Welcome to The Finance Forums.

I'm hoping for the same. I posted a similar question already and cannot find the thread. I hope to get answers here as well.

Welcome to the forum. I am glad to see you want to try to organize your financial life and try to get debt free.

To begin, I would recommend getting everything (finance wise) together. Start with your free credit reports to see where you stand with debts and/or collections. Next, get your most recent bank statement(s), investments, IRAs, etc. You need to be able to account for every single dollar you have and, likewise, owe. Write everything out in two columns, one for assets, one for debts. Then you will know exactly where you stand.

A couple of years ago, I began tracking my finances daily, using a spreadsheet program I set up on my computer. You can buy software to do it, but with a little work tweaking a spreadsheet program, you can do the same things a $100 program can do for free. I have it set now so I just have to update it once a day and it takes all of two minutes. I can use the spreadsheets to track and figure out how much I spent yesterday, last week, last month, this week last year, etc.

Once you begin tracking everything, you can really see where your money goes and how to try and save to pay off debt. In essence, you need to become a minor league accountant to track your daily (or weekly) finances. It takes some discipline, time and work, but it really pays off when you start seeing the debt shrink and the money going in the right directions.

I hope you get where you want to be financially and if you want more suggestions or help, just let me know.

If you are focused on getting out of debt, Dave Ramsey and John Commutta have popular and similar approaches. Do some budgeting and figure out how much you can commit to each month to pay down debt. This should be MORE than your total minimum payments. If you can't meet or exceed the minimums, these programs can't help much, and you need professional debt management help. If you can do this, you stick to this commitment until all debts are paid off. With your monthly commitment, pay the minimums on all accounts except one, the "focus" account, which you pay the most on, up to your commitment amount. Its best if the focus acount is the highest interest account, though Ramsey recommends the lowest balance first to give you quick wins. Once the first one is paid off, you roll all the extra amounts into the next focus account. The key is you DO NOT lower your commitment amount as acocunts are paid off. Instead, later focus accounts are accelerated even more with increasingly higher extra payments.

You might check out www-DueMinder-com, which has on-line software (free) letting you track and simulate payments following the Dave Ramsey and John Commutta strategies.

In case you are still reading this thread, I suggest you read Dave Ramsey's The Total Money Makeover. It will give you a step by step way to get out of debt and build wealth.

Reading a few books on personal finance will do you wonders. Here are some general things to do:

Write down all your expenses.
Figure out what you can get rid of.
Make a budget to follow.
If you are current, save a small emergency fund of 1k, in savings
Pay the minimums, then take all extra funds and pay towards smallest debt to largest or highest interest to lowest.
After debts are paid, build EF to 3 to 6 months expenses.
Then invest at least 10% of gross wages into stock mutual funds.
Establish a car-misc. fund.

Bottom line, budget, payoff debt, live on less than you earn.

I think the posts above are very helpful. In addition I would suggest to get your spending into control and that is all about your mindset.

Maybe this helps: Every time you want to spend money, ask yourself: Do I really need this or do I want this? My experience is that you need less.

The drawback is that we don't like to cut our expenses.
Motivate yourself by asking: what will it bring you when you are debt free? No more financial worreis etc; you know the answers.

My experience is that writing it down and reading daily definitively helps. Will power alone is often not enough.
I think you two can dig out when applying the advices of the posts.

Good luck

Have you been paying your bills on time or have you experienced some type of financial hardship that has gotten you behind?

The Dave Ramsey/John Comutta systems may work if you have cash flow. If you are tight and things are getting tighter you need immediate relief. My Debt Relief program will reduce your debt by half and you will stop paying interest on Day #1. This is the only way out unless you file bankruptcy.

I would first recommend you find out how badly in debt you are, and were you want to be. spreadsheets,journals, or planners will become your best friend. The first step would be to find out exactly were you are balances, minimum payments, and a budget. you will find were you are carelessly spending your money if you document absolutely everything. Then you can "cut the fat" so they say. If you are doing well making your payments start hammering at the lowest one until it is paid off and then take what you were paying on that one and apply to the next one and so forth. If you are not making minimum payments and are getting further behind. I would recommed settlement for your unsecured debt to get out of it fast. it will effect your credit, but it will return after about a year. Its better than bankruptcy for the long haul. you can do this on your own or use a company. I myself used a company and would gladly let you know the details if you are interested just let me know if you have any questions i will gladly answer whatever i can!

I was on the web and found this article interesting. It's a mathematical approach to understanding your debt and how to act on the info. It really shines a light on the cross section of one's debt!

Crunch the Numbers to Chomp Away at Debt:
A mathematical approach to solving your debt problem.

Author: Dennis Strzegowski




Step 1: Determining Expenses

Before we can decide which program will be the most efficient, we must fully understand your current cash flow situation. Before the Doctor can operate he must know where it hurts.

***You can always go to end the debt . org and click on the “Do I qualify” button in the top right corner of the page. Fill out the form online and have one of our Debt Managers do it for you!!***

• On a piece of paper list the total monthly household income.
• Underneath income list all of your creditors that you pay on a monthly basis. (If you are not sure what they are go to annuall credit report . com for a free look at your credit report which will list all of your creditors.) Next to the name of the debt enter:
• Minimum monthly payment
• Interest rate
• Account type: Is it a revolving (credit card) installment (loan with payoff date) Automobile or Mortgage debt.

Step 2: Determining Debt Ratio

• Using a calculator, add up both the balances and the Total Monthly Payments (here forth referred to as Monthly Expenses) for all the creditors on the sheet.

• Take the Monthly Expenses (ME) and divide that by the Monthly Income (MI) from step one. For example:

ME = $1750
MI = $5,000 = 35% Debt to Income Ratio (DTI)

Step 3: Determining Housing Expense Ratio

• Determining Housing expense Ratio is very similar to determining DTI. You simply add up your total monthly housing expense (MHE) (Mortgage, Rent, taxes, insurance, repairs, utilities, etc.) and divide that into your total monthly income. For example:

MHE = $1,150
MI = $5,000 = 22% Total Monthly Housing Expense


Step 4: Determining Consumer Debt Ratio (CDI)

• Keeping with the trend, determining monthly consumer debt expense ratio (MCDE) is much like solving for MHE. Add up all consumer debt (Auto, Credit Card and Personal Loans) and divide into the MI.

MCDE = 650
MI = 5000 = 13% MCDE Ratio

Step 5: Analyze the Data

Now that we are pros at solving for DTI, MHE, and MCDE, what do we do with this data? What impact does it have on my overall financial fitness? Great question! To answer this we must think of the Debt-to-Income Ratio as an onion with layers. These layers are made up of our MHE and MCDE.

Onions need to fit in the refrigerator and cannot exceed a certain size much like our DTI cannot exceed our Income Threshold. A healthy DTI can be found in the 30 – 40% range.

Exceeding the 45% is very problematic. Mortgage Lenders take this ratio into account when analyzing a borrower’s credit worthiness, keeping a threshold of 43% for most. At this point many people begin realizing how slippery of a slope it they’re on. Paychecks do not seem to go as far, credit card debt begins to rise, bills being paid at the last possible minute and stress levels are peaking.

What about MHE and MCDE? Where do they need to be?

The rule of thumb suggests remaining at or below the 33% mark. We know that the total DTI needs to stay under the 40% mark. Deductive reasoning tells us that the sum of MHE and MCDE cannot exceed 40%. As long as the consumer remains below this 40% threshold, he or she can dance responsibly and comfortably within the numbers. In other words, there is no rule of thumb when determining the MHE and MCDE. These ratios will vary from consumer to consumer depending on the consumer’s preference, needs and local market.

Step 6: ACT!

If you haven’t already, go back to step one and plug in your numbers.

***Remember: You can always go to end the debt . org and click on the “Do I qualify” button in the top right corner of the page. Fill out the form online and have one of our debt managers do it for you!!***

Once you have calculated for household DTI and you fall below the 40% barrier, put your pencil down and pat yourself on the back. You are finished.

If you are 40% or higher it is imperative to view a cross section of your ratios. We have just a little further to go.

Where Are You? DTI = 40% - 45%

Scenario: Little financial stress. No need to panic here but you do need to act. You may feel very comfortable in this range but, as stated previously, you are on a slippery slope. Even the smallest of financial incidents (car accident, short time off from work, etc) could be just enough to send you sliding down the slope.

Action: Take a look at your list of monthly creditors. Narrow that list to just credit cards. First search for a new credit card with a promotional 0% APR on balance transfers. Move balances of the higher rate cards to this and begin paying down the debt. If this is not possible, find the card with the highest rate. Make the minimum payment to all other cards. Allocate the surplus to the card with the highest rate until the card is paid off. Repeat this process until all cards are paid off. **This process will not work if you continue using the credit cards**.

Where Are You? DTI = 45% - 55%

Scenario: Not delinquent on any monthly obligations but only making minimum payments. Not enough left at the end of the month to apply to principle of revolving accounts.

Action: More than likely you will not qualify for a refinance or HELOC as a result of high DTI and the impending risk thereof. As a result, we suggest one of the following options:

• Consolidation Loan: Apply for an unsecured debt consolidation loan. Although this will typically carry a higher interest rate than a mortgage loan, it is a viable option. Make sure this loan terms are fixed and installment based (not revolving like a credit card or line of credit). There is no negative impact your credit assuming you make your payments on time.
• Third party consolidation plan: An agency consolidates your debt into one payment and attempts to lower the rates with your creditors. Typical programs range from 3 – 7 years of repayment. This will negatively impact your credit rating as the creditors will notify the credit reporting agency, and subsequently showing on your credit report, that the account terms have been negotiated and being managed by a debt management service.

Where Are You? DTI = 55% And Up

Scenario: Bills are late, or will be late soon. Collectors may be calling. Stress is high. There is simply not enough income to cover financial commitments and day to day expenses.
Action: Debt Settlement: A third party agency like Mitigation America will negotiate down the principle of the debt to roughly 40% of the original balance. Additional benefits are, but not limited to, the following:
1. As opposed to a consolidation agency that only negotiates the interest rate, debt settlement companies eliminate the interest and any late fees or penalties.
2. It is the most cost effective service of its competition. Go to end the debt . org and click on the debt calculator tab to illustrate the huge cost difference.
3. Most importantly typical repayment programs under debt settlement range between 1 – 3 years. Like consolidation companies this service will negatively impact your credit. However, because you graduate the program much sooner, you are able to rebuild your credit much sooner.

*** If you find that after working through all debt settlement scenarios and there is not enough monthly income to comfortably allocate to the program, you may want to discuss bankruptcy with a local Bankruptcy Attorney.

One of the best things to do in controlling your debt, is note your spending.

- By this I mean literally everything. Then at the end of each week you'll know exactly how much you've spent. So you can have more control over your incoming and outcoming finance.

It amazing how alot of people dont even know how much they've spent each month and all these little things eventually rack up into a big total.

Hope this helps

- Check out my youtube channel in my sig, as has some great documentarys on debt on it. You'll probably learn quite alot from them.

Welcome! I'm pretty new here too but I really wanted to share my story with others and help people that are struggling. Everyone talks about all of these ways to get out of debt, I tried almost every way you can think of. I found a way to get free financial funding from the government that you don't have to pay back and it helped me pay off my debt. If you want more info. please visit my blog on in my sig and read my story. This method saved my family and it can be your saving grace as well. Please let me know if you have any questions!