Debt help

[flyinsquirel]

Only thing I can add that hasn't already been suggested is, sell some hunting gear in the classifieds here and put that $$ towards the high interest CC's. If you're like many of us here, you probably have a few duplicate items, and some high grade items that you can downgrade and still get by. You only really need 1 rifle, and you can always buy another once you get out of debt. Old bows kill deer just as dead. Got any Swaro's? Sell those and slum one of the many other brands out there that will still find you deer for less than 1/2 the price. You might be able to free up several thousand real quick to give you a jump start.

On the bright side, you did buy a Tacoma new, and not something else that wouod depreciate much faster. You'll most likely get damn near what you paid for it.

 

[cornfedkiller]

I'll say this, if he recommends paying off small debts with low interest rates prior to bigger debts with high interest rates, I disagree with him.

I'm not going to argue, and mathematically it doesn't make the most sense to do it his way, but his explanation for why he suggests this way makes a lot of sense... Most people need psychological "wins" and see progress being made. The need to see their behavior working for them. If weight loss program A said you were going to work out every day and lose 5# per month and at the end of the year you will have lost 60, or program B said you are going to lose 70# this year if you work out every single day, but you wont lose a single pound of it until the last two weeks, how many people would stick with the program?

Nobody will argue that the math works better in the long run if you pay more toward your highest interest first, but most of the time people don't get into their terrible financial situations because of math, they get into them because of their behaviors.

 

[NDGuy]

Most people need psychological "wins" and see progress being made.

Outside of CC debt I agree, that's a whole other animal. Get that thing taken care of first!

But in regards to normal debt I agree with him tackle the lowest loan first to get your "win". Then snowball that payment to whichever is the next lowest one. A big loan will take the longest to payoff aggressively and can definitely wear a person down.

 

[Titan]

I have seen friends in the same situation. I do think Dave Ramsey has great points that work well for the intended audience.

Being a numbers guy, the math doesn't always come out the best and it drives me crazy seeing that. But its not always about the math. Like others said, the phycological aspect can be huge.

The other issue I see watching others go through this are the sacrifices made to make it happen. I saw them trying to make huge changes for a small amount of extra cash each month while totally overlooking the easy money. Don't drop down to a significantly less reliable car to save $150 a month, when you are eating out half of your meals each week (not saying you do this, but I watched a few peers do exactly that). Look for easy savings - cutting cable, meal prepping, etc.

 

[HoneyDew]

I have seen friends in the same situation. I do think Dave Ramsey has great points that work well for the intended audience.

Being a numbers guy, the math doesn't always come out the best and it drives me crazy seeing that. But its not always about the math. Like others said, the phycological aspect can be huge.

The other issue I see watching others go through this are the sacrifices made to make it happen. I saw them trying to make huge changes for a small amount of extra cash each month while totally overlooking the easy money. Don't drop down to a significantly less reliable car to save $150 a month, when you are eating out half of your meals each week (not saying you do this, but I watched a few peers do exactly that). Look for easy savings - cutting cable, meal prepping, etc.

Yeah I personally don’t like Ramsey because of his scorched earth tactics when it comes to tackling debt. “You can only afford to eat canned beans until you’re debt free” haha give me a break. But then again I’m also a numbers guy and have been very successful financially by running the numbers and being disciplined. I also recognize that I’m not his target audience. Psychological wins and hurdles are a real issue for some people causing them to be overwhelmed and decide “well it’s too hard” or “I can’t mess up if I don’t change anything”.
If you want an alternative to Ramsey I would recommend this book.
I Will Teach You to Be Rich, Second Edition: No Guilt. No Excuses. No BS. Just a 6-Week Program That Works https://www.amazon.com/dp/1523505745/ref=cm_sw_r_cp_api_fabc_4I8XFbD5H42Z1?_encoding=UTF8&psc=1
It’s from a younger guy who approaches finances from let’s say a more modern perspective. He addresses everything from credit cards- cars-retirement-etc. He also walks you through how/when to handle debt vs other things. His style matches mine. Spend BIG on what you love but that means cutting on things you don’t.

 

[PAhntr91]

Good advice here. We don’t have cable. I didn’t not buy the Tacoma new I do have about 5000 in equity. I make decent money I work in a body shop. Just have been slower lately because of COVID. I feel people are driving less. We have two kids so I have to pick the one up from school and what not my wife works from home and watches the younger one. We rarely eat out. I enjoy cooking a lot. I make all our coffee and lattes and shit at home. Make all our pizza at home. Get the eggs from the backyard. Thanks for all the input guys. It’s nice to hear that we’re not alone. As for selling hunting equipment I don’t have t that much as it is. One rifle one shot gun and one bow. A cheap frame and one hang on tree stand. Vortex and leupold Bino and range finders. Gonna look to trade in or sell the Tacoma. Any one have luck selling a car with a lien.

 

[JBrew]

Gonna look to trade in or sell the Tacoma. Any one have luck selling a car with a lien.

People do it every day. Blue book it and go from there. The Tacoma will sell.

 

[bsnedeker]

People do it every day. Blue book it and go from there. The Tacoma will sell.

I bought my Tundra this year with a lien on it. Just met the dude at his bank, gave the money directly to the teller, got the title and lien release right there.

 

[Johnboy]

One thing about Dave Ramsey is that he uses absurdly high assumed % returns on investment when he runs his hypothetical scenarios to illustrate principles. I agree with a lot of his principles, but 12% ROI? Really? Sign me up!

 

[MattB]

No Dave doesn’t recommend consolidating debt. Take all your debts except your mortgage and list them smallest to largest. Start attacking the smallest first while paying minimum on everything else.

He might even tell you to keep the cars, just depends on how much you owe on them and how much your income is.

Read the Baby Steps someone else listed above and fight like crazy to get out and never go back. Raise your kids the same way.

I understand the notion of paying off the smallest first - milestones - but I think that is bad financial advice. Better would be to prioritize based on interest rate and tackle the debt with the highest rate first.

 

[Sekora]

You have been given some great advice already. One thing that I see in your posts is that you have a skill. If work is slow, are you able to supplement your income through side work? I understand you need a garage and your own tools to do this but if it is an option for you consider it. Even detailing cars can make you some good cash that will help you in the long run. I worked as much as I could when I was young and most importantly healthy. I would never turn down an opportunity to make money. All that money went to the little amount of debt that I had. I paid everything off and am glad I did. My health took a turn for the worse 2 years ago at age 40 and I can not do the things I used to. I am fortunate that I no longer have to.

 

[Rich M]

I used to teach Dave Ramsey's stuff and some other fella's at church. Another name to research is Clark Howard. The underlying issues were usually bigger than the debt - folks who had low income spending too much.

The opinions you are getting are off the cuff, with no real insight into your situation. The particulars are missing - how much debt, income, living expenses, etc. Lots of us have been there tho - and more than happy to help.

You might be $100K in debt and expect to see it gone in 5 years - expect painful sacrifices and big fights with the wife. You could be $10K in debt and just don't like having it...

Evaluate the cars - I think you should hold on to the truck. That Tacoma is gonna last 20-30 yrs if you take care of it. That's 25 years without payments...as opposed to having some clunker that needs fixing at the worst possible moments.

What you really need to realize is that you didn't get underwater overnight and you aren't gonna be sitting on dry land for a while. Think 10+ year time-frame if you have any appreciable debt.

 

[Cedarsavage]

Hello everyone. Looking for some advice here with our financial situation. My wife and I both have two newer cars she leases in paying to own. We each have school loans which are deferred at the moment. And a bunch of credit card debt which were only making the minimum payments on. We don’t really have much left over after everything is paid to pay extra on CC. we have be thinking of doing some debt consolidating or somethjng of that nature. I’m not sure if I should downgrade in vehicles and get something cheaper or with no payment at all I’m sure it’s possible with having some equity in my Tacoma. We are just ready to get out of this debt and be free of it. Any thoughts????

Listen to Dave Ramsey's podcast. Once you listen to 5 you know everything he will say. My wife and I did it. At one point we had over $900 in student loans plus $675 in student loans. We were making good money and broke. We are now debt free except our house. Freedom and lack of stress that come with it are priceless. I hate to sound like a cult member, but having debt is making life harder and more stressful than it needs to be.

 

[Eltigreblanco]

Good advice here. We don’t have cable. I didn’t not buy the Tacoma new I do have about 5000 in equity. I make decent money I work in a body shop. Just have been slower lately because of COVID. I feel people are driving less. We have two kids so I have to pick the one up from school and what not my wife works from home and watches the younger one. We rarely eat out. I enjoy cooking a lot. I make all our coffee and lattes and shit at home. Make all our pizza at home. Get the eggs from the backyard. Thanks for all the input guys. It’s nice to hear that we’re not alone. As for selling hunting equipment I don’t have t that much as it is. One rifle one shot gun and one bow. A cheap frame and one hang on tree stand. Vortex and leupold Bino and range finders. Gonna look to trade in or sell the Tacoma. Any one have luck selling a car with a lien.

I would suggest looking into carvana. I just sold a f-150 for more than I paid for it through them, and the process couldn't have been easier.

 

[browning2480]

I understand the notion of paying off the smallest first - milestones - but I think that is bad financial advice. Better would be to prioritize based on interest rate and tackle the debt with the highest rate first.

Can’t argue with the results. You don’t have to agree with them, but can’t argue them. It is psychological, not financial. So I would agree with you, not the best financial advice, but it gets the best results the quickest.

 

[CorbLand]

I think the main thing that people dont realize with Ramsey is that his goal is to get you out of debt, not save you money. Saving money is a side effect of being out of debt from his stand point. If you understand interest rates and can calculate which one will cost you more (its not a simple as which is highest) then yes it makes the most sense to pay off those first but for most people just getting out of debt is the goal. That is his audience and that is who he helps.

 

[EastCoaster]

It’s nice to see a post like this. We are out of debt minus the house and it will be done in 5-6 years. This is coming from someone who didn’t have a savings account 4 years ago due to a home flood and no flood insurance. It is a grind to dig out but man when you can start seeing daylight.....pretty awesome feeling. I’m 37 and hope to be debt free by the time I’m 42.......those high end packs will have to wait until then.

 

[Baddog]

Make more money. Part time gigs, preferably tax free...

 

[AKBorn]

Only thing I can add that hasn't already been suggested is, sell some hunting gear in the classifieds here and put that $$ towards the high interest CC's. If you're like many of us here, you probably have a few duplicate items, and some high grade items that you can downgrade and still get by. You only really need 1 rifle, and you can always buy another once you get out of debt. Old bows kill deer just as dead. Got any Swaro's? Sell those and slum one of the many other brands out there that will still find you deer for less than 1/2 the price. You might be able to free up several thousand real quick to give you a jump start.

On the bright side, you did buy a Tacoma new, and not something else that wouod depreciate much faster. You'll most likely get damn near what you paid for it.

LOTS of truth in this. My compound bow is 20 years old, and my hunting rifles were purchased 20+ and 15 years ago respectively. They kill the animals just as dead. Most of my hunting clothes are 20 years old. I realize that new clothing technologies could possibly provide more warmth with less weight, but I seem to do just fine with what I have. I couldn't enjoy my hunts any more with new clothes or gear.

 

[longspeak74]

Just buckle down and you can do it! Lot's of solid advice here, but I'll throw my Dave Ramsey recommendation in the ring too. I have no debt other than my house. I pay cash for everything and have no credit cards, debit card only. Just realize it's a marathon and takes work, from both you and your wife. Make sure you're both on the same page.