The snowball thing was how we decided what needed to be paid off first. This year we've paid off about 10k in debt.. but we haven't saved a single penny.
This is a major accomplishment and you should be proud that you paid off so much debt. It sounds like you have the determination to meet your goals and I bet that, if you and your husband continue along this path, you will have a well-padded savings account this time next year.
I don't post terribly often, so sorry for butting in. The whole concept of a monthly budget was overwhelming for us. We would come up with something "reasonable". $600 for groceries. $200 for clothes. $x for auto. At the end of the month we were always over on some categories because X came up or whatever. Eventually we gave up because it seemed pointless to just rationalize overspending categories. Lots of people around here hate Dave Ramsey, but his description of how to budget is what really set us straight.
It's basically like this: -Every month come up with a new budget. This works much better for us than trying to fit things into "averages". We can sit down at the beginning of the month and say groceries will probably be $750 because there are 5 Sundays, and gifts should be $200 because there are 3 birthdays, for example. -Every $ of expected income should be allocated to a category. -If you are going to overspend a category, you need to rebalance the budget. So, if you decide to go to the movies and that wasn't budgeted for, you and DH have to decide together that it's ok to spend the money and then you need to take that money out of some other category (debt repayment, groceries, savings, whatever) -If something comes up that can't be taken care of by rebalancing your budget, it comes out of the emergency fund (if it's truly an emergency) -Keep your emergency fund at some base level. If you take $ out, focus on putting that $ back and back off on debt repayment until that $ is replaced. -Towards the end of the month we re-examine the budget. There are usually categories that we allocate money to conservatively and then we underspend. I take that extra money and throw it at our debt.
I know many will disagree, but I highly recommend Dave Ramsey's Total Money Makeover
I actually have this book...sitting on my nightstand.
From what I know about Dave Ramsey, I like his methods. DH used to listen to his show on satellite radio which where he learned about the debt snowball or whatever it's called.
The snowball thing was how we decided what needed to be paid off first. This year we've paid off about 10k in debt.. but we haven't saved a single penny.
And this is one of the reasons a lot of people don't like Ramsey, but if you follow through with his plan, it's ok that you're not doing any saving. He'd say that as long as you have debt, that's what you should focus on and you'll get to saving later. I'd get really intense on debt pay off, and start saving after you're out of debt.
When we started Ramsey we weren't even sure it was possible to live within our means, so to be able to make a budget and not only stick to it, but also pay off debt (and fairly quickly - $11000 since March!!!) was a huge relief and I'm feeling confident that we'll get our debt paid off and continue to be on track to our goals for saving and for our future.
Post by cricketwife on Aug 27, 2012 17:30:24 GMT -5
I didn't read all the posts but I read enough to make a couple of suggestions that may be helpful to you. My parents are a disaster with money. I'm self-taught, (books, this board, etc.)
Like you, I used to spend everything. I was good at finding bargains and getting lots of bang for my buck, but I always spent it all. Two things have helped turn me into a saver. One is the zero-based budget. I liked the idea of deciding where my money would go rather than wondering where it went. (that's how Dave Ramsey explains it, but there are lots of resources for a zero based budget.) Also, envelopes. To this day, I still use the envelope system. People think I'm weird. Cashiers say things like, "oh cash?" with a confused look when i pay, but it totally keeps on on track for my spending. You can figure out your own system, but I use envelopes for groceries, eating out, fun money, miscellaneous spending.
Start with little steps, like opening the 401k, if the money isn't there, you can't spend it...well, if you don't use a credit card. You may want to limit yourself to a debit card only for a few months to get your act together and then decide if you feel like you can trust yourself to use a credit card and not exceed what you can pay off.
Post by stingsharkruns on Aug 27, 2012 17:36:00 GMT -5
We have discussed a plan for paying off the rest of our debt (besides my car & the house) and saving... we actually discussed this last week, but today i opened mint and i just felt so disgusted.
Sell DH's truck. We owe 3500, it's valued at 10k on KBB.. I doubt we'll get 10k. probably get 8k Sell DH's motorcycle .. we own it. Sell it for no less than 2k
Pay off the Chase card, put the rest in savings. Selling his truck will give us an additional $370/mth ..
At some point DH will get another truck. We have agreed that we have to have X saved before he can begin looking for his "Dream" truck.
He doesn't need this truck. He has a work truck. We can be a 1 car family - it's not really ideal, but it can be done for a little while since he does have the work truck..
I have always been cheap, but not MM. I managed to get myself buried in student loans because I was very, very stupid in college. Not the usual partying and not working, but a total fear of finances that led to me never filling out my FAFSA, so I took out student loans to pay for ALL of it. I didn't really understand what taking all that money meant. I made vague jokes about being in debt till I was 90, but I didn't realize what interest rates were. My parents were no help. They were of the "just take out loans and you'll make so much money out of college you won't even notice it" camp.
Then of course my first job out of college, if I there wasn't enough available overtime, I couldn't pay my bills, so the CC debt just spiraled.
It wasn't until I got into getrichslowly, thesimpledollar, and similar PF websites that we started getting anywhere. Oh, and getting jobs that increased our income by 20%. That helped a lot. Now I'm learning the difference between frugal and cheap. I used to be just cheap. Now I'm frugal. Life is much better.
I learned how to saved and be conservative from my parents. I had $1k saved by the time I was 10 and started working when I was 15. I went to college with $7k in savings and lived paycheck to paycheck throughout college and refused to touch my savings.
Investments and day trading I learned partly from my dad and mostly from H.
It's all about figuring out what's best for you, trial and error, and learning from your mistakes.
Post by elizabethann on Aug 27, 2012 19:09:28 GMT -5
I can hear my dad saying "pay yourself first" in my mind when I think about childhood. I guess I also understood delayed gratification from a young age and always had the tendency to save money. DH and I are working at our first "real" positions since graduating college and were so excited to start contributing to 401K's.
It doesn't seem like you overspend on entertainment but maybe shopping or random purchases the most? I think previous posters have suggested the envelope system to help curb that. Like Dave Ramsey says; it is much harder to pull out your cash and hand it over than it is to swipe your card. It sounds like you guys are doing pretty great at paying down your debt and once that is taken care of you will have plenty to add to your savings account. Keep it up!
Yes. My parents divorced when I was very young and my mom supported four kids on $10k a year. She was very smart about money and passed that on to me.
Before DH, I never had debt, saved money each month while in school, and lived well below my means. DH had a ton of debt and we worked hard to pay it off.
Post by stingsharkruns on Aug 28, 2012 5:58:52 GMT -5
We sat down last night and talked about what we feel like we need to do to get this under control. The issue isn't him or me - it's definitely a combination of both of us.
For now, we are going to sit down each week and decide together where our money will go. It feels like overkill to do it each week, but until we have a good grasp on where everything goes we think it's the best idea for us.
We are going to make an appt w/ a financial planner we know so we can figure out DH's 401k, or some kind of retirement fund.
We made a list of things we know will be coming up in september (bridal shower, running shoes for me, hair cut for me) and will work them into the budget each week as we can.
We just have to stay strong! We budgeted next week (we get paid this Thursday & i have a pretty good idea of how much DH's check will be)- we tried to think of everything that we would NEED.. we'll see how it goes.
Lessons learned. If I could go back, I would of gotten 1 good full time job prior to college instead of 3 dinky ones that paid crap during college, and graduated with less debt. From what I recall school didn't teach any of this, my parents taught me the basics of budgeting, understanding needs, wants and paying upfront for your wants. But everything else, that older generation felt like they sorta dropped the ball, wasnt until my first job I learned about retirement plans, and other investments. In recent years I would say the newer generations are definitely becoming more aware of what is going on with their money.
Post by spartychic2010 on Aug 28, 2012 6:43:50 GMT -5
No, I think I finally got smart in my mid to late twenties. The early years after college were about trying to get by on a small salary. But, as I moved up at work and had more money available to save, I started feeling better financially.
Talking with friends, reading articles, and this board have all helped! I know I'm not as MM as some people on here, but generally, I feel pretty good about where my husband and I are.
I agree, there should be some sort of lesson on budgeting in high school or college. Believe it or not, my parents never really discussed anything like this with their kids!
Post by whitepicketfence on Aug 28, 2012 7:19:55 GMT -5
DH and I were both horrible with money in our late teens and early 20's. So much so, that we're still paying off our cc debt from this time. While my parents were always good at saving money, I was too stupid to listen when they tried to give me advice. They also didn't know much about investments or the need for insurance.
I've learned most of what I know about budgeting, saving for retirement, and paying off debt from MM. I also really liked the books Smart Couples Finish Rich and The Total Money Makeover. Even though this board tends to dislike Dave Ramsey, I feel that he gives great advice for those who don't even know where to start when it comes to personal finance.
We sat down last night and talked about what we feel like we need to do to get this under control. The issue isn't him or me - it's definitely a combination of both of us.
For now, we are going to sit down each week and decide together where our money will go. It feels like overkill to do it each week, but until we have a good grasp on where everything goes we think it's the best idea for us.
We are going to make an appt w/ a financial planner we know so we can figure out DH's 401k, or some kind of retirement fund.
We made a list of things we know will be coming up in september (bridal shower, running shoes for me, hair cut for me) and will work them into the budget each week as we can.
We just have to stay strong! We budgeted next week (we get paid this Thursday & i have a pretty good idea of how much DH's check will be)- we tried to think of everything that we would NEED.. we'll see how it goes.
My father always said that if you couldnt afford to pay for something right now, dont buy it. That has stuck in my mind. Both DH and my car were purchased new without financing and our home is also paid for. I shop sales, use coupons, pack our lunches, etc..... We are comfortable and are able to go on a nice vacation ( either a cruise, to an island or somethign like that) each year.
DH wasnt raised like me but likes that I know how to manage money so he is fine with me taking care of bills.
My parents taught me to be thrifty, but my HS economics teacher taught me to be smart. Some things he taught: Dollar cost averaging Roths vs 401k vs pensions Why you should take out only what you need in student loans, and to avoid subsidized loans if possible How to get $$for college ( which inspired me to open a small investment account with a company to be eligible for a scholarship--I won How to read a stock ticker and hollow the market Budgeting
And so much more. I would have been lost without that,
I always have. My mom isn't even sure where I got it because neither of us remember her teaching me. I have no idea if my dad knows finances or not. I know how to budget. I use excel to keep track of my purchases. It makes it so much easier to balance my checkbook. My mom even had me create a spreadsheet for her so she could do it and loves it. I am able to set aside money in savings and save up for the big things, trying not to use credit cards at all. I only had to take out loans for my first 2 years of college, and used my earnings from co-op jobs for the final 3 years. Quality vs cost. Knowing that sometimes you pay a little extra at first, but in the long run it is a better investment I don't know much about investing though. That is my weak point.