TheLoveBandit
Retired Never Was, Coulda been wannabe
Ah, Finder, finder, finder.....
Actually, this is very close to my heart (or at least my OCD habits) as I've been fighting my way out of debt for the past 4 years. I've been listening to several of the guru's on the subject for much longer than that and have quite a bit of insight.
My insight on school loans, however, is miniscule as I was fortunate enough not to have to take any out. Still, debt issues are something of an obsession/passion for me. I've gone so far as to build spreadsheets to keep track of all my credit cards, their rates, and how long until I can pay them off based upon how much over the minimum I am paying. In the past 3 years, we (my wife and I) have managed to never bounce a check, always keep a little cash for emergencies, and drive credit cards down from nearly 40k to almost 10k (granted, we've got two incomes, but we also travel a lot and enjoy our lives).
Regardless, there are some basic principles to keep in mind. First and foremost - pay yourself first. This means you address the 'Have-to-pay' things first (car payment, rent/mortgage, groceries until next paycheck, AND put a llittle into SAVINGS for emergencies). Then you start addressing the 'Need-to-pay' things. The list of 'Need-to-pay' would be credit cards, loans (school, bank-personal, friend/family-personal) etc. These should be listed from highest interest rate to lowest (usually, that puts friends and family at the bottom, but you can move them higher on the list based on guilt-factor). Next to each one, list the interest rate and the minimum monthly payment. Add them up and see what's left from that pay-period's paycheck as disposable income (for ciggs, fun, travel, whatever). Of that disposable income, how much can I get by on and still enjoy myself? How much could I put towards paying down my debt quicker (again, personal guilt may sway this value).
If you have, say, $200 of your disposable to put towards debt, pay it to the top of the list first. The goal is to always get rid of the highest interest debt (because money paid on interest is money you are throwing away - just *giving* to the bank). It may take a few weeks to feel out how much of that disposable money you can live without, and put towards debt, but once you've got to a comfortable living cash flow stick to it. By paying more than the minimum, you bring that debt closer to being paid off in a much quicker fashion.
At the point where you refinance a debt (either student loan consolidation, or rolling credit card debt to a new 'low introductory offer' card) you should re-evaluate this list of debts - and re-rank them based on interest (and guilt).
When you finally pay off one of your debts, take the entire monthly amount you were paying to it and add it to the next highest debt on the list in order to pay that next one down even quicker. Also, there are little 'helper' things you can do (like the 1:1 for cigg spending or eating out spending) such as any bonus money you get can go straight to debt. It's money you don't *need* to live on, so send it where it can benefit you the most. Granted, you need to enjoy life, so maybe take 10% and buy a new outfit or some new kande
but put 90-100% towards debt and it will help. Similarly, when you get a raise, if it is an extra $50/mo, try to bump up your debt payments by that amound and keep your disposable fun spending at the same level it's been. Another thing to do is the student loan consolidation (a single payment on one debt is better than multiple payments on several debts). And for credit cards, you want to consolidate where you can - do a balance transfer from 1-3 cards down to a single card (at the lowest rate possible).
I'll stop my LONG ASSED POST here, but I'll be back (in this thread or one like it) to discuss the pitfalls of credit card debt consolidation and ways to make it work for you without hurting your credit rating (because someday, you *may* want that wife, and I gaurantee she'll want the house which means you need to protect your credit rating all the time).
Actually, this is very close to my heart (or at least my OCD habits) as I've been fighting my way out of debt for the past 4 years. I've been listening to several of the guru's on the subject for much longer than that and have quite a bit of insight.
My insight on school loans, however, is miniscule as I was fortunate enough not to have to take any out. Still, debt issues are something of an obsession/passion for me. I've gone so far as to build spreadsheets to keep track of all my credit cards, their rates, and how long until I can pay them off based upon how much over the minimum I am paying. In the past 3 years, we (my wife and I) have managed to never bounce a check, always keep a little cash for emergencies, and drive credit cards down from nearly 40k to almost 10k (granted, we've got two incomes, but we also travel a lot and enjoy our lives).
Regardless, there are some basic principles to keep in mind. First and foremost - pay yourself first. This means you address the 'Have-to-pay' things first (car payment, rent/mortgage, groceries until next paycheck, AND put a llittle into SAVINGS for emergencies). Then you start addressing the 'Need-to-pay' things. The list of 'Need-to-pay' would be credit cards, loans (school, bank-personal, friend/family-personal) etc. These should be listed from highest interest rate to lowest (usually, that puts friends and family at the bottom, but you can move them higher on the list based on guilt-factor). Next to each one, list the interest rate and the minimum monthly payment. Add them up and see what's left from that pay-period's paycheck as disposable income (for ciggs, fun, travel, whatever). Of that disposable income, how much can I get by on and still enjoy myself? How much could I put towards paying down my debt quicker (again, personal guilt may sway this value).
If you have, say, $200 of your disposable to put towards debt, pay it to the top of the list first. The goal is to always get rid of the highest interest debt (because money paid on interest is money you are throwing away - just *giving* to the bank). It may take a few weeks to feel out how much of that disposable money you can live without, and put towards debt, but once you've got to a comfortable living cash flow stick to it. By paying more than the minimum, you bring that debt closer to being paid off in a much quicker fashion.
At the point where you refinance a debt (either student loan consolidation, or rolling credit card debt to a new 'low introductory offer' card) you should re-evaluate this list of debts - and re-rank them based on interest (and guilt).
When you finally pay off one of your debts, take the entire monthly amount you were paying to it and add it to the next highest debt on the list in order to pay that next one down even quicker. Also, there are little 'helper' things you can do (like the 1:1 for cigg spending or eating out spending) such as any bonus money you get can go straight to debt. It's money you don't *need* to live on, so send it where it can benefit you the most. Granted, you need to enjoy life, so maybe take 10% and buy a new outfit or some new kande
but put 90-100% towards debt and it will help. Similarly, when you get a raise, if it is an extra $50/mo, try to bump up your debt payments by that amound and keep your disposable fun spending at the same level it's been. Another thing to do is the student loan consolidation (a single payment on one debt is better than multiple payments on several debts). And for credit cards, you want to consolidate where you can - do a balance transfer from 1-3 cards down to a single card (at the lowest rate possible).I'll stop my LONG ASSED POST here, but I'll be back (in this thread or one like it) to discuss the pitfalls of credit card debt consolidation and ways to make it work for you without hurting your credit rating (because someday, you *may* want that wife, and I gaurantee she'll want the house which means you need to protect your credit rating all the time).
Last edited:
Suze
)
![:\](https://bluelight.org/xf/BL_Images/Orig_Emoji/wrygrin.gif "wry grin :\")
