Comments on: How to Get Out of Debt http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/ personal finance tips, tricks, and commentary Sat, 21 Nov 2009 22:11:52 -0500 http://wordpress.org/?v=abc hourly 1 By: maria http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/comment-page-1/#comment-133537 maria Sat, 25 Jul 2009 10:09:56 +0000 http://www.fivecentnickel.com/?p=3292#comment-133537 I really enjoyed this article. I am surely going to follow these steps to try to get out of debt myself.. I really enjoyed this article. I am surely going to follow these steps to try to get out of debt myself..

]]> By: Shambolam http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/comment-page-1/#comment-133155 Shambolam Tue, 14 Jul 2009 05:29:46 +0000 http://www.fivecentnickel.com/?p=3292#comment-133155 While I agree with all of your points, I must say that you are preaching (not in a bad way) to the choir, your audience... a specific demographic of people that are not already in a precarious debt situation. You chuckle at the "program creditors don't want you to know about", so often heard on the radio, but the fact of the matter is that if you have a lot of unsecured debt that you can handle... and then there is a sudden death in the family, job loss, sickness, disability, or divorce... the lonely but still alive, viable, working partner, or divorced partner (not being sexist as I am a woman... usually the male's) current financial situation will be drastically and negatively changed. Debt Settlement is a valid way to avoid bankruptcy, or attempt to, and a viable option for many people in hardship situations. Is it the solution for everyone? Absolutely not! If there is another alternative (side job, odd jobs, overtime)... but I speak to people every day that come to a debt settlement company as a last straw... the one way to potentially avoid bankruptcy. It isn't a magic wand... in fact its a tough scenario to go through, but in some situations you must think of the bigger family financial portfolio and choose the lesser of two evils. Debt Settlement or Bankruptcy. To top it off, now the creditors are actually contributing to the need for an alternative. Chase just upped their minimum payment from 2% to 5% of your minimum balance. If you have just $5,000 on their credit card your minimum payment went from $100 to $250. If you can't afford the new payment and pay what you can, you will be considered late. Late? The credit card companies LOVE that for the related late fee, and the ability to raise your interest rate to 29.99%! Until the new creditor laws go into affect in 2/2010 that means that every other creditor you have HAS THE LEGAL RIGHT TO RAISE YOUR INTEREST AS WELL. In that case, what would you do? Take a hit on your credit... or become a "Client for Life" to the credit card company? I have seen all sides of the argument on this, and speak with real people every day regarding this issue. I am truley a proponent of becoming debt free - no matter the 'cost'... While I agree with all of your points, I must say that you are preaching (not in a bad way) to the choir, your audience… a specific demographic of people that are not already in a precarious debt situation. You chuckle at the “program creditors don’t want you to know about”, so often heard on the radio, but the fact of the matter is that if you have a lot of unsecured debt that you can handle… and then there is a sudden death in the family, job loss, sickness, disability, or divorce… the lonely but still alive, viable, working partner, or divorced partner (not being sexist as I am a woman… usually the male’s) current financial situation will be drastically and negatively changed.

Debt Settlement is a valid way to avoid bankruptcy, or attempt to, and a viable option for many people in hardship situations. Is it the solution for everyone? Absolutely not! If there is another alternative (side job, odd jobs, overtime)… but I speak to people every day that come to a debt settlement company as a last straw… the one way to potentially avoid bankruptcy. It isn’t a magic wand… in fact its a tough scenario to go through, but in some situations you must think of the bigger family financial portfolio and choose the lesser of two evils. Debt Settlement or Bankruptcy.

To top it off, now the creditors are actually contributing to the need for an alternative. Chase just upped their minimum payment from 2% to 5% of your minimum balance. If you have just $5,000 on their credit card your minimum payment went from $100 to $250. If you can’t afford the new payment and pay what you can, you will be considered late. Late? The credit card companies LOVE that for the related late fee, and the ability to raise your interest rate to 29.99%! Until the new creditor laws go into affect in 2/2010 that means that every other creditor you have HAS THE LEGAL RIGHT TO RAISE YOUR INTEREST AS WELL. In that case, what would you do? Take a hit on your credit… or become a “Client for Life” to the credit card company?

I have seen all sides of the argument on this, and speak with real people every day regarding this issue. I am truley a proponent of becoming debt free – no matter the ‘cost’…

]]> By: Carma http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/comment-page-1/#comment-133141 Carma Mon, 13 Jul 2009 18:33:51 +0000 http://www.fivecentnickel.com/?p=3292#comment-133141 We live debt-free principles in good times and bad times. I guess our families taught us when we were young. Maybe that didn't happen for you, but the good news is that you can live that way and teach your children so they can have that security as adults. There are no guarantees in life, but learning to be thrifty can help no matter what. We have never carried a balance on a credit card. If we use a credit card, we deduct it in our check register and when the bill comes pay it to zero. We had to purchase a car once and pay some interest, so to cut that as small as we could, we took extra work to pay it off in one year. So I guess that is how we handle getting out of debt. It becomes THE GOAL, if there is any at all, and we just think about putting all the money on the debt so that we aren't paying interest or having that payment while the item is losing value. We also evaluate our budget often and trim it where we can. No, we are not obsessed with any of this. We do the math, make the choices and forget it . . . then we sleep good and put our minds on other things. Dave Ramsey has some good motivating seminars that I have heard about from friends. We live debt-free principles in good times and bad times. I guess our families taught us when we were young. Maybe that didn’t happen for you, but the good news is that you can live that way and teach your children so they can have that security as adults. There are no guarantees in life, but learning to be thrifty can help no matter what.
We have never carried a balance on a credit card. If we use a credit card, we deduct it in our check register and when the bill comes pay it to zero.
We had to purchase a car once and pay some interest, so to cut that as small as we could, we took extra work to pay it off in one year. So I guess that is how we handle getting out of debt. It becomes THE GOAL, if there is any at all, and we just think about putting all the money on the debt so that we aren’t paying interest or having that payment while the item is losing value.
We also evaluate our budget often and trim it where we can. No, we are not obsessed with any of this. We do the math, make the choices and forget it . . . then we sleep good and put our minds on other things.
Dave Ramsey has some good motivating seminars that I have heard about from friends.

]]> By: Jennifer http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/comment-page-1/#comment-131180 Jennifer Fri, 01 May 2009 02:20:21 +0000 http://www.fivecentnickel.com/?p=3292#comment-131180 We just became debt free (except for the house) yesterday by following Dave Ramsey's plan. And I agree with coming up with some extra income. I have been earning some decent extra income by selling handcrafted pendants on Etsy. We just became debt free (except for the house) yesterday by following Dave Ramsey’s plan. And I agree with coming up with some extra income. I have been earning some decent extra income by selling handcrafted pendants on Etsy.

]]> By: Matt Jabs http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/comment-page-1/#comment-131127 Matt Jabs Wed, 29 Apr 2009 04:05:03 +0000 http://www.fivecentnickel.com/?p=3292#comment-131127 As simple as it sounds, I'm following this philosophy to a tee and tis working grand As simple as it sounds, I’m following this philosophy to a tee and tis working grand

]]> By: Tim http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/comment-page-1/#comment-130960 Tim Tue, 21 Apr 2009 02:23:03 +0000 http://www.fivecentnickel.com/?p=3292#comment-130960 Nice. All I saw was "Accelerate Your Payments"; sorry for the confusion. The earn extra income link is a great one too. A lot of people don't realize how easy it is to freelance on the web. Nice. All I saw was “Accelerate Your Payments”; sorry for the confusion. The earn extra income link is a great one too. A lot of people don’t realize how easy it is to freelance on the web.

]]> By: Nickel http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/comment-page-1/#comment-130955 Nickel Mon, 20 Apr 2009 23:44:54 +0000 http://www.fivecentnickel.com/?p=3292#comment-130955 Tim: Thanks for the comment. I actually covered those points in the latter part of my post. Tim: Thanks for the comment. I actually covered those points in the latter part of my post.

]]> By: Tim http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/comment-page-1/#comment-130953 Tim Mon, 20 Apr 2009 22:41:56 +0000 http://www.fivecentnickel.com/?p=3292#comment-130953 Nice article. I'd also add another tip: Come up with some new sources of income. Very often, the indebted does not have enough income to stop using credit, so having a garage sale or selling some crafts, for instance, is a good way to cushion yourself during the "digging out" period. Nice article. I’d also add another tip: Come up with some new sources of income. Very often, the indebted does not have enough income to stop using credit, so having a garage sale or selling some crafts, for instance, is a good way to cushion yourself during the “digging out” period.

]]> By: Danielle http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/comment-page-1/#comment-130946 Danielle Mon, 20 Apr 2009 20:02:24 +0000 http://www.fivecentnickel.com/?p=3292#comment-130946 Thanks Nickel for addressing this, so many of those commercials sound like a complete scam to me too! To add to the "build up a cushion" and "attacking your debts" sections, a great way to do this is through automation! Set it up and forget it :) I agree with DebtGoal, particularly with having a single location to record all your debts and assets. In the end I found it better to only record minor payments each month and track all assets/networth/savings on only a quarterly basis in a separate table. More than anything, just take a regular look at what you are doing and re-evaluate your direction as it makes sense. Don't lament over mistakes, because the only mistake that matters is the one you were making before, when you were not giving your finances the attention they deserve! Thanks Nickel for addressing this, so many of those commercials sound like a complete scam to me too!

To add to the “build up a cushion” and “attacking your debts” sections, a great way to do this is through automation! Set it up and forget it :)

I agree with DebtGoal, particularly with having a single location to record all your debts and assets. In the end I found it better to only record minor payments each month and track all assets/networth/savings on only a quarterly basis in a separate table.

More than anything, just take a regular look at what you are doing and re-evaluate your direction as it makes sense. Don’t lament over mistakes, because the only mistake that matters is the one you were making before, when you were not giving your finances the attention they deserve!

]]> By: DebtGoal http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/comment-page-1/#comment-130944 DebtGoal Mon, 20 Apr 2009 18:29:40 +0000 http://www.fivecentnickel.com/?p=3292#comment-130944 Another great piece of advice is to set up a debt tracking form to track existing debt amounts from month to month, as well as progress towards paying it off. Institutionalize the process by pledging to review and update the debt tracking sheet on the last day of every month. Being able to measure the impact of one's strategy is just as important as setting up that strategy in the first place. Another great piece of advice is to set up a debt tracking form to track existing debt amounts from month to month, as well as progress towards paying it off. Institutionalize the process by pledging to review and update the debt tracking sheet on the last day of every month. Being able to measure the impact of one’s strategy is just as important as setting up that strategy in the first place.

]]> By: Corporate Barbarian http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/comment-page-1/#comment-130941 Corporate Barbarian Mon, 20 Apr 2009 16:43:25 +0000 http://www.fivecentnickel.com/?p=3292#comment-130941 I love the diet secret and fitness gadgets that they sell on late-night infomercials. Want to know the secret to losing weight? Caloric reduction. You really have to eat less. Same with debt. It's that simple. I love the diet secret and fitness gadgets that they sell on late-night infomercials. Want to know the secret to losing weight? Caloric reduction. You really have to eat less. Same with debt. It’s that simple.

]]> By: Vicky http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/comment-page-1/#comment-130939 Vicky Mon, 20 Apr 2009 15:50:17 +0000 http://www.fivecentnickel.com/?p=3292#comment-130939 "As important as your emergency fund is, you shouldn’t overdo it." In this economy I'm having just the hardest time convincing myself to pay down debt rather than save. I have the savings to pay down most of our credit cards in a lump sum, but with my husband having already lost his job and with major medical procedures on the horizon, I'm really hesitant to give up the security of three months of my salary in savings. I'd feel so foolish if I lost my job, too, and found myself available-credit-rich but unable to pay the mortgage for as long as it would take to sell the house. On the other hand, it just burns me up to pay finance charges on credit we don't actually need: all the time I've spent on coupon hunting, all the delicate negotiating with service providers and vendors, is wiped out every month by my own hesitancy to pull the trigger and flush the debt away. We have not accumulated new debt in years and years and by most standards our DTI is quite healthy. It's just such a worry in these uncertain times. “As important as your emergency fund is, you shouldn’t overdo it.” In this economy I’m having just the hardest time convincing myself to pay down debt rather than save. I have the savings to pay down most of our credit cards in a lump sum, but with my husband having already lost his job and with major medical procedures on the horizon, I’m really hesitant to give up the security of three months of my salary in savings. I’d feel so foolish if I lost my job, too, and found myself available-credit-rich but unable to pay the mortgage for as long as it would take to sell the house. On the other hand, it just burns me up to pay finance charges on credit we don’t actually need: all the time I’ve spent on coupon hunting, all the delicate negotiating with service providers and vendors, is wiped out every month by my own hesitancy to pull the trigger and flush the debt away.

We have not accumulated new debt in years and years and by most standards our DTI is quite healthy. It’s just such a worry in these uncertain times.

]]> By: Wealth Pilgrim http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/comment-page-1/#comment-130938 Wealth Pilgrim Mon, 20 Apr 2009 15:44:21 +0000 http://www.fivecentnickel.com/?p=3292#comment-130938 This is a great post. Right to the point. The only addition I'd make is that it's important to understand why you got into debt. You have to change those behaviors permanently before you can solve the problem. This is a great post. Right to the point.

The only addition I’d make is that it’s important to understand why you got into debt. You have to change those behaviors permanently before you can solve the problem.

]]> By: DDFD at DivorcedDadFrugalDad http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/comment-page-1/#comment-130932 DDFD at DivorcedDadFrugalDad Mon, 20 Apr 2009 14:20:16 +0000 http://www.fivecentnickel.com/?p=3292#comment-130932 Great advice! Nothing is easy, but it is possible to get out. Even small steps make a difference . . . make a plan and attack your debts! Great advice! Nothing is easy, but it is possible to get out. Even small steps make a difference . . . make a plan and attack your debts!

]]> By: Clair Schwan of Frugal Living Freedom http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/comment-page-1/#comment-130930 Clair Schwan of Frugal Living Freedom Mon, 20 Apr 2009 14:08:39 +0000 http://www.fivecentnickel.com/?p=3292#comment-130930 Good solid advice. There's nothing magical about it, just figure out where you're at, stop doing whatever got you there to begin with, face your demons and start getting the monkey off your back. The toughest part is changing your attitude about spending money, using credit cards, and disregarding the future. Until a shift in values takes place, any "digging out" will be countered by more "digging in." When people have a compulsion to spend money and medicate themselves with things, it's difficult to turn that behavior around. The key is finding out what drives us in that direction, and fix that first and for good. Clair Good solid advice. There’s nothing magical about it, just figure out where you’re at, stop doing whatever got you there to begin with, face your demons and start getting the monkey off your back.

The toughest part is changing your attitude about spending money, using credit cards, and disregarding the future. Until a shift in values takes place, any “digging out” will be countered by more “digging in.”

When people have a compulsion to spend money and medicate themselves with things, it’s difficult to turn that behavior around. The key is finding out what drives us in that direction, and fix that first and for good.

Clair

]]> By: Trevor @ Financial Nut http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/comment-page-1/#comment-130928 Trevor @ Financial Nut Mon, 20 Apr 2009 13:55:55 +0000 http://www.fivecentnickel.com/?p=3292#comment-130928 Having never been in "desperate debt," I have a hard time relating to some of this; however, I have heard the power of working out some sort of settlement with your creditors. And often it works! Having never been in “desperate debt,” I have a hard time relating to some of this; however, I have heard the power of working out some sort of settlement with your creditors. And often it works!

]]> By: Baker @ ManVsDebt http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/comment-page-1/#comment-130927 Baker @ ManVsDebt Mon, 20 Apr 2009 13:50:44 +0000 http://www.fivecentnickel.com/?p=3292#comment-130927 Great post! I really enjoy how you put recognize the problem first. I think this is a step that is often overlooked by people. They want a quick result (like the ad) without really taking personal responsibility and addressing the core issues. Great post! I really enjoy how you put recognize the problem first. I think this is a step that is often overlooked by people. They want a quick result (like the ad) without really taking personal responsibility and addressing the core issues.

]]> By: the weakonomist http://www.fivecentnickel.com/2009/04/20/how-to-get-out-of-debt/comment-page-1/#comment-130924 the weakonomist Mon, 20 Apr 2009 11:38:47 +0000 http://www.fivecentnickel.com/?p=3292#comment-130924 I've been surprised that people have been able to pay down debt during this recession. Sure defaults are up and unemployment continues to rise, but people are managing to pay down debts. It's the silver lining of the recession. That being said people who lived off cards for an upgraded lifestyle and now can't even manage an appropriate lifestyle will continue to have difficulties. Good post. I’ve been surprised that people have been able to pay down debt during this recession. Sure defaults are up and unemployment continues to rise, but people are managing to pay down debts. It’s the silver lining of the recession.

That being said people who lived off cards for an upgraded lifestyle and now can’t even manage an appropriate lifestyle will continue to have difficulties. Good post.

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