Debt free planning

[Cowracer]

Originally Posted by Iwannacamp

I like what I read here about not charging anything you won't have after its paid off... pretty good philosophy in my book. No food, gas, utilities or gifts etc...


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Best financial advice I have ever gotten. Best financial advice I have ever given.

Tim

[bob caldwell]

You have to re-pay?....bummer......

[Iwannacamp]

They only do loans for cars from dealers that sign up with them. And by dealer, I mean the guy with 8 or 9 used POS cars who rented out a closed gas station for his lot.


OMG My friend owns this lot...

Funny thing is... they(2 dudes) are paying taxes on over 250K in profit this year...they have an 80K buliding(with a back shop they rent), small floor plan, insurance and utilities and a contract detail dude.

I want one!!

[mac.dblues]

You sound like you are on the right track. One note though on the snowball. Don't randomly pick one and pay it off. Pay off the smallest with the smallest payment and snowball that amount to the next larger debt.

Get Out of Debt With the Debt Snowball Plan - daveramsey.com

Originally Posted by ependydad

Sadly, that's the habit that I'm trying to cut. It's not intentional- but more we don't like waiting or doing without. Both a recipe for disaster.

So fortunately/unfortunately - it's all common sense and a lot of what I'm hearing I already know (not that I practice it, just that I know it):

• pick one and pay it off; move onto the next and snowball it
• generally avoid plastic
• loans aren't terrible, but be certain of the purchases
• have self control

[ilmor]

I have one loan, my home mortgage, which will be paid off in 13 years or sooner.

The obvious answer to debt-free is pay off all loans and take out no more.

Of course this depends on the balance between your salary and wants / needs, with a strong emphasis on buying only what you need...which is probably not an RV! LOL!

[Herk7769]

Originally Posted by mac.dblues

You sound like you are on the right track. One note though on the snowball. Don't randomly pick one and pay it off. Pay off the smallest with the smallest payment and snowball that amount to the next larger debt.

Get Out of Debt With the Debt Snowball Plan - daveramsey.com

The way I did it was:

1) Go cash only until the revolving debt is paid off
2) Pay the highest interest debt off first (regardless of payment size) because money that goes to interest is money you don't have to retire principle.
3) At the end of every month, put any remaining cash into principle payment for #2 the following month till it is gone,
4) Repeat 2 and 3 until your only debt is your mortgage.
5) refinance mortgage to a SHORTER term and add the credit card payments you have been making into mortgage principle payments.

Using the above method, I went from paycheck to paycheck buried, to debt free (including paid off mortgage) in 12 years.

I started this at age 40 and was able to retire in a debt free status.

I am now able buy my vehicles cash by banking my car payment so when I am ready to replace my car, the bank has HELPED me by paying me interest during the "period of the loan" and not the other way round. Instead of paying $30,000 plus 3% interest per year, you actually pay $30,000 minus the interest you earned on the $30,000.

Keeping your vehicle more than 8 years makes this VERY doable. Say you bought your car and financed it for 5 years. At the end of the 5 years, you keep the car for 3 more years while banking that payment in an interest bearing account. Now you take the 3 years of savings and put it down on your next car allowing you to keep the same payment as initially. This means you only finance 1/2 of the amount for 3 years instead of 5. After 3 years, you keep making that payment to the bank. for 5 years. You should now have enough to pretty much pay cash.

The above assumes that your "tastes" don't get crazy as you see some money in the bank.

[mac.dblues]

I think the reason Dave Ramsey recommends paying the smallest first is so you see quicker results. For someone overwhelmed with debt, seeing good results is crucial. Please don't get me wrong, I am not knocking your personal method. Glad it worked for you. I need to get busy knocking my debt down. Being debt free by age 52 would be incredible!

Originally Posted by Herk7769

The way I did it was:

1) Go cash only until the revolving debt is paid off
2) Pay the highest interest debt off first (regardless of payment size) because money that goes to interest is money you don't have to retire principle.
3) At the end of every month, put any remaining cash into principle payment for #2 the following month till it is gone,
4) Repeat 2 and 3 until your only debt is your mortgage.
5) refinance mortgage to a SHORTER term and add the credit card payments you have been making into mortgage principle payments.

Using the above method, I went from paycheck to paycheck buried, to debt free (including paid off mortgage) in 12 years.

I started this at age 40 and was able to retire in a debt free status.

I am now able buy my vehicles cash by banking my car payment so when I am ready to replace my car, the bank has HELPED me by paying me interest during the "period of the loan" and not the other way round. Instead of paying $30,000 plus 3% interest per year, you actually pay $30,000 minus the interest you earned on the $30,000.

Keeping your vehicle more than 8 years makes this VERY doable. Say you bought your car and financed it for 5 years. At the end of the 5 years, you keep the car for 3 more years while banking that payment in an interest bearing account. Now you take the 3 years of savings and put it down on your next car allowing you to keep the same payment as initially. This means you only finance 1/2 of the amount for 3 years instead of 5. After 3 years, you keep making that payment to the bank. for 5 years. You should now have enough to pretty much pay cash.

The above assumes that your "tastes" don't get crazy as you see some money in the bank.

[ependydad]

Originally Posted by mac.dblues

You sound like you are on the right track. One note though on the snowball. Don't randomly pick one and pay it off. Pay off the smallest with the smallest payment and snowball that amount to the next larger debt.

Get Out of Debt With the Debt Snowball Plan - daveramsey.com

Thanks for the link. I appreciate the info.

Originally Posted by Herk7769

The way I did it was:

1) Go cash only until the revolving debt is paid off
2) Pay the highest interest debt off first (regardless of payment size) because money that goes to interest is money you don't have to retire principle.
3) At the end of every month, put any remaining cash into principle payment for #2 the following month till it is gone,
4) Repeat 2 and 3 until your only debt is your mortgage.
5) refinance mortgage to a SHORTER term and add the credit card payments you have been making into mortgage principle payments.

Using the above method, I went from paycheck to paycheck buried, to debt free (including paid off mortgage) in 12 years.

I started this at age 40 and was able to retire in a debt free status.

Thanks for the info Herk.

[ependydad]

Originally Posted by MillerTime

Doug, we are graduates of Dave's Financial Peace University, class of spring 2016.
Its tough to face what you spend compared to inflow.
I know others will disagree with me and him, and that's fine!

Since I'm not in one place long enough to attend them in-person, would you recommend these Financial Peace University classes in online form?

[lbrjet]

You don't need any class to tell you that you need to spend less. You are are already an educated man. What it takes is sacrifice. Sitting down with your family and having a frank discussion might be a good place to start.

I went through this 20 years ago. We cut out vacations, like zero, for the next ten years. Refinanced to a 15 year mortgage. Maxed out our retirement contributions. Got the kids through college which we had been saving for for a long time anyway. Worked on the credit cards first, then autos, then the mortgage. Paid it all off in 12 years and bought my truck and first RV for cash a couple years later after 30 years of tent camping.

Everyone has a story. The only one that matters is how you are going to write yours.


2010 F250 5.4L 3.73
2011 Flagstaff 831FKBSS
Equal-i-zer 4pt 12K

[ependydad]

Originally Posted by lbrjet

You don't need any class to tell you that you need to spend less. You are are already an educated man. What it takes is sacrifice. Sitting down with your family and having a frank discussion might be a good place to start.

Good point.

[MillerTime]

Originally Posted by ependydad

Since I'm not in one place long enough to attend them in-person, would you recommend these Financial Peace University classes in online form?

Honestly the book i posted is almost verbatim what the class says. I bought the class kit or what ever its called, and it had the book, a work book, the dvd that is used in the class and an envelope system and a couple other things.
About the only thing you would miss that you would get in a class would be the class participation stuff that they have in the workbook.
I think if you go to the website you can purchase the kit.
(Actually just looked at daveramsey.com and this is the first thing that popped up, and they have a sale on the starter kit i was talking about. I think i payed a little over $100 for it when i took the class)

[Iwannacamp]

Well....I missed the 52 YO debt free....maybe 62.

On another story...years ago I got bogged down with debt and called CCCS they did what was mentioned here. Payed the smaller balances first(as they were paying larger) the added the smaller to the larger. Good feeling to have been debt free.
Sorry to say...that was then.


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[CaptnJohn]

This is what I meant to use credit as tool and why it is a great thing. I have not had less than 7% return on savings and investments in decades so loans between 0% and 3.5% make sense. Talk to people ~~ when Ford was at 4% I made a deal on a F350 but would only sign at 3%, we settled at 3.375 through Ford. Spoke to one bank and asked the best we could do ~~ nothing special on CDs or savings BUT if I kept a minimum of $75K in checking for 1 year he could do 2% forever as long as the balance remained above $25K. That is still better than CDs and savings. Paying a CC off every month is no different than paying cash through a debt. Miles is one thing but I prefer cash to use and if a flight is purchased more points toward cash.

Originally Posted by Mr Havercamp

I have been doing the same thing for years but beating the banks at their own game is the key. I have over 300K in Southwest points right now and A list status. We have used over that amount flying around almost free for the last 3 years. Almost every bill we pay go's on the SW card or some other cashback card. Paying off the balance monthly and not letting them make a dime is the way to approach it. Some cards do not like that and they'll let you know by canceling your account.

We financed our 2017 Roo for 5 years at 3.9% at the dealer with a local bank. I made two payments and then paid it off by using my Discover card with a special offer for 0% for a year. It did cost me a small fee. Now it has no lien against it. Right before that offer is up in July I'll move that balance to another account that has an offer that is lower than the original 3.9%, but most likely 0% for a specific period. I make the payment to Discover monthly and throw an additional $500 at the principal and all of it is principle because its 0%. Those payments are made using the Chase Southwest card to get the points, then that cards balance is paid off. The return is much higher than I'd ever get throwing that money I am spending anyway would get in the IRA, a CD, or savings.

Its just a big game and to me its fun to beat them on their own field. It just takes a little work and some math.

What amazes me is when people finance a 20K or even 50K or 60K RV for 10 or 12 years. What a money loser that is but the amount of people that do is staggering. I can see it with a 300K class A but holy cow.

Using other peoples money is a benefit, especially when the other people is a big bank. If you don't have some fun you'll regret that too later down the road. Make a plan and stick to it.

[Terier]

I like the advice that has been provided. Budget, planning and accounting are my tools. The tools are only as good as the effort put into using them.

[Lcountz]

http://www.early-retirement.org...for inspiration on early retirement.....

It's never too early to start preparing.....

and /www.bogleheads.org for advice on investing, saving, spending etc that

anyone can understand.....

[OldCoot]

We are debt free except for the monthly utility bills, insurance, etc. If we don't have the cash we don't buy it. We do have credit cards that we use that are paid off every month. We also have enough cash hidden that we can go 3 months without any income(adding to it every month also). We have old vehicles that are well maintained and we definitely DO NOT try to keep up with the "Jones". We figure we can pay cash for any vehicle repair and still spend less than one year's depreciation on a new vehicle. We pay less than $1000 on campgrounds with full hook up and spend 3+ months in FL every year. We do not and would not stay in a Disney campground due to the exorbitant prices they charge when TT is 30 minutes away and yearly dues is just under $500/year for unlimited use. JMO.

[Electra glide]

Mr. Money Mustache — Early Retirement through Badassity

I've been on this forum a few years. Very good help there.

[tony5oh]

I'm reminded of the expression, "It's expensive to be poor." Didn't really understand that when I was very young, but now can understand the overall sentiment and that there are also many layers to that statement.

[RV_Fan44]

I agree that it's sacrifice. Cutting corners on this or that whenever you can.