Starting the Debt Snowball

I thought I would share here on Wallet Wise what my husband and I are up to in regards to personal finance. One of the things we have recently embarked on is Dave Ramsey's Total Money Makeover. We've completed baby step 1 (save $1000 fast) and are working on baby step 2 (get out of debt). What's our debt? Student Loans.

Arg, debt that all too many are familiar with. With a staggering amount of student loan debt, it can be a burden, especially when considering purchasing a house. Which is what we want to do. But we decided instead to embark on a two year odyssey in paying off over 40 grand in student loan debt. It can be done, and we are ready to join the ranks of those who live life debt free, dubbed 'weird' according to Dave Ramsey! And after we pay that debt off we are going to save for 50% down on a home. :-)

Read more about the total money makeover here. Are you ready to join me in this crazy quest to get out of debt? Tune in to the Dave Ramsey Show on AM radio from 2pm-5pm Monday-Friday to get a taste of what the makeover entails and to hear stories from everyday people seeking to get out of debt for good.

House Prices Show Signs of Recovery

Many people have equated the current housing and mortgage crisis with the economic downturn and recession. If so, then this bit of news should cheer some of you up!

A recent article explains how some areas of the housing market are beginning to recover due to the decrease in house price decline (down from 15%). Because many home owners now find themselves 'in the hole' or 'underwater' with their mortgage (meaning they owe more on their house than it is currently worth), any increase in housing prices should be a signal indicating recovery is on its way.

There seems to be a bit of a turnaround with supply and demand. Although many homes are still sitting on the market, many home owners have opted to 'wait it out' and try and sell their home sometime next year when the market is more stable. Several are choosing to rent or lease their home until they are ready to put it back on the market. However, this puts a decrease on the amount of homes available for sale, which temporarily brings the prices up a tad. It is still too early to tell for sure whether this will have a lasting positive effect on housing prices, though, and it is entirely possible for prices to continue to fall given the recession.

How has the housing crisis affected the average home-owner? Many are unable to finance their child's college or university education. Taking out a home equity loan was once a quite popular way to finance education, and those who are underwater with negative equity are now unable to do this. Some are stuck with mortgages they cannot afford to pay, and others are holding onto property they no longer want, delaying retirement dreams and relocation.

Thus, any sign of rising housing prices, however minimal, are taken quite seriously. Although there still remains quite a bit of time before full recovery is restored, there does seem to be some hope that the worst is finally behind us. We can only predict, however slightly, that prices will continue to rise, albeit quite slowly.

How has the housing crisis affected your life? Have you had to delay relocation or retirement plans? Are you unable to finance your child's education as planned? How has it impacted your ability to sell your house? Has negative equity resulted in debt for your family?

Share your thoughts here with other readers of Wallet Wise, and know that recovery is certainly on its way!

Budget Right: Are You in Denial?

Recently, I stumbled across this article which discusses how many people are in denial about their debt. Why are they in denial? Because they are not seeking help. This is surprising, because the people polled for this article say they have not only fallen behind in their monthly payments, but that they are unable to "meet their credit commitments". Because this article is based on the UK, it reinforces the fact that we are in a worldwide recession.

Does this sound like you? Apparently there are more than 6 million people who are afraid their home my be repossessed. If you find yourself unable to meet your credit commitments, you should know there is help! It's called financial and debt counseling, and its more readily available than you may think.

People who are in denial about their debt reminds me of those who are in denial about their OCD. Research indicates that more than 2 million Americans have Obession Compulsive Disorder. However, it remains to be one of the most under-treated and under-diagnosed pyschological disorders even though highly effective and readily available treatment exists. What is interesting about this is that those with OCD are fully aware that they have a problem. It disrupts their lives by hindering their work, relationships and daily activities. They either don't want to seek help or are unaware that it is available. Likewise, those with debt are also aware that there is a problem, and it severely disrupts their lives as well.

If you have questions about how to manage your debt or get help, I encourage you to check out this site. Jessica Swingle is an accredited Financial Counselor who answers your questions for FREE in order to help get your finances going in the right direction. Specializing in financial counseling for military families, young couples and individuals, Jessica's aim is to get the word out that there is help and educaiton available. She has remarked that the ratio of those who seek help verses those who actively need it is desperately out of proportion. Perhaps many people are simply unaware that financial education and help exists. If so, then now is the time promote financial education awareness.

Saving money by using coupons and sales is simply a starting point for getting your finances inline. However, many people need more professional help with the rest of their financial lives. Perhaps you need to refinance your mortgage, understand your debt repayment options for credit cards or initiate an overhaul on your stock portfolio. Its never too late to get help and advice.

Budget Right: Getting Help with Debt

For those of you who read my last post on debt management here, I figured I should leave you with some places where you can get debt help if you really truly don't know where to start.

If you are struggling or unsure about your college loans (or if you just recently graduated, like me, and are dumbfounded at that huge financial commitment you made about four years ago when all you wanted to do was move into the dorms with your friends), check out this site, called You Can Deal With It. This is a great site full of resources to help your manage and get help in paying back your student loans. For example, you can learn about the different repayment options available for your loans and find out who to call if you are about to default. It also discusses loan consolidation, and gives you tips on how to practically manage your money.

If you need debt help with credit cards, this site also provides some valuable information on step by step actions you can take now to help eliminate it.

With the Obama Administration's new financial stimulus plan, there is real help for those of us (in the USA) who've found themselves unable to pay the mortgage. Click here to visit the government's website to determine if you are eligible for refinancing.

I hope this helped steer you in the right direction if you are having trouble getting debt help.

Click here to read my review of Dave Ramsey's bestselling book, Total Money Makeover. I really encourage anyone who's trying to get control of their finances to read his book. You can buy it here.

Stay tuned for more on budgeting right as well as more principles from Dave Ramsey!