Looking to lower debt, especially student loan debt. How does Dave Ramsey’s work and how did it work for you?
July 23rd, 2010 | 
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ktpb asked:
I’m a single mom just preparing to finish nursing school. I also have an B.A. and my student loan debt is about 85k. I am going through a divorce and have two kids, need to buy a home ( my ex is keeping the current house we are in). I have maybe 1500 in credit cards and a car loan. Other than that no debt that I can think of. My major debt lies within my student loans. I want to pay these off asap and not over a 20-30 year period. I want to know if Dave Ramsey’s system is worth it. I will be the only one paying for my new home, the car, the loans, daycare, food etc and when you throw on that much in student loans its scary! I want something that will work and help me to get my finances in order and paid off in as little time as possible. Any suggestions? Thanks in advance. And please no sarcastic or rude comments. Looking for real advice from people who actually care to give it. Thank you.
The house is owned by my ex. We bought it while married but his name is on everything and mine is not so I dont have to worry about the house. As soon as I get a job I will have only a limited amount of time to get a new place to live, and with two children and a dog I want a house with a yard so I have to buy as soon as I can. I’m having a hard time finding a place that will consolidate the debt. The loans I have out used to have an option for it but with everything going on with the economy (I’m guessing thats the reason) they aren’t doing it right now!!!
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I’m a single mom just preparing to finish nursing school. I also have an B.A. and my student loan debt is about 85k. I am going through a divorce and have two kids, need to buy a home ( my ex is keeping the current house we are in). I have maybe 1500 in credit cards and a car loan. Other than that no debt that I can think of. My major debt lies within my student loans. I want to pay these off asap and not over a 20-30 year period. I want to know if Dave Ramsey’s system is worth it. I will be the only one paying for my new home, the car, the loans, daycare, food etc and when you throw on that much in student loans its scary! I want something that will work and help me to get my finances in order and paid off in as little time as possible. Any suggestions? Thanks in advance. And please no sarcastic or rude comments. Looking for real advice from people who actually care to give it. Thank you.
The house is owned by my ex. We bought it while married but his name is on everything and mine is not so I dont have to worry about the house. As soon as I get a job I will have only a limited amount of time to get a new place to live, and with two children and a dog I want a house with a yard so I have to buy as soon as I can. I’m having a hard time finding a place that will consolidate the debt. The loans I have out used to have an option for it but with everything going on with the economy (I’m guessing thats the reason) they aren’t doing it right now!!!
Bad Consolidate Credit Debt
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I think Dave Ramsey’s plan is great. A couple of things in your situation before you get started though.
1) If your name is on the mortgage with your husband for the existing house, get it off. Force him to refinance. If you are on the mortgage and he decides to stop paying you are screwed. If you are on the mortgage and even if he pays, that mortgage is going to count against you when you go to buy a house of your own. It does not matter what your divorce decree says. Do not sign a quit claim deed which only gives up your rights to the property and does not get you off the mortgage.
2) Call whomever your student loans are through and ask them how much your student loan payments will be each month. I assume that you have not been paying on them since you have still been in school. $85K is a considerable amount in student loans and the monthly payment may be more than you are planning on.
3) Do not rush out to buy a house right away. I know it is a good time to buy, but you want to get used to your new life before having to deal with a house too.
4) Do not start buying your kids stuff out of guilt over the divorce or to be the “good” parent.
Just take it one step at a time. Congratulations on finishing school.
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Student loan debt is tricky, there is no real way around it. I’m not familiar with the Dave Ramsey system and how it applies to student loans but here is what I do know.
Consolidate your loans. This can lower them all to one payment with a good rate. (most people already know this but I’m just throwing it out there).
When looking for jobs try and find ones that will relieve/pay off some or all of your student loan debt. You might find that these jobs are not the most favorable or your first choice but they might help eliminate some of your debt immediately which can have a positive effect on trying for a mortgage.
Look into as many payment options as possible. Most student loans will offer graduated payments that allow you to pay less in the beginning and more towards the end of the loan. This will help free up funds in the beginning but still give you the freedom to pay more if you have it available.
Hope this helps.
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Dave’s plan works but what you are planning on doing will not be with in Dave’s plan. He would tell you to rent until you are out of debt because if you purchase right now Murphy will move into your spare bedroom (you know as in Murphy’s Law). Something always breaks on homes and then there are taxes, insurance, etc.
You can find a home to rent with a little yard for the kids and the dog. Renters insurance is much cheaper than home owners.
Dave’s plan does work. We have paid off over $45k in a couple years and had baby number 2 and paid cash for grad school.
If your car loan will take more than 12-14 months to pay off Dave would tell you to sell the car and buy a paid for car to get your debt snowball rolling.
I HIGHLY suggest you read The Total Money Makeover prior to purchasing a home. Read his advice, take it to heart and then do the plan, you will be better off. Plus, don’t depend on your husband to pay the child support (if ordered), I work in child support and that money should be looked at as “extra” not have to have to live on money. If he looses his job then you won’t get the money.
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I completely understand Dave Ramsey, I do endorse his program, and I suggest you read his book. If you need to read it free, go to Barnes and Nobel, and sit there for a couple hours at a time.
Basically you either buy into it, or you will have a harder time. I like what the first and third people are telling you. Furthermore, this is what we would like you to do: Make out a budget, and stick to it. Every dollar each month is allocated to something.
Your first step is an emergency fund. Save up $1000 in a savings account. Don’t worry about getting ahead of your bills until this is in place. Then, list your bills smallest to largest. Each month, pay your rent, food, utilities, and car bills first, and then after paying the minimum on each bill, concentrate the rest of your effort on the smallest bill. Attack that with a vengence. Once the first bill is gone (forever!!!) take the money next month that you would have paid on the first and combine that with your regular payment towards the second. When that is gone forever, attack the third with the money you would have paid on #1 and #2. This is the “snowball effect”. We all have done it—it works.
Please heed the advice on the house: WAIT until the bills are out of the way. It probably means two years but you will be in better shape financially. Also the car: You did not say how much that bill is, but if you can’t pay that off real soon, or if you are in a $40,000 car, get one that is maybe $5000, you know a “beater” so you can loosen up budget money for the other bills. Interest kills us, and makes others rich.
Now listen to our advice: the home although in your husbands name is 1/2 yours. You say it was aquired during the marriage, by law you should be getting bought out by him. Seek a lawyer. Also he needs to be paying child support, and with that you can pay off your bills as well. You don’t need a bill consolidation loan. Dave and we strongly are against this. Try the debt snowball effect. It doesn’t cost any extra loan cost, and those dollars go to the bills instead of a loan officer.
Make sure you force the ex to get new credit cards in his name. Close the cards with joint priveledges or he can charge up your cards. And one more thing we will say: cut up the credit cards. They are killing you and America. Budget and pay cash for the things you need. Stay away from spending on feel good things.
Good luck from me and others around the country, Dave advice is really good.