...and wow it's HARD! We stopped cold turkey. Our balances kept going up and never went down so we decided we have to stop it!! Right now we can pay all our bills and eat and drive (leanly) without using any credit cards. The hardest part will be over Christmas break when my teaching pay dissapears. How do I do it? We will literally NOT be able to cover all of our bills for about a month. Most, but not all. Ideas?
I would try to cut costs now in the areas like eating out, movies, stuff like that. You might want to consider a line of credit loan and put all those credit cards together with one payment.(even though it may be big) with less interest and see if that will help the budget. We did this a few years ago and have stop using credit cards. (We were debit free until we decided to use them again...now getting debit free again!) But I think going thru you budget now and cutting things where you can is a start.
Good for you for making the decision to become debt free! We carry no debt at all and it's a wonderful freeing feeling. I agree with tightening your belt now. And also accept that maybe the kids don't need lots and lots of toys for Christmas. Explain to them that finances are tight and you'll get them one or two toys, but that's it. It'll be fine.
Our problems are necessary repairs. We had a fairly cheap car repair (less than $100) about three weeks ago on our "good" car. Then last week, I was stopped at the light with our clunker, my foot on the break, when suddenly the pedal went to the floor!!! I guess we blew out a cylinder. The blessing in that is I was close to home, and was able to get home without driving on any major streets. My brakes still stopped the car, but there's no way I could have stopped quickly. Also, I am thankful that Rachael wasn't driving at the time, on any major highways. She had taken the car just the week before to Dayton for the weekend, and drives it often to her college classes. I could have been disasterous if either of us had been on the interstate! But the bottom line was it cost $400 that we didn't have, and it HAD to be done. Carl handed me his debit card this past week. I'm good about not using it, but he's not. The problem is that we use the debit card for gas. This week the cost jumped 30 cents a gallon. He saw it going up, and couldn't fill our half-empty tank up because he didn't have the card on him. (Rachael laughingly calls it my "Magic Money Card", lol!)
I am working on digging myself out of a hole. I figure it will take a few years, but it will be worth it. I have also been able to work overtime at my job so that helps. I was really happy when I had some expensive car repairs that I was able to pay in cash last year. Also my son had his wisdom teeth taken out and I had the money for that.
Not necessarily. Depends on the interest rates, minimum payments, etc. Usually it's the smallest one, but not definitely always.
What I had heard (not sure where from) is that you start with the smallest, because then you get excited when it's paid off, and that makes it all the easier to pay off the next one.
So what about paying off the smallest debt which has the highest interest rate... then you're achieving two goals at once. My DH still has one debt we didn't pay off when we sold the house (we were going to but he chose not to). Each month I look at the statement when it comes in the mail and I see that a very small portion of the payment actually was applied to the debt itself - most of the payment goes to interest and so when I go back to work this week, the debt will be paid off in full as soon as I'm paid again. Ediesbeads, as for Christmas, take advantage of law aways, set a budget of what you can afford and resolve not to spend above it. It may be difficult to do this year but this is something you can do in the future... buy in advance when you have a little extra.
You may have heard that from Dave Ramsey. He uses a snowball system in his teaching, but it's not the same one I use. I look to see how much total time and interest will be applied. He just looks at whichever one is smallest. For example, it seems crazy, but a few years ago when we rolled our own debts, the first thing to pay off was my new trailblazer with a high balance, high minimum payment and 0% interest. DR would've said we were crazy, but when you crunched the numbers, it put us saving about $40k in interest and paying off the house 6-7 years earlier than we would have by starting with smaller stuff. It also freed up $400/mo for emergencies.
