Paying off Credit Cards - Page 2

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Posted: 8/27/2009 6:29:00 AM EDT

[#1]

Pay them off ASAP.

Posted: 8/27/2009 6:33:53 AM EDT

[#2]

Quoted:
Pay them off ASAP.

And there it is.

Anyone that thinks it is a good idea to pay 18% interest on a cup of Starbucks they drank 2 years ago, is nuts.

Posted: 8/27/2009 6:42:08 AM EDT

[#3]

Getting your house in financial order will improve almost every aspect of your life: health/stress, finances, relationships, etc.

1. Get a 3-6 month "buffer" in the bank to cover your expenses if you lose your job.

2. Pay off your highest interest cards / loans first.

3. Don't close the accounts, keep them open for credit rating.

4. Put *something* on each card at least once a month. Gas, groceries, whatever. Paid it off at the end of the month... ALWAYS. Never pay the minimum.

Good luck.

Posted: 8/27/2009 6:46:55 AM EDT

[#4]

CCCS and other debt mgmt services will ask you to stop using all but one 'emergency' CC, then they will negotiate a lower interest rate than you can negotiate with the cc company, and set up a monthly payment that you can afford. The payment you send to the debt mgmt svc. starts to pay off the smaller CC bills first, then as those are paid off, your monthly rate does NOT go down, but rather, more of the money is going to pay off the higher CC debt cards. Over time, this process accumulates paying more and more off until you are out of debt. Usually 4-5 years.

There is a really high failure to complete a CCCS program, as most folks don't have the discipline to stick with it, OR they cheat, get a new CC for a impulse buy, and you are thrown off the wagon, interest rates go back up etc.

Sit down, calculate a detailed house hold budget, and stick with it. IF you have a lot of CC debt, [$20k or more] and are having problems making the min. payments, a debt mgmt. service may be your only hope short of bankruptcy.

YMMV

Posted: 8/27/2009 6:50:19 AM EDT

[#5]

Quoted:

3. Don't close the accounts, keep them open for credit rating.

4. Put *something* on each card at least once a month. Gas, groceries, whatever. Paid it off at the end of the month... ALWAYS. Never pay the minimum.

No offense Ken, but I often see this bad advice.

I don't care what my credit rating is. A "credit rating" is a "How much I love to give interest to banks" score.

I hope my credit rating is Zero.

I don't borrow money. I pay cash.

Posted: 8/27/2009 6:53:13 AM EDT

[#6]

Quoted:
CCCS and other debt mgmt services will ask you to stop using all but one 'emergency' CC, then they will negotiate a lower interest rate than you can negotiate with the cc company, and set up a monthly payment that you can afford.

No offense Jim, but "debt consolidation" services are a rip-off.

Debt consolidation does not fix the problem. It treats a symptom.

The real problem is spending more than you make. "Lowering your monthly payments" will only allow the drunk to get more to drink.

The solution is to pay off your debts with the Debt Snowball, and then quit borrowing money.

That is the path to Financial Freedom.

Posted: 8/27/2009 6:59:53 AM EDT

[#7]

Quoted:

Quoted:
CCCS and other debt mgmt services will ask you to stop using all but one 'emergency' CC, then they will negotiate a lower interest rate than you can negotiate with the cc company, and set up a monthly payment that you can afford.

No offense Jim, but "debt consolidation" services are a rip-off.

Debt consolidation does not fix the problem. It treats a symptom.

The real problem is spending more than you make. "Lowering your monthly payments" will only allow the drunk to get more to drink.

The solution is to pay off your debts with the Debt Snowball, and then quit borrowing money.

That is the path to Financial Freedom.

None taken, I'm just saying what those types of services are doing, and how hard it is to make them work out. Many folks in this economy are actually living off their CCs and are on a fast track to a financial melt down. A consumer credit counseling service is, for many, the first step towards either breaking the cycle, and the payoff from the service is lowered interest rates, or the other option for many is bankruptcy.

I'm not promoting one over the other, just saying, thats all. Everyone's financial situation is different. It takes time to get into CC debt, and it takes even longer to get out of it unless you have a plan, and can stick to it. Many folks can't live within their means, and use CCs to extend their lifestyles. BAD, BAD voodoo.

Posted: 8/27/2009 7:13:36 AM EDT

[#8]

Quoted:

Quoted:
As Dave Ramsey would say

Get out of debt the same way you learned to walk, one step at a time.

$1,000 to start an Emergency Fund

Pay off all debt using the Debt Snowball (pay off debts smallest to largest, using payments from paid off debts on the next bill)

3 to 6 months of expenses in savings

Invest 15% of household income into
Roth IRAs and pre-tax retirement

College funding for children

Pay off home early
Build wealth and give

Oh great Dave Ramsey. Now I know how to do it. I love how people give advice akin to "pay this off, and pay that off"

OK...give me the money, and I'll do it...

With that attitude, it's no wonder you have money/financial problems.

I never said that, you made an assumption for some reason...don't know why... I don't have money problems. I am just making an observation. It seems like a major disconnect to me. To tell people to put 3-6 months of expenses into savings when they don't even make enough to live on seems a bit shortsighted.

Advice must be in line with capabilities. If people are living paycheck to paycheck...how does one put away 15% for retirement? Or save for a child's eduaction?

I find it hilarious when people WITH disposable income give financial advice to people without it. It's like people from two different planets trying to communicate...they can't understand each other.

Posted: 8/27/2009 7:14:28 AM EDT

[#9]

It's very simple: Always pay off high-interest debts before saving.

Posted: 8/27/2009 7:18:21 AM EDT

[#10]

No offense taken, Sir.

A huge part of your credit rating is the ratio between available credit and debt carried. A better ratio means a better credit rating.

I put lots on my cards ever month - and promptly pay it all off. No interest paid to the card issuer. Some people don't have the disicipline to do it. No shame in that - just find a method that works for you and keeps those cards open and the ratio high in your favor.

At some point, everyone will likely need to borrow even if it's just for a house or a refinancing of a house. It's good strategy to be prepared for that eventuality.

Worse yet, many insurance companies are using credit ratings to determine car insurance rates as there is a statistical correlation between credit rating and insurance risk. I don't agree with it, but I understand that it's based on a "holistic" approach to measuring an individual's risk.

best to you!

Posted: 8/27/2009 7:22:36 AM EDT

[#11]

Quoted:
As Dave Ramsey would say

Get out of debt the same way you learned to walk, one step at a time.

$1,000 to start an Emergency Fund

Pay off all debt using the Debt Snowball (pay off debts smallest to largest, using payments from paid off debts on the next bill)

3 to 6 months of expenses in savings

Invest 15% of household income into
Roth IRAs and pre-tax retirement

College funding for children

Pay off home early
Build wealth and give

Win.

Once the wife and I started doing this, we put a budget in place and bam 38% of our takehome pay goes to debt every month. We'll have that shit killed by next summer.

Just think what getting rid of debt does to your monthly income. $10,000 CC debt = $200 minimum payment and now the CC companies have the right to raise that to $500 minimums for $10000 debt. And then there's the car payments... #1 thing keeping America poor.

Posted: 8/27/2009 7:29:44 AM EDT

[#12]

Quoted:

Quoted:
As Dave Ramsey would say

Get out of debt the same way you learned to walk, one step at a time.

$1,000 to start an Emergency Fund

Pay off all debt using the Debt Snowball (pay off debts smallest to largest, using payments from paid off debts on the next bill)

3 to 6 months of expenses in savings

Invest 15% of household income into
Roth IRAs and pre-tax retirement

College funding for children

Pay off home early
Build wealth and give

Oh great Dave Ramsey. Now I know how to do it. I love how people give advice akin to "pay this off, and pay that off"

OK...give me the money, and I'll do it...

With that attitude, it's no wonder you have money/financial problems.

I never said that, you made an assumption for some reason...don't know why... I don't have money problems. I am just making an observation. It seems like a major disconnect to me. To tell people to put 3-6 months of expenses into savings when they don't even make enough to live on seems a bit shortsighted.

Advice must be in line with capabilities. If people are living paycheck to paycheck...how does one put away 15% for retirement? Or save for a child's eduaction?

I find it hilarious when people WITH disposable income give financial advice to people without it. It's like people from two different planets trying to communicate...they can't understand each other.

My understanding is that those are steps to take- and that is the order to take them. First find a way to scrape together $1k, then start the debt snowball.

Having never had money problems i guess it makes it hard for me to comment- or does it make me qualified to comment?

only debt i have is my mortgage- and i pay extra on it every month. I hate owing people/corporations money.

I think Ramsay's best advice that he gives it to avoid resturants and drive old cars. I know several friends who are in deep debt, and still go out to eat on credit cards regularly. How does $40 on one meal for two people make any sense? My wife and i eat on a max of $80 per week. If we go out to eat it comes out of our $150 monthly fun budget. I find it's about setting priorities, making a plan, and sticking with it.

Car payments are another thing that really kills people money-wise. I love my 10 year old truck and will hopefully drive it another 10 years. That as opposed to me previously mentioned friends who aren't happy with anything more than about 2 years old.

Ramsay's advice really isn't bad imo. All of the things i mentioned above are things he regularly tells people to do on his show.

So OP- put together something of an emergency fund and pay those suckers off. The interest rate if i carry a balance on my card is 21.9%- that's an insane amount of money to give them on a cup of coffee from 2 years ago as old painless mentioned.

Posted: 8/27/2009 7:47:41 AM EDT

[#13]

Quoted:
Your "credit score" is virtually meaningless.

Ok if you say so

I've heard some whoppers on ARFcom but this one takes the cake.

Posted: 8/27/2009 7:51:30 AM EDT

[#14]

Quoted:

Quoted:
Your "credit score" is virtually meaningless.

Ok if you say so

I've heard some whoppers on ARFcom but this one takes the cake.

It actually is meaningless. For a mortgage, they can underwrite the thing based on your income and personal finances. Maybe you get popped a little on the rate. maybe not.

Exactly when the hell else would you need a good debt credit score?

Posted: 8/27/2009 7:52:01 AM EDT

[#15]

You promised to pay the bill so pay it. Your credit is your word!!! If your credit is no good, then neither is your word.
Always pay off the one with the highest interest rate first even if you have smaller bills that you can pay off immediately. Your "emergency fund" should be used to pay for the high interest debt. Pay minimums on everything else until the one with the highest interest is paid off. You can actually go backwards faster than fowards if you don't do it this way.

If you have too much cash on hand, you won't even qualify for all that gubbmint help and you'll keep falling into a bigger hole.

Posted: 8/27/2009 7:54:09 AM EDT

[#16]

Quoted:

Quoted:
Your "credit score" is virtually meaningless.

Ok if you say so

I've heard some whoppers on ARFcom but this one takes the cake.

Let me re-state that so you can understand it.

Your credit score is meaningless, if you don't intend to borrow money.

I don't borrow money, so I don't care what my credit score is.

Posted: 8/27/2009 7:54:50 AM EDT

[#17]

Quoted:

Quoted:

3. Don't close the accounts, keep them open for credit rating.

4. Put *something* on each card at least once a month. Gas, groceries, whatever. Paid it off at the end of the month... ALWAYS. Never pay the minimum.

No offense Ken, but I often see this bad advice.

I don't care what my credit rating is. A "credit rating" is a "How much I love to give interest to banks" score.

I hope my credit rating is Zero.

I don't borrow money. I pay cash.

That won't work for most of us. It might work fine for a millionaire.

But, Auto loans... Home loans... Are real things for most people.

And having stood credit score secures you a loan with a lower APR.

Posted: 8/27/2009 7:54:51 AM EDT

[#18]

Quoted:
Pay them off and avoid them like the plague…
Credit is what has fucked up our economy…
Credit is not wealth, its debt and debt is BAD!

I respectfully disagree.

Debt is a tool. It can be good or bad, depending on how it is used.

Posted: 8/27/2009 7:59:02 AM EDT

[#19]

Quoted:

Quoted:

3. Don't close the accounts, keep them open for credit rating.

4. Put *something* on each card at least once a month. Gas, groceries, whatever. Paid it off at the end of the month... ALWAYS. Never pay the minimum.

No offense Ken, but I often see this bad advice.

I don't care what my credit rating is. A "credit rating" is a "How much I love to give interest to banks" score.

I hope my credit rating is Zero.

I don't borrow money. I pay cash.

That won't work for most of us. It might work fine for a millionaire.

But, Auto loans... Home loans... Are real things for most people.

And having stood credit score secures you a loan with a lower APR.

But that's what people don't get. you don't have to be a millionaire to pay cash for a car. You just have to plan for it and you don't get to drive a nice new car until you can afford one. (for example my truck is 14 yrs old. It runs fine and could be purchased for about $2500) Culture tells you you have to borrow to have nice things. Common sense tells me you have to budget your finances and save money if you ever want to afford nice things.

Read this for an actionable plan:
Dave Ramsey TMMO

Also in regards to your "millionaire" comment, the following book details lots of millionaires. Most of them get there by working normal jobs but living within their means, saving, and paying with cash. It's a great book:
Millionaire Next Door

Posted: 8/27/2009 8:01:55 AM EDT

[#20]

Quoted:

Exactly when the hell else would you need a good debt credit score?

Employers, insurance companies, and landlords sometimes look at credit scores.

Posted: 8/27/2009 8:02:53 AM EDT

[#21]

Quoted:

I never said that, you made an assumption for some reason...don't know why... I don't have money problems. I am just making an observation. It seems like a major disconnect to me. To tell people to put 3-6 months of expenses into savings when they don't even make enough to live on seems a bit shortsighted.

Advice must be in line with capabilities. If people are living paycheck to paycheck...how does one put away 15% for retirement? Or save for a child's eduaction?

I find it hilarious when people WITH disposable income give financial advice to people without it. It's like people from two different planets trying to communicate...they can't understand each other.

Okay, FreeFloater, you seem to be genuinely interested, so I will explain it some more.

If a person says, "I don't have enough money to live on", what that really means is, "I don't have enough money to live in the style I am presently living."

The solution: Lower your standard of living, to a level where you have enough money to live on.

If you have a $450 a month car note (typical, I believe), then sell that car and buy a beater for $1,500 and drive that for a while.

Have a house note of $1,500 per month? Sell the house and rent for a while.

Find that you are spending several hundred dollars a month on eating out? The eat rice and beans, beans and rice at home for a while.

I'm not talking about for the rest of your life, but just until you pay off your debt and can then pay cash for things. Set up a budget and live by it. Get "gazelle intense" about getting debt free and you will be amazed at how quickly you can get control of your life.

Dave says he talks to people that make $10,000 a year, others that make $50,000 a year and others that make $100,000 a year, and all are having financial problems. He asks them, "What's the problem?", and they all answer the same....."I don't make enough money."

But the are all wrong. Their real problem is that they are living above their standard of living and spending more than they make. The solution is to get control of your debt and life, and live on what you make.

It is not impossible. Many of us have done it.

Posted: 8/27/2009 8:04:15 AM EDT

[#22]

Quoted:
whatever you do ... don't act responsibly , that fucks up your credit score.

Well shit, isn't that the point? Let the .gov pay it off for you?

Posted: 8/27/2009 8:06:57 AM EDT

[#23]

My CC balance was in the stratosphere five years ago. I have been paying on it and not going crazy "needing" things for five years. It takes learning some discipline, but you can learn to live with using very little credit. I paid off three of my cards last month. I had already paid off several others. I now owe a whopping $438.01 on one card. It goes away next month. I feel like that dude that said. "Free at last, free at last. Thank God I am free at last."

Posted: 8/27/2009 8:10:41 AM EDT

[#24]

Quoted:

That won't work for most of us. It might work fine for a millionaire.

But, Auto loans... Home loans... Are real things for most people.

Sure they are.

But it is a false idea that you "have" to borrow money for a car.

Why not save $1,500 and buy a beater and drive that for a while. Take the usual car note of $400 a month, and put that in savings each month. At the end of the year, you will have $4,800 in the account. Sell the beater and use the $1,000 you get from it to add to the $4,800 and pay cash for a $5,800 car. That won't be to bad of a car.

Then continue to pay a car note to your savings account for two years and then you will have $9,600 in the account. If the old car is depreciated to $3,000, then sell it and you can pay cash for a $12,600 car. It will be a nice one, too.

Keep this up and in a few years, you can pay cash for a very nice car every few years.

Why get in debt. Why borrow money? Thinking that you "just have to" is believing a lie.

You can get out of debt and pay cash for things.

Posted: 8/27/2009 8:12:51 AM EDT

[#25]

Quoted:

Quoted:

As Dave Ramsey would say
Get out of debt the same way you learned to walk, one step at a time.

$1,000 to start an Emergency Fund

Pay off all debt using the Debt Snowball (pay off debts smallest to largest, using payments from paid off debts on the next bill)

3 to 6 months of expenses in savings

Invest 15% of household income into

Roth IRAs and pre-tax retirement

College funding for children

Pay off home early

Build wealth and give

Oh great Dave Ramsey. Now I know how to do it. I love how people give advice akin to "pay this off, and pay that off"

OK...give me the money, and I'll do it...

With that attitude, it's no wonder you have money/financial problems.

+1

Posted: 8/27/2009 8:14:11 AM EDT

[#26]

Quoted:

Quoted:

I never said that, you made an assumption for some reason...don't know why... I don't have money problems. I am just making an observation. It seems like a major disconnect to me. To tell people to put 3-6 months of expenses into savings when they don't even make enough to live on seems a bit shortsighted.

Advice must be in line with capabilities. If people are living paycheck to paycheck...how does one put away 15% for retirement? Or save for a child's eduaction?

I find it hilarious when people WITH disposable income give financial advice to people without it. It's like people from two different planets trying to communicate...they can't understand each other.

Okay, FreeFloater, you seem to be genuinely interested, so I will explain it some more.

If a person says, "I don't have enough money to live on", what that really means is, "I don't have enough money to live in the style I am presently living."

The solution: Lower your standard of living, to a level where you have enough money to live on.

If you have a $450 a month car note (typical, I believe), then sell that car and buy a beater for $1,500 and drive that for a while.

Have a house note of $1,500 per month? Sell the house and rent for a while.

Find that you are spending several hundred dollars a month on eating out? The eat rice and beans, beans and rice at home for a while.

I'm not talking about for the rest of your life, but just until you pay off your debt and can then pay cash for things. Set up a budget and live by it. Get "gazelle intense" about getting debt free and you will be amazed at how quickly you can get control of your life.

Dave says he talks to people that make $10,000 a year, others that make $50,000 a year and others that make $100,000 a year, and all are having financial problems. He asks them, "What's the problem?", and they all answer the same....."I don't make enough money."

But the are all wrong. Their real problem is that they are living above their standard of living and spending more than they make. The solution is to get control of your debt and life, and live on what you make.

It is not impossible. Many of us have done it.

+ 1 This is where the wife and I are now. We are pairing back our lifestyle to pay off debts. We just emptied out a storage unit to free up $85 a month, Direct TV is gone as well. Many people live well beyond their means, we have done it for a long time and are now are playing catch up just to live within our means.

Posted: 8/27/2009 8:14:23 AM EDT

[#27]

oops, stupid work computer...

Posted: 8/27/2009 8:14:28 AM EDT

[#28]

oops, stupid work computer...

Posted: 8/27/2009 8:14:42 AM EDT

[#29]

oops, stupid work computer...

Posted: 8/27/2009 8:14:52 AM EDT

[#30]

oops, stupid work computer...

Posted: 8/27/2009 8:15:00 AM EDT

[#31]

oops, stupid work computer...

Posted: 8/27/2009 8:15:03 AM EDT

[#32]

Quoted:
Why get in debt. Why borrow money? Thinking that you "just have to" is believing a lie.

You can get out of debt and pay cash for things.

How you propose paying for medical school or law school?

Bear in mind that most law schools prohibit students from working full time.

Posted: 8/27/2009 8:15:04 AM EDT

[#33]

oops, stupid work computer...

Posted: 8/27/2009 8:15:16 AM EDT

[#34]

oops, stupid work computer...

Posted: 8/27/2009 8:15:25 AM EDT

[#35]

oops, stupid work computer...

Posted: 8/27/2009 8:15:48 AM EDT

[#36]

oops, stupid work computer...

Posted: 8/27/2009 8:16:11 AM EDT

[#37]

Quoted:
whatever you do ... don't act responsibly , that fucks up your credit score.

I know right..

Posted: 8/27/2009 8:18:07 AM EDT

[#38]

Quoted:

Quoted:
As Dave Ramsey would say

Get out of debt the same way you learned to walk, one step at a time.

$1,000 to start an Emergency Fund

Pay off all debt using the Debt Snowball (pay off debts smallest to largest, using payments from paid off debts on the next bill)

3 to 6 months of expenses in savings

Invest 15% of household income into
Roth IRAs and pre-tax retirement

College funding for children

Pay off home early
Build wealth and give

Oh great Dave Ramsey. Now I know how to do it. I love how people give advice akin to "pay this off, and pay that off"

OK...give me the money, and I'll do it...

With that attitude, it's no wonder you have money/financial problems.

+1

Oh look...another assumption maker who jumps to conclusions...

Posted: 8/27/2009 8:33:32 AM EDT

[#39]

Tag.

Posted: 8/27/2009 8:37:43 AM EDT

[#40]

Quoted:

Quoted:
Why get in debt. Why borrow money? Thinking that you "just have to" is believing a lie.

You can get out of debt and pay cash for things.

How you propose paying for medical school or law school?

Bear in mind that most law schools prohibit students from working full time.

That's an investment that you have to weigh out carefully. There's a law school close to me that has a degree plan for full time workers. Never go to an expensive private school. When you're in school and you do take out loans, live like you're poor and don't borrow the max living expense allowance, etc, etc. Obviously taking on some debt for a degree that makes you a high income earner in the future is fine. But most people take on too much debt in graduate school that they could have avoided.

As a current professional considering law school some day, I was about to take the LSAT and start getting ready to go. But then we got on our plan and it would be irresponsible to quit my job and jump into school that required debt. So now I'm working on my finances and should have enough to pay for all of law school within 5 years. Even if I decide to make the leap in 3 years I'll have enough stacked up to avoid most of the debt if not all.

And keep in mind there's lots of lawyers that don't make that much money. If I went, I would end up being that type so it's important for me to keep my finances in order so I wouldn't end up having to take some awful job in a firm in a large city just to pay my debts.

Posted: 8/27/2009 8:43:18 AM EDT

[#41]

Quoted:

Quoted:
Why get in debt. Why borrow money? Thinking that you "just have to" is believing a lie.

You can get out of debt and pay cash for things.

How you propose paying for medical school or law school?

Bear in mind that most law schools prohibit students from working full time.

That's an investment that you have to weigh out carefully. There's a law school close to me that has a degree plan for full time workers. Never go to an expensive private school. When you're in school and you do take out loans, live like you're poor and don't borrow the max living expense allowance, etc, etc. Obviously taking on some debt for a degree that make you a high income earner in the future is fine. But most people take on too much debt in graduate school that they could have avoided.

As a current professional considering law school some day, I was about to take the LSAT and start getting ready to go. But then we got on our plan and it would be irresponsible to quit my job and jump into school that required debt. Do now I'm working on my finances and should have enough to pay for all of law school within 5 years. Even if I decide to make the leap in 3 years I'll have enough stacked up to avoid most of the debt if not all.

I concur with the part in bold. But people keep saying debt is bad, debt is unnecessary, and/or that cash is the way to do things.

Saying debt is bad is like saying guns are bad.

Saying that debt is unnecessary is like saying guns are unnecessary.

Saying that cash is the way to do things is like saying the police are the way to protect yourself and your family.

Posted: 8/27/2009 8:46:29 AM EDT

[#42]

Quoted:

Credit Card debt is never good to have.

I pay down my cards and save a little each month. Look at it like this:

You lose your job, you pay the minimum due while you can but you run out of money. Now you dont have any money and you still owe money.

If you pay off your cards you wont owe anything but you wont have much saved up. I would rather be poor than in debt and poor.

Posted: 8/27/2009 8:48:28 AM EDT

[#43]

Quoted:

Your "credit score" is virtually meaningless.

No it is not.

Go ahead and never pay attention to it and try to get some type of credit, either a CC, loan, car loan, or mortgage.
Good luck getting it.

Posted: 8/27/2009 8:56:25 AM EDT

[#44]

the best advise is to transfer balances to a zero balance card. If you cannot do that, then go to a bank and get a loan at 5-7% and pay on it.

Credit cards are raising up into the 20% range now and you will never pay it down. well over half would go to finance charges.

Holy crap a TEN TAP up there

Posted: 8/27/2009 9:00:24 AM EDT

[#45]

Quoted:

Quoted:
Your "credit score" is virtually meaningless.

No it is not.

Go ahead and never pay attention to it and try to get some type of credit, either a CC, loan, car loan, or mortgage.

Good luck getting it.

CC - I use credit cards only when they give me rewards (normally cashback) for doing so. I have no idea what the interest rate on my credit card is, nor do I care.
Loan - What do I need a loan for? Instead of paying payments every month, I'm saving it. When I want to buy something, I check to see if I have the cash to do so. If I do, then yay! If not, then I save up until I can afford it.
Car Loan - There's no reason to have a car loan. If you can't afford to purchase the car with cash in hand, why buy it? Invest your money for 5 years, earn interest on it and then purchase a new car. Doing it that way gets you a more expensive car for less money than if you had purchased one 5 years ago and paid interest on it.
Mortgage Loan - 2 words: Manual Underwriting. Any mortgage company worth their salt is capable of doing manual underwriting. They prefer not to because it's a lot easier to simply look at your FICO, but they will still do it.

Posted: 8/27/2009 9:00:28 AM EDT

[#46]

Quoted:

Quoted:
Why get in debt. Why borrow money? Thinking that you "just have to" is believing a lie.

You can get out of debt and pay cash for things.

How you propose paying for medical school or law school?

Bear in mind that most law schools prohibit students from working full time.

That's an investment that you have to weigh out carefully. There's a law school close to me that has a degree plan for full time workers. Never go to an expensive private school. When you're in school and you do take out loans, live like you're poor and don't borrow the max living expense allowance, etc, etc. Obviously taking on some debt for a degree that make you a high income earner in the future is fine. But most people take on too much debt in graduate school that they could have avoided.

As a current professional considering law school some day, I was about to take the LSAT and start getting ready to go. But then we got on our plan and it would be irresponsible to quit my job and jump into school that required debt. Do now I'm working on my finances and should have enough to pay for all of law school within 5 years. Even if I decide to make the leap in 3 years I'll have enough stacked up to avoid most of the debt if not all.

I concur with the part in bold. But people keep saying debt is bad, debt is unnecessary, and/or that cash is the way to do things.

Even Dave Ramsey supports getting a home loan to buy a home. But such a loan is a "secured loan", meaning that if forced to by circumstances, you could sell the home to pay off the loan.

I can't answer your question about med school. I foolishly took out a college loan for my first 2 years of college, and had a hard time paying them off. After a hiatus, I went back, working full time, and completed my college education at night school, paying cash for it as I went. It can be done.

Saying debt is bad is like saying guns are bad.

Saying that debt is unnecessary is like saying guns are unnecessary.

Saying that cash is the way to do things is like saying the police are the way to protect yourself and your family.

Those comments do not make sense.

Posted: 8/27/2009 9:00:39 AM EDT

[#47]

Quoted:

Quoted:
Your "credit score" is virtually meaningless.

No it is not.

Go ahead and never pay attention to it and try to get some type of credit, either a CC, loan, car loan, or mortgage.

Good luck getting it.

Yep, some day people will know your promises don't mean jack.

Posted: 8/27/2009 9:34:40 AM EDT

[#48]

Quoted:

Quoted:
As Dave Ramsey would say

Get out of debt the same way you learned to walk, one step at a time.

$1,000 to start an Emergency Fund

Pay off all debt using the Debt Snowball (pay off debts smallest to largest, using payments from paid off debts on the next bill)

3 to 6 months of expenses in savings

Invest 15% of household income into
Roth IRAs and pre-tax retirement

College funding for children

Pay off home early
Build wealth and give

Oh great Dave Ramsey. Now I know how to do it. I love how people give advice akin to "pay this off, and pay that off"

OK...give me the money, and I'll do it...

With that attitude, it's no wonder you have money/financial problems.

I never said that, you made an assumption for some reason...don't know why... I don't have money problems. I am just making an observation. It seems like a major disconnect to me. To tell people to put 3-6 months of expenses into savings when they don't even make enough to live on seems a bit shortsighted.

Advice must be in line with capabilities. If people are living paycheck to paycheck...how does one put away 15% for retirement? Or save for a child's eduaction?

I find it hilarious when people WITH disposable income give financial advice to people without it. It's like people from two different planets trying to communicate...they can't understand each other.

I think you misunderstand the concept.
1.Cut spending to a minimum.You have to get your spending below your income. That's paramount. Keep paying the minimums until you you can save up $1000 cash.

2. Order your debt from smallest to biggest. apply that money you were saving each month for your smallest bill, on top of the minimums you were already paying. When that smallest is paid off, then apply those payments to the next, etc.

3. After you have all your debt, except house paid, then you build your savings up to 3-6 month of expenses.

He's not saying do all those things.at once.

Posted: 8/27/2009 10:06:30 AM EDT

[#49]

Quoted:

Quoted:
As Dave Ramsey would say

Get out of debt the same way you learned to walk, one step at a time.

$1,000 to start an Emergency Fund

Pay off all debt using the Debt Snowball (pay off debts smallest to largest, using payments from paid off debts on the next bill)

3 to 6 months of expenses in savings

Invest 15% of household income into
Roth IRAs and pre-tax retirement

College funding for children

Pay off home early
Build wealth and give

Oh great Dave Ramsey. Now I know how to do it. I love how people give advice akin to "pay this off, and pay that off"

OK...give me the money, and I'll do it...

With that attitude, it's no wonder you have money/financial problems.

I never said that, you made an assumption for some reason...don't know why... I don't have money problems. I am just making an observation. It seems like a major disconnect to me. To tell people to put 3-6 months of expenses into savings when they don't even make enough to live on seems a bit shortsighted.

Advice must be in line with capabilities. If people are living paycheck to paycheck...how does one put away 15% for retirement? Or save for a child's eduaction?

I find it hilarious when people WITH disposable income give financial advice to people without it. It's like people from two different planets trying to communicate...they can't understand each other.

I think you misunderstand the concept.
1.Cut spending to a minimum.You have to get your spending below your income. That's paramount. Keep paying the minimums until you you can save up $1000 cash.

2. Order your debt from smallest to biggest. apply that money you were saving each month for your smallest bill, on top of the minimums you were already paying. When that smallest is paid off, then apply those payments to the next, etc.

3. After you have all your debt, except house paid, then you build your savings up to 3-6 month of expenses.

He's not saying do all those things.at once.

#2 above is bad advise. Pay off the ones with the highest interest first, regardless of size. Pay the minimum on the rest.

Posted: 8/27/2009 10:41:41 AM EDT

[#50]

Quoted:

2. Order your debt from smallest to biggest. apply that money you were saving each month for your smallest bill, on top of the minimums you were already paying. When that smallest is paid off, then apply those payments to the next, etc.

#2 above is bad advise. Pay off the ones with the highest interest first, regardless of size. Pay the minimum on the rest.

Nope, he is right.

He has found that one of the most important things for a person with financial problems is for them to "see some results" as soon as possible. By paying off the smallest, you get quick results.

Then you take the minimum payment you were paying on the smallest and any extra cash you can find and apply it to the next smallest debt. When it is paid off, you take the amount you were paying on the smallest two and apply it and any extra cash you can find on the third smallest.

See? A "snowball effect".

You see quick results, and free up cash to apply to the next one as you go. The small difference between the credit card interest amounts doesn't make much difference, especially if you pay them off fairly quickly.

His method has worked for many thousands of folks.

[ARCHIVED THREAD] - Paying off Credit Cards (Page 2 of 4)

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