Current Events/Get Out of Debt/Have a Plan

The economy isn’t growing as fast as economists first thought.  At least that’s what MSNBC ran in their business section on April 17, 2011.  The storysays that the predicted growth of the economy has been downgraded from 3.3 percent to 2.8 percent for this year because of a weak housing market, expensive oil, and the rising price of groceries.

Ya think?

Most of the stories I read these days, even in the mainstream media, are pointing to a bearish economy.  But come on, it really doesn’t take a rocket scientist to figure out the economy is in trouble does it?  Somewhere, somehow, all the wild spending is going to catch up with us and when it does I have a feeling it’s going to be nasty.  Will it happen around the end of QEII or will they come up with a way to kick the can down the road a little more?  Stay tuned…

What Can I Do to Protect Myself?

There is lots of advice out there about how to protect yourself and your investments from another market crash or an economic collapse.  Not being an investment banker or financial advisor I won’t bother to offer advice on investing; however, I will go so far as to say that if you’re in debt right now it’s time to get out.  Easy to say, much harder to do.  More about this in a minute.

First things first though – it’s better to have food and other supplies laid in than to have a pocketful of gold and silver.  Why?  Because if things get bad, such as hyperinflation for example, it’s better to have food and other supplies in place because that’s something you can immediately use.  After the initial crash – if there is one – most people are going to be more worried about getting something to eat than they are adding to the piggy bank.

If you have all your preps in place and want to put some gold or silver aside go for it, but if you don’t have either yet and you’re wondering what to buy with your extra cash I’d go for food and other supplies.

There are other disasters out there too that are much more likely to affect you.  Check out this post by Joe over at PreppingToSurvive.  He makes an excellent point about being ready for a job loss.

Get Out of Debt

Now, back to debt.  If you’re like most Americans today you have a house payment, a vehicle payment, credit card debt, phone and cell phone bills, cable, groceries, gas, insurance, eating out, and whatever else you might spend your money on.  Is it really possible to get out of debt once you’re in that deep?

In a word:  yes.

However, getting out of debt is like going on a diet.  It’s hard work, it involves sacrifice, and you have to keep at it for a long time in order to see it pay off.

Dave Ramsey has a program that’s well worth looking into if you’re serious about getting out of debt.  I used his program to do it and no, I’m not getting paid to endorse his product.  I did his program exactly as described and it worked for me.  Honestly, I don’t agree with a lot of the stuff that he says, but his get out of debt program works and I don’t have to be in love with the guy in order to follow his method.

Six years ago I had about 35k in credit card bills, which I’d brought on myself from stupidity.  To make a long story short it took me about five years to get all the bills paid off.  Here’s what I gave up:  cable, going out to eat, and spending money on anything that wasn’t necessary for survival.  I shopped at Goodwill, I bought an old pickup truck that I drove the entire time, I quit drinking, I had a side business in addition to working 40 hours a week, and I didn’t take any trips.  Entertainment was a free hike in the mountains right where I lived.  I sold a bunch of stuff and every extra penny went straight to debt.

I ain’t gonna lie to you.  It’s hard work and it requires a lot of sacrifice, but once you’re there… wow!  Being debt free is an awesome feeling and when you reach that point it’s worth all the hard work you put into it.

Here’s a hint:  if you don’t have a budget get started.  Don’t wait until next week.  Sit down right now and get started.  If you don’t have any idea of how to do it I’ll be happy to share the spreadsheet I used to budget and pay everything off.

Have a Plan

Plan to get out of debt.  Plan to have your preps in place.  Plan for when TSHTF.  If you have some idea of how you’re going to react when things go south you’ll avoid that big demon called Panic.  When people are crowding the grocery stores looking for food you’ll be home going over your preps and your plan, secure that at least in the short term you’re going to be ok.  Instead of reacting to a situation you’ll be one step ahead of the mob.

Set Goals

Don’t say, “Well, I’m guess I’m going to get out of debt now.”  Instead say, “I owe twenty-four thousand dollars.  I am going to pay this off by December 2013.”  Be specific in your goals and that will help your planning.

-Jarhead Survivor

BTW:

Do you have goals?  A plan?

Here’s my goal:  Mrs. Jarhead and I are expecting a new recruit in August.  My goal is have the hospital bill paid off before the end of the year.  How am I going to do it?  We’re already saving money for the bills and will put money down on it all at once and then pay as much as we can afford monthly until it’s paid off.

28 comments… add one
  • Templar May 20, 2011, 7:50 am

    All excellent advice, as usual. My wife and I got out of debt 20-plus years ago by selling the (mortgaged) house, working a total of four jobs for a year, buying 15 acres in the middle of nowhere, and building a house with our hands. (This can be relationship-straining, by the way). I truly believe that a self-built house is the only way to break the fetters of indentured financial servitude.

    Reply
    • Jarhead Survivor May 20, 2011, 3:47 pm

      That’s great, Templar. Sounds like your hard work and perseverance really paid off. 20 years ago? Awesome!!

      Reply
    • Joe May 20, 2011, 10:02 pm

      Wow! That’s great Templar! I followed the traditional method and bought a small house, sold it and bought a bigger one, and finally sold it and made lateral move to the country with 24 acres.

      In retrospect, I wish I’d have done something similar to what you did.

      Joe

      Reply
  • Matthew May 20, 2011, 8:44 am

    Do you consider 3 – 3.5 k a lot in credit card debt?

    Reply
    • Jarhead Survivor May 20, 2011, 3:48 pm

      Matthew – without trying to sound preachy, I personally think any credit card debt is too much. Some people might disagree with that, but that’s my personal philosophy and it’s worked for me so far.

      Reply
    • Joe May 20, 2011, 10:04 pm

      I’d agree with Jarhead, Matthew. Like him, I don’t want to sound preachy but it’s a slippery slope from 3.5k to 5k to 8k to 25k.

      Just my opinion, though.

      Reply
  • Prepared N.D. May 20, 2011, 8:49 am

    We paid off our variable rate debts first, even though it wasn’t the most efficient way for getting out of debt in our situation. I have a feeling that variable rate noose would tighten quickly and be a cash vacuum in the event we see some hot and heavy inflation. I wouldn’t necessarily rely on the general public being able to hyperinflate their way out of personal fixed-rate debts. The banks were bailed out once, they’ll probably get bailed out again and we’ll be asked to bend over and take one for the team.

    Even though I’m in the economic collapse camp, I wouldn’t completely shun the stock market and other traditional investments. I still contribute to a 401K and have assets in the stock market, if we’re all proven wrong, we could be missing one hell of a profit making opportunity. I would just prefer to be on a solid foundation where I’m debt-free, have a means of being self-sufficient, and have preps to rely on before chasing profit.

    Although I think the administration is delusional for pursuing green energy to the extent that it is, I think this would actually be a wise investment on a personal scale. Part of our game plan is to continually reinvest in ourselves and our self-sufficiency to lower those monthly bills and require less resources for living/retirement.

    As for those hospital bills, maybe you could convince Mrs. Jarhead to go with a midwife, it’s a lot cheaper compared to the hospital if you’re paying cash. Or if you’re really hardcore, you can deliver it yourself ;-)

    Reply
    • Jarhead Survivor May 20, 2011, 3:32 pm

      @Prepared – that’s awesome and I do the same thing as you do with money in a 401 K as well as other places. I also have a small solar generator setup that I’d like to start adding to. Sounds like we’re very much in agreement. Except delivering the baby myself. Uhuh. If my back was against the wall and I HAD to I’d take a swing at it, but if we have a nice safe hospital to go to I’m there, man!

      Reply
  • Austin May 20, 2011, 10:00 am

    Congrats on the bambino!

    I totally agree. People are freaking out about the economy and their first instinct is to save. I think thats a bad idea. If you have debt, they can come after you- take wages..etc. Also, debt is constantly accumulating interest. If you don’t have debt, your savings is subject to hyperinflation and you’re handing it over to banks that may irresponsibly loan it out and be unable to pay you back.

    As a parents of twin infants, its such a scary time to have young children. We’re trying to figure out right now how to be home owners without going into crazy debt. Its a complicated situation, but I think its best to not do what society tells you to do (take out a mortgage for the max you’re pre-qualified for) and instead do what is best for your financial future. If you’re in a SHTF situation, and you have all your preps ready, but don’t own your home….what are you going to do when you can’t make that payment and they take it away? But young people are in a tough position right now.

    Reply
    • Jarhead Survivor May 20, 2011, 3:36 pm

      @Austin – thanks for the congrats! I agree with everything you said above and would add that if you miss one credit card payment they’re going to nail your ass to the wall with a 25% or higher interest payment. Louis the loanshark doesn’t make that kind of profit!! The government wants you to borrow money because debt is the grease that keeps the financial machine turning. It’s good for the country, but bad for you. (At least in my opinion.)

      Reply
  • Kerg May 20, 2011, 10:29 am

    I started the getting out of debt on January 1st 2010. We are using the dave ramsey method. We aren’t cutting corners we are following it to the “Tee” We are using the envelope system and writing and budget every month. We started with $49,705 in debt. We have been working the plan for 17 months now and have paid off over $34,500. Our goal was to be out of debt in 2 years. We are almost there.
    I really think, if you want to be prepared for a emergency, being debt free is vital.

    Reply
    • Jarhead Survivor May 20, 2011, 3:40 pm

      @Kerg – hats off to you and my congratulations! I know exactly how hard it is to pay off this kind of debt and sounds like you’re just slaying it. Not only is it a good idea in case of an emergency, I just think that being debt free at any time is one of the smartest things you can do. Hey – I had all the fringes… big house, nice car, lots of stuff, expensive dinners, leather jacket and nice clothes. I still have some of the stuff, but it’s all six years old now or older! These days I still shop at Goodwill. :-)

      Keep up the awesome work! I love hearing stories like yours.

      Reply
  • Synn May 20, 2011, 12:29 pm

    congrats on the new little one! It’s funny that I read your post today, yesterday I pretty much paid off all my debt, except for my car payment. The ex husband left me with over 20k in debt and with only my income raising 3 kids it’s been a major struggle but we’ve done it! Now to tackle the car payment….

    Reply
    • Jarhead Survivor May 20, 2011, 3:42 pm

      Congrats to you on getting out of debt! That’s a huge achievement – especially with a mound of debt, three kids and only one income. It says a lot about your determination and dedication. My hat is off to you!

      Reply
  • Jeff May 20, 2011, 12:33 pm

    Regardless of what may or may not happen in the next 2/5/10/20 years your advice is EXCELLENT!!!!!

    I decided 2 years ago we needed to get out of debt when the bank refused to refinance our mortgage.

    We finally sold the house last year and bought a new one with no mortgage and have been aggressively reducing consumer debt ever since. 8k to go.

    I also agree that short term, it better to have food than gold. You can’t eat gold if something happens to the nations infrastructure that limits the amount of food in your area.

    Also, while I don’t personally drink (not for religious reasons, but because alcohol gives me a headache) I think keeping a few cases of Jack and Jose around for barter is an excellent plan. Has a shelf life of forever, it’s liquid calories in a pinch and liquid gold in the future.

    Reply
    • Joe May 20, 2011, 10:12 pm

      Ha! If TEOTWAWKI ever happens, that Jack and Jose may be the most valuable thing you own, at least in the first few months.

      Joe

      Reply
  • Jason May 20, 2011, 3:19 pm

    Jarhead,

    Quit drinking, are you nuts?? Ha, ha – that is a great move for many reasons aside from the obvious, congratulations.

    The biggest part about getting out of debt in my view point is the mental freedom. Sure its great to have reduced bills but it is so disheartening to go to work each day, be productive & walk away with the knowledge that a huge percentage of your efforts (gold) goes towards interest payments & foolish or needless purchases. I know this all too well …

    There was a point in my career where I made enough money to feed a small country BUT had bills (IRS tithing, business operating costs, idiotic lifestyle yada, yada) that ate up 95% of it. Sure I drove the $100K car & had many of the pointless accouterments but I was absolutely drowning in a sea debt & that was killing me. My life was complicated & the thrill was replaced with survival. I can tell you with clear certainty – it was not worth it.

    Today I drive a nice ’95 Mercury Marquis, got rid of the business without making money, eliminated the debt & make much, much less money and am far happier.

    My 2 cents? I could care less what the media says about the economy – eliminating debt & simplifying a life style is the way to go besides, you never see a armored car following a hurst & if your family is sitting around the lawyer’s table, foaming at the mouth to see who gets what in the will, you’ve created the wrong legacy.

    Great article Jarhead, thank you.

    Reply
    • Jarhead Survivor May 20, 2011, 3:55 pm

      Thanks for the comment, Jason and I agree 100%. I made good money – not as much as you apparently, but what good is it if you can’t keep a nickel in your pocket?? These days I make less, but am far happier. I can walk into a Walmart, look around and realize I can buy anything I want, but here’s the funny part: I don’t want anything! Once you live an austere lifestyle for awhile it just gets to be a habit.

      Ever read Thoreau?

      “I went to the woods because I wished to live deliberately, to front only the essential facts of life, and see if I could not learn what it had to teach, and not, when I came to die, discover that I had not lived.”

      Walden was the book that started me down the path of shedding all the extra things I didn’t need. Great book!

      Reply
      • Anonymous May 20, 2011, 5:09 pm

        Love Thoreau.

        The old saying is so true – it’s not what you make, it’s what you keep that counts.

        When I started out in business I had a lofty goal which included “things”. I figured you have really made it when you make X and drive Y & live on Z street.

        So there I was making X, driving Y & living on Z street and on my way to the hospital for emergency bypass surgery. I finally woke up, looked around and found myself detached from life – a near death experience has a way of identifying priorities as long as you listen.

        It did not matter how much I made, I was still chasing an illusion. I took the financial colonic and beating for better health & sanity and never looked back (except it was kind of nice having air conditioned seats – ha, ha). I enjoy life, my kids and smile at the guy who pulls up in the car like I used to have & think – better you than me.

        Lastly, believe nothing the commercials tell you – drinking light beer will not get you a Dallas Cowboy Cheerleader, driving a Lexus will not improve your life & using GoDaddy will not help you meet Danica.

        Reply
        • Jason May 20, 2011, 5:10 pm

          Oops that anonymous was me –

          Reply
  • Don Ruane May 20, 2011, 3:58 pm

    Read Dave Ramsey book in 2004. Did exactly what he recommended, been out of debt seance 2007. It works folks and it does take as long as you think.
    What a feeling. what I make, minus 50% for the Government, is mine to spend and save.
    Working with eFoods to develop my storage plan and working with a range safety officer to improve my aim.
    Congrats on NEWBIE, may it be healthy and never see this county down and out.

    Reply
  • JeanneS May 20, 2011, 4:20 pm

    Congratulations on the new sprat! Kids are so awesome — says the lady whose youngest is (FINALLY) 18. :-)

    I highly recommend midwives. They aren’t just for hippies anymore; both my girls were delivered by RN midwives (in a hospital) and their encouragement helped me to deliver without drugs — and I was back in my safe, comfortable, less-germy-than-hospital home in under 24 hours both times. With my second, I left hospital only 7 hours after giving birth! (No matter how clean you think your hospital is, it’s still filthy. Ask them about their MRSA rates before you check in! Ask them when their latest bedbug outbreak was. Spend as little time there as you can!)

    If you haven’t already made plans for the expense of diapers, and a diaper delivery service is available in your area, please check them out. They are quite likely to be more economical than disposables. Of course, the number 1 way to save money with a new baby (not to mention the best way to keep your baby healthy!) is breastfeeding. Whichever hospital you deliver at should have a lactation consultant, whose expertise should be used even if you’re certain you don’t need their help.

    Reply
    • Jason May 20, 2011, 10:50 pm

      BTW Jarhead – your wife supplies the breast for feeding ….

      Couldn’t agree more about the breastfeeding for the bambino, it is the way to go.

      Reply
  • Joe May 20, 2011, 10:15 pm

    Great advice, Jarhead! And once again, a big congratulations on the new recruit!

    And thanks for referencing my Most Likely Scenario post – glad you found it worthwhile.

    I completely agree with you on Dave Ramsey. I don’t know that I like his style, but his advice is spot on.

    Joe

    Reply
  • Chefbear May 21, 2011, 4:52 pm

    I think I am kind-of an odd-ball for my generation… I am 29, have NEVER had a credit card (and never plan to!), bought my first new vehicle almost 2 years ago (’09 Jeep Wrangler, wanted one since I was a kid), before that had bought old trucks which I fixed up myself and drove until they could be fixed no more, have & continue to hunt/fish to provide meat throughout the year for several years now, and have paid cash for almost everything I have ever owned (the JEEP is even my first car-payment).

    Maybe I am sort-of “old fashioned”, but I am a firm believer that if you can’t pay for something outright, you save up for it and then buy it when you can. The only exception I have to that, is purchasing my JEEP, which I sought a loan for to build credit… though I have little to no desire to use said credit! I have seen to many folks around my age completely destroy their lives and relationships by over-extending their credit purchases. I don’t quite understand why folks do that, or what makes that kind of lifestyle seem desirable.

    Not to “preach”, but I just cannot wrap my mind around why folks would get themselves completely mired in debt, just to “keep up appearances” or to purchase [insert stupid purchase item here… i.e. $100k car] just to look like some big-shot! Again, maybe it’s an “old-school” mentality, but I don’t care what someone drives, what their home looks like/where it is, or who’s name is on the label of their clothes… an idiot, is an idiot no matter what clothes they have on…. If you put a suit on a monkey, it’s still a monkey! Wearing fancy clothes, driving a flashy car, or owning the house-on-the-hill won’t change who you really are, it might make some people see you different, maybe even give them a more positive opinion of you, but in the long run those folks opinion won’t matter at all!

    Reply
    • gat31 May 22, 2011, 12:09 am

      l agree with ya chefbear l’ve been told l would make a lousy witness because l don’t even notice glasses, facial hair, tattoos, etc. BUT let them be a jerk and l remember. I’ve reduced myself to almost zero debt and none to businesses just friends. (sadly big ticket prep items they bought and letting me make payments on) and even that is less than 800 dollars. So get ahead of the game as much as you can. and good luck everyone.

      Reply
      • Chefbear May 22, 2011, 2:56 am

        Thanks Gat… I have a habit of noticing all kinds of unusual things about people, anywhere I go, all the time. My friends give me a hard time, because I can usually walk into a place, like a gas station, and describe in pretty good detail everyone who was around me or my girl after I leave. I don’t know if you have ever seen the show “Psych” on USA Network (the main character is a fake psychic who works for the Santa Barbara CA police department, he was trained by his Cop father to notice anything and everything, most of which is stuff other folks miss, which makes him appear to be psychic when he throws in a bunch of “mumbo-jumbo” “spiritual” talk and crazy gestures), but my friends joke that I could do that in real life! I can’t help it though, I notice stuff most folks miss… Like whenever I park somewhere, especially when I have to go into the city, I memorize the license plates along with make/model/year/color and distinguishing features (like damage, bumper-stickers and decals/stuff hanging in the windows) of the vehicles parked near me; This is just in case I get a new dent in a door, or scratch.

        This all started because I parked in a public garage in Downtown Richmond VA, something told me to remember the vehicles around my truck, not sure what but I did. It turns out that the person driving the vehicle that was parked to the left of mine cut his turn out of the space WAY to sharp… causing his bumper to drag all the way down the side of my old truck (from the driver-side door to the driver-side taillight assembly… which the jerk ripped out with his car!). That jerk caused roughly $2200 worth of damage to my truck; luckily I had kept “in the back of my mind” the guys tag number, vehicle description and actually saw him walking away from his car when I pulled up, so I gave all that info to the state police. They found him the next day, when he was pulled over for reckless driving (speeding) on I95, the troopers I had given the information to flagged his tag number so when the officer ran his tag number, it came back telling the trooper to detain him; The officer said that the passenger-side front corner of the vehicle was completely covered in dark green paint scrapings (my truck was Ford Dark-Metallic Jade), and he even had a piece of red plastic from my taillight assembly jammed into the space between his bumper and headlight assembly! Anyway, the guy received a reckless driving ticket (110mph in a 55 zone), a hit-and-run charge, destruction of property in excess of $1500, vandalism, another reckless driving ticket (for hitting my truck) and fleeing the scene of an collision… I went to his trial as a witness for the state, the judge made him pay for all of the damages to my vehicle, plus $500 for my time and the hassle (which put new tires on my truck! and bought me lunch that day). The jerk who didn’t know how to drive (obviously because he got popped driving 55mph over the speed limit and what he did to my truck while it was parked!) received 60 days in the regional jail (because it was his second hit-and-run conviction), had his license suspended for 2 years, got $2500 in fines, was required to do 500hrs community service and was ordered to re-take drivers education and the states “behind the wheel” class that is usually taught to high-school students when they are in the 10th grade…

        My point is that noticing, and remembering details in everyday life can be a HUGE benefit to you and others in your community! If I hadn’t remembered the information about that guy and his vehicle, I would have been stuck either A- paying for the damage out-of-pocket, which I definitely didn’t have at the time -OR- B- would have had to claim it on my insurance, which I would probably still be paying for in increased insurance premiums! There are many other times I can think of where noticing details could be a serious benefit, like a few years ago here in Central VA a woman noticed that a guy was carrying a strange-shaped item under his coat when he walked into a check-cashing joint… she called the local PD and they caught this guy before he could rob the them (it was found out later that he had committed 6 previous armed robberies, two of which he had shot several of the people he was robbing, after they had cooperated with his demands!), the strange item under the guys coat was an illegally modified double-barrel, sawed-off shotgun… Her noticing something “out of the norm” very well may have saved someones life.

        Sorry, I know that was a CRAZY long response to you Gat!

        Reply
  • Chefbear May 22, 2011, 1:46 am

    I heard a pretty good joke the other day in a movie I was watching, while typing a new post. It caught me so off-guard, that I had to move my laptop off of my lap, because I though I was gonna fall off my bed laughing! I don’t remember the name of the movie (It was some action flick, where a guy was trying to protect a woman and the baby she delivered just moments before, and the guy from “Kill Bill” (Bill) was trying to kill the mother, the hero and then take the baby, supposedly he is the father)… Anyway, the “hero” is driving along in a stolen car, when some guy in a $100k+ Mercedes (or something similar) cuts him off without using a turn signal… I have “road rage” issues with stupid moves like that, so to me this was hilarious! So the “hero” looks to the woman in the passenger seat and says “Do you know what the difference between a porcupine and a crazy-expensive car?!”… The woman gets a strange and confused look on her face and says “No, what?”…. Then the “hero” says “With the porcupine… the PRICK is on the outside!”

    Sorry, I am laughing just typing it! I know it’s kinda stupid, but it seemed appropriate considering some of us are discussing owning expensive cars… and in my experience, the folks driving those types of cars tend to think they own the road, and me in my JEEP (it was worse when I drove my 1965 F100!) have no right to be anywhere near him and his ridiculously over-priced, quicker/more “luxurious” than it needs to be, “look at me… I’m important”, penile compensation vehicle. Personally, I find that the folks who feel they “have-to-have” one of these types of vehicles tend to be lacking in some part of their life… again in my experience, most of them have a “need” to feel superior to those around them, want to show off their “success” or simply feel “little” in other parts of their life (not necessarily going back to my penile compensation comment).

    Reply

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