Debt Dumpers 2021

[jackers]

Now - if you are getting out of debt, this is not possible. But once you are out of debt, if you plan to continue using the cards, don't carry a balance. Even it I get a 0% promo I wouldn't use it.

Very good point. When I was getting out of debt, I didnt allow myself to use credit cards at all and was cash funded. I kept one - but not in my purse - for any TRUE emergencies that thankfully didn’t happen.

Brief recap of my debt dumping story, which hopefully helps anyone reading this:

Started my path in 2009 with 1 income, 5 figure credit card debt, 5 figure school loan, and 5 figure bank loan (that I had taken out to consolidate prior credit card debt and then let myself accumulate it again - head smack). And a mortgage but that was not part of the focus.
I did a version of DR and the snowball where I focused on one debt at a time. Played the 0% interest game with CC balance transfers. Set up a detailed Excel spreadsheet to track income and expenses (that I still use today). Took me 2.5 years, no big vacations, and living on a cash budget (sometimes scrounging change to buy milk before payday) but not only did it work and work quickly (I paid off the school loan and bank loan early), I also learned a lot about my spending habits and also how to live within my means.
I will say that we had to add a car loan during those years (DH’s 15+ yr old car died, he had just started a new job after being a SAHD for 5 years, and we are rural with no public transportation) but, by that point I had learned so much about budgeting that I feel like we did it smart and with 2 incomes I was able to pay that loan off 18 months early.

It‘s a journey, but it really will get you to a good place down the road.

 

[Barlament]

Great ideas in here!

 

[DLgal]

We use our credit cards as debit cards too. We have 4 of them, all for various uses based on how many points they will earn. I haven't carried a balance on a credit card or paid interest in many, many years. we also have a predictable, fixed amount income so I have been able to project ahead for spending pretty easily. We would never be in a situation where we would put more on the cards than we could pay off because I expand my spreadsheet out by a month.

 

[Tygerlilly]

Thank you everyone for the congratulations! I'm 10 weeks today and feeling pretty good (although very tired).

We do a secret Santa with my family and I got a bunch of new planner things to go with the new planner I can't find anywhere lol. Local stores are completely sold out. Apparently people are trying to be more organized in 2021 because I've never had issues finding them any other year.

I'm going to try my hand at doing some cash envelopes for sinking funds and my #1 goal is more meal planning and using grocery pick up for everything except fresh produce. I'm so bad about going grocery shopping and blowing my budget because I find stuff I don't need.

 

[ruadisneyfan2]

I increased my Roth IRA contributions to the maximum allowed, from just $100/month. I should have done this last year but never got around to it.

I'm already debating what to do with whatever stimulus check we end up getting. Part of me wants to just keep it in the checking account as a cushion. I've also been thinking of paying off all my credit cards the day the statement is posted, rather than the "due date." However, since I project ahead for these payments now, it would basically mean I need an additional $3000-4000 in my account NOW so that when the statements post, I can pay them immediately rather than 2-3 weeks in the future as I do now.

How do you all handle credit card payments? Do you pay on the due date or right away once you get the statement?

I have a set amount each week but varies according to which week it is, that goes to our monthly cc, the one we charge everything to.
We can't necessarily pay as we spend each week because the first 2 pays of the month we can put a lot toward the card. For the second 2 pays of the month, the mortgage/escrow amount is split in half for each week. For those 2 pays, we send a lot less to the card. It all averages out over the month and it always gets paid on time. I haven't carried a balance since I first signed up here in 2013. If I ever have a month with heavy spending, which is rare, I funnel from the snowball, interrrupting that goal I'm working on temporarily, so that it gets paid in full. I feel very strongly about making sure I never carry a balance. I can't say that I'd go to the point of not buying food, but darn close to it. I have gotten pretty good at knowing by looking at the balance any given day that we're in the safe range.

Basically, we pay like you do. The statement comes and I make payments each week so that the statement balance is paid off before the due date. I too have considered how to fix this system so that I already have the money when the statement is issued. Our monthly cc bill is around $3000 (includes cable/phone/internet from Verizon and 5 cell phones from ATT). The only way is to save up an extra $3000 to have on hand. Then I think, it really doesn't give me any extra bonus to immediately hand the whole thing over to them so why stress about it. If I were ever stuck I could funnel the snowball in that direction or dip into our emergency fund for any sudden loss of income.

 

[Buzzsgramma]

I pay mine weekly but that's also because I get paid weekly. So I know which the mortgage will come out of (hoping for not much longer) and then I just pay what's there betwren the ccs and bills each week after I move money to savings. Anything left goes to my car fund.

As for the mortgage, the hope is it'll be gone because I'm planning to sell it. I've been renting it out since I moved back to Seattle 8 years ago and while it's cash positive it's a stress. The markets finally rebounded well around charlotte at my low price point so now I'm trying to get estimates on getting the work that needs to be done. Also stressful as a lot aren't getting back to me but short term stress is better than long term. And it needs the stuff done as it's a swing of 30 to 40k between leaving it as is and doing it so it's worth draining savings in the short term. Plus if I kept it as a rental it'd take forever to be back cash positive.

North Carolina is a hot property these days and you own in a major town....Our daughter and family just sold their condo in 8 days,full price and cash....they are planning to purchase around Asheville, waynesville etc area....properties are selling like hot cakes....

 

[ruadisneyfan2]

North Carolina is a hot property these days and you own in a major town....Our daughter and family just sold their condo in 8 days,full price and cash....they are planning to purchase around Asheville, waynesville etc area....properties are selling like hot cakes....

There has been a mass exodus from NYC from what I’ve heard here in South Jersey. Now that so many people can work from home, there’s no point in paying high NYC rent/mortgage and oppressive taxes coupled with high crime levels. Businesses are learning this too and dont need/want all that office space.

 

[afan]

North Carolina is a hot property these days and you own in a major town....Our daughter and family just sold their condo in 8 days,full price and cash....they are planning to purchase around Asheville, waynesville etc area....properties are selling like hot cakes....

It is but my house is far enough north of uptown, that while still commutable to the city people would probably rather live closer. It's also very much a starter house and will probably get listed for around 115. So while close to Charlotte has always been ok for the houses closer to 200 and up, even back when I moved home, the area with my house and the price point still had a ton of foreclosures. Even back 3 or 4 years ago mine wouldn't have sold for the amount I'd have wanted. I was actually surprised when my realtor gave me the numbers. Now if I could just get people to get back to me so I could get numbers and stuff set up And from people I've already spoken with on the phone and exchanged texts with, and one gave me an estimate.

 

[dayvewc]

I'm just sitting over here reading everyone's posts and thinking about what my goals are. I'm not sure I'm ready to post them just yet. I made some in last year's thread, and I completely failed on all aspects. I believe it's because I made them too grand and not what I thought I could really do in reality. So that's what I'm trying to figure out.

I have failed on every goal every year I've made them, whether I posted them or not. Don't let that bother you. It's not about whether you fail, it's about whether you get back up and try again. (Stolen off of a poster I have in my classroom --- I also have one of Gandalf on the bridge in Moria saying "You Shall Not Pass!!" that I only put up on test days, but that's because I'm a fun teacher)

I see people in here trying to pay x amount of dollars into their vacation fund or home renovation fund or onto their car or school loans. And I'm like heck I don't even make that much. That's why part of me doesn't want to post in this thread.

I understand this exactly. I've seen people post about making mortgage payments that are more than I bring home in a year. Then I remind myself that I chose to live in a low-cost state. Beyond that, I live in one of the most impoverished regions of the entire country. I don't try to compare my $$$'s to other peoples $$$$$$$$$$$$$$$$$$$$$$$'s, I just work to massage my $$$'s as far as they will go.

With no more than I make, I'm kind of embarassed to post what I think I can pay. But I will do it eventually. Just need time to figure out what is feasible.

What is feasible is what you think you can do. No one else is monitoring your pocketbook. If feasible for you is to pay your current bills and reduce them by an extra $12 this year, we will all cheer you on if you make it, and commiserate with you if you don't, but most importantly, we will be here for you to support you as you need us.

Welcome!!!!!

(I don't think I left out anything. Others did a much better job of talking about actual budgeting.)

 

[DLgal]

I have a set amount each week but varies according to which week it is, that goes to our monthly cc, the one we charge everything to.
We can't necessarily pay as we spend each week because the first 2 pays of the month we can put a lot toward the card. For the second 2 pays of the month, the mortgage/escrow amount is split in half for each week. For those 2 pays, we send a lot less to the card. It all averages out over the month and it always gets paid on time. I haven't carried a balance since I first signed up here in 2013. If I ever have a month with heavy spending, which is rare, I funnel from the snowball, interrrupting that goal I'm working on temporarily, so that it gets paid in full. I feel very strongly about making sure I never carry a balance. I can't say that I'd go to the point of not buying food, but darn close to it. I have gotten pretty good at knowing by looking at the balance any given day that we're in the safe range.

Basically, we pay like you do. The statement comes and I make payments each week so that the statement balance is paid off before the due date. I too have considered how to fix this system so that I already have the money when the statement is issued. Our monthly cc bill is around $3000 (includes cable/phone/internet from Verizon and 5 cell phones from ATT). The only way is to save up an extra $3000 to have on hand. Then I think, it really doesn't give me any extra bonus to immediately hand the whole thing over to them so why stress about it. If I were ever stuck I could funnel the snowball in that direction or dip into our emergency fund for any sudden loss of income.

Basically same. Our monthly spend is between $3,000-4,000. I have been wanting to do this for awhile. The stimulus check will get me close to the excess I'd need to switch over to paying either weekly or bi weekly as we spend money each month. So, I might just do that since it's basically free money and I don't have any pressing goals to funnel it towards, unless we somehow end up with the $2000 per person checks, in which case I will likely pay off my husband's car (literally our only debt) early to free up another $432/month.

 

[FQLover]

I get paid once a month, on the 1st. So I pay all my bills then, no matter when in the coming month they are actually due. This includes my credit card (I have only one but I use it for many things so that I get the reward dollars). The money for my credit card balance is already sitting in my account from the previous month.

I also set aside my planned savings at that bill paying time. I then have assigned budget categories for the rest-- the old "every dollar has a name" philosophy. Anything left over from those budget categories at the end of the month, goes into one of my savings accounts--whichever one needs some plumping up or has a big expense coming. And then I start over again on the 1st of the next month.

 

[imbatman]

Advice time!

I have my one lone CC left ($6420.79) and the balance of my daughter's braces ($1628.50). There is a small monthly fee for the braces payment. Should I treat this as a snowball and pay it off before the CC (which is 0%)? I'm leaning yes, but am pretty emotional today. Emotional spending and decision making is bad for me.

 

[dreamer17555]

@imbatman

If your credit score is good- focus on the braces first. Also make sure you can pay off the CC before the 0% APR expires.

 

[BrerRabbit66]

Advice time!

I have my one lone CC left ($6420.79) and the balance of my daughter's braces ($1628.50). There is a small monthly fee for the braces payment. Should I treat this as a snowball and pay it off before the CC (which is 0%)? I'm leaning yes, but am pretty emotional today. Emotional spending and decision making is bad for me.

I would snowball it to avoid additional fees. Let that 0% work for you unless you are nearing an end date for the 0%.

 

[dreamer17555]

Question-

How do you prioritize an emergency fund vs credit card debit (especially if the cc debt has a low or zero APR)? I know DR preaches $1,000 baby fund and then everything at debt but with how wonky this year has been I am wondering if that is still sage advice. 1k goes fast.

 

[PhoenixStrength]

Advice time!

I have my one lone CC left ($6420.79) and the balance of my daughter's braces ($1628.50). There is a small monthly fee for the braces payment. Should I treat this as a snowball and pay it off before the CC (which is 0%)? I'm leaning yes, but am pretty emotional today. Emotional spending and decision making is bad for me.

I agree with PPs, snowball the braces first to minimize the fee since the CC is at 0%. That's what I would do.

 

[pblack]

Question-

How do you prioritize an emergency fund vs credit card debit (especially if the cc debt has a low or zero APR)? I know DR preaches $1,000 baby fund and then everything at debt but with how wonky this year has been I am wondering if that is still sage advice. 1k goes fast.

For me, I prioritized paying off our cc debt first, but I did also have at least $1000 in emergency savings. I have a set amount that gets transferred to our savings every month and I didn't touch that when paying off our debt. I just didn't transfer anything extra into our savings. My thought was worst case scenario I'd use a credit card and 0% offer for any emergencies that happened. I know that's counterintuitive, but realistically if an emergency happened it would probably be more than what I had saved anyway. This method worked for me, but that doesn't mean it will work for everyone.

 

[afan]

Question-

How do you prioritize an emergency fund vs credit card debit (especially if the cc debt has a low or zero APR)? I know DR preaches $1,000 baby fund and then everything at debt but with how wonky this year has been I am wondering if that is still sage advice. 1k goes fast.

I agree with @pblack. Your emergency savings needs to be a number you are good with even when paying off debt. It also comes down to how much credit you have available too. If you own a home, do you have a home equity line, some will use that as back up emergency funds.

Also good to remember that DR isn't the only one that suggests the snowball method nor is he the only expert out there that helps with advice on paying off debt, he's just the most well know that's made millions off people paying off debt.

 

[FQLover]

--As I do follow DR's debt reduction plan, I would absolutely snowball the braces first, get that out of there, and then work on your larger debt. You will feel great to only be looking at one payment then!

--If you think that $1000 is not enough, I would adjust it just a bit, say $1500, and make saving that amount as your first priority with every extra penny going into that pot. It is not there to cover huge expenses, of course, just there to keep you from charging a car repair, a large dental bill, an unexpected vet bill, etc. Once you use it for something, the plan is for you to prioritize getting the account back to $1000 or $1500, etc. before you resume your debt snowball.

And you do have to examine your spending and find the fluff to cut so that you can come up with the savings for the emergency fund and the debt snowball. But if you over-estimate that amount, you can end up without enough cash to meet your real expenses, so try to be realistic about where you can downsize your expenditures. It becomes like a puzzle, sort of, and can be really gratifying to tweak and work!

 

[CaleCakes]

Hello everyone, long time reader but first time posting on this board (I think ). I'm almost ready to share my goals for 2021. I wanted to ask if anyone got a stimulus deposit today. We did and I can't figure out how they came up with the figure. It's not $600 pp and it's not even a whole number- like it had cents. Anyone else get a weird number?