Debt reduction/payoff.

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bustednutz

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Its an ugly topic but one that we've all though about.

I have recently resolved myself to the fact that I have way too much debt and I need to pay it off.
I have excellent credit, and a really good job. But I have reached a level of debt that makes me very uncomfortable. Approx $22k in debt. Not including my car payment. Thats a low interest loan at 3.9% so I'm not including it here.

Why share this info with all of you? Well, because I think that people that are deep in debt sometimes feel ashamed of it. Don't want to face it. Procrastinate about it. etc....

I'm here to tell you that the sooner you have a plan, and stick to it, you'll start feeling relief. Just tallying it all up and making a decision to tackle it makes you feel a little better.

I've put myself on a 15 month plan and will be debt free June 2015. Like many others out there I've kicked myself for getting in this deep. It annoys me that all the money I'm gonna spend digging myself out could've gone to my 401k or another investment such as a mutual fund, college savings for my kid, etc... But once the debt is 100% GONE, then I'll be able to snowball money into such things.

This didn't all happen overnight mind you. It was a culmination of years of reckless spending, and telling myself I'd worry about it later. Well....later has arrived.
At first it was $5k in debt....no biggie. Then time passes and its 10k in debt....not to bad, I'll just throw an extra hundred at the monthly payment. Then $15k.....sticking head in sand. Now $22k.....Time to wake up.

I hope that my current experience can help some of you. And if you're in the same boat as me, I know it can fell incredibly overwhelming. Fear not my friends, we're gonna clean this mess up one way or another.
 
Quote:

And if you're in the same boat as me


You got a boat? j/k.

Kudos to you for realizing a problem exists and acting.
 
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The good thing is you've started, and approched it head on. Chances are you will never let it get that big again.
 
Originally Posted By: bustednutz
Approx $22k in debt.

Presumably this is on top of any mortgage that you may have?

In any case, having a sound plan is the first step. Glad you faced your demons and took that step.
 
How old are you?

I think those of us that lived through the era of 18% mortgage rates and other Super high interest rates learned how carrying debit can cramp your style.

No Debit, no more!
 
I'm 43. Have a 250k mortgage that I've refi'd twice and owe approx 190k on it at 4.5% on a 30 yr term. Low property taxes here as opposed to NY where I was originally from. Utilities are reasonable too. I tend to be a miser when it comes to the electric and water usage. Always buy store brands, etc...

I used the debt reduction calculator at Bankrate dot com. Very useful too. After housing expenses I can lay out an additional $1500/mo towards debt reduction. I honestly wish I could put it towards investing for the future, but this is something must be dealt with now. At my age I'm not really young anymore, not really old either. Kinda in the middle. So its time to act asap on this.
 
butednutz, you need to get on a budget for sure. start itemizing what you spend your money on. eating at restaurants, movies, vacations, smartphone plans, have an extra car with insurance, expensive cable tv package, constantly buying merchandise, etc???
what items are your splurging on? if you want help, you gotta fess up.
 
Cutehumor has hit the nail on the head. Keep more of your money and give less away for things that have no long term meaning. Cable TV is a great start. Go to a cheap phone plan as well. The Wall Street Journal a few years ago had an article about people worth one million or more. The one thing many had in common....almost no spending at all on things related to electronics (cable, expensive Internet, cell phone plas, etc).

I admire your effort to get this paid off. Bravo!!
 
Trust me, I'm on a strict budget. The entire past month I've been watching and itemizing every penny. Boomer, I don't do the whole "smartphone" thing. I have a 5 yr old "dumb phone" with a cheap plan that works just fine for me.

All that debt accumulated thru the course of approx 10 years. Whether it was moving expenses, new furnishings, a couple new bathrooms in the house, some TV's, restaurants, buying a car for my cancer stricken dad, braces for the kid, vacations, etc...

But I'm not going back to that debt lifestyle again. I can only hope that other people my age that are in debt do the same thing and soon. I want to take those debt payoff funds and plug them away for retirement. My generation is going to have a hard enough time 20 years from now when we want to retire. I really don't want to work myself into the grave at 70+.
 
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Is that $22k credit card debt? I wasn't clear from your post. If so, can you do some sort of consolidation or HELOC loan? A good forum, with very direct and brutally honest people is bogleheads.com.

John Bogle was found of, and CEO of Vanguard.com for many years. He has a rather religious following.
 
Well done...getting rid of debt was, and is, one of the best things you can do for yourself.
 
Mostly credit card debts. I don't want to roll any of it into a refi'd mortgage, or a Heloc. I'd rather just slam it every month till its done. Half of it is at zero interest for a year. Not sure of the costs with a HELOC, may not be beneficial. But I may look into it.
 
Some people may want to go to a consumer credit counseling agency. An excellent idea as long as they are a member of NFCC. Not some rip off place. They can in some cases negotiate lower interest rates for you and along with reasonable payments. They places are free with respect to credit counseling. Highly recommended. I used on in Rochester NY. Typically you use one in your state.
 
Originally Posted By: bustednutz
Mostly credit card debts. I don't want to roll any of it into a refi'd mortgage, or a Heloc. I'd rather just slam it every month till its done. Half of it is at zero interest for a year. Not sure of the costs with a HELOC, may not be beneficial. But I may look into it.


Get the other half on a personal line of credit ASAP. With a house to your name getting it should be a cake and at a good rate too. I understand that you just want to pay it off, but with high interest credit cards, quite a big chunk of your efforts will be pocketed by the bank.

Try to pay off the credit line as much as you can and then transfer the zero interest rate to the credit line just before the year's end to avoid the high interest that will follow.
 
As unfortunate and negative as this may sound (no offence to OP), statistics show that once you have accumulated that kind of debt, you will never pay it off. Kids education, vehicles, home repairs and other life's expenses will crop up and you will be back where you started. I'm not saying it can't be done but it is extremely difficult. As long as folks have mortgages, then living with debt is pretty much the norm.
 
Another resource for you would be Dave Ramsey, a huge proponent of being debt free. www.daveramsey.com Of course, there are books and other material available on his site, but I am sure you could find one of his earlier books at Goodwill or a used book store at a steep discount.

Have never needed to buy a book, but I catch parts of his radio show in the evening sometimes. He makes a lot a sense.
 
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