutting 10%from rent is bigger than cutting the entire $350 lattes. And cutting your income taxes by $4000 (via 401k). And cutting car depreciation - and so on.

You make the assumption that a 10% cut in rent($12,000), is possible and even desirable. A 10% cut in $1000 per month rent is $100 per month. The poster may likely be unable to find a comparable apartment for $100 less. But let us say he can.
He has saved more by cutting other expenses, seems like nearly $300 per month by reducing and/or eliminating other frivolous spending. They also do not have to deal with the hassle of moving and the associated cost. They may also like their apartment.

[DVM gone riding]

Phil-I hear what you are saying but to me it sounds like the OP had a lot of the big items under control-paid for car, housing less than 25%. but was hemorrhaging on lots of small things. Cut enough small things they add up. Plus I don't know about everyone else but you can't just cut taxes, or ditch a to expensive car but you can cut the cable bill and ditch the lattes and after a while it helps.

[mtntigger]

Mar 4, 2011 12:42:33 GMT -5 RoadToRiches said:

Hmmm.. never knew what that Women in Red thing was... I thought it was something for women lol where they get together and talk lol

I might have to check it out!

LOL! Get out and expand your horizons more!
A brief overview of WIR: There are 5 debt-racing threads (depending on where you live, but, really, it does not matter which one you are a part of) where you periodically update your progress and can cheer yourself on (like this thread). Just say Hi and Help and someone will come along to answer your questions; you don't even need to read any previous posts if you don't want to. There is also a savings thread, a thread to minimize spending each month, and a thread to keep grocery costs down. Overall, WIR is more for motivating people on the routine ongoing financial activities.
Also, if you are thinking about investing, check out the Investing board. Different investment approaches (buy and hold, ETFs, trading, dividend stocks, day trading, etc.) are discussed to varying degrees, so that may help you figure out how hands on you want to be and get you more comfortable on the investing front. It is generally pretty quiet over there, so you get a lot of personal attention if you want it.

[RoadToRiches]

Mar 4, 2011 13:06:22 GMT -5 @mtntigger said:

Mar 4, 2011 12:42:33 GMT -5 RoadToRiches said:

Hmmm.. never knew what that Women in Red thing was... I thought it was something for women lol where they get together and talk lol

I might have to check it out!

LOL! Get out and expand your horizons more!
A brief overview of WIR: There are 5 debt-racing threads (depending on where you live, but, really, it does not matter which one you are a part of) where you periodically update your progress and can cheer yourself on (like this thread). Just say Hi and Help and someone will come along to answer your questions; you don't even need to read any previous posts if you don't want to. There is also a savings thread, a thread to minimize spending each month, and a thread to keep grocery costs down. Overall, WIR is more for motivating people on the routine ongoing financial activities.
Also, if you are thinking about investing, check out the Investing board. Different investment approaches (buy and hold, ETFs, trading, dividend stocks, day trading, etc.) are discussed to varying degrees, so that may help you figure out how hands on you want to be and get you more comfortable on the investing front. It is generally pretty quiet over there, so you get a lot of personal attention if you want it.

Heh, thanks! I already checked it out. I am going to belong in Northeast thread. I will have to post my stuff when I get home

As of right now, I am just reading Mutual Funds for Dummies. Let's start with basics. lol I know what holds, buy, short and all that stuff is. I was playng with my Scottrade account couple years ago, while still being in debt.. silly huh?

So I am reading Dummies book now. It's actually pretty good. It tells you lots of stuff how to read prospectus and talks about all kinds of stuff and what to look for. I want to UNDERSTAND what I am investing in. But that will come later. Right now, I am just learning

I will definitaly post in WIR board with all my stuff. I can't wait!

[ihearyou2]

Phil is 100% right, assuming that your most expensive costs are not fixed costs. The little things are nice and add up but are difficult to manage since there are so many of them and there is nothing like chopping a big payment down to size to really make a difference in your cost structure. I recently had a major setback financially and got a bill for 70K that I wasn't expecting. We took the shears to one of our biggest expenses tuition and halved it, resulting in 2K of savings a month that goes to pay this bill. We haven't had to change much as far as our little enjoyments, life continues, and our debt will be paid off in under three years.

[Tiny]

I don't the Pareto exercise gaurentees that you should (or even can) cut down on your biggest expenses... I think it forces you to actually acknowledge the amount of money you ARE spending on your biggest expenses. At that point you can ask yourself is spending $X on rent/cars/entertainment/whatever are really where I want to be spending the bulk of my money? Am I really getting $X dollars of value from that expense? Could I cut back?
Once you see you are spending $12000 a year on shelter (just for example) you can then determine if that fits within in your Value System.
Sometimes you stop seeing the forest for the trees...
Case in point a friend who rents who NEVER considered moving closer to work when her job changed and her lease was up.... she could have gotten a similiar apartment 15 miles closer to her job for the same amount of rent... She didn't think it was worth moving - the rent and amenities were the same... she overlooked the extra commute time, gas expense, maintenance on the car - because she was so use to it (or maybe just Math Challenged....) .

[Deleted]

Congratulations Indebt -
Your posts were so inspiring to read! I am looking forward to your reports on your journey.

I love that when you are done with your debt you will be able to live on 1/2 of your income. I once heard someone who lived on half of their income say that every day that they worked bought them a day of freedom. I loved that!

Please keep us updated and best of luck to you.

[Tiny]

Karma for SlowButSure - i mistook Per ardua ad astra for Per aspera ad astra but that's ok... same meaning just different references.

[mtntigger]

So I am reading Dummies book now. It's actually pretty good. It tells you lots of stuff how to read prospectus and talks about all kinds of stuff and what to look for. I want to UNDERSTAND what I am investing in. But that will come later. Right now, I am just learning

You're right, that is a pretty good book to start with. Another one that I really enjoyed is "Four Pillars of Investing." It discusses more of the history of investing, theories, and why Phil keeps using that darn 10 or 11% number.
Good luck on your quest! ;D

[zuzu]

You are off to a great start. Congratulations!

[mtntigger]

Mar 4, 2011 13:24:20 GMT -5 Tiny said:

Karma for SlowButSure - i mistook Per ardua ad astra for Per aspera ad astra but that's ok... same meaning just different references.

Thanks ATSiaRU! ;D I'll treat you in 50 minutes. That's been my motto since grammar school and I love seeing it flash on the screen.

[ihearyou2]

I thought we agreed you were a member of the Royal Air Force, SbS?

[mtntigger]

Mar 4, 2011 13:34:16 GMT -5 ihearyou2 said:

I thought we agreed you were a member of the Royal Air Force, SbS?

Riiiiiggghhttt. Just like we agreed that I was part of your harem.
Dad was in USAF and we lived in Europe when I was a youngster. Does that help satisfy you?

[RoadToRiches]

I am good with my mortage and my car is paid for. I bring home $1920 twice a month. My mortgage, including property taxes is 960/month and 200 for HOA. So I am at what, 30%? It's ok.

My debt is really result of stupidity and wrong mentality. It would be very easy for me to just go out with my friends and spend 60-80 bucks in a bar on friday night. Those kind of expenses, just pretty much blowing my money on "stuff" really put hurting on me. I was able to make my payments, don't get me wrong, but I was able to make minimum payments. Whatever was left, my thinking was "Uh oh, I got 600 bucks left, what can I buy?" That's wrong way to think! I was spending money, while making minimum payments on my cards.

I could EASILY live on one paycheck per month.