topic Re: Knocking down debt in Community Chat

Knocking down debt

ScenicMaine — Sun, 30 Dec 2018 21:01:56 GMT

So, after reading a few other interesting topics this week, I thought this topic might be incentive for reaching financial goals, opinions, etc.

I'll begin .. on my goad/wish list:

- pay off both CCs

- just paid off my car 4 mos. early this month & house payed off a few years ago.

- continue to add to our bank savings as well as 401K. The bank savings is what I consider small/modest. We still feel the need to add to it -( just never know of any health challenges along the way but hopefully some of it can be used for "fun.")

Speaking of small or modest savings accounts, what do you consider the $$ range to be?

Re: Knocking down debt

sissel — Sun, 30 Dec 2018 21:28:23 GMT

It's hard to say how much you should have in savings, depends on your lifestyle, are you married, do you have children, own a home? Always plan to save as much as you can, owning a home you never know what is going to break, kids are expensive. Dave Ramsey gives out great advice on this subject; He wrote several books but maybe google him & you will get an idea of what his saving ways are. My DD was getting a little bad with credit cards had to really talk to her but it took a few years now she pays them off every month. It's a wonderful feeling to be debt free, DD now understands. .

Re: Knocking down debt

ScenicMaine — Sun, 30 Dec 2018 21:42:43 GMT

@sissel

Thank you for your input.

I perhaps didn't explain right .. I mostly was curious what others considered a comfort zone for their lifestyle in their savings account. Just something to be thought about.

Re: Knocking down debt

phoenixbrd — Sun, 30 Dec 2018 21:59:31 GMT

@sissel Agree. This is highly individual information and depends on your unique situation.

Re: Knocking down debt

sandy53 — Sun, 30 Dec 2018 22:01:30 GMT

When we were working I wanted 3-6 months of living expenses in liquid assets. Now that we are retired, we don't have to worry about losing our jobs, but I still want a healthy emergency fund in liquid assets. This year we are looking at more dental implants and probably hearing aids for my DH. It's good to know there is money in the bank for those kinds of expenses.

Re: Knocking down debt

SilleeMee — Mon, 31 Dec 2018 01:29:53 GMT

I try to go by the "50/30/20 Rule". But I think realistically it's more like 50/40/10 and then sometimes that just gets tossed out the window altogether. Trying to keep things within a manageable arrangement is flexible for me as long as I keep it 'manageable'.

The 50/30/20 rule...from Elizabeth Warren's book (2006):

"All Your Worth: The Ultimate Lifetime Money Plan"

Re: Knocking down debt

Annabellethecat66 — Sun, 30 Dec 2018 22:15:11 GMT

OMG! I'm going through this with my youngest daughter. I try to make her understand unless she gets down the credit card bills she's just paying interest.

Hopefully (with my help) she'll get a handle on this stuff. I watched a show and it showed how these credit card companies come to colleges and push young people into signing up for them. Then before they know it they are .....(well I won't use the phrase I use but it involves the bottom) in debt.

She isn't a kid anymore. Her generation is obsessed with having a 'good credit rating'. I keep telling her she wouldn't need to even think about it if she didn't have any debt.

Myself and a few of my friends my age (I'm 72) are totally debt free. We all own our homes, own our cars, no credit card debt and so on. My oldest daughter is the same way, no debt at all and she and her husband have 4 children and she's a stay at home mom.

Everyone could live similarly if they'd just learn to live within their means. That isn't a phrase you hear anymore....LIVE WITHIN YOUR MEANS.

Re: Knocking down debt

MarieIG — Sun, 30 Dec 2018 22:39:31 GMT

This very much depends on personal circumstances.

If working, enough to cover eight months of expenses if laid off.

If retired, and living off a stock portfolio, two years to cover downturns.

Depending upon expenses, certainly enough to cover a car or new roof, if needed or in the plan.

Someone, for example with a Federal pension, enough to cover all their needs, would need less that the retire living off their stock portfolio.

Re: Knocking down debt

Laura14 — Sun, 30 Dec 2018 22:46:19 GMT

I put a healthy amount into my 401k (not looking at present but I do keep an eye on it) and then more than half my paycheck goes into savings automatically and the remaining smaller amount into checking.

I transfer a little from savings as needed if I have a larger expense to pay like semi annual insurance premiums.

I also pay off my credit cards in full every month. No debt for me.

Re: Knocking down debt

Big Joanie — Sun, 30 Dec 2018 22:50:54 GMT

@Annabellethecat66 wrote:
OMG! I'm going through this with my youngest daughter. I try to make her understand unless she gets down the credit card bills she's just paying interest.

Hopefully (with my help) she'll get a handle on this stuff. I watched a show and it showed how these credit card companies come to colleges and push young people into signing up for them. Then before they know it they are .....(well I won't use the phrase I use but it involves the bottom) in debt.

She isn't a kid anymore. Her generation is obsessed with having a 'good credit rating'. I keep telling her she wouldn't need to even think about it if she didn't have any debt.

Myself and a few of my friends my age (I'm 72) are totally debt free. We all own our homes, own our cars, no credit card debt and so on. My oldest daughter is the same way, no debt at all and she and her husband have 4 children and she's a stay at home mom.

Everyone could live similarly if they'd just learn to live within their means. That isn't a phrase you hear anymore....LIVE WITHIN YOUR MEANS.

if only we could get the kids to understand this .....

Re: Knocking down debt

RetRN — Sun, 30 Dec 2018 23:00:26 GMT

@ScenicMaine, financial goals are so important, you are wise to try to knock down debt. Nothing better than being debt free and having money in savings. Keep up the good work.

Re: Knocking down debt

blackhole99 — Sun, 30 Dec 2018 23:30:28 GMT

We are retired, we don't have debt, we just don't buy things and take vacations we can't afford to pay for. I do use the credit card as a convenience, but the card gets paid in full at the end of the month. Our son is only 34 and is very aware of what debt looks like, he sees the pressure his friends who have debt and families are under. I think that might be one of the reasons he is still single.

Re: Knocking down debt

RetRN — Sun, 30 Dec 2018 23:36:58 GMT

Interesting, I heard on news today that divorce rate is down because young people are waiting longer to marry and that the middle child is vanishing because many people are choosing to not have more than two children.

Re: Knocking down debt

haddon9 — Sun, 30 Dec 2018 23:40:43 GMT

@sandy53 wrote:
When we were working I wanted 3-6 months of living expenses in liquid assets. Now that we are retired, we don't have to worry about losing our jobs, but I still want a healthy emergency fund in liquid assets. This year we are looking at more dental implants and probably hearing aids for my DH. It's good to know there is money in the bank for those kinds of expenses.

We are in the same position being retired. While we don't have much in our checking & savings accounts (enough to pay monthly bills) we do have an IRA with some funds in cash assets to take out whenever we need extra money.

It's such a different set up compared to when we were working. It took a little while to get used to it.

Re: Knocking down debt

VaBelle35 — Sun, 30 Dec 2018 23:41:34 GMT

Dave Ramsey says we should have 3-6 months of expenses in savings for emergencies.

Everyone's expenses are going to be different, so that's a good goal to shoot for.

Re: Knocking down debt

Big Joanie — Sun, 30 Dec 2018 23:43:06 GMT

yes .. being retired and living on retirement income can be an

adjustment .....

Re: Knocking down debt

software — Mon, 31 Dec 2018 00:21:58 GMT

Enough is a relative term.

What is enough?

There is never enough.

Which is why I don't go to these seminars on how to manage money.

When I worked, we had them at work all the time.

People thinking $50k is enough, or $100k or $500k

Any amount can be wiped out by a disaster or you don't live long enough to enjoy it.

And it all depends on your lifestyle, some of the "richest" people live a modest day-to-day lifestyle.

I don't know anything about you.

But I'll throw out a number.

If you own a home, cars or anything that would cause a problem if it broke down, I'd keep a minimum of $5k in a savings account. Hopefully if anything were to use up all that in case of emergency, you would have access to other sources of income to make up the difference.

Re: Knocking down debt

deeva — Mon, 31 Dec 2018 14:03:12 GMT

We always followed the rule to live below you means. Because if you live within your means there isn’t enough money for savings.

When I got my first job at 16, my parents encouraged me to pay myself first. Even if it was $5 or $10 a week. I've followed that advise my entire life.

through out my working years, every time I got a raise, that money went to savings.

Re: Knocking down debt

Still Raining — Mon, 31 Dec 2018 01:29:42 GMT

You may not want to use a bank savings. There are higher returns elsewhere and you can structure the maturity to keep yourself covered.

Re: Knocking down debt

ScenicMaine — Mon, 31 Dec 2018 01:33:01 GMT

Thanks to you all for the differing views & suggestions. All of them make so much sense.

I like seeing that some of you have commented on your kids being mindful of debt. Your kids are fortunate to have learned to live financially responsible from your good parenting advice. I think financial advisers had usually recommended to have at least 3 mos. of living expenses during emergencies.

Confession: I wish I had heeded my Mom's advise when I first started working at 15. That is to save. Usually I spent what I saved. NOT GOOD! Had I taken her advice, I would have been much better off. Learning a hard lesson, I ended up a few times working 1 full-time & 2 part-time jobs. In more recent years we're getting to be in a more comfortable, disciplined lifestyle.

One of the reasons I chose this topic, is because I know of 3 different homes that still have quite high mortgages close to 100k, while being in age range of 60ish - 72. One of them several years ago (when her husband was alive) won a large sum in the lottery.

For those of you that have always been disciplined with your handling of financial matters & savings, I compliment you for knowing better.

Lessons learned .. easy for some, tough for others. Keep up with the common sense to continue saving if possible.