Get out of debt brehs

newarkhiphop

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:wow: hopefully this helps some of yall

Background on me :

Over the past 7 months or so i have paid off about $5,500 in debt (medical bills, old card bills etc) while this initially may not seem like much take into account that I for the most part like the average person have been HORRIBLE with money. By the time i was 24 i already had a car that had been repossessed and a $24,000 student loan go into default. This was mostly a combination of bad financial choices and personal things going on in my life but mostly just bad financial choices. Trying to keep up with a lifestyle i couldn't afford , y'all know the usual, cars, clubs , girls clothes etc etc. I had a job for most of this time, was unemployed for two years but was going to school and receiving a nice size unemployment check. When i was working I was certainly making enough bills to pay off debts/bill but just wasn't keeping up with and at one point once the debt piled up high i just fuk it .

As you can imagine my credit was shyt , I literally couldn't even get a cellphone :heh: , eventually my wages started to get garnished and that student loan and what was left on my repossessed car got paid off and i had barely enough larry holmes credit to get a phone but still i gave up on "fixing" my credit or paying off various other things no mind. Now you probably asking what changed and honestly nothing. I just grew up brehs , well that and I came across a radio talk show (Dave Ramsey) dealing with getting out of debt that gave me a guide to really get serious with it , so this is the method that I've been using over the past 7 months and will continue using until I finish paying off my current and only debt now $43,000 student loan.

So the method I use has 7 steps, there called the "baby steps" . Two things are important to remember about the steps, do them in order and do them in order . You might be tempted to skip around or modify them cause trust me I did but Ive seen that when follow them as closely as your own situation allows you will see the best results.

For now I will list the 7 steps but will only expand/give you tips on the first 3 of them as that is almost where I am at.

The Baby Steps:

Baby Step 1: Save $1000 cash in the bank. Start your emergency fund. If your income is less than $20,000, make that $500.

The key to this quickness , try to save this $500-$1,000 as if your life depended on it . If you don't make enough money to just take it out of your account in one or two swoops also SELL SELL SELL , sell them jordans, sell them games , sell something . Once you have that $1,000 you can do one of two things put it in your current savings account OR open up a new savings accounts and put in there. I had it in my regular account for a few months but always found myself dipping in it to take $20-$60 , which i would eventually put back, but that defeats the purpose of a emergency fund. I opened a different savings account at a small local credit union that did two things for me. It helped keep that money out of my "reach" and also it just felt good to know i had two bank accounts with money in it lol

Now to the purpose of the emergency fund. This money is ONLY and i cant stress it enough ONLY for emergency's. A emergency is anything that you can't cash-flow (more on that term later) but basically if you can save up for it cash its NOT a emergency . For most people this is either falls into the category of family travel emergency or car breaking down emergency.


Baby Step 2: Get out of debt. With Gazelle intensity and using the debt snowball, pay off all your debts.

This is the step in which you will spend the most time on , this is the key step and the one where you will fall of the wagon on over and over again but keep at it brehs.

The debt snow ball works like this:

- Make a list of your debts from lowest BALANCE to highest BALANCE. Do not worry about interest rate. Keep in mind this is debit only, not day to day bills

- Once you have that list start paying off your lowest BALANCE first with ALL the money you can muster. Now if you can only afford the monthly minimum payment on that bill it is fine.

-When you finish paying off that first bill completely , you take that minimum payment/ whatever amount you were putting into that bill and SNOWBALL it into your second lowest balance's monthly payment . So for example if you paying ABC credit card $20 a month and you finish it off and now your going to payoff your Visa card which has a monthly minimum of $30 monthly , your new payment on that Visa card is $50/monthly ($20 + $30) . Once you finish you that card and your going to pay your old hospital bill which is $60 monthly , your new payment to that would be $110 monthly ($50 +$60 )

Now you probably asking why the lowest balance first? and not the highest interest first? The main benefit of this approach is the psychological effect of seeing debts disappear quicker. Trust me it feels good and it gives you motivation.

Baby Step 3: Finish the emergency fund. With the money you were paying towards debt, now with no debts, you can save 3-6 months of expenses into a fully funded emergency fund.

I have not reached this step YET like i said earlier , i plan on paying off my student $43,000 is about two and half years if all goes according to plan, but the premise of this step if basically whatever can happen WILL happen. You could lose a job, a child could become sick, family member could die. Having this 3-6 months of expenses saved up will help you go through that with our restoring to borrowing money or using credit cards. This emergency fund should include all your bills ONLY cause remember by this time you should be completely out of debt. So this fund will be, house/rent payment, home utility payments, insurance payments , etc etc 3-6 months worth.

The rest of the steps are listed below , I am semi familiar with them but not as deeply as I am with the first three.

Baby Step 4: Save for retirement. Saving 15% of your income didn't seem possible before, but with no payments, you'll be ready for retirement and not have to take a job as a Wal-Mart greeter.

Baby Step 5: Save for College. Instead of taking out student loans, your kids will be eternally grateful you thought ahead and had a plan for their higher education.

Baby Step 6: Pay off the House.

Baby Step 7: Build Wealth and Give It Away.


I have said it before i HIGHLY recommend you guys check out the book "The Total Money Make Over", shyt changed my life, also check out his podcast,radio show and website

http://www.daveramsey.com/home/

:blessed: feel free to ask me any question brehs, I am far from a financial expert but hopefully I can help, there is a lot more I wanted to write about as far as lifestyle changes I made (become much more frugal, paying for EVERYTHING cash etc), hopefully they come up in questions if not I'll write a second part to this.
 

King Poetic

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Student loan is killing me and my car note.

and this because my job just slashed positions and i had to take a pay cut. that's why i'm starting to look for other work. i had to dip into my retirement funds to take care of some expenses

honestly i don't think i'm going to retire until i'm 89 :snoop:

if anything happens to my father ( which i pray it doesn't ) he told me he had money at the credit union already for me and he worked for chrsyler for over 35 years
 

gho3st

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:lupe: how much you in for?

what you do :lupe:

Same here. Student Loans and Mortgage. I am about to say fukk these student loans this is my reparations. I the hole for 47 in student loans.
Student loans + medical bills(b4 obamacare :sadcam:) for around 48-50. Those refund checks are :demonic: as fukk: you spending your own money(+ the interest). And by the time i took business classes and truly understood how much shyt really cost it was already too late. IT could have been worse too b/c i enrolled to graduate school and change my mind at the last minute.
 

newarkhiphop

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Student loan is killing me and my car note.

and this because my job just slashed positions and i had to take a pay cut. that's why i'm starting to look for other work. i had to dip into my retirement funds to take care of some expenses

honestly i don't think i'm going to retire until i'm 89 :snoop:

if anything happens to my father ( which i pray it doesn't ) he told me he had money at the credit union already for me and he worked for chrsyler for over 35 years


have you thought about selling your car? getting something cheaper?

am almost happy I made the car mistake so young ( had a new whip by the time i was 18) and i was able to learn from that, the new car thing is nothing more than a expensive fashion statement to impress other

:heh: i drive around in damn mini van now , only cost me $1,800 though and my insurance payment is dam near laughable

With that I think i will drop another tip

If you have a large amount of debt and you have a car note you need to sell that car ASAP, sell the car, use whatever money you get to go towards your current balance and borrow the rest

I.E you have a $20,000 Honda note , sell it for $15,000, now you only owe the bank $5,000. What are you going to drive around in the mean time? ANYTHING WITH 4 WHEELS THAT MOVES. Trust me best decision you will ever make , while other may laugh or talk, wait until your doubt of debt and they still pay $400 a month + $200 a month insurance, trying to keep up with the Jones's.

In case yall thought i was playing :heh:

http://www.thecoli.com/posts/6794370/
 

newarkhiphop

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ive been saving since I was little

:blessed:



I just :mjlol: at all these fools buying a new car and clothes, when they have $137 in their savings account



pretty pathetic people cant even trust themselves with a credit card


did your parents/family member teach you the importance of saving growing up?
 
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