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dthatcher · 03-08-2012, 11:58 AM

You don't have to be in debt to be broke. We have no debt, just a secured card that is paid off in full every month. We don't have iPhones, the only phone we have is a single Verizon prepaid basic flip phone that I let my wife have. We don't have cable/satellite TV. Our TV is a small tube set. No car payment. We only have one car, and my commute is only 14 mi each way. The only thing we "splurge" on is high speed cable internet. And yet we live paycheck to paycheck. Of course, part of our problem may be that health insurance for my wife and I (through my employer) is $435/mo. But what are you gonna do? Cancel that and end up with tens of thousands in medical debt?

notdrinkingthekoolaid · (This post was last modified: 03-08-2012 12:35 PM by notdrinkingthekoolaid.)

Not to make light of your situation...we lived paycheck to paycheck for a very long time and are just now starting to have something leftover. If debt isn't the problem, then income becomes the issue. Just like debt...changing your income isn't an easy fix either. Insurance costs definitely are a necessary evil and it's hard to be in that position of needing it, but then it eats up so much of your income. $435 sounds REALLY high for just spouses and not a family with children included. Is there any chance that getting individual insurance coverage would be less expensive? (And yes...I know it probably isn't.)

dthatcher · (This post was last modified: 03-08-2012 12:46 PM by dthatcher.)

Well... there is a possibility. I just realized that individual coverage for my wife could save us about $100/mo but I would have to supply the new insurance with a certificate of credible coverage to get around pre-existing conditions. She would have to change doctors and there might be some gotcha but still I would have to wait until the end of 2012. I can't change my employer med benefits mid-year.
I think I would lose the tax break on her premium though.
My coverage is cheap, it is hers that is through the roof.

notdrinkingthekoolaid · 03-08-2012, 01:05 PM

Pre existing conditions change everything. Hope you find a workable solution!

JoeR · (This post was last modified: 03-08-2012 01:23 PM by JoeR.)

dthatcher - Being "broke" with NO debt is still better than broke WITH debt.

I refused medical coverage through my work, because it would be triple the cost of outside coverage for a similar high-deductible plan. It sounds really strange, but I believe the group has had too many major claims, which drastically increased the premium rates. My monthly rate right now is $485 for Me, my wife, and family (one child) + a maternity rider on an outside HDHP. I think it will go up again this year a small amount when my wife turns 31. But, it is still better than about $1,200/month for about the same thing through my employer.

Elijah Craig · 03-08-2012, 01:39 PM

(03-08-2012 11:41 AM)C_Fresh Wrote: Yeah, my plan is to eliminate all other debts and then start paying maybe one or two hundred dollars extra on the mortgage every month. I made a one time $1000 extra payment after I got my tax return the first year and according to my spreadsheet it cut 10 months off the end of the loan and immediately resulted in $6 more a month going to principle instead of interest.

If possible, I always pay extra on every bill for this reason. I know maybe the math doesn't support it but I like the idea of cutting down the principle up front so that it gets paid off faster.

C_Fresh · 03-08-2012, 01:48 PM

(03-08-2012 01:39 PM)Elijah Craig Wrote:
(03-08-2012 11:41 AM)C_Fresh Wrote: Yeah, my plan is to eliminate all other debts and then start paying maybe one or two hundred dollars extra on the mortgage every month. I made a one time $1000 extra payment after I got my tax return the first year and according to my spreadsheet it cut 10 months off the end of the loan and immediately resulted in $6 more a month going to principle instead of interest.

If possible, I always pay extra on every bill for this reason. I know maybe the math doesn't support it but I like the idea of cutting down the principle up front so that it gets paid off faster.

I've been doing the same thing for my student loan and I've been amused to watch the monthly amount due go down. Apparently, while extra payements do go towards principle, they also reduce the required amount of your next payment by the same amount. This month my minimum payment was $25. Not sure what happens once that reaches zero. Either they tell me I don't have to pay for the month or it cycles back up to $58.

Paying extra is always nice. You just have to make sure it actually goes towards principle. I've heard of some companies taking extra payments and putting it towards the next month's interest. Laws may have changed on that since then.

Derek · 03-09-2012, 05:24 PM

When we got out of debt we used the plan from here: http://www.crown.org/

Very simple. If I had paid down the highest interest rate first that would have put my mortgage over my student loans....

~~SomethingFundy~~ · 03-09-2012, 05:28 PM

Debt is a thing that has me up a creek from medical to HAC being hats. It's to the point of enlisting because I can't find a decent job..

notdrinkingthekoolaid · 03-10-2012, 10:56 PM

I meant to post this earlier, but it's been a busy few days...

To all of you making extra payments...call whatever company has the account and make sure they are putting your extra payments toward the principle and not the next month's payment. We've been paying extra on a car note for a year or more. I called a few weeks ago about something else with the account and happened to ask about the extra payments. The account rep I spoke to had to make the note on our account to put the extra payments towards the principle. Apparently it had been going toward the following month's payment. Not a huge deal, as it was going toward the balance eventually, but it wasn't having the total intended effect on the the loan balance either!