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WARNING- Looooong post, but with a happy ending!!!

It's hard to believe that I'm finally writing the post I've been waiting to write for three and a half difficult years. Today I received confirmation that our last two outstanding debt payments (aside from our mortgage) have been received and our accounts have been marked as paid in full.

For those who are newer to the board, here's our background in brief: In the Fall of 1997, my wife and I found ourselves with a grand total of $84,000 of debt. The breakdown was as follows:

$37,000 on EIGHT credit cards...
$14,000 in student loans...
$18,000 on one new car loan...
$15,000 on another new car loan...

We were maxed out and drowning in our debt. I decided that my pride would not allow me to consider filing for bankruptcy, so the only way to defeat the debt was to tackle it head on. After getting my wife on board, we started on the long, deliberate path to freedom from our debt. Soon after, I discovered The Motley Fool. After spinning our wheels a bit at the start of our debt payoff quest, the Fool provided me with invaluable information and guidance without which I'm not sure we'd be at this point today.

I can't begin to guess how many people I've turned on to the Fool since I started turning my debt situation around. I have become known, to a degree, as the "debt wizard" around the office and among friends, many of whom have since sought my advice about getting out of debt. I would NEVER have imagined that I would ever even be out of debt, much less be looked to as a consultant on debt reduction! Thank you for putting me in that position.

In terms of how we've actually done this, it's really quite simple. Here are a few basic points:

1- After much denial, I sat down with my wife and explained to her the gravity of the situation we were in. My wife had, until then, been quite the free-spender. She listened, and subsequently became an amazing partner in the battle. I think if you are married you have to do this as a partnership.

2- Once we confronted the problem, we almost completely stopped using credit cards. It was the first step to seeing our balances actually decrease for the first time in a long while. Plus, our debt to income ratio had become so out of whack that after a long period of receiving low intro-rate offers, they dried up and we were stuck with high balances at high rates. It wasn't until we started knocking down the balances that, way down the road, we started getting intro-rate offers again. By this time, I had learned how to play the game and used them to MY advantage.

3- After trying other methods, I finally locked onto the snowball method, which is without question the best way to not only see results in debt reduction, but also the best way to FEEL that you are making some headway. At one point we actually had as many as eight credit cards at one time, all with significant balances. The snowball method enabled me to pay them down, pay them off, and systematically cancel each card as they bit the dust, one by one.

4- We became very conscious of what we were buying. We really tried to make every purchase a case of, "Do I really NEED this, or do I just WANT this?" We ate out at restaurants far less. Saw far less movies. Generally deprived ourselves of many pleasures, big and small. It had to be done. No pain, no gain was never more true than it has been for us over these last years. I have to admit that my wife is now spending a little more freely again than I'd like, but we're paying it off every month, and I try to reel her back in when I feel like she's losing control. I, on the other hand, have had this new way of thinking so ingrained into my brain that I have, for better or worse, become something of a tightwad.

5- Without question, one major way we paid down the debt has been to work...and work...and work. LOTS of overtime for me at every opportunity. My wife tutors students on the side and teaches Sunday school. Every little bit helps.

Something else I should mention is that during these debt paying years, I also lost my job at one point (3/98) and took a 40% cut in pay when I started my current job. We also had our first child, who is the joy of our lives. He is now 21 months old, and will no doubt be educated in the ways of debt-free living as he grows up. It's something I wish I had been taught. My parents, like many of their generation, had lots of credit debt and were always playing catch-up.

I have to tell you that getting out of this debt situation is the single-most rewarding financial experience of my life . I am not really an emotional type, but when I think of what we have achieved, it almost brings me to tears. When I just think about the strength it takes to achieve this...I never thought I had it in me....but here we are. Amazing.

I know I've said this in previous posts, but I want to again thank the Motley Fool for the information it provides and for all of the wonderful people it has brought together on this board, without whose knowledge and insight this task would have been incredibly difficult at best, and impossible at worst. Who would have ever thought that being Foolish would be such a good thing? Even though we have reached our goal, I won't stop reading this message board, and I won't stop posting or responding to posts from time to time if I feel I have something of value to share. No matter how much I think I've already learned, I always learn something new when I'm here. Thanks again to all and to those still fighting the good fight: Hang in there and you'll be writing your own "victory post" in due time!!

Radio!!!





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Congratulations!!!! That is wonderful news! I know your whole family must be doing happy dances day and night. :)

It's great to hear that you're passing it on to your kids. The world needs more Fools like you. :)

Fool on,
Selaya
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<<4- We became very conscious of what we were buying. We really tried to make every purchase a case of, "Do I really NEED this, or do I just WANT this?" We ate out at restaurants far less. Saw far less movies. Generally deprived ourselves of many pleasures, big and small. It had to be done. No pain, no gain was never more true than it has been for us over these last years. I have to admit that my wife is now spending a little more freely again than I'd like, but we're paying it off every month, and I try to reel her back in when I feel like she's losing control. I, on the other hand, have had this new way of thinking so ingrained into my brain that I have, for better or worse, become something of a tightwad.
>>

Congratulations on a great story. It sounds like you have put your family on a firm financial footing.


The question is, what's NEXT? You have three basic choices --- 1) get back in the habit of drifting along and slowly fall back into debt again 2) pay off spending as it occurs, living at your means or 3) continue snowballing some of your surplus cash flow into savings and investments.

Here's a hint --- just as most of the interest you have paid cut the amount of money you will have available to spend over a lifetime, every dollar of dividends, interest and capital gains you earn on investments will add to the amount you will have available to spend over a lifetime.

Could you wife buy into a program that would increase her ability to spend ---long term, of course.



Seattle Pioneer
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What a wonderful story! You should be very proud of yourself and your family for making a huge accomplishment in a rather short period of time. When I reflect back on what I was able to do as a single Mom, I also get a bit emotional. It is very difficult, takes a commitment that few understand, and an incredible amount of hard work and dedication. Congratulations! I hope you are taking the same amount of money that went to debt repayment and pouring it into CDs!

L
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The question is, what's NEXT?

Hi SP! Not to worry...we are formulating our plan now as to what to do with all the money we'll have that we've been plowing into our debts for the past three and a half years. Some is designated to add to our existing (but somewhat small) emergency fund, some will go to the baby's college fund, some to retirement savings, and yes, some to a fun money fund. We are also putting away a substantial amount every month so that when we need our next car, we can pay for at least a big chunk of it in cash.

Take care!

Radio!!!
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Radio

A very wonderful experience. Thanks for sharing. I am sure that many will get a big boost from your story, Best wishes

Walter
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What an inspriration! You are so right about how this board helps people! I'm going to be posting a similar story in July 2003!
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Congratulations Radio! A big HAPPY DANCE...
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Thanks for the Hope....My wife and I just started our trek out...

Keep Dancing...

Eporeily
Dealing with $64,000 in Debt one Day at a Time
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Congratulations RadioPhool. As someone who has just started down the road that you have driven, it is good to hear such a rewarding ending.

Enjoy the money that you were using to pay off all that debt.

BLLL/Dave
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Heya RadioPhool!

What an inspirational post--a true testament to this board, and to what can be done!

Congratulations, my Foolish friend on such an outstanding and life-changing success. $84,000 is an amount of debt that can make even the most determined among us feel queasy.

To have formed a plan and followed it through so diligently as you did gives hope and courage to others as they can see that they too can acheive such a victory.

I've bookmarked your post so that I can point to it in the future so that others in debt can also be inspired by it.

Continued success and enjoy your new found freedom from debt! You make us all proud. :-)

Tony
...but I still am...

Off2Aruba
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I cannot wait until I am in your shoes.

Until then, I am still working on debts, LBYM, and waiting to exhale...
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job well done my friend few people have the commitment to do what you have done. Take a moment to realize the accomplishment so few people could do. reward yourself for your struggle , maybe a new lexus
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Congrats on a hourney that ended as successfully as yours did! I can only hope that others will take your story as an inspiration that nothing is impossible!!


CaveGirl
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Hi Radio,

Congrats!

You've done an amazing job and it sounds like you have started putting together a plan for the future, too. Don't forget to plan for tax purposes. If you continue investing at anywhere near the amounts you have been making payments, you are going to make some significant gains! :)

foolwizard





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RadioPhool:

Congratulations! I really mean it. Your story is fascinating and a lesson to all of us. I'm also skeptical by nature and wonder what useful lessons you learned from the Fool. Your first mention of the problem you faced was:

12/10/98:
We're burdened with just over $30,000 in credit card debt from recent renovations. Trying to decide how to proceed. We have about $18,000 in stocks which we could sell and pay directly down on the debt. That would leave us with little or no safety cushion. Or, we could refinance and then open a home equity line. Or, both of the above in some combination. Current mortgage is $156,000. House just appraised for $215,000. Any suggestions?
http://boards.fool.com/Message.asp?mid=10456167

I could have suggested an easy solution to your problem. Pay off the credit card debt by the proceeds from selling your stocks and refinance your home as you suggest at a very attractive interest rate at the time. I don't understand your problem also because your house most likely appreciated subsequently making the refinance option even more attractive later.

Your first two messages to the boards dealt with the Foolish Four. Here's the first:

Hi! I'm looking forward to starting two Roth IRA's using the Foolish Four method as of 1/2/99.
http://boards.fool.com/Message.asp?mid=10448487

I hope the Foolish Four is not part of the useful lessons you learned from the Fool because here I think the Fool learned a lesson! Then you went (in your own words) from foolish to Foolish overnight and bought DELL, a very risky stock, instead of paying down your credit card debt!

But I have followed DELL with envy and admiration for quite a while, and am glad to have finally gotten off of the sidelines! Perhaps this will inspire somebody in a similar situation to do the same. True, there is always that risk involoved...but for me, it feels great to have gone from foolish to Foolish overnight!
http://boards.fool.com/Message.asp?mid=10562288

I hope that's not the useful lesson you learned from the Fool. In the meantime TMF2Aruba announced the upcoming Fool PBS special at this board and solicited success stories:

12/23/00:
The Fool is going to be featured in a PBS Special in February! Wanna watch it? Of course you do, but even better...wanna be in it
http://boards.fool.com/Message.asp?mid=13963579

Shortly thereafter you suddenly remembered that you were almost out of $84,000 in debt compared to the 30-some-thousand you had previously mentioned:

1/9/01:
Here's a very brief synopsis of my situation, which I believe I did not make fully clear in past postings because I was so deeply in denial about my debt. In the Fall of 1997, my wife and I sank to the depths of endebtedness: a total of $84,000 in consumer debt ($37,000 credit cards due mainly to major home renovations; $18,000 new car loan; $15,000 new car loan; $14,000 graduate school loan), not including our mortgage. Just over three years later, we have reduced the $84,000 to $8,000 through frugality, caution and lots of hard work. Destroying this debt has become a personal obsession.
http://boards.fool.com/Message.asp?mid=14074009

Why did you suddenly remember all that other debt after you had been very honest about your situation for years? You later thanked for the opportunity for being on the Fool PBS show: http://boards.fool.com/Message.asp?mid=14481757. Is this a coincidence?

Did the Fool pay you for being on the show?

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radiophool-

That is simply amazing. Apply that type of resolve to investing and you'll be a millionnaire in no time.

Awesome job!

-bigML
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You are an incredible inspiration. You have just given me more than you realize.

I am $90,000 in student loan debt. I have a 7 year plan to pay this off.

Thank you so very much. I know I can do it based on your testimonial. Look for me in 5 years to post a similar story!
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Radio,

Wow, $84,000 !!!

You are a God. (and your wife a Goddess)

Thanks for the inspiration.

Bret
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The Fool is going to be featured in a PBS Special in February! Wanna watch it? Of course you do, but even
better...wanna be in it?


Just so you know, a staffer from the Fool contacted me out of the blue about being on the show. I actually didn't even see that post from Tony asking if anyone wanted to be on the show. I'm sure I would have been too shy to propose our appearance. We were flattered that the Fool thought enough of our story to want to feature it in the show.

Did the Fool pay you for being on the show?

I wish. Unfortunately, I was not compensated in any way or form for our story being featured on the Fool PBS special. Funny thing is, after several people I know saw the special (without knowing we would be on it), they asked me how much we were paid to be on it. Perhaps I was foolish (small f), but I never even considered asking for any compensation for our story and appearance. I was truly grateful to the Motley Fool for what I believe to be a tremendous amount of guidance and support that helped us reach our goal. For that reason, I felt that allowing the Fool to use our story on the special was my way of saying thanks to the Fool.

What you probably also don't know is that the Fools also asked me to appear on their Get Out of Debt radio show in January, also without compensation. I did it gladly. Again, partially as a thank you for what I perceive to be the Fool's role in assisting us in reaching our goal, and partially to help others in a similar predicament.

Why did you suddenly remember all that other debt...?

The truth is, for some reason I didn't consider other debts to fall into the same debt category as credit card debt. At the time, it just felt to me like car payments and student loan payments were necessities, just like a mortgage payment. It was only later that we began to receive low-rate balance transfer offers again (once we had made significant progress in our debt reduction). It dawned on me that we could move our credit card balances onto low-rate offers and at the same time pay down our car and student loans, which were charging higher interest rates than the promotional credit card offers supplied. By this time, I had learned a lot and decided that it was OK to maintain credit card balances if it meant paying off higher rate loans more quickly.

I hope the Foolish Four is not part of the useful lessons you learned from the Fool because here I think the Fool learned a
lesson! Then you went (in your own words) from foolish to Foolish overnight and bought DELL, a very risky stock, instead of
paying down your credit card debt!


I never said that I have not made mistakes along the way. You are correct in that perhaps we should have sold off our stocks to pay down some debt and that we should not have been making any new investments until our debt was paid off. These are some of the hard lessons we learned along the way, and they were made harder by the fact that we lost about 50% of the investments in the market over the past year or so. Would I do some things differently if I had to start over? Absolutely. That is why I say that I always learn new things at the Fool and in general, no matter how much I think I have learned. Also, I am not saying the Fool is the be-all, end-all. While I am a huge fan of the debt reduction part of the site, I am much less a devotee of the investment section. That is why none of us should have blinders on when we read stuff on the Fool or anywhere else. You have to look at all of the information and decide what is right for you and what is relevant.

Just some extra info, FYI. We also very recently refinanced our house (a no cost, no points refinance) that will save us some $300 per month. This savings includes the elimination of PMI on our mortgage (yes, it was another mistake not to have had the PMI removed long ago).

So, yes, we made mistakes along the way. We could have done some things better. But life is a learning process, and the lessons we learned, some expensive, will go a long way in helping to shape our financial fuure. What is that saying... "Give a man a fish, and he'll eat for a day. TEACH a man to fish, and he'll eat for a lifetime." We've listened, we've learned, and now we hope to benefit from our knowledge for many years to come.

All the best!

Radio!!!
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Good luck, Dunce (which I'm sure is true in name only)!!! You'll do it. Just be patient and diligent. I never thought I'd do it. I did. So will you. Fight on, Fool on!

Radio!!!
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Hey, I just saw the Fool PBS special last night, and it's great to see RadioPhool's inspirational success story on the board posted April 18. I now have a face to the name! I and at least 186 other people are inspired by the courage and dedication RadioPhool's family has. I know I benefited from learning that young families do eventually get out of debt when they apply themselves.

Good Going!

InvestorGrrl
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RadioPhool, Thanks for your reply that cleared up things. Taking everything into account it seems to me that you would have been better off meeting with a fee-only financial planner than discovering the Fool (after expenses). You'd likely have been out of debt years ago and have avoided costly mistakes like using credit card debt to invest in a highly risky individual stock because the Fool had taught you to be overconfident in your own stock-picking abilities. I interpret your story as years of unnessesary suffering because you had the wrong guidance.
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Radio!!!,

You may not have been given money for being on the Fool shows, but you were compensated in other ways. I'm sure you learned a lot of great information, even stuff that was not in the video.
Compensation does not have to be actual cash dollars, and sometimes compensation can be education (and in this case ABOUT actual cash dollars).
You are not compensated for your contributions to this board, but we really appreciate your contributions.
So don't let those guys get to you. The ones who are telling you that you should have been compensated. I would have loved to have been there.

Beth
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So, yes, we made mistakes along the way. We could have done some things better. But life is a learning process, and the lessons we learned, some expensive, will go a long way in helping to shape our financial fuure. What is that saying... "Give a man a fish, and he'll eat for a day. TEACH a man to fish, and he'll eat for a lifetime." We've listened, we've learned, and now we hope to benefit from our knowledge for many years to come.

Very sage, RadioPhool!

Mistakes are tools from which we learn. Without them, how would we be able to truly recognize our successes.

TMFConfucious. ;-)

Tony
...but I still am...

Off2Aruba
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All I go to say to you as I am so happy I started to cry as I read your post!!!

Sean
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Just some extra info, FYI. We also very recently refinanced our house (a no cost, no points refinance) that will save us some $300 per month. This savings includes the elimination of PMI on our mortgage (yes, it was another mistake not to have had the PMI removed long ago).

Radio, could you share how you managed to find a no cost/no points refinance deal? It seems everything I look into involves lots of expenses, which makes refinancing not so attractive a prospect. Thanks.
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could you share how you managed to find a no cost/no points refinance deal? It seems everything I look into involves lots of expenses, which makes refinancing not so attractive a prospect. Thanks.

Hi jthrelkeld! Don't be misled...the fees and all are still there, they're just built into the interest rate. Essentially what we did was to accept a slightly higher interest rate on our refinance. By doing that, the lender essentially agreed to pay all of the fees up front, and in theory, will recoup the cost over the life of our mortgage by our paying a slightly higher interest rate.

Here's the thing: The ONLY reason I looked for a loan like this is because we may very well not be staying in our house for very long (we may be buying a house soon that we have the inside track on). Therefore, it didn't make sense for me to take out a really low-rate mortgage with high closing costs or points when in fact we may only be in our current house for only a few more months. My thought was that it would take much more time to recoup the cost of fees and closing costs than we are likely to stay in the house.

By taking the higher interest rate with no fees or closing costs, we are getting a lower payment than we had, which will benefit us until we move. The real catch is that if we don't ultimately move, we would have been better off paying closing costs and perhaps points in exchange for a lower interest rate. So it's a bit of a gamble, but we feel pretty confident that we'll be buying the other house (which belongs to a relative). If we don't buy the other house, we can always refinance again (hopefully the rates will still be attractive if we need to go that route).

Hopefully that provides the insight you need. The bottom line, I guess, is that you can always find a lender to give you a loan with no closing costs or points, but you'll pay a higher interest rate to get it.

Radio!!!
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"4- We became very conscious of what we were buying. We really tried to make every purchase a case of, "Do I really NEED this, or do I just WANT this?" We ate out at restaurants far less. Saw far less movies. Generally deprived ourselves of many pleasures, big and small. It had to be done. No pain, no gain was never more true than it has been for us over these last years."

Fantastic!!!!! This post demonstrates that it's all about choice - anybody who says they can't survive without credit cards should read this post. Good luck, and remember, your BEST credit is your own cash.
johnmoni
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You are an inspiration to us as well and we are very close to your situation

Wish us luck
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Hi, Radio,

I read your post...wow, congratulations!!! I'm in a similar situation, but not as much debt. My husband will retire in about 15 years. I'm frightened, because that isn't too far away when you're our age (50). I'm disabled and can't work.

I was interested in what you said about snowballing:
3- After trying other methods, I finally locked onto the snowball method, which is without question the best way to not only see results in debt reduction, but also the best way to FEEL that you are making some headway. At one point we actually had as many as eight credit cards at one time, all with significant balances. The snowball method enabled me to pay them down, pay them off, and systematically cancel each card as they bit the dust, one by one.

Can you please let me know where to find info on that, or can you tell me? I'd like to cut my credit card debt ASAP, which I know will mean several years.

Thanks for your help and experience.

Hugs,
Criquette
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I was interested in what you said about snowballing: Can you please let me know where to find info on that, or can you tell me? I'd like to cut my credit card debt ASAP, which I know will mean several years.

Hi Criquette!! The snowball method works like this:

Take your debts and arrange them in order of interest rates. List the debts starting with the highest rate first, and ending with the lowest rate. Then, when it is time to pay your bills, send the MINIMUM PAYMENT for all of your debts EXCEPT for the one with the highest interest rate. Pay as much as you can toward the bill with the highest interest rate, and the minimum toward all the rest. Continue to do this, month after month. After you have paid off the debt with the highest interest rate, follow the same pattern with the debt with the next highest interest rate, and so on.

This method enables you to pay your debts off in the quickest way and with the least amount of interest payments possible. Some people follow this method using only thier credit cards. For me, it became worthwhile to use the snowball method for our credit cards PLUS our car loans and student loans. That is a call you'll have to make for yourself.

I'm sure there have been great posts here in the past detailing the snowball method much better than I have here. Perhaps somebody can point us in the right direction toward one or more of these posts. Hopefully my description can at least give you a starting point toward using the snowball method. And just like the lesson learned in "The Tortoise and the Hare," slow and steady wins the race!

Good luck!! And just like the lesson learned in "The Tortoise and the Hare," slow and steady wins the race!

Radio!!!
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Thank you so much, Radio! I'll start right now. It's so frightening to actually have the balances stare me in the face, but i have to face the truth! You're a blessing!

Hugs,
Criquette
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Good luck!! And just like the lesson learned in "The Tortoise and the Hare," slow and steady wins the race!

Just make sure it's not the Bugs Bunny version. ;-)

It's so true that we need to implement patience into our plans. We're such an instant gratification type of society that we want to see results immediately, or we're not satisfied.

When it comes to reducing debt, it's a gradual process, but the beauty is that the results can begin to be seen right away. Then, eventually, the we reach the ultimate success as long as we stick with it!

Tony
...but I still am...

Off2Aruba

Are you a Select Fool?
http://www.foolmart.com/Shopping/Product_View.asp?PRODUCT_ID=MF4200_01&REF=CSBO03123
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I had read your post before but looked at it again and couldn't believe the similarities between your situation 3 yrs ago and mine currently. My wife is also a teacher who spends freely and we are 64K in the hole and need to start making headway.

Very impressive what you accomplished and def. an inspiration for us.

Even though you're A Met's fan (Red Sox shoulda won in 86...Buckner--AAARRRGGHHH!) my hat's off to you!

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Congratulations, Radio! Hope many good things come your way. It's always nice to read about someone who takes responsibility for their past actions and works to correct their mistakes. Great job!
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Thanks, Radio, for the encouraging post. I am in a position similar to yours, only I am still on the long road to reaching the point you are at now. My interest-accruing debt topped out at the end of 2000 at nearly $37,000, over $29,000 of which was credit card debt spread out over 6 cards. I had added on about $11,000 to that in 2000, primarily because I got married and incurred a lot of expenses related to that, naturally. After Christmas of 2000, I was beginning to earn more money and resolved not to use a credit card (besides American Express, payable each month), and I've held true to that resolution. Now my credit card debt is down about $3,000, and my overall debt about $4,000. Also, I have one less credit card. I hope if I can keep plugging away that I can erase the debt in about 3 years.
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Your story was very inspiring!!!!

I am in a similar situation, however my debt load is about 1/3.

Is it possible to get a copy of the things you actually did to get "Debt free".

I also saw a link to "snowball method", however it does not work.

Could you provide me with the actual spreadsheet you used( blank of course)

Thank you very much for your time.

Good luck in continuing to be debt free, you both did a fantastic job.

Best regards,
Robert
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You are an inspiration! Congratulations.
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Congratulations! Maybe you can give me some specific pointers. My husband and I are in a very similar situation to what you and your wife were in. Here's our story.

My husband and I had always had joint checking accounts, however, we never had the "1 pot" concept. He was responsible for certain bills, and I was responsible for certain bills. We had 2 joint checking accounts...one was "his" and one was "mine". No problem right? Wrong!

For years I always knew that my husband barely existed in paying his portion of the bills. I burried my head in the sand and didn't ask any questions. As long as the bills were paid, I didn't care. Bad choice!

My husband spent years "robbing Peter to pay Paul". By the time I had found out what he was doing, he owed thousands on credit cards. Not to mention the fact my husband thought that paying cash for something was a cardinal sin. So the debt kept on accumulating.

The last straw happened in January of this year. I had found out (because he had to tell me), that he had not paid our property taxes for 8 months! This was truly the first time I ever thought of divorcing him. I was infuriated that he could be so irresponsible with our future...our home! And what made matters worst...I had the money to pay our taxes! All he had to do was tell me!

Well, we sat down and a new regime took over. First thing, he lost his "right" to pay any bills or handle any money. I now control both checking accounts, and am responsible for all bill paying. I made my husband get a second job (more about this in a bit). And, I took away every single credit card he had (most of them didn't work because they were maxed out or had been canceled by the bank). Finally, I put him on an allowance ($25 per week). The way I determined the amount was simple: $15 per week for gas, and $10 misc. expenses. If he wanted something special, he needed to save his money.

Here's the bright side of the story...

In April, my husband started a part time business (he teaches piano). Our start up cost was $0. We have a finished basement, and my husband is a professional pianist. I made up a flyer, took it to work, and made 1000 copies. He then went door-to-door putting his flyer by people's mail boxes, houses, and local businesses. He offers lessons 5 days a week (M-T-Th-F from 7pm-9pm and Sat 8am-12pm): a total of 11 hours. For the month of September he has 10 of those 11 hours booked! If each of his students come this month he will earn an extra $1,080.
My brings home $1,500 per month from his full time job. Here's my financial plan:

$650 for Daycare
$250 put away to pay for property taxes
$200 for groceries
$250 for car payment
$33 for cell phone
$67 for cable
$50 phone
$120 utilities (gas and electric)
$250 for minimum payments on all credit cards (reduced by me to 10)
$40 for homeowner's insurance
$25 for life insurance
$89 for car insurance

Total expenses per month: $2,024
Total income per month: $2,580 (surplus of $556, minus $100 for husband's allowance- total surplus = $446).

The above mentioned list doesn't even consider the cards that have been charged back! While the bill collectors aren't calling as frequently as they did before, they still are calling.

Bottom line...with all this and only $446 per month, how can I erase at least $30,000 of bad debt?

Lastly, if you're wondering where I fit into the picture now, I have taken over paying for our vacations, taking us out to dinner (occassionally), and buying anything we need for our home or daughter. If you, or anyone can give me some good advise or even a plan, I'd really appreciate it.

P.S. Bankruptcy isn't an option for us...we have too much equity in our home according to an attorney, and I will not loose my home! I also will not take out a home equity loan...I think that's a one way ticket to dissaster!

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Hey Radio. This is way overdue but........CONGRATULATIONS! I am sure you are feeling great. Especially going throught he summer with no debt. The holiday months are coming up soon. Now you can purchase the gifts and not have any bills in January.

Can you possibly send me the Snowball Calculator? I have tried the links but they did not work.

Thnks

gamehost@mediaone.net
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You are already making the minimum payments and still have extra money so it's not as bad as it looks. The keyword on this board for people in your situation is snowball. You can check through the back posts to find the best ways to snowball but basically the idea is to line up your cards, pay minimums on all but one. On that one you throw all the excess. As that card gets paid off you throw the payments you were making to it on to the next and so on and so forth. Like a snowball rolling down hill the amount of principle being paid off just keeps getting bigger. There is a program called a snowball calculator around somewhere which will tell you how long it will take to pay off the debt. If you read here enough you will also find people telling you about e funds, Living below your means (LBYM) and all other sorts of good tips for getting to the promised land, debt free living. You may not decide to take all their advice (personally I refuse to give up my DSL line even tho it would give me a few more bucks towards paying things off) but depending on your circumstances you may not have to but the advice is good and will help you out.

Wolfshead
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Great story!!! Thanks for sharing some good stuff.
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Congrats! it would be helpful to know how much money you were making annually that allowed your family to be able to pull this off. No small feat- well done.
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The snowball method sounds good. Here's another way to consider - I learned this from my wife after we got married.

For those of us who have a balance every month, make monthly payments as follows:

Minimum payment + finance charge + amount of charges for the month + 10%

The 10% is just a suggestion - you could pay more or less. Obviously it would depend on your income, amount of charges for the month, etc. The point is to pay more than the minimum and chip away at the balance.

We've found this method to be very effective. You're watching your spending (because what you charge today must be paid on the next statement), you realize how much the finance charge adds up (or decreases), you'll pay the balance off sooner than if you made the minimum.

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Can you email me the snowball calculator at jrider@adwarchitects.com?
I would appreciate it.
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"After trying other methods, I finally locked onto the snowball method, which is without question the best way to not only see results in debt reduction, but also the best way to FEEL that you are making some headway. At one point we actually had as many as eight credit cards at one time, all with significant balances. The snowball method enabled me to pay them down, pay them off, and systematically cancel each card as they bit the dust, one by one."


Can you elaborate further as to what the "snowball method" is?

Thank you
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This is the most heartening story I have read in a long time. I know where you are coming from because I have been there. When my husband and I bought our house, I withdrew my profit sharing savings. I knew I'd have to pay taxes on it but didn't know about THE PENALTY !! We ended up taking out a bank loan plus putting some on a card. It was a long haul but we did it. I can't say we are richer for the experience, but we are definately wiser. You had a much deeper hole to crawl out of than we did. CONGRATULATIONS !!! Pataroonie
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Please tell write an article showing exactly how you got out of debt. My husband and I could have wrote your story word-for-word including that enomous $84,000. amount. Our monthly bills (mainly credit card) are $1800. more than we make. So I keep borrowing on my credit cards to make the minimum payment. We are self-employed are bankruptcy is not an option. Please give more advice.
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Wanted you to know that you've inspired me greatly with your terrific story.
I am somewhat of a sought-after "advice-giver" being that I am a recently retired tax accountant and have lots of valuable young friends who do chores for me.
I am saving your story and calculators in order to pass them along to the next guy who needs the info. Everybody should know the practical methods you outlined and PROVED that they worked. You and your wife are an inspiration to everyone who reads this, I know!!
Keep up the good work and the word!
Best regards,
Carolyn
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This is exactly the type of post I really need to hear right now. As I have stated in earlier posts, i am just starting where you began 3 1/2 years ago. It is very inpirational to hear stories like this. I STRONGLY ENCOURAGE OTHERS WITH SUCCESS STORIES TO KEEP THEM COMING. It helps us newbies along. Thanks for sharing that with me. Bob.
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I enjoyed reading your post on getting out of debt. My wife and I are financal counselors (we deal mostly with debt). These are some of the things Dave Ramsey (author of Financial Peace) teaches. The debt snowball is very effective, hard work is another good technique. We also encourage people to stop using and cut up their credit cards. It is also important to know the difference between WANT and NEED.

Ken

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Congrats!! It feels great doesn't it? I will save the story, but in brief while I was married I had no debt and a few grand in savings. During the divorce I was given a choice to take over the debt she built up during our seperation or give her half of my 401K. It was a no brainer on paper but I got out of the divorce with $54,000 in debt, and took a $1200 a month cut in pay, for an easier job the I desperately needed to save my sanity, while I healed emotionally. I went from living the good life to sinking in a river of debt that I could barely make my minimum payments. 3 years later I am debt free, here is how I did it.

1)I sold everything I could, including my Bass boat, and Big screen TV to give me breathing room. I Reduced my 401K contribution, to just enough to get the employer match.

2)Payed minimum on everything until I had $1000 in savings. This cushion is the key. I would always try to pay extra on bills, then would run out of money and "need" to fall back on credit cards. I wasn't making any head way until I had this cushion. For anyone trying to get out of debt, I promise this step is key.

3) Payed minimum on the largest balanced bill and any extra payment toward your smallest bill, regardless of interest rate. When the smallest bill was payed off, I took what I was paying on that bill and applied it to the next to the lowest balance. The experts will tell you to pay the highest interest first, but if your highest interest bill is also your highest balance, you won't see progress until your debt is almost gone. This snowball method allows you to see progress and give you hope.

4) I have taken up golf again, but I am budgeting that as well. I maxxed out my 401K and employee stock purchase (catch up mode), and I am putting at least $300 a month into savings plus all overtime. Anything left over is green fees, for now anyway I have to get caught up on relaxation as well. My next goal is to have 6 months of pay in savings, then I will put that $300 + a month into investments.

I still feel like I am far behind what my goals were a few years ago, but at least I am going foward debt free. I have made a vow to myself to never buy anything on credit. Maybe a house, but I will do without the white picket fence and live within my means.

Good luck to all who may be going down this road now, the journey stinks but the destination is worth it.
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Radiophool: Congratulations on making it!!! Happily I don't have this problem but wanted to say thanks for sharing your story as it has crucial lessons learned.

Those that are buried will certainly benefit from knowing that it is possible to make it out of the hole.
Hopefully those that are not buried yet will learn from you and do themselves a favor and fix the problem now (cuz it only gets more painful).

Your story will be an exceptional conversation piece for me to review with my kids (one of which just graduated from HS). Thanks again for sharing!!! /mike
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You GO Guys!!!!
congratulations!!!!!
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Congratulations!!!! If you don't mind, I'd like to ask a question. In your point #3, you mentioned the "snowball method." Can you explain what that is? I'm trying to become debt free and if it's something that works, I'd like to know more about it. Thanks.
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In your point #3, you mentioned the "snowball method." Can you explain what that is? I'm trying to become debt free and if it's something that works, I'd like to know more about it. Thanks.

The snowball method is where you determine a set amount to be paid towards your credit cards/loans monthly. You pay the minimum on all accounts except the one with the highest interest rate. Once that card is paid off, you go to the next card/loan with the next highest rate. You can download the snowball calculator to help you.
http://www.geocities.com/schizeckinosy/Snowball.html

Kim
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saverill wrote:

My wife is also a teacher who spends freely and we are 64K in the hole and need to start making headway. Even though you're A Met's fan (Red Sox shoulda won in 86...Buckner--AAARRRGGHHH!) my hat's off to you!

saverill-

Sorry, but I haven't been on the boards for a while and just saw your post. You are right, by the way, the Sox probably should have won in '86. Did I mention that Bill Buckner is my hero? The Mets had a great year that year, but the Sox probably should have won that series.

What is it about teachers that makes them spend so much, anyway? Whatever it might be, they do a job that is very tough and very much underappreciated. I give them all the credit in the world.

Hope you're making progress on the debt elimination. Hang in there!

Radio!!!
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Thank you, stan1ley! So far, so good...sticking to being debt free and slowly but surely investing for the future (I just wish the market would turn around already). I guess for now, stocks are "on sale."

Radio!!
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madmdf wrote: After Christmas of 2000, I was beginning to earn more money and resolved not to use a credit card (besides American Express, payable each month), and I've held true to that resolution. Now my credit card debt is down about $3,000, and my overall debt about $4,000. Also, I have one less credit card. I hope if I can keep plugging away that I can erase the debt in about 3 years.

madmdf-

Way to go! You sound a lot like I did when I finally grabbed the bull by the horns and started beating it back! The lower your debt drops, the more inspired you'll be, and it will be over before you know it! Just expect an occassional bump in the road (there always is one) and keep your head down and you'll get there! Good luck!

radio!!!
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gamehost wrote: Can you possibly send me the Snowball Calculator? I have tried the links but they did not work.

gamehost-

I never did have an actual calculator that I was using, just the advice of others on this board. In short, my plan was just to pay the minimum payment allowed on all of my monthly bills EXCEPT for the bill with the highest interest rate. I would throw as much as I could at the bill with the hightest rate until it was paid off. Then I would close that account and begin the same process with the bill with the next highest rate, and so on.

By the way, unlike some others, I did not just start with paying off credit cards first: at some points, I was actually paying off student loans and car loans first because I had lower intro rate offers on credit cards at the time. As long as you're careful and play the game right, you can do this and beat the credit card companies at their own game.

Good luck!

Radio!!!
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This is exactly the type of post I really need to hear right now. As I have stated in earlier posts, i am just starting where you began 3 1/2 years ago. It is very inpirational to hear stories like this. I STRONGLY ENCOURAGE OTHERS WITH SUCCESS STORIES TO KEEP THEM COMING. It helps us newbies along. Thanks for sharing that with me. Bob.

Thank you for saying so, Bob! Be determined, be tough, be strong. You'll do it, too. And the financial and emotional payoff is HUGE! Best of luck!

Radio!!!
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Great job, glad to see you did not take the easy way out and will be able to avoid those traps in the future.
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Radio,

CONGRATULATIONS!!!!

To say your post is inspirational would be stating the obvious. Heck just look at the recs on that post! Holy Credit Freedom, Batman!

And now that you've accomplished what most would see as unsurmountable, what's your next step? What are you doing with the cash that's no longer going towards the debt?

Are you investing? Are you saving? Have you checked out the crash course called, "Where to Stash Your Cash"? (http://www.foolmart.com/Shopping/Product_View.asp?PRODUCT_ID=MF2700_01&REF=csbo03123)

Now that you've taken us from where you've been to where you are now, how about sharing your ideas for where you're going! :-)

We're proud of you, Radio!!

Tony
...but I still am...

Off2Aruba
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OY!!

You know what I did?

I just posted a response to Radio's post----which was posted in April!

See how frazzled TMF Cheeze got me today??!!

I've been sitting here posting many replies, and just realized that I'm replying to posts that are months old. For some reason, my browser took me back to OLD Posts!

Sheesh!! How "embarraskin"!

(And ironically, one of my responses was rec'd by someone!) LOL!

Tony
...but I still am...

Off2Aruba
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I just posted a response to Radio's post----which was posted in April! I've been sitting here posting many replies, and just realized that I'm replying to posts that are months old. For some reason, my browser took me back to OLD Posts!


Time does fly as you get older, doesn't it?

Kim
Don't they say the memory is the first to go?
DATE: SEPTEMBER 6, 2001

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Time does fly as you get older, doesn't it?

Kim
Don't they say the memory is the first to go?
DATE: SEPTEMBER 6, 2001


Ouch! Cruel, Kim. Very cruel!

;-)

Tony
...but I still am...

Off2Aruba
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Tony

Senior moments???

Wolfshead
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Kim

it's a toss up between the memory or the hard drive <G>

Wolfshead
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RadioPhool,

I think you should write an e-book on your trials and tribulations, and finally your TRIUMPH.

It would be great to see and read about your techniques, and of course, you could give us TMF folks a discount on your book. I'm sure you'll have a little more free time now that you don't have to worry about your debt.

Congratulations.

ew

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Congrats. Could you explain the snowball method or direct me to a source that does? Thanks
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Since this is dated 4/18/01, I'm not sure that this reply is actually going to go anywhere. I applaud you for getting out of debt ($21,000 a year for 4 years, plus interest) so quickly, but I have one question: How old are you?

I ask because I'm 53, and I cannot IMAGINE going into debt for a second car when you're still in debt on the first car and have other debt besides. Maybe I'm a tightwad, but the most I have ever paid for a car was $9100 (the only new car I ever bought), and I got rid of it after 125000 miles. I have a car now which has 142000 miles on it, and I've put on 105000 of those miles, and it didn't cost as much as that new car. I should add that both my parents were teenagers during the Depression (there is only one "the Depression"), and obviously that had an effect on the way I was raised.
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Congrats. Could you explain the snowball method or direct me to a source that does? Thanks

Keep reading, it's explained about a million times here. But here's one explanation.

Look at your budget, cut everywhere you can. Look how much is left over. This is your total debt redux amount.

Now list all debts, balances, interest rates and minimum payments due. Add up the minimum payments due. This number should be less than your total debt redux amount. If NOT, go back to the budget and slash where you can.

Now, pick a debt. The numbers crunchers say to pick the debt with the highest interest rate, but some of us choose the one with the smallest balance or the one that annoys us the most. Now, pay the minumums on all the debts EXCEPT the one you picked. This one, send the amount left in your total debt redux pile after you pay the mins on the others.

Now, here's where the snowball comes in, when the first debt is paid, you take the amount you were sending to that company and add it to the minimum payment of the debt next on the list. This way, you keep sending the same amount every month to debt reduction, but the payments keep getting larger.

Good luck!

Ishtar
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Since this is dated 4/18/01, I'm not sure that this reply is actually going to go anywhere. I applaud you for getting out of debt ($21,000 a year for 4 years, plus interest) so quickly, but I have one question: How old are you?


THBR, if you want to read more posts by a particular Fool, you can go to the list under the CC board and click on a Fool's name. It will reorganize the list to where you can see all of his/her posts.

Ishtar
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Snowball method?

Sorry for the ignorance - this is my first time here... What exactly is a snowball method? Where can I get more info about it?

I need some help... $18K in credit card debt here...

Thanks.

Byaka
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Thank you very much for your truly inspiring post. I'm not the first to say it, nor will I be the last...

My husband and I are actually in a deeper hole. I recently posted "need help with 90,000 in cc debt" and got a great amount of very caring and valuable advice. I feel if I had known about this board a few years earlier, I would have been in a much better financial situation today.

I hope to be able to, someday, post a similar message about our successes.

Thanks again
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Wow!! What an encouraging post!!! Please fill me in on the aforementioned "Snowball Method". I don't have any idea what this is, but think I really need to find out! Thanks for the positive words, we can all use especially this time of year!!!

Laura L.
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Wow!! What an encouraging post!!! Please fill me in on the aforementioned "Snowball Method". I don't have any idea what this is, but think I really need to find out! Thanks for the positive words, we can all use especially this time of year!!!



One explanation of the snowball method:

http://boards.fool.com/Message.asp?mid=16228623


Ishtar
(posted and emailed)
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I would just like to say this is the first time I have read your story and it gives me so much hope!!!! Congratulations, truly! I myself am trying to get rid of the debt I accumulated in college and have spent many nights upset over how I would plan for my financial future.. Honestly, it has to come down to making committments to yourself NOT TO USE THOSE CREDIT CARDS!!!Cut them up , hide the numbers, do anything!!! But promise yourself not to use them. Its been a slow start but I have managed to pay off a few debts already.. I am just breaking into the bigger balance cards and it seems I can't make them budge... Can someone tell me what this "snowball method" is? I really hope I can write such a wonderful success story someday as well. Godd Luck to all of you!
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Congratulations!! Well done. I wish more people like you two.
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Radio,

First off, congratulations on accomplishing what would seem to be impossible! Way to go!

A question for those who would like to follow in your footsteps: Can you explain what the "snowball method" is and how it works?

Thanks and best of luck for your financial future,

Tddiva1


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Hi THBR! I am now 35, so our debt repayment pretty much came between the ages of 31-34 for me (28-31 for my wife).

In terms of our cars, we had moved to a pretty distant Washington, DC suburb, and both had major commutes to and from work. When I got my new car, my old one had 165,000 miles on it. My wife's old car went away at 130,000 miles. My commute was 80 miles roundtrip; my wife's was 45. Even though it was probably not the smartest thing to do, I decided to get two new cars so they would be reliable, theoretically, and come with a full warranty. I was afraid of buying a used car and living with the constant worry of what might go wrong. I should tell you that I pretty much have decided to only buy new cars, as I can monitor the maintenance for the life of the car and try to make them last as long as possible. I figure if I can buy a new car and pay it off within three years and then keep it for close to ten years, I'm coming out ok. I should say that my Dad is a "Depression Baby," and it drives him crazy that I 'waste' money on new cars instead of buying used. It just turned out to be one of my quirks in life.

To be sure, making $700 a month in car payments was a huge burden on top of everything else, but I just made that debt part of our plan, and we paid both cars off early as a result.

Hope some of this answers your question...

Radio!!!
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Could you please tell me what the "snowball method" is that you used to help get yourself out of debt? Also, if you wouldn't mind sharing what your income was as you paid off your debt, I would find that information very helpful.
thanks
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Could you please tell me what the "snowball method" is that you used to help get yourself out of debt? Also, if you wouldn't mind sharing what your income average was as you paid off your debt, I would find that information very helpful.
thanks
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Dear 'out of debt' I'm delighted to hear what you have achieved, well done. Some years ago when I decided that I had better help my family understand finances a bit better, I bought each of them a little book called 'The Richest Man in Babylon' dont know if its still around, but it was a great tool to help people, especialy young people, learn about money.
All the best,
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Congratulations Radio. I am new to Fooldom and tell you I can't wait to be in your situation. Almost everything I have read has been inspirational, but yours is by far the best so far.

Fourees
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I am new to Fooldom and tell you I can't wait to be in your situation. Almost everything I have read has been inspirational, but yours is by far the best so far.

Thanks, Fourees, for the kind words! You'll get there, too! Just remember to keep your eye on the finish line, but don't forget to celebrate smaller victories along the way. And realize that there will be stumbling blocks along the way... that's just part of life. To win, you need to get past those bumps in the road and keep on moving forward. Best of luck!!

Radio!!!
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Wow.

Your post brought me to tears.

Sitting here swimming in debt myself... I'm ready. I want out.

Your last word... RADIO! I take as a sign too...


seeings how that is my occupation. Radio.

Now you got me excited.. ready to battle my demons.
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thanks radio for your inspiring note, i will keep it handy. for the new to this site, the snowball method???? jeanne
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i will keep it handy. for the new to this site, the snowball method????

I seem to be the only poster at this hour, so I'll explain.

The snowball method, in its simplest form, is when you line up your credit card debt with the highest interest rate at the top, and the lowest rate on the bottom. You pay the minimums to all the other debts, but to the card at the top, the one with the biggest APR, you pay the minimum plus every other dollar you can scrape up. You continue this, month after month, until that debt is gone, then move to the next debt. Now you have everything that had been going to the first debt, plus the minimum that had been going to this card, so the amount of money is greater, like a snowball rolling downhill that keeps accumulating more snow, getting bigger and bigger and more powerful all the time.

There are variations on this. Dave Ramsey says to pay them off in order of increasing size (you start with the card that has the smallest amount due, then work up). This generally costs a lot more money, and can leave people with a final, weary, $15,000 card at the end, which is when many people get tired and start getting careless.

Some people like to wipe out a bunch of small cards at the beginning to give themselves more money to work with. Other people target the card they hate the most.

But essentially the idea remains the same; pay the minimums on most cards, and remain focused on one card at a time for paydown, rather than paying extra to this card this time, and extra to that card the next time.

Hope this helps.

Nancy
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Well written article. Great turnaround story, But I would like to just point out one thing. You said after you paid off the Credit cards you would cancel them. Canceling credit cards after they are paid off actually hurts your debt to credit ratio. For example if you canceled a MasterCard with a limit of lets say $10,000 your overall credit available will also lower by that $10,000 amount. So with the credit card being paid off , yes your debt will be lowered by that amount but also your available credit overall will lower by canceling that same card.
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No. of Recommendations: 7
Well written article. Great turnaround story, But I would like to just point out one thing. You said after you paid off the Credit cards you would cancel them. Canceling credit cards after they are paid off actually hurts your debt to credit ratio. For example if you canceled a MasterCard with a limit of lets say $10,000 your overall credit available will also lower by that $10,000 amount. So with the credit card being paid off , yes your debt will be lowered by that amount but also your available credit overall will lower by canceling that same card.

You responded to a 13 year old post. The decision to cancel or not has probably already been made.
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No. of Recommendations: 2
Still good to know for the future lol
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