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InTheLight

InTheLight

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evangelist6589 said:
No Dave Ramsey says to pay the smallest debts first.
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Well, he's wrong. You will spend less money over time if you pay off the higher interest rate loans first.

He's probably suggesting paying off the smaller debts because it gives the borrower a sense of accomplishment.
 
evangelist6589

evangelist6589

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annsni said:
I'm not Don but pay off the small debts then and then start working on the larger ones. Don't have a fatalistic attitude saying "I can't pay my student loans." You can. It might take years but that's OK. You give them $50 more a month when you can and then you give them $100 more a month when you can and someday, it will be paid off.
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Don thinks.. never mind. Know I do not have much or anything to buy so I can do this.
 
TCassidy

TCassidy

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How do you make elephant soup? You start with one medium large elephant, chopped fine.
 
A

annsni

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evangelist6589 said:
Impossible to eat such an animal. Wait... Is this a metaphor?
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Yes, it's a metaphor. I always think of this saying when I need to do something that is seemingly impossible. You just take one bite at a time. You just take the next step towards your goal. $5 extra towards one bill is $5 sooner to have it paid off. It may make it that instead of 20 years to pay off a student loan, it will be paid off in 15 years because you've paid $5 a month on it over the minimum amount and then you slowly made that $5 into $10 because you had some extra money and so forth. Debt isn't paid off in a day but it NEEDS to be paid off because it is a promise we made when we took the loan or charged the item on the credit card. Do you know that charging something on a credit card that already has a balance and you are paying interest on it suddenly increases the amount that you have to pay for it? So that great buy at $80 may end up being $150 by the time you pay down that debt.

My daughter is not financially a good manager but now that she's out of the house on her own, paying rent and managing her own bills, I'm trying to help her think things through. I've shown her through her budget of her fixed expenses that she has VERY little extra at the end of the month and that she needs to earn extra money. Basically her paycheck will pay her fixed expenses with a small amount left that she will use for savings (her first savings goal is to get one month's rent money in a Capital One 360 account for an emergency and then after that, $1000 in another CO360 account as her emergency fund, plus she is to put away $5 a week in singles or 5s into an envelope until she has $200 in emergency cash in her apartment in a few hidden locations). She also has $800 in credit card debt that she NEEDS to pay off and my plan is for her to have that paid off by the end of the year, with that amount being accounted for in her budget because to me, that needs to be a fixed expense rather than an extra. So instead of having $200 towards extra food, clothing and fun, she's tightening her belt, eating cheaply, not buying clothing and only doing the free things that are around Washington DC and paying off that debt that she incurred. Once that is paid off, she will have a little more breathing room. These are things that adults do. Be responsible, fulfill your promises and deny yourself some pleasure in order to be financially sound.
 
evangelist6589

evangelist6589

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annsni said:
Yes, it's a metaphor. I always think of this saying when I need to do something that is seemingly impossible. You just take one bite at a time. You just take the next step towards your goal. $5 extra towards one bill is $5 sooner to have it paid off. It may make it that instead of 20 years to pay off a student loan, it will be paid off in 15 years because you've paid $5 a month on it over the minimum amount and then you slowly made that $5 into $10 because you had some extra money and so forth. Debt isn't paid off in a day but it NEEDS to be paid off because it is a promise we made when we took the loan or charged the item on the credit card. Do you know that charging something on a credit card that already has a balance and you are paying interest on it suddenly increases the amount that you have to pay for it? So that great buy at $80 may end up being $150 by the time you pay down that debt.

My daughter is not financially a good manager but now that she's out of the house on her own, paying rent and managing her own bills, I'm trying to help her think things through. I've shown her through her budget of her fixed expenses that she has VERY little extra at the end of the month and that she needs to earn extra money. Basically her paycheck will pay her fixed expenses with a small amount left that she will use for savings (her first savings goal is to get one month's rent money in a Capital One 360 account for an emergency and then after that, $1000 in another CO360 account as her emergency fund, plus she is to put away $5 a week in singles or 5s into an envelope until she has $200 in emergency cash in her apartment in a few hidden locations). She also has $800 in credit card debt that she NEEDS to pay off and my plan is for her to have that paid off by the end of the year, with that amount being accounted for in her budget because to me, that needs to be a fixed expense rather than an extra. So instead of having $200 towards extra food, clothing and fun, she's tightening her belt, eating cheaply, not buying clothing and only doing the free things that are around Washington DC and paying off that debt that she incurred. Once that is paid off, she will have a little more breathing room. These are things that adults do. Be responsible, fulfill your promises and deny yourself some pleasure in order to be financially sound.
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I agree that we need to pay down the debts that we owe and why I make all my payments per month. I just paid off two of my smaller credit cards and only have one left. I do not plan to get any interest charged because I plan to pay off the balance of that card in a month. This is my strategy unless my car needs repair or something really expensive pops up and I cannot pay off the balance in a month. Washington DC? Thats a really expensive area to live.
 
A

annsni

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evangelist6589 said:
I agree that we need to pay down the debts that we owe and why I make all my payments per month. I just paid off two of my smaller credit cards and only have one left. I do not plan to get any interest charged because I plan to pay off the balance of that card in a month. This is my strategy unless my car needs repair or something really expensive pops up and I cannot pay off the balance in a month. Washington DC? Thats a really expensive area to live.
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The bold is why you then have an emergency fund. Most car repairs would be under $1000 and that is exactly what that might be for although I'd also start putting some money aside for a specific car repair account as well so that you have money in there. I'd go for $500 in that account.

Yep - DC is a really expensive area. She's JUST able to meet her expenses on her salary which is a decent salary (she makes a bit more than you) but she has nothing extra so that's why she's babysitting as well. Fortunately babysitting is VERY lucrative (she made $30 an hour this past weekend) and if she has a job a week, that will be her money for extra food, clothing, entertainment and apartment stuff. We've helped her out a LOT with her apartment furniture and even now I have a dresser that is freshly painted in my entry hall that we will bring down for her and I'm keeping my eyes open for a coffee table as well. She'd love to have a coffee pot but for now, she's using a pour-over thing that I got a few years ago and is making her coffee cup by cup and that's saving money (both in buying coffee out and not buying a coffee maker). Again - you just need to make priorities and meeting your expenses and paying off debt are priorities.
 
evangelist6589

evangelist6589

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annsni said:
The bold is why you then have an emergency fund. Most car repairs would be under $1000 and that is exactly what that might be for although I'd also start putting some money aside for a specific car repair account as well so that you have money in there. I'd go for $500 in that account.

Yep - DC is a really expensive area. She's JUST able to meet her expenses on her salary which is a decent salary (she makes a bit more than you) but she has nothing extra so that's why she's babysitting as well. Fortunately babysitting is VERY lucrative (she made $30 an hour this past weekend) and if she has a job a week, that will be her money for extra food, clothing, entertainment and apartment stuff. We've helped her out a LOT with her apartment furniture and even now I have a dresser that is freshly painted in my entry hall that we will bring down for her and I'm keeping my eyes open for a coffee table as well. She'd love to have a coffee pot but for now, she's using a pour-over thing that I got a few years ago and is making her coffee cup by cup and that's saving money (both in buying coffee out and not buying a coffee maker). Again - you just need to make priorities and meeting your expenses and paying off debt are priorities.
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Well I have an APPLETV a blue ray player and a boom box. No need for a new car or Apple watch. I should be able to save up to $1000 now.
 
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