Attacking Debt

[Stallion]

Hey,

I'm starting to get my income in order. I can do it anywhere in the world, it's somewhat recurring, I can outsource any parts of it, etc.

For the first time in my life, Just over a week ago, I sat down, hammered out a budget and made a plan of attack on my debt.

I haven't seen my credit score or anything, but I don't think it's good. When I was at university, I had a $500 cash limit credit card and I missed payments. I know it sounds stupid because the minimum payment was $10. I was just broke all the time and instead of paying it every month, I'd just miss it for months and than pay off the whole thing.

I was stupid and probably should of been more sensitive to my credit score. Anyway, got out of school, now I owe student loans. I've been deferring them since than.

I decided to take it on. The only positive thing I can pull out of my whole debt position is that I have very little in the way of credit card (I only have a $500 limit lol) and the rest is my student loan.

I'm on a tight budget and I'll make minimum payments on my student loan, while rapidly paying off my credit card(shouldn't take long). Than I'll take the excess and hammer it on my student loan.

Anyway, I was wondering if anyone had some advice to help me get through this. I'm not exactly looking for ways to get cheaper food and stuff like that. I know how to handle that aspect of my finances.

I'm not really sure what I'm asking for. Basically, I want to take my first test mini vacation(I never traveled as a kid, so I have no real take on traveling). I have three places in mind; Vegas, Prague and Bangkok. The most probable, seems like vegas with the way the energy prices are going.

I guess what I'm asking is what is the best way to furiously attack your debt with all your excess money and still some how prepare for a trip?

I would love to build up miles with a credit card. The current one I'm on now doesn't do any. I live in Canada, so the ones I typically hear about (like the ones in the book) are American.

Plus with the whole way I screwed up my credit, I'm not sure if I could even get one.

Someone throw some wisdom at me lol.

[AshokanKid]

Crazy American advice.,

OK., well .,here goes., if I had it to "do all over again" I would be BUILDING my (available) credit and be less concerned with paying it off (or down). Don't get me wrong, paying down owed balances is a great idea., but having good credit (and lots of it) can be very beneficial.

Next., build your credit while you create as many passive or close to passive streams of income. Better in my opinion to get ten small, but WORKING, streams of income up and operational than to work for a year trying to build a "perfect Muse" that MAY pay off (or not). Get the FIRST thing that MAKES money going., and then work towards a second, third, fourth. ,etc.,

Def take that TRIP and allow it to free your mind AND your DREAMS~! Many a great idea was hatched once one is OUT of ones "normal surroundings"., sometimes it is just the way our minds work and being out and about is also very freeing and good for the soul.

OK., and now here is the Crazy American advice du jour., look to buy a piece of real estate., anything., ASAP., and now is a great time believe it or not., and no., I am not selling real estate OR a "system" or program of using real estate as part of your investment portfolio (yet! :-) ).,

When I was "young", I paid for EVERYTHING in CA$H and as a result had NO credit., once I learned how to USE credit to my advantage it became very useful. As long as one uses discipline and spends credit money ONLY as an "investment" to make more money., it all makes sense.

Using credit is now one of the most powerful forms of leveraging and goes right along with delegating, outsourcing and other forms of RESOURCE management., which is what 4HWW is all about (Time is ALSO a RESOURCE., and in fact the most PRICELE$$ resource!).,

[JFrenzel]

My advice,


Check your credit score. Take a trip, but get out N America. You would be surprised to see that travel can be inexpensive. Use couchsurfing.org as a good lodging resource.


Jose

[Stallion]

Thanks for the advice guys.

I definitely want to fix my credit and work on building it, so I could go out and buy some realestate.

What do you think the best way to improve my credit?

I've heard a few things on the topic. I heard that making minimum payment for month after month, demonstrates that you can pay it and the credit cards love it when you make minimum payments.

I've also heard that the more available credit you have, the better your credit score is.

I suppose they're both true.

I guess I just have $500 in credit, since my student loan doesn't count as a line of credit.

Should I be looking to get another credit card (one with air miles lol)? To increase my credit line. This will be a little fun since credit card companies usually want a verification of your income and I'm officially earning my own income from home. I wonder what I'd send them to verify that. Do you think I should start putting bills and other expenses on the credit card and pay it off before the end of the month? I'm not sure if that is considered a positive or negative to credit card companies.

And like you said, realestate. It's been floating through my mind. We're not having the housing bubble pop in Canada, but there are probably some deals. Though buying a piece of realestate in Vegas(of course) would be pretty cool(I heard the realestate market has been hit hard there).


JFrenzel, I'll definitely get my credit score. I do want to get out of North America, but it just seems like an expensive time to fly. Tickets are still listed as reasonably cheap, but I have to pay fuel charges seperately and they could be an extra $400 - 600.

I've been making a plan to travel around the world. Yes, that is my big goal. It's going to be a full 365 day adventure around the world and that's what I'm working for. According to my research, I can travel anywhere in the USA, for hundred dollars going on the rails. So I think that gives me a double adventure. I live on the East Coast of Canada, so I'd be entering the States in Maine and I'd get to travel across the country.

Like I said, I haven't done much in the way of traveling. I think the most I've adventured down into the US is in the North East, down to Boston. Plus I plan to do the hostel thing, which is a totally new experience for me. It would seem more comforting to be doing it in the US, rather than England (Which ironically would be closer than Vegas).

[kamakiri]

Get a copy of your credit rating. They are available for free online, Does Canada have the same 3 big companies? You can subscribe to any number of free credit rating services in the US for your first month free. Just be sure to cancel the subscription within that first month. I do this about once a year.

When you have your credit report in hand, you can start to work on it. Sadly the credit companies don't keep track of much over 3 months, so if you have any black marks over 2 years old, you can protest them and 80% of the time, they will take them off your credit report, improving it dramatically, and far faster then the normal 7 years it would take that old data to drop off on its own.

That is a trick the credit consolidation companies use to clean up your credit rating. You might as well use it too. Worst case, you write 5 letters, and spend a few minutes on the phone, and nothing changes. Best case, they drop off all derogatory data and you look like the best credit risk in Canada. You really have nothing to lose, and there are sample letters all over the internet.

Here is a quote for you:

If you believe information being reported about you is inaccurate, incomplete or outdated, challenge it by notifying the credit reporting bureau (http://law.freeadvice.com/resources/gov_material/ftc_how_to_dispute_credit_report_errors_2_98.htm).

Once placed on notice, the credit reporting bureau must verify the facts within a reasonable period of time or else delete that information. If it is not resolved to your satisfaction, you are allowed to have a statement (up to one hundred words) included as part of the report which the bureau issues in the future.

The info doesn't have to be incorrect either. You can report anything, and the chances are very high that the reporting bank does not have easy access to any of your records over 3 months old, so they will either ignore the inquiry or the process will take so long that the credit reporting agency will take it off anyway.

Kind of sneaky, but it works, so why not use it.

[Stallion]

Get a copy of your credit rating. They are available for free online, Does Canada have the same 3 big companies? You can subscribe to any number of free credit rating services in the US for your first month free. Just be sure to cancel the subscription within that first month. I do this about once a year.
I think Canada has the big three. I don't think they're free online. I believe it's a priviledge to get it instantly online, so you have to pay. But you can have it mailed to you for free.

Interesting trick with subscription, with the free month. I'll see how many there are in Canada, but I think it's fine though. I don't think they're free in the US, but I believe it's considered a consumer right in Canada, so you can have them mailed.

I'll have to look into it.

When you have your credit report in hand, you can start to work on it. Sadly the credit companies don't keep track of much over 3 months, so if you have any black marks over 2 years old, you can protest them and 80% of the time, they will take them off your credit report, improving it dramatically, and far faster then the normal 7 years it would take that old data to drop off on its own.

That is a trick the credit consolidation companies use to clean up your credit rating. You might as well use it too. Worst case, you write 5 letters, and spend a few minutes on the phone, and nothing changes. Best case, they drop off all derogatory data and you look like the best credit risk in Canada. You really have nothing to lose, and there are sample letters all over the internet.
Good idea. I have a feeling there is something on my record from the cable company. About a year ago, some debt collection agency came after me claiming I owed them like $600 in back cable bills. *I was fully paid*. I told them, I don't send checks to people that I don't know and have presented nothing to me to believe I actually owe something. I'll definitely be attacking that.

That would be only problem on the credit report. I don't think I can wipe the damage I did with my credit card (which I still use) and my student loan.

[Stallion]

I could of swore transunion had a number you could call up and you verified yourself through that and they'd send it out to you. But all I see on their website is in person(can't do) and by mail. Which is more of a pain because I have to get my hands on a photocopier, to copy my "both sides" of various ids.

Equifax's link doesn't even work for the free report.

The other one is Northern Credit Bureaus.

http://www.ic.gc.ca/epic/site/oca-bc.nsf/en/ca02197e.html

[AshokanKid]

Like you say, paying minimum payments (if that is ALL that you can do) is PRIMARY., and IF for some reason you are going to be late, CALL the company IMMEDIATELY and ask them NICELY for a brief extension. This is really one of the most critical steps that people ignore and then they wonder why the company (in exasperation) flags their credit account.

Better not to be late, EVER, but the companies LOVE communication and you will be surprised what you can get just by calling and asking nicely. At a Robert Allen seminar lately (free, by the way) one of our between class exercises was to call one of our credit cards and ask for NO INTEREST and then also ask for a credit limit of $100,000~!

All they can do is say, "no" (and usually offer you less!) and it hurts nothing to try (although there are certain things that may flag your credit if you make too many requests). Apply for an EASY card to get., this includes any gas company (haha) cards and more so any department store cards. They will BEG you to open a credit account. Home Depot, Sears, Best Buy, etc.,

Even if all they give you is $200 credit line, go to the store and USE the card for a minimum (needed) purchase., and then PAY IT OFF., make a few payments ALWAYS BEFORE the due date and then just pay it off. Do this a few times and then go in to the store and ask for an increase for a "certain large purchase" that you are considering.

Make it a big increase request., again., they will give you what they can., and you can even ask for more on the spot and see what happens. Once you have several of these cards and are using them occasionally AND makling regular TIMELY payments, then other companies will start getting around to sending you applications, BUT, BE CAREFUL., !

Applying for too many credit cards too quickly can also flag your account., just be patient., one card every 6 months or so is fine I think., and then once you get a decent credit line on a good card (perhaps one with freq fly miles!:-) you can call and ask for a hefty credit line. One thing they like is for "more schooling", but NEVER mention Real Estate., they balk at that for some reason.

I use my credit card now for almost everything because it has built in book keeping. I just DL my account and it is all there., Voila~! Now this may not work for some people, but I have not written a check in years (unless to mail perhaps). And credit cards are GREAT for floating the materials for an upcoming Muse test or creation. Leverage., investment., but NOT that tempting looking stereo., :-)

Las Vegas has been hit pretty hard and there are foreclosure bargains to be had almost everywhere., even non-foreclosure sales are tempting. I am within the New York Metro (or close enough for a lengthy commute,. many travel in to the city for a few days a week and then stay here the rest of the week) and someone just bought a place on 1.3 acres for $55,000.

This place is only a mobile home, but they were asking $80K and settled for 55, for which an owner can easily rent in this area for $600 - 700 or more and pay the mortgage with some left over. Now that is passive income and only one small example. I suggest loooking, Looking and more LOOKING because shopping is FREE and is NO obligation.

What you get by looking, shopping and appraising is KNOWLEDGE so that when you are ready to buy, you have a pretty good idea what is a good deal or a GREAT deal. With fuel prices going up, durable goods prices rising etc., we will eventually see real estate go crazy again., not soon, but eventually., this is the course and rise and fall of things. (Many GREAT books on real estate out there)

Going back as long as these things have been tracked real estate has more or less kept pace with "inflation" and ya' gotta live somewhere. OK., well., perhaps not., a thatched hut on a Tahiti deserted beach may not be "real estate" in the technical sense, but I would bet that even Tim owns something somewhere even if he only "lives there" occasionaly (or uses it as a hedge, shelter or investment).

Look at it this way, there is NO wealthy individual or entity who does not own some real estate., it is crazy not to and anyone who tells you otherwise is either broke or in serious denial. It is just one peice of the wealth puzzle and can also make one pretty comfortable if one does some reasearch and makes the right moves. perhaps not a priority, but since you mentioned it, make it a current research / study topic.

Speaking of which, another "wealth trait" is to NEVER stop learning, watching, thinking, researching & testing / trying., too many people "get comfortable" at some point and then this all goes out the window. We are naturally curious and creative beings and like anything else that we did when children (like MOVING our bodies!), we either USE it., or we LOSE it. Sit in a chair and "watch sports" (or rock climbing, or whatever) instead of playing or getting involved and see how long your body and mind last you~!

[Stallion]

I really appreciate your "extra juicy long replies" lol.

You're right about asking for extra credit. The worst they can say is no. They might give me some because I have been paying my bill on time for over a year now.

I actually should get a store card. My whole budget and paying down debt had a "prize" in there for me of saving up for a nintendo wii. I might as well put it on a store card and pay it off, to get the credit score a little health.

I'd also love to buy some realestate. I feel like this is the perfect opportunity, but I'm just not prepared credit wise to get get. I've heard some of the amazingly cheap prices on somethings and I feel bad about not being able to take advantage of it.

[JFrenzel]

You can sometimes also get a secured credit card. This is not a bad way to go also.


Jose

[frekwentflier]

The single best resource for credit repair is creditboards dot com. Be sure to read the FAQs and the discussion forum.

My favorite way of disputing is to ask for validation of the debt and that the agency claiming to collect actually has the legal right to do so. You'd be amazed how many collection agencies do not!

Also while you're there, if your personal credit is screwed up, you should check out the business credit discussion forum and build that up to use in your muse business(es).

Just to let you know what is possible, in 2003 I had a few negatives on my personal credit and scores of about 600 and maybe $25k total credit limit. Today, both personal and business credit reports are completely clean and my personal scores are all 750+. I have about $500k total credit limit (credit cards and lines of credit) for personal & biz combined, and I have 10 mortgages on rental properties. So it can be done, but it takes time and effort. I cannot stress enough how important it is to read and study the advice in the discussion forums.

Also, you can get your personal credit reports at www.annualcreditreport.com. This is a government-mandated site where you can get your report 1/year. ALL other "free" sites are fronts for credit monitoring services that you'll have to sign up for to get the report, so don't be fooled. Not that there is anything wrong with credit monitoring, I use it, but just don't be fooled into signing up for something you don't want.

One last thing I will say. Please do not build credit just for the sake of building credit. Build it to use to establish your muses and ongoing sources of income (multiple streams of income described in an above post). Develop the discipline to handle credit wisely.

[kamakiri]

ALL other "free" sites are fronts for credit monitoring services that you'll have to sign up for to get the report, so don't be fooled.

That is actually what I was suggesting. Sign up for the pay service, and cancel during the initial first free month.

The credit agencies make it as hard as possible for you to get your free credit ratings. No phone numbers, lots of info (but is it really that hard to find a copy machine?) Just use the system against them. All it takes is a bit of time, and effort. Write a letter, change the addresses, and then mail it out to the credit agencies. Worst case, they say "No!" Leaving you no worse off than you are now, best case is perfect credit.

[Stallion]

Thanks for your reply frek.

I'm going to definitely hang out at that credit board. I actually saw you mention it in another thread, so I bookmarked it. It's encouraging knowing I can get this fixed.

As for that site. It's currently down right now(I know it is temporary), but I believe that is for American credit scores. Can't use that in Canada.

In the coming days I'll figure out the best way to get it.

[AshokanKid]

Yes, thanks Frek., Muchas Gracias., good stuff., some of us might just benefit from hearing a little more about your own personal transformation. In 2003 when you cited only $25K in credit limit, does this also mean that you owned no rental property? Any other streams of passive income that you utilize that you might recommend to us?

I might also encourage that just having a poor credit "history" is also very similar to having a poor financial management "history"., or a poor personal relationship "history"., or whatever history that you may deem in need of change. The keys here are that this is HISTORY., even if only moments ago. Making a change only takes a moment. Speaking of Nintendo, my first instinct might be to calculate in actual dollars (Can or U$) the precise cost of one or two (or ten) real estate deals.

Tim even mentions something similar in the book about shopping for a dream car or dream vacation., it is the same principle. Once you KNOW how much something is going to cost you, it is easier to visualize ownership as opposed to some nebulous thought of "I can't afford IT". If you know what IT is, but do not know how much IT costs, then you are just another uninformed prospective buyer (more like dreamer). (Frek can probably tell stories of deals to be seen)

You might be surprised that once a little research is done and you have "flagged" several properties for further study, just how much your subconscious mind kicks in and works towards making this ownership a reality. Besides, if you are as excited about obtaining a passive income stream as you are about the "new Nintendo", there is a MUCH better chance that you will be heading in that direction. You might also be surprised that you CAN afford a piece of real estate., even now~!

I might say., $hit-can the Nintendo for the time being., spend your time and use your dimes and quarters to buy or develop something that produces income., (then once you are wealthy, go and buy all the games that you want., :-) ) Hey, Frek., start a new post about your experiences building from 2003 to present,. would love to hear more., (or perhaps you have a web site? :-) )

[frekwentflier]

Yes, thanks Frek., Muchas Gracias., good stuff., some of us might just benefit from hearing a little more about your own personal transformation. In 2003 when you cited only $25K in credit limit, does this also mean that you owned no rental property? Any other streams of passive income that you utilize that you might recommend to us?

I might also encourage that just having a poor credit "history" is also very similar to having a poor financial management "history"., or a poor personal relationship "history"., or whatever history that you may deem in need of change. The keys here are that this is HISTORY., even if only moments ago. Making a change only takes a moment. Speaking of Nintendo, my first instinct might be to calculate in actual dollars (Can or U$) the precise cost of one or two (or ten) real estate deals.

Tim even mentions something similar in the book about shopping for a dream car or dream vacation., it is the same principle. Once you KNOW how much something is going to cost you, it is easier to visualize ownership as opposed to some nebulous thought of "I can't afford IT". If you know what IT is, but do not know how much IT costs, then you are just another uninformed prospective buyer (more like dreamer). (Frek can probably tell stories of deals to be seen)

You might be surprised that once a little research is done and you have "flagged" several properties for further study, just how much your subconscious mind kicks in and works towards making this ownership a reality. Besides, if you are as excited about obtaining a passive income stream as you are about the "new Nintendo", there is a MUCH better chance that you will be heading in that direction. You might also be surprised that you CAN afford a piece of real estate., even now~!

I might say., $hit-can the Nintendo for the time being., spend your time and use your dimes and quarters to buy or develop something that produces income., (then once you are wealthy, go and buy all the games that you want., :-) ) Hey, Frek., start a new post about your experiences building from 2003 to present,. would love to hear more., (or perhaps you have a web site? :-) )

You're all very welcome. I'm happy to share. Believe me, I have a long way to go before I consider myself a true 4HWW graduate, but before I read the book, I never knew WHY I wanted to get out of corporate life. What was I going to do, play xbox all day? Now not only do I have some ideas from Tim, but am picking up even more ideas in this forum.

To answer your question, you are correct, in 2003 I had no mortgages. I got the 10 rental properties from 2004-2007. I was a fanatic, buying every real estate course and book I could find, but eventually just settled down and bought HUD foreclosures. Most of the stuff you see on TV is geared toward people with bad credit. If you have good credit, real estate investing is much easier.

To be perfectly honest, my using good credit to buy real estate is something I'll probably eventually write an ebook/course about as one of my muses, so I can't give too many secrets away. :) But suffice it to say I use business credit sources to buy houses, fix them up, and then refinance them with traditional mortgages. I learned all about business credit sources on crediboards.com. Most business credit cards and lines of credit do not show up on your personal credit report. hint hint. OK, that's enough for now. :)

If you find a real estate deal that is good enough (I'd say at least 30% off appraised value after any needed repairs), you can find the money to buy it from relatives, credit, hard money lenders (do a google search for that term), or just visit your local real estate investor association and network with people. Most of my first deals I used hard money lenders. They were profitable, but the HML took an easy 33% of the total profit right up front. I thought to myself, there has to be a cheaper way!! And that's when I learned all about business credit and have not looked back.

The other thing about me is I no longer live a flamboyant life nor do I try to keep up with the Joneses. I drive a small truck, I shop for food at Aldi, etc. Sure, one day I will have my dream Aston Martin but for now, I'd rather invest money into building income streams.

I hope this helps you out. I honestly believe right now is one of the best times to buy real estate in US history. As long as it cashflows well, you're set!

[TimW]

Another thing to consider if you need cash flow is to ask your student loan company for a forbearance. This essentially puts the loan on hold. Interest still accrues, so it's not like it's "free", but it can help you if you're in a bind. I used it several times after grad school when I moved, and then again when I relocated to Tokyo. After about 4 months in Japan, I was able to get on my feet and start repaying again.

[JFrenzel]

Great Ideas, I am going to have to come back and read all this.


THanks Everyone,

Not even my thread, but it kicks ass!


Jose

[kamakiri]

One other things that I keep thinking of when I come back to this thread is that the best way to eliminate debt is to increase your income (without a corresponding lifestyle 'increase' of course). This is one great nugget of advice from Kiyosaki. Don't increase the rest of your life when your income goes up.

Things like buying a bigger house and a Porsche are not the things to purchase the first time you get debt free and have $50,000 in the bank. I can assure you of that from my own personal experience.

Even though having $35,000 in debt is the same if you make 80,000 a year as if you made 40,000 a year, it is one hell of a lot easier to pay off if you are making 80k.

[captaink]

Try paying off more than minimum payments.

Even if it is just 5$ more, it WILL add up.
If you just pay minimum, that debt is going to be with you a looooong time.

::emp::

[AshokanKid]

One other things that I keep thinking of when I come back to this thread is that the best way to eliminate debt is to increase your income (without a corresponding lifestyle 'increase' of course). This is one great nugget of advice from Kiyosaki. Don't increase the rest of your life when your income goes up.

AMEN to THAT~! So many Millionaires cite FRUGAL Living as a path to Wealth Creation., wow., simple, subtle., and SO True., (Again, the Nintendo and other such stuff may wanna wait 'til one has $100K in the bank., :-) )
Great Ideas, I am going to have to come back and read all this. THanks Everyone, Not even my thread, but it kicks ass! Jose
Which is why we are ALL Here., :-) Each one of us has nuggets & experience to share.,

[kamakiri]

I am a big fan of the Zen Habits blog, and they had a great post on the subject a few days ago.
The Golden Money List: Hundreds of Tips for Turning Your Financial Life Around (http://zenhabits.net/2008/07/golden-money-list/)

[Stallion]

Looks like my credit rating isn't that good. I decided to take the advice of getting one of those store cards, just to try and build a little of it.

I applied for one at Staples because I needed to get a new computer chair. Well, just got a letter in the mail from them today and it was DENIED. lol.

I found out that Equifax and Transunion are both in the city I live by, so one of these days I'm going to stop in and get them.

Than, I'm going to apply some of the tactics over at the credit boards to help me fix it. Hopefully the stuff applies here in Canada.

[Stallion]

It's funny how things add up when you just decide to attack it.

I don't make a lot of money, but I made plan to put as much money on my debt as possible. I just finishd off the math for the month. By the end of July I'll have paid down 3.8% of my total debt. Yeah, I know there is interest and stuff, but for simple math, I'll just say it that way.

That was a good month and I won't be able to duplicate that next month. I'll be aiming for a 3% target for August, which should eliminate all my credit card debt. Not sure if there will be any left over to put on top of the minimum payment on my student loan.

Feels good giving debt the ONE-TWO Punch. lol. I'm in the starting phase of testing out my new muse. Going to see if there are any buyers out there. If there is, it's going on my debt.

[Tulkas]

Read the Millionaire Next Door. And check out Dave Ramsey.

www.daveramsey.com

[TimW]

And check out Dave Ramsey.

www.daveramsey.com

+1

While I use debt as a part of my business (terms with vendors is a form of debt), it's not something I like doing. We're working to pay it down as much as possible.

While a lot of money "gurus" tout debt as a way to leverage businesses, just remember one thing:

Think of all those folks who tapped all the equity in their homes to buy a second home to rent, or flip, or whatever...and are now upside down.

Think of the banks who made stupid business decisions, and are now going under...with taxpayers picking up the tab.

When you have no debt, it's fairly easy to ride out tougher times because you don't HAVE to shell out a set amount of money each month.

[Driven]

The best program I've ever seen (and the one I use) is Dave Ramsey's Total Money Makeover. You can get the book from the library if you don't want to spend any money, and I really suggest joining the online forums (free trial, then it's a paid membership - $10/mo, less for a year's subscription). I don't get a cent if you do, but I think it's great.
He explains why killing the debt is important, and why credit is not. He has millions, and has a FICO score of zero.
You can find him at http://www.daveramsey.comand the membership is http://www.mytotalmoneymakeover.com You can get to MyTMMO from Dave's site.

[froldt]

I'll have to agree with the Dave Ramsey advice. We don't like debt and are doing our best to avoid it completely.
The only debt that my wife and I have are school loans, and we're still in school. A good chunk of the money is sitting in our savings account, we're going to use it for our study abroad trip next semester, otherwise we would have already paid it back (there's a window where we can return the money and have no interest incurred for that portion).
As soon as we get "real" jobs, we're going to put one income stream towards paying off the debt, and one to live off of (the smaller one). Debt will be with us for as short a time as possible.

[kamakiri]

I though this thread died. I guess I have some more insight to add.

Increasing your income is the fastest way of eliminating debt there is.

I love BB code

[Tulkas]

One of the fast ways to increase income is to eliminate debt.

If you have a $500 car payment, $1000 dollar house note, $X amount of credit card debt, etc. that can quickly add up to close to $2000 a month that you're paying out and not using for more constructive, more fun uses. Eliminate debt and you get a $1,500-$2,000 a month raise.

Also, making those payments every month and budgeting for them adds to clutter in your life mentally, physically, and emotionally.

[kamakiri]

One of the fast ways to increase income is to eliminate debt.

Not the case at all. With $50,000,000 in debt or $5,000 in debt, that has no affect on your income. Disposable income? probably, but income? NO.

[earthmother65]

Guys, keep life simple and avoid debt (unless you want to buy a house...). I have an Amex, so paid on time every month and converts to airline miles :), and a couple of store cards I kept in the States just to keep my official rating alive (I live in Europe) - but rarely use them, always pay off in full ASAP. Don't fall in that American Debt Trap, trust me!! I regret to this day my student loans!

[Stallion]

I agree with not getting into debt. Well good debt like a mortgage is fine. Student loans are considered good, but I wish I was more responsible in college. I would of been a little more frugal with my student loans and made sure I had a job while at school.

I do agree that increasing your income is a great way to pay down debt, but I disagree that it is the fastest way. Like, from a mathematical point of view, it is, but the only way to pay down debt is to have a plan to do it whether you're making very little or a lot. The people in the United States that have the most consumer debt and are drowning in it aren't broke. These people are typically upper-middle class. As their income went up, they just started spending more and it just made an even bigger cycle of debt.

Obviously my goals are always to increase my income and I'm following a plan to pay down my debt too. My credit cards are all paid off and I make sure to pay them off at the end of the month now. I'm also paying down extra on my student loans. There's a plan in place to get out of this and there is a light at the end of the tunnel.