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I thought it might be encouraging if we shared stories on how we climbed out of debt. I've read a couple of good ones in other threads, like one person saying he lived in a storage unit so he could pay off bills. I like stories like that, when a person sets his/her mind to something and makes the miraculous happen.
My personal story is that I'm 44 years old and I've moved back in with my father. I've paid off all my credit card debt, my taxes are paid to date (self employed) and I'm putting money into my Roth IRA and a Health Savings Account. When I was growing up, nobody ever taught me about money. I've had to learn the hard way, by making terrible, stupid mistakes.
I still have a $11,000 student loan I'm struggling to get rid of. Not too many years ago, it was up at $42,000. It's been a subject of great shame and embarrassment to me how I let that happen. Right now I have no car. Long story, but even though my credit is excellent, I'm afraid to buy a car, because I'm afraid to take on more debt. A friend is going to lend me an old Toyota Supra with 130,000 miles on it to use for a while. I'm happy with that.
Anyhow, does anyone have a story they can share? It would be inspiring to hear what others are or have gone through to pull themselves out of debt and turn their lives around. I need to know I'm not alone. (I tend to feel like a loser sometimes living at my pop's house, driving a moped and a friend's crap car, but then I think about that car who lived in the storage shed...)
Good for you putting your financial health before Keeping Up with the Joneses. If only more did that.
I have never been in debt. Not because I am some financial genius or make lots of money (I don't) but because I fastidiously live within my means and don't buy anything unless I have the cash in hand.
The bad side of being debt free is that we live in a society that values the outward trappings of wealth - big car, big house, expensive clothes. Swimming against that tide - of appearing to have less than others - is the hardest part.
Well, I've hear that it's not how much you make, but what you do with it. People don't walk around with their credit card debt written on their backs. All we see is the new BMW, the nice clothes, and expensive shoes, and it's easy to assume that they have wealth. Is it possible to share some examples of how you live? What kind of car do you drive? Do you own a home? Etc...
Don't let it get you down....you can't change the past and I admire your changes.
There are a lot of people that don't get this far, rather than wake up beating yourself up over your past....you should be happy....many people NEVER kick their bad habits and if you can get past this then think what you can do going forward.
I think that EVERYONE has something later in their life that they wish someone had warned them about (or wish that they'd listened). Seems you are wiser and more mature for the experience.
The biggest money savers I can recommend are:
1) Go without a car if at all possible. Rent one occasionally if you must.
2) Get roomates or live in a similar set up. This can save a lot of money fast.
3) Don't eat out much, especially don't go to bars....avoid alcohol and cigarettes.
4) The public library is an incredible source of entertainment....books, movies, music....
mine even has a great big collection of graphic novels I enjoy.
Are you a guy? If so, then yeah....society does put a bigger stigma on men then women when it comes to money but women get nailed on looks so there is an opportunity of empathy there.
Thank you for the advice. I'm living with my father now, but I plan to move to the east coast soon, and when I do, I will probably get a roommate. I don't eat out hardly ever, and if I do, it's a $10 meal at the most. Netflix has been a wonderful source of movie entertainment. In regards to car, I will have to buy one soon. I can't skimp too much on a car, because I need something comfortable to get around in and I need a decent car seat to support my back, or I won't be able to drive anywhere.
I am really hoping that a few people will find their way to this thread and post some stories about how they managed to crawl out of debt. I want to hear some stories!
I've managed to almost get out of debt. I went to graduate school and have a large school loan. I've paid off over half though. I don't have a very exciting story. I started on a budget a few years ago and still live on the same amount of money though my income has increased. I got married recently and my wife is now on board with this. She had some debt on a car which we quickly paid and are now working on my school loan again.
I don't have a dramatic story either. I can tell you the best thing that I've ever done was set a budget. I'm young, have lots of friends, just got married, and was blowing a lot of my money. I have several bank accounts now to help me manage my money and am in contact with a financial advisor whenever I have questions. I live off of commissions (which gets scary sometimes). We've decided to throw away all of our credit cards and live meagerly for the next few years. We're slowly paying off 5 credit cards and about $10,000 in student loans. We are also pouring all of our money into a money market account, which earns 4.2% interest p/month. It's great! In 15 years we'll be millionaires! (as long as we stick to the plan). It is hard not being able to keep up with the Jones's...but in a few years we won't have anything to worry about!!
I don't have a dramatic story either. I can tell you the best thing that I've ever done was set a budget. I'm young, have lots of friends, just got married, and was blowing a lot of my money. I have several bank accounts now to help me manage my money and am in contact with a financial advisor whenever I have questions. I live off of commissions (which gets scary sometimes). We've decided to throw away all of our credit cards and live meagerly for the next few years. We're slowly paying off 5 credit cards and about $10,000 in student loans. We are also pouring all of our money into a money market account, which earns 4.2% interest p/month. It's great! In 15 years we'll be millionaires! (as long as we stick to the plan). It is hard not being able to keep up with the Jones's...but in a few years we won't have anything to worry about!!
You are really smart to start young! Nobody ever taught me about money so I lived young and foolishly until I was 40!!! Now I am paying the price. When you start saving young you are able t take advantage of years of compound interest.... I still put everything on credit cards, but I pay them off at the end of the month. I don't like to carry much cash around...
I'm certainly no financial "genius", I grew up middle class, we budgeted and saved on trips (motel 6, etc).
The way I've stayed out of debt is just to see it for what it really is, a very, very expensive way to buy something.
Especially credit card debt, that's just insane if you're carrying a balance.
-They can change your interests rate on a whim.
-Crazy, outrageous fees vs what you owe. If you're late paying a $100 debt, they'll charge you $29. That's just nuts.
-They have very aggressive terms...late fees and overlimit fees.
I don't think people are naturally wired to handle interest rates, payments, compound interest, etc. You see it with minimum payments which take forever to pay off a balance.
Interest rates tend to be alot higher than increases in peoples salary.
Say someone borrows $5,000 at 20%. You'll have to come up with $6,000 by this time next year to pay it down to zero. And if you're only getting a 3-5% raise every year (if that)...how exactly do you pay it off?
If you pay it down religiously every month, and you're other expenses are fixed, you'll only pay down $5,250 (with a 5% raise), leaving a $750 balance. And that's assuming your other expenses don't go up.
Most things go up by at least 5% a year.
Tracking your net worth every month, every 6 months, is a good way to see where you stand. I keep track of things in a simple excel file, nothing too complicated.
My best money tip...stop paying retail for anything. Esp with online shopping, ebay, etc.
About time the lender was brought into this, over here these type of loans are called unsecured and the reason for the high interest rates is quote " because of the high risk".
Therefore the lender expects to take a hit. When the lender takes a hit he is often insured and loses nothing or very little.
The lender has a responsibility to see that the borrower can pay, thats his side of the bargain.
Over here, an offer sometimes as low as ten percent of the outstanding will be accepted as full and final payment.
If you are up to your neck in debt it is worth asking. First ask to freeze the interest then if you can borrow ten percent or so make an offer, then tear up those cards for ever.
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