Debt Management How to pay off debt, the Dave Ramsey way.


(ง︡'-'︠)ง ♥ Quasher of Dead Links ♥
  • List your debts from the smallest to the largest payoff balance. Disregard interest rates just stick to listing your debts based on the payoff balance.
  • Make minimum payments on all debt, except the smallest. Attack the smallest with everything you have!
  • After you pay off the smallest debt, take the money you were paying on that debt and start paying off the next smallest (payoff balance) debt. Attack it with all you have!
  • Repeat this method until you cross off the very last debt!
Good advice I think! :)


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I have not been getting the monthly thread up lately, so here is the expanded baby steps:

The Baby Steps:

Pre-Step 1: Get current on your debts and do a budget
Before you begin the baby steps, you must be current on your bills and, if you aren't doing one already, begin doing a monthly budget.

Baby Step 1: Save $1000 cash in the bank
Start your emergency fund. If your income is less than $20,000, make that $500.

Baby Step 2: Get out of debt
With Gazelle intensity and using the debt snowball, pay off all your debts.

Baby Step 3: Finish the emergency fund
With the money you were paying towards debt, now with no debts, you can save 3-6 months of expenses into a fully funded emergency fund.

Baby Step 4: Save for retirement
Saving 15% of your income didn't seem possible before, But with no payments, you'll be ready for retirement and not have to take a job as a Wal-Mart greeter.

Baby Step 5: Save for College
Instead of taking out student loans, your kids will be eternally grateful you thought ahead and had a plan for their higher education.

Baby Step 6: Pay off the house
Baby Step 7: Build Wealth and Give It Away

Expanded Baby Steps:
0.1 Commit to NEVER borrow $$$ EVER for ANYTHING other than possibly a house
0.2 Talk with spouse and get him/her on the same page as you concerning finances
0.3 Do a written budget
0.4 Temporarily stop all retirement contributions
0.5 Get current on the basics (You MUST have Food, Utilities, Shelter, Basic Transportation)
0.6 Amputate "toys" (bikes, boats, ATV's etc) if they will keep you from completing the snowball within 12 months
0.7 Cut lifestyle (Cut CATV, Cellphone, Regular phone "extras", Internet, Eating out, etc) and/or take a second job if $1000 EF will take more than 30-90 days. (depending on income)
0.8 Get current on ALL bills.
1.0 Save $1000 in Baby Emergency Fund (EF)
1.1 Chop up CC's. (You have an EF now, no NEED to keep those CC's!!!)
1.2 Get Health Insurance NOW (chances of getting sick w/major medical bills are larger than that of death), especially if you have children.
1.3 Get Life Insurance NOW if you have debt/your family couldn't make it financially if you died. Especially important if you have children! Social Insecurity only provides a small amount of coverage if you have dependents.
1.4 Amputate cars that you can't pay off within 24 months (you have an EF to fix "bondo buggy" if something should happen)
1.5 Consider raising insurance deductables to $500 or $1000 and dropping full coverage on paid for "bondo buggy" (you have an EF ya know)
1.6 Draw up a will.
1.7 Get Long-Term Disability Insurance.
2.0 Do debt snowball, paying all your debts from lowest BALANCE to highest.
2.1 You can take your first vacation since finding Dave if you can pay cash for it. (no using the EF!!!)
3.0 Save 3-6 months EXPENSES in EF (FFEF)
3.1 Start replacement car fund.
3.2 Save up 20% for home purchase OR pay down existing mortgage to the point you can drop PMI.
3.3 Start furniture or other non-essential stuff replacement fund.
3.4 Move up in car if you still feel the need to (must pay cash for it!, you can only buy NEW if you have a net worth over a million dollars)
4.0 Start contributing 15% of your paycheck to retirement.
5.0 Save for kids college fund.
6.0 Pay off the house early.
7.0 Live like no one else since you have lived like no one else! Give, Build Wealth and Have Fun!

"What can you do when you have no payments?
Anything you want" - Dave Ramsey


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I am still tackling BS 6 - pay off house. I am down to $29,500. I just cashed some out of my brokerage that I will apply to August 1 payment ($10K) to really get the ball rolling a bit more. I anticipate being done with the mortgage in 2019 at some point....

I am putting 30% into my 401(k) now and am not willing to sacrifice that since I am too close to retirement. I did pick up 7 extra hours plus holiday pay this pay period, so that will all get plowed back to the mortgage when I get paid in the middle of the month. Work is demanding that everyone sign up for 1 day of OT in late July or early August, but I may do more that one anyway, just because I want the money.....

Next vacation is coming up quick on July 12 - 21. It is a cheap one as I am staying home on my first 3 nights (regular days off anyway), going to my own condo for 3 nights, and lastly doing a points stay in western Colorado for 3 nights. I will cook mostly and just plan 3 nights of eating out when we are at the hotel. Gasoline will be the biggest expense as we will do some scenic driving/sightseeing. I anticipate 3 or 4 fill ups before getting home (at $30 -$40 each). I think we will only spend around $250 to $300 total for the week. Splurge might be a hot springs visit at $18 each .....

Otherwise my summer is being spent doing fix it projects at home to keep me entertained. Staining the front door this weekend as it was looking pretty nasty. I have a big list that we have neglected over the last few years and am sure I have at least 3 or 4 summers worth of projects that I can find to do here.....


(ง︡'-'︠)ง ♥ Quasher of Dead Links ♥
My hubby and have been throwing all we can at the mortgage...

I was fortunate to have a dad that taught me well about the value of a dollar. When I was newly married and felt like I did not have tons of extra money, my dad's mentality was this: "Pretend you are hitting the Wendy's one extra time each week, and slap that on your mortgage."

I did this regularly as a young person, and now in my 40s, I am very close to the finish line. I feel happy.
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This week I put a little bit on to the mortgage again out of my leftovers from June budget. ( $134). Waiting for the deposit to checking from my brokerage account - hopefully it will post on Monday. Applying that to the principle will drop my interest portion of my payment from $160 to $110 for next month. I have a 3rd paycheck in July that will be partially applied to Sept payment.

I picked up some OT right after vacation that should net $150 and may do another shift in early August. I am actually a bit motivated to work extra just to see that mortgage shrink a few $$ more......


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Mortgage = $18800 as of August 1. I was thrilled to see the amount going to principle on regular payment is now at $1230. I am looking at a goal of getting this thing paid off about June or July of next year, if not sooner.

I did 13 total hours of OT that will come on my first August paycheck, so I am looking forward to that. No OT this week at all though..... I am gonna put my ebates check and my Ibotta refund on the mortgage though instead of adding it to vacation funds. ($25+$13) Every little bit helps!