Debt Dumpers - 2016

[hollybearsmom]

I also have a couple of cc's that give me my credit score with each monthly statement. That's pretty handy as well and I don't pay extra for it.

I have no credit cards, but good to know.

 

[ruadisneyfan2]

I'm in as well...though still at the point where I'm no longer dumping debt but in phase two, where I'm trying to build up savings.

My general goals are:

1. Build an emergency fund of $3000, then $6000, then $9000. This represents one, two and three months of basic expenses. On a related note, I am also working on building up 1, 3 and 6 months of food storage. I haven't decided if I will adjust the emergency fund money or not. We budget $500 a month for food, toiletries and cleaning supplies, so once I get my three months' worth of food storage, I could decrease the cash savings to $2500, $5000, and $7500. I'm leaving it as is for now with the proviso that I could alter it later in the year.

2. Build up a Murphy Fund. I want to set aside my emergency money for what I consider to be an actual emergency and not just a sudden large expense. I've decided to anticipate car/appliance repairs and replacements as Murphy Money expenses and am going to save accordingly. This fund would potentially be revolving, in that I would have to pay out things as the expenses come up (if they do, in fact come up). My first goal is to get this fund to $1000, then $2000 and finally $4000.

3. Save for a house. DH and I are considering a new build. In this area, houses are are fairly expensive and we are aiming for 10% down. Our income tax refund goes towards this goal in full as well as whatever else we can pull together each month. This is the big one. It will take 2-3 years to meet this goal. We need about $40,000 in total. I'd like to surpass the $10,000 mark by the end of 2016 but $15,000 would be better.

So, for the 2016 specific goals:

1. Emergency fund $4000 (I am close to this right now and should have the full amount by the end of January. At that point, I will put the fund on pause and work on building up the Murphy money.)

2. Murphy Fund $2000 (Just brought the car in for repairs and it wiped out the little I had managed to put together for this fund. So, I am starting from zero again. I have $100 a month set to automatically transfer into this account each month. I'd like to put extra cash towards it each month by being under budget in other categories and shifting the money there. If I can average $75 a month doing this, I can make my goal.)

3. House savings $15,000 (I am starting from zero on this one...the emergency fund was the priority for the past couple of months but the bulk of our designated savings will be going to this account from now on. I should easily reach $10,000 by the end of the year but I'm setting myself the challenge of getting to fifteen to see if I can stretch myself.)

I would look into this to make sure but...
Back when we bought our house 19 years ago, the rule was if your equity was less than 20% at time of purchase, you would be saddled with an additional fee called "mortgage insurance premium". This is not insurance for YOU but insurance for your mortgage company for taking a risk. Back then (1996) ours was almost $100/month. Grrrr.....
The good thing for us was that as home values increased, our equity did also. We were able to petition our mortgage company to have this dropped once our equity was 20%, which was only a couple years after buying. We simply had to pay for an appraisal and submit it.

Recently I have heard that people can no longer have it dropped off the way we did. Now it's for the life of the loan. So if your loan rate drops later and you refinance, and at that time you have 20% equity, that's great. But what if interest rates increase and you don't wish to refi? Then you're stuck with that PMI. (or whatever it's called these days.)

I would seriously consider waiting until you have 20% to put down. Houses are money pits. I love mine but the list never ends. We have friends who bought new and they said they still spend a lot on so many things. Maybe not roofs & driveways but plenty of other things: decks, shed, fencing, landscaping, etc.

JMHO

ETA: Just found this at the bottom of my page. It must find threads of similar topic and suggest them.

 

[knkmom]

I'm joining too!! We had a great year until last month! We had to replace the transmission in dh's truck and get a new fridge! Our emergency fund wasn't enough to cover the $6500 we had to charge so our goal this next year is to pay off that debt and boost our emergency fund way up!!

 

[bcwife76]

I would look into this to make sure but...
Back when we bought our house 19 years ago, the rule was if your equity was less than 20% at time of purchase, you would be saddled with an additional fee called "mortgage insurance premium". This is not insurance for YOU but insurance for your mortgage company for taking a risk. Back then (1996) ours was almost $100/month. Grrrr.....
The good thing for us was that as home values increased, our equity did also. We were able to petition our mortgage company to have this dropped once our equity was 20%, which was only a couple years after buying. We simply had to pay for an appraisal and submit it.

Recently I have heard that people can no longer have it dropped off the way we did. Now it's for the life of the loan. So if your loan rate drops later and you refinance, and at that time you have 20% equity, that's great. But what if interest rates increase and you don't wish to refi? Then you're stuck with that PMI. (or whatever it's called these days.)

I would seriously consider waiting until you have 20% to put down. Houses are money pits. I love mine but the list never ends. We have friends who bought new and they said they still spend a lot on so many things. Maybe not roofs & driveways but plenty of other things: decks, shed, fencing, landscaping, etc.

JMHO

It's the same in Canada, where Stayathomemom77 lives (like me). If you put down less than 20% you have to pay CMHC which is mortgage loan insurance. We had it on our first condo and then when we sold we *almost* didn't need it for our townhouse. But thankfully now on our house we don't have to pay it.

Our house is newer (2009 it was built, we are the second owners) and yes, we've had expensive fixes too. Like when our heat pump/ac unit went two years ago, right before Christmas. That was nearly $3,000 (and no it did not fall under warranty, don't ask). We've also had to have part of our front walkway fixed to the tune of $800 (again not covered under our home warranty, grrrr). Plus our fence already needs work, the developers put these houses up so damn fast - where is the pride in workmanship anymore?!!

 

[gracie1]

Wow!! I can't believe how many people have hopped on board!! Looks like 2016 is going to be a great year for dumping debt for everyone. You guys have such great plans laid out!! I do love how everyone expects Murphy to visit at some point! Lol

 

[gracie1]

I need to jump in with both feet. Lots of medical back bills, student loans, and a car. Don't even know what I owe. January means getting my credit reports and trying to write it all down. Probably go the Dave Ramsey route for repayment unless I find something else that I can really get onboard with.
Have at least two major expenses coming in16 so need to plan for those too so I don't go further down the hole for them.

Do you have a credit karma account? You can view your trans Union and Equifax reports on there - see all your accounts and balances. I would suggest this be your first step - sit down and list all your debt as well as the interest your paying on each. That really puts things in perspective!

 

[dayvewc]

I REALLY don't like Apple products . I had some extra time today before going in to my second job, and wrote a really long post to put up here. The iPad ate it.

Don't know if I can remember it all to rewrite, so I'm just feeling quite frustrated with it all.

Oh, well. I did get a ticket for the PowerBall drawing tonight as a gift from a friend of mine, so my monetary troubles should be ending in a couple of hours.

 

[ruadisneyfan2]

Do you have a credit karma account? You can view your trans Union and Equifax reports on there - see all your accounts and balances. I would suggest this be your first step - sit down and list all your debt as well as the interest your paying on each. That really puts things in perspective!

I couldn't agree more.
It's just human nature that we tend to avoid things we dislike or find painful/stressful to deal with. I was in the same boat of having no idea of the total. I just kept paying extra to different bills each month and got NOWHERE.
The only way to create a plan for the future is to face it head on.
I personally found the Dave Ramsey snowball method to work so well because it's very methodical and systematic. I can put it all down in black and white and I only deviate when Murphy visits (or I'm dying for a vacation). Let's face it, we still have to live. If we cut ourselves so far back to bare minimum to exist, we won't stay with it for long. It's very much like crash dieting.
OTOH, slow and steady wins the race. It didn't accumulate overnight and it won't go away overnight either.
So create a plan and have patience. It will work.

I REALLY don't like Apple products . I had some extra time today before going in to my second job, and wrote a really long post to put up here. The iPad ate it.

Don't know if I can remember it all to rewrite, so I'm just feeling quite frustrated with it all.

Oh, well. I did get a ticket for the PowerBall drawing tonight as a gift from a friend of mine, so my monetary troubles should be ending in a couple of hours.

You are too funny! Be sure to write us of your debt pay down plan when you hit big. You know we'd still be happy for you.

That is so frustrating to lose all of that writing. My iPhone saves everything I start to post but forget to click the post button but I don't have an iPad.

 

[dayvewc]

You are too funny! Be sure to write us of your debt pay down plan when you hit big. You know we'd still be happy for you.

That is so frustrating to lose all of that writing. My iPhone saves everything I start to post but forget to click the post button but I don't have an iPad.

My debt pay down plan is easy once I win. I'll just pay it off. . And then divide the remainder into "savings & investments" (75%), "bills and required expenses" (15%), and "spending money" (10%).

Yeah, the iPad had saved a portion of my post, and it even showed up on my phone and computer. I really think the problem was that I had lost internet connection after one of the draft saves, and the iPad just didn't actually save the rest of my draft. I discovered it was gone when I clicked post, and the screen blanked out.

 

[DisneyMandC]

I would look into this to make sure but...
Back when we bought our house 19 years ago, the rule was if your equity was less than 20% at time of purchase, you would be saddled with an additional fee called "mortgage insurance premium". This is not insurance for YOU but insurance for your mortgage company for taking a risk. Back then (1996) ours was almost $100/month. Grrrr.....
The good thing for us was that as home values increased, our equity did also. We were able to petition our mortgage company to have this dropped once our equity was 20%, which was only a couple years after buying. We simply had to pay for an appraisal and submit it.

Recently I have heard that people can no longer have it dropped off the way we did. Now it's for the life of the loan. So if your loan rate drops later and you refinance, and at that time you have 20% equity, that's great. But what if interest rates increase and you don't wish to refi? Then you're stuck with that PMI. (or whatever it's called these days.)

I would seriously consider waiting until you have 20% to put down. Houses are money pits. I love mine but the list never ends. We have friends who bought new and they said they still spend a lot on so many things. Maybe not roofs & driveways but plenty of other things: decks, shed, fencing, landscaping, etc.

JMHO

ETA: Just found this at the bottom of my page. It must find threads of similar topic and suggest them.

This is right. We just bought our house and were only able to do 5% down. Our PMI is $300 a month!!! It stinks, but the house was one of a kind, opportunity would not come up again, connected to our family farm. And within our budget. You can refinance and remove it now though. I'm not sure if it varies for each mortgage lender, but ours told us once we got down to 25% equity, we could refinance. You are required to pay the PMI for 2 years though, so even if we got 20% equity in between now and 2017, we'd still have to keep paying it. Definitely hoping to have it paid off before 5 years to refinance though!

 

[wdwfan51]

Long time lurker but first time posting here. Just wanted to wish everyone good luck for 2016 and remind you all of the importance of your emergency fund. I began having back trouble in April and after many doctors appointment, physical therapy etc. it was decided I needed surgery in November. All totaled, after insurance, I am out about $9,000. Plus 2 months wages. Without our emergency fund this would have been quite difficult. So, don't overlook savings for emergencies. Happy holidays and good luck dumping that debt in 2016.

 

[stayhomemom77]

Yeah, houses around here start at $400,000. There's no WAY DH will wait 5 years to save up the $80,000-$100,000 we'd need for the 20%. I BARELY got him to agree to wait long enough to get to 10%. We aren't fully invested in the whole idea of buying a house at this point anyway. For now, we are saving up and we'll make the call a couple of years from now.

 

[Brancaneve]

I'm in! Questions for all of you.......

We are not using the envelope system but still using our CC's and paying them off monthly. We review our balance daily online and try to stay within our budget. We have never had credit card debt so using the cards makes me feel "safe" in a strange sort of way. But we do have a large car loan and a rental property we would love to pay off. Ultimatey we would love to pay off our home. However, I feel that we would be much more successful using cash.

I am scared to carry so much cash around. How do you reconcile that?
Do you actually use envelopes or use some other system/wallet to organize the cash?
How do you split the cash with your spouse? For example, gas money, grocery money, restaurant money, etc? Is it best to budget for each person indivicually based on their lifestyle/job?

Thank you in advance for your insight!!

 

[stayhomemom77]

I'm in! Questions for all of you.......

We are not using the envelope system but still using our CC's and paying them off monthly. We review our balance daily online and try to stay within our budget. We have never had credit card debt so using the cards makes me feel "safe" in a strange sort of way. But we do have a large car loan and a rental property we would love to pay off. Ultimatey we would love to pay off our home. However, I feel that we would be much more successful using cash.

I am scared to carry so much cash around. How do you reconcile that?
Do you actually use envelopes or use some other system/wallet to organize the cash?
How do you split the cash with your spouse? For example, gas money, grocery money, restaurant money, etc? Is it best to budget for each person indivicually based on their lifestyle/job?

Thank you in advance for your insight!!

My sister and her husband do the envelope system (well they actually use jars, but...) and they keep them hidden at home with the cash in them and then take out what they need when they are heading to the store, gas station, etc. They each carry around a $20 bill for those unexpected pop up expenses but otherwise don't have any cash on hand. Each jar has the monthly allotment for each line in the budget, which she pulls out of the bank on the first of the month. They have a little notebook with the jars and they put all the change back in the correct jar (after a purchase) and write down the date, expense and total left in the jar in the book. At the end of the month, everything is reconciled and...well, I don't actually know WHAT they do with any leftover cash. LOL

HTH!!

 

[gracie1]

I REALLY don't like Apple products . I had some extra time today before going in to my second job, and wrote a really long post to put up here. The iPad ate it.

Don't know if I can remember it all to rewrite, so I'm just feeling quite frustrated with it all.

Oh, well. I did get a ticket for the PowerBall drawing tonight as a gift from a friend of mine, so my monetary troubles should be ending in a couple of hours.

My iPad has done that many times to me! Well it seems like all your troubles will be gone in a few hours when you hit the power ball!! Now you really should use some of it as charitable contributions so it helps on taxes - so just send each of us a pm and we can give you our addresses!!

 

[gracie1]

I'm in! Questions for all of you.......

We are not using the envelope system but still using our CC's and paying them off monthly. We review our balance daily online and try to stay within our budget. We have never had credit card debt so using the cards makes me feel "safe" in a strange sort of way. But we do have a large car loan and a rental property we would love to pay off. Ultimatey we would love to pay off our home. However, I feel that we would be much more successful using cash.

I am scared to carry so much cash around. How do you reconcile that?
Do you actually use envelopes or use some other system/wallet to organize the cash?
How do you split the cash with your spouse? For example, gas money, grocery money, restaurant money, etc? Is it best to budget for each person indivicually based on their lifestyle/job?

Thank you in advance for your insight!!

If your putting most of the stuff on the cc like gas and food and all are you just paying it off when the bill comes in plus keeping the cash in the envelope? Or are you putting it back in the bank to pay the bill?

 

[ruadisneyfan2]

I'm in! Questions for all of you.......

We are not using the envelope system but still using our CC's and paying them off monthly. We review our balance daily online and try to stay within our budget. We have never had credit card debt so using the cards makes me feel "safe" in a strange sort of way. But we do have a large car loan and a rental property we would love to pay off. Ultimatey we would love to pay off our home. However, I feel that we would be much more successful using cash.

I am scared to carry so much cash around. How do you reconcile that?
Do you actually use envelopes or use some other system/wallet to organize the cash?
How do you split the cash with your spouse? For example, gas money, grocery money, restaurant money, etc? Is it best to budget for each person indivicually based on their lifestyle/job?

Thank you in advance for your insight!!

Despite still paying off other debts, we still use our SWA cc for everything to earn free flights. I am careful to pay it off monthly, usually making 2-3 payments online each week so it doesn't get out of control.
I know what you mean about the security of a cc. I don't feel comfortable carrying cash. I also don't like using our ATM for purchases. I feel that if our cc numbers were ever compomised, someone might make fraudulent charges but we don't have to pay for while being disputed. I don't like the idea of letting someone reaching into my bank account, even for legitimate purposes.
Sorry, I probably should, but I don't do the envelope system. Someone can most likely help you with that.
I do bank with Capital One 360 which is an online bank which you link to an external account, usually a local bank. Once a customer, you can have up to 25 savings accounts under 1 log in. Maybe this is my version of the envelope system. I have multiple accounts with nicknames like Christmas, car insurance, sewer bill (which is quarterly) vacation, emergency, etc.
I find it very convenient.

 

[Allison Joy]

Well, I was debt free for about 4 months in 2015. Then I managed to total my car in an accident (totally my fault) and so now I have car payments again. BUT I put about half down, and am hoping to pay off the balance ASAP, in a few large payments. Then I keep thinking about going back to school. But that would probably mean debt again (or more), and the idea doesn't sound nearly as appealing.

*Edited to add*
Ha! Funny timing. Right after I posted this, I checked the mail and I got the loan payment paperwork with my account number. Now. To work on making this debt disappear!

 

[momtosam]

My immediate goal for 2016 is to get a part time job. As much as I don't want to, we aren't chipping away our debt at all.

 

[DawnM]

We are hoping to sell the house in 2016, and hopefully by SUMMER!

I am not counting our home equity line in here but we are only using that to work on the house.

I have got to get back on the savings train here. We have gotten far too free with our $$.

Dawn