imho:
+ 1 on Dave Ramsey's Financial peace, as well as/or Crown Money Map. One can usually listen online.
Credit card companies are evil. A report on the news today said that they get 70% of their income, roughly 12 BILLION dollars, from finance charges and other fees!!!
OMG! That is staggering.
Broke people shouldn't buy houses. This ONE fact is why the economy is tanked and all the fannie, freddie, and bailouts has come down the pike!!!
I agree with dad, get that stuff cleaned up FIRST. Whether or not consolidation is a good idea would depend on several factors, including interest rates, the $$$ owed, etc. AND, most importantly, if he can change his habits. If he consolidates this year, doesn't change his habits, and is in the same boat again in 5 years with a consolidation loan, plus more cards, plus a mortgage, then what? another big item: is spouse involved, and is spouse on board?
How is he going to pay for incidentals in his own property, if he can't make his payments now? Home ownership has it's rewards, but it's also a LOT of work... and there's always an expense... always something...a new furnace, a water heater, a faucet repair, paint. We just spent two days mowing and cleaning, and filled three gas cans, plus a battery and a new inner tube for the mower tire, which is shot and a new tire is $60. The tube might buy us a couple of months. Even mower gas starts to add up. (Most covenants are NOT going to let you have a goat.)
How to:
The first most important thing to do is to get a budget written out, as 'Uncle Dave' says..."On paper, on purpose."
Ya can't spend it if ya don't have it. Pay cash. If you can't pay cash, you can't afford it.
Most people don't have a spending plan that outlines who they owe and what they're making. First you have to know where you are: List everything that is income and list every single outgo. First, basic necessities. Food and lights, and then go from there.
If you can't make it stretch that far, then either the income has to increase (Sell something and/or get another job) or the spending/outgo has to decrease.
You make a spending plan to tell YOUR dollars where to go. A budget isn't a life sentence, it's just making a plan ahead of time where to send your hard earned dollars. It's YOU taking control of YOUR money...it's your most powerful tool.
A lot of people don't realize where their $$'s go, and when you see the payments listed on paper, one can begin to see it more clearly. And, it makes that $4 latte seem a little less enticing! Dining out, computer toys, cable tv and multiple phones are NOT a necessity!
Most computers come with some kind of software...Quicken, Microsoft money, etc, get those checks and payments onto that software, and it will help to do the budget. Most programs can make reports that show who gets what.
Dave R. recommends starting with the smallest credit card balance first and getting that paid off, then start the next one...the reason: people start to see progress and it tends to motivate them even more.
Also, ON paper also makes it easier to make sure payments have been made, you're not overlooking something and ending up with a late fee or finance charges someplace.
As has been stated, changing the spending habits that got him in to this mess is not going to be easy, and it IS going to take a while to dig out. The upside is that it can be done, and every week, on Fridays, Dave Ramsey has callers that yell out, "We're Debt free!" and it's amazing what they have paid off!
If you're looking at an item to purchase with a credit card, Add 25 to 30% of the price onto the item, then look again and ask yourself, is it really that great a deal?
We're an 'instant' society...microwaves heat food in seconds and computers give us instant information. This generation has not had to wait for anything...and they don't want to wait for the 'big stuff' either...they want what they want when they want it. Their folks bought a house that they had to work 15 years to save the down payment, and then work another 30 to pay it off, and to fill it...but they want that standard of living NOW. So, they slapped down the plastic to fill the houses that they couldn't afford, damn the torpedoes. They bought mc mansions when all they qualified for was a cereal box, and then filled them with stuff charged on credit cards. I don't believe that they should be able to declare bankruptcy and not have to pay for what they 'had to have'!
Their spending habits are causing big problems for those of us that tried to do things the right way...saved, scrimped, worked hard, and now are unemployed or worse, because of the current economy. My hubby hasn't had a full week's work since January.
sorry, this turned into a bit of a rant!
sammi steps off her soapbox...
