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| As Extraordinary as Everyone Else  |
I agree with the above. I’m not a follower of Ramsey but have heard good things about his process. In this day and age $1000 is not enough for many true emergencies....but it is a start. In counseling my younger son who is getting married later this year and who’s fiancée has a chunk of student loans first priority is an emergency fund slash lay off fund of about $8K. Then he has convinced his fiancée to aggressively attack the higher interest loans first and they are making good progress. Their goal is to pay off her loans and buy a home next year and they should be able to do that. ------------------ Eddie Our Founding Fathers were men who understood that the right thing is not necessarily the written thing. -kkina | |||
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| Member |
I lean towards paying off debt if you have $1k for emergencies. Betting interest on debt is way way higher than savings interest, | |||
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| Stupid Allergy  |
Hope y’all don’t mind me chiming in with a question or two also.. this thread hits home with us. We have a sizable amount of debt we are trying to get a handle on as well. No emergencies though, thank goodness. I’ve heard and read some of Ramsey’s methods and it certainly seems solid. My question is this, is it always best to throw extra cash at the smallest debt/card first *even* if the biggest balance (on another card) is killing you from high interest? Hope that makes sense.. thanks! "Attack life, it's going to kill you anyway." Steve McQueen... | |||
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Member |
Always pay highest interest first. Always. The only exception is if you need the psychological boost of “paying off a debt” in order to keep grinding away and saving. From a money standpoint, highest interest first. Always. | |||
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| Stupid Allergy |
What if the are several balances with basically the same interest rate (within 1 or 2%). Do you then attack the highest balance or lowest first? "Attack life, it's going to kill you anyway." Steve McQueen... | |||
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| Lawyers, Guns and Money  |
I agree with you... but this entire debate risks going too far into the weeds. Yes, if you have credit card debt at both 18% and 16%, by all means the math is simple: Pay off the 18% first. But what I advise both clients and kids is simple: Learn to live on 80% of what you earn. Then we can have a discussion of priorities for the 20% you are saving/investing. But until you can limit your spending, it's a waste of time. "Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible." -- Justice Janice Rogers Brown "The United States government is the largest criminal enterprise on earth." -rduckwor | |||
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Telecom Ronin |
We do the same but got some interesting advice from a financial planner that was highly recommended to us. Regarding our mortgage, which is at 3.8% and we were working on a plan to pay it off in the next 12 years. This would have cost ~$900 extra a month that we would put into savings 1. As an emergency house fund (we already have 6 mo mort payments saved) and then once we have the amount needed we would just pay off the mortgage. He advised that since it was such a low percentage rate and homes in our area continue to climb in value (N. of DFW) it would be wiser to put into savings or a fairly secure investment such as bonds....earning 3-4%. His point was why pay off something that is only slightly higher than the cost of inflation. All other debt, which at this point is only my wife's car gets paid off ruthlessly. I am so lucky I married a smart woman.....if it was up to me I would be living in a box .....mind you my gun collection would be AWESOME  | |||
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| Member |
This is the most important sentence in this entire thread. I’m amazed at how much people spend on frivolous items, then find themselves short and in debt. | |||
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| Member |
A. don't buy a damn thing ( except absolute essentials) until! you have payed all your debts in full. and then B. Don't buy a damn thing ( except ther absolute essentials ) until you have ten months worth of bill paying in the safe deposit box. thats right 10 months worth of all the bills you will have to pay if you are out of commission , unable to work. then and only then can you go out for a movie and supper. cancel the web service , cable and what ever else you need too , to accomplish this. I did it this way and managed to stretch the ten months in too 14 months when the shit hit the fan. ( out of work) https://www.suzeorman.com/ Safety, Situational Awareness and proficiency. Neck Ties, Hats and ammo brass, Never ,ever touch'em w/o asking first | |||
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Step by step walk the thousand mile road |
Do both. Look at the debts you have AND the monthly interest rate on each debt. As you pay on each debt, pay the highest interest debts first, with an affordable additional amount paid directly on the principal. The next month, put the amount saved in interest on the additional principal you paid the month previous into your emergency fund. In this way, you pay down debt faster (due to additional principal paid) while simultaneously building you emergency reserve. Nice is overrated "It's every freedom-loving individual's duty to lie to the government." Airsoftguy, June 29, 2018 | |||
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Member |
Not sure if anyone has mentioned this, but try looking for credit card offers with 0% APR for some period of time. I haven't seen any offers like this in quite some time, but some years back when I was in fairly deep CC debt, I'd get these 0% APR offers and transfer my balances to those. Eventually I'd get another 0% APR offer and transfer any outstanding balance to that. Rinse and repeat over time. There was some transfer fee, but in the end, I think I saved a lot of interest expense by continually transferring balances to 0% cards. In addition, any bonus I got at work and IRS refunds went immediately to reduce/pay off the CC balance. I used to be in excess of $25k in CC debt. I am now debt free and what a glorious feeling it is!! "If you’re a leader, you lead the way. Not just on the easy ones; you take the tough ones too…” – MAJ Richard D. Winters (1918-2011), E Company, 2nd Battalion, 506th Parachute Infantry Regiment, 101st Airborne "Woe to those who call evil good, and good evil... Therefore, as tongues of fire lick up straw and as dry grass sinks down in the flames, so their roots will decay and their flowers blow away like dust; for they have rejected the law of the Lord Almighty and spurned the word of the Holy One of Israel." - Isaiah 5:20,24 | |||
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eh-TEE-oh-clez |
Snowball. Pay the smallest first, roll that payment into the next biggest, and so on. If you got into the psychological trap of getting into debt, bank on the fact that you'll need the psychological help to pay it off. | |||
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| Member |
Not necessarily re: getting into debt. There could have been a lay-off, medical emergency, etc. that caused the influx of debt. However, if the debt was caused by other, controlable factors then the snowball method may be appropriate. | |||
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