Calling anyone who started with large debts

**pammy** · 12-19-2005, 11:18 AM

This came from my other thread. Here's the deal:

My smallest debt I start with for snowballing is over $10k. I have no small ones to work on. No cc's, no pay-day loan places, no department store charges, nothing. Just big ones, only 3 other than my mortgage. I have been doing so many new things to save money and I'm seeing some of the good of it (we're saving money for retirement and we didn't do that before), but I'm not able to start snowballing any debt yet, and the smallest one is just too big.

I'm getting frustrated. I'm reading like it's going out of style. I'm shopping sales, stockpiling, cooking from scratch, shopping thriftstores, selling my expensive car and driving a used paid-for car, cutting down some utitilities, staying home more to save on gas, line drying clothes, made most of the Christmas gifts, finished buying other Christmas gifts for under $300 (of which I had already saved up).... basically doing all I can now and voraciosly reading and learning of more ways to save. All of this on one income and we're doing so much better than we were when I was working.
~YET~
I don't see any fruits of my work. And if nothing sells the way I'm hoping it does it will be a very long time before I see the first 'small' debt paid off.

Someone please tell me how you kept the faith. I know I will look back at this and laugh.

All things take time. I know I will be able to get out of debt completely, I'm certain of it (I'm Taurus, stubborn so describes me). I know I am not a patient person.

If nothing comes of this thread, then at least I feel better getting this off my chest. Think I wrote something like this a few months ago, lol. See? Still no patience. At least thanks for letting me vent, peeps.

Think I need a break, and to just shut up.

**Darlene** · 12-19-2005, 11:51 AM

I think writing down the balances and payments in black and white will help you see. Your doing all the right things and should pat yourself on the back for that. Don't give up, those debts are going down.

**my4littlebuffaloes** · 12-19-2005, 12:01 PM

We were in the same boat as you. Our only debt was a car loan of $20K and a student loan of $11K. It was frustrating, but it felt so good to add large chunks to the required payment each month. That is what kept me motivated. It was frustrating when I could only make th minimum payment on the van. It was inspiring when I could triple it.

One thing I would recommend is to stop funding retirement and add that money to your debt snowball. It would go much faster then and when you have your debt paid off you can put ALL of that money towards retirement each month.

Jennifer

**homesteadmamma** · 12-19-2005, 01:25 PM

I'm the type of person that always goes AGAINST the trends. We had $18,000.00 in debt and rather than start with the smallest amount, I started with the largest amount because the interest rate was so much higher.

I did a couple things that helped me see how much I was saving.

~make a graph and put it somewhere where you can see it often. Each time you make a payment, make sure you color it so you can see your amount going down.

~make a graph for the amount of interest your saving by paying off your debt early. There is nothing quite like seeing the amount you saving here and that is no longer going to be going into someone else's pocket (the banks!!!)

I also made myself a couple challenges. I challenged myself to see how much more each month I could put towards the debt I was paying off at any one time. If I put an extra $100 towards that debt, I challenged myself to put more than the $100. It got to be a game for our whole family, to see where we could find a few extra $$ here and there to add to the debt.

The other challenge we did often was try to find something we could stop doing completely for a full month. ie: we stopped the newspaper and then realized we didn't get all that much news from it we didn't see on tv, so cut it out completely after the end of that one month.

Remember that every $$ over and above your minimum payment means less interest your paying out!!!!

Your doing great - keep it up.

**Mamaw** · 12-19-2005, 01:55 PM

I understand completely. I have one smaller debt right now to pay off then the remaining ones are ALL biggies. So I can relate to what you are saying! Thanks for posting this thread so I know that I am not alone in having big ones!!! LOL

I think for 2006, I am going to make the graphs and charts to keep watching the numbers go down!

Keep going! You are doing great and before you know it your debt will be gone!!!

**Lucky Star** · 12-19-2005, 02:21 PM

Boy oh boy! I can definitely relate to the challenge of paying off large sums of debt. I started on this journey in August, and the first step was honestly writing down exactly how much we owed. Needless to say, it was not a pretty sight - but what a great motivator! It sounds like you've already taken that first step - taking an honest look at how much you owe - so you are already ahead of many people

Here are some of the things that have worked for us (and others have already mentioned some of them):

1. Stopping all retirement fund contributions. That increased our monthly cash flow substantially, so that we could start paying off debts faster.

2. Liquidating our EF to a minimum of $1,000, and keeping it there. Everything else went towards the debts. Since we both work, we felt that it would be enough in case of a real emergency.

3. Being realistic about how long it's going to take. I looked carefully at our budget, and although our cash flow varies substantially from month to month, I was still able to make a ballpark estimate of how long it's going to take. This way, since we know that it will take us about 2 years, we can stay patient and realize that for the next 2 years our lifestyle will have be quite different. It is a tradeoff we are willing to make.

4. Modifying the plan to our circumstances. We first paid off a couple of smaller loans, but then we tackled the bigger of the remaining two, for the same reason as you: the interest rate on the bigger loan is significantly higher, and will only keep going up. Of course, plowing through the big loan is going to take a while. To make it a bit more fun, and our progress more tangible, we play a little game by setting interim milestones: e.g. trying to get it to under $40K, then we'll be trying to get it to be less than the "smaller" loan, etc.

~ Trying to ramp up our payments. So far, each month we have paid down more than the previous. It is also like a game - to see if we can keep doing that.

~ Tracking our progress. I have put together a simple Excel spreadsheet, with rows for each of our debts and columns for each month. At the end of each month, I add a new column with the month-end balances on our loans, and a total outstanding balance. I also added rows for each month with the following metrics:
$ reduction in principal for the month
reduction as % of total principal
$ reduction to date (since we started this plan in August)
% total paid to date
At the end of each month, I print out an updated spreadsheet and proudly display it on our fridge. Every time we open the fridge, we can take a look and feel good about the progress we made. It also reminds us of why we are doing this and making all the sacrifices. My DH especially gets very excited to see the new chart every month (since I'm the one managing our money), so it's a great way for him to stay up-to-date and motivated.

~ Posting updates here! Posting my regular updates here at FV makes me feel more accountable (to myself) and also gives me great motivation from all the positive comments and words of encouragement that I get.

**pammy** · 12-19-2005, 03:25 PM

Am so glad I'm not alone. So much great advise, you ladies are a gem!!

As you can probably tell I was pretty frustrated this morning. So what do I do when I get frustrated? I read. lol I got out Dave Ramsey's book again and started from the beginning. Instant inspire! Like a jolt of caffeine.

Sat with some figures, figuring this way, figuring that way. I love the graphs and printout ideas, it'd be a great way to see how it's working for us.

Still, I get confused when one group advocates 'paying yourself first' and then another group advocates using retirement money towards debts right now instead of funding retirement. There are good arguments for both. That could be a debate in itself.

I lean more towards using it now to pay off debts, dh is steadfast in paying ourself first. We need to really discuss this issue.

I've got my debts pretty much in interest order, and it goes with the smallest debt with the highest interest to the largest debt with the lowest interest. Except the student loan. At the moment it's my very smallest interest, so still debating with myself over paying it off last or right before the mortgage. Got a while to decide on that one.

Thanks yall for the pick-me-up, I needed it greatly!

**thrifty gal** · 12-19-2005, 03:55 PM

Big hugs. Paying off debt is never any fun. At least not for us! I get really discouraged even over the small ones. Everyone here has given you some really great advice. I just wanted to say don't give up. Keep on keeping on.

Keep us updated.

**Lucky Star** · 12-19-2005, 05:22 PM

I'm glad to hear you're feeling better about the situation - it's really not that bad! And I think you have a pretty good idea of how to turn it around.

Interesting question regarding "paying yourself first" vs. paying off debts first. I actually think that both are a form of "paying yourself first", because all it means to me is not spending money on "things" but rather putting money towards your future. Paying down debts is just one form of doing that. When you have debts, it means that you will have to pay that money back sooner or later. And usually, it's not free. There are some debts (like mortgage) that are better than others (like CC's, which I know you don't have). But it basically means that you are stuck with payments for a long time. If you can get rid of debts, it's almost like you're paying yourself, because once they are paid off, you'll be able to save all that money on interest and start paying yourself even more, but this time into retirement fund or savings.

Bottom-line, it's all a matter of priorities. Regarding mortgage and low-interest student loans (by that i mean less than 3% interest) are probably lower priority than saving for retirement. Even Dave Ramsey advocates fully funding retirement plans before paying off mortgage.

That's just what I've been thinking and wanted to throw it out there! I'm sure you'll do great no matter which way you go

**my4littlebuffaloes** · 12-19-2005, 05:57 PM

Just wanted to comment on the student loan. I would pay that off last, just before the mortgage. If I remember correctly it is the lowest of your interest rates right? But also, you can deduct the interest on your taxes. So, I wouldn't hold on to it for the tax write off, because it isn't much, but I like your idea of concentrating on the others and working on that one last, right before your mortgage. You are like me - a planner!

Jennifer

**Telephus44** · 12-19-2005, 07:21 PM

I think that different people have different plans about what works best for them - for some people that's retirement, for others its paying down debt, and then the debate about smaller loan vs. largest interest rate - you can read all you want on the subject (and you should! A lot of people have great advice and it's important to be informed), but I think you also have to remember that there is no one "right" way or "wrong" way - just what works best for you. While DH and I are chipping away at his CC debt and my student loans, we're also currently investing in our retirement funds AND in the stock market. Could we pay off our debt faster? Yes, but that's not how we're choosing to do it - and its always a choice.

And on the original subject - I challenge myself with small hurdles. My biggest debt is my student loans - I started with $17,625. First I tried to get it under $15K, then $10K, now I'm pushing fir under $5K. It just helps me to break it down into more managable chunks.

And it always helps to have a plan!

**SHOPGIRL** · 12-19-2005, 09:33 PM

Remember, you didn't go in debt overnight so it will take awhile to get out of debt. Also, your mortgage and student loan debt is good debt. Your very fortunate, you don't have credit card debt. You are making strides in reducing your debt. If you want to get rid of it faster, maybe look at ways to increase your income.

I'm doing a little bit of everything right now. I'm contributing to my retirement account monthly(though, starting next month I'll be decreasing my contribution).

I restructured my debt. I paid off my smaller loans, then I combined a bunch to a lower rate card.

I'm working on my larger debt first with the highest interest rate.

Also, any extra money I earn was going to pay down debt, but right now its going into my EF. My dh will have inconsistent income beginning in 2006 so I need to have as much money as possible saved.

Posting on FV keeps me accountable and keeps my spending in check. I've been soo good with the XMAS budget and I'm not buying things I don't need.

I'm with you; I'm frustrated too, it would be nice for the debt to go down faster. I'm hoping my dh has a steady stream of income the beginning of the year so I can continue to pay down debt.

**PrairieRose** · 12-20-2005, 05:02 PM

It was really hard for me in the beginning because the progress was so slow. Just hang on, keep reading (that's what I did and still do for inspiration) and figure and re-figure those debts and interest. Dream about and see yourself celebrating being debt free. It's an awesome experience when what you've been dreaming about starts to come true. Hang in there. It's much more fun when that snowball gets bigger......it goes soooo much faster down that mountain of debt.

**pammy** · 12-20-2005, 07:09 PM

*Update* Sorta...

Sat dh down last night, we got a lot worked out. Finally! he's gonna let me sell the rv. I've spent all day working on that thing! lol Did not realize I had so much stuff in it! It's all sitting in the floor of the dining area right now, not sure where I'm gonna put it. Called my sis who is an rv dealer, she's gonna help me sell it. Had me take a ton of pics, finally got them up on the net. Well, everything except all the awesome basement storage, I gotta finish getting stuff out from under it first. Stuck all the pics on my boatgirl name for the photobucket.com site so maybe it'll be easier for her customers to view it all. We'll see. But it's at least a step in the direction of being gone. She has people calling her all the time for her rv's. I hope I get lucky soon!

We also decided to sell dd my used paid-for car and go get my high dollar one off the sale lot. It's been there 2 months and they said they haven't had a nibble yet. Dd is thrilled to get mine! And she paid us pretty much what we've spent on the used car. I know she'll be getting a good vehicle, I love that car. As for me, I will buckle down and pay the newer car off! I know I will be getting a nearly new vehicle with under 27k miles on it, I can drive it forever. We decided to put the $400 extra a month we have towards this car loan, along with it's regular $500 monthly payment. When the rv sells, that's another $400 towards this car. When you add the $500 payments I'm making on it already, the rv payment, and the extra $400 that's $1300 a month I can put towards this car. Plus, what dd has paid me for my used car. Plus whatever kind of bonus we may get this Christmas. Plus whatever I may get over the sale of the rv. That car will be paid off in 14 months at the very latest, if not sooner. Then we attack the student loan. That will be gone a year later. Then we fully fund the emergency fund, another 6 months. Then we attack the house. By then that would be a total of $2000 towards payment on the house, we can knock it out in less than 3 years later. All of that without any changes than what we've already accomplished already.

Better, better. I'm loving a plan!! I'm a planner, I tell ya! lol I gotta have a plan, gotta have my paper out and draw it out and make goals. I love graphs and all. This plan is doable!

Thank you, thank you, thank you all. You gals bolstered my spirits! It was much needed and I truly do appreciate it. Thanks

pammy