Getting out of debt - best financial advice/plan?

My big goal for the year is to put a big dent in the amount of debt we have. I want to only buy things that are absolutely necessary, stick to a budget, etc.

 

I feel like we both have manageable debt that we can knock out in a year or two with some concentrated effort.

 

So, I was wondering if anyone recommended a particular plan or book? I've heard a lot of good things about Dave Ramsey. A few years ago I had something from Suze Ormand but I wasn't really at a point where it could work for me.

 

I'm also open to general tips.

Erin, you're soo not alone as this has been a goal of mine as well. I think I'm doing much better so far & I've seen a difference in credit card bills. I don't have any "professional" advice but only what I've always heard in reference to credit cards which is try to pay off the higher interest cards first. Have you ever looked at your statement & paid attention to how much of your payment goes towards the actual balance & how much goes to finance charges

Its crazy that sometimes we don't realize that more than half of a payment goes to interest/finance charges. No wonder the balance never seems to go down!

Once I started paying attn to that, I made sure to always try to double those minimum payments.

 

What I found that works for me is that I pay a little on my cards, every week when I get paid. Even if its $20-$25 bucks, I pay it. I mean, $25 bucks every week adds up. I never realized how many little rinky dinky store credit cards I have, that I don't use often but still have balances from I don't know what!!

Again, its not a professional strategy but I've found that it does help. So that means I go without my wants pretty often, such as not eating out as much & cutting down on my non-essential shopping sprees, but I want to get rid of these cards asap!

 

Good luck with your goal & I hope that you find a strategy that works for you!

 

FYI..Just heard that Oprah will have Suze Orman on tomorrow discussing financial advice as part of her Best Life series.

Okay girls....a good thing to do is figure out what credit card has the highest intrest...that is the one you want to pay off first. So....wht you do is make a list of all your credit cards and find out the minimum payment. WoW...that sounds confusing....let me see if I can find a better way to write this out. I'll use my junk as an example. I have three credit cards.

 

Credit One: Balance $554.00

Minimum Payment of: $25.00

Household: Balance: $764.00

Minimum Payment of: $28.00

Some Visa: Balance: $233.00

Minimum payment of: $15.00

 

My visa has the highest %APR so instead of paying $75.00 to all of them I take and pay the minimum of the Credit One and Household and pay the $100 plus the $75.00 that I would normally pay towards the Visa. Giving me a total of $175.00 to one Credit Card. Do this untill all cards are paid off. Promise this works...I do Financial Needs Analysis for people everyday! If you need me to explain this better PM me!

I would say that first, you should get a low interest line of credit and use that to pay off your credit cards. Then you only have one debt to pay each month, and the interest is waaay lower. Last month the interest on my line of credit (it was at about $1200 at the time) was only $8!

 

You could also try calling your credit card companies and asking them to lower their interest rate. If you've been a client for a long time, they will often do this if you ask.

 

I like the idea above also of paying your debt with each paycheck and not just once a month. I do that too. Every little bit helps!

that is good advice lil miss frogg....I am trying to get out of the debt I incurred in college..ughh! I have always heard to make sure you pay more than the minimun payment on credit cards. I am proud to say I cut up all my credit cards last year and it feels good. I know I still have a lot to pay off but just knowing I am not charging anything on the cards ever again makes me feel good. Also, I am trying to cut back on shopping, starbucks, eating out, alcohol, etc.

I recently did this. My goal was to be debt free before I got married. That was all debt, school loans, credit cards, what ever. (except my car) I just sucked it up. I put myself on a VERY strict budget, and I put as much money as fiscally possible to pay it off. But it meant that I had to miss out on some events, and not drive far away becuase I could pay for gas, you get the picture. But I was able to pay off over 15,000 in less than a year.

Yes, this is good advice and that is what I did a few years back when I was trying to pay off my credit card debt. I also sent any extra money (B-day, Christmas, tax returns, etc.) to credit cards to pay off the debt. Also, something that Suze Orman always says is once you have made a list of all your credit card debt and interest rates is to call your credit card companies and ask to lower your rate. The first person you speak to may not be able to give you a lower rate so ask for their supervisor, etc. This is something that I haven't done yet, but would like to do. Once you pay off the cards, close the account and just keep 1 or 2 with low rates to use for emergencies.

I do not like dave ramsey. i disagree with so much of his advice & do not like his personality. I agree with his statement that getting out of debt is like losing weight, but I think his approach is a fad diet.

suze orman can be a little annoying, but she gives very sound advice. she has a book called something like "young fabulous & broke" that is about getting out of debt.

I am SOOOO bad with $$$!!! FI handles our finances! I don't go on huge shopping sprees, but the grocery store & walmart kill me!!! I don't know what it is!!!?? I am so happy my car payments are done in May!!! That will help a lot!

Keep an eye on your junk mail - sometimes a credit card company will offer a REALLY low (like less than 5%) interest rate for a period of time (usually a yr). If you think you can pay off your debt in that amt of time then do a balance transfer from all (or at least your high rate) cc's.

Oh...I'm watching Til Debt do us Part right now!! Watch that for some tips!! lol

Morgan - can you explain a little bit more about what it is that you don't like about Dave Ramsey?

 

My FI and I are Dave Ramsey junkies. There's a marker board on our fridge. In big black letters it states a few of his most said sayings

 

Live like no one else now, so you can live like no one else later

 

An emergency fund turns a crisis into an inconvenience

 

Debt is dumb, cash is king. The paid off home mortgage has taken the place of the BMW as the status symbol of America.

 

I'm 33 and contemplated bankruptcy about 5 years ago. I didn't and decided to get serious about debt. I moved into a less expensive studio apartment for two years and paid off debts. I wish I had found Dave back then as I would be debt free now. As is, 2009 I will pay the last $8000 off that lingers over my head and kick Sallie Mae out of the house 11 years early on a 15 year loan!

 

I don't mean to drag my soapbox out (especially on a wedding forum) but getting out of debt is definitely a lifestyle change as is losing weight.

 

Dave will tell you to SELL THE CAR right off the bat. How many people out there are making less than $30,000 and are driving $20.000 cars. Car debt alone eats up a bunch of your money.

 

My FI and I bought a house this past April and we did a 15 year mortgage just like Dave recommends. I drive a 13 year old car with over 200,000 miles on it and it looks like crap but guess what, it's paid for! Dave suggests picking up a second job to help pay off debt. I didn't want to be locked into certain hours so I became a mystery shopper instead. I pick my schedule and it's the only time we go out to eat. This week we've got a Texas Roadhouse and Applebees scheduled. lol

 

We religiously stick to a written budget. After it gets a little warmer, I plan to park the car and start riding my bike to work more consistently (20 mile round trip) and no, there's no bike trails here in Cincinnati. It's all roads.

 

Whew - got a little long.

 

My advice - get a gameplan and stick to it. Doesn't matter if it's Dave's, Suze's, or your own! Congrats on facing your debt.