Quote:
Originally Posted by VulcanRider
"What does everyone else stress about?"
Right now money's the biggest issue. I dug myself in pretty deep with credit card debt a few years ago, and I'm trying to get that paid off. My work cut our hours in January and with the decreased income I'll need a 2nd job to make more than the minimum payments.
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Since you asked...
Head over to your bookstore or local library and look for Dave Ramsey's
Financial Peace book. It covers a lot of things, but there are two main important ones: the baby steps and the debt snowball. Note that he comes from the perspective that debt is bad... evil, even.
The
baby steps:
- Get $1000 in the bank to start an emergency fund
- Pay off all debt using the Debt Snowball (except house)
- 3 to 6 months of expenses in savings
- Invest 15% of household income into Roth IRAs and pre-tax retirement
- College funding for children
- Pay off home early
- Build wealth and give!
- Invest in mutual funds and real estate
The
debt snowball: arrange all debts by increasing payment amount. Pay the minimums on each one. Then whatever else you can, pay on the one with the smallest balance. When you kill that one off, keep your total payments the same and apply the excess to the next smallest one. Repeat until they are all wiped out.
The links in there are to his own articles on both topics.
He is Christian, and a lot of his philosophy is based on that. However, it's also based on solid logic and
practical experience - he was a millionaire by 26, and lost it all (and more!) by going bankrupt in a downturn before he was 30.
Financial Peace grew out of him deciding how to get back on his feet after that. He's all for second (and even third!) jobs when you get angry and want to get out of debt fast.
I came up with something similar to the debt snowball on my own, except I ordered them by decreasing interest rate instead of by balance. I put more against the one that cost me the most. I occasionally broke the pattern, however; if one debt got within striking distance, I paid it off to get the psychological boost from killing it. His program goes for that boost every time.
I also didn't snowball it, at least not on purpose. I'd have been out of debt even faster had I done so. And I did get a second job, delivering pizzas. Programmer by day, pizza guy by night. In addition to having more money coming in, I had less time to spend it, meaning I kept more of it.
Whatever works for you...
