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January 26, 2012


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Great post RM!! I am so excited for your family – because you have a HUGE income (big shovel) and your debt is very manageable. If you haven’t already – I would pick up Dave Ramsey’s book or better yet attend his class (Google it). Your family is the PERFECT candidate for that material – because from the way you are writing, I get the feeling you think it’s going to take you longer to get out of debt then it really will (if you get intense and excited!). You guys just need to learn how to manager you money more effectively. I bet if your “non-negotiable” expenses have some room for comfortable cuts. Go get his material – you will thank me later :-)

How much is your car payment – what interest rate? I don’t have all the information but I bet you could be out of debt in 12 months – and setup to begin building a huge nest egg. I don’t know what state you live in – but if could get a house for around 100K? If so – your 3 year plan could be 1.) Get out of debt in 12 months. 2.) Buy a house for around 100K. Then after that (you would be 41 at that point) – but several thousand a month into retirement (because you have no payments – the world is yours).

Thanks for posting!!!

It sounds like you’ve wised up and are taking control of your finances and your future. It takes a lot of courage to admit you’ve made mistakes- but it opens the door to a brighter future. The great news is that with $200K of income at age 38 it is certainly not too late.
I wouldn’t worry about what you think others have- unless you have seen all of their statements you don’t really know. People that “own” a house may be very much underwater and have a variable rate mortgage that could cause them to lose their home. Do you really know how much your peers have saved for retirement? Many of them may have nothing.

>monthly non-negotiable living expenses total about $6745 (rent, car payments, groceries, etc)

That is a LOT- over $80K/year, most families do not gross that much. Hopefully you can change your lifestyle to have much lower non-negotiable expenses. This may require lifestyle changes- moving to a less expensive home, selling a car or giving up some luxuries. However, most families live on a lot less and are still happy.

It’s great that you can put 24% into savings that is a huge percentage to start off. However, I would knock out the credit card or other high interest debt first. Remember that paying off debt is an investment too. It has a known rate of return and isn’t taxable either. If the CC interest is 10% or more I would pay it off first before contributing to the 401K. With at least $48K/year I bet you could still contribute to the 401K this year after getting rid of the CC debt.

If you keep up the new determination to get your finances I think you will be surprised at just how fast you can turn things around.

-Rick Francis

Take care of EVERYTHING first before you save for your children's college. In the end there's always scholarships and student loans.

"Things have been quite the mess." The good news is you have a large shovel. At 200k, I think getting rid of the 59k in debt is in your near future. The children going to college can also work and save and work some more for their college education. You do not owe it to them.

I agree with the above. I'm not a total fan of Dave Ramsey, but agree it would apply nicely to this situation. I didn't hear you mention if you were now communicating with your children, setting good role models, as you said you and your husband didn't have. Ramsey talks about "changing your family tree". Maybe this would be your driving motivation to stay focused and cut some of the "wants", which is always hard.

Forget your credit scores. Clean up your mess, and they will be there, but you don't need any more debt till you clean up your mess anyways. And I agree about not necessarily paying for college, but understand that is always about as controversial as tithing, i.e. everyone has to make their own decision.

From you numbers, I'm betting there is at least one large car payment involved, with a corresponding large debt, and you may have to trade down to a "beater" car for a while.

With both ex military and two kids approaching college, check out the military scholarships, and all the details of the GI bill. I've heard that depending on circumstances, whether either of you used the benefits or not, how long you served, and others, sometimes it can be passed on to kids. I'm not an expert, but at least check it out. You also may or may not be surprised when at least one of the children of two ex-military wants to join up, and thus college may be taken care of. So again, focus on the debt, then retirement, and only college after that.

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