OT: Becoming debt free

Just wanted to say this is a great thread! Very informative. Thanks!!!

We have been using the principles from Total Money Makeover by Dave Ramsey for 2 years now. The difference is amazing. Every year at tax season I was always amazed at how much money came in and how little was left. Now, I love to look at how much we have saved each year. I loved how he gave you the percentage for each cost (i.e. house, 25-35%) and allowed you the freedom to adjust it to work for you. Rob and Julie....you might not agree with the snowball plan he uses....from smallest debt to biggest debt, but when you read the book, you will understand his premise. If you pay off the smallest debt, you then have the money and the encouragement to pay off the next debt. When you have then paid off the next debt, then you have the money from the last two to put toward the next one. It snowballs. I think he has found that it is most effective because it gives you the encouragement to keep going rather than giving up. It really is common sense and I make it a point to give it as a gift at every wedding. If everyone started off this way, life would be so much easier. I also love that my kids are seeing me budget my money. I am also actively teaching them these principles so that they, too, can grow up with a respect for money and not think impulsive spending is the way to go! Ali

Wow...I am proud of all of you that have done this. We are in major debt...just trust me...LOL...and until I graduate there is nothing we can do. Once I start working...AWAY IT WILL GO! Can't wait. I feel like it just "looms" over my head all the time. We hope to be debt free with the exception of our home, five years from now.

I couldn't agree with you more Ali. We used the same principle to get out of debt a few years ago and it worked wonderfully! It is very encouraging and motivating to do it that way.

His theories appear to be sound as far as not spending so much and getting out of debt. But some of it just isn't. For example, with his car, he assumes you are paying $475 a month (which most people are not) and you can invest it at a 12% a year return (which has to be above inflation for it to count - which is pretty crazy - no one gets those kind of returns on a sustained basis). But the basic theory of spending less and getting out of debt and saving some is good.

You're right. Even Dave admits it makes mathematical sense to pay off debt with the highest interest rate first. He does it the other way to keep you motivated and b/c in most instances it doesn't make a big difference monetarily. Ultimately I think it's personal preference.One thing I left out is budgets. Dave is VERY into budgets and "spending every penny on paper" before you get your check.Dh and I do our budget by paycheck rather than by month. We allocate every penny to go somewhere before we get the money.He also recommends buying most things with cash, rather than credit cards (even if you get rewards) because it's been shown people spend more money when they aren't using cash. If you absolutely can't use cash, then use debit cards b/c they are self limiting.We take out cash for things like groceries, restaurants, gas, clothes, "blow money" etc so we don't overspend. We keep the cash separated into envelopes so we know exactly how much we can spend in each category. If there's no cash, we can't get it!Did you know there are lots of "debt" bloggers too? There nearly as addicting as the adoption and infertility bloggers I read. [url=http://www.thesimpledollar.com/]The Simple Dollar[/url] is one.Another thing I've started doing that is kind of motivating is tracking our net worth each month. You can do it for free here: [url=http://www.networthiq.com/]Track, share, and compare Net Worth. How do you measure up? NetworthIQ[/url]

For those not familiar with Dave's plan, listen to his radio program for a couple of weeks and you'll get his message loud and clear. (See his website for a radio station near you or you can download the shows from the site.) He's a bit heavy on the religion, and if you're not into that, it's pretty easy to ignore and still benefit from his message. And I don't believe/do everything he says. There's also a forum dedicated to his principles -www.llnoe.com - check it out. "Live like no one else now, so later, you can live like no one else." DR And we did exactly that. Paid for 2 Guate adoptions and house, etc., took early retirement and now we're living overseas for a year. And we're teachers from blue collar/farming families, not CEOs or trust fund babies. Visit our blog: [url=http://www.gaceinchina.blogspot.com]G.A.C.E. IN CHINA[/url]

Thank you so much for those of you who have responded. This is exactly who I was thinking of. I am definately going to check it out.

We, too, are working the Dave Ramsey plan. We needed MAJOR help so we went to see one of his "endorsed local providers" in our area. The person we went to see helped us sort everything out and make a budget and is available to answer questions for us as we work the plan and have random stuff (life) happen to us. We feel sooooo much better now that we have a plan and an actual written budget (had never had one before). It's really freeing to know where your money is going and to be the ones directing it there. We are making progress and it feels good!

Yeah, if someone would have told me two years ago that we would be where we are today I would have laughed at them!! DH and I have always made a very comfortable living, but, like many people, we weren't making good choices with our money and were living slightly above our means. Now, we have NO consumer debt - none - no credit cards - no home equity loans - no car payments. It's AWESOME!!! It has really allowed us to give more than we ever expected. (and Dave would probably yell at us and tell us to make sure our emergency fund was fully funded - and retirement started - which it is - and get our house paid off before we started giving more) I'm a huge fan - a huge supporter - and I think his way makes a lot of sense. Kim

Just wanted to say that DH and I have been doing the Dave Ramsey plan for the last 3 years. We were lucky to begin with because we neither one had credit card debt to begin with but with his principles we were able to pay off everything!!! We have NO debt. Our HOUSE is paid off, we paid cash for our adoption and we just paid cash for our van!! I highly recommend this program. Dave also has a TV show on Fox Buisness channel.

This subject fascinates me! For those that have paid their homes off could you share the ballpark starting figure and how long it took to pay off? I don't have any credit card debt, but I would LOVE to pay off my home in record time!

We've never seen Dave Ramsey, but I can't wait to check it out. My husband convinced me of the benefits of being debt-free. It's wonderful not to pay interest. I think of all the times I paid $20 here; $30 there and what I could have done with that money. Our house is about $300K; we had a 15 yr fixed rate mortgage and then made extra payments whenever we could. We paid it off in 10 years. It's a great feeling - although property taxes are still an expense! I don't know if anyone has heard Bob Brinker - he's an excellent investment person. He has a radio show on saturdays and sundays. When you get debt-free you can get more and more into investing.....

OH I think we should keep this subject going and check in each week with tips and accomplishments. I think we could support each other and in the end have more money to give. We have been doing the Dave plan for about 3 years now and our house is paid for, our adoption and in 2 months our credit cards. We have our retirement plan started and an emergency fund.

Wow!!!! House paid off, that is wonderful! Congrats to all of you that were able to do that. We, too have no debt except for our house and need to get going on that. As I mentioned before, we have been on the plan for 2 years and I have passed the book along to many people. Last summer we went camping with some close friends and we told them about The Total Money Makeover. We laughed about how far they could be the next time we go camping (which is now in June). She called me the other day and told me that she had just sent in the final payment for their two cars. I don't think I have ever been so happy for someone!! Having control of your finances in an uncontrollable economy is so freeing. I am excited for those of you starting out. You are on the beginning of such a rewarding path....Ali