I hear the commercial a lot on 700WLW about how to eliminate your debt. They make claims about how you can payoff either a 30 or maybe a 15 year loan in 2.5 years based on what your income is now? I'm not sure how a married couple making what they were already making before can suddenly pay a house off that quick. I realize this is likely somekind of scam. I'm not curious enough to order this guy's book but am curious if anybody knows what the general story on this is.
I did a little research on this character and what I found is that he does not have any new fangled ideas. He merely suggests common sense ways to better manage your money. Nothing illegal about what he's doing but expecting to pay off your house in 2.5 yrs is not really realistic either
There's really no quick way to do it. You just have to buckle down, follow a budget, and pour all possible funds into your debt. The Dave Ramsey "snowball" approach works well. Make higher payments on the higher interest stuff first while making minimum payments on the rest, then when you pay the first one off, roll those funds over to the next one, and so on.
I put most of those financial commerials in the same catagory as the quick diet plan ones. Mostly, IMO, they are scams. They aren't neccessarly complete frauds, but most times they simply package basic or general information and want you to pay money, sometimes big money, to get information you either already know, already should know, or could easily find on your own.
I'm sure there's probably a good "system" out there to help you get on track financially. However, the best system is, and always will be, spend less than you make. If you always spend $1 less than you make, you'll never go in debt (woln't get rich either, but you woln't be in hock). Obviosuly the goal over time is to increase what you take in, and continue to reduce what goes out.
Ltlabner's secret system to getting out of debt (and it doesn't cost a dime):
* An excel spreadsheet with your budget. Update it daily with the recepts and see exactly how much you are spending. Best tool I can reccomend. You quickly see areas where you can cut back, where you are overspending, and it allows for conversations with the spouse that are rooted in facts not emotions.
* With credit card debt: pay off biggest one first. Get on the phone and negotiate lower interest rates. Cut up existing cards. When you pay off one, roll that into the next one.
* If you are in debt, no new cars, no new houses, no new TV's, nothing. Going out to eat only on really big occasions. No vacations. Nada. You don't have to sit in the dark and do nothing, but whatever you do, don't spend any more money needlessly.
* Once your credit card debt is paid off, roll that money into paying off your cars (if loan is outstanding).
* Save money every month by paying yourself first. Pay it like you would pay a bill.
To me, money and finances are increadibly easy and straight-forward. People just make them hard because it's a hellofa lot more fun to buy a new fancy anything that say "no". The irony is, when you are disciplined with money, and spend it wisely (instead of implusivley) you actually end up with better "stuff" and live better than the wild spender.
Guess this is a really long winded way of saying. Just like dieting, you can dress it up, but it always comes back to discipline and restraint being the best "system".
^^^^ What he said about the commercials. There really is no quick fix to geting out of debt. The biggest thing is paying off the highest interest rate first. If you are into serious debt you probably should see a credit counceler. It may ding your credit at first but they are able to do a whole lot of good with interest rates and planning out a payment schedule.
One thing that I have noticed that helps with spending is I set up a separate savings account. I direct depost a set amount of money from each check in to this account. I have it set up at a separate bank that I only go to every 9 months or so. What I did was when I started to genereate some money I rolled it into a CD and every time the CD matures I drain my savings account (keep the minimum amount in it) and put the rest into a CD.
If it seems too good too be true it normally is.
Worked for us. My wife and I paid off about $16K in just around 9 months using that method. Of course, we found a lot of money in our budget that we'd been blowing on crap. Worked well enough that she was able to quit her job and be a stay at home mom. Now all the debt we have is our mortgage and my student loan (which is next on the list to knock off). It wasn't easy, but man was it worth it.Originally Posted by durl
I'm just like everybody else. I have two arms, two legs and 4,000 hits."
-Pete Rose
I myself am not in serious financial doo-doo but if I still owe approx 86k on my mortgage, I dont care what I do I am not going to be able to pay that off in 2.5 years
Sure, just come up with about $2,800 per month and you knock it right out.
That's not factoring in the declining intrest outstanding as this is a simple intrest loan, but it's a good rough number to get you started.
See...piece of cake.
You'll be getting my bill for sharing this wunder-system with you. Don't worry, I have easy pay plans.
All kidding aside, if you make extra principal payments every month, you'll be suprised how quickly the outstanding ballence starts to reduce. Most of your monthly payment goes to interest, and a tiny bit to principal. You can send in even an extra $50 or $100 and designate it to go towards the principal. This not only reduces the amount of the loan outstanding, but lowers the total amount if interest paid.
However, I wouldn't recomend doing this unless (1) all your other debt is retired (2) your retirement accounts are maxed out including 401K, Roth IRA, etc (3) you have some insane interest rate (anything above say 7 or 8%and can't get refinanced. Otherwise paying off your mortgage early doesn't make tons of sense.
Last edited by Ltlabner; 02-11-2008 at 04:05 PM.
I think the best investment in the world is peanut butter. Eat it every day.
The local PBS station would run a show from this guy with a very sensible plan. First, he has you identify your "latte factor" - the small items you buy every day or week that you really don't need -- latte's, cigarettes, bottled water. Eliminating those can free up hundreds a month.
Then he has you "pay yourself first" with your paycheck -- that means servicing debt or saving.
The rest is yours. He dismisses the kind of budgeting that says, for instance, "$100/month -- entertainment" as unrealistic. That's been my experience.
Really...interesting.
Different strokes for different folks, but I find itemized budgeting per month pretty simple. Guess it depends on your ability to catorgize things and not make it so complex as to be overwhelming and so simple as to be useless. Or the complexity of your finances.
Last edited by Ltlabner; 02-11-2008 at 04:13 PM.
Creating the budget isn't hard, following it is a different matter for most people. I'm not about to enter every dollar I spend in a worksheet.
Ahh...gotcha. Yea, doing budgets and actually following them are two different things. Fortunatley, the method of following a budget isn't nearly as important as actually following the thing.
But yes, you have to have the mindset and discipline to do it. It works for me, doesn't work for others. I like knowing where everything went and the "big picture" of the spending.
Actually paying the bills, writing the checks and ballencing the checkbook? Errrggghhh. I'd rather slam my fingers in a door, again and again and again and again. Mind numbingly dull.
Fortunatley my wife likes doing the bills and I like keeping track of everything, doing budgeting and long term planning, etc. Makes for a good team.
Last edited by Ltlabner; 02-11-2008 at 04:38 PM.
“I don’t care,” Votto said of passing his friend and former teammate. “He’s in the past. Bye-bye, Jay.”
My wife and I budget $100/month for entertainment and keep to it pretty easily. That would be harder with kids but still not impossible.
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