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Author: lerej Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 14985  
Subject: Re: Intro / Depressed about debt Date: 4/29/2008 6:23 PM
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Hello bowled818,

As a fellow crazy let me share my past exp. I'm 28 never diagnosed, as i think therapy is purely power of suggestion, which doesn't apply to me. Also costs money (much like those lovely cc's) and i think once it hits paper health insurance gets more expensive and harder to come by.

I'm one of those people who bought a house, using a cash advance off of my credit card as my down payment. A bad decision in retrospect, but not at all the majority of the debt i had acculated over the previous years.

I was 24 and a homeowner, within a year my debt had grown to around 40k all on credit cards, some of it was back taxes, all helped mold me into the up and coming financial powerhouse i've become.

So how did i deal with 40k of debt averaging about 14% with a mortgage? Slow and steady. Here's how i did it.

1. NEVER miss a payment
2. CANCEL CABLE - tv is garbage you don't need it, basic cable is 12 a month, you can get more of the mind numbing dribble you need from the networks than you could ever possibly need.
3. make a real budget, i used excel, when you see you have x amount to spend, you need to spend less than that.
4. stick to the budget, starve if you need to, i'm a 6 figure earner and i still won't eat if it means staying under budget.
5. always pay more than the minimum, if you don't you can't waste money quicker, even if you were burning it, literally.
6. check your statement every single month, when they raise your rate, call and demand they lower it back to what it was. Bank of america does this about every other month, you actually have to send them written denails to avoid it.
7. Pay the highest intrest cards first
8. don't transfer money to new cards, after the fees you break even.
9. cut all your cc's up, emergency money is better not to have than to borrow. Anticipate emergencies also.
10. budget for your taxes, i pay 3% local, i have to put away 120 per pay just to not get hit quarterly.

ok so now we've established what you need to live on, you are no longer spending money you don't have, and you are cutting your non essential expenses.

So how does this apply?

Remember that 40k i had of debt 4 years ago at 14%, and that new mortgage which really cut my available monies, lets see how the above helped me out.

4 years later, i still have debt and mortgage, for 2 of those 4 years my payments seemed to have no effect on the balances, then one day it happened, i paid off 1 card, that left me a measly extra 50 a month, seems like 50 extra dollars wouldn't make any difference at all considering i had cards still that had 10k + on them.

So sticking to the plan to get out of debt, i applied that 50 to a different credit card.

2 additional years later (brings us to now) i still have around 26k in debt, down from 40, all by sticking to a budget, keeping on top of the rates i was paying, and ALWAYS ALWAYS ALWAYS taking the roll over money from paid off accounts to the high intrest ones.

That spreadsheet / budget i mentioned, without any of the roll over money on the current path i'll have that debt gone jun 2010. Realistically the debt will be gone within a year, as all extra surplus of cash goes directly back to the cc's.

Don't get me wrong, it's been hell, i've wasted my 20's paying for a few years of nothing. I won't ever examine what i spent in fees as it'll make me sick. In fees alone i should be driving a new 3 series.

I mentioned the crazy before, let's say i'm mildly ocd, i just applied that to checking my balances multiple times a day, obesessing over my debt, day in day out. It is hell until you start down the other side of the plateau, but once you crest it, it goes away almost as quick as it came on.

"gradually then suddenly" that's how it happens, that's a quote from prozac nation.

The only thing I didn't expect with the process was while i was obsessing over my debt trying to pay it as quickly as possible, I created income flows from every direction i possibly could.

I forgot to mention i've been remodeling that house all the while, so regardless of the large income, which is only really as of the last year or so, on a lesser salary i still could've bought the house, and paid the cards. As "well you make a fortune" should not come into play.

So none of this is new advice i'm sure, more a testament that you can do it. My case was extreme, i DO NOT have a trust fund, rich parents, rich grandparents, a rich uncle, winning lottery numbers, if anything I have really bad luck in that everything i own breaks immediately.

a few more $ saving tips

quit smoking
ditch cable
don't get that new car
don't ever EVER spend money you don't have
don't spend money you are planning to receive
don't bother trying to date as you are to caught up in debt to devote yourself without worrying about things that shouldn't matter under those circumstances
buy groceries from the local market (if possible) ie, i eat lots of apples, giant eagle is one chain of grocery stores we have. 1 lb of apples at giant eagle 1.79 1 lb of apples at the market .99 (and the apples taste better)
work for less than you're worth. I just did a 5000 dollar website for 750 bucks, why? because it's 750 off that debt, that i'm paying 10% + intrest on, that i'm inturn not investing which costs another say 10%. Arrange the numbers in what could be applied scenerios and you'll find 1 dollar of debt is really 10 you aren't making.

you mentioned a support group, talking about your problems doesn't fix them acting does.

Granted my lifestyle may not work for you, but if you live my lifestyle and pay off your debt, you can live any way you want.

My debt is not gone, but the light at the end of the tunnel is blinding me it's so bright, with a year + to go.

The kicker is this, once i get my debt paid off, with the amount of money going towards it, i'll be able to pay the remainder of my mort 70k ish in about 3 years, if that.

I hope this unstructured rambling helps. You are alone in your endavor, but you got yourself into it.

phyc drugs only make you lazy, i've been on them, worrying less doesn't do much, aside from keep some hair on your head.

speaking of work, it is now 6, time to leave the 40hr job to work for myself, then once that is finished, time to work on the webpages until 2 am.

28 years old, homeowner, ALL DEBTS i have are under 100k right now, this inculdes school loans, mort, cc's, and EVERY OTHER PENNY i owe the world.

Go dig a ditch for $20 bucks, that's 20 less you pay intrest on.

Best of luck, if i can do it anyone can!

like yoda says, "do or do not there is no trying"

peace
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