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Dave Ramsey method, personal budgeting

Pay Higher interest debts or lower bills first??

I have heard two different ways to pay off the debts. First pay the higher interest ones first. The second, was pay off the lower debts first and then eventually add the money to the larger debts. Which method would be best?

Pay off the higher INTEREST debts first and work on the lower interest debts after that. Its costing you more for the higher interest debts.

The reason Dave Ramsey, and others, suggest paying the lowest balance cards first is what he calls the snowball effect. Once you have paid off one credit card, you become more psyched up about paying the next one off, and then the next. You will see results a lot faster this way.

My caveat to all of this is if you receive a windfall (tax return, Christmas bonus, etc.), pay off whatever will give you the largest cash flow. For me, I had corporate stock that I could not sell. When the company was bought, my corporate stock, which was held be Fidelity, was now in a cash account. When fidelity asked me how I wanted to invest it, I told them in paying off my wife’s car – send me the check. That freed up $400 a month which then went to paying off 2 other credits. So I have paid off 3 and have 4 more to go.

If you choose the highest interest rate first, you may get discouraged long before you arrive at your goal.

personal budgeting

Has anyone heard of Dave Ramsey?

Has anyone heard of http://www.daveramsey.com/? His show used to be on in Northern VA but now it is not.

Yes, He is on the radio everyday. Try the AM dial. HIs books are in the library. He makes sense. His overall message is to not accrue any more debt. decide to pay cash for everything. Pay off teh smaller things first, not necessarily the highest interest items. Just the smaller and then apply that payment to the larger one.

hi, what doyou mean by apply the payment to the larger one, please explain. Speaking of debt.
I got a stupid bill for $280 for my cell phone. OK. It was my fault. I called non-verizon people like my friends and my grandmother and checked my Voice Mail (at .45 a pop). My bills are usually $40-$50 a month, so seeing this bill made me go into a mini-heart attack

Lets say you have three credit debts at $25.00 per month each.

debt one is 200.00, debt #2 is 1000.00 and debt # 3 is 1500.00.

Pay the $25 each month to each one. In 8 months you have paid off debt # 1 and then add that $25 to the $25 you are paying on debt #2.

At the end of 8 months debt # 2 is now at $800.(more or less) and debt # 3 is at $1300. At the end of the 8 months you can now pay $50 per month to debt #2, while still paying the $25 to debt # 3. As you pay off each one, add the amount you were paying on the other two to the third.

Anyway, that is basically what you do. It is suggested by Dave Ramsey.

I believe the original poster means that once a lower balance card has been paid off, ie. you pay off a card that has a $1000 balance and your payments are $50 a month, that the month after it is paid off you will have an ‘extra’ $50 to apply to the card with the next lowest balance. So card 1 is $50 a month and card 2 is $85 a month, after card 1 is paid off, you will be able to pay $135 on card 2. It will then be paid off sooner because you are paying the minimum plus $50.

But wait… if this is something new they’re doing to you and this activity (Calling your friends and family etc) is ‘normal’, you need to make a fuss with Verizon!

You might want to check what kind of plan you have. My mother took ill and passed away last month and as you can imagine there were lots of calls, etc to make (I don’t use my land line as I don’t have long distance on it). I thought sure I was going to get hit with a big charge for over using my minutes but that was not the case. I have Verizon as well.

personal budgeting

Is there a church in your area?

Is there a church in your area that can give you some temporary help? Using those credit cards is gonna get you in deeper and they will have no mercy on you.

First let me start by saying I totally understand how you feel and where you are. My husband and I were in the same situation some years ago. I was working for the school system and we were relying on my income only. I had to use cards to pay for FOOD not eating out but food for my family. I used my cards to pay for gas to get to work not cruising around. I used the card to pay for emergencies like the hot water heater going out! It was so depressing. I couldn’t see any way out. Then I lost my job.

When I lost my job we sat down and looked at ALLLLL the bills and debts. My husband took a second job. He owns his own business and he was just breaking even. I went to work for him. We went from $32K a year to $8K a year. I began to pray.

I fasted and prayed for weeks. I would go out into our front yard and just cry out to God. I begged for mercy. At first it was a cry to God, then I began to see that things *would* be ok, then I was crying in thanks to God. It took weeks but I finally had a vision for our future and it didn’t include debt.

We cut up the cards, called the credit card companies and told them the situation. Most advised us to close the account and then we could be put on a program with reduced interest and no penalties. The payments were still close to what we had to pay before, however it would be paid in 7 years instead of 30 years.

Then we went on a starvation budget. I laid out all our bills each week and prayed over them. I asked the Lord to guide me. I would select each bill to be paid and whatever I had left over was to see us through till the next week. Once I had $30 left over and needed to do grocery shopping. I went out into my yard and held that $30 in my hand and began to pray for the Lord to lead. I went back into the house and looked in the free paper that comes to the house. I looked over the ads for the local grocery store. They had 10 pound bags of chicken on sale for $3!!!!

Once we were short $178 to pay bills. I prayed and prayed. The next day I got a check in the mail for $180 as a refund for overpaying our insurance.the YEAR BEFORE.

Once we needed money and prayed for the Lord to move. I got a check in the mail for $400 from profitsharing. However it was from a company I had not worked with for 3 years!

Long story short: we survived. God sustained us and helped us. He showed me how to really cut back to barebones. You may think there is NO wiggle room in your budget but I guarantee you there is and God will show you. Keep your chin up and your prayers going. I promise you that there *is* a light at the end of the tunnel.

personal budgeting

Where to start budgeting?

Hello. I need to start a budget for my family but I do not know where to start…. Any ideas?

Separate ‘needs’ from ‘wants’. Food, Housing and utilities are first. then the other debts can be tackled over time.

Without food, you have no job. Without a job, you have no home. Without a home you have no way to pay for other bills.

Prioritize: Do your kids really need that Game box, or do they need shoes? Do you need that designer car, or would an economy model do for a while more?

Not knowing a thing about what your family’s comprised of and whether you rent, own, whatever, not knowing the income or such, that’s like flying blind. The homepage has a link to the money managing tutorial/worksheet. Start there.

Ditto here. And it should be easier for me since I’m single & have no one else to worry about so to speak. I suck at budgeting.

I am single and glad to have no credit card.

I do have my ATM card. You would think that I have tons of money in savings since I have no credit card and you would br wrong. The only debt that I have is my Health Insurance, Car Insurance, Car and that is it. Now if only I can stop spending money on things that I do not really need.

I don’t have a credit card either. I put money in savings now, but I started late in life with this good habit.. Me and my sister laugh now about all those times our Mom, now gone ,used tell us little sayings, like “save for a rainy day”, or “a fool and his money are soon parted”. I have gotten to the point where the good feeling of having money saved feels so much better than going shopping and buying more “stuff”. Stuff that just clutters my home.

One suggestion if you can receive your pay via direct deposit, is to set it up so that a certain amount goes to a savings account that you do not have any ATM/Debit card with. If you want the money, you have to go to the branch or contact them via web, etc. A good money market may be a solution if you can find one that will let you start with a small initial investment. Money Markets typically will not let you write a check for less than $250.00, just put that check book away so that it is not easily accessible.

There is a saying that is quite true, if you never see it, you do not miss it. That is the beauty of direct deposit and having some of it put into accounts you do not typically use.

One suggestion if you can receive your pay via direct deposit, is to set it up so that a certain amount goes to a savings account that you do not have any ATM/Debit card with. If you want the money, you have to go to the branch or contact them via web, etc. A good money market may be a solution if you can find one that will let you start with a small initial investment. Money Markets typically will not let you write a check for less than $250.00, just put that check book away so that it is not easily accessible.

There is a saying that is quite true, if you never see it, you do not miss it. That is the beauty of direct deposit and having some of it put into accounts you do not typically use.