| Needing help with personal finance... |
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btobalski
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Joined: 08 Jun 2011
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| Needing help with personal finance... |
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To start off I am only in my early 20's and am not happy with my financial debts and condition. After recently adding up all debts I owe(student loans, credit cards, car payment and personal loans) I have found out I owe over $40,000(half being my car and over $16,000 being student loans).
What I am most worried about is getting rid of my estimated $3500 credit cards and personal loans, I was wanting to see if I could combine the 2 credit cards together and quickly pay off the personal loan.
Also I would like to find better ways to quickly put money aside for emergency funds, child's future and everyday family fun or vacations.
Any help or insight is very much appreciated.
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Wed Jun 15, 2011 9:01 pm |
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oldguy
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So - in the military with kids and SL? So - married? and a degree? and a good income?
The usual financial disaster for people is late-model cars. And if you want to see the worst of the worst, drive thru a Base such as 29 Palms. You see rows of $50,000 cars/trucks. Big Dually with 4 Doors, 4WD, Diesel. They depreciate at about $4000/yr and cost $2000/yr to insure. So - $6000/yr just to park one. If you drive it, add another $4000/yr for gas. That $10,000/yr cost sucks about $13,000/yr of your gross salary - folks don't realize it, they mostly look only at their monthly payment. It also explains why millionaires usually drive older cars. 
Your distant future is mainly directed by your investing, not your debt. Eg, if you invest $5,000/yr in an 11%/yr investment, it will be $200,000 in 15 yrs, $1,100,000 in 30 yrs. (Notice that compounding happens quickly in the out-years - the $1.1M is way more than twice the $200k at the halfway point).
The point is - if you never waiver, always make the $5000/yr your primary family focus, you will be millionaires in your 50's. And whether or not you have a $3500 loan won't matter much. Personally I would sell the car, get that $5000/yr car payment stopped, and buy a reliable affordable car. And keep the student loan for the full term, they are usually inexpensive, low interest rate & long term.
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Wed Jun 15, 2011 9:56 pm |
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Deaner
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Congrats for thinking about these things so young. You well ahead of the game already.
So the first thing you need to do is examine your income and expenses. Clearly if your make as much money as you spend it will be difficult to pay off any debt past making the minimum payments each month.
So you can raise your income with a extra job or starting a side business, not possible for everyone. For most people it is easier to reduce there expenses. There are probably easier things you can cut out - movies, restaurants, cable packages....you just want to maximize the amount of money left over each month to pay that debt!
You can certainly shop around for a better interest rate on a balance transfer, but in my opinion this not the key thing. If it saves you 20 dollars a month in interest that you can apply to the principle thats great. Giving up the cable could yield a 100 bucks extra a month to pay down debt.
Not eating out could yield an extra 100 bucks a month. These things add up bigtime!
I would highly recommend doing a budget before every month starts and try your hardest to stick to it. Knowing where you are going to spend your money before you spend it can really help control expenses. Of course things will happen you never expected, but hopefully you can be CC debt free and use emergency funds instead of CC's when that happens!
For what its worth, I was in the exact same spot as you 5 years ago. I followed the Dave Ramsey "Baby Steps" plan and paid off my debt, made an emergency fund, and started investing. I'd say your on the right path, paying off debt and having a little money in the bank sure helped me sleep better!
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Wed Jun 15, 2011 10:18 pm |
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btobalski
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I have been somewhat following that method already. I have 2 savings accounts with a few hundred dollars in each, Ive thought about taking it and paying off big lump sums of my CC debt but have been told to just hold it and continue to pay it off monthly. One thing I would like to know though is should I try and combine my 2 credit cards into 1 and deal with just a combined monthly payment and if so how would I go about doing that because I would actually like being down to 1 CC instead of 2.
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Thu Jun 16, 2011 7:52 pm |
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Deaner
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Sure. Just about any Credit Card would offer a "Balance Transfer" on there website or if you call them. That would transfer the balance of one card to the other (or if you got a 3rd card and transferred both to that).
Remember though, If the goal is to pay off debt this CC debt, consolidating these CC's got you no closer to paying off the debt. You just went from 2 payments to 1.
Focus on the raising your income/lowering your expenses to pay the debt off to accomplish this goal.
Oldguy - you just made my 2001 VW look an awfully lot more appealing 
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Thu Jun 16, 2011 8:11 pm |
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oldguy
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quote:
you just made my 2001 VW look an awfully lot more appealing
Good! Feel free to park it next to my 2001 Dodge Pickup.
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Thu Jun 16, 2011 8:21 pm |
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Jail Nation
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The 1st step or focus of private finance that I would recommend is to pay attention to your money. Simply this means, know each month how much money you have coming in, and what quantity of cash you have going out. How much are you making with pay checks, second roles, pensions, settlements, etc?
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Thu Jun 16, 2011 8:38 pm |
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btobalski
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deaner, its not me trying to get rid of the credit cards, i would just rather prefer having only one payment, as of right now i am already paying 3 times the amount per month on both cards so i know the 1 payment wont hurt me but my question to that would be would it hurt my credit getting rid of one cards consolidating them to one?
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Sat Jun 18, 2011 5:24 pm |
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AClare
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It sounds like you're going through a similar situation to what I've recently come out of.
Be very careful when doing balance transfers. Make sure you read the fine print. We opted to do a balance transfer a few years back. The bank was offering 0% interest on balance transfers and we took the bait! They then required that you make at least 2 purchases per month at 29% interest. We bought two packs of gum every month for our two purchases but since our payments went to pay off the 0% interest balance transfer, those two packs of gum were accruing enormous amounts of interest each month. They can really get you with the fine print if you're not careful.
Another option that you have is to implement the snowball effect. You mentioned that you're already paying 3 times the amount on both credit cards. Instead of doing a balance transfer, you could just keep both of your credit cards. Make just SLIGHTLY over the minimum payment on the credit card with the lowest interest rate (maybe only $10 or $15 over the minimum each month) and then make 5 or 6 times the minimum payment on the higher interest credit card. You'll knock that card out in no time and once that card is payed off you can apply the whole amount to the lower interest card, plus what you're already playing on it. You'll knock that one out even faster!
My husband and I are (rapidly) approaching our late 20's and just paid off $42,000 of consumer debt. I recently began a blog to share our experiences and the things that we've learned about paying down debt and living a lifestyle that facilitates saving. I only have a few blog posts so far, but you may be interested in checking it out to find a few everyday money saving tips.
Best wishes!
Mandy
http://modernmoneyforfamilies.blogspot.com/
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Sun Jun 19, 2011 3:25 am |
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keshavmish
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A Personal finance site can help you take control of your financial transaction. And they do it for free. You need not worry about paying them huge parts of the benefits you own. You need not buy the original software for that, you can just use these sites to do the rest of the work for you.
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Sat Aug 20, 2011 1:13 pm |
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Eric80
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Have you considered a debt consolidation and making one single payments on your debt, maybe talk to a financial planner and see what your options are.
Freeze your interest with an IVA (Individual Voluntary Arrangement)
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Sun Oct 30, 2011 2:08 pm |
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psteve710
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I agree with guy on top who said this "The 1st step or focus of private finance that I would recommend is to pay attention to your money. Simply this means, know each month how much money you have coming in, and what quantity of cash you have going out. How much are you making with pay checks, second roles, pensions, settlements, etc? "
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Tue Nov 01, 2011 10:45 pm |
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Tylertim
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First you have to eliminate some unnecessary expenses in your daily life.You have to search a part time job in order to increase your monthly income.Many people will get good income from online business.So, you can try to get more information and do which ever is the best.
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Thu Nov 03, 2011 1:58 am |
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Sanderson
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Yes,Firstly u discard to use all expensive item.Try to save money for better future option and use internet Home base type part time work which will be helpful to get some money.Thank you
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Thu Nov 03, 2011 11:09 am |
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