Dave Ramsey, debt, credit cards, retirement, etc

[afcblink]

Yeah, I agree with Darin. Everything is a compromise. If you make decent money and your job is relatively secure, there's nothing wrong with some debt per say, as long as you have a pay down plan and stick to it. Not everyone becomes debt free over night.

DougVery true. Here's a perfect example: over the weekend, we had to replace 15 feet collapsed main sewer line. It was 2600 smackers -- more than we have on hand. And that's not the sort of thing you can just live with 'til you have the cash! We put it on a CC until our tax refund can pay it off in two or three months.

Dave Ramsey can say that "credit is NOT a tool," but it sure came in handy for us. Yes, discipline is important, but not flushing or washing dishes for a couple of months is an unacceptable sacrifice for us. Call us spoiled.

[Matt_E]

However - had you had 6 months of living expenses in an emergency fund, you would not have needed credit.

Right? :biggthumpup:

Dave Ramsey doesn't start & end with "NO CREDIT CARDS, RARRR!!!!". In fact, only one of the 13 sessions of Financial Peace University deals with credit cards.

[afcblink]

However - had you had 6 months of living expenses in an emergency fund, you would not have needed credit.I agree. But that takes time to accrue. I was referring to the original post that said, "Not everyone becomes debt free over night."

And "Debt is NOT a Tool" is the name of one of the chapters in Total Money Makeover.

[Mark44]

I surprises me the amount of people that have no money in the bank.

Mark44

[Matt_E]

I agree. But that takes time to accrue. I was referring to the original post that said, "Not everyone becomes debt free over night."

And "Debt is NOT a Tool" is the name of one of the chapters in Total Money Makeover.


One chapter out of how many?

[SeaLion]

I will totally take what you all have said into consideration. I totally understand what you guys are saying... Though if I wait say 4-8 more years until all my debts are paid off, the housing market could be and will probably be fully inflated again. Right now in southern california it is the time to buy. House prices are almost what they were 12 years ago. If I wait I could screw myself and have to a buy a house for $600,000 that right now is $225,000. Owning a house will also give me more disposable income due to lower income taxes, and my mortgage will be hundreds of dollars less a month than I am paying in rent now.

And I am not saying what you guys have recommended is not what I will do, I just have some more thinking and things to consider.

Trust me that home prices are not going up from $225K to $600K for probably 20+ years. They are still falling and will continue to fall for a couple of more years and then level off for many years after that. You would be better off waiting and saving more money in the meantime for 20% down payment and paying down your current debt. You will come out way ahead and you will be locked in at a lower purchase price for property taxes sake. In CA, your property taxes and not reassessed every year like most states. Don't believe the home ownership hype. There is nothing wrong with renting and renting is sometimes the best way to go. Rent is falling too so when your lease is up, you can negotiate a lower rate. Play it out with your head and not your heart and you will be way ahead in a couple of years.

[Matt_E]

x100.

What Sealion said. :biggthumpup:

[douglee25]

I surprises me the amount of people that have no money in the bank.

Mark44

You wouldn't believe the population that lives from paycheck to paycheck. Many are literally a 'paycheck from povery'. No joke.

Doug

[Big Kahuna]

There is a time and place to rent.

We bought our first house 6 months after we got married. The monthly payment was only $100.00 more than our rent was. To us it was a no brainer. Lived in it 10 years. Paid 70k for it, sold it for about 110k 3 years ago.

[SuperJETT]

There is a time and place to rent.

We bought our first house 6 months after we got married. The monthly payment was only $100.00 more than our rent was. To us it was a no brainer. Lived in it 10 years. Paid 70k for it, sold it for about 110k 3 years ago.

The payment was only $100 more, but when you add in the extra costs of owning vs renting, it's a lot higher and that's what gets a lot of people in trouble believing they can afford a house that's the same as their rent.

[dbrutherford]

My credit union is currently doing 5.01% APY on checking accounts for balances under $25,000.

www.fairmontfcu.com



As far as debt goes, car loans and student loans look a lot better than revolving debt like credit cards.

[Big Kahuna]

The payment was only $100 more, but when you add in the extra costs of owning vs renting, it's a lot higher and that's what gets a lot of people in trouble believing they can afford a house that's the same as their rent.

That is true also............. look at the houses that are empty now where the people skipped out. Got one down the street, I got tired of the 1-2' tall grass and went and cut it.

But, when you have equity, you can use that in a pinch if you need it. With Renting, you do not build up anything other than any money you could save from not having the expense of owning. When I did Property Management years ago, we had a few people that had been renting the same houses for over 10 years.

[Mark44]

I worked with a guy that retired with 14 rental homes paid for, he loved OPM
other peoples money.LOL

Mark44

[SeaLion]

On the same token, there are a bunch of renters that are golden because they are not upside down on a house and could take decades to break even. Actually many are mailing in the keys to the mortgage co and becoming renters. Owning is great and renting is great too. There are a ton of variables. Currently, if I was a renter, I would hold off on purchasing, especially if I didn't have 20% down and I had other debt. Oxnard111 is in SoCal (I assume Oxnard from the name) where you are not going to buy a house for $70K, well not yet anyway. Another 20% drop is not unlikely in the coming years. It is not only the sub prime mortgages and interest only mortgages that are foreclosing. Unemployment is affecting many people and that will flood the market in the coming years with more and more foreclosures. Prices have not bottomed by a long shot. Rent, save, pay off debt for a couple of years and you will make the years following that exponentially greater for yourself.

If you don't take my advice and still want to buy now then do not get emotionally attached to a house you look at and possibly make an offer on? There is always and I mean always a better one and a better deal on the next one. If you have a girlfriend or a wife, I would sit her down and talk to her about the purchase being a business decision and not an emotional one. You will do much better going into it that way. Take your time and look and do your research. If you make an offer and don't get it, there will be another one and most likely a better one. There always is. I can guarantee that there always is so that is why I am saying to keep emotion out of it. It took my wife 3 months to realize this and now that I am showing her the houses we didn't get that closed at too high prices and what they are worth now, she finally gets it. There were people offering $30k over asking on some foreclosures we looked at. The banks play games, the real estate agents play games (yours and the sellers) and the lenders play games. I have had numerous calls back months later from houses we made offers on that we didn't get and that were supposedly pending but didn't end up closing escrow. They want to take my original offer and I said no thanks. We have moved on from that house and have found much better and cheaper. I did convince my wife to just wait and she now doesn't even want to move. We have a really nice house in a great neighborhood with lots of equity. Just cause she wants a single story instead of our current 2 story. She was all emotion and even made me make an offer on a house I was not comfortable with. I did it to not cause grief but the next morning she realized it was not the right one. We withdrew our offer right away and that was the turning point for her where she got it. That house ended up selling for $289,000 4 months ago and is now worth $219,000. It sold new in 05 for $475,000.

[SeaLion]

Here's a pretty neat tool/calculator for rent vs. buy. Plug in the numbers and see where you are at. http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html?ref=patrick.net Keep in mind prices are falling and so is rent so that will affect the numbers in a couple of years but still a useful little calculator.

[firemedicmonkey]

Finally I got all signed up on the TMMO website the book is on its way. I have been listening to the radio show striaght through while I am doing all this driving. I am so stoked to get going... I have $1000 for the EF but I am looking for the best money market account to put it it in... any ideas?

Also how does everyone budget for Jet-Skiing? Blow money or a seperate budget item for it?

[Matt_E]

Gas for skiing is going to come out of my blow money. I don't have anything else budgeted for the ski.

As for MM accounts, I am actually using www.centurybankdirect.com. It's a straight savings account with close to 4%

[SuperJETT]

I wouldn't worry about a money market account for the $1000, you're talking about maybe an extra $20/year?

We keep $1000 at our credit union linked as overdraft funding, and we can immediately transfer/withdraw that money if needed, the rest is at ING which takes a couple of days to transfer if needed.

[firemedicmonkey]

Dave says on the website to put the $1000 for two reasons... 1) To make it have limited access so that you won't be tempted to spend it as blow money and you keep it put away for an emergency! 2) Eventually there will be much more than $1000 in the account... The EF will grow to 3-6 months expenses! It seems like you guys suggest ING or Centerybank....


Still Jett and others that are on the program how do you budget for ski repairs upgrades, maintance... blow money or a seperate budget item? I am working on trying to set-up my budget and hammer my debt but i want to be able to keep riding...

[Matt_E]

Set it up how you think it will work best - just as long as it's budgeted for somehow.

[SuperJETT]

You set the budget based on your priorities. If it's a big priority, budget a lot for it.

With me, I pay for ski gas/etc out of my personal blow money, but every once in a while I need something bigger so we figure a way to budget that in because I like to ride.

For others, it's a bigger priority, so they budget more money.

You do what works for you, there is no set rule on it.

[firemedicmonkey]

Set it up how you think it will work best - just as long as it's budgeted for somehow.

I don't know how to set it up... The budget is the hardest part of this equation for me! Thanks for the suggestions though!

[Matt_E]

First, figure out how much money you will need to support that hobby.

[romack991]

anybody use mint.com, quicken online, or other money management sites?

My cc tracks all my spending, but I do have a few other transactions like my morgage payment and a few other things that it doesn't track. Having it all together would be nice. Plus they let you track your other stock investments. Haven't used any of them before but seem interesting.

[Matt_E]

I pay my bills online and pay cash for the rest, out of my budget categories.
An Excel spreadsheet I made tracks the amounts.

[SuperJETT]

Just started leading my 3rd FPU class today, 12 people in this one at the preview, all ages too from a ~23 year old couple to some 60 year olds, singles and couples, etc.

[SuperJETT]

Clark Howard:

http://www.cnn.com/2009/LIVING/personal/02/13/clark.howard.credit.cards/index.html

ATLANTA, Georgia (CNN) -- I've been getting many calls from listeners who are outraged or perplexed by the actions of their credit card issuer.
The issuing banks are raising interest rates by 20 percent or more -- even if the individual has good credit, has never been late on a payment or hasn't even had any change in their credit standing.

This is happening across all income levels. It's even affecting successful business owners and moderate to wealthy individuals. Fortune magazine recently spotlighted one small business owner who had a card that went from nearly 8 percent to 26 percent, even though nothing changed with his finances or payment history.

Bank of America (http://topics.cnn.com/topics/Bank_of_America_Corporation), Citibank and Capital One are among the big issuers arbitrarily jacking up rates in the face of what they often cite as a "continually changing business environment." In fact, the Federal Reserve reports 37 percent of banks have increased their interest rates.

The reality is that the banks are fearful of the high rate of credit card default, and they know they've got you if you're among the 70 percent of Americans who carry a month-to-month balance.

The good news here is that there are new rules coming that will stop the banks from retroactively raising the rate on existing balances you already carry. The banks will still, however, be able to raise the rates if you stopping paying as well as on all future purchases.

But what stinks is that these rules won't go into effect until July 2010. That gives the banks plenty of time to lobby members of Congress and get this pending legislation overturned.

For right now, the problem with banks jacking up the rates is that they're making it tougher for someone who might have been able to pay at 5 percent but could never pay at 30 percent, for example.
So they're setting you up for failure, and they're shooting themselves in the foot at the same time.

The only smart move is to pay your debt down or pay it off entirely. And don't assume you're a sitting duck if your credit standing is decent. You can always shop around for a card that has a lower rate. Try looking at Web sites such as CardWeb.com (http://www.cardweb.com/) or CardTrak.com (http://www.cardtrak.com/) to find the best rates.

I also have a special warning for you if you're buried in debt and thinking about using one of those debt-negotiation firms that advertise all over the Internet and late-night TV.

Do not believe these people about their ability to negotiate with your credit card company and reduce your outstanding balance by 50 percent or more. These con artists get you to pay them money as a retainer and then tell you to stop making all payments while they negotiate on your behalf.

But they're rip-off artists through and through. Many banks won't even take a phone call from these people anymore because they're on to their game. That leaves you scammed out of your retainer fee while your bills continue to pile up.

There is a better way to address your debt. Try calling your credit card and telling them you're in over your head. You may get blown off, or they may work with you. If you do get the cold shoulder, go to NFCC.org (http://www.nfcc.org/) -- the National Foundation for Credit Counseling -- and find a local affiliate who can help you come up with a debt-conquering plan for free or very low cost.

You didn't get into credit card debt (http://topics.cnn.com/topics/Credit_Card_Debt) overnight, and you won't get out of it overnight; the recovery is going to be a slow step-by-step process.

[jetsport484]

Boy that sounds familier?!

[Matt_E]

I am up to 2 full months of expenses in the bank now. :woot:

[SuperJETT]

We're still refilling our emergency fund from replacing the water heater and getting the van's transmission rebuild, but even with all of that we still had about 2 month's expenses in savings. We're getting it back up to over 3.

[SeaLion]

I never paid any account fees for my business checking account. The past few months, wells Fargo has been charging $10 a month. That bites!

[Idok]

so go in, tell them to remove it and never charge it again or to cut you a check for your entire worth and you'll bank with someone else!

i dont pay for cashiers checks, "maintenance fees" or any of that BS...

[douglee25]

Good article Darin.

Doug

[Scorn800]

so go in, tell them to remove it and never charge it again or to cut you a check for your entire worth and you'll bank with someone else!

i dont pay for cashiers checks, "maintenance fees" or any of that BS...

I don't either.
The manager of my branch noterizes all of my "bill of sale" forms for toy deals for free too.
I do pay $6 a month to get original checks back.

[djkorn1]

My one card is still at zero percent...I am waiting for them to change it on me and break the original agreement.

Wells Fargo just upped the rate on my car loan. I promptly changed it over to my credit union. F'n crooks.

[firemedicmonkey]

awesome... i love dave ramsey...

[SuperJETT]

Mike, Darin, all the others, you all are nuts IMO.
Instead of "fighting" the debt, try to use it to your advantage.
A credit card is giving you the cash you don't have at the moment.
I used a credit card to fund my small business until "the competition" killed it (money laundry, if anyone wants details, PM me).
The "evil lender" is willing to pay 90% of your business expenses right now for a small fee payed over the years, you should be grateful.
They give you MONEY that can make A LOT MORE MONEY.

I'll try to make it as simple as it gets: you've saved $40K. The bank gives you another $360K. You buy a $400K Subway franchise that pays the loan and brings you anywhere from $5K to $10K every month after taxes and you DON'T EVEN HAVE TO BE THERE because those things run by themselves.

One of the happiest guys I knew owned a few Dunkin Donuts. He did not remember if he had 4 or 5 of them, he was too busy traveling, taking care of his family, he was in his mid-30s, had a beautiful wife and two kids, drove two Carreras and two Grand Cherokees depending on the day and the road conditions. Just a simple guy who got it right. BTW, he never ate donuts.

I wonder how that plan is working out about now.

[Matt_E]

They give you MONEY that can make A LOT MORE MONEY.

Sounds eerily similar to what got us where we are.

[oxnard111]

its been a while since i've been on the thread...

we still have our mini emergency fund.
still have our large emergency fund.
Not paying into the 401K as recommended, but upp'd the amount.

We are going to hold off for a while on the house.

We just paid off our smallest loan which happened to be the highest interest rate. Moving onto the next which is her car loan.

We were going to use our tax refund for debt payment as well, but I/we needed a new mattress. Bought a tempur-pedic and my quality of life has been way better. That mattress is great. No more sore lower back when I wake in the morning.

[dbrutherford]

A little update on me.

I borrowed 6k off of my mom and I took what I had in savings and completely paid off all my debt. I had to pay around 10k to completely pay off my student loan. I had to pay around 3.5k to completely pay off my credit card.

The agreement was $500 a month, no interest. So far I have paid her 1500 back (Jan, Feb, & now Mar payments). So I still owe her 4500 which I will continue to pay 500 each month.


I recently got a new work car so I won't be buying a new vehicle anytime soon which is nice. I am living at home which is letting me save as much money as possible for a house. So...

Right now I have 6k in my "house savings account" and around 2500 in my everyday account. That is like my emergency and everyday money account. I get paid every two weeks and I have my work take $500 out of my pay and put into their credit union account I have with them. So at the end of June I will have 10k saved up :) Plus I will get 3 paychecks in July which will be nice.

Only stupid purchase I have done and I know it wasn't the smartest thing to do but... my work gives up to 3k for 3 years 0% interest loans for personal computer purchases. So I borrowed 2800 and went out and got a new laptop, docking station, wireless mouse/keyboard, 24" monitor, 500 GB external hard drive, USB TV tuner, ect... I know it wasn't the smartes decision but I plan on keeping this computer stuff for at least 5 years. They take the money out of my check before I ever get it. But it is about 80 a month.

I did sell off all of my old stuff on eBay and got 800 back. I put it back in the bank. Plus I just got a 2400 work bonus before taxes. Well I ended up with around 1400 which I thik is total BS and Obama needs to fix crap like that. No since for people making less than say 150k a year to get nailed with taxes on bonuses. But I was smart and wrote a check to the work credit union to put 2k in that account. With the 4 i had that made up the 6k for a house downpayment/closing costs.

Only other thing I can think of not being the wisest is only contributing 4% to my 401k. That is the max company match. I feel right now I need the cash more for myself to buy a house. I will take more of a hit if I was to take a loan out on my 401k so I am best to have that extra cash more easily available.


So if you ask me, I am sitting pretty. I have a great job with a natural gas company. I have a company car I get to commute to work in. I am even eligible for overtime even though I am a salaried engineer with the company. Our business is stable even in the wake of all the bad economy stuff. I provide a valued service to the company which is desperatly needed. I have several years worth of work currently. I live at home so if something would happen I won't be out on the streets. I only owe my mom money which I am paying back each month, never late and never short. I have money in the bank for emergencies (my truck may go all POS on me at some point). All that said... I really really want my own place. But purchasing a house is a real PITA!

Enough said....

DBR

[shawn_NJ]

Dave, I wouldnt be so quick to buy a house, esp now. After I sold my first house, I wish I kept the money I took out of it and rented or moved back home with my mom or dad. Instead I bought another place 2blocks from the ocean. Its really nice, but I would MUCH rather be sitting on the cash I took out of the other place...I'd sleep alot better. Thats for sure.

Now granted there are what appears to be alot of good deals out there....but who knows what the hell is going to happen to the housing market in the next 5-10years. And if they will still be "deals" 3-4years from now. I personally do not see the overall US housing market shifting positive.....for atleast 5-10years. And thats assuming things start turning around in 2010. We really screwed this up.

[dbrutherford]

Well at the rate I am going at it won't until the end of this year at least. And even then, I mightjust end up building a place. In my area, prices just haven't dropped. I am looking for a place in the 150k range. But it seems everything newer and nice is 200k+. Now I can afford a 200k house, I just don't want to. But there aren't too many places at 200k, they are all 225, 230, 250 ect... Everything between 100 and 200 are either overpriced crap, or they are so old they would need almost totally remolded. So right now I have only found two homes in the last 4 months I would have bought and they both have sold already. It is a tought decision because I am living at home with my grandparents roght now. Granted i ma living here practically for free but I really need my own space agaon. But when I lived in PA and AL it cost me almost 13k in rent. I wish I had that 13k right now...

[Speedfreak]

We have been looking at houses for about 4 years and the deals cant be beat right now. Even Dave says if your planning on buying seen then do it before spring.

We used to look in the 150K range and we were looking for an older home (built in the 60's or so) with a 2 car detached garage with an acre of property. Recently we have been finding houses built in 2000 or newer 2 or so acres with a 2 car attached garage for the same price.

We are going to look at one saturday. We are pretty sure we will make an offer according to what we think of the inside.

3100 square feet of home, with a partial basement, 3 car attached garage another 40X60 garage swimming pool, 5 acres built in 2003 for 180K We wouldn't have even thought about looking at this house 3 or 4 years ago.

Also Daves plan kinda gives you more money to do what you want also. We will be helping another couple lead a FPU class starting the end of march also.

[dbrutherford]

Man I wish I could find a nice place. Only few I found I never jumped on and someone else bought them. Lots of fixer up ers but I don't want to buy one of those.

Had a scare/shock at work yesterday. I guess this other big natural gas company near us is restructuring. I think I will be ok with my company because I am in the compressor services group and not the project engineering group. A lot of our projects are getting put on hold so a lot of those engineers are worried job cuts may be coming to them. They are way over staffed.

[tnj4life]

Im still paying down our last debt. We had it down to $5500, but I have to pay in $1900 on taxes this year(self empoyed). We're getting some land surveyed soon, my dad is giving us land and we're going to build a house out of our pocket. Were planning on spending less than $50,000 (hopefully) for a 1700 square foot house. We're not financing a penny and don't care how long it takes. I will be doing most of the work on my own.

[Speedfreak]

Well I am super stoked... We LOVED the house can't find a thing we would change. Other than add a bathroom in the garage for party time years down the road.

But the better part is we were going to keep our house for a few months maybe a year and hope that the market heads up then put it on the market. But the guy that owns the house wants to down grade and move into town. He lives in his motorhome traveling around 9 months out of the year so we might be trading homes. WhooHoo!!! We might have 60K in a 180K home and no hassles. Wish us luck negotiating...

[nightrider05]

Well I am super stoked... We LOVED the house can't find a thing we would change. Other than add a bathroom in the garage for party time years down the road.

But the better part is we were going to keep our house for a few months maybe a year and hope that the market heads up then put it on the market. But the guy that owns the house wants to down grade and move into town. He lives in his motorhome traveling around 9 months out of the year so we might be trading homes. WhooHoo!!! We might have 60K in a 180K home and no hassles. Wish us luck negotiating...


That would be a great deal for you guys! Best of luck JR. Hopefully its still close to the water. Haven't got to do any riding with people around here yet.

[Speedfreak]

That would be a great deal for you guys! Best of luck JR. Hopefully its still close to the water. Haven't got to do any riding with people around here yet.

Actually it is a little more distance from the water but shorter time wise since It is about 1.5 miles from interstate exit so I can blow down the interstate instead of going through town.

[SuperJETT]

I just watched a local news segment on payday lending and how the state legislature has a bill before them to change the max interest rate from 390% (yes that's 390, not 39.0) to 36% to be more inline with credit cards. Apparently the legislature called an emergency meeting last week on it without any public notice or comment and several advocacy groups are saying due to heavy campaign contributions, the legislators are blocking any attempts to limit fees/interest rates.

I love Kentucky, one of the most corrupt governments in the country.

[romack991]

Dave is on lifechurch.tv for 3 episodes. Here's the link if you want to watch. The first episode is up, the other two will come out each week.

http://www.lifechurch.tv/message-archive/watch/life-money-hope/1

[oxnard111]

Just got my CA tax refund this morning (finally after filing 2 months ago) and put all toward a loan.

Slowly but surely we're paying them off.

[dbrutherford]

Just got my CA tax refund this morning (finally after filing 2 months ago) and put all toward a loan.

Slowly but surely we're paying them off.



It took Alabama about a month and a half to give me mine. I know how you feel...

I just wish mine was more than what it was so I could have paid off the rest of my debt. But a little here and a little there and it will be gone...


Did you change your mind about buyinh a house? I think I will do it this year before the Nov 30th deadline so I can get the 8k back on my 2009 fed taxes.

[SuperJETT]

I'm in the process of refinancing our mortgage, and here's the message I got this morning while doing an online application.

It feels good to see that.

http://www.x-h2o.com/photoplog/images/1/1_mortgageapp.gif

[Scorn800]

It took Alabama about a month and a half to give me mine. I know how you feel...

I just wish mine was more than what it was so I could have paid off the rest of my debt. But a little here and a little there and it will be gone...


Did you change your mind about buyinh a house? I think I will do it this year before the Nov 30th deadline so I can get the 8k back on my 2009 fed taxes.


FYI- The 8k is a no interest loan you must pay back over 10years.

[oxnard111]

It took Alabama about a month and a half to give me mine. I know how you feel...

I just wish mine was more than what it was so I could have paid off the rest of my debt. But a little here and a little there and it will be gone...


Did you change your mind about buyinh a house? I think I will do it this year before the Nov 30th deadline so I can get the 8k back on my 2009 fed taxes.

for now we're gonna hold off on purchasing. if a killer deal falls in our lap we won't pass it up, but we are not actively looking right now.

[romack991]

I'm in the process of refinancing our mortgage, and here's the message I got this morning while doing an online application.

It feels good to see that.



What bank are you looking to refinance at? I just refinanced last year at a 6.125% and think i might refinance again since its dropping under 5%. Plus I don't really care for the bank I'm currently at.

[SuperJETT]

Republic Bank, they have better rates than our credit union, though I'm going to check with them also.

[dbrutherford]

FYI- The 8k is a no interest loan you must pay back over 10years.



No that was last years first time home buyer's tax credit. It was a loan up to 10% of the house puchase cost with a max amount of 7500. You got the 7500 back with your 2008 federal tax return. Then you had two years before you had to start paying it back. The government would take 500 from your federal tax return for the next 15 years.

This year, it is the same deal except up to 8000 tax credit and you DON'T have to pay it back. You have until Nov 30th to buy a house to qualify for the credit. You also have to make less than 75k a year if you are single, and you cannot have purchased/owned a home in the last three years.

I have been reading up on all this stuff. Just google it, it is all over the place.

My sister and bro-in-law just did the 7500 tax credit. They are po'd because they bought their place the second week fo december 08. If they waited another month, they would have gotten the 8k free, instead of paying it back.


http://www.8ktaxcredit.com/



One of the key new items of the $8K tax credit is the repayment requirement has been removed, unlike the $7,500 tax credit.

[SuperJETT]

Keep an eye on your federal tax withholdings from your paychecks. Mine changed quite a bit, and would have resulted in owing taxes at the end of the year if I hadn't caught it.

[AtomicPunk]

Keep an eye on your federal tax withholdings from your paychecks. Mine changed quite a bit, and would have resulted in owing taxes at the end of the year if I hadn't caught it.

it got me, i usually have a small return, this year i owe. :smashfreakB:

:unitedstates:

[SuperJETT]

I'm talking about with the 'stimulus'. I went from $3300+ in federal taxes last year to $196 this year if I don't change my withholdings. The point: if you get bonuses, the tax rate is way higher and contributed the bulk of my federal taxes, and no bonuses this year, plus the stimulus dropped my tax withholdings.

I'm just glad I caught it now.

[SuperJETT]

Just locked in a refinance on our mortgage. We have ~26 years left on our 30 year @ 6%, the new one is a 20 year @ 5%. The payment will go up $45/month, but the closing costs will be recovered in ~10 months and going forward we'll build equity way faster.

I could have gotten a 4-7/8% but wanted to stay at our credit union, so they were 1/8% higher with the same closing costs as Countrywide (current holder) and Republic Bank.

[steveyz250fpilot]

Just locked in a refinance on our mortgage. We have ~26 years left on our 30 year @ 6%, the new one is a 20 year @ 5%. The payment will go up $45/month, but the closing costs will be recovered in ~10 months and going forward we'll build equity way faster.

I could have gotten a 4-7/8% but wanted to stay at our credit union, so they were 1/8% higher with the same closing costs as Countrywide (current holder) and Republic Bank.

Do you really feel you will live in your home for another 20 years?

[dbrutherford]

That is what I am saying YZ. I was all gun ho to buy a 225 to 250k house but then I said nah, get a 75-125k house, live there min of two years, put a little work into it, and flip it. No need to over extend myself now. I don't want to be house poor. But then again, I am not wanting to live at home any longer then I have to because yoiu just can't put a price on your mental well being!

[steveyz250fpilot]

I dunno...maybe I am different that others when it comes to a house. I get bored with my homes very quickly. I always seem to want something different, more innovative, creative... I got a 7 year arm on my current house. I have been in about 16 months, and I will probably be out of it in another 6 months!

[Big Kahuna]

I dunno...maybe I am different that others when it comes to a house. I get bored with my homes very quickly. I always seem to want something different, more innovative, creative... I got a 7 year arm on my current house. I have been in about 16 months, and I will probably be out of it in another 6 months!

uh, yeah, but you build the houses that you move into when they dont sell!!!!!!!!!!! j/k!!!!!!!!!!!!

[SuperJETT]

Do you really feel you will live in your home for another 20 years?

Maybe, we really like it here. We have a 10 month break even on the closing costs, so why the heck wouldn't we refi?

[AtomicPunk]

Maybe, we really like it here. We have a 10 month break even on the closing costs, so why the heck wouldn't we refi?

how are your closing costs so low that you are at break even after 10 months? anytime I have looked at refi it is 30-50 months.

[SuperJETT]

$1800 closing costs, and the first month our principal portion will be $150 higher than the current mortgage, so, ok, 12 months to break even on closing costs.

freestylegeek just went from a 30 year to a 15 year at 4.5% and his payback time is even less.

[steveyz250fpilot]

But during that 12 months, you could have been putting that towards your loan balance.....say if you sold your house in 2 years.... that money would have gone much better widdling your loan down.

[SuperJETT]

But during that 12 months, you could have been putting that towards your loan balance.....say if you sold your house in 2 years.... that money would have gone much better widdling your loan down.

That would be your situation, we won't be selling for many many years, trust me. Paying $1800 down on our balance barely changes anything. Trust me, I've run the numbers every which way.

[oxnard111]

So my wife and I have been throwing the idea back and forth for weeks now and we finally made the decision. We are moving in with my parents for a year or so. We will be able to pay off our cars in about 4.5 months taking into consideration money I hope to get from the square nose I have for sale, and 6 months if the square doesn't sell.

After that we will be able to put $1970 extra a month toward individual school loans. We have zero credit card debt.

One of her school loan's outstanding balance is about $300 more than the outstanding balance on my truck. We decided to attack the two car balances first so we have all the money we are applying toward those monthly payment to put elsewhere.

So please someone wish us luck. We're gonna have to deal with my mom who is an insomniac and watches TV at all odd hours of the night, a loud azz barking beagle, my sister that listens to music as loud as her speakers can handle, and not to mention all of our crap in storage.

I can just see it now, needing something that is in storage about once a week.

Luckily we are able to take their second spare bedroom and make a TV/family room for ourselves out of it.

[Emm]

Good luck! It will fly by.

We lived with Garrett's dad after our house sold and we were building another one a few years ago. He is NOT an easy man to live with but we made it ...and saved every penny of our paycheck to put toward new house stuff. It will be worth it.

As for storage....it will help you realize what you can actually live without :biggrin: Only thing I ever have to get out of storage is my suitcase when we go on trips....the rest of it is all useless now.

[Mark44]

O your poor parents...............

Mark44

[oxnard111]

Good luck! It will fly by.

We lived with Garrett's dad after our house sold and we were building another one a few years ago. He is NOT an easy man to live with but we made it ...and saved every penny of our paycheck to put toward new house stuff. It will be worth it.

As for storage....it will help you realize what you can actually live without :biggrin: Only thing I ever have to get out of storage is my suitcase when we go on trips....the rest of it is all useless now.

ya, for me it will be jetski stuff and stuff that I currently have in my garage... You know there are those tools or sprays or gadgets you only use like once every six months when wrenching on the skis...

For her, she is a teacher and the same applies for her... Every year around the same time she'll need a certain manual or book. But we hope to have all the furniture in the back of the storage unit, boxes in front, and the tool box and one of my garage racks near the front too.

[dbrutherford]

Good luck man, you are going to need it... I moved back home in with my grandparents 9 months ago. It has been the longest 9 months of my life. Then again, I have other family drama which makes life hard on me. But it has its rewards, I did exactly what you are doing with paying off debt. Now I am debt free and have money saved up for a down payment. I am about to go buy my first house and it feels pretty good. Now if I could just get these idiots selling this house I want to knock 25k off the asking price...

[SuperJETT]

Anyone got a Chase card that had the minimum payment bumped from 2% to 5%?

We have a Chase card, but it's been zero balance for almost 2 years now, only used for my business trips (get reimbursed the Friday I get back) of which I haven't had any in over 7 months.

We haven't gotten a notice, but then again we haven't received a bill in a long time either.

Back when we were paying off our debt, I transferred our HELOC to our Chase card at 5% fixed. $15,000 total, so a 2% minimum would have been $300/month, a bump to 5% minimum would have been $750/month, yikes!

[afcblink]

I moved back in with my parents from ages 25-28, and it was a really positive experience. I am much closer to my parents now because of it. Of course, all my sisters had already moved out, so it was a pretty calm household.

My folks had always told us kids that we could live at home for free while we were in college, but I went in the Army instead. Once I got out, I worked for a few years at various motorcycle dealers, making barely more than minimum wage. I got really sick of being broke, so I called my folks up one day and said, "Does that offer to stay at home if go to college still stand?" They said sure. "Great," I said, "My lease is up tomorrow." To their credit, they rolled with it.

I lived at home and worked part-time while I went to community college for two years, then went away to a 4-year university while staying at home over two more summers.

[djkorn1]

I'll be living in my house for at least the next 18 years until my son graduates HS....I don't like moving anymore.

[32vickie]

We have eight more years to pay on our house. Great school district and i am 2.4 miles away from work so i go home each day to let out the puppy and take him for a walk. Now i just need the wife to pay off her charge cards.

Doug

[SeaLion]

Maybe, we really like it here. We have a 10 month break even on the closing costs, so why the heck wouldn't we refi?

Did you guys know that as soon as you do a refi, it turns a non-recourse loan (your original loan) to a recourse loan? Let's say you get foreclosed. With a non-recourse loan, the bank can't go after you for the difference in your mortgage amount and what they unload it for. With a loan that has been refi'd, it is automatically a recourse loan and a bank can go after you for the difference even after a foreclosure. Just an FYI as many don't know this.

[douglee25]

Did you guys know that as soon as you do a refi, it turns a non-recourse loan (your original loan) to a recourse loan? Let's say you get foreclosed. With a non-recourse loan, the bank can't go after you for the difference in your mortgage amount and what they unload it for. With a loan that has been refi'd, it is automatically a recourse loan and a bank can go after you for the difference even after a foreclosure. Just an FYI as many don't know this.

Interesting. Not aware of that either.

Doug

[Matt_E]

Did you guys know that as soon as you do a refi, it turns a non-recourse loan (your original loan) to a recourse loan? Let's say you get foreclosed. With a non-recourse loan, the bank can't go after you for the difference in your mortgage amount and what they unload it for. With a loan that has been refi'd, it is automatically a recourse loan and a bank can go after you for the difference even after a foreclosure. Just an FYI as many don't know this.


Aha.
Are you telling us that Joe Schmoe can take out a $500k mortgage for a house, default on it 2 years later, and NOT be sued for the difference? :confused:

[SeaLion]

Yes that's basically a non recourse loan. As soon as you refi, take cash out, consolidate, it turns into a recourse loan and you can be sued for the outstanding balance. Most do settle for quite a bit less but you have full protection if you never mess with your original 1st mortgage. In the clusterfawk we are in now, the odds of the banks going after you are slim. They don't want or can't cover the costs associated with pursuing it and then have to settle. They have not even gotten to all of their foreclosures because there is such a backlog. I just wanted to make light of this little known issue. Knowledge is power.

[afcblink]

Yes that's basically a non recourse loan. As soon as you refi, take cash out, consolidate, it turns into a recourse loan and you can be sued for the outstanding balance. Most do settle for quite a bit less but you have full protection if you never mess with your original 1st mortgage. In the clusterfawk we are in now, the odds of the banks going after you are slim. They don't want or can't cover the costs associated with pursuing it and then have to settle. They have not even gotten to all of their foreclosures because there is such a backlog. I just wanted to make light of this little known issue. Knowledge is power.Yes, FHA, VA, etc., are non-recourse, but not all original loans are non-recourse to start with.

[SeaLion]

They are in my state, California. I don't know about other states. I imagine many are non recourse too on the original loans. Regardless, a refi, heloc etc turns it into a recourse and that was little known info I was relaying.

[SuperJETT]

http://www.visualeconomics.com/wp-content/uploads/2009/07/wheredidthemoneygo.jpg

[yamasaki]

lol, that chart applies to maybe 1% of the people on this site.

you'd need a huge slice for HOBBIES - 18%

lol

[oxnard111]

Just paid off one of my cars a couple nights ago... Waiting for the pink slip to come in the mail.

Moving onto the next car (next smallest outstanding balance) which should take only 3 months, then attacking the school loans. Will be able to pay $2,300 a month on the school loans.

Living with my parents again sucks, but will be totally worth it.

[tightithrash]

Just paid off one of my cars a couple nights ago... Waiting for the pink slip to come in the mail.


:woot::woot::woot:NICE!!!!

[BruceSki]

A letter i just got from the credit card company:


Dear Bruce Fisher,

At First National Bank of Omaha, we periodically review our customer's accounts. In reviewing your account, we noticed that you have not used your College Visa Card for 19 months or longer. Therefore, we have closed your account as of November 19, 2009.

We apologize for any inconvenience this has caused.

Sincerely,
Credit Department
First National Credit Card Center

[oxnard111]

A letter i just got from the credit card company:


Dear Bruce Fisher,

At First National Bank of Omaha, we periodically review our customer's accounts. In reviewing your account, we noticed that you have not used your College Visa Card for 19 months or longer. Therefore, we have closed your account as of November 19, 2009.

We apologize for any inconvenience this has caused.

Sincerely,
Credit Department
First National Credit Card Center


happening left and right. companies are trying to lower there outstanding available credit.

gotta use the cards and pay them if you want to keep 'em.

[SharkB8]

FWIW, when you or the lender closes a cc account, it hurts your credit rating.

Of course if you're a Dave Ramsey fan you may not care.

[BruceSki]

my credit rating is in the high 700's so i don't think i have anything to worry about.

not financing a car anytime soon and won't be buying a house for a few years. all the bills get paid on time or early.

[SharkB8]

Don't wanna jack the thread but anyone interested in increasing their credit score should read "7 steps to 720". The audiobook is available on most torrent sites. The audio version has an infomercial tone to it but the information is good. It has become a bit of a hobby for me to get my score into the 800's using advise from that book.

[SuperJETT]

FWIW, when you or the lender closes a cc account, it hurts your credit rating.

Of course if you're a Dave Ramsey fan you may not care.

Not true. We paid off all our consumer debt and closed a few cards and when we refinanced this year, our credit scores were about 20-30 points higher than when we had $30k in consumer debt.

[SuperJETT]

BTW, both our scores were over 800 when we refi'd back in May, going by Dave Ramsey's plan.

[Mile9c1]

How long's it take to lose one's credit score, going by Dave's plan (no credit cards)?

I like Dave's plan but I use my one credit card as much as possible, for convenience.

[SuperJETT]

How long's it take to lose one's credit score, going by Dave's plan (no credit cards)?

I like Dave's plan but I use my one credit card as much as possible, for convenience.

How is using a credit card more convenient than a debit card?

[SharkB8]

Not true. We paid off all our consumer debt and closed a few cards and when we refinanced this year, our credit scores were about 20-30 points higher than when we had $30k in consumer debt.Going from 30 grand in consumer debt to zero is an extreme case.

For the other 99.9% of the population who probbably aren't going to do that, closing an inactive credit card account increases the ratio of debt to available credit. It can also decrease the average age of your credit history, depending on which card you close. Neither of these help a credit score.

[djkorn1]

down to 1 credit card, $4 G's on the car, The house and student loans...

Should have the car done in 6 months and the card done one year from now...then I have to work on the wife, and that is like starting over....

[Speedfreak]

How long's it take to lose one's credit score, going by Dave's plan (no credit cards)?

I like Dave's plan but I use my one credit card as much as possible, for convenience.


How is using a credit card more convenient than a debit card?

And if you have your 6 months emergency fund in place then your debit card balance should be higher than your credit card limit.

Your FICO score can start dropping in the first 4 months or so after being debt free. But it could be years before it goes down.

But if the lending institution uses your actual credit report and sees that your are on a cash only plan then getting a home lone shouldn't be a problem. There is no other reason to get a loan except a home. (if you follow Dave) everything is paid in cash

[douglee25]

FWIW, when you or the lender closes a cc account, it hurts your credit rating.

Of course if you're a Dave Ramsey fan you may not care.


Not true. We paid off all our consumer debt and closed a few cards and when we refinanced this year, our credit scores were about 20-30 points higher than when we had $30k in consumer debt.


Actually Darin I don't think that's the case. It's situational dependent, but typically having more open cards is a good thing, not bad.

The biggest driver is the debt to income ratio. Creditors typically like a person to have more available credit if they are a good standing customer who pays their bills on time. Closing cards CAN in fact lower your credit rating because your overall available credit decreases.

My guess is your credit score increased because your debt to income decreased, not because you closed a few cards.

Doug

[Mile9c1]

How is using a credit card more convenient than a debit card?

I was comparing my credit card to cash, but since you asked, for one thing, I don't have to use a PIN with my credit card. That's a convenience.

When I use a credit card I don't actually "pay" for 20-50 days.

I have more confidence in my credit card's fraud protection than my debit card's fraud protection.

I get airline miles (or whatever) on my credit card. Dave can call BS on perks like this but I've flown three places now for free so "the proof of the pudding is in the eating" IMO.

[dbrutherford]

I agree with you Miles on the debit to credit card debate. I had to do a charge back twice now on my debt card and it was a hassle. I was out the money until the bank finally sided with me. When I did this on a credit card, they instantly gave me the money back. Much better protection.

Citi tried jacking up my interest two months ago. They sent a letter saying they were raising it from 10.2 to 39.99 %. I had to option to keep the card and pay they high interest rate. Or I could close the card and pay off what I owe at my current rate. I had a $600 balance so I paid half of it last month and half this month. The ended up canceling my card. I thought to myself that is smart, screw the customers who pay their bill on time. I originally balance transfered 8k of cc debt to that card two years ago and paid it all off 100% in that time period. They initially gave me a 6% rate for that and no balance transfer fee. then it went ot 10.2% whn I started using it for purchases once the original balance was paid off.

So I had to sign up for a Discover since teh Citi was my one and only cc card... The Discover is 5% for 6 months and then it becomes 18.99% WTF? And to top that my limit is 2k. My credit kind of sucks now because I still have a medical collection that is to come off my report in two years and I have a 215k mortgage now. I had to do an FHA because of the medical collection. So my debt to income ratio is high. And also now having a $1200 balance on a 2k cc card doesn't help either.

But I will get my 8k tax credit for buying a house soon enough and another 4k for my companmy bonus in a few months. I am paying everything else I owe off so I will be free and clear except for my mortgage and 401k loan.

I could have been stupid and went and financed new furniture "counting" omn the 8k tax credit. Instead I am making myself wait until I have the cash in hand. Still I wil put back from that tax credit and company bonus for my emergency fund. Everything I owe now, Discover card, small personal loan to mom, and what is left on my Citi I have in the bank.

I leanerd the debt lesson the hard way a long time ago. While I am a bit of a spot now because of the mortgage, I am way better off than most people. No major cc debt, no major hospital debts, no wife debt, no kids or wife to spend my money, ect... And I own almost 8% of my house already. I pay 100 extra each month to principal too. A guy at work got the same treatment from Citi but he owes over 10k !

[SuperJETT]

I was comparing my credit card to cash, but since you asked, for one thing, I don't have to use a PIN with my credit card. That's a convenience.

When I use a credit card I don't actually "pay" for 20-50 days.

I have more confidence in my credit card's fraud protection than my debit card's fraud protection.

I get airline miles (or whatever) on my credit card. Dave can call BS on perks like this but I've flown three places now for free so "the proof of the pudding is in the eating" IMO.

Not using a PIN is a convenience? Don't you have to sign a receipt? You either use a PIN or you sign a receipt except for places where the total is typically under $10 or whatever like fast food joints.

Oh, you have to pay the bill, so that's where it's 'less convenient' yes? None of that with a debit card.

Anyway, good for you that it's worked out. Our Discover card worked out for us too, but we're only talking like $200 worth of rewards over the course of years. Miss a payment just once and $40 worth of that is wiped out. It's nice to not have to remember to make the payment and make sure it went through, etc.

Credit cards are tightening up dramatically nowadays though, so there is less and less reason to use them for perks, plus the consequences of missing a payment or going over your limit have gotten much more harsh.

[Speedfreak]

I have more confidence in my credit card's fraud protection than my debit card's fraud protection.
If you use your Visa debit without putting your pin number in it has the EXACT same buyer protection as a visa credit card. I have 2 debit cards and don't know the pin number for either card.

And if you pay any interest at all on your card then your airline miles are not FREE. Also if you play with fire long enough you will get burned. They will loose a payment or charge it to the wrong account and you will have to go through all that hassle to get the late fee refunded "IF" you get it back at all.

At one time or another they WILL loose your payment. Or jack up your interest rates or change your billing cycle date. Anything to get money out of you and they can do what ever they want. It is in that fine print on your contract that you signed.

EDIT: FROM VISA
It’s important to know that Visa debit cards carry the same protections as Visa credit cards. For example, all Visa cardholders are protected by Visa’s Zero Liability policy. This policy means you pay nothing if unauthorized purchases are made on either a credit card or a Visa Check card when you choose to sign for your transactions. Some financial institutions offer Zero Liability protections for certain PIN debit transactions as well, but the best way to ensure you are protected is to sign for your purchases. Visa’s Zero Liability policy also applies to purchases made on the Internet.

[Matt_E]

I don't have CC's.....but you have to admit, while a Debit card may have the same protection as a CC, you are initially out the money on the debit card if there is an unauthorized transaction.
That could be a hassle.

[SharkB8]

After reading this thread over the last couple days, I listened to Ramsey's total money makeover and I'm pretty pumped about paying off my consumer debt and home mortgage.

I'm not a complete convert yet (I still plan to keep my two cards, with near-zero balances) but there is no tax advantage whatsoever to a home mortgage here in Canada so I will be happy to pay that off ASAP. Most of all it has lit a fire under my a$$ to pay off all cc debt. I guess I will forego the superjet upgrades this winter.

[Mile9c1]

Both my DC and CC are Mastercard's.

I've had a CC for at least 11 years now and haven't paid a dime of interest or late fees. I pay the bill online (can't get lost). I get a notice emailed to me when it's due and I have a grace period (which I've never needed, and I check my online statement a few times a month so I'd notice if I were late (if they change the due date on me)).

Signing is easier than entering my PIN, lol :Þ

I like my credit card statement. It's easy to follow. My debit card is attached to my checking account so the statement is more complicated.

I'll probably ditch my CC if I ever get married. I'm not attached to it, but it's the way I've always done things and my system works pretty well, I've never really had any "debt".

[Speedfreak]

my system works pretty well, I've never really had any "debt".

I thought the same thing. And never had any debt either... A little bill for a few months and a truck or car but when you get motivated and get completely debt free there is just a feeling that you can't explain. AND the money stacks up faster than you can spend it. I am always looking for something to spend my blow money on. But Shhh don't tell the wife she will want another new car.

[SuperJETT]

http://money.cnn.com/2010/03/09/pf/retirement_confidence/index.htm?hpt=T2


The percentage of workers who said they have less than $10,000 in savings grew to 43% in 2010 from 39% in 2009


Workers who said they had less than $1,000 jumped to 27% from 20% in 2009

[WaveDemon]

http://money.cnn.com/2010/03/09/pf/retirement_confidence/index.htm?hpt=T2

that is not at all surprising. I had a nice retirement fund once. It's all gone now.

[douglee25]

Especially with the economy in the dumps. Things cost more... companies are paying less... retirement fund accounts/investments are shrinking, etc. Things are not good right now for sure.

Doug

[Matt_E]

I'd say a lack of adequate savings prior to chit hitting the fan, over-reliance on debt, and people being house-poor has a lot more to do with that than the "economy".

[douglee25]

I'd say a lack of adequate savings prior to chit hitting the fan, over-reliance on debt, and people being house-poor has a lot more to do with that than the "economy".

To a certain degree yes. What about people who lost their jobs and had more than adequate funds for survival during a temporary lay off? The reserve funds don't last forever. The problem is that due to the economy, companies are under hiring freezes. How can people find work if companies aren't hiring. So now your $1500-$2500+ mortgage payment becomes hard to make. So does feeding your kids, paying utilities, etc. It's a nasty spiral from there. You can't blame people for that type of disposition.

Doug

[Matt_E]

You're right with that. But realistically, how many people do you think were adequately prepared and didn't have a mortgage payment that was 40-50% of their paycheck?
Add a couple of $30k car loans to that, and you're in deep chit if you lose your job.

[douglee25]

You're right with that. But realistically, how many people do you think were adequately prepared and didn't have a mortgage payment that was 40-50% of their paycheck?
Add a couple of $30k car loans to that, and you're in deep chit if you lose your job.

Good points no doubt.

I tend to go on the conservative side of things. I think our mortgage is somewhere around 30% or less of our monthly net income.

Doug

[Matt_E]

I think too many families were living right on the edge as it was. Once somebody lost their job or the income was significantly reduced, it pushed them over the edge.
I know I've been there.

[WaveDemon]

I think too many families were living right on the edge as it was. Once somebody lost their job or the income was significantly reduced, it pushed them over the edge.
I know I've been there.

that was true with us. I was the bread winner so things went south quick after I was laid off. Live and learn.

[SuperJETT]

DR had a call a couple of weeks ago that pinpointed why you have term life insurance. A family of 6 went to Mackinac Island for vacation and the dad drowned within an hour of getting there (raft blew over in rough water). Boom, stay-at-home wife has no income and 3 kids to raise. Because of Dave Ramsey, they had paid off all their debt except the mortgage in the previous 2 years and with the $380,000 insurance she received from term life and work policies, she can pay off the mortgage and will be just fine.

It was a pretty serious call, last call on 7/9 first or second hour if you want to listen. www.daveramsey.com

[SurferSmurf]

i didnt know this was an actual plan so i figured i would chime in. i have used this plan before and it works. unfortunately the relationship at the time did not outlast the bills being paid off. but i am currently using this plan again since i am engaged and tgrying to plan a wedding. my fiance had about 13k and i had about 7k. we started back in october and i have been making some extra money at work. i have paid off about 6k of the debt and have us down to 5 cards total left to pay off. i am planning on being out from under the credit cards by january or february if things hold together at work. i am looking forward to getting it all paid so i can finally get an xft hull and a gigantic motor.

[SuziQ]

:newangel:I haven't read this thread, so please accept my apologies if this has been posted!


http://www.youtube.com/watch?v=rgeQJK1eGV4

[SuperJETT]

"Debt gives you the ability to look like you’re winning when you’re not." ~Dave Ramsey

[Mark44]

i didnt know this was an actual plan so i figured i would chime in. i have used this plan before and it works. unfortunately the relationship at the time did not outlast the bills being paid off. but i am currently using this plan again since i am engaged and tgrying to plan a wedding. my fiance had about 13k and i had about 7k. we started back in october and i have been making some extra money at work. i have paid off about 6k of the debt and have us down to 5 cards total left to pay off. i am planning on being out from under the credit cards by january or february if things hold together at work. i am looking forward to getting it all paid so i can finally get an xft hull and a gigantic motor.

are you going to charge that? LOL

[djkorn1]

Still haven't watched a Dave video or read a book, but this thread did get me to want to pay off all my consumer debt.

Update: Car paid off. 1 Credit Card to go ($3000) (should take about 3 months without a car payment!).

Then I get to work on the wife....(1 mini van $13000) (3 credit cards totalling 11,000) My goal is 2 years from now with her stuff.

Once these are done, student loans are next....(those are the killer!)

[SuperJETT]

The credit card for kids, thanks to Kim Kardashian.

http://www.popeater.com/2010/11/12/kardashian-kids-credit-card-bad-idea/

Out of the goodness of her heart, Kim Kardashian launched a credit card (http://www.popeater.com/2010/11/08/kim-kardashian-credit-card/)this week for kids as young as 13 in what she says is an effort to teach them how to spend wisely. The famously extravagant reality show star and sisters Kourtney and Khloe unveiled the Kardashian Prepaid MasterCard, touting it as a way for parents to monitor their children's spending while teaching them money management skills.

Sound all warm and fuzzy? Not so fast, say parenting experts.

"If I were to select a spokesperson for responsible spending for children, they're the last people I would go to," Beth Feldman, founder of Role Mommy, tells PopEater. "They're completely out of touch with reality, they're ridiculously wealthy. They are promoting the excesses of having everything you want in life and not really working very hard to get it."
Feldman doesn't think it's a good idea to give children in middle school or high school a credit card at all, whether or not parents can put a fixed amount of money on it and track its use closely.

"I think it's more important to keep the cards away for as long as possible," she says. "Wait until they really need it -- if they're away at college, in an emergency situation. The best credit limit for a kid is not to give him a credit card."

Kim Kardashian and her sisters, the stars of the E! reality show 'Keeping Up With the Kardashians,' are famous for driving Bentleys, wearing fancy, expensive clothes and generally living in the lap of luxury. Kim, in particular, is also known for her vast array of sponsorships -- everything from perfume, clothing and jewelry to diet drugs and self-tanner.

"We are excited to partner with Mobile Resource Card to create our very own financial product," the Kardashians said in a statement ahead of the Tuesday launch. "Now our fans will be able to take us with them everywhere."

And that's exactly what worries parent advocates, who say teens are very impressionable, especially when it comes to their favorite stars.

"Celebrity endorsements are particularly compelling to adolescents who want to identify with these icons by imitating how they are and doing what they value or recommend," parenting expert Carl Pickhardt, author of Psychology Today's blog Surviving (Your Child's) Adolescence, tells PopEater. One of his recent entries (http://www.psychologytoday.com/em/47903) was about giving teens credit cards.

Not surprisingly, the credit card's sponsor, Mobile Resource, defended the new Kardashian plastic.

"Teens do not spend their money as their parents think they do," a company rep told the New York Post (http://www.nypost.com/p/pagesix/kim_kardashian_backs_kids_credit_5lNyBFc6j3fSeTbsX UTHeO#ixzz150GXleNu) earlier this week. "And drugs are a huge problem in this country. I give my son a small amount of cash and track his spending on his card."

But Susan Newman, social psychologist and the author of 'The Book of NO: 250 Ways to Say It and Mean It,' says there's been a long-running debate over college-age teens having credit cards, let alone those in middle and high school. As a result, many card companies have been prohibited from soliciting business on school campuses.

"Giving them a credit card is, for the most part, a bad idea," she tells PopEater. "We're not selling a pair of sneakers here. You're really giving a child carte blanche, even if you stipulate the amount. Teenagers are very impulsive. Many of them will just purchase whatever they see."

And those familiar with the Kardashian sisters find it laughable that they're the ones behind the new credit card for kids, considering the lavish lifestyle they lead and promote.

"They represent the indulgent part of our society," Feldman says. "They're the poster children for the wealthy. But for the rest of us, they're not role models for our kids."

[Matt_E]

Lol, wut?

[SuperJETT]

Kim Kardashian helping teenagers learn to spend wisely.

Let me know how that works out for you.

[Matt_E]

:lmao:

[Peter123]

Does her card come with a video camera and box of condoms?

[SXIPro]

What's next? Rosie O'Donnell teaching kids how to eat right?

[oxnard111]

Still haven't watched a Dave video or read a book, but this thread did get me to want to pay off all my consumer debt.

Update: Car paid off. 1 Credit Card to go ($3000) (should take about 3 months without a car payment!).

Then I get to work on the wife....(1 mini van $13000) (3 credit cards totalling 11,000) My goal is 2 years from now with her stuff.

Once these are done, student loans are next....(those are the killer!)

I feel you DJ... Student loans are biotch

[oxnard111]

Update for me.

-Paid off wife's car summer 2009 (is currently 4 years old with 50k miles)
-Paid off my truck 2 months ago (is almost 4 years old with 36K miles)
-Zero credit card debt
-About $70K student loans between the two of us
-Bought our first home in June 2010. Mortgage payment is about $450 more than when we were renting and utilities are about $75 more than compared to renting. We received both the $8K federal tax credit and the $10k CA state tax credit.
-Putting away $1400+ per month to reach our large emergency backup fund that consists of 6 months of one of our wages or 3 months of combined wages. About 4 months away to reaching that goal.
-$1000+ in our small emergency fund.
-Putting away $20/week into a separate fund for regular vehicle maintenance (oil changes, new tires, etc).

Once we reach our large savings goal we're going to start putting money towards the student loans; that is until our baby is born around June 1... We'll see how much we can throw towards the loans once our bundle of joy arrives.

[SuperJETT]

Looks like the Kardashian debit card is dead.
http://www.cnn.com/video/#/video/showbiz/2010/11/29/sbt.kardashian.credit.card.hln?hpt=T2

Just to buy the card and use it costs $59.95 for six months, or $99.95 for 12 months. That does not include any money on the card. The person buying the card must add money onto it.
The initial feels were just the start. After those six or 12 months are up, it costs $7.95 a month to keep using the card. Users have to pay $1.50 to withdraw cash from an ATM, and $1 to check their balance. Talking to a customer representative on the phone costs $1.50 for each call, and canceling the card costs $6.
Losing the card results in a charge of $9.95. If the loss is reported within two days, then losses are limited to $50. But if the loss or theft is not reported, and the issuer believes the user knew it was lost or stolen, then losses could be as high as $500, according to the terms and conditions on the Kardashian Kard website.

[Big Kahuna]

WTF are you babbling about??? heheheheeh

No Credit card debt.
Student Loans out the tail (Wife),
Just floating buy on single income.

[Matt_E]

Step away from the keyboard, BK.

[WaveDemon]

Looks like the Kardashian debit card is dead.
http://www.cnn.com/video/#/video/showbiz/2010/11/29/sbt.kardashian.credit.card.hln?hpt=T2

Just to buy the card and use it costs $59.95 for six months, or $99.95 for 12 months. That does not include any money on the card. The person buying the card must add money onto it.
The initial feels were just the start. After those six or 12 months are up, it costs $7.95 a month to keep using the card. Users have to pay $1.50 to withdraw cash from an ATM, and $1 to check their balance. Talking to a customer representative on the phone costs $1.50 for each call, and canceling the card costs $6.
Losing the card results in a charge of $9.95. If the loss is reported within two days, then losses are limited to $50. But if the loss or theft is not reported, and the issuer believes the user knew it was lost or stolen, then losses could be as high as $500, according to the terms and conditions on the Kardashian Kard website.

it was a joke from the beginning. I'm glad it's dead.

[djkorn1]

That is one thing I will teach my kids...no credit cards in college!!!! Those loan sharks are in every student union with free college hats, t-shirts, ipods, just for signing up. Rotten bastards.

[blaster800]

Have to differ with you DJ ! Credit cards are a tool and a good thing when used correctly . I gave both my kids a credit cards for college with a $2- K limit and it all turned out great ! I had the bill sent to me monthly ,and they were to use it for necessary items only . Any thing in question had to be cleared with mom or dad first , great tool ! If my college kid cannot be trusted to use a credit card wisely it would only mean I failed somewhere in the previous years !! College is for learning , why not teach them how to use money and credit wisely !

[Scorn800]

That is one thing I will teach my kids...no credit cards in college!!!! Those loan sharks are in every student union with free college hats, t-shirts, ipods, just for signing up. Rotten bastards.

I use to like all that free stuff. I would sign up everytime and put down all the wrong info. I would get the free stuff then get denied the card. Worked great for me.

[djkorn1]

Now they ask to see your drivers license.

[djkorn1]

Have to differ with you DJ ! Credit cards are a tool and a good thing when used correctly . I gave both my kids a credit cards for college with a $2- K limit and it all turned out great ! I had the bill sent to me monthly ,and they were to use it for necessary items only . Any thing in question had to be cleared with mom or dad first , great tool ! If my college kid cannot be trusted to use a credit card wisely it would only mean I failed somewhere in the previous years !! College is for learning , why not teach them how to use money and credit wisely !

I agree partially, Frank. I just don't want them to sign up for their 'own' credit card in the student union that I am not monitoring. They will be 'buying' part of their education on credit, so I'm not completely against credit...College is where I got a bunch of credit cards and bought a bunch of crap I didn't need.

[SuperJETT]

100 year old Dorothy Custer on Leno says the best invention of the past 100 years is the microwave and the worst is **the credit card**.
http://www.nbc.com/the-tonight-show/video/100-year-old-dorothy-custer-part-2-6-20-11/1335246?__source=tnt|home|featured|recent&ectid=bitlyified062120111015


BTW, because of getting out of debt/saving/etc, I'm able to take advantage of a once-in-a-lifetime opportunity to take a month off from work next month. Our kids are 9/7/5 and being able to take a month off while they're out of school and actually want to do things with me is priceless. Thanks to doing the work years ago we can afford it. All nay-sayers can suck it.

[SXIPro]

100 year old Dorothy Custer on Leno says the best invention of the past 100 years is the microwave and the worst is **the credit card**.
http://www.nbc.com/the-tonight-show/video/100-year-old-dorothy-custer-part-2-6-20-11/1335246?__source=tnt|home|featured|recent&ectid=bitlyified062120111015


BTW, because of getting out of debt/saving/etc, I'm able to take advantage of a once-in-a-lifetime opportunity to take a month off from work next month. Our kids are 9/7/5 and being able to take a month off while they're out of school and actually want to do things with me is priceless. Thanks to doing the work years ago we can afford it. All nay-sayers can suck it.

Outstanding. While most of the rest of America will be working long hours and multiple jobs to keep up with the Joneses, you'll be chillen with the kids and I am guessing visiting some cool places together as a family. Talk about winning. Well done.

[SuperJETT]

Yep, we have a vacation to Hilton Head in the middle of it plus the girls are going to YMCA camp for a week at the beginning, so I'll have a week of just my wife and 5 year old son. I'm planning on taking him camping or something for a couple of days during that week to let my wife have a true 'break' from kids/everything.

[firemedicmonkey]

I agree partially, Frank. I just don't want them to sign up for their 'own' credit card in the student union that I am not monitoring. They will be 'buying' part of their education on credit, so I'm not completely against credit...College is where I got a bunch of credit cards and bought a bunch of crap I didn't need.

x2 Thats what happened to me... Luckily I have them almost all paid off...

[SeaLion]

Darin, Nice going man. It will be time well spent. Having no debt is what's enabling me to not sweat, stress or worry since my business has been very slow to dead the past two and a half years. I have been home quite a bit with the kids because of it. Because of it I have been able to take them to their piano, guitar, drum and violin lessons. Soccer, swim, gymnastics, basketball practices. Some solo time for me to fish. Life is actually good. Only have like 3 years left on the mortgage and it will be even better. BTW, I'm still using the credit card but still pay it off in full every month. I know we kinda part ways on that but I have the discipline so it never carries a balance.

Enjoy the family time. You earned it, literally.

[WaveDemon]

We're about to get one big step closer to freedom.

I'm hoping to get another (better) counter offer to settle a big unsecured debt today. We're hoping for a slightly better number than our first contact with these animals.

[Mark44]

Animals?

Mark44

[douglee25]

I'm assuming he means credit card companies?

Wavedemon - Can you not make payments and hence why you're trying to settle with them?

Doug

[WaveDemon]

I'm assuming he means credit card companies?

Wavedemon - Can you not make payments and hence why you're trying to settle with them?

Doug

for a few years now they didn't want payments, I thought it was because of my long unemployment (i'm 3-4 years behind). Now that we're making settlement offers they seem open to it but I don't want to make payments. They've told me they'll take half in a lump sum after I offered them ~25%. If they come down just a little I'll pay them off.

[WaveDemon]

Animals?

Mark44
It's what dave ramsey calls the debt collectors.

[douglee25]

for a few years now they didn't want payments, I thought it was because of my long unemployment (i'm 3-4 years behind). Now that we're making settlement offers they seem open to it but I don't want to make payments. They've told me they'll take half in a lump sum after I offered them ~25%. If they come down just a little I'll pay them off.

I got you. Well make sure whatever you do that you get it in writing. Also make sure you include verbiage to say that the debt was paid in full as of X date and that they will provide you with a copy of your updated credit history showing that it was removed.

Doug

[WaveDemon]

I got you. Well make sure whatever you do that you get it in writing. Also make sure you include verbiage to say that the debt was paid in full as of X date and that they will provide you with a copy of your updated credit history showing that it was removed.

Doug
yep, I've actually got a lawyer representing me and making the calls for me since this has gone way beyond collections calls by now. I'm in a hurry to get this one behind me. My wife's student loan is next...

[Mark44]

It's what dave ramsey calls the debt collectors.
:-) I hate people that want their money.

Mark44

[WaveDemon]

:-) I hate people that want their money.

Mark44

They took a risk as did I. we both lost. so did my old mortgage company and my wifes student loan bank.


It's either take less or fight for scraps in bankruptcy.

[The Penguin]

I got you. Well make sure whatever you do that you get it in writing. Also make sure you include verbiage to say that the debt was paid in full as of X date and that they will provide you with a copy of your updated credit history showing that it was removed.

Doug
I doubt that will happen. when you settle for less than what is owed - they will place a note on your credit file that it was a settlement and it will affect your credit score.

accurate information can't be removed from a credit report.

[WaveDemon]

I doubt that will happen. when you settle for less than what is owed - they will place a note on your credit file that it was a settlement and it will affect your credit score.

accurate information can't be removed from a credit report.
It doesn't really matter, I'm going to stay away from using credit anyway. I'm not going to let my credit score change what's best for me and my family. What is best for us is to get out of and stay out of debt.

[douglee25]

I doubt that will happen. when you settle for less than what is owed - they will place a note on your credit file that it was a settlement and it will affect your credit score.

accurate information can't be removed from a credit report.

That's fine. As long as it shows no outstanding debt, he's in good shape. Credit history can be repaired within 2-4 years.

I know a woman who left her ex boyfriend. While they were together they had credit cards which were used to purchase appliances, carpet, etc in both of their names. The boyfriend was abusive, so she left. The ex bf stopped paying the bills for stuff that he now lived with. After the collections agencies came after both of them, he didn't want to pay anything. Lawyer this, lawer that, letter this, letter that.... the guy wasn't moving. She was sick of waiting around and wanted to get her credit history repaired (she had outstanding history prior to this incident). She made settlement with the company and paid it all off... stuff she never saw from the ex in order to clear her name. Within 1-2 years a significant jump in her credit score occured. Within another 1-2 years, it doesn't even show up now. Credit score repaired.

Doug

[WaveDemon]

That's fine. As long as it shows no outstanding debt, he's in good shape. Credit history can be repaired within 2-4 years.

I know a woman who left her ex boyfriend. While they were together they had credit cards which were used to purchase appliances, carpet, etc in both of their names. The boyfriend was abusive, so she left. The ex bf stopped paying the bills for stuff that he now lived with. After the collections agencies came after both of them, he didn't want to pay anything. Lawyer this, lawer that, letter this, letter that.... the guy wasn't moving. She was sick of waiting around and wanted to get her credit history repaired (she had outstanding history prior to this incident). She made settlement with the company and paid it all off... stuff she never saw from the ex in order to clear her name. Within 1-2 years a significant jump in her credit score occured. Within another 1-2 years, it doesn't even show up now. Credit score repaired.

Doug

I'm aiming for a score of 0. No credit.

[douglee25]

I know some people will disagree, I believe we even discussed it here in this thread or elsewhere on the board, but it's not really possible to function with zero credit.

Everything to a certain degree functions with the evoltion of 'credit'.

Even if you don't use credit cards per say, 'credit' is needed for utilities, mortgages, school, etc. Unless you are just privately wealthy, how do you plan on functioning with zero credit?

Doug

[WaveDemon]

I know some people will disagree, I believe we even discussed it here in this thread or elsewhere on the board, but it's not really possible to function with zero credit.

Everything to a certain degree functions with the evoltion of 'credit'.

Even if you don't use credit cards per say, 'credit' is needed for utilities, mortgages, school, etc. Unless you are just privately wealthy, how do you plan on functioning with zero credit?

Doug

Doug

no loans, no credit cards, mortgage is not in my name, I pay cash for my college classes and books. The only thing I can think of that utilities will want with bad credit is a bigger deposit and I have no need to give them a deposit since I'm already a paying customer. We own our cars out right.

For once, my wife and I both have a decent income and plenty of money left over at the end of every month. Now we're getting out of debt.

[douglee25]

I guess I'm also thinking of other tangible things that depend on a good credit score.

Doug

[WaveDemon]

I think the 2 things that are most over rated are a good credit score and a new(ish) car.


People often fall into the trap of wanting to get out of a car that has a repair that costs than the car is worth retail. What is an owned car really worth? to me, more than most repairs. A car payment will quickly cost me more than any mechanical repair. You can make most cars run well over 200k (especially a stick shift).

[Matt_E]

I guess I'm also thinking of other tangible things that depend on a good credit score.
Like?

[Mark44]

no loans, no credit cards, mortgage is not in my name, I pay cash for my college classes and books. The only thing I can think of that utilities will want with bad credit is a bigger deposit and I have no need to give them a deposit since I'm already a paying customer. We own our cars out right.

For once, my wife and I both have a decent income and plenty of money left over at the end of every month. Now we're getting out of debt.


I would pay of my dept in full then. IMO

Mark44

[WaveDemon]

Like?
like an engine rebuild or a combination of things like brakes, ac, and struts. It's better to bite the bullet and fix what you have. Otherwise it's just an excuse to buy something newer.

I'm not saying to never buy a newer car, just don't think you're doing something better financially by buying a newer car (especially a new car). If you have a car new enough for a warranty there is a better chance for you to lose more money in depreciation than the cost of mechanical repairs.


My exception to this is an automatic transmission. I don't trust rebuilt automatic transmissions. I'll replace with a used one or buy another car.

[WaveDemon]

I would pay of my dept in full then. IMO

Mark44

That makes no sense when I can pay less.

I tried to set up a payment arrangement for years and they didn't want to hear it. They got the lawyers involved and now they're willingly walk away with less and I'm more than willing to pay less.



Trust me, the bank is going to be just fine. I came out on the worse end of this deal over the last few years.

[Matt_E]

like an engine rebuild or a combination of things like brakes, ac, and struts. It's better to bite the bullet and fix what you have. Otherwise it's just an excuse to buy something newer.

I'm not saying to never buy a newer car, just don't think you're doing something better financially by buying a newer car (especially a new car). If you have a car new enough for a warranty there is a better chance for you to lose more money in depreciation than the cost of mechanical repairs.


My exception to this is an automatic transmission. I don't trust rebuilt automatic transmissions. I'll replace with a used one or buy another car.

Sorry, I was asking Douglee what other tangible things he meant..

[The Penguin]

Sorry, I was asking Douglee what other tangible things he meant..
My wife and I have her house on the market to lease.

the first candidate had a 188 credit score with bad history of late payments.

where do you think his application went?

insurance rates are also based on credit score to some degree as well.

[AtomicPunk]

employers are starting to run credit checks too

[SuperJETT]

I always hear how insurance rates are based on credit score, but have never see why or how much. Why would insurance be tied into how often you borrow/repay money?

[Matt_E]

My insurance is not tied to credit. I've asked the companies before.

I agree that lots of things are EASIER with a credit score, but they are not impossible without it. After all, what does a zero score mean?
You're dealing with a person that won't borrow money. Is this a bad thing?

[madscientist]

we have made it down to less than 11k on credit cards from 25k in the last 1.5yrs.. not bad. still have the house and wifes car.

[WaveDemon]

The plan is to go from a combo of secured and unsecured debt of ~$330,000 to $0 in the next year or less.

[The Penguin]

I always hear how insurance rates are based on credit score, but have never see why or how much. Why would insurance be tied into how often you borrow/repay money?

credit score also includes how you pay back the money you borrow. On time. Late? How late, how often?

[douglee25]

Penguin pretty much answered for me. Credit score may not be directly tied to everything even in terms of repayment, it basically is how companies determine what type of person you are or qualities you possess. Think about it... you walk down the street and see 100 people. You ask the 100 people if they are 'stand up' people or not (meaning a good, trustworthy individual). I bet most would say absolutely. Now go pull their credit history. I bet you may come away with a different opinion by the time you're done analyzing the data. Who would you lend money to in that case? Who would you trust with the keys to your house? The person with an 800+ score or someone with a 0 score?

I'm not disagreeing that cash has its places, but not everywhere. I'll give you a couple of examples.... 1. My buddy has a business. He tried to go buy a van for his business but they wouldn't sell it to him because he didn't have a credit score when he applied for a loan. Why? Because in the past he paid for everything cash. 2. My Dad has currently started a new business in the past few years doing multi-dwelling rentals plus flipping houses. He bought this one house cash in order to expedite the sale. He later went to get a mortgage on it while it was being rehabbed in order to free up some capital. He had a hell of a time finding a bank to lend to him. Why? Not because my Dad's credit rating was bad (he's over 800 something), but rather the business was too new to have even established credit. He paid cash for the house!!

Doug

[Matt_E]

Think about it... you walk down the street and see 100 people. You ask the 100 people if they are 'stand up' people or not (meaning a good, trustworthy individual). I bet most would say absolutely. Now go pull their credit history. I bet you may come away with a different opinion by the time you're done analyzing the data. Who would you lend money to in that case? Who would you trust with the keys to your house? The person with an 800+ score or someone with a 0 score?


Honestly - I'd be more impressed with the guy having a zero score, as that implies he's never borrowed money before. He very likely doesn't need me to lend money to him.


I'll give you a couple of examples.... 1. My buddy has a business. He tried to go buy a van for his business but they wouldn't sell it to him because he didn't have a credit score when he applied for a loan. Why? Because in the past he paid for everything cash. 2. My Dad has currently started a new business in the past few years doing multi-dwelling rentals plus flipping houses. He bought this one house cash in order to expedite the sale. He later went to get a mortgage on it while it was being rehabbed in order to free up some capital. He had a hell of a time finding a bank to lend to him. Why? Not because my Dad's credit rating was bad (he's over 800 something), but rather the business was too new to have even established credit. He paid cash for the house!

Both of those examples are issues only if the person wants to borrow money.

[SuperJETT]

You don't get a zero score, you get "no score".

'to free up capital' is an excuse or sophisticated way of saying 'i used up all my money and need to borrow some'. If you don't have the money, don't buy something, it's pretty simple and in the long run since you're not paying interest, YOU MAKE MORE MONEY AND CAN BUY MORE TOYS.

BTW, Apple is a debt-free company and has tons of cash. It does work.

[douglee25]

You don't get a zero score, you get "no score".

'to free up capital' is an excuse for 'i used up all my money and need to borrow some'. If you don't have the money, don't buy something, it's pretty simple and in the long run since you're not paying interest, YOU MAKE MORE MONEY AND CAN BUY MORE TOYS.

BTW, Apple is a debt-free company and has tons of cash. It does work.

Darin - Not quite. The money is there. Like I said, it was done to expedite the sale. It's easier to be more liquid in order to free up resources for other business strategies.

Doug

[SuperJETT]

to be more liquid in order to free up resources for other business strategies.

I love sophisticated talk like this. In other words, he had some other plans and was out of money, so borrowed on something that was paid for so he could pay interest and try the other stuff out too.

[WaveDemon]

I love sophisticated talk like this. In other words, he had some other plans and was out of money, so borrowed on something that was paid for so he could pay interest and try the other stuff out too.

there is a reason why the biggest buildings in every city have names on banks on them.

[The Penguin]

My Dad has currently started a new business in the past few years doing multi-dwelling rentals plus flipping houses. He bought this one house cash in order to expedite the sale. He later went to get a mortgage on it while it was being rehabbed in order to free up some capital. He had a hell of a time finding a bank to lend to him. Why? Not because my Dad's credit rating was bad (he's over 800 something), but rather the business was too new to have even established credit. He paid cash for the house!!

Doug

It probably has more to do with the fact that the credit market has tightened, and the type of loan your father was looking for either does not exist - or the broker he used does not have access to a lender that provides that product.

the mortgage business has change A LOT in the last few years - especially this year.

Thank Obama.

[douglee25]

I love sophisticated talk like this. In other words, he had some other plans and was out of money, so borrowed on something that was paid for so he could pay interest and try the other stuff out too.

This isn't sophisticated talk at all. Is there a reason why you don't believe me? Seriously? He has working capital soley for the business and nothing else. We're not talking about using his retirement, savings, or something similar to fund the purchase. This is working capital for for the business ONLY! My father has no debt. Zero. Everything is paid for. His old business went on for 45+ years. He's trying something else for kicks. 'Sophisticated talk' doesn't keep someone in business for that long. Smart business moves on the other hand just might.

Doug

[douglee25]

It probably has more to do with the fact that the credit market has tightened, and the type of loan your father was looking for either does not exist - or the broker he used does not have access to a lender that provides that product.

the mortgage business has change A LOT in the last few years - especially this year.

Thank Obama.

He did mention that was a factor as well. Things have changed, and not for the better.

Doug

[The Penguin]

oops, sorry - yes, I forgot to include "not for the better"

[AtomicPunk]

wait a minute the "change" everyone wanted was "not for the better"?
What about the "hope" we were promised?


A business using a line of credit is nothing like personal use of credit.



BTW, Apple is a debt-free company and has tons of cash. It does work.

Sure, but have they always been (debt free)?

[SuperJETT]

When all of the different kinds of debts were added up, the average consumer held a total debt load of $210,236 at the end of 2011, down only about 1% from 2010.

Credit cards: $6,576 - went down in 2011
Mortgage: $173,876 - steady in 2011
Auto: $15,504 - went up in 2011

http://money.cnn.com/2012/01/17/pf/credit_card_debt/index.htm?hpt=hp_t3

[SuperJETT]

So my coworker that was the final person that convinced me to start this stuff retired on Friday. He asked his financial advisor on Thursday if he was able to retire yet (was planning on it later this year) and was told yes, so he came in Friday and said "I retire".

He's 60 years old. He is set and can finally travel to see his kids/grandkids more often like he's been wanting to.

The cool thing is we live about 2 miles apart so we do see each other occasionally outside of work so it'll be cool to keep in touch.

[Buckwild12]

wait a minute the "change" everyone wanted was "not for the better"?
What about the "hope" we were promised?


A business using a line of credit is nothing like personal use of credit.




Sure, but have they always been (debt free)?

The "HOPE" is that you better hope to have some money left in your bank account after he "re-distrubutes" it to a bunch of unemployed free-loaders and people that in general will rob you if you walked through their 'hood late at night.

[SuperJETT]

I just submitted a preapproval application online for a house we've made an offer on. On the page where it lists non-mortgage debts, it was empty, as it should be.

BTW, if you haven't refinanced recently, take a look because we did in the beginning of 2011 to a 15 year and rates are even lower now so that it would be worthwhile if we were staying here more than 2 years.

[SuperJETT]

http://www.bloomberg.com/news/2012-10-29/consumer-spending-in-u-s-increases-0-8-as-incomes-climb-0-4-.html

Awesome, and people wonder why the national debt keeps going up. Incomes climbed 0.4% and spending rose 0.8%, double the income increase.

[oxnard111]

I just submitted a preapproval application online for a house we've made an offer on. On the page where it lists non-mortgage debts, it was empty, as it should be.

BTW, if you haven't refinanced recently, take a look because we did in the beginning of 2011 to a 15 year and rates are even lower now so that it would be worthwhile if we were staying here more than 2 years.

My refinance is funding tomorrow. Getting 3.375 fixed 30 years non-conforming. Not saving a ton on our monthly payments ($187 less per month) because PMI has increased since we first purchased our home but once the PMI drops off (about 7-8 years away) we'll save another $380/month. Zero out of pocket to refinance, in fact they're cutting us a $327 check at closing.

Our only debt are our student loans and the mortgage.

[AtomicPunk]

My refinance is funding tomorrow. Getting 3.375 fixed 30 years non-conforming. Not saving a ton on our monthly payments ($187 less per month) because PMI has increased since we first purchased our home but once the PMI drops off (about 7-8 years away) we'll save another $380/month. Zero out of pocket to refinance, in fact they're cutting us a $327 check at closing.

Our only debt are our student loans and the mortgage.


How do you save $380 month when PMI drops, is it really that much?
Just curious, we will probably start house shopping in the next month and I am not up to speed on the latest mortgage challenges.

[douglee25]

My refinance is funding tomorrow. Getting 3.375 fixed 30 years non-conforming. Not saving a ton on our monthly payments ($187 less per month) because PMI has increased since we first purchased our home but once the PMI drops off (about 7-8 years away) we'll save another $380/month. Zero out of pocket to refinance, in fact they're cutting us a $327 check at closing.

Our only debt are our student loans and the mortgage.

Who did you refi through?

Doug

[SuperJETT]

How do you save $380 month when PMI drops, is it really that much?
Just curious, we will probably start house shopping in the next month and I am not up to speed on the latest mortgage challenges.

Just do a normal 80% mortgage and skip PMI altogether.

[SuperJETT]

Another thread kind of brought this up and it made me realize we're over 5 years with no debt other than a mortgage. We had no problems at all getting the mortage on our new house and were even approved with no contingency to sell our old house, so we actually had 2 mortgage payments for 2 months+.

[douglee25]

Good to hear. I guess you're doing everything right for your situation.

Doug

[djkorn1]

Awesome, Darin...just refinanced again. It was a big one. Should take 12 years off of my loan, if I continue to make the same payments and save me over $120,000 in interest. Bad for banks, good for me.

I have been debt free for a year (except for house and college loans).
My wife will be credit card free in 4 months. (She still has van, house, college loans). We'll get there, Darin.

[masterblaster]

Just do a normal 80% mortgage and skip PMI altogether.

This is def the way to go if you are buying something you can truly afford you should be able to do it...if not rethink what you are about to buy..Ive never been in debt,I started paying cash for things I could afford before I got credit..Got a few car loans to build credit,payed them early,credit cards for same purpose,paid them off every month..
Have a few houses now all mortgaged under 80% One thing good obama did was get the feds to enforce MAKING banks refi at no cost to the lowest possible rate you qualified for..If you own a home and havnt refinanced it in the last couple yrs,you should be now.......the plan is extended to end of jan 2013

[Big Kahuna]

This is def the way to go if you are buying something you can truly afford you should be able to do it...if not rethink what you are about to buy..Ive never been in debt,I started paying cash for things I could afford before I got credit..Got a few car loans to build credit,payed them early,credit cards for same purpose,paid them off every month..
Have a few houses now all mortgaged under 80% One thing good obama did was get the feds to enforce MAKING banks refi at no cost to the lowest possible rate you qualified for..If you own a home and havnt refinanced it in the last couple yrs,you should be now.......the plan is extended to end of jan 2013

Uh, last time I ckecked a Mortage puts yo in debt, Car Loans put you in debt...........................

[norcal ex]

Having mortgages is a "debt" but it doesnt put you in Debt. If you are paying 3.5% on a rental home but you are getting 10% out of it (minus property value rise) then you are borrowing money to make money which is not putting you in "debt" . All of the largest corporations have some sort of "debt" . It makes financial sense for various reasons in different situations. Mostly tax reasons.

Another thing is is you have a house (Rental or home) and it is valued at 100k but you owe 65k on it then what is the problem? you have a debt but if push come to shove you can sell the property and have money. It is very stupid (High property value areas) to have half a million or a million tied up in your home. Not even Mark Zuckerburg does this. Why would you tie the money up not making anything when you can invest in other things.

Just for the record.. I have never ever had any credit card debt or car loans. I own everything I have . I do have a mortgage and for the little interest I am paying I wish I could keep it for more then 30 years. I can make a hell of a lot more money investing a couple hundred k elsewhere then it will ever make me sitting in my house.

[SuperJETT]

All of the largest corporations have some sort of "debt" . It makes financial sense for various reasons in different situations. Mostly tax reasons.

Not Apple, and last I heard they were the most valuable company in the world, right?

Pay interest to get a tax cut? Pay $10,000 to get a $2500 tax credit?


Why would you tie the money up not making anything when you can invest in other things.

Risk. Some people are fine with a lot of risk, others aren't.

Simplicity is another thing. We have like 5 regular monthly bills now, it really does take a load off not having to even think about bills each month.


With our new house, We probably have $100k in equity already thanks to the crazy deal we got and all the work I did. That definitely lowers the risk of holding a mortgage on it.

[norcal ex]

Not Apple, and last I heard they were the most valuable company in the world, right?

Pay interest to get a tax cut? Pay $10,000 to get a $2500 tax credit?

First, Im sure they have sort of debt on their books somewhere. Weather it be to their venders with a 60 day pay out instead of immediately. It is how it works. Also if you research their strategy is not looked upon as good in the business world. Apple wont be the largest company for long. They are already starting to fall with their over priced exploited products.

Second I never said to pay interest to get a tax cut. That makes no sense if that is why you are doing it. It does make investments more lucrative and attractive though. I just refied my house to 3.6%. I could of payed more off of the note ( I already have 30% equity) but instead I have that cash to invest. After my interest write off I am really paying less then 2.5% which is less then inflation.

I can then take that money I could of put into the house (which would of saved me 2.5% ) and use it in another investment which will give me a ROI of around 8-10% minus property value increases and depreciation. And when I do that I will have at least 25% equity. I dont believe in leveraging more then 20% in properties. I would like it to be closer to 30%.



Risk. Some people are fine with a lot of risk, others aren't.

Thats true but either way, being debt free or not (when it comes to properties) there is a risk. Being debt free you actually have more of a risk if you plan to use that property for investment or retirement fund. Properties that are debt free can lose their value also. One way you lose your money, another way you lose your credit score.



Simplicity is another thing. We have like 5 regular monthly bills now, it really does take a load off not having to even think about bills each month.


With our new house, We probably have $100k in equity already thanks to the crazy deal we got and all the work I did. That definitely lowers the risk of holding a mortgage on it.

I couldnt agree with you more!! I do not beleive that anyone should purchase something they cannot afford.

I have always paid cash for all of my vehicles, jet skis and other hobbies. I do not beleive in borrowing so you can have a cooler car then your neighbor. I dont always need the newest or the best (unless it comes to skis or mountain bikes) but when I do get them I pay cash.

I use my credit card for almost all of my purchases now to keep track of my purchases but the entire bill is paid off every month! I have never not paid it. If I cannot afford it , I wont buy it.

I have my cable bill, gas/electric bill, garbage bill, credit card bill , and my mortgage. It feels good and I dont have to worry about how I am going to be paying them every month.

[Scorn800]

Balling isn't for everyone.
Biggie said it best... more money more problems