Debt
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05-04-2013, 10:38 AM
RE: Debt
(05-04-2013 10:14 AM)TheBeardedDude Wrote:  There was an article about a year ago on a recent grad student who had a six-figure debt that he had basically eliminated within a few years. The strategy wasn't just rice and beans and cutting up the cards. He still went out to bars, but brought his own liquor in a flask (illegal in some places) and got free club sodas (which a lot of bars do). No eating out (not even fast food). And he focused on cutting transportation costs plus charging for certain things. Like, renting out a room in his apartment, renting out his car, etc.

Yeah identifying your habits is HUGE.

I ate out a lot... I tended to spend a lot of money on stupid shit and always made an excuse not to put money aside or not "pay extra" on my debts. Takes some real motivation and strict self discipline to do it, but imagine if you eat out 4 times a month at $10 a pop. That's $40. Put that to the debt instead, instantly bring your debt down $40 that month. If you could do that for an entire year that's $480 a year towards the debt, just from something as simple as not eating out or eating out less.
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05-04-2013, 10:43 AM
RE: Debt
(05-04-2013 10:14 AM)TheBeardedDude Wrote:  There was an article about a year ago on a recent grad student who had a six-figure debt that he had basically eliminated within a few years. The strategy wasn't just rice and beans and cutting up the cards. He still went out to bars, but brought his own liquor in a flask (illegal in some places) and got free club sodas (which a lot of bars do). No eating out (not even fast food). And he focused on cutting transportation costs plus charging for certain things. Like, renting out a room in his apartment, renting out his car, etc.

I don't think you have to eat rice and beans...but if you're creative and keep your expenses down (which means not having the latest in everything and making due with what you have)...it's really not that bad.

If I had to save substantial money there are many things I'd just cut all together. The point is there are usually things that you can simply do without for a short amount of time.

I would make a list on everything you pay for...And I do mean everything...sometimes the act of seeing the numbers...adding them up...is enough to give you pause. Then set a reasonable budget and stick to it. Shop sales. Pour over credit card statements and see where the trouble is. If you're using the credit card to augment your pay...that's a problem.

Try to apply for zero interest on balance transfer credit cards or shoot for the lowest interest. Talk to your credit card issuer they might be able if you pay on time to reduce your interest rate for a limited amount of time too.

Focus on ONE card at a time if you have multiple ones and don't use (not really cut up), the ones you have unless it's a dire emergency. Have it so your debit card shuts off when you run out of money.

Replace things you truly need not just want because there's a new one out.

I don't know your situation specifically (OP)


God is a concept by which we measure our pain -- John Lennon

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05-04-2013, 02:55 PM
RE: Debt
Here is another thing that helps me avoid impulse buys...

It is very tempting to see an item you want on sale and think - hey it's normally $100 and now it is only $80. That means I'm saving $20.

No, you are actually SPENDING $80.

On top of that my credit cards are high enough that by the time I pay it off the interest will make the item cost $100 anyway... maybe more!!!

Sometimes I think I'm still paying off things I bought 5 years ago...
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05-04-2013, 07:08 PM
RE: Debt
I'm reluctant to get into details on the amount.

Basically I have enough consumer debt that it's gonna take me a while to pay it all off.

But then again I lost 90 plus pounds, by doing the basic things one does to lose weight while remembering that it was a long term goal. The weight did not come off all at once. Neither will this debt go away all at once.
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05-04-2013, 07:11 PM
RE: Debt
(05-04-2013 07:08 PM)BrianD Wrote:  I'm reluctant to get into details on the amount.

Basically I have enough consumer debt that it's gonna take me a while to pay it all off.

But then again I lost 90 plus pounds, by doing the basic things one does to lose weight while remembering that it was a long term goal. The weight did not come off all at once. Neither will this debt go away all at once.

You don't have ro go into any details. And really don't need to know...

The weight loss is a fantastic analogy. And congrats on the loss! That's awesome!

Hugs,
msbb


God is a concept by which we measure our pain -- John Lennon

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05-04-2013, 10:21 PM
RE: Debt
(05-04-2013 10:03 AM)BrianD Wrote:  
(04-04-2013 09:56 PM)bbeljefe Wrote:  Rich Dad, Poor Dad and CASHFLOW Quadrant by Robert Kiyosaki are both good books for understanding basic finance. I think he's a theist but he's not bothersome with it. Those and any other books you can read on finance are all good information, even if they aren't written specifically for debt reduction. I know that in the books I listed above, there are some creative ideas on how to earn extra money but it's been a while since I read them so I can't cite any examples off hand.

Personally, I don't care for the cash only model, for a variety of reasons, but that may work well for you. I'm happy to share my thoughts on the subject if you're interested but I don't want to write a novel here with no audience. Tongue

Go for it!

Will do... but not tonight. Company has arrived and I have imbibed.

The beginning of wisdom is to call things by their right names. - Chinese Proverb
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05-04-2013, 11:13 PM
RE: Debt
I don't intentionally listen to Dave Ramsey but he comes on the radio in the evening when I am on my way home from school. He is on the station I listen to on my daytime commute. If you just filter out his religious comments, he really makes a lot of sense. Just because he is a believer doesn't mean he doesn't know how to get out of debt, I mean he started this because he failed with his finances and had to figure out how to get on track again.

I wouldn't just write his advice off because he is Christian any more than I would want someone to write someone off for being atheist.

Good luck, heavy debt sucks!

I'm not anti-social. I'm pro-solitude. Sleepy
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06-04-2013, 01:31 AM
RE: Debt
My thoughts:
1. Track your spending. Get some accounting program. Keep all of your receipts and enter them religiously. If you can't account for some spending you can enter it as "uncategorised" spending... but when you have gotten some data together you need to count that uncategorised category along with all of your other categories (rent, food, etc) and ask yourself every month whether you are getting good value from the money you are spending.
2. Focus first on money you spend every day, then on money you spend every week, then every month, then every year. $1 per day is $365 dollars. $1 per week is $52 and so on down the chain. I would strongly suggest trying to put yourself into a situation where on the average day you literally spend no money. Try to take your daily expenses and turn them in to weekly expenses - for example try to stop buying lunch/dinner if you are doing so and instead buy once per week at the supermarket. The more you can change daily expenses to weekly, weekly expenses to monthly, etc the more clear it will be to you how much money you are spending and the easier it is I think to keep spending in check.
2. Keep "eating out" as a separate category to other food. As a potential daily expense this is something I have found can easily get away from you. Say you spend $7 per day on eating out - lunch or dinner then that adds up to $2555 over the course of a year - enough to buy a cheap car.
3. If you can't handle credit cards go cash only. My wife and I do use credit cards however. Our rule is simple: Pay them off in their entirety at the end of each month. If you can eliminate all fees and charges on the credit card it can actually be a good financial tool for a) keeping track of your expenditure and b) delaying payment for goods so that you are actually earning interest on the money until the credit card bill needs to be paid c) Occasionally for spreading out large expenses - if you get three major utilities bills in a month you can defer one or two until the next month by paying them on the credit card. So it's not all negative for the cards, but if you can't handle them then don't go playing with that fire.
4. Any debt that isn't reducing your tax burden is bad debt. Avoid it and get out of it as soon as possible.
5. If and when you get a pay rise, try to live like you did before the pay rise. Take the new extra amount you are earning and give that amount (or at least half of that amount) to savings. You didn't have that money before, so in theory you won't miss it.
6. Delay gratification whenever possible. If you really want to buy something, try to wait until the next month to buy it. By that time a few things will have popped up on your list as things to buy, and you can compare them and prioritise them - just buy the most important thing on your list and wait another month before deciding whether to buy the next thing down or some other more important thing that has come along since.

My wife and I were never in serious debt but we certainly had times when we were on reasonable money but just weren't getting ahead. We are now doing quite well for ourselves, and the above suggestions are how we did it. Note that if you are in a relationship the recording and checking of expenses can be challenging. We found it good to have some amount of personal expenses wiggle room where we explicitly didn't question what was in each others' personal expenses categories, but we simply treated them like we did all of the other categories we identified: At the end of the month we would look at the total monthly figure for each category and ask ourselves "are the proportions of money we are spending in each category in line with our values and our goals?".

I'm paid monthly which I find actually helps with the financial discipline. When I get my pay packet the following happens:
1. All credit card debt is paid in its entirety
2. A fixed amount of cash is reserved for the month's cash expenses - currently $100-$200
3. All extra money goes into long term savings and cannot be withdrawn unless there is a genuine emergency need
4. Throughout the month we pay everything on the credit card. Over the years our income and our frugal habits have improved to the point we don't have to watch these numbers too closely as we know they'll be able to be paid in full the next month.

Give me your argument in the form of a published paper, and then we can start to talk.
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06-04-2013, 06:28 AM
RE: Debt
I cut up my cards long ago.

I cannot spend on line and it is a pain when. e.g I wanted to contribute to TTA or when I have to physically go to an agent to buy tickets for flights etc. or checking in to a hotel and of course I can't buy iPhone apps.

I have cleared the debts I was left in my divorce settlement (she got the assets and I got the debts).

But I think it was a good idea overall.

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06-04-2013, 09:53 AM
RE: Debt
(06-04-2013 06:28 AM)DLJ Wrote:  of course I can't buy iPhone apps.


The iPhone was a huge thing for me a couple of years ago. Who the F spends ridiculous amounts on music and apps? I guess I thought $1 at a time wasn't much- but if $1 can get out of hand, then that shows how other purchases defffinately could too! I unhooked the credit card and now I get iTunes gift cards which slowed it right down. The only music I've really bought in a long time is JT's new album Heart and most good apps are free.
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