Frustrated with the Baby Steps - Page 2
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  1. #16
    Registered User Mochashello's Avatar
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    Quote Originally Posted by Greebo View Post
    DR has answered the question before - yes, Mocha's Heloc debt is large enough to be considered part of baby step 6.

    But that's where mocha's frustration lies - because BS4 - 15% to retirement - comes BEFORE early pay off of the house.

    Mocha - unless there's matching on the 401k to be gained, don't modify the plan. Save the BEF, pay off the CC, then save up the EF. Your retirement investing, when done at the right time, will have a much better long term pay off than paying off your house, which is why house comes after retirement investing. If over 20 years you make 10% in the market but pay out 6% on the house, you're ahead overall.

    Meanwhile, keep looking for ways to scale back lifestyle. With $5k / month coming in, you *should* be able to live on 30-35k. Maybe a tad more. Like I said - the house is not being a blessing to you right now...
    Greebo, I've been sticking to the plan as far as steps 1-3 in order. When hubby started considering selling his car (that's a big WOW!), steps 1-3 were suddenly not too far off from completion. I am not tempted to put more into 401K before the first 3 steps, regardless of matching.

    The reason I want to modify is because if we hadn't consolidated, we'd be snowballing a good chunk of the debt that is on the HELOC. Two cars and some other random financed stuff. Had I come across DR even 6 months ago I would not have used the HELOC for some things (the sod and a patio enclosure). But now that it's done I'm forced to let it sit there and keep paying interest on it while I work up to 15% going toward the 401K. I'd rather rewind and undo some of the consolidating balance I created.

    Can you see where I'm coming from with that?

    Well, nothing is decided or anything. This is just my mental processing of the situation I am faced with. I don't want to deviate from the plan DR has laid out, but I can't help but want to rewind the clock a year by paying off the car, the sod, the sprinklers, and whatever else we paid for with the HELOC in the last year or so. It's hard to resist that inclination, and even harder to discount the logic I see in it.

  2. #17
    Registered User Greebo's Avatar
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    If you want to snowball the HELOC, you certainly can. You just don't *have* to...

  3. #18
    Registered User Mochashello's Avatar
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    Well, I agree it would not be wise to try and pay off the entire $154K HELOC before saving for retirement. But I am leaning towards making a dent in it with snowballing. We shall see.

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  5. #19
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    How about this? Pay off some of that HELOC like you want, to at least make it "fair" to you. Whether that's 1/3 or 1/4 or whatever is up to you. Then start working on your retirement and the rest of the HELOC, or just your retirement, or whatever you're comfortable with? But don't forget to do BS1 and 2 first.

  6. #20
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    uh, i would pay off the heloc in the debt snowball, then start retirement.

  7. #21
    Registered User HappyMama's Avatar
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    You sound very talented . I hope your web design project brings you joy. I know you are trying so hard. Keep your chin up, things will get better. Great ideas about selling the car etc.Hugs and prayers to you.

  8. #22
    Registered User HappyMama's Avatar
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    Quote Originally Posted by ladykemma2 View Post
    uh, i would pay off the heloc in the debt snowball, then start retirement.
    That is more in likely the route I would take also.

  9. #23
    Registered User Cricketlegs's Avatar
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    Ok here is what I am doing....and I follow Dave too~~my way. It may be WRONG but it works for ME and that is what I think is important.

    One-my bills are all current so ok there.

    I had to use some of my EF last month but putting what I used back this month so that is okay. No interuption on my snowball.

    First, I am snowballing TWO debts at one time and while this has been happening this year I did a seperate MEDICAL BILL payoff snowball.

    The medical bills are now all paid off-made my last payment this month so $50 rolled into my debt snowball.

    Now, my cc payment is about $105---I pay $300 but starting in October I managed to find another $300 so $600 a month on cc which puts payoff at or around March 2009.

    BUT I also snowball my car. The payment is $310 and I pay $400 so I am 3 months in advance as well as making more payment than principal so I am loving seeing the balance go down. When the cc is paid, the snowball $600 will roll to the $400 making $1000 and the car gets paid off in July 2009--that is the new plan.

    The current plan--$300 and $400 are worst case payoffs as if the plan stays as is in my current signature.

    So I do it "wrong" and yet it works for me.

    Payoff on the Kirby will stay the same. It is a draft and I am not messing with it short of a payoff. I will let it just ride itself out--see my signature.

    Also, we do have a 401k--it is small and dhs employer pays too so we keep it going. At the step I am another Dave no no.

    Now, when I started my dd was ALREADY in college and I had already started loans. I hope to get started on dds loans asap before interest starts so you see I now have 2 kiddos in college and am no where near the "save for college" step lol. College is my REALITY not my future....Maybe for the 12 year old but not for the 20 and 18 year olds! Sooner the debt is paid the sooner I start to deal with that debt.

    The reason for this post~~~it is YOUR money. Dave's plan WORKS and it works well but all situations are unique so find your system and base it off Dave.

    Can't you choose a percentage of your HELOC and work it like a snowball. Keep a running tally of the debt going down so you feel like you are doing something while follwing Dave's steps???Break it down and give time limits and hit it as hard as you can with any extra misc money you find.

    One thing I do is right when the money comes in I PAY it OUT. Can't blow or waste what you don't have and can't get back.

    Driving home and want to stop for a burger, keep driving and move the money from your account to the debt right then. Find some little tricks that work.

    Good luck and don't get discouraged!

  10. #24
    Registered User Mochashello's Avatar
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    Thank you! I think that is what I am going to do- work on paying down a certain amount of the HELOC before upping our 401K contributions. I'll have to discuss with hubby what the figure will actually be. But I think this will work better for us (me).

    Thank you for encouraging me!

    Oh- and I totally agree with moving the money right away! I do that all the time. If a bill is less than I budgeted for, I move the excess to the savings account or the Heloc or wherever it should go right when I pay the bill. Otherwise it disappears somehow- funny how that always happens!

  11. #25
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    Wow, I feel your pain, and I totally agree with Cricketlegs "The reason for this post~~~it is YOUR money. Dave's plan WORKS and it works well but all situations are unique so find your system and base it off Dave." Absolutely what I was thinking.

    The HELOC is stressing you out. You need to find what works for you and will keep YOU motivated. It doesn't matter if an expert says, "do it this way" and it works for thousands of others. If it won't work for you, modify it.

    Did I read correctly that you are paying interest only on the HELOC? If so, putting it off doesn't seem to make sense. You're making NO progress on the principal.

    My advice, for what it's worth, and obviously modify to your heart's content, but from what you've written:

    Follow the baby steps through #3 as you're planning to do.
    Make a plan for #4. For example, determine you'll put some percentage of every raise towards the 401K. Each year you'll be increasing your 401K percentage effortlessly and at some point will reach 15%.
    Snowball the part of the HELOC that you used for extraneous stuff. If that is $40,000, consider your snowball done when you've paid off that much principal, then finish step #4 (if you haven't reached it by funneling raises). Then continue baby steps in order.

    Just remember, it is YOUR money, YOUR life and only you are the real expert. It's great to read & gain advice from others, but no one's life, personality, situation, etc. is the same as anothers, so do what you think best.

  12. #26
    Registered User Greebo's Avatar
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    Just remember, it is YOUR money, YOUR life and only you are the real expert.
    Yes, yes, and then no... not in those words.

    She (and DH of course) are the only ones who can make the personal decision. But that's true of everyone, whether they become an expert on the decision or not. I disagree that only the person "on the scene" can determine what the best course of action would be. Sometimes the person on the scene is the worst one to make that call. NOT sayin that's true here - just making the point.

    Replace "are the real expert" with "can ultimately decide", and I'll agree.

  13. #27
    Registered User Mochashello's Avatar
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    Check out my new goals in my new sig file. This is between now and the end of 2009. Of course this list may evolve and grow and change, but this is what I came up with as my starting point.

    I also found out my balance on the mortgage is $4K less than I thought- yay!

  14. #28
    Registered User chevy_chick95's Avatar
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    Congrats!! Those are some great goals! :clappy:

  15. #29
    Registered User Cricketlegs's Avatar
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    Great goals!

    Remember that the budget is like a living part of the family. Try to stay 100% on it, roll with it when it changes, fix it when it breaks but always keep it close by.

    Have certain things you absolutely refuse to budge on --for example a set EF fund. If you have to use it--put it back, like I am doing THIS October.

    Pay a set minimum amount on the debt you chose to work. Steal from everywhere else to get it done, do without, or find a way to make it work. Make the debt payoff dates be worse case instead of must be paid dates that sometimes let you down.

    NEVER set yourself up for failure and know the budget can change keeps you on your toes and getting it done.

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