personal debt reduction

Cool Hand Linc · Posted: Thu Nov 24, 2005 10:25 am Post subject: personal debt reduction

I wasn't sure where to put this Pops. Feel free to change as you see the need.

One common thing heard is both for the short term and long term is TO BE DEBT FREE BEFORE things turn for the worse. Even if things don't ever decline this is still a good thing for my future.

Assuming, as I do, that “TSHTF” will be basically a MAJOR down turn in the economy. A huge issue then becomes being in a good position financially. NO DEBT!

I am getting really serious about getting debt free. More than ever!

Tell what your doing to be debt free. What tricks have you learned? What methods? Here is what I have done so far:

1. I am working any overtime I can.
2. I am not spending any money on nothing. I have begun asking myself. Luxury or necessity? Can I live without it? What happens if I go without?
3. I cut up the credit cards when I divorced so that was done years ago. I get sent new ones and cut them up too.
4. I didn't go deer hunting this year. I saved the money for tags and all the driving and eats.
5. I began driving a little motorcycle I had in my storage building out back. This little bike was something my ex-wife wanted just before we got divorced. Now it is paid for, had 1100 miles on it, and gets 70 miles to a gallon. So I can cut the amount of money spent on gas!
6. I stopped eating out. Huge money hole this one is. I cut way back here.
7. I went after my ex-wife for money she was required to pay but didn't. Now her check is garnished. So I reward myself with one meal out when I deposit the garnishment check.
8. I got rid of highspeed internet. I really loved highspeed but getting into a better position before TSHTF is pretty important! I went to a 10 dollar a month dial up.
9. I got rid of cable TV. What a money hole!
10. I haven't trusted the water here. We had a situation where the water company didn't tell us of a problem. We went a month drinking water that was bad. My back (kidney area) hurt so bad I went to the doctor. So I began to drink only bottled water. What a money hole. I recently installed a water purifier. Big savings. I also stopped drinking pop too!
11. I have been juggling the credit cards. I am looking at a credit card counselor currently.
12. I still haven't started my gas furnace. I am finally thinking about it with this extreme cold front that has hit. It seems the natural gas price went up way more than the electric. (Locally we get much of our electric from coal) So I am using several small space heaters with thermostats. I already had one with a thermostat and one with out so I purchased one more with thermostat. With this super cold here. I have a heat lamp on the pipes behind the washing machine. The none thermostat space heater running in the kitchen with the cabinets open that have pipes both in them and in the walls. I use the other 2 turned up when home in the rooms I use. Turn them down when I leave. So far I have let the temp drop to 45 degrees in the house at times. Kind of an extreme, huh!
13. I think my mentality has changed. I continually think of how to save a penny. Cut expenses where I can. Even until it hurts. My checking account is growing. Soon I will have a cushion or emergency fund of sorts and will be able to begin making monthly lump sum payments. Very Happy

This is a list of things I have begun doing to get debt free. I will use your ideas if they apply to me so give up anything you can and help this fellow peak oiler to get my financial situation in order.

What are you doing for your future and being debt free before TSHTF and we go into a major depression?

edit: added 12 and 13.
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Peace out!

Cool Hand Linc Cool

linlithgowoil · Posted: Thu Nov 24, 2005 10:46 am Post subject: Re: personal debt reduction

getting debt free might actually be useless. just think - you spent a few years dutifully paying off all your debts and then a huge recession hits and everyone just defaults on their debts and a ton of it is written off, letting most people off scot free.

i hate debt, and the only way out for me now is probably defaulting. ill likely do this after christmas.

uNkNowN ElEmEnt · Posted: Thu Nov 24, 2005 12:11 pm Post subject: Re: personal debt reduction

I thought about defaulting, but I'm only like 35,000 in debt. that's not that much and if I apply myself to it I can pay it off in 5 years. by paying it off, I keep my stellar credit rating, learn a lesson and can buy a piece of land at the end of those 5 years (or 10 if I want to pay cash).

but at least I have gone the responsible route. If a recession hits I will still have cut down on everything I don't need and will then re-decide if I need to default to pay for increased living expenses. Otherwise, money always comes and goes and if I wasn't paying down my debt I'd just find other stuff to do with it.

1. Food- I have started making a lot of our food (bread etc). Instead of junk food, I bake our goodies now. its not much of a savings but its better for you and is cheaper. I've also started a food storage plan. I've gone back to natural food which is a hell of a lot more satisfying once you get all the chemicals out of your body and re-orient your taste buds. I also started canning and drying foods. Oatmeal sure is nicer when you have dried strawberries to put in it. casseroles are a lot better with onions (I dried a lot out so they wouldn't go bad). (I've also discovered taht it costs on average about 0.45$ for me to make a loaf of bread or a dozen buns. which means I save $1.55 for each loaf and we go through 1-1/2 loaves a week.)

2. Location - I got out of the city to where its a cheaper standard of living. I also have a garden now... (now I just have to learn to use it, its a lot different than the container gardening I did in the city). I also have a neighbour who lets me take her horse poop so I have free fertilizer.

2. Contacts - I've also made friends with my neighbours who are 73 and 74 and lived as kids through the last depression. He and I help other out with chores and maintenance so I am learning waht needs to be done to maintain my place and get his expertise in exchange for some manual labour. (they ahve also paid me off with a couple dozen cookies and squares)

3. Transportation - I left my car in the city and have a little scooter I use to bring groceries the 3kms to home. Otherwise I like walking most everywhere.

4. Expenses - I re-organized my budget and started tracking where I am spending my money. I am a lot more strict with my budget too. If it isn't on my budget I will not buy anything without a 24 hour period of thought and without consulting my budget.

5. I bought new appliances (was pre-planned for) when I bought my place. the appliances were old and I got energy star appliances. I've, of course, totally insulated my place as much as I can, and we are learning to live with it about 10 degrees cooler. I used to have it at 72 degrees when we were in the city, I can't stand it that hot now.

6. Xmas - I cut my xmas budget back. I have $150 limits for each of the kids. Instead of jsut buying toys I am getting them things that do stuff. like building things, or for baking. one daughter is getting her own tool set (real tools) the other is getting her own real birch knitting needles (size 5) and some yard to mess around with. I am also going to get them a computer program that teaches you to play piano so they can make use of the one we have. I am using this to wean the kids off tv. they are only allowed to have it on for 1 1/2 hours a day now.

5. Clothes - I've started learning how to knit socks, so that if clothes become really expensive I will know how to supply our needs. I've also made some friends in a knitters club so I have their expertise available to me. (one of them spins her own wool blends which I'd love to learn how to do) this is also saving me money by giving me something to occupy myself with.

6. Next - is to change out all the light bulbs as they die with flourescents. put in a new garden adn some containers next year.

strider3700 · Posted: Thu Nov 24, 2005 12:48 pm Post subject: Re: personal debt reduction

I'm torn on if debt free is the way to be in the future because it's really really hard for me to get there within 5 years.

the end of this month is when I'm allowed to make a lump sum payment against the mortgage but it would require drawing down my emergency slush fund to do it with anything more then a couple hundred bucks. I save a crap load in the long run if I make these payments but thats great if the peak is 7 -10 years away. If it's today then I could really use that money in the next little bit to advance the preps

Still since I'm needing cash to fund all of my prep work here are the things that I've done or been trying.

- Spent money making my house more efficient. I've shaved off $75/month from my electric bill. That's enough to cover my cellphone or two weeks worth of groceries or make a lumpsum payment of $900 against my mortgage or cover the insurance on my truck.... Anyways it's free money after I spent the $200 and got in the habit of doing things more efficiently.

- Purchased woodstove. I have a giant forest behind me, so free or close to heating from next year on. I hope this reduces the electric bill even more since I'm currently electric heat.

- less fast food - think $8/meal two maybe 3 times a week. Thats $1250/year of course once I stopped doing that my grocery bill increased but not quite as much as the fast food.

- my coke habit while at work. $2.10 for a bottle of coke each day at coffee. I'm still working on kicking this one. $550/year. If I bought it in advance and brought it in with me rather then walk to the store I'd be way ahead but I really like the get out of the office walk each day. I'm working on it. Maybe I'll pick up a flat of cans tonight, that should give me almost a months worth for about $5 instead of $42 hmm 90% savings.

- I cut back on the cable TV during the summers but I increase it during the winter. When it's dark and dreary having cable is cheaper then most of the alternatives we think about doing. During the summer I watch almost no tv anyways so thats fine.

-driving. I basically do everything in a loop on weekdays since I'm in town at that point. it saves on gas. I'm also careful to monitor my mileage and notice changes early on.

I'm not sure what else I'm doing to save money. Basically not much. It turns out doing nothing is far far cheaper then doing something in many cases.
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Paul64 · Tar Sands Joined: Sep 23, 2005 Posts: 58

Dukat_Reloaded · Light Sweet Crude Joined: Jul 31, 2005 Posts: 1011

I would try to default on the loans and start off new. People here seem to be worried about defaulting because they still would like to get another loan in future which was the cause of their problems. It is dishonest not to pay back a loan if you can, but then this is the system we are in and to get ahead you need to use it to your advantage. If you need money, I think the best way to go is work and earn some money then invest that money into mining stocks. If your debt free, get a loan out for 20k and invest that in mining stocks too. Racking up debt on a credit card is pretty stupid, and I don't have one.

Cool Hand Linc · Posted: Thu Nov 24, 2005 9:57 pm Post subject: Re: personal debt reduction

2 other things I can add to the list.

I received 110 dollars from work as a bonus about a month ago. I purchased the screw in types of florescent lights.

I purchased AA and AAA rechargeable batteries and a charger.
I am keeping the heat turned down to about 55 degrees.

The fluorescents are brighter and only slightly more expensive. They give off more light per watt. I have saved back the incandescent light bulbs and amusing them outside in the motion detector lights.

I forgot about these.

linlithgowoil, I hear what your saying. The laws did just change making a default more difficult. I think I can pay down in a year and maybe a 1/2.

If we do go into a recession and then on into a depression. Defaulting and keeping what you got won't happen in the beginning. Later maybe but not at first. I want to be safe on the repossessing issue anyway. There maybe other issues come up to deal with but at least I can breathe easy on this part.
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Peace out!

Cool Hand Linc Cool

Trab · Posted: Fri Nov 25, 2005 10:19 am Post subject: Re: personal debt reduction

If you believe things are going to get to the point where there are mass loan defaults going on, you would still want to be in the position where you're not one of the first ones to default. While the system may become overwhelmed eventually, it's not unreasonable to believe that they will crack down hard on the first wave of defaultees and continue to do so until they are overwhelmed.

I'm not sure things will go that way, since the PTB seem to be looking to inflation as the way out of the financial mess the country is currently in. Whether they can do so before things collapse is up for debate.

I am planning on getting rid of all my unsecured debts, and then working on the mortgage as I can. Since I'm in the burbs, I'm not sure owning a suburban manse is necessarily the smartest thing to do anyway. As George Ure points out in one of his recent articles, if you're convinced things are going to hit the fan, you'll want to own your property outright, or be highly leveraged (i.e. large mortgage). Anything in the middle is asking for trouble.

uNkNowN ElEmEnt · Posted: Fri Nov 25, 2005 1:05 pm Post subject: Re: personal debt reduction

hull3551 · Posted: Fri Nov 25, 2005 1:27 pm Post subject: Re: personal debt reduction

Regarding debt, I am trying to pay off everything: car, student loans, unsecured. I realize in inflationary times, it’s better to have large amounts of debt (at a fixed rate and fixed payment), but I’d feel better with no debt. It allows me more flexibility in jobs (or losing them) and all other elements of my life. I do intend on having a mortgage next summer, so right now I am trying to pay everything off. And I plan on this being sometime in Q1 2006.

I also feel that when TSHTF, having good credit and no debt will place you in the minority, since so many people (from a US standpoint) have huge debt loads and will most likely be defaulting, or at least delinquent, within the next year (attributable to rising heating and transportation costs, sluggish economy, etc.). If the RE market tanks, which it very well may, this will be the time to use good credit to acquire land at highly discounted prices.

Personally, I plan on buying a home in a mid sized town that will allow us to sell a car, and use the other one minimally, but I am digressing.

To save money right now:
Shop at farmers markets – Food is cheaper, much off the time organic, and it’s a form of entertainment to get out amongst people in the community.
Volunteer – Mostly, I’ve found I spend money because I am bored. Volunteering occupies my time, I feel good about it (and myself), and it’s free.
Cook at home – I quickly found I do not like eating processed food. It tastes like garbage. I also do not trust what’s in it. I think the human species in the industrialized nations is sterilizing itself through the crap they put in their body. Cooking is cheaper, more relaxing, and the food tastes better.
Create a budget – I’ve had a simple budget on an Excel spreadsheet forever. I put my pay at the top, deduct all my bills for the month, and carry the balance forward to next month. That way I can see how much I can budget for fuel, food, rent, etc. Anything extra goes toward debt. I also created a simple graph with all my debt and adjust it on an ongoing basis. It’s nice to see the debt going down.
Pay down credit cards – Sort of a no-brainer, but I pay a fixed amount every month even though my next month will show a deficit. In my years and years of having a budget, I’ve always seemed to manage having some extra money leftover to catch a movie or play or see a band. I do spend all excess cash on paying down debt. Extra cash laying around is dangerous; it always seems to get spent on something “necessary.”
Join a food co-op – I used to volunteer at one also. Inexpensive food, like-minded people, and much is grown or produced locally.
Invest in a hobby – I personally need to do something with my free time. In my years, I’ve spent a chunk of change on seemingly frivolous on things like a drum set, a sailboat, and most recently a seasons pass for skiing. (Last year, I managed to ski 35 times, so it was ~$8.50 per day of skiing, even though some days I only went for an hour or two. But these are memories I’ll have forever.) Up front it seems like a lot of money but over time, it’s a great form of entertainment, usually healthy, and something to develop oneself personally.
Libraries – Pretty self-explanatory, and free
Colleges – Having a college nearby is always nice. Cheap entertainment, sometimes free. Last week we saw a play for $7 each, and he acting was quite good for a community college. Lecture, concerts, indie films, etc., and more forward thing people in these environments.

(I didn’t really intent on wring so much, but a slow day at the office.) Embarassed

Trab · Posted: Fri Nov 25, 2005 5:32 pm Post subject: Re: personal debt reduction

actionreplay · Posted: Sat Nov 26, 2005 4:31 pm Post subject: Re: personal debt reduction

Get a copy of one of Alvin Hall's personal finance books (about 7GBP paperback, I guess about $10 in the US?). He is American but is a well-known tv personality over here in the UK - he has a show where he tackles people's money problems and straightens out their finances.

He has some great advice and I find it helpful - including the stuff about the psychology of why you shop and so on. If you write down everything you spend you'll find those cans of diet coke and bags of crisps get expensive! yikes!

Pops · Posted: Sat Nov 26, 2005 6:10 pm Post subject: Re: personal debt reduction

Here’s the venerable Debt or No discussion:
http://www.peakoil.com/fortopic268.html

I think linc has a good idea for a thread about how to reduce debt, let’s concentrate on that here, debate the overall idea there, and shoot, start another thread about how to run up debt if you think that is a good plan!

Here's a start for that thread: icon_santa

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FoxV · Posted: Sat Nov 26, 2005 8:44 pm Post subject: Re: personal debt reduction

although mentioned in the "Debt or No" thread. I would just like to re-iterate that the reason why you want to be debt free even when inflation is high is because of interest.

While you may think that inflation shrinking your debt away to nothing is a good idea, the bank will not. The solution, raise interest rates so they at least match inflation (plus a few percent so they still make money).

Just imagine a situation where all your debt (including mortgage, because they're only fixed for 5 years at a time) has about as much interest on it as your credit cards.

Merry Christmas and Good Luck
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lowem · Posted: Sun Nov 27, 2005 12:10 am Post subject: Re: personal debt reduction