WELCOME TO 105.1 THE BIG TALKER
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- Dave Says - January 24, 2012
In your plan, you talk about Baby Step 3 as saving enough to have three to six months of expenses ...
- Wrecked my financial life by helping parents
I was a very successful twenty some year old back in the late 90's. I was working for a top 5 fortune 500 companies as a road warrior consultant in the IT field making well over $100K! I saved every penny I could save. When my parents wanted to put a retail shop together in 2004, I agreed to help. I gave them $85K cash I saved up and let them use my credit. The next thing I knew, they racked up more than $130K debt under my name in less than 2 years buying inventory. Well, I was helping my parents right? By the time I found my Mr.Right and got married and ready to purchase a house, our application for mortgage got turned down. I didn't realize that over the years when my parents had free access to my credit, they built up so much debt under my name, that my credit is no longer worthy. The lender told me that my husband had to go solo on the mortgage. But since he doesn't make enough income alone, we could not qualify for the house we wanted. Although I was still making really good money, it didn't matter. We opted for a tiny house with no garage and a complete fix upper with no insulation nor plumbing. When I had a baby, the living condition got pretty terrible. My parents were shocked too after they found out what they did to me and vowed to pay off the debt under my name as soon as possible. And they did. It took them over 5 years to pay off the credit cards under my name and restored my credit. I just bought a beautiful house with my husband a month ago. I don't regret helping my parents. But if I knew the consequences of letting someone borrow my credit, I probably would try to come up with some other ways to help them.
- Never Co-sign Means NEVER ! ! !
In August of 2008, I co-signed for a pickup with my younger brother so he could lower his car payment. I felt uneasy about it at the time, but with the help of some pressure and guilt, I did it. My brother made his first four payments on time, no problem; however, he was late on EVERY payment since then and often missing payments for months at a time. We did a workout loan in December of 2010 in order to lower the payment to something he could afford, which extended the life of the loan another 84 months. He missed the December payment, the January payment, the February payment... you get the idea. By November of 2011 he had made a total of maybe three payments (one every few months). After three years my relationship with my brother, and consequently the rest of my family, is almost non-existent. My parents support him and tell me I need to be more compassionate; I was told not to worry about the truck anymore because he had it taken care of. In November of 2011, I received a repossession call. I scrambled to buy more time so I could try and figure things out. My brother threatened to let it get repossessed if I didn’t help him out by paying for the truck. I told him I would only pay for the truck if I has possession of it- he dropped it off at my place the next day as a “sacrifice” for the restoration of our relationship- I had to pay $2500 to bring it current just to avoid repossession… Long story short, he paid less than $4000 on the truck over three and a half years. The truck Blue Books for $17,000 but is not in the best shape. It has been posted online and sitting by the mall for three months now and I have lowered the price to about $15,000 praying that someone will buy it (your prayers for the same would be much appreciated). Oh, and I still owe $23,000; I will be using my savings to pay off the loan once I sell the truck. PLEASE learn from my stupid tax. When someone asks you to co-sign for them, do yourself a favor and RUUUUUUN!!!
- A worthwhile journey...
In April 2008 I saw the Total Money Makeover Live in Colorado Springs and had my lightbulb moment (Thanks Dave!). We were in deep, to the tune of about $60,000 in credit cards, HELOC and car loans. They had been built up slowly over years of spending more than we earned and buying things we couldn't afford. We tightened up our spending and used the debt snowball. We slowly chipped away at our debt, sold our cars and paid off the loans, any spare cash went to paying off the debt and today I made our last credit card payment. I cannot describe how good it feels. Finally the chains are broken and we no longer have the burden of debt. The world is our oyster and we plan to save up for a home and plan for our future and our children's future. It was a long hard journey, involving good choices and sacrifices but oh so sweet and worthwhile.
- Dave Says - January 16, 2012
We've read about your plan, and we're in pretty good shape financially, but ...
- The tortoise had it right.
In '08 I gave a client $22k to invest in Florida real estate b/c it looked like such a great deal. We were doing okay financially but we certainly werent getting rich fast. So I took advantage of this terrific opportunity. It gets worse. b/c we didn't have enough saved and credit cards were so readily available I borrowed $15k from them to do this. Fast forward 4 years - I have only received $4k back from him in total so I'm still out $18k of which $12,600 is still on the credit cards plus all the interest charges b/c that 0% on the credit card didnt stay 0% for long. Lesson learned-trying to jump ahead only ended up getting us further behindthe tortoise had it right-slow and steady wins the race
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