Not there, but getting there

Have you paid off your debt? Managed to save for your dream home? Had an awesome investment pan out? Share your personal finance success stories here.

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Space
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Not there, but getting there

Postby Space » Sat Oct 03, 2015 12:58 am

I just wanted to share my story and hope to inspire somebody struggling. Basically, I am following Dave Ramsey's advice and am 1 year into it. My story is probably very typical with our society.

I am 35, most of my adult life was spent working extra hard to build great credit. Never let an oppertunity go by to increase my available credit, never late on a payment in the last 15 years, etc. Currently, I have over 140,000 available to me. I used credit cards for just about anything and everything, thinking nothing of it. It was normal, everyday fact of life, nothing was wrong with it. Car repairs,tvs,stereos,Christmas,tools,furniture, and the occasional low points of groceries,gas,and gambling. I've gotten "good deals" over the years, and have actually paid very little in interest in the last 10 years. I've always carried a large balance, like I said, it was normal. I could totally afford the payments, not a problem. I always paid much more than the minimum due and always saved a little bit into a savings account. My first car loan was 10% apr. That was atrocious, but I had enough credit available, that I consolidated my CCs and my car loan onto a 3.9% fixed until paid off balance transfer. I didn't even know if they'd take my car loan on a balance transfer, but they did, and I got my title. I budgeted 300 to CCs and had a $400 car payment. After the transfer, I had a 300 something dollar minimum payment, but paid 700 a month, with the secure feeling I could fall back to minimum in tough times.
Was in an aparment, kind of a rough area, I wanted out in a bad way. I knew I couldn't afford a house, but the wife got things rolling and next thing you know, we're in touch with an agent and looking at houses. This is in 2009, after all the chaos and we were taking advantage of the $10K rebate on first time buyers. Of course we didn't have any money down, but there's a loan for that. While we were looking, disaster struck. By this time, I had lowered my monthly CC payment to like 400 or so. Chase implemented new minimum payment rules and my next payment due was 800 bucks! I had over $20K on this one card, so I decided to inquire about 401K withdrawals at work. I heard you could take some out while buying a house as a one time deal. I had about 45K in it at the time. I didn't want to go that route, but it was the only thing I could think of. I was going to take out the money to pay off the credit card, while at the same time buy a house and hope it would fly. Thankfully, my boss, out of nowhere, intervened and prevented me from doing that, which I am super thankful for. He offered me a personal loan. I didn't want to do that, but it was a lot better than messing with my 401K. I didn't get enough to pay it off, but it was enough to cut the minimum down a lot. Then we found a place, I figured 180K was about as much as we could afford, but ended up buying one for 205. No money down, and financed closing costs, we were living the dream. As for that 10K rebate, it went towards some debt, but not all of it. It took me over 3 years to pay him back. But that was my highest priority. Along with a new house came new stuff, beat up the cards some more. 2013 came along, I made the most money I've ever made at that point, working overtime and what not. I knew not to depend on overtime, but I did, in a huge way. I traded in my car and got a cool one. I knew I couldn't afford it on anything less than what I was making. 2014, it started to take it's toll. I was making good money and had nothing to show for it, except a car (payment). We went to the credit union and refinanced our cars to a decent rate under 3%. We inquired about a HELOC for our debt. They said our home was worth 40K less than what we owed. I was starting to worry about all this debt, but still freely charged more and more.

August 2014, a friend of mine showed me a video of Dave Ramsey doing his routine at some church on Youtube. He says finances is 20% head knowledge and 80% behavior. I agree with that statement. I learned absolutely nothing new from watching it, but his delivery had such a profound effect on me that it literally changed my life. That was one year ago. I was 33K in debt, not counting the house, and the wife was about the same. From that point on, I vowed not to charge anymore and decided to follow his advice. Unfortunately for me, my CC debt has always been tied up on one or two cards with very high balances with 0% interest, doin the transfer game every 12 to 18 months or so. So my little victories weren't there, paying down small ones first and so on.

My first victory was Christmas. Never in my life have I not charged something for Christmas until now. That was a huge boost, I never even imagined paying cash for Christmas. While it wasn't the best one ever, it was enough, and it didn't put me back any to do it. The most credit goes to making a realistic budget. I've never had an actual budget before, and that made the most impact. I found out I was saving too much, and paying too much on debt. Yes, you heard that right. While I put alot into savings, and paid alot on debt, I was lacking in other bills, and constantly raided savings once or twice per month to make ends meet. I adjusted them both down, and wouldn't you know, I'm making progress. I haven't had to touch savings now and am actually paying my debt down faster. By decreasing my savings and debt allocation, my savings account actually grew, because I wasn't touching it, and my 33K debt is now 22K one year later! I paid down $11,000 in one year by budgeting 435 per month on credit cards, making my regular 235 car payment, and then throwing anything extra at debt that I could throughout the year.
The next big thing was, I refinanced my 30 year 5.5% mortgage to a 15 year 3.375. I cut 10 years out of the picture and am going to save a good 90K in interest. It's not easy, but it doesnt have to be really hard. It all comes down to self discipline and really "wanting it" I was fed up with debt enslaving me all my life. Now it stops. I dropped my 401K contributions to the minimum to get the matching, I am attacking my debt, and I figure Im 1/3 of the way through it. With that budget, Im comfortably making it happen. I always have enough money for whatever comes along. I probably don't budget as well as I should, as I have excess. But after a few months of that, I toss it at CC debt with an extra large payment, until now. I'll use that money for Christmas, then after the new year, whatever is there, goes back to debt.

Space
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Joined: Fri Oct 02, 2015 10:51 pm
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One step forward, two steps back

Postby Space » Sun Mar 05, 2017 9:12 pm

Bit of an update. I am down to 8900 on CC debt, the rest of mine and all of the wife's has been paid. We kept on track very well since starting late 2014.
However, we fell off the wagon a bit and bought some new(er) cars. Didn't go nearly as cheap as usual this time, we're now in it for 61K in cars, so about 70K, kinda where we started. It's not eating into our budget any, and should have things paid off a little early. In order to avoid changing of the car loans every 6 or 7 years, I've also budgeted a new car fund. I've been contributing 300 per month into it. It consists of decent dividend paying stocks. I was prepared to have at least one more car loan before buying my next car(s) in cash, so far Im quite on track with that. Nice thing about not using credit for a few years and doing nothing but paying it down means you have a very nice score.

jdmartin
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Re: Not there, but getting there

Postby jdmartin » Wed Mar 15, 2017 10:14 am

Excellent on the credit cards, and ouch on the cars! I don't know what kind of car(s) you are driving, and how many miles you drive per year, but any decent quality new car bought in the last 5 years should last you 200,000 miles easily. I think you need to be honest with yourself that buying 2 new cars that you owe $70k on is not "falling off the wagon a bit" :D . I own 3 cars, if you include my wife's car, outright, and 2 of them are 2012 are newer (my work truck is the old one at 2004), and combined the 2 new ones didn't cost $30k. If you have enough money to toss 300 per month towards a new car fund, you would be far better served retiring the last of that credit card debt and then (if you won't sell them to recover most of those losses) pile that money on getting rid of your existing car loans. And then drive your current cars into the graveyard!
"Money is better than poverty, for financial reasons" - Woody Allen

Space
Posts: 6
Joined: Fri Oct 02, 2015 10:51 pm
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Re: Not there, but getting there

Postby Space » Wed Apr 12, 2017 9:44 pm

Not 70K in cars, 70 total. Was 61 in cars. Got the wife a new one, happened to run into a salesman that was very good at his job and our gameplan quickly eroded. But we justified the purchase and it's a nice,new,safe car that will have much less problems than her previous one. For the last couple years I've been driving a ~20 year old paid for ride that had 225,000 miles on it, totally content with it, I really liked it. Then some dude came along and hit me and totalled it. I made the decision I wanted a newer version of that car, which ended up running me 25k, rather than rolling the dice on finding a comparable replacement of that era. I make no regrets on either decision, it is what it is. Our commutes are long enough that I am not willing to settle for anything less than what I wanted sitting in traffic 2 hrs a day.

80% behavioral. I am very aware of the other 20%, but I don't care at the moment. Things are fine.


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