My past debt and current plan

[StimpyJCat]

Hello everyone,
I've been reading posts here for a long time and decided to register and post my story.

My debt started around 2001-2002. I had a failed marriage which spun me into a downward spiral of debt. I was behind on most of my cc's and had a car loan on top of it. My total debt was over 40K and my interest on most cards skyrocketed with the late payments. Even to this day it hurts my head to think about the amount of interest I was paying at the time. The first step was to get frugal with my expenses and get current on my cc's. Then I started getting good cc offers with 0% periods and little to no balance transfer fees. The card hopping began.

It wasn't until 2005 that I had the interest down to a managable level. The debt was about the same because I was spinning my wheels with all the interest. I kept card hopping and traded in the sports car for an car with good gas milage. Today I have around $20K of debt. I now have three cc's with a continuing balance that are all at 0% and a car loan at %5.99.

My plan:
I'm now engaged (the ring is part of the reason I'm not further along in my debt reduction). I've opened a ING account and will be paying the min due on my 0% cards and putting everything left over (after bills & misc expenses) into the ING. The first 0% card will be up in July and I'll take out what I need to pay it off in June. Then continue to save until August. At that point I'll pay off the second 0% card.

Have to make a choice:
I'll have enough saved up in August to also pay off the car. Normally I would pay it off, but we are looking to get into a house some time this year or next. So depending on if we find a house we like I'll either use the savings for a downpayment (my parents are going to help with the downpayment, but I'll need 5% of my own.) on a home or to payoff the car. Either way I should be able to save up enough for the wedding (In December). My finance wanted to get married earlier but I wanted to be out of cc debt around the time we finally tied the knot.

Another option is to plan on getting the house next year now and use the extra money each month to pay down the principal of the car loan. But, it is a great market to buy a house right now and we might find a deal sometime this year...

Next year:
The last 0% card will be up in Feb 2009 and I will have enough saved up to pay it off as well. Then the only debt we will have is the mortgage and my fiance's student loans.

If anyone has any advice on my choices coming up please let me know. Otherwise thanks for the inspiration in the past.

[leezza]

You sound like you have things pretty well figured out.....I only have a few comments and they are made with you in mind.....

**Your Fiance, have you checked there debt....is there anything else besides the student loans???

**You are working so hard to be out of debt don't you want your fiance to be out of debt when you get married???

**You fiance seems to be pushing pretty hard......

**Try not to overspend on a wedding....it is one day.

If it was me I would want to have a pretty good amount in savings.....

JMHO,
leezza

[Cricketlegs]

if it were me I would hit debt and car debt hard and put off the house.

If not you will still have the debt, car debt AND house debt.

That is going in the wrong direction IMO.

Remember money can't buy happiness but debt can sure suck the life out of it!

[StimpyJCat]

You sound like you have things pretty well figured out.....I only have a few comments and they are made with you in mind.....

**Your Fiance, have you checked there debt....is there anything else besides the student loans???

**You are working so hard to be out of debt don't you want your fiance to be out of debt when you get married???

**You fiance seems to be pushing pretty hard......

**Try not to overspend on a wedding....it is one day.

If it was me I would want to have a pretty good amount in savings.....

JMHO,
leezza

My Fiance has no cc debt, but does have a car loan and student loans. We have been going out for over three years so I think she has been great about waiting for my debt to be paid off. We haven't forgotten her debt, but the student loans are at a great rate and are not a current priority. She has been paying more towards her car loan and is starting to save for the wedding. There is no way for her to payoff her debt before the wedding.

We don't plan on overspending for the wedding, but it will still be fairly expensive. We are looking for all the ways to save on wedding expenses and will not go crazy on it like many we have known.

My minimum payments are very small (around $223 total) and I think we will be able to handle anything a EF would cover. But, I still want to build up my savings. I've been agressivley paying off the debt over the last few years (Usually over 50% of my takehome) and haven't really put together an EF. This year I will put all but my minimum payments into savings, but it will be used when needed to payoff cc's, possibly the car loan, and to pay for the wedding.

Once we get in the house I'll start to build up the savings. One thing I never did during my debt reduction is reduce my 401K contributions. I give 6% of my paycheck (which gives me the max matching) and I have two rolled over 401Ks in an IRA from previous jobs. I've been at this job for 10 years and I'm not very worried about job security.

About the choice of paying off the car debt or buying a house I'm leaning towards paying off the car. But, if I can get into a house for a great price and a great rate this year I might consider it. The housing market might swing the other way by the time we are able to do it next year. So it might actually save us money to buy the house instead of paying off the car. Either way we will be in a great place financially by next year.

Thanks for all the advice.

[Telephus44]

I'm in a similar situation between debt reduction and saving for a house - her ein MA, houses are pretty expensive (though getting cheaper!). We've decided to just keep paying the minimums on the car loans (we have two) and sock the extra away towards a house. The interest rates on the car loans aren't so bad, and while yes, debt is debt, I figure that if I did buy a house, I'm going to pay it off sooner the sooner I buy it (if this makes any sense).. because I'm not getting any younger. I believe that debt is a money management tool, not something to be avoided like a plague of the black death :-)


Either way, you have a good plan and made some good decisions. As long as you keep your head on your shoulders, you should do well.

[Telephus44]

**Try not to overspend on a wedding....it is one day.

And I agree with this too :-) It doesn't mean you have to have a wedding dress from the consignment shop and a potluck reception, but please - don't go overboard on the big day. Pick a budget amount and stick with it. Spend money on the things that are important to you and be frugal on the areas that aren't. We spent a lot on our invitations because I work in the paper/printing industry and I wanted something nice - but we didn't hire a photographer because I didn't care about professional pictures. I have a friend that is a photographer and they spent a ton on money on their photographer but next to nothing on flowers - so don't be afraid to spend where it matters to you, but you don't have to spend a ton of money on everything.