Paying off debt

[eclark53520]

I am slightly reluctant to bring this up as i understand the economic climate and realize that there are a lot of people out there that are having hard times but...

Anyone paying off debt in a hurry or have plans to pay off their debt quickly?

G/f and i have been doing some financial planning...

Currently my g/f and i have plans to pay off all debt(besides the mortgage) in about a year and a half barring any catastrophic unknowns(which are bound to happen)

We just paid off all the furniture loans(no payments or interest for a year, but we paid them off before the year was up like ur supposed to)

Credit cards will be paid off in about 6 months, and then we are going to pay off her car loan as quickly as possible. Probably take the rest of the year(of our 1.5year plan)

Issues we will run into:
1. My car has 160k on it and is 16 years old, so its not likely it will make it all that much longer, may have to replace before the 2 years i hope it will make it to. However, i still believe it will make it 2 years, its running great and getting 25ish MPG, leaks not even half a quart of oil over 7500 miles from the front main seal so not bad.

2. The g/f wants the basement finished, kitchen remodeled, etc.

3. I want a new garage, because whoever built mine was either a quadrapalegic or retarded....(i probably spelled that wrong...o well)

4. We both want a kid, but i want the only debt over our heads to be the mortgage and maybe a carpayment when we have one. Hence the planning.

5. Marriage......

6. I really want to buy some land in about 5 years to build my final house on later in life(i hope mid to later 30's)

Issues we might run into:

1. Hit a deer with either car(at least if its the new one it will be covered by insurance) Mine might be able to take a deer and not die....pretty tough old car

2. Natural disaster....(flood, tornado) tornado would be covered under insurance, flood is really not likely in the area i livea(river would have to crest 3X higher than ever on record before the house would flood....possibly...buti doubt it.



I have found that financial planning is tough...there are so many 'what if's' and unknowns that long-term planning is almost impossible at this point in our lives(i am 22 and she is 21).

Sorta just a journal for me to keep track of our progress, but suggestions or your stories are very welcome

 

[Clugnut]

I think this is a good topic to be talking about now. It all depends on what you believe is coming in the economy. Without getting political, (which is tough), history tells me that with the way we are doing things right now, between bailouts and the expansion of the public sector, that the economy will continue to slide, and deflation will continue. My opinion of course. So, what I'm doing.

1. Get out of consumer debt. I'm trying to pay my truck off, and then start hammering the home eq. If you are not in a fixed mortgage, get into one, but don't be too worried about paying it down unless you can swing it. Pay those consumer debts first, and don't accrue more.

2. Save up some cash. Have it on hand. If you want to buy land, save up all you can right now. Some experts are predicting a depression. We have not reached the bottom yet, and people will start carving off acres to pay bills. Be ready for a bottoming out.

3. You have guns! Buy ammo. Repressive taxes on ammo are coming.

4. Hold off on the car as long as you can. Stuff is only going to get cheaper. Although we are printing a ton of money, people are hunkering down and not spending.

5. Get out of the stock market. Its going to hit 4000.


OK, enough of my Nostra-dumbass predictions!

 

[BigJim13]

I think this is a good topic to be talking about now. It all depends on what you believe is coming in the economy. Without getting political, (which is tough), history tells me that with the way we are doing things right now, between bailouts and the expansion of the public sector, that the economy will continue to slide, and deflation will continue. My opinion of course. So, what I'm doing.

1. Get out of consumer debt. I'm trying to pay my truck off, and then start hammering the home eq. If you are not in a fixed mortgage, get into one, but don't be too worried about paying it down unless you can swing it. Pay those consumer debts first, and don't accrue more.

2. Save up some cash. Have it on hand. If you want to buy land, save up all you can right now. Some experts are predicting a depression. We have not reached the bottom yet, and people will start carving off acres to pay bills. Be ready for a bottoming out.

3. You have guns! Buy ammo. Repressive taxes on ammo are coming.

4. Hold off on the car as long as you can. Stuff is only going to get cheaper. Although we are printing a ton of money, people are hunkering down and not spending.

5. Get out of the stock market. Its going to hit 4000.


OK, enough of my Nostra-dumbass predictions!

Good advice here!!

My advice and things I wish I could do or did do:

1. Go without a car payment as long as possible, if you have to buy a car don't buy new-possibly the worst investment ever since they lose at least 5K just driving off the lot.

2. Pay off as much consumer/Credit card debt as fast as possible and then cut up the cards. There is a law going into effect in the summer, july I think, that will limit what CC companies can charge and how they raise their rates arbitrarily. Expect your CC rates to go up- a little at lease, more likely alot- before that laws goes into effect.

3. If you have a mortgage/home eq etc pay it down but pay down other debts first. Mortgage interest is- in most cases- tax deductible, CC and other installment loan interest is not.

4. If you can, save, my wife and I are in a tight spot now so saving has gone out the window. She switched jobs and took a 10k/yr pay cut-that hurt. We are cutting corners wherever we can and I am selling whatever I can on ebay to help pay stuff down. We will be switching our phone plan, maybe getting rid of land line all together, and going down to the bare minimum as far as TV goes.

I could go on, but this is a good start. I started clipping coupons as well, never thought I would but hey, money is money.

And yes, Like Clug I believe that the economy and stock market are going to get worse. The so called expert say one thing one day and the next day turn around and say they were wrong. It seems like nobody knows whats going on or what to do about it-not a political shot just how I see it.

 

[zaphod]

Paying down debt to a manageable level is always good. You did not mention whether you are liquidating investment assets or forgoing a planned investment plan to do so. That method of retiring debt requires some scrutiny. Future earning vs interest recovered issues.

Get your credit score. The strength of your credit score will dictate your borrowing ability for some very attractive fixed loans rates in the near future. In order to know which debts to pay down the in & outs of your (both of you) credit rating is key.

Make out a current budget and a future needs plan to understand what debt load you can handle. Example---Purchase price of home should be limited to 2x your realistic combined income. With 30 year fixed mortgage this will yield a safe monthly payment.

Right now cash is a valuable asset. Bargains are available from those who need "cash flow" to offset a diminished lender capacity. Inflation is generally being predicted therefore loan interest rates in the future should increase.

Finally look at your job security issues. How much cash reserves are prudent if that job no longer exists. This is the "BEST Of Times and The Worst of Times" depending on which end of the stick you are on. However it is stressful for all.

That word "stress" is also a key. How much risk are you willing to endure is an essential question. Some are enthralled by the unknown and some are repulsed by the very same.

The fact you are currently thinking about and addressing the issue is a MAJOR PLUS. Drifting in these economic times---IMHO not a good choice. Chance can be a cruel mistress.

Good luck my friend

 

[warbirdlover]

Our three cars will be paid up shortly. That will be a giant load off our backs. We are buying one for our daughter in college. And next winter she graduates and (hopefully) moves out on her own.

We have mucho dollars in medical bills from my wife's chemo and radiation last summer that are binding us up.

It's smart to pay off debt like you're doing. Most young couples borrow too much (want everything right away) and their quality of life suffers from having no money for fun things.

 

[BigJim13]

Our three cars will be paid up shortly. That will be a giant load off our backs. We are buying one for our daughter in college. And next winter she graduates and (hopefully) moves out on her own.

We have mucho dollars in medical bills from my wife's chemo and radiation last summer that are binding us up.

It's smart to pay off debt like you're doing. Most young couples borrow too much (want everything right away) and their quality of life suffers from having no money for fun things.

I wish somebody had impressed this fact on me when I was younger. When my wife and I found out she was pregnant, almost 3 yrs ago, we thought we knew what we were getting into. We had just closed on our house a month before finding out, she got pregnant sooner than expected but we knew what we wanted. We also "thought" we needed a bigger car rather than making due with what we had, although the lease was almost up and we were over our mileage-we were screwed no matter which way we went.

Anyway, having a child really threw our budget into shambles. Formula, diapers, child care has taken its toll and while I would NEVER want to change the fact we had a beautiful little girl I wish I did have a few things to do over. But that's life I guess, live and learn.

 

[eclark53520]

Paying down debt to a manageable level is always good. You did not mention whether you are liquidating investment assets or forgoing a planned investment plan to do so. That method of retiring debt requires some scrutiny. Future earning vs interest recovered issues.

Right now i am doing a little bit of liquidating assets, but mostly giving up on investment since i figured any money i would put in now would be lost anyway with the way the stock market is going. I figure if i wait for the bottom, or just before, get in then i can be debt free and still making money. Dont know if this is the best way to go, i am by no means a financial wiz...just trying to do what seems logical

Get your credit score. The strength of your credit score will dictate your borrowing ability for some very attractive fixed loans rates in the near future. In order to know which debts to pay down the in & outs of your (both of you) credit rating is key.

Last time i knew my credit score it was in the 740's and that was over a year ago(about 15 months) and i havent taken out any more loans, or missed payment or any of the other things that can hurt the credit score(that i know of)

Make out a current budget and a future needs plan to understand what debt load you can handle. Example---Purchase price of home should be limited to 2x your realistic combined income. With 30 year fixed mortgage this will yield a safe monthly payment.

We bought a house that was about 1.3X our current yearly income. With taxes i can pay our mortgage with about 3/4 of one paycheck. I can pay all of our bills on my income alone.

Right now cash is a valuable asset. Bargains are available to those who need "cash flow" to offset a diminished lender capacity. Inflation is generally being predicted therefore loan interest rates in the future should increase.

Good to know.

Finally look at your job security issues. How much cash reserves are prudent if that job no longer exists. This is the "BEST Of Times and The Worst of Times" depending on which end of the stick you are on. However it is stressful for all.

The company we both work for is in the medical field. Currently the company itself is doing fantastic, were still hiring like mad trying to keep up with workload. I am not a huge fan of being both in the same company but as of right now i dont see it as a problem. This company does not pay top wages, but the bene's are great and the atmosphere in the office is like a big group of friends....most days im not even sure if i am at work. HOnestly i dont know how much money it would take to get me out of this environment. I feel extremely lucky to be an employee for this company.

However we have planned for me loosing my job, we keep 2 months of bills in the savings account. If we drop all un-nessicary bills(tv, phone, etc) the g/f can almost cover the bills by herself, if i made minimum wage we would be ok. If she looses her job we will be fine on my salary paying bills.

That word "stress" is also a key. How much risk are you willing to endure is an essential question. some are enthralled by the unknown and some are repulsed by the very same.

The fact you are currently thinking about and addressing the issue is a MAJOR PLUS. Drifting in these economic times---IMHO not a good choice. Chance can be a cruel mistress.

Good luck my friend

The part of this i really need to figure out is retirement funds and how and when i am gonig to start investing for that.

 

[TheWOAT]

Luckily for me, my wife hates spending money.. so we have saved like crazy and I am down to zero credit, one student loan (20k), and a car payment that is done soon. We are looking for a home, and have money for a house downpayment, but I keep feeling like waiting for things to calm down.

 

[Clugnut]

Sounds like you have a good handle on things already, Clarke. Preparation is key, and I think you're doing that.

 

[eclark53520]

Sounds like you have a good handle on things already, Clarke. Preparation is key, and I think you're doing that.

You know me...i want to be prepared for anything and everything.

I believe a lot of people call it "Paranoid"

To have and not need > to need and not have

ETA: WBL brought up a good point....not only possible medical bills from us, but my daughter....braces...

I never had to have them, but her mother did...as of right now, i'm not sure whose teeth she got.lol

This is a few years down the road obviously but its something i want to look into and see how much my insurance covers...i didnt even think about that when i was going through benefits...

 

[zaphod]

Clark---Looks like you have a good plan in place. Getting rid of the Credit card debt is a priory. Those interest rates will kill. CC are a good tool for floating money "if you stay current and on budget". Otherwise they are a Pandora's box.

What medical field?? Me--I was a Medical Technologist, primarily
research and teaching at UW Hospitals Chemistry department. My wife was the Head RN for the Trauma Life Support Unit of same hospital.

Hope to meet you on one of these planned outings.

 

[eclark53520]

Clark---Looks like you have a good plan in place. Getting rid of the Credit card debt is a priory. Those interest rates will kill. CC are a good tool for floating money "if you stay current and on budget". Otherwise they are a Pandora's box.

What medical field?? Me--I was a Medical Technologist, primarily
research and teaching at UW Hospitals Chemistry department. My wife was the Head RN for the Trauma Life Support Unit of same hospital.

Hope to meet you on one of these planned outings.

Yes, my father taught me about credit cards and the demons that lie within them long before i even could attempt to apply for one. He instilled in my from a young age that old and paid for was a lot better than new and borowed. Hence why i have never bought a new car.(might not ever)

The company i work for is called Care Wisconsin. We adminisiter at home care to elderly or disabled peoples. The company also runs a Senior Citizen day care center right by the dane county regional airport.

Personally i am a programmer for the company, so i am not really doing any 'hands on' work in that field but i'm still sorta part of it. The g/f works in the dept that takes orders and sends out all the supplys and DME for the members.(walkers, wheel chairs, O2 setups, other disposable daily needs)

I too am looking forward to meeting all my wisconsinites that frquent this site, hopefully i can make more than one. Got lots of paid time off to use up before July!

 

[zaphod]

Retirement planning. WOW you are ahead of the curve.

Does your company offer a "match" investment in a 401k or Simple IRA Plan. That's the first step that really adds up. The next is to open a self directed IRA or a Roth IRA depending on your tax situation. The IRA/Roth can be funded on a "I've got the money" basis each year.

The Roth does not allow a current tax deduction for the voluntary investments however the removal of the funds are a bit more flexible. Medical bills, housing, student tuition I believe are all in play without penalty since these are post tax dollars.

Most investment councilors will recommend you pay yourself first. If you have the means and will power to do that your future self will congratulate your present self heartily.

When we worked for the State in basically your situation we maxed out on our matching contributions. Best financial decision we made. And if your money comes out first you will learn to live within your means on the remainder. The key is to have self control to let that $ gestate, growing by the power of compounding interest.

 

[eclark53520]

Retirement planning. WOW you are ahead of the curve.

Does your company offer a "match" investment in a 401k or Simple IRA Plan. That's the first step that really adds up. The next is to open a self directed IRA or a Roth IRA depending on your tax situation. The IRA/Roth can be funded on a "I've got the money" basis each year.

The Roth does not allow a current tax deduction for the voluntary investments however the removal of the funds are a bit more flexible. Medical bills, housing, student tuition I believe are all in play without penalty since these are post tax dollars.

Most investment councilors will recommend you pay yourself first. If you have the means and will power to do that your future self will congratulate your present self heartily.

When we worked for the State in basically your situation we maxed out on our matching contributions. Best financial decision we made. And if your money comes out first you will learn to live within your means on the remainder. The key is to have self control to let that $ gestate, growing by the power of compounding interest.

Yes, i believe the company does offer a matching 401k option.

I was just a intern when they went over all that stuf with me, so i wasn't even eligible at the time so i really wasnt paying too much attention. I should request some material on that from HR...

Seems to me like they will match up to 6% of your yearly income or something like that...those are the numbers that stick in my head anyway....

Where would i go to open a self directed IRA? The bank? I guess i should do some research on those.

Thanks for the tips, this gives me some good direction to head in.

 

[Pa Jayhawk]

A few years back we started paying off debt with bonuses and such. As a result our only current debt is our Mortgage and what is left of one car payment.

Things like Credit Cards are a no brainer. You figure if worst comes to worst and you found you over extended yourself further than you wanted, it is not like you can't use the card again.

You want my personal opinion of the best thing you can possibly do for debt. Pick up an American Express card that you have to pay off each month. We put everything we purchase on AMEX for anyone who takes AMEX. Nice only having to pay one bill a month. Even most of the utilities will accept it as payment. Then usually do the rest with Cash. Although even now with or CC's if we use them it is pretty much habit to pay them off. We do try and maintain a low balance on CC's just for a method of credit ratings. It has probably been two years since I have written a check for anything. Also manage to make a couple thousand a year off of the Rewards points. Also have paid for anything I have bought in Home Depot since getting AMEX. Plan on buying a stove with the points there next. The Gift Cards are the highest value on Points. Hilton Rewards are pretty good rate for them as well.

Although you do want to weigh options for things were your work will match investments. We topped those out prior to paying down debt.