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I'm a 29 year old single guy trying to pay off his debts. My debt load is pretty high,(about 40,000 including student loans, car, credit card and another loan). I'm on a downward trend, but right now I'm working a second job and looking for a higher paying one. Anyway, does anyone have any encouraging stories of becoming debt free? If so, what's your story? I could use the encouragement.
Have the government take more taxes than necessary out of your pay check. If you can afford an extra $50 x 26 payperiod = $1300 at the end of the year to go to debt relief. I am in a higher tax bracket and I am getting back $16,000. That's right Sixteen grand. All that goes to pay off all my credit card debt. By next week the only bill I will have is my mortgage payment.
Keep up the good work on the working that second job. I had done it for over 20 years and it paid off handsomely. The exess cash I generated went into my 401k so I would think twice about giving the second job up once you get your debt down. Like you said once you get a better paying job then you can give the second one up but I really would think twice about doing that unless you are moving out of town which I did and had to give it up;
I'm 27, paid off my student loans this year. Granted, parents helped pay for part of college. I don't remember the last time I didn't pay a credit card off in full at due date although it's happened on occasion..
Quite a number of posters in various threads have addressed this topic through the years on C-D. I suggest you search those old threads.
You'll find a wealth of information related to your financial goals in books such as "The Milliionaire Next Door", or the motivational writings of Norman Vincent Peale, Zig Ziglar, and others in that business. Not all will resonate with you, but check out the library or bookstores near you to find other similar authors ... you'll find one that will connect with you and your situation as you percieve it at this time.
You're on the right track already by recognizing that the earnings must be maximized by your efforts and that you have to control the expenses to achieve your goals. It will neither be easy or trivial to accomplish, and it will take time/perserverence to do. The trick is to balance the price you have to pay with the needs & wants you have along the journey. At age 29, it's a long journey ahead .... so you've got to learn what for you is the real levels of needs ... and wants ... balanced against what you can find to earn a living and supplement that for a durable income that doesn't have you strictly trading time for dollars.
You'll find some forum members who note that they've done so by the time they're in their 40's-50's-60's ... and some who have never found the balance.
I basically paid off my undergrad student loans as soon as I started earning peanuts (about 20k/yr average) during my grad school years, probably by the time I was 24. I paid off credit cards month to month so it never built up. Save every cent and allocate it to repaying the highest percentage debt - including your student loans. I also lived in very cheap housing ($300/month) as a grad student. I never ate out, went only to very cheap clubs (like free), never drank booze, did not buy much new clothes.
Have the government take more taxes than necessary out of your pay check. If you can afford an extra $50 x 26 payperiod = $1300 at the end of the year to go to debt relief. I am in a higher tax bracket and I am getting back $16,000. That's right Sixteen grand. All that goes to pay off all my credit card debt. By next week the only bill I will have is my mortgage payment.
Keep up the good work on the working that second job. I had done it for over 20 years and it paid off handsomely. The exess cash I generated went into my 401k so I would think twice about giving the second job up once you get your debt down. Like you said once you get a better paying job then you can give the second one up but I really would think twice about doing that unless you are moving out of town which I did and had to give it up;
Keep up the good work.
Wouldn't it be better to use that extra money to pay down the debt instead of having Uncle Sam hold it during the year, interest free I might add. When you get money back it is because you paid too much in the first place. I know of some people that max out their credit cards during the year and then use the money that they overpaid during the year to pay that debt off. Would have been so much better to just pay as you go in the first place.
That being said, the OP wants to get out of debt and I would hope remain debt free. Here is what I have done in the past, (Yes I am in debt again, Student loans and a home loan.)
Take all your debts and lay them on the table. This is assuming that you are at least making the minumum payment anyway or better yet more than the minumum.
Here is a scenario:
Store Card: $500 debt $25 monthly minumum payment
Visa: $1,600 debt $30 Monthly minumum payment
Car payment: $5,300 debt $240 a month payment
Student loan debt: $18,000 debt $250 a month payment
Here is what I would do. Chances are you have to pay the minumum so do that on all debts. On your smallest debt, in this example the Store card, pay it off or take as big a chunk that you can each month. When you have eliminated the store card debt pay off the Visa using all your extra money and the money that you would have used to pay down the store card. Once that is paid off jump to the car loan, and then the student loan debt. It will take some time to do this. If it is a goal of yours I am sure you will be successfull.
People too often make the mistake of assuming that they can become debt-free merely by increasing their income. If you can't restrain your spending at your present income, you likely will not be able to even if your income increases. So, the road to being debt-free, as unpleasant as it can sound to people (especially young people), is to not spend money unnecessarily to begin with. Simply stated, live below your means. Rule no. 2, which is widely ignored today, is never borrow money for short-term consumption. If you can't pay cash for your recreation, your vacation, your fun toys at home, etc., etc., then don't buy them until you can. Same goes with depreciating assets. For example, about the only time I ever borrowed money for a car is when I could borrow it at 0% interest. Even then, I could have bought the car I wanted for cash, but I left that money in the bank earning interest.
Finally, and this is a sore point that many people refuse to acknowledge or discuss: The singularly most financially expensive thing most people can do is to have children. If you want debt-free financial independence, you may have to seriously consider if you have children at all, when you have them if you do, and how many you have. Whatever wonderful joys children may bring, they also bring a massive financial burden that must be borne if parents are to be considered even remotely responsible. People who are unwilling to accept that responsibility really need to consider, before the fact, whether they should be parents at all.
PS--Even ordinary middle-class people can be debt-free if that is their goal and they work toward it. I am, and have been for years now.
Have the government take more taxes than necessary out of your pay check. If you can afford an extra $50 x 26 payperiod = $1300 at the end of the year to go to debt relief. I am in a higher tax bracket and I am getting back $16,000. That's right Sixteen grand. All that goes to pay off all my credit card debt. By next week the only bill I will have is my mortgage payment.
Wow. That is incredibly dumb advice. You could have just put that money in a basic 1% interest savings account and you'd have had $16,160 by the end of the year. Instead, you apparently have so little willpower to save the money bit by bit, that you gave Uncle Sam $160+ in interest on YOUR OWN MONEY.
Better advice is to have $50 per pay period directly paid towards extra on your student loan or car payment or whichever debt you want to aggressively lay down. You'll save in interest on that loan (which is way more than the 1% you'd earn in a savings account) and pay down the principal faster.
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