Hi Traci! I'm soooo glad you brought this topic up.
Here's our experience:
Traci & I have in the past been "maxed out" on unsecured debt. We had 18,976 that we had to get paid.
First we considered "debt counseling". I spoke with 6 different agencies willing to "help". One called one night and I could here this girl whispering to others that we were in excess of the 10K debt. That made me mad.
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I asked her what she was talking about and she denied it. She said that there were MANY counselors in their call center and I must have heard one of them! YEAH RIGHT. Finally, I spoke with a lady who seemed very compassionate. She was an older lady and I told her what'd happened, and said, "listen, I want it up front and blunt... will this, yes or no, look negative to potential future creditors, esp. when making a major purchase (IE: Home). She said Yes, and that if I wanted to avoid ANY problems in the future, then I would need to stay clear of a "counseling program". She told me that it was excellent for older people that knew that the home they lived in would be where they were living when they died, that had no desire to purchase a new car (someone who was happy with the 30 year old car they had), and the only creditors they owed were credit cards, and if that person was on either fixed income or limited income. I said thank you, expressed my gratitude, and hung the phone up. I've not called on since.
THEN... we went to Dave Ramsey classes. This was interesting. We learned a lot. This was not quite what it's built up to be. We watched Dave on a television inside a classroom at one of our local churches each Sunday afternoon from anywhere from 90-120 mins. We paid $90+ for our financial peace kit. It normally run $100+ but the church managed to get a discount, and they passed it on to us. This 13 week program WILL NOT get you out of debt. It has some wonderful aspects, but IT IS based on a lot of WHAT IFs and IF YOU CANs. I would be happy to share these ideas with you from time to time, or if you just want to know what Dave says about a particular subject, just ask me. I've got several of his books and his kit. But that's why he's doing this..... to sell you the kit..... that, the books, audio tapes, and every other dave ramsey item is how he makes his living. He does it to feed himself and his kids.....not because he loves you.
So, using some of the principles we learned from Dave's classes, we managed to pay off some small debts - - - then we obtained a home equity loan, which allowed us to pay off the high interest rate credit cards that wasn't benefitting us tax wise, and we paid off all credit cards and shredded every one, except for just 1- - it's our emergency relief only in a TRUE EMERGENCY. What constitutes a "true emergency". First, let's define "emergency". Emergency- is any situation that jeopardizes the outcome of one's life or property. Example of true emergency. Say child is hurt / ill and needs medical attention, possibly at a hospital 100 miles from your home. Obviously you will be there with your child. But during that time, you've got to worry about certain expenses such as hotel, food, maybe purchases an outfit or two if you rushed up there, and other necessities. Then use the credit card, but PAY IT OFF when the bill comes in. If you don't pay it off, DO NOT USE IT until that balance is ZERO.
I've got soooooooo much I could say about this topic it's unreal.
Since we have done this Traci, we have managed to purchase another home and rent it out. We used some of the money from our home equity as a down payment. Our monthly mortgage payment is $200.19 plus and extra $70 which goes toward escrow to pay taxes & insurance.... total monthly payment $279.19 Our rent we charge is $350.00 - - each month we pay an additional $30.00 in principal- - - which on a 30 year mortgage, cuts it into 19 years. Right now we are looking at this investment LONG TERM, and because of the tax write off, we have a long mortgage. Should this investment been just a short term thing, example: buy, pay for 5 to 10 years and then sell to collect the profit, then we'd shortened the mortgage term by half, paid $330/month and rented it out for $400. and in 7-10 yrs, we'd sold the 32,800 house we bought (which btw appraised for 39,600), and we'd of sold it for 45,000, paid off our remaining $12,000 mortgage and stuffed $33,000 in our pocket. But because of children this is a LONG term investment, and we just put excess rent money into an account, designated solely for the rental business. Right now it will pay unexpected expenses and our mortgage payment during any vacancies, and maybe some day the excess rent money will be used as a down payment toward another rental house.
