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 Post subject: Need financial inspiration
PostPosted: Tue Jul 24, 2012 8:58 am 

Joined: Sun Apr 29, 2012 12:54 am
Posts: 18
Hello everyone,

While this is my first post, I am not new here. I've actually been reviewing the stories here for the past year. I've been trying to overcome this financial hardship that I endured which was totally on me. It seems that I have been asleep for a long time and have finally awaken to the reality that a train wreck is about to happen where I am the engineer. I'm 34 years old, married with two kids and feel that I am at a fork in the road where decisions at this juncture are costly. At this time the only debt that I have are two cars and my mortgage. The total amount of debt is around $380,000. I'll post actual numbers later, but I would like to use this thread as inspiration (as the title explains) from fellow users and a means to help keep me on the straight and narrow by reporting my progress.

I plan to go and pick up "The Total Money Makeover" and "The Richest Man in Babylon" sometime within the next hour. Are there any other books that are recommended for investing?

My goal is to be retired sometime between 55 and 65 enjoying life debt free and having my children be setup for college. This is probably crazy, but one can hope right.

I'm looking into a roth IRA as I opened an account with Fidelity yesterday (which I am proud of cause I had been lazy doing it for quite sometime).

Will post plan details soon


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 Post subject: Re: Need financial inspiration
PostPosted: Tue Jul 24, 2012 9:39 am 

Joined: Fri May 04, 2012 2:23 pm
Posts: 810
Step one: Don't buy those books, go to the library and check them out for free!

Step two: anything Dave Ramsey has to say about investing, wipe your butt with it. He is solid on the (extreme) debt elimination.

But, you just say you have $380k in debt. Which, with the mortgage included, may not be that bad. The car debt isn't the best, but it is what it is. All this is relative, and depending on how much you make, your ship may not be sinking as bad as you think it is. Sure, if your household income is only 40k, this may not be ideal. If you're around $150k, certainly, this is manageable. Of course, I don't know where you are income wise.

Just throwing this out there, but you AND your wife should keep a budget (together). This solves 90% of the personal finance problems. Well, keeps you from falling into many common traps. And it also keeps you AND your wife on the same page.

If you want specifics, post up specifics. If you want to talk in generalities, that is fine as well.

good luck.

_________________
Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."


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 Post subject: Re: Need financial inspiration
PostPosted: Tue Jul 24, 2012 9:42 am 

Joined: Wed Oct 07, 2009 4:16 pm
Posts: 961
I am not sure I understand what you are asking?

Is it to know what everyone's financial report card looks like to get motivation to get to their level?

Are you asking help for your own financial score card? You might want to start on a financial journal to track your progress.

_________________
Be what you want to attract.


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 Post subject: Re: Need financial inspiration
PostPosted: Tue Jul 24, 2012 10:24 am 

Joined: Mon Nov 01, 2010 5:15 pm
Posts: 1201
Quote:
I plan to go and pick up "The Total Money Makeover" and "The Richest Man in Babylon" sometime within the next hour.

Bichon Frise pretty much nailed it with the colorful imagery, so I won't rehash it. But I do concur.

Quote:
Are there any other books that are recommended for investing?

Yes, quite a few. My personal favorite for individual stock picking is The Intelligent Investor by Ben Graham. Or if you're interested in index funds anything by Jack Bogle should do.

Quote:
My goal is to be retired sometime between 55 and 65 enjoying life debt free and having my children be setup for college. This is probably crazy, but one can hope right.

Retired & a college fund in 20 years with your debt load??? Probably not gonna happen unless you are making a high salary.


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 Post subject: Re: Need financial inspiration
PostPosted: Tue Jul 24, 2012 11:35 am 

Joined: Sun Apr 29, 2012 12:54 am
Posts: 18
Bichon Frise wrote:
Step one: Don't buy those books, go to the library and check them out for free!


Oops!
Bichon Frise wrote:
But, you just say you have $380k in debt. Which, with the mortgage included, may not be that bad. The car debt isn't the best, but it is what it is. All this is relative, and depending on how much you make, your ship may not be sinking as bad as you think it is. Sure, if your household income is only 40k, this may not be ideal. If you're around $150k, certainly, this is manageable. Of course, I don't know where you are income wise.


Here's the breakdown as of today:

Item Amount Owed Interest
Car 1 : 20,438.42 1.9
Car 2 : 21,305.50 4.4
Home: 344,023.00 7.25

Accounts Amount
Money Market 6576.56
Checking 2595.66

I need to mention that I've been taking care of these bills as my wife is currently taking care of childcare. My income is 110K. By the end of this year I am going to renegotiate my salary and hopefully that will give me a significant bump.

Bichon Frise wrote:
Just throwing this out there, but you AND your wife should keep a budget (together). This solves 90% of the personal finance problems. Well, keeps you from falling into many common traps. And it also keeps you AND your wife on the same page.


You're absolutely right. Once I get a plan together from reading the material I'll sit down with the boss (lol).


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 Post subject: Re: Need financial inspiration
PostPosted: Tue Jul 24, 2012 11:44 am 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1780
Location: Ottawa, Canada
You haven't given us much to go on yet, but just from what you've posted, my initial reaction is that you've got waaaay too much money tied up in cars. Either one of your cars seem extravagant. Do you really need two expensive cars, if your wife is a SAHM?

Other information that would be helpful would be your ages, number of children, long term goals, list of all assets (home, cottage, retirement, value of cars, etc.), and extenuating circumstances such as handicaps or upcoming inheritances, long-term plans (when you want to retire), and so on.

Oh yeah, and I almost forgot .... Welcome! :)


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 Post subject: Re: Need financial inspiration
PostPosted: Tue Jul 24, 2012 11:47 am 

Joined: Sun Apr 29, 2012 12:54 am
Posts: 18
fantasma wrote:
I am not sure I understand what you are asking?

Is it to know what everyone's financial report card looks like to get motivation to get to their level?

Are you asking help for your own financial score card? You might want to start on a financial journal to track your progress.


Hi Fantasma, I have to apologize for not making it clear. I would like All of the above. Reading other success stories here have helped me enough to understand the bigger picture and that I need to do something to get a handle on this debt now. I do not want to be elderly trying to make payments. I'll be starting that financial journal soon.


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 Post subject: Re: Need financial inspiration
PostPosted: Tue Jul 24, 2012 11:52 am 

Joined: Sun Apr 29, 2012 12:54 am
Posts: 18
Tightwad wrote:
Yes, quite a few. My personal favorite for individual stock picking is The Intelligent Investor by Ben Graham. Or if you're interested in index funds anything by Jack Bogle should do.


Thanks for the info Tightwad. I'll look into it.


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 Post subject: Re: Need financial inspiration
PostPosted: Tue Jul 24, 2012 12:13 pm 

Joined: Sun Apr 29, 2012 12:54 am
Posts: 18
kombat wrote:
You haven't given us much to go on yet, but just from what you've posted, my initial reaction is that you've got waaaay too much money tied up in cars. Either one of your cars seem extravagant. Do you really need two expensive cars, if your wife is a SAHM?

Other information that would be helpful would be your ages, number of children, long term goals, list of all assets (home, cottage, retirement, value of cars, etc.), and extenuating circumstances such as handicaps or upcoming inheritances, long-term plans (when you want to retire), and so on.

Oh yeah, and I almost forgot .... Welcome! :)


Kombat, My wife actually works a full time, but she only makes 36K. Her money goes toward daycare payments and a couple of bills for the home. I should've made that clear.

Information requested is:
Ages: 34
Kids: 2
long term goals: To make 150K within the next 4 years and to retire when we turn 55. I also would like to get a portfolio that can accumulate growth up to 300K.
1 home: 198K (underwater)
car 1: $19,219
car 2: $17,533
retirement: 40K in 401K which is being switched over to a traditional IRA and I just recently opened a roth IRA to begin my own investing with after tax money.

Thanks for the reply.


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 Post subject: Re: Need financial inspiration
PostPosted: Tue Jul 24, 2012 12:27 pm 

Joined: Fri May 04, 2012 2:23 pm
Posts: 810
Since you spent $20 - $30 on books today, I would suggest you download those credit card statements and review them with your wife tonight (or within the next few days). It is eye opening to see how much you spent eating out, or how much your wife spent on clothes for the kids, or how much you spent on...whatever it is people with a Y chromosome spend money on. You'll more than likely find some "waste" in there and for things neither of you find is "worth it." And then, you can start saving TODAY.

It certainly does suck about the house...so, you Owe $200k or $340k? I see you are pretty much locked in at your crappy interest rate...It may be time to ditch the cars and get something much more economical (fuel efficient and not as expensive to insure). I would say you are fine except you are underwater (which is ok as long as you don't move) and you have a high interest rate. If you could get the interest rate down to a more reasonable level, you would be MUCH better off. What about HARP or whatever?

_________________
Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."


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 Post subject: Re: Need financial inspiration
PostPosted: Tue Jul 24, 2012 5:33 pm 

Joined: Sun Apr 29, 2012 12:54 am
Posts: 18
Bichon Frise wrote:
Since you spent $20 - $30 on books today, I would suggest you download those credit card statements and review them with your wife tonight (or within the next few days). It is eye opening to see how much you spent eating out, or how much your wife spent on clothes for the kids, or how much you spent on...whatever it is people with a Y chromosome spend money on. You'll more than likely find some "waste" in there and for things neither of you find is "worth it." And then, you can start saving TODAY.


You're right on the money. I've actually gone through my bank statements last week and realized that I was eating out entirely too much. So starting the middle of last week i've been bringing my lunch and have pretty much decided to go this route until I get these cars paid off. I will be getting my wife to download the statements so that we can go over this together.

Bichon Frise wrote:
It certainly does suck about the house...so, you Owe $200k or $340k? I see you are pretty much locked in at your crappy interest rate...It may be time to ditch the cars and get something much more economical (fuel efficient and not as expensive to insure). I would say you are fine except you are underwater (which is ok as long as you don't move) and you have a high interest rate. If you could get the interest rate down to a more reasonable level, you would be MUCH better off. What about HARP or whatever?


I owe 344K on the house. So the interesting story with the house is that I had been looking into HARP 2.0 for the longest time and just waiting for someone to say yes to helping me refinance. I thought I did a good job with picking the right lender to help me, but they were nothing but a waste of time. It was Aimloan.com. I should've researched them alot more. They ran my credit to see if I qualified to do the refinance and it was a go. They asked for quite a bit of paperwork which wasn't a problem, but they were taking a while to get back to me. I had already went to closing and everything early in June. Right before they paid the loan off they ran my credit again and found that I had financed the other car for my wife. Soon after they kept giving me the run around and asking for more paperwork. By the time it was over they ran my credit again(3rd time) prior to funding the lender and said they couldn't fund my loan cause of the extra car. This whole process took 3 months for them to tell me no although they said yes in the beginning. So now i'm afraid that if I try to go to another lender then the same will happen. I have great credit which was a 798 before this ordeal and now it's down to 770. Aimloan said they use a form that they send back to Freddie Mac to determine if i'm eligible which they said gave a caution the last time.

So i'm with you on the refinance, but I think that i'm going to have to wait a year to get that done as well as pay off one of the cars.


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 Post subject: Re: Need financial inspiration
PostPosted: Wed Jul 25, 2012 6:51 am 
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Joined: Thu May 17, 2012 10:05 am
Posts: 1114
Welcome to the forums DenjinLee! The good news is you are not alone! There are many people on this site that have experienced success and have great advice to share. You are doing the right thing by asking questions. Here’s a little game plan to get your started. Questions I believe would be helpful are labeled by letters A-I and are in bold.


1. Make the Resolution: Spend less than you make. This is a tough one. Spending more money than you earn is common practice in the U.S., and increasingly in other countries around the world.

Learn to just say “No.” You must learn to say no to yourself, your spouse, and your children. This is called delayed gratification.

“Live like no one else [today] so you can live like no one else [in the future debt free].” – Dave Ramsey

2. Educate Yourself: Looks like you’re starting to do that. Both books you mentioned are a great place to start. I know a lot of people hate on DR on GRS and other PF sights but he has helped lots of people get out of debt. We used DR's methods and went through Financial Peace University twice (first the audio cd and then the dvd series) and I can tell you it works. We have been debt free since the summer of 2011! A) Have you considered taking DR’s Financial Peace University course? The new FPU course is only 9 weeks (1.5 hour sessions) long now instead of 13 weeks (2 hours sessions).

3. Motivate Yourself: Getting out of debt takes commitment, energy, and intensity. This will require sacrifices. Set clear and achievable goals on one page or less. (I’d recommend the “The One Minute Manager” by Kenneth H. Blanchard and Spencer Johnson.) Put these goals on the fridge or as you walk out the door so you see them every day. Starting a financial journal on the GRS forum is a great idea too. Reward yourself with little treats as you accomplish your goals. Normal = spend like there is no tomorrow. Being different or even “weird” by seeking to become debt free is a good thing. B) How are you and/or your wife motivated?

4. Organize Yourself: Create a balance sheet. This helped us a lot when looking seriously at getting out of debt. C) What is your total debt? How much is the interest rate associated with each debt? What is the total pay off? What is your total Net Worth?

Assets(stuff you own) – Liabilities(debts) = Net Worth

5. Choose: D) How are you going to get out of debt? – Lowest balance (Debt snowball) or highest interest.

6. Cut Expenses: Sell something. Create a budget. Cut. Cut. Cut. E) What are some ways you can cut expenses out of your budget? See this thread. Once you’ve created your budget evaluate it periodically but most importantly - Stick to it!

Expenses > Income = Bad & Expenses < Income = Good

7. Spouses get on Same Page: While every couple is different, you could consider reading the same materials, talking openly about your feelings, and sharing like goals. When you share goals, you are usually more likely to take the necessary steps to accomplish your goals. If you or your spouse are not on the same page, the process will be a lot more difficult. Communication is the key. F) Have you considered how much your wife is actually bringing home each month? How much are you paying for childcare? Is it possibly worth it for her to stay at home and take care of the kids while you all seek to get out of debt?

8. Get an Accountability Partner/Coach: When you are getting out of debt, you want to be influenced by people who support your decision. Not everyone does. This can even include family. Hang out with friends who are frugal. Befriend people who enjoy movies at home instead of in the theater. G) Who do you know would be a good role model for you in getting out of debt and holding you accountable to your goals?

9. Save up for an Emergency Fund: $300 (if you make less than $15,000 a year), $500 (if you make more than $15,000 and less than $24,000 a year), or $1000 (if you make more than than $24,001 a year) respectively. Emergencies can and always will happen – car repairs, hospital bills, etc. It is better to be prepared for when the emergencies happen. With your income getting $1000 should be easy. Looks like you have some cash in your checking account. That is a good place to start. I’d say a good goal would be an E-fund with 3-6 months of household expenses. We have 9 savings accounts we use to save for emergencies and expenses we know will happen – car repairs, new car, new computer, medical bills, baby related, purchases, vacation, etc. We don’t even touch our E-fund anymore for most emergencies. H) What system do you think would work best for you?

10. Increase Your Income: You mentioned you will be seeking a raise. That is a great goal! Hopefully this extra income will lead to you paying off your debts sooner. Your income is your greatest asset. Time to stop giving other people portions of it through interest and fees!

11. Set Financial Goals: Goals are the fuel that propel you through the slow days of debt repayment. Hey, the process will get hard and it will seem to drag on at points. You’ll want to quit and give up. You’ll start to think that your old way of living wasn’t so bad after all. These are the days you need to look at your goals and remind yourself of why you are making the decisions you are making. Make sure your goals are SMART – Specific, Measurable, Attainable, Realistic, Time specific. I) What goals do you want to establish for 2012?

12. Stop Making Excuses: Sometimes, not always, we make excuses. I would get out of debt but …

Right now you have a perfect opportunity to change your life and create a new financial identity. Accomplishing goals always feels great. Imagine how you would feel if you paid off all your debt and didn’t owe any money to anyone! You are on the right road to change your family tree!


Hopefully this was helpful. ;)

Your thoughts?

_________________
~ Eagle


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 Post subject: Re: Need financial inspiration
PostPosted: Wed Jul 25, 2012 8:54 am 

Joined: Fri Sep 12, 2008 12:29 pm
Posts: 1627
Location: Seattle, WA
DenjinLee wrote:
I had already went to closing and everything early in June. Right before they paid the loan off they ran my credit again and found that I had financed the other car for my wife.


Financing a new car is pretty much going to kill any mortgage loan application in progress. In fact buying one with cash probably would too. Especially one "on the edge" such as a HARP refinance.


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 Post subject: Re: Need financial inspiration
PostPosted: Wed Jul 25, 2012 6:20 pm 

Joined: Mon Feb 07, 2011 6:33 pm
Posts: 1150
Location: Illinois
DenjinLee wrote:
Here's the breakdown as of today:

Item Amount Owed Interest
Car 1 : 20,438.42 1.9
Car 2 : 21,305.50 4.4
Home: 344,023.00 7.25

Accounts Amount
Money Market 6576.56
Checking 2595.66



DenjinLee wrote:
Information requested is:
Ages: 34
Kids: 2
long term goals: To make 150K within the next 4 years and to retire when we turn 55. I also would like to get a portfolio that can accumulate growth up to 300K.
1 home: 198K (underwater)
car 1: $19,219
car 2: $17,533
retirement: 40K in 401K which is being switched over to a traditional IRA and I just recently opened a roth IRA to begin my own investing with after tax money.

Which is the correct set of numbers?


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 Post subject: Re: Need financial inspiration
PostPosted: Thu Jul 26, 2012 5:29 am 

Joined: Tue Aug 02, 2011 7:39 am
Posts: 57
Eagle wrote:
Welcome to the forums DenjinLee! The good news is you are not alone! There are many people on this site that have experienced success and have great advice to share. You are doing the right thing by asking questions. Here’s a little game plan to get your started. Questions I believe would be helpful are labeled by letters A-I and are in bold.

......

Hopefully this was helpful. ;)

Your thoughts?


My thoughts are that that was fantastically helpful. :clap:

DenjinLee, I'm pretty much in the same place you are (without children, but with some credit card debt) so taking advice from me is like asking the car next to you why there's a traffic jam up ahead, so I won't give any. One thing I'm curious about, though, is how much you already have available to pay above the designated monthly car and mortgage payments, before you squeeze the fat out of your budgeted spending?


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