The 10,000th Post, Thoughts and Guidance.
10,000 posts is an interesting milestone, but in the end, it is just a nice, round, number. 5 years and 10,000 posts. For perspective, that number is approximately 2.77% of all posts on this forum (there are around 360,000 posts).
I wasn't really sure what to write. I figure I would share my general approach to things and guidelines.
Getting out of debt
1. Do not rule out any options.
2. Never turn unsecured debt into secured debt
3. Never liquidate or borrow from retirement accounts to pay a debt.
4. Debt settlement is the TRUE last resort.
5. Borrowing is not a way to get out of debt. (i.e. don't borrow from friends and family to pay debt).
6. View your financial life as a business
7. Don't just focus on the here and now, look at your financial life in the medium and long term.
It is always better to be proactive and take action to get out of debt...the wait around and see if they sue me or trying to wait out the statute of limitation is ALWAYS a losing strategy long term.
Budget
Savings: 10% (minimum)
Housing (not including utilities): 20%
Food: 10% (includes dining out).
Transportation 10% - 15% (but you can save a lot of money in this category).
Household Operating Exp. 15% (utilities, repairs, maint. furnishings, etc)
Clothing (and associated exp.) 5%
Other Expense 25-30% (everything else, medical, recreation, entertainment, etc).
AND, know what you spend, track your expenses in some manner, create a well categorized tracking system for expenses and track what you spend.
Determine the cost of any action by what you are giving up to get it. For example, if you spend $200 per month on wine, consider that if you saved that money for 10 years at 5.5%, you would have $32,247. Thus, is the wine really worth it? In one year, that is $2,400 (that is a nice vacation, down payment for your next car, emergency fund, etc)
Write down your goals. Get a giant white board and write down your goals and start brainstorming ways to achieve them. Take an inventory each week of steps or actions you took to achieve those goals. When you achieve a goal, have a bulletin board where you can post and look at your successes. Success breeds success.
Real Estate:
Location, Location, Location. Find ONE house, and make it the house you plan to retire in, or at least plan on living in the house until it is paid off. If you move around every few years, (or if you want flexibility) then rent, it makes no sense to buy a house. And whatever you do, NEVER REFINANCE and take out equity. The only time it makes sense to refi is if you can get at least a 1% cut in your interest rate (but also consider the length of the loan, for example, if you only have 25 years left on your existing mortgage, and go to refi, do not take a loan out that has a period longer than 25 years).
Spend money on experiences, not things. You cannot take things with you, but experiences help define and enhance your soul. Although I cannot say this is true of me today, but the best times in my life were when I could fit everything I own into the trunk of a car. Many of you longer term members may remember that I took a hiatus for 9 months to travel; I went to New Zealand, Thailand, Malaysia, Cambodia, Singapore, Greece, and Italy, and all I had was a back pack, passport and debit card. Experiences are often cheaper, and sometimes free, anyway.
I wasn't really sure what to write. I figure I would share my general approach to things and guidelines.
Getting out of debt
1. Do not rule out any options.
2. Never turn unsecured debt into secured debt
3. Never liquidate or borrow from retirement accounts to pay a debt.
4. Debt settlement is the TRUE last resort.
5. Borrowing is not a way to get out of debt. (i.e. don't borrow from friends and family to pay debt).
6. View your financial life as a business
7. Don't just focus on the here and now, look at your financial life in the medium and long term.
It is always better to be proactive and take action to get out of debt...the wait around and see if they sue me or trying to wait out the statute of limitation is ALWAYS a losing strategy long term.
Budget
Savings: 10% (minimum)
Housing (not including utilities): 20%
Food: 10% (includes dining out).
Transportation 10% - 15% (but you can save a lot of money in this category).
Household Operating Exp. 15% (utilities, repairs, maint. furnishings, etc)
Clothing (and associated exp.) 5%
Other Expense 25-30% (everything else, medical, recreation, entertainment, etc).
AND, know what you spend, track your expenses in some manner, create a well categorized tracking system for expenses and track what you spend.
Determine the cost of any action by what you are giving up to get it. For example, if you spend $200 per month on wine, consider that if you saved that money for 10 years at 5.5%, you would have $32,247. Thus, is the wine really worth it? In one year, that is $2,400 (that is a nice vacation, down payment for your next car, emergency fund, etc)
Write down your goals. Get a giant white board and write down your goals and start brainstorming ways to achieve them. Take an inventory each week of steps or actions you took to achieve those goals. When you achieve a goal, have a bulletin board where you can post and look at your successes. Success breeds success.
Real Estate:
Location, Location, Location. Find ONE house, and make it the house you plan to retire in, or at least plan on living in the house until it is paid off. If you move around every few years, (or if you want flexibility) then rent, it makes no sense to buy a house. And whatever you do, NEVER REFINANCE and take out equity. The only time it makes sense to refi is if you can get at least a 1% cut in your interest rate (but also consider the length of the loan, for example, if you only have 25 years left on your existing mortgage, and go to refi, do not take a loan out that has a period longer than 25 years).
Spend money on experiences, not things. You cannot take things with you, but experiences help define and enhance your soul. Although I cannot say this is true of me today, but the best times in my life were when I could fit everything I own into the trunk of a car. Many of you longer term members may remember that I took a hiatus for 9 months to travel; I went to New Zealand, Thailand, Malaysia, Cambodia, Singapore, Greece, and Italy, and all I had was a back pack, passport and debit card. Experiences are often cheaper, and sometimes free, anyway.
And everything you wrote in you 'Do NOT Do in Trying to Get Out of Debt List--we did do, trying to stave off the inevitable. Now we are here trying to help others not do the same stupid things we did.
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