Again, pay cash for EVERYTHING. Do not borrow a cent EVER. If you can't pay cash for it, don't do it or buy it.

Don't hide your credit cards. Cancel them and cut them up and throw them in the trash. Make it impossible to borrow money or go into debt.

Only exceptions are buying a car and buying a house. But when you do these, make sure you can put down at least 35% on a car, and 20% on a house. That way, if you ever have to sell, you won't be upside down.

All these theories are great, but how pratical are they.

I try not to spend more than I make, but I have debt. Luckily, I make enough money to pay all my debts, but I don't know if I will ever be completely debt free while my kids are in the house.

RodeoSchro said:

Good suggestions. Except for this one:

RodeoSchro said:

The car payment is the bane of the middle class. Buy a cheap car, and make payments to yourself. After a year or so, you'll have saved money. Use that to pay cash for a better car, all the while paying yourself. Every time you sell the car and use your savings, you'll be able to step up in car, all without paying anybody.

Bottom line....Debt is Dumb.

This is a great book for getting your finances in order: http://totalmoneymakeover.com/

Bottom line is:

1. Make minimum payments on all your bills. Squeeze your budget until you've accumulated $1,000 cash. This is your beginner Emergency Fund.

2. Pay off your debts in order of smallest balance to largest. "Snowball" the payments as you go.

3. Create a full-fledged Emergency Fund containing 3 to 6 months' worth of expenses.

4. Direct 15% of your annual pre-tax income into your retirement plans. Utilize tax-advantaged accounts such as 401ks and Roth IRAs, if eligible.

5. Take care of college funding. Fully fund Educational Savings Accounts and/or utilize 529 plans.

6. Become financially "ultrafit" and 100% debt-free: Pay off your home early.

7. Get to the point where your money works harder than you do: Build wealth (mutual funds, real estate, etc.), have fun, and give!


It's about "living like no one else, so that later you can live like no one else"!

truefunksoldier said:

Most of these are rules for people who already have money. Pay off my home? I don't have a home. 15% towards retirement? I can barely afford to get by putting in 5.

RodeoSchro said:

Good suggestions. Except for this one:

RodeoSchro said:

The car payment is the bane of the middle class. Buy a cheap car, and make payments to yourself. After a year or so, you'll have saved money. Use that to pay cash for a better car, all the while paying yourself. Every time you sell the car and use your savings, you'll be able to step up in car, all without paying anybody.

Bottom line....Debt is Dumb.

This is a great book for getting your finances in order: http://totalmoneymakeover.com/

Bottom line is:

1. Make minimum payments on all your bills. Squeeze your budget until you've accumulated $1,000 cash. This is your beginner Emergency Fund.

2. Pay off your debts in order of smallest balance to largest. "Snowball" the payments as you go.

3. Create a full-fledged Emergency Fund containing 3 to 6 months' worth of expenses.

4. Direct 15% of your annual pre-tax income into your retirement plans. Utilize tax-advantaged accounts such as 401ks and Roth IRAs, if eligible.

5. Take care of college funding. Fully fund Educational Savings Accounts and/or utilize 529 plans.

6. Become financially "ultrafit" and 100% debt-free: Pay off your home early.

7. Get to the point where your money works harder than you do: Build wealth (mutual funds, real estate, etc.), have fun, and give!


It's about "living like no one else, so that later you can live like no one else"!

truefunksoldier said:

Sorry guys, some debt is necessary to keep your credit score high. That's the bottom line unfortunately, folks. Your damned credit score.

gemini13 said:

Sorry, that's another myth. If you don't plan on borrowing money, you don't need a credit score. When it's time to buy a house, get someone that actually writes their own mortgage instead of selling it to Fannie Mae, Fannie Mac, etc. and it won't matter.

truefunksoldier said:

That would be rather difficult in this area.

Is this your plan right now?

we are about $180,000 in debt (of the home loan kind) but we have a line of credit thing going, so all our income just goes straight into it and we pay everything with a credit card which is paid in full each month. We paid off our house in under 10 years with this thing.

I'm miss thrifty though, so it isn't any wonder lol. I buy generic and aldis wherever possible, and choose our green grocer and butcher over the supermarkets too, MUCH cheaper, local produce. I don't buy shoes, or take-out hardly EVER, don't get coffees everyday, smoke, or drive when I can walk. It is amazing how much money those things cost

I an deeply in debt. I find playing all the latest games on my PS3 & 50" plasma in my huge house takes my mind off it.

Number23 said:

Great idea. I like to go shopping to cheer myself up about my debt.

NDRU said:

If it wasn't for credit cards, I wouldn't have had Prince jump on top of my table in Las Vegas, play a solo in front of my girlfriend and I then flick his sweat on us. Not that I normally welcome that sort of thing.

Number23 said:

wow! he had the credit card swiper right on him, huh?

"Peanuts! Popcorn! Guitar solos! Flicked sweat!"

If it wasn't for credit cards, I wouldn't have had Prince jump on top of my table in Las Vegas, play a solo in front of my girlfriend and I then flick his sweat on us. Not that I normally welcome that sort of thing.

Number23 said:

Is this your article?


.
[Edited 12/4/07 12:20pm]

NDRU said:

I swiped it down his arse as he walked away as a joke. Imagine my surprise when £2456 registered on the following month's Visa bill. Confused and flabbergasted, I called Visa in a fluster, who informed me - with interest added - I actually owe £3121.

RodeoSchro said:

Good suggestions. Except for this one:

RodeoSchro said:

DR has some great principles. I'm considering changing cars, using his theory. My calculations are bearing out that theory of his.

The car payment is the bane of the middle class. Buy a cheap car, and make payments to yourself. After a year or so, you'll have saved money. Use that to pay cash for a better car, all the while paying yourself. Every time you sell the car and use your savings, you'll be able to step up in car, all without paying anybody.

Bottom line....Debt is Dumb.

This is a great book for getting your finances in order: http://totalmoneymakeover.com/

Bottom line is:

1. Make minimum payments on all your bills. Squeeze your budget until you've accumulated $1,000 cash. This is your beginner Emergency Fund.

2. Pay off your debts in order of smallest balance to largest. "Snowball" the payments as you go.

3. Create a full-fledged Emergency Fund containing 3 to 6 months' worth of expenses.

4. Direct 15% of your annual pre-tax income into your retirement plans. Utilize tax-advantaged accounts such as 401ks and Roth IRAs, if eligible.

5. Take care of college funding. Fully fund Educational Savings Accounts and/or utilize 529 plans.

6. Become financially "ultrafit" and 100% debt-free: Pay off your home early.

7. Get to the point where your money works harder than you do: Build wealth (mutual funds, real estate, etc.), have fun, and give!


It's about "living like no one else, so that later you can live like no one else"!

truefunksoldier said:

Dave?? Dave??? DAVE!!! Is that you? Coming to the Org all this time?


[Edited 12/4/07 19:23pm]

I an deeply in debt. I find playing all the latest games on my PS3 & 50" plasma in my huge house takes my mind off it.

Bottom line is:

1. Make minimum payments on all your bills. Squeeze your budget until you've accumulated $1,000 cash. This is your beginner Emergency Fund.

2. Pay off your debts in order of smallest balance to largest. "Snowball" the payments as you go.

3. Create a full-fledged Emergency Fund containing 3 to 6 months' worth of expenses.

Don't hide your credit cards. Cancel them and cut them up and throw them in the trash.