Newbie with a couple debt reduction ?s

[bmd1011]

Hi all. I'm a 26 yr old newbie here, hoping to be debt free by the time my 30th bay rolls around. I have been saying I was going to focus on paying off my debts/budgeting for YEARS now (prior goal was by age 25, which came and went). I am almost done with reading the Dave Ramsey book and love the idea of the snowball. My dilemma now is that I also want to go back to school to finish my degree at the local community college. To return part time it would be about $300 a month, with a no interest payment plan. Approximately $1000 a semester, and if I really stuck to it I'd be done in about 3 semesters (so $3000 later). I know this money would greatly help with eliminating my debt (about $20,000 plus my car loan that I should have never gotten ).

I know I'm rambling here, just a little overwhelmed.... I guess my question is, should I focus on the debt snowball first, or try to work on the school payments and work on that also. I used a debt snowball calculator online, and if I add an extra $100 or so to my bills each month I will be debt free a couple months before my birthday. I have a decent job, and don't necessarily need the degree right now, but I guess I'm a nerd and enjoy keeping myself occupied with school.

Also, I owe my mother about $800 for a loan she gave me, should I focus on paying this back first, or just make monthly payments to her. She wouldn't have an issue with getting monthly payments, but I wasn't sure if there were rules to these sort of things.

Thanks for any help and advice you all may give me. I'm a definite newbie to worrying about my finances and hope to secure my debt plan/budget/etc so I can quit having anxiety and stress every payday! It seems like all the money is spent before I even get the check in the bank.

[Greebo]

Hi all. I'm a 26 yr old newbie here, hoping to be debt free by the time my 30th bay rolls around. I have been saying I was going to focus on paying off my debts/budgeting for YEARS now (prior goal was by age 25, which came and went). I am almost done with reading the Dave Ramsey book and love the idea of the snowball. My dilemma now is that I also want to go back to school to finish my degree at the local community college. To return part time it would be about $300 a month, with a no interest payment plan.

Which would be more debt- which works against your goal of debt reduction.

Approximately $1000 a semester, and if I really stuck to it I'd be done in about 3 semesters (so $3000 later). I know this money would greatly help with eliminating my debt (about $20,000 plus my car loan that I should have never gotten ).

I'm all in favor of you improving your education but not by borrowing money to do it. TOO MANY PEOPLE buy into the idea that "if I borrow for an education I'll get ahead faster when I'm done" and it's not usually a good plan. Far better to CASH FLOW your education, EVEN IF IT TAKES LONGER, and come out school *at least* no worse off than you were when you started.

Also working while going to school looks better on a resume.

I know I'm rambling here, just a little overwhelmed.... I guess my question is, should I focus on the debt snowball first, or try to work on the school payments and work on that also. I used a debt snowball calculator online, and if I add an extra $100 or so to my bills each month I will be debt free a couple months before my birthday. I have a decent job, and don't necessarily need the degree right now, but I guess I'm a nerd and enjoy keeping myself occupied with school.

Then I would first get out of debt AS FAST AS YOU CAN - REALLY push yourself ($100/mo extra is a laugh, come on, you can do better) - then push yourself MORE to get the cash on hand for the degree, THEN go back to school.

Trying to do too many things at once will just get you flailing around producing nothing.

Also, I owe my mother about $800 for a loan she gave me, should I focus on paying this back first, or just make monthly payments to her. She wouldn't have an issue with getting monthly payments, but I wasn't sure if there were rules to these sort of things.

If it's not creating family drama, go with the monthly payment and pay your debts smallest to largest. OTOH if it's making Thanksgiving taste funny, put mom at the top of the list.

[khaski]

Continuing your education is a noble goal, but don't use it as an excuse to put off getting rid of your debt....and Greebo is right- do not pass 'go' unless you can pay cash and are otherwise debt free- will just compound your misery.

[Bournecrazy]

I think it would help posting your budget (if you have one) any debt details and income

I know Greebo loves working everything out - Sometimes looking at your finances from someone elses POV can give you that kick you need to beat the debt

[bumplett]

A bit off topic, but I'm just curious -

why does your profile say you're 41 years old?


As for the question: I wouldn't put off school, as long as you can pay as you go.

Personally, I would put all debt smallest to largest, including mom's debt - just make sure you pay her back and don't let it slide because she's your mom. ((not that you would, I've just seen so many people do that to their parents))

good luck!

[bmd1011]

A bit off topic, but I'm just curious -

why does your profile say you're 41 years old?

I noticed that in my info but can't figure out how to change my birthday.... I'll figure it out though...


As for my budget, I will get that all typed out later this afternoon so I can get some feedback. Stay tuned and thanks again!

[Greebo]

PM me with your birthdate and I think I can fix it for you.

[bmd1011]

I do need to really figure out a good budget for gas/food/entertainment. I SHOULD have money leftover each month (to put towards debt and what not), but somehow every month I'm short

As of right now I'm about $17,000 in credit card debt. $15,000 in my car loan.

Break down for debts is this....

CC 1: $138 balance- minimum payment of $15. This is expected to be paid off with next paycheck.

CC2: $285 balance- minimum payment of $15

CC3: $505 balance- minimum payment of $15

CC4: $3691- minimum payment of $115

CC5: $4340- minimum payment of $110

CC6: (the big one) $8,000- minimum payment of $170.

CC7: $200- minimum payment of $20

I also have my debt to my mother in the amount of $800.

Car loan is $510 a month, at 19.9% interest (bad move)

Other bills monthly include: car insuance ($105), Cell phone ($100), Weight Watchers ($40), Gym ($25), Credit Report Monitoring ($8)

I also have gas/food/entertainment (need to learn to say no to going out all the time with friends ) which seems to be where the money sneaks off... Eating out has always been a HUGE money waster for me, but I have realized that and am cutting that out. Went to the grocery store this weekend and hope to stretch the majority of that food out until my next payday.

I currently bring home $2058 monthly with my full time job. I work a part time job at a tanning salon (been working there off and on for about 7 or 8 years)... I started again at the beginning of busy season and was working every Sunday and bringing in almost $300 extra a month... It's now slow season, and we will be closed Sunday, so I will just be working one Saturday a month which will only be around $70 a month extra income. I do also pay a little each month to tan (employee discount pricing) but will be cutting back since summer is ending and I don't need as much color now...



I just did calculations myself...with just the minimum payments being made I should have $800 a month left over (not including gas, food, entertainment, health/beauty, etc). Wow, where has it all gone?

[bmd1011]

PM me with your birthdate and I think I can fix it for you.

I just tried to send a PM and it says I have to have at least 20 posts to do so...

[Greebo]

Ok - PM me when you get to 20 posts.

[Greebo]

Wow, where has it all gone?

uh.. rent?

[bmd1011]

uh.. rent?

No rent... still living at home with the rents until I can afford to live on my own. Around here it'd be close to $1000 for a one bedroom apartment.

[Greebo]

No rent... still living at home with the rents until I can afford to live on my own. Around here it'd be close to $1000 for a one bedroom apartment.

Gotcha.

So getting out of debt SHOULD be easy enough - cause you make enough that you *could* afford your own place if you hadn't already sold so much of your future to buy the present.

Now what you need to do is get it into your head that EVERY PENNY YOU SPEND that isn't for debt reduction is continuing to sell your future. You need to light that fire inside you to become the owner of your own future again.

[Greebo]

More news you may not want to hear:

You can't keep that car.

Your car is eating up TWENTY FIVE PERCENT of your income. That's *insane*.

You probably owe more than the car is worth right now - so what you need to is:
1) Get a good estimate on the PRIVATE SALE value of your car (kbb.com)
2) Determine exactly what you owe on the car
3) Determine the difference and add $3-4,000 to that and get approval for a loan for that amount.
4) Sell the car
5) Use the loan plus the proceeds of the car to pay off the car so you can complete the sale
6) Buy a $3,000 car that gets you from A to B

You're KILLING yourself with that car payment.

[bmd1011]

Gotcha.

So getting out of debt SHOULD be easy enough - cause you make enough that you *could* afford your own place if you hadn't already sold so much of your future to buy the present.

Now what you need to do is get it into your head that EVERY PENNY YOU SPEND that isn't for debt reduction is continuing to sell your future. You need to light that fire inside you to become the owner of your own future again.

Thank you. Those are very wise words that I need to remember so that I can stay on track. I've always had a way of giving into my present temptation and forgetting the future. The fire is lighting though, and I am ready to focus on my future!