Personal budgets

Agree. If you can't do 10%, which many just starting out can't do, at least do up to the company match. Otherwise, you'll just be leaving money on the table.

Kinda agree. Student loan debt isn't that bad. Lenders tend to look more favorably on that than say typical credit card, etc debt as long as it's not too much.

 

Now I know where I've seen this...


you follow Dave Ramsey?

 

Don't even know who he is. This is from the school of Charles Wilson, wifey's grandad.

 

Not really. I've found where student loan debt can crush a mortgage deal. People with a ton of it...and it's deferred...

YOu have to get the lender to write a letter stating that it's deferred for at LEAST 2 years or the payment is counted in the debt to income ratio. Lenders won't provide letters beyond 1 year.

Consolidate those damn things as soon as possible. They also tend to report twice in many cases...they do a shitty job when it comes to reporting to the bureaus.

Old credit cards where you owe less than 50% of the available (25% is better) and never missed a payment???

 

That was my caveat.

A ton of any debt isn't good, even mortgage debt.

 

A ton of mortgage debt can be a very good thing - tax writeoff, low interest rate...if you have the cash to pay it off anyway you've got low risk and can put that money to use in ways that return much more than your interest rate on the mortgage. Almost nothing else in debt is that good (partially because of the tax implications), and it's an appreciating asset (you hope).

Personally, while it's not financially the best move, I'm in the school of paying off even the house debt ASAP. I locked in a 4.5% 15-year mortgage, only 13 years left til I own this baby. It's an investment in my sanity. Of course, I'm looking at much more expensive houses at the same time, so my sanity can be (and often is) questioned.

 

Our study group from church is doing a 10 week series from dave ramsey. He is pretty amazing and can put his complex ideas into terms anyone can understand. We are half way through the dvds. We started with the envelope system. Mrs P and I each get $80 cash for gas every payday. also $100 for food, and misc "blow money".

We don't use credit cards, or even our check cards. The cash is "REAL" unlike swiping a card. It's interesting how we watch what we spend when using cash. I used to just swipe the check card ad not even know exactly how much money I had since Mrs P does the check book. I just give her the receipts.

The first thing we really cut out was eating out and buying impulsive things, like at the gas station. I used to buy candy, coffee, breakfast, even a liter of aquafina. Now it's just gas and that's it. I make my own coffee. I refill my aquafina bottle with the filtered water dispenser on our fridge. No more candy and impulsive purchases at the store. Mrs P does the grocery shopping without me.

We also do not use credit cards for anything. We save at least $100/month and put it into a high interest savings account. As dave ramsey says, start small with $1000 in savings for emergencies. Buying kids clothes for school or christmas presents are not emergencies. Not having money for those kind of things are from lack of planning. Car breaking down, or a health crisis, or layoff is an emergency. These kind of things can break a marriage and the bank if you don't plan how you are going to handle an emergency. It used to take us weeks to catch up after having a financial emergency. We also used credit cards, which are paid off now.

Dave Ramsey talks about the "debt snowball". Pay off your lowest balance card first, and then take the money you were putting into that card and put it towards the next lowest card on top of the payment you were already paying, and so on. It's amazing how fast debt is paid off when you do it that way.

I highly recommend checking out Dave Ramsey's books or videos. He has definitely changed our way of thinking about money.

 

This envelope idea is really cool - thanks Meatpile (and others) who suggested it. I've sort of deviated from it a little in that I put my savings in the envelope and bank it once a month. I know it's crazy - but it works for me. In my family, I seemed to have missed the money making gene. My Dad is exceptional with money and can turn two beans into hard cash in hours - me, not so skilled. I decided to use the envelope thing a couple of months ago and am really sticking to it. I don't purchase a lot of crap and think twice on any purchases I make, which naturally saves me more so I'm squirrelling away bits all over the place . I think it works for those who get tempted by moving funds around via Internet banking and such. Anyone else having any luck with it?

 

I'm stoked you're using this. I have had alot of people ask about a budget, most people are unwilling to do it - it's uncomfortable.

 

Thanks Meat . It's really made a difference and I feel great that I'm tucking a little away each fortnight. Yes, most people are unwilling to do it because they don't want to fess up to an amazing amount of shit that they buy and debt that they have. I know that's a bold statement and I don't mean to offend, but that's the case for a lot of people. And yes, that included me. I'm actually really savvy at getting bargains and wise shopping, but just because it's on sale, doesn't mean I need it.

Anyway, rant over - cheers for giving me the idea!