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The Family Piggy Bank The Family Piggy Bank

Becoming debt free

Posted by on Feb. 6, 2013 at 8:17 AM
  • 16 Replies
I'm really wanting to get me and dh debt free before we plan to buy our first home. Does anyone have ideas on where to start??

We both have school loans, cc, and medical bills. We don't have any car loans or anything like that.

If you need more info just ask. Thank you
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by on Feb. 6, 2013 at 8:17 AM
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QuiltLover
by Jocelynn on Feb. 6, 2013 at 8:31 AM
3 moms liked this

Get the Dave Ramsey book and use it...there is also a Dave Ramsey group, he uses an envelope system, which I use also, and has a system that you first, get $1000 in an emergency fund, yes , there WILL be an emergency, not if but when, then start with what he calls the snowball effect. Start with your smallest bill, pay the minimum amount on all other bills, then put all the cash you can on this small bill, until it is gone, then take the money you were paying on that bill, start on the next smallest bill and do it all over again until all the bills are gone...it goes quickly but you have to be disciplined in this. You pay what he calls the four corners...pay the mortgage, the utilities, your car payment and buy food....all others will get paid according to the snowball effect. It works. Pay cash for everuthing you need and get rid of all credit cards...you dont need them nownthat debit cards are available..the key to thatbis..if there isnt any money in the bank, you dont have any to use...if you join the DR group, they will help you immensely..good luck..you are on the right track....

hudson.maggie
by Member on Feb. 6, 2013 at 8:33 AM
Thank you! We only have two cc between the two of us (a capital one build your credit card).. Ill search for that book!

Thank you soo much for your help!


Quoting QuiltLover:

Get the Dave Ramsey book and use it...there is also a Dave Ramsey group, he uses an envelope system, which I use also, and has a system that you first, get $1000 in an emergency fund, yes , there WILL be an emergency, not if but when, then start with what he calls the snowball effect. Start with your smallest bill, pay the minimum amount on all other bills, then put all the cash you can on this small bill, until it is gone, then take the money you were paying on that bill, start on the next smallest bill and do it all over again until all the bills are gone...it goes quickly but you have to be disciplined in this. You pay what he calls the four corners...pay the mortgage, the utilities, your car payment and buy food....all others will get paid according to the snowball effect. It works. Pay cash for everuthing you need and get rid of all credit cards...you dont need them nownthat debit cards are available..the key to thatbis..if there isnt any money in the bank, you dont have any to use...if you join the DR group, they will help you immensely..good luck..you are on the right track....

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ivf_blessed
by Bronze Member on Feb. 6, 2013 at 9:43 AM
1 mom liked this
I agree with prev poster
Dave Ramsey:
www.daveramsey.com
Financial Peace University
Total Money Makeover

It will change the way you think about and handle your money.

I also started using www.youneedabudget.com for budgeting. They have a free trial and free classes.

Good luck!
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QuiltLover
by Jocelynn on Feb. 6, 2013 at 9:58 AM

Credit. Card companies will try to convince you that you need them to BUILD CREDIT like you stated...you do not...please dont fall for that trap...your phone, your rent, your utilities will all do that for you....In fact, if you are late or dont pay a phone bill or utility, it will keep you from getting a loan of any kind...if you are out on your own,you are  building credit.....just be diligent in paying on time with the things you have in your name.d the Total Money Makeover will become your new best friend....

hudson.maggie
by Member on Feb. 6, 2013 at 10:50 AM
I realize I don't need the cc. I will look into closing them out :). Thank you!

Quoting QuiltLover:

Credit. Card companies will try to convince you that you need them to BUILD CREDIT like you stated...you do not...please dont fall for that trap...your phone, your rent, your utilities will all do that for you....In fact, if you are late or dont pay a phone bill or utility, it will keep you from getting a loan of any kind...if you are out on your own,you are  building credit.....just be diligent in paying on time with the things you have in your name.d the Total Money Makeover will become your new best friend....

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Amberleigh81
by Member on Feb. 6, 2013 at 11:00 AM
3 moms liked this
DON'T CLOSE YOUR CREDIT CARDS!





You will damage your credit score by closing. Just stop using. Pay off cards, then use once every three months for a small purchase and pay off right away.





Once you buy your house, close your cards. Don't do it before AND definitely don't close if you have ANY unsecured debt unpaid. You will end up with a negative debt-to-available-credit ratio and it will TANK your credit score.





Dave Ramsey is awesome to get out of debt. Just realize that unless you have a TON of money saved, you won't get your house easily.




Quoting hudson.maggie:

I realize I don't need the cc. I will look into closing them out :). Thank you!





Quoting QuiltLover:

Credit. Card companies will try to convince you that you need them to BUILD CREDIT like you stated...you do not...please dont fall for that trap...your phone, your rent, your utilities will all do that for you....In fact, if you are late or dont pay a phone bill or utility, it will keep you from getting a loan of any kind...if you are out on your own,you are  building credit.....just be diligent in paying on time with the things you have in your name.d the Total Money Makeover will become your new best friend....

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hudson.maggie
by Member on Feb. 6, 2013 at 11:02 AM
Ok then I'll keep it lol. I usually keep it under $50/ month and pay $25-$40 on it per month. But I'll pay what I owe and keep it at $0 for a while :). Thank you!

Quoting Amberleigh81:

DON'T CLOSE YOUR CREDIT CARDS!







You will damage your credit score by closing. Just stop using. Pay off cards, then use once every three months for a small purchase and pay off right away.







Once you buy your house, close your cards. Don't do it before AND definitely don't close if you have ANY unsecured debt unpaid. You will end up with a negative debt-to-available-credit ratio and it will TANK your credit score.







Dave Ramsey is awesome to get out of debt. Just realize that unless you have a TON of money saved, you won't get your house easily.






Quoting hudson.maggie:

I realize I don't need the cc. I will look into closing them out :). Thank you!








Quoting QuiltLover:

Credit. Card companies will try to convince you that you need them to BUILD CREDIT like you stated...you do not...please dont fall for that trap...your phone, your rent, your utilities will all do that for you....In fact, if you are late or dont pay a phone bill or utility, it will keep you from getting a loan of any kind...if you are out on your own,you are  building credit.....just be diligent in paying on time with the things you have in your name.d the Total Money Makeover will become your new best friend....

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Juniper53098
by on Feb. 6, 2013 at 11:08 AM
1 mom liked this

I concentrated on paying off the bills with the highest interest rate 1st, but otherwise, I did things as the above suggested.  Now we only have a mortgage, which we are paid ahead on.

baconbits
by Bronze Member on Feb. 6, 2013 at 12:57 PM
1 mom liked this

 I prefer to pay off the lowest balance first. It gives me a boost that I'm actually doing something to see a bill drop off. I then take that payment and add it to another lower bill. The only time I did differently is when a cc jumped it's interest rate from 5% to 24% because I missed one payment in 10 years and then I went to our credit union, got a loan to cover the cc and paid it off and sent it back to them in pieces.

In the last few years we have paid off 2 credit cards (cancelled them), a car and just last week a student loan! We're down to just one credit card which we pay off each month, a truck loan (dh's truck went caput!), the credit card loan which will be paid off in April and the 2 home loans. My credit rating is 693! Aiming to be debt free except for home in 2 years or less. As for the home....lets just say it will not belong to the bank any longer then it has to.

I have closed out some cc's over the years without it hurting my credit. When financing a loan they want to see you have some credit but at the same time do not want someone to have 10 cc's that they could charge up as soon as they get the loan. It's moderation. Two cc's isn't bad unless you have a limit of $10,000 on each. Even if you only owe $1,000 on each that tells the mortage company that you have $18,000 you could charge for furishings as soon as you bought the house .

Take a look at your bills and decide a plan of attack. Are you a person who needs to see progress? Then attack the smallest first while paying minimum on everything else. Are you more disciplined? Then pay the one that has the highest interest rate off first. Both ways work.

One other thing that works for us is that our loans are thru our credit union. The truck payment that we just got requires that we pay $200/month by the end of the month. Instead of paying it when it is due we pay as much as we can each week. That may mean $100 the 1st week, $25 the 2nd, $50 the 3rd and $25 the 4th BUT that means we are paying less in interest each month because we are making payments thru out the month. A normal bank will not allow you to do this. Our credit union doesn't care how you do it as long as they get the total payment by the date due.

hudson.maggie
by Member on Feb. 6, 2013 at 1:03 PM
Thank you for all the advice! Our cc limit it only $200 so we try to keep it under $50 if we do use it. When dh gets home I plan on sitting down with him and going over everything. I really want to be debt free or close to it before we buy a house so we aren't so stressed. Right now our student loans are getting stressful since we owe about $25,000-$30,000 :/. But I think we'll start with some of the smalle medical bills.

Thank you all soo much!


Quoting baconbits:

 I prefer to pay off the lowest balance first. It gives me a boost that I'm actually doing something to see a bill drop off. I then take that payment and add it to another lower bill. The only time I did differently is when a cc jumped it's interest rate from 5% to 24% because I missed one payment in 10 years and then I went to our credit union, got a loan to cover the cc and paid it off and sent it back to them in pieces.


In the last few years we have paid off 2 credit cards (cancelled them), a car and just last week a student loan! We're down to just one credit card which we pay off each month, a truck loan (dh's truck went caput!), the credit card loan which will be paid off in April and the 2 home loans. My credit rating is 693! Aiming to be debt free except for home in 2 years or less. As for the home....lets just say it will not belong to the bank any longer then it has to.


I have closed out some cc's over the years without it hurting my credit. When financing a loan they want to see you have some credit but at the same time do not want someone to have 10 cc's that they could charge up as soon as they get the loan. It's moderation. Two cc's isn't bad unless you have a limit of $10,000 on each. Even if you only owe $1,000 on each that tells the mortage company that you have $18,000 you could charge for furishings as soon as you bought the house .


Take a look at your bills and decide a plan of attack. Are you a person who needs to see progress? Then attack the smallest first while paying minimum on everything else. Are you more disciplined? Then pay the one that has the highest interest rate off first. Both ways work.


One other thing that works for us is that our loans are thru our credit union. The truck payment that we just got requires that we pay $200/month by the end of the month. Instead of paying it when it is due we pay as much as we can each week. That may mean $100 the 1st week, $25 the 2nd, $50 the 3rd and $25 the 4th BUT that means we are paying less in interest each month because we are making payments thru out the month. A normal bank will not allow you to do this. Our credit union doesn't care how you do it as long as they get the total payment by the date due.

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