Dave Ramsey, debt, credit cards, retirement, etc

[dbrutherford]

Well I have one for everyone. This December made 3 yearsd since I have charged one single penny on a credit card! Sad thing is though I still owe $3100 on the card I have now. I could have paid it off easily by now if I hadn't bought half the ski parts I have bought in the last year. But I do pay $1000 a month on it so March will be my last payment.

Debt used to really stress me out because I didn't have the money while in college to afford my debt bills. Now I stress because I am so close to being out of debt, I just want it gone. I still have 8k in student loans though. I may just hit my mom up for 6k amd pay everythign off. Then pay her 500 a month for the next 12 months. That way I would have 0% interest on the 6k loan from her.

 

[afcblink]

The hardest part of getting out of debt is learning to say that unsecured debt simply isn't an option. Now, I can say no to myself pretty easily, but being the heavy, downer buzzkill and constantly telling my wife (who admittedly brings in 2/3rds of our income), "no, we don't have the money" has proven more difficult for me.

Of course, prior to our marriage, I went through a business failure and as a result I had a truck repossessed and a home foreclosed on. Those sorts of events stick with you. My wife hasn't shared those life-altering experiences. In fact, she's never missed a payment for anything in her whole life, so fear of debt is not quite as real to her as it is to me.

I've just gotten to the point where I choose domestic bliss and a nagging CC balance over sound finances and a lousy marriage relationship. I'll just have to keep my fingers crossed.

 

[yamasaki]

The hardest part of getting out of debt is learning to say that unsecured debt simply isn't an option. Now, I can say no to myself pretty easily, but being the heavy, downer buzzkill and constantly telling my wife (who admittedly brings in 2/3rds of our income), "no, we don't have the money" has proven more difficult for me.

Of course, prior to our marriage, I went through a business failure and as a result I had a truck repossessed and a home foreclosed on. Those sorts of events stick with you. My wife hasn't shared those life-altering experiences. In fact, she's never missed a payment for anything in her whole life, so fear of debt is not quite as real to her as it is to me.

I've just gotten to the point where I choose domestic bliss and a nagging CC balance over sound finances and a lousy marriage relationship. I'll just have to keep my fingers crossed.

lol, well said man.

i dont have much, if any CC debt usually, but i certainly aint afraid to bust out some plastic if i want something. thats what its for IMHO!

DAM! check out that sweet new helmet! BAM, SWIPE!

what honey? you wanna go out for a pimp meal and do it up right? no problem.. bam, SWIPE!

we always figure it out at the end of the month! :smile:

i been working 2 jobs for a few months now, so i been able to buy a few toys and put a comma here and there in the bank accounts.

that said, i still carry a balance here and there and it doesnt really phase me too much. i'm back to one job now because i just didnt have too much to time lately to work out or even work on my bike, boat, ski, whatever. get home and back to work, sucked. :sad6:

 

[Matt_E]

It's a personal thing, but I always want to have some liquid assets. Whatever the reason is, I know I can run to the bank and withdrawal money if I needed it right away. I'd rather not totally wipe out all my emergency money IF I don't have to. Don't ask me why, but my track record in the past dictates that when things go wrong, multiple things go wrong. There's a certain amount of debt on a CC that I'm comfortable with and there's a certain amount of money I always like to have in an emergency fund. It's just the way I roll. Again, for me, I can have some CC debt and not get in over my head because I'm very disciplined in paying things down.

Doug

So you'd rather go into debt now to preclude the chance of possibly having to go into debt later?

 

[Mark44]

Well I have one for everyone. This December made 3 yearsd since I have charged one single penny on a credit card! Sad thing is though I still owe $3100 on the card I have now. I could have paid it off easily by now if I hadn't bought half the ski parts I have bought in the last year. But I do pay $1000 a month on it so March will be my last payment.

Debt used to really stress me out because I didn't have the money while in college to afford my debt bills. Now I stress because I am so close to being out of debt, I just want it gone. I still have 8k in student loans though. I may just hit my mom up for 6k amd pay everythign off. Then pay her 500 a month for the next 12 months. That way I would have 0% interest on the 6k loan from her.

O your lucky mom.

Mark44

 

[douglee25]

So you'd rather go into debt now to preclude the chance of possibly having to go into debt later?

If that's how you want to spin it, then yes.

I always want to have cash reserves... period. If unexpected items pop up which warrant totally draining the cash reserves (ie big bucks - thousands, not hundreds), I will opt out and split the expense between cash/CC to save for the possibility of another unexpected expense that month. There is a threshold in my mind that I don't want to cross between liquid assets and unsecured debt. Again, I'm probably way more disciplined with CC debt than most. I can handle some debt and pay it off on a fixed schedule where others can not.

Doug

 

[SuperJETT]

If that's how you want to spin it, then yes.

I always want to have cash reserves... period. If unexpected items pop up which warrant totally draining the cash reserves (ie big bucks - thousands, not hundreds), I will opt out and split the expense between cash/CC to save for the possibility of another unexpected expense that month. There is a threshold in my mind that I don't want to cross between liquid assets and unsecured debt. Again, I'm probably way more disciplined with CC debt than most. I can handle some debt and pay it off on a fixed schedule where others can not.

Doug

I think I see what you're saying, it's like you have different levels of 'emergency' and like having money available just in case, even if you've had to spend some for an 'emergency'.

I don't agree with it, but I think I see where you're coming from.

I have a real aversion to paying interest to banks anymore, period.

 

[douglee25]

I think I see what you're saying, it's like you have different levels of 'emergency' and like having money available just in case, even if you've had to spend some for an 'emergency'.

I don't agree with it, but I think I see where you're coming from.

I have a real aversion to paying interest to banks anymore, period.

Exactly! That's basically where I'm coming from. The thing is, I always have a card with 0%... always. When one offer runs out, I close it out, search on www.creditcards.com , fill out the online form, get approved instantly, and in another 2 weeks I have a new card with a $30k limit.

Doug

 

[dbrutherford]

O your lucky mom.

Mark44

I know, she is great here's to the good old bank of mom :Banane35:

Several months ago when you said to just pay her off in one lump some, I declined and kept making the set payment amount each month until I paid off the moving loan she gave me. So just like any lending institution, I showed her that I could meet my monthly obligations. This opens the door up for future lending situations. Not that I should depend on my mom for loans at any point in my life but she has been giving and why would you turn down an oppurtunity at a cheaper interest rate? Not that the student loans are that high of a rate, just 0% would be a lot better. Only downside for me is that mom doesn't report my good payment history to the crediting agencies like the student loan would. I could use that to help secure a better mortgage in the upcoming year. Downside for her is lost income for the interest she could be earning on the loan elsewhere.

I bet your attitude woudl change if you had a child in the same situation.

But to each his own and I agree with you I should take care of my own responsibilities. I am just saying why not explore all options possible? It sure would save some interest each month and I would be 100% out of debt all together a lot faster. Plus I would have the funds in the bank at any point in time if she wanted the full amount. She has it to spare so why not ask? It couldn't hurt me any.

 

[dbrutherford]

Exactly! That's basically where I'm coming from. The thing is, I always have a card with 0%... always. When one offer runs out, I close it out, search on www.creditcards.com , fill out the online form, get approved instantly, and in another 2 weeks I have a new card with a $30k limit.

Doug

If you ask me, that really isn't a good idea. Part of your FICO score comes from the length of credit. Keeping a card just for the introductory rate of 0% usually 6 month to a year at most and then canceling it or balance transfering it to another just creates a long list of former creditors on your credit reports.

I took a hit in my FICO score because I had five credit cards. Two (Mastercard & Discover) I had since 2001 and I consolodated them onto my current card (Citi). Then I closed those two cards out. I had a Chase card that I got for a balance transfer a year earlier. Yet Chase wouldn't give me a high enough credit limit to balance transfer all of the two previous cards onto it. So I said fine and cancled it. Then I had a card (HSBC) that I bought a 4-wheeler on from the dealership. I paid it off this year and canceled the card. I had the 4-wheeler card since 2003.

So as of right now I have one Citi card with a balance of 3100 and a limit of 8000.

A Chase card I never used, even activaed, but had in my name for almost a year.

A Mastercard and a Discover I had since 2001 used, paid off, and cancled.

A HSBC I had the 4-wheeler I bought on, paid off in full, and cancled it.


I had a higher FICO score with all 5 cards active than with four of them paid off and cancled. Time will fix that but as of right now I am getting screwed in the FICO score because of the "length of credit history" portion of the score.

I personally thinks it looks better that I paid off all my debts and closed the accounts. But teh FICO is a mathematical formula and it doesn't look at that. From here on out, I will only keep the Citi card active and only use it in dire emergencies. But I also do have teh emergency funds in my bank account.

 

[afcblink]

I personally thinks it looks better that I paid off all my debts and closed the accounts.

Credit scores are not just about how likely you are to pay off your debts. They are also about how likely the lender is to MAKE MONEY off your business with them. Creditors make the most money when you use a lot of credit, carry a large balance, and manage to pay on time. That's who they're looking for.

Paying off and closing accounts make you a less profitable prospect.

 

[douglee25]

If you ask me, that really isn't a good idea. Part of your FICO score comes from the length of credit. Keeping a card just for the introductory rate of 0% usually 6 month to a year at most and then canceling it or balance transfering it to another just creates a long list of former creditors on your credit reports.

I took a hit in my FICO score because I had five credit cards. Two (Mastercard & Discover) I had since 2001 and I consolodated them onto my current card (Citi). Then I closed those two cards out. I had a Chase card that I got for a balance transfer a year earlier. Yet Chase wouldn't give me a high enough credit limit to balance transfer all of the two previous cards onto it. So I said fine and cancled it. Then I had a card (HSBC) that I bought a 4-wheeler on from the dealership. I paid it off this year and canceled the card. I had the 4-wheeler card since 2003.

So as of right now I have one Citi card with a balance of 3100 and a limit of 8000.

A Chase card I never used, even activaed, but had in my name for almost a year.

A Mastercard and a Discover I had since 2001 used, paid off, and cancled.

A HSBC I had the 4-wheeler I bought on, paid off in full, and cancled it.


I had a higher FICO score with all 5 cards active than with four of them paid off and cancled. Time will fix that but as of right now I am getting screwed in the FICO score because of the "length of credit history" portion of the score.

I personally thinks it looks better that I paid off all my debts and closed the accounts. But teh FICO is a mathematical formula and it doesn't look at that. From here on out, I will only keep the Citi card active and only use it in dire emergencies. But I also do have teh emergency funds in my bank account.

What I failed to mention is that I have a couple cards that I've had for going on 10 years now. I don't just open an account and close it right away. There really is a method to my madness which has helped me generate a score of over 750 (last time I checked - I must be doing something right!!) It's not only a good history that brings about a great credit score, but it's also available credit. I bet you get dinged on your credit report because you don't have enough available credit.

Doug

 

[tnj4life]

I will say this about dept, CC, interest, and all the stress that comes along with it(especially on a marriage). The ONLY way to learn is trial and error on your own. Some people will live from paycheck to paycheck and cannot and will not try anything different and wont have a penny in savings( i know a lot of ppl like this). Whereas some other ppl learn pretty quick. I'll guarentee you each one of us have different spending and saving habits. But the less we rely on banks lining the pockets of ceos with stupid interest payments and put more of your own cash back in your own pockets it will make our way of life more enjoyable and happy. Since Ive gotten out of dept I feel like a burden has been lifted. And because of my mistakes and stupidity it has molded my character and my new views on dept. And I wouldnt have learned all of this if I havent jumped in it. Some ppl tried to tell us about the house we were building but at the time we wouldnt hear it. A $915 mortgage for 30yrs of my life. Over $700 was going to the big wigs.

 

[The Penguin]

that's exactly right - the debt to income ratio

credit score wise - it's best to keep your credit accounts to 50% of the credit limit, once it goes over 50%, your credit scores will suffer.

 

[SuperJETT]

that's exactly right - the debt to income ratio

credit score wise - it's best to keep your credit accounts to 50% of the credit limit, once it goes over 50%, your credit scores will suffer.

It is not 'best' unless you're trying to pay a lot of interest to keep your credit score up so you can borrow more money and pay more interest down the road.

Bad plan.

 

[Big Kahuna]

Kinda Ironic. Everybody says it is bad to pay interest. Yet, for banks to be in business they make money off interest. So, If we pay no interest on anything, banks will go under. If that happens then who will loan money for mortgages??? We cannot pay cash for everything......

Moderation is the key........ Does not matter which method you use. Set a budget, follow it, make sure you can handle the unexpected and live your life.

 

[dbrutherford]

I bet you get dinged on your credit report because you don't have enough available credit. Doug

That and two medical bills turned into collections because I was fighting with the insurance company about paying them, a long story. Also being past due 120 days on the Mastercard three years ago because I couldn't afford the payment and was fighting with MBNA about being put on a repayment program is the worst ding to my credit. They raked me good at the defaulted interest rate for four months. That is what opened my eyes and made me realize I needed to change my ways or else I wasn't going to get out of debt. I was in college at the time and thinking of "how much money I was going to make" when I got out of school. Granted I got a job no problems but it is tough paying rent and a bunch of debt bills first out of school. You are paying the debt but not knocking iot out very fast. I did get lucky with my new job and I got a 5k sign on bonus. All in all I learned my lesson but not quite enough. If I was really smart, I would already be 100% debt free and socking away every penny I had. My bank is now offering a 5.01% APY on their checking account. I made 40 bucks the each of past two months for doing nothing!


Shaun, it is 30 to 35% and below of your credit card limit is ideal. Anything higher than that hurts your credit. Lenders are worried you will rack up more debt and not be able to pay them. Example, you buy a new home, then you need stuff to put in it. I have been doing a ton of reading up because I am wanting to buy a house soon. But I came back to my senses and said to myself I should wait and save some more. I feel the prices and interest rates will drop some more. That is better for me!

 

[SuperJETT]

Kinda Ironic. Everybody says it is bad to pay interest. Yet, for banks to be in business they make money off interest. So, If we pay no interest on anything, banks will go under. If that happens then who will loan money for mortgages??? We cannot pay cash for everything......

Why not? There are people that save up and pay cash for houses every day.

Think outside the box.

 

[tnj4life]

I doubt everyone on this forum will quit financing because of what someone said on this post, but maybe it can help someone to not be so dependent on loans. Banks do need our business to survive, but ppl are too loan happy these days, and im speaking for myself and how I used to be. Just like the housing market crash with the balloon notes. Americans will finance bubble gum if they dont have the cash. Moderation is the key with anything. I think since I screwed up it scarred me for life so maybe thats why im a bit extreme about it. Im gonna buid my next house out of my pocket. I know a guy that does great carpentry work reasonable, he has a few guys that work with him and Im going to pay him to get it in the dry and im going to do most of the rest of the work. Once you get a house in the dry with a roof on it it can sit there no harm done and work on it when you want to.

 

[SuperJETT]

speaking of emergencies, our water heater gas valve went out last night. The heater is fairly old, so I'm just going to replace the whole thing, and since we have an emergency fund, it's no big deal, just gotta get one and get it hooked up.