Answer to private email - debt reduction
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Answer to private email - debt reduction
| Fri, 01-28-2005 - 2:53am |
This evening I had a private email asking me some important questions, and I wanted to answer them here on the board so that others can read my response as well as add their own input if they want!

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Thank you for sharing Danni.
That was uplifting to read!!!! :)
Becky -
Becky
CL of 4th, 5th & 6th grade Scoliosis
Thank you for sharing and thanks for always pitching snowflaking. when I first joined this board, I'd get upset everytime I read that someone was able to snowflake a large amount of money. Or that they were able to cut back on expenses. I don't think that I really understood what theyh were doing.
I had my budget, I was paying my bills and using my cc or od to live. I had to really sit down and realize that my expenses were more than my income. (Ithink that I was caught up in the fact that I make "good money"). One thing that helped me was a conversation with a friend about the buying power of $20K, 50K and 100K.
Last summer I cut my grocery expense and utilities (no snowflake just living within my means). After almost a year, I have finally found my snowflake. My transportation expenses averaged $120/mo gas, 70 public transportation. I was driving into the city as part of my commute and then took public transportation from there. I now take public trans all the way and have reduced my travel time. I still have to drive my car daily to pick up my DD but my gas bill is now $60/mo. I reduced my land line bill to $40/mo from $63 this may even be less after things even out. I receive $20 extra/pay period for some retroative something.
I transfered all of my debt to 0% interest cc that I don't charge on I enjoy watching the numbers reduce.I truely think before I buy. All of this help me realize how much money I really NEED to live on. I also do the envelope system for somethings, my DD allowance, my allowance and afterschool care.
I think that getting out of requires time and effort and rethinking where I am spending my money.
Danni, thanks for sharing!
Danni, thank you for sharing! There are as many different ways to tackle debt as there are people on this board, and the more we can share success stories, the more possibilities we give to others.
I posted earlier this week about the major things DH and I have done, after we began reducing expenses a year ago, but I'll just briefly recap them here.
First, last July we started with CCCS and have reduced our principal debt by $5000 (we could not do it on our own because no one would negotiate rates with us).
Second, we took a look at not just our debt but where we wanted to be financially - in broad, general terms - and we decided it was time for me to get my career back on the fast track. Now, fortunately I had that option where I work, but it's not without sacrifices, which before this I could not make.
Third, we gave up for this year the previously sacrosanct summer beach vacation - which just goes to show that some sacred cows really aren't. Maybe we'll do it next year, maybe not.
I'm sure there are other things we can do, as we continue to try to be creative about tackling our debt and achieving financial independence, and we will continue to look for them. Shaking up your thinking is sometimes the most important thing you can do.
Kelly
I like that--"shaking up your thinking is sometimes the most important thing you can do." That was certainly true for us.
We got into our debt primarily in the summer of 2001 (when dh was out of work) and the following winter, though we had started out with some debt as well, due to not having taken care to learn to live within dh's income before I quit the work world to stay at home with ds#1. We racked up a good 30k, probably a bit more, in unsecured debt (plus a hefty car loan--about 15k at that time).
There wasn't much way around at least some debt at that time, due to our employment situation, but at the same time, we were running out to the grocery store for ingredients we could have lived without, thinking, what the heck, it's all "fake money" (that's how I thought of credit card charges at the time) anyway, we were insisting on $50 a month into savings for ds's college fund (he wasn't even 1 yet), had a land line and a cell phone, and so on and so forth. We were paying our rent late every month and all the creditors were calling us on an almost daily basis. We paid just enough on our utilities to prevent cut-off notices.
We hit rock bottom in early 2002 when it became obvious we couldn't even continue to pay the rent and we had no credit left to tap to keep going and even Dad was beginning to hesitate to loan us money (our largest debt is still owed to him, which we pay on monthly and pay interest on), though mostly because he was smart enough to know that we would later regret it if we took on too large a debt burden.
We began packing up boxes for our planned move three states away to live with my in-laws. We looked into selling our car (which we had carefully shopped for before ds's birth, looking for the best, safest vehicle for our planned family).
About one week before our "deadline" for making final arrangements for the move, dh was offered a job, paying 2/3 what he had been at his former job. But it was an income, so he took it.
We sat down and worked out the details of our budget, I began learning to shop more effectively for groceries, we cut lots of fat, stopped saving for ds's college, and refinanced the car (interest rates were low, so we got a lower monthly payment and lower interest, though we also extended the term, which I wouldn't recommend except that it allowed us to be able to pay on our credit cards). I found a part-time night job at a bar to make the ends meet (I was staying home with ds during the day, and dh was with him at night). We moved from our duplex to a cheaper apartment very near my night job, and nearer to dh's day job.
Dh hated his job. I hated mine. But the bills were being paid, and the debt was starting to inch downward, and I was grateful.
About six months later, dh was offered a better position in the company, and accepted a better job and a raise (still below our former earnings). Because of our new way of looking at things and our new priorities (and our lower debt), it was enough to allow me to quit my job, which I did about four months after that (actually, I was fired about two months before I had planned to quit, but that's another story LOL).
By the spring of 2003 we were able to start ttc #2, which would not have been possible with me working at an icky smoky bar. He was born Feb 2004.
Meanwhile, we inched the debt down and down, trimming expenses from time to time, and always working toward our goal. I still have some freelance income from contacts made when dh was out of work and I was spending 40 hours a week building my freelance base, etc.
By the fall of 2003 we were in a position to begin saving for a down payment. I researched our credit reports and contested some items, working with a mortgage broker to tackle the aspects that harmed us the most, and learning what I needed to do to qualify for a mortgage. Dh and I worked over our budget, inside and out, to determine how much we wanted/could afford to spend.
We began searching for our home with the intent to purchase at the end of 2004, but found exactly what we wanted in Jan 2004 and purchased our beautiful beloved home May 1, 2004 (Beltane, also known as May Day--one of my favorite holidays! :).
We are still in debt to the tune of roughly 23k, though only 6k of that is ccs. The rest is owed to my dad, who is actually my next target (the ccs are all on 0% interest, whereas I still pay dad interest--he has offered to lower our rate, but I feel like he really helped us out when we needed it and I don't mind paying him the interest for it). Dh recently got a raise, and we have increased our monthly payment by $100. We expect to be out of debt in two years (including the auto loan, which is currently at under 9k), with a maximum repayment schedule of three years.
We also have assets which, including our retirement savings, that exceed our debts (a net worth in the positive numbers--that's a first for us!! woo-hoo!!). They include $1k in an emergency fund plus a few thousand spread among various freedom accounts, and some college savings for the boys.
We don't count the mortgage in these numbers, as we would be paying rent if we weren't paying a mortgage, so we don't really see it the same way. Although, once the rest of the debt is paid, we *do* plan to pay extra on our mortgage.
Anyway, that's our story. Now it's time for me to take my little boys to our homeschool play group.
Thanks for starting the great thread, Danni, and for sharing your inspiring story.
Blessings,
Heather
thanks danni for your answer - I was the one who emailed you. I was having a very very bad night last night. I contacted CCCS yesterday. Today I need to decide if this is the way to go. $1000 a month for 5 years and we will be out of debt. I think what got me really thinking about doing it is thinking how far we have not come the past 2 years. Our balances have barely come down at all because of the high interest rates. I keep thinking 5 years is so long - but what if I don't do it and 5 years from now we are still in debt? I'll hate myself.
I am seriously in need of advice about CCCS, the Debt Management Program. I know Suze Orman supports it. Can those of you out there doing it please give me any and all advice?
thanks so much!
Hi Walden,
I
I called a couple of agencies when we were looking for debt consolidation. I hung up on the first one because the woman who answered the phone kept giving me a spiel about how scared and frustrated I must be, and how I couldn't handle things on my own, and all this other crap that maybe makes someone else feel good but infuriated me. The next place I called was quite professional, proactively offered information, and answered every question I had (and I really dug into how do they make their money, how many days between their receiving my money and it being paid, etc., etc.). All of my creditors agreed to work with them, and the rates are between 5 and 10%. I was allowed to keep my Amex card and one Visa card out. I have a set amount of money withdrawn from my account on the 1st of every month and all my creditors are paid by the 5th business day of the month (they make money off my $35 monthly fee and the "float" for those days they hold my money before sending it). Although my plan is for 5 years, I can pay off anything I want before then. They *prefer* that I pay any extra through them, but I have no contractual obligation to do so.
So they can work, but they can also be shysters. Keep calling til you find one you like. They don't even have to be in the same state as you, I discovered. CCCS doesn't operate in my state, but the agency in a neighboring state has clients in my state. Oh, and I never had to go into their office - I made an appointment for a phone consultation to set it all up, they told me what information I needed to have available before the phone call, and I faxed them all the documentation as backup.
Good luck!
Kelly
The agency I am working with CCCS which is the agency that Suze Orman and many others recommend. I feel comfortable with the agency and the woman I am working with seems excellent.
I guess my major concern is how bad our credit reports will look (but then again our debt to income ratio kills it anyway) and the thought that the payments would be "out of my control".
I do know however that if we did not get overlimit fees stopped and the interest rates lowered (they are astronomical) we will probably be in the smae place we are now 5 years form now making the same payment!
I am thisclose to signing up.
Danni,
Thank you for a wonderful post! Littlesbigs
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