There are many good books on the subject of debt and cash flow which you may even be able to find at your local library. One to look for is "Rich Dad, Poor Dad", by Robert Kiasaki, and another is "Think and Grow Rich" by Napolian Hill.

Libraries rock, it's better than a book store's selection for free.

Looks like there has been much response on this topic. It is one close to my heart since I have gone through this debt resolution problem. Big mortgage, car loans, credit card debt, vacations, kids, etc. TDTW offers good common sense advice to start the process of digging out of your huge debt hole. Other books/programs offer similar advice.

The program that I chose was "The Total Money Makeover" by Dave Ramsey. He offers a Christian-based debt snowball approach where you line up all your debts smallest to largest and then attack the smallest with as much as you can afford to pay. Pay minimum amounts for ALL other debts. With each debt that you pay off, you apply the previous payments for the paidoff debt(s) to the next debt on your list. As you continue, you will pay off your remaining debts more quickly than your first ones.

The beauty of this approach is that once you are debt free, you continue to make big payments. Not to your creditors, but to yourself in the form of investments (mutual funds, CDs, stock, YOUR MORTGAGE, etc.).

There is more to the Money Makeover. I have only outlined the Debt Snowball. Buy the book for yourself. Listen to Dave Ramsey on the radio, internet or satellite radio. Lots of free advise if you take the time. I did (do).

Good luck!

sounds like junk to me. I hear it on radio all the time.

he claims I can pay off my debt/and the house in 3 years on my current income. If I could do that, i'd of done it already.

Most of what Dave Ramsey has to say seems pretty good, especially working with people to get rid of high interest debt, but some of his advice is questionable.

A couple of nights ago I heard him telling someone to pay extra on their mortgage (for a couple of months until some other things came about) because "it is the easiest way to get a 6.5% return on your money". He failed to mention that the money would no longer be liquid if needed in the coming months. He also failed to mention that with deductible interest on a mortgage, taxes reduce the interest cost by several points. He also didn't mention that you can put it in an on-line bank at over 5% and still have it be 100% liquid. He also didn't point out that no matter how much, or how little equity is held, the appreciation amount earned will be the same.

I am just wondering that with all of the expenses of a house, maybe it’s cheaper to rent? I also was told by a friend that a friend of hers wanted to pay cash for a house..but the bank wouldn’t let him! He actually got penalized for it..they charged him a fee for paying off the mortgage too soon! What highway robbery.

By the way, has anyone heard of the movie THE SECRET? It’s pretty popular. In it, one of the interviewees said..“if you are trying to visualize and use affirmations, never, ever say...I am getting out of debt..because you will NEVER get out of debt because your focus is wrong.” That’s what I was doing so I changed my focus and said..“Money and abundance is coming from all directions and in many forms..” You wouldn’t believe the change! It was like the block was cleared and I started making progress.

Regarding rent...remember, you are making the mortgage payment and paying the landlord a profit, otherwise he couldn't afford to keep the property.

You are right about The Secret 4silverstrea, focusing on the things you want to eliminate creates more of them in your life. "I want", "I will do", "I will be", "I will get", are all restrictive affirmations. Presence the positive things to exist in your life by thinking in the now and say, "I am", "I have", "Life is". We were taught that we must DO certain things to BE something or other but the doing gets in the way of the being. To turn this around, BE first, and by default, you will DO those things required to support your belief. Ex: "I am a dancer...therefore I will do my practicing".

Paying cash for a house and paying off a mortgage early are two separate issues.

You would never have a problem paying cash for a house, and it would not involve a bank or mortgage. Your check, made out at closing, would go to the seller or their leinholder. The seller could have a penalty depending on the terms of his mortgage, but that has nothing to do with the new buyer.

If your friend had a mortgage (he did not pay cash for the house) and now he has the desire to pay it off, he is bound by the terms of the mortgage agreement. Frequently to reduce up front costs, or to reduce a rate, a buyer agrees to stay in the mortgage for a minimum time period (usually 2-3 years) so that the lender can earn his costs back and a reasonable profit. If you want to change the terms of the agreement, there is a pre-payment penalty to cover that loss of income. One of the reasons for doing this is to stop investors from rolling over a property without paying a fair cost for the money they borrowed.

I think that the real problem in a focus on paying down smallest to largest debt is that there is an assumption that we will not incur any new debt as we are living ....but what happens when we have a car accident and have to come up with a high deductible, or pay college new tuition, or one looses one's job, or starts a divorce proceeding, or one's hours are cut, or on and on ...that is the difficulty, even christmas and travel to ones family, etc is always there and expensive.
i have found a great program by mary hunt... " the official cheapskate"..etc. books. i have tried her programs for financial survival during a terriblly stressful divorce /loss of x spouse job situation of stressful finances and found that her concepts of separate accts at banks with separate job monies direct deposited each paycheck for mortgage and select bills has been a tremendous help. she also advocates setting up emergency funds which are so important yet so very hard to maintain....( as costs go up, we tend to use that money for "necessary expenses" like property taxes, etc.......)