33 replies to this topic

[Gudziel]

Monthly:

Car Gas - $120
Internet/Phone/Cable - $250
Rent - $330
School Loans - $421
Insurance - $108
Credit Union - $100
Company Stock - $100
Food - $200
CC Debt % remaining - 70%

Left in Pay - $1500


I'm 29yrs old and CANNOT save money if my life depended on it. I have NO emergency fund at all. I am SLOWLY paying off credit card debt. But even then, I am only putting in maybe double of the minimum and trying not to touch the cards until I pay them off. Car is paid off. My 401k is maxed already prior to getting the $1500/month left of free money. My internet/phone/cable is my way of indulging myself. I want to pay off my CC debt ASAP, as most of them are toy cards and only one's limit is over $1k.

What would be the best way to save money in the long run? How do you not touch it? I know these questions are childish, but I'm immature with money. I have no responsibility when it comes to saving money. Also, the money that goes straight from each pay into a company partnered credit union is never given the chance to grow because I end up taking from it for some reason.

What would be the best way for me to split my money, in your mind? What would be the best percentage of money to place into a savings, money to put towards CC debt and money to hold on the side each month for just miscellaneous expenses? Please help?

[hegemony]

The first thing you should do is make a very detailed budget. Then you should see what expenses you can lower, such as shopping around for insurance, lowering cable bills (your cable/phone item above is higher than some consumers' car payments! ). Indulgences are better left for after you feel more comfortable with your finances.

There is a sticky in this forum on reducing expenses.

I would then make a list of your consumer debt and rank it in order of APR. Start paying as much extra a month to the highest APR debt. You can exclude school loans from this rank order if you are mostly concerned with paying credit cards off first. Are your school loans consolidated or have you thought about changing your payment plan?

what are the balances on your cards and corresponding APRs?

Why are you buying company stock?

[Gudziel]

Thanks Hegemony for your reply.

I should have clarified that my cell phone plan and FIOS package are all on the same bill. It's actually cheaper than if I had stayed with Comcast because they just jacked my cable/internet bill with them up $50. So I dropped them IMMEDIATELY before they could charge me four days on the new bill. And since I get a discount through my company with Verizon, it is a better move. I'm locked into a two year contract with Verizon now, so changing it pretty much leaves me forced to pay any fees.

As for the CC's and APR's, I'll have to gather that information together. I'm at work right now on lunch so that will be a bit tough to do. But I did download that CC spreadsheet which I will use to figure out the better means to attack.

I've been placing stock into the company since I started here seven years ago. I put in and they match it, up to a certain point of course. It was just a benefit to have matched stock by my company as well, so I thought that in the long run this was an advantage I should take use of.

[ArchonInitiative]

I've been placing stock into the company since I started here seven years ago. I put in and they match it, up to a certain point of course. It was just a benefit to have matched stock by my company as well, so I thought that in the long run this was an advantage I should take use of.

It's nice to be able to have an instant return on your stock purchase. You want to make sure you invest in other things, too. The biggest stockholder in your company still has other investments, and so should you. Diversify.

Unless you have a lot of points on your license, or you are driving some Porsche or something, I guarantee you can find better liability coverage. If you are still carrying full coverage, that is something to think about as well.

[Gudziel]

See, if someone told me "Here is $100, make it last." I think I could honestly do it. But I know that I have these other accounts available and someone saying that is not true. I don't know why or how I do it, I just do.

Is having $1500 left a month after all of my main worries (except CC debt) is taken care of, a horrible thing? I just need someone to tell me from the outside looking in. I'm not frugal by any means. I love my gadgets. I make all of my payments on time and my credit rating is slowly rising.

Looking back into a spreadsheet I have, I have about $4k total in credit card debt over 7 cards. Every pay I have $350 direct deposited (currently) by my company into an ING account. This account is specifically used for CC payments.

I will do what Hegemony suggests. Simply out of my respect for their knowledge.

But in the meantime, if you had $1500 to:
- pay off approx $4K CC debt
- place into emergency fund of $0
- use for miscellaneous expenses each month

How would you spread it out?

[Gudziel]

It's nice to be able to have an instant return on your stock purchase. You want to make sure you invest in other things, too. The biggest stockholder in your company still has other investments, and so should you. Diversify.

Unless you have a lot of points on your license, or you are driving some Porsche or something, I guarantee you can find better liability coverage. If you are still carrying full coverage, that is something to think about as well.

I do diversify. I try my best to stay on top of that. But staying on top of my spending is the TOUGHEST thing for me to do.

I know I have full tort coverage on my car which is now paid off and over 5yrs old. I have no points, only "fender bender" was due to ice which no damage was done to the back of the 18-wheeler, lol. So I got accident forgiveness. But that $108 insurance also includes renters insurance. Not sure if that matters or not.

[jv01]

I will do what Hegemony suggests. Simply out of my respect for their knowledge.

You say that as if you have a better idea. Well, what is it?

But in the meantime, if you had $1500 to:
- pay off approx $4K CC debt
- place into emergency fund of $0
- use for miscellaneous expenses each month

How would you spread it out?

$1000/month to the credit card and save the remainder; how much of that goes to E-fund vs. spending is up to you. Your CC debt can be GONE in as little as three months. Then you can start saving like crazy. Why not make this day arrive as soon as possible?

[Gudziel]

I will do what Hegemony suggests. Simply out of my respect for their knowledge.

You say that as if you have a better idea. Well, what is it?

But in the meantime, if you had $1500 to:
- pay off approx $4K CC debt
- place into emergency fund of $0
- use for miscellaneous expenses each month

How would you spread it out?

$1000/month to the credit card and save the remainder; how much of that goes to E-fund vs. spending is up to you. Your CC debt can be GONE in as little as three months. Then you can start saving like crazy. Why not make this day arrive as soon as possible?

I do not have any better ideas than Hegemony has provided. I meant I will look into it just because I highly respect ANYTHING that Hegemony suggests. Nothing negative or condescending meant behind it what-so-ever.

Ideally, I would love to place $1k into my CC debt asap, to clear it fast. I just wasn't sure if people would rather I gain an emergency fund along with paying off my debt, or get it over with, or what? And how much should I leave myself outside of the emergency fund/savings/CC debt for miscellaneous spending during each month.

[jv01]

You should already know how much your spending for "miscellaneous expenses" is. If not, as hegemony suggested do a budget NOW, going back at least a few months.

The CC debt is costing you interest every month, much more than you can make in a starter E-fund, and is affecting your credit utilization ratio. People seem to forget that if you do run into a short term need for funds, you can usually just use the CCs, and if that happens you're best off if the balance on them is as low as possible (zero is ideal).

Any perceived judgements on what people would "rather" have you do don't really matter. But the sooner YOU pay off YOUR debt, the sooner the day will come when YOU can start aggressively saving, and then you're not living paycheck to paycheck at all. (Also, your creditworthiness will improve more quickly.) Considering that was what you subtitled the thread, isn't that what you want to have happen as soon as possible? I suggested doing it within four months, which is really quite short compared to what some people here are facing, although you can go even faster. Back when I was in this situation I took a second job and essentially eliminated non-essential spending until my debt was gone.

[Gudziel]

Very true. I am just as excited to see my debt go down as I am to see it impact my score! With that said, everything you've said so far makes complete sense. I think I will go your route and get it all paid off as soon as possible. And I will use the credit card spreadsheet to figure our my best options. Now I need to think whether highest APR or lowest cards first is my best choice. I'm excited to do this.

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[Gudziel]

Actually, I do not think that it will matter if I go to APR or Lowest-Highest/Highest-lowest first. here is why:

Orchard #1 - $1090.00
Cap1 #1 - $730
Dell - $580
Hooters - $450
Cap1 #2 - $400
Best Buy - $290
Orchard #2 - $200

I think I'll pay off the lower ones first just to see more go at once. That will be a huge self esteem boost for myself. I'll begin in two weeks.

[jv01]

Yeah, with that many cards I'd knock out as many of them as possible at once. Fewer debts to keep track of, fewer stamps if you pay by mail, more tradelines reporting a zero balance and a higher "
number of things you got done".

[Gudziel]

I'm excited now. extremely exited. I just wish my pays were quicker!

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[jolla]

How do you not touch it?

I'm good at paying off debt, but I can't save money. To keep myself from my money, I max out 401k (not just to company match, but max it out to IRS guidelines) and I max out an IRA; that way I'm saving at least something.

[Gudziel]

How do you not touch it?

I'm good at paying off debt, but I can't save money. To keep myself from my money, I max out 401k (not just to company match, but max it out to IRS guidelines) and I max out an IRA; that way I'm saving at least something.

That's a goods idea. But I want to save for major purchases in my life. One such item would be a house. I would to at least like to start looking next spring.

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[jolla]

I also have money in savings accounts that are a pain to access. The hope is that my laziness will win over my impatience.

[Gudziel]

Haha. That's funny.

I figured it out on a spreadsheet and three cards will be paid in full starting next pay. After that the three cards remaining will be paid off.

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[ArchonInitiative]

Sounds like a plan, Gudziel. Please update us with your results.

[Gudziel]

Thanks. I will definitely do that.

I will have $500 left after my first round of payoffs. Then two more will be paid off the following month (second and third highest). After that I'm left with the biggest payoff to attack in July. Each month will leave me money left in my account to place a small amount (roughly $400) for anything that may come up, which I hope I won't EVER come up.

Once the cards are paid off, then it will be time to close the Orchard accounts and I can see exactly how much my FICO goes up after my 60-70% utilization goes down to 0-10%. Right now my EQ is at 640.

I'm anxious and excited for this to happen. July can not come by fast enough, and paying off my last card that month would be a GREAT birthday gift to myself.

Thanks everyone for your help and suggestions!

Oh, and I'm also looking forward to being in a position to look for a house in a year, which is a MAJOR accomplishment and turning point in my credit life (or my life in general)!!!!

[hegemony]

best of luck! be sure to update this thread with your progress as it will probably inspire others!

[Gudziel]

best of luck! be sure to update this thread with your progress as it will probably inspire others!

I definitely will Hegemony. Thanks for your help!

[Baddies4Breakfast]

Car is paid off. My 401k is maxed already prior to getting the $1500/month left of free money.

I dunno, paid off car, completely maxed out 401k ($17,000 a year right?), and THEN $1500/month left of free money? Give yourself some credit -- you're doing very well. Heck, that $1500/month can wipe out your credit card debt, build an emergency fund, then fund some IRA and other savings in a hurry. That's a lot to have left over. Stick with it, you're doing better than many.

Edited by Baddies4Breakfast, 26 April 2012 - 11:27 PM.

[Repairerer]

I also have money in savings accounts that are a pain to access. The hope is that my laziness will win over my impatience.

I do this too. I don't know if it's so much laziness as if needed I could ACH it in a day or two, but it helps with the psychology of "money we pay bills with" and "money we 'do not really' have."

[Gudziel]

Car is paid off. My 401k is maxed already prior to getting the $1500/month left of free money.

I dunno, paid off car, completely maxed out 401k ($17,000 a year right?), and THEN $1500/month left of free money? Give yourself some credit -- you're doing very well. Heck, that $1500/month can wipe out your credit card debt, build an emergency fund, then fund some IRA and other savings in a hurry. That's a lot to have left over. Stick with it, you're doing better than many.

Thank you for the words if encouragement. Very much appreciated. I just don't like not putting money into a savings, and especially not having an emergency fund. Its scary.

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[KYBOSH]

Kill the cable bill.
Watch TV online (internet) via your computer or a Hulu media box (~$80).