Rock bottom, now what?

Saving & investing, frugality & simple living. They're all part of the wealth equation.
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timwalsh300
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Re: Rock bottom, now what?

Postby timwalsh300 » Mon Oct 15, 2012 5:36 pm

DoingHomework wrote:Spenster, please don't listen to Dave Ramsey. And under NO circumstance pay him money by buying his snake oil.


Again, I'm not a big fan of Ramsey, but I actually think Spenster would benefit from his tough-love approach and motivational style. Listening to the radio show is free.

Tim

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Eagle
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Re: Rock bottom, now what?

Postby Eagle » Tue Oct 16, 2012 1:20 pm

timwalsh300 wrote:
DoingHomework wrote:Spenster, please don't listen to Dave Ramsey. And under NO circumstance pay him money by buying his snake oil.


Again, I'm not a big fan of Ramsey, but I actually think Spenster would benefit from his tough-love approach and motivational style. Listening to the radio show is free.

Tim


I agree with Tim. The radio is free. And if you do the DR course through a local church, etc. it can be reduced cost or free (we had friends who lent us their copy so we didn't pay anything).

DR is good at helping people that are not great with finances get out of debt. After that pursue other thoughts regarding investements, etc. ;)
~ Eagle
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Re: Rock bottom, now what?

Postby Spenster » Tue Oct 16, 2012 4:30 pm

stannius wrote:The program should either be scrapped or made permanent.


From a personal standpoint, I believe it should just be scrapped. I can think of many other things I'd rather my taxes go to. On a business standpoint, not extending it is giving a huge advantage to natural gas and oil companies who are still receiving government money. My vote is for ending all such programs. Too bad many campaign donations come from those who are receiving such money.

Eagle wrote:DR is good at helping people that are not great with finances get out of debt. After that pursue other thoughts regarding investements, etc.


I'm great at spending money! I do need help fixing the way I think about money. I would charge things pretty willy nilly and now I'm paying about $205 a month just in interest not including my house. I can think of plenty of things to do with that money a month other than paying someone for nothing. I've asked around and have a local friend that has some DR dvds so I will be giving them a shot.

nelson wrote:Read this


Thank you so much. I've only made it through the first 20 pages but I can tell I was somewhat on the same train track as that guy and I would have wrecked just as hard if I continued to be stubborn. My $8 Hulu bill which I was going to continue because is was only $8 is now cancelled. (Just one example, not all I've done)

A question. I'm upside down on my car, 25kish on the loan vs the 15.8k KBB says I can get for it. Selling it back to the dealer and still making payments just can't be a good idea. Someone suggested making extra principle payments until I can walk away clean and clear after a private sale. I'm thinking this will probably be my best bet, would anyone like to weigh in on that?

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timwalsh300
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Re: Rock bottom, now what?

Postby timwalsh300 » Tue Oct 16, 2012 6:54 pm

Since you're going to give Dave Ramsey a shot, this what he would say (and I would agree): Sell it now, use $1k from the sale to buy a beater (if you really need something to drive), set aside another $1k for a little emergency fund, and then buckle down and start working on the debt. With the remaining cash from the sale you could knock out all of the higher-interest credit card debts. That would leave you with about $11k to put toward the remaining car loan. Then you would just have the $14k of debt at the relatively lower 6.75% interest rate (assuming you can keep the same terms - I actually don't know how this would work - hopefully this wouldn't cause the rate to skyrocket...).

During the time it would take you to pay off the $10k of negative equity while holding onto the car, you would still have no emergency fund, and you would still be getting clobbered by the higher-interest debt. Plus the car would depreciate further.

Tim

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Re: Rock bottom, now what?

Postby Spenster » Wed Oct 17, 2012 7:36 am

Clearly I'm no expert, but I don't think I'll be able to sell the car while it still has a lien on it. The dealer may buy it back but even if they do, I'm almost certain that money will just go straight to the bank leaving no money in my pocket to pay anything else.

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Re: Rock bottom, now what?

Postby timwalsh300 » Wed Oct 17, 2012 8:57 am

Good point.

The best course of action, then, is to refinance everything (credit card debt and the car loan) with a personal loan. Then you'd be able to get the car title, sell it on the private market, and use the money as you wish. The trick, of course, would be getting a loan, and getting one at a reasonable interest rate. I have no idea if this is possible. Lending Club (as discussed in another thread from the investor side) seems to specialize in this.

Even if the above is not possible, I still like the idea of getting rid of the car now to stem the bleeding from further depreciation, as well as the premiums for comprehensive and (I'm guessing) gap insurance that you are paying. It might help to talk to the dealer and find out exactly what the terms will be if you bring back the car.

Tim

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Re: Rock bottom, now what?

Postby DoingHomework » Wed Oct 17, 2012 9:09 am

timwalsh300 wrote:The best course of action, then, is to refinance everything (credit card debt and the car loan) with a personal loan.


I don't think so. Perhaps that would be true if all the "ifs" in your post are satisfied. But the car loan, at least for now, is secured by the car. Refinancing would make it unsecured which would almost certainly drive up the interest rate...if he could get an unsecured loan at all. This might have been an option before the layoff notice but not any more. I'm afraid even the lending clubs are unlikely to approve someone without a job except possibly at punitive rates.

This is an unfortunate situation where Spenster should have acted months ago. There are few options available now besides just cutting expenses. I hope once the immediate storm is weathered it will lead to being better prepared for teh next one.

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Re: Rock bottom, now what?

Postby peterr89 » Wed Oct 17, 2012 10:07 am

Welcome to the forums Spenster.

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Re: Rock bottom, now what?

Postby ssarah » Wed Oct 17, 2012 12:46 pm

Regarding the 401k - you'd have to pay a penalty and taxes to withdraw early (I think you'd have to roll it into an IRA first?)

If you could save more in interest charges than you'd lose, it might be worth considering.

Of course you'd have to use it as a starting point to be much more disciplined or you'll be right back here in 6 months, except with no retirement.

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Re: Rock bottom, now what?

Postby Eagle » Thu Oct 18, 2012 5:29 am

Spenster wrote:
Eagle wrote:DR is good at helping people that are not great with finances get out of debt. After that pursue other thoughts regarding investements, etc.


I'm great at spending money! I do need help fixing the way I think about money. I would charge things pretty willy nilly and now I'm paying about $205 a month just in interest not including my house. I can think of plenty of things to do with that money a month other than paying someone for nothing. I've asked around and have a local friend that has some DR dvds so I will be giving them a shot.


There is a difference between spending money and managing money. Anyone can spend money. ;) Spending less than you make, getting out of debt, and staying out of debt all are intentional habitual processes.

DR is a good starting point.

Might want to check out his book at your local library for free too:

The Total Money Makeover: A Proven Plan for Financial Fitness
by Dave Ramsey

What does your wife think about all this?

Keep moving forward. ;)
~ Eagle
www.eaglesoaringhigher.com


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