10 Mistakes That Can Derail Your Debt Payoff
2022 ж. 18 Жел.
235 992 Рет қаралды
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Thanks to the baby steps I’m debt free since yesterday, 🎉except the mortgage
Congratulations!! I can't wait to make my debt free scream!
Yehhhhhh @Joanne Way to go!
Congratulations!!
Woo hoo!! Congrats!!!
🎉 congratulations..
I rewatch these videos to use as encouraging reminders when I feel like I’m struggling. Thank you
We are on a fixed income and I have been paying off the bills, but don't have a bunch of money hanging around and I had two unexpec ted trips to the dentist and another one, 'planned' but before our monthly checks arrive that has to be paid. Also an unexpected furnace repair. But the good things is I have been whittling the bills down and hopefully it won't be so bad like it would have a couple years ago.
You can give your time also. Charity is not just money, volunteering is important.
I've been debt free for a long time now and now I'm tackling my mortgage I got 85k left in it... people on the internet always say to not pay it off but I dream of having a paid off home! Watching these gives me reassurance
There’s something about having a paid off home. It belongs to you. I’d say keep going you’re almost there!!!
Im guessing these people owe 500k
@@b.l.wilson9724Don’t forget that property tax every year. And you better hope you never have a squatter take over your home
Same here!
Doing the credit card balance transfer really helped me as moved my card to a card that was offering 22 months interest free so just done it to ensure that every payment I made was making a difference without being charged interest and ONLY done this to pay off the card quicker. Now it’s cleared I’ve closed the account and no longer have credit card debt.
We have done the same. It pays off faster with no interest or 1% even....our balance is going down faster than our old credit card that was 22% 😂😊
This is a point I don’t understand. If I bring my interest rate to zero and stay diligent with paying it off, why wouldn’t I?
@@halliemoyer agreed. We are still snowballing with no interest and don't have a card for that account even. I believe most of their philosophies but for some I do my own things but with gazelle intensity of course 😂🥳
I’m happy it worked out for you but it didn’t for me I’ll never do it again
I think Rachel really meant, if you do a balance transfer, keep hitting it with gazelle intensity. I took her point to mean that people don't pay it off as fast, if they have 0 interest.
The credit transfer helped us make real gains on one of our credit cards. We moved to a 0% interest so all of our payment went towards principal. Before that we were taking 2 steps forward and one step back with interest. If you’re intentional and stay intentional, it could be a game changer and it was more motivating.
1. Debt consolidation 2. Debt settlement 3. 401(k) loans 4. Paying off highest interest 5. Home equity line of credit (HELOC) 6. Not changing your lifestyle 7. Continuing to invest 8. Not giving 9. Credit card balance transfers 10. Waiting on someone else to pay off your debt
🐐
Doing the Lord’s work
MVP
Back in the day number nine was my biggest mistake. American way with good credit- so wrong!
These seem like the 10 commandments, The first 5 are focused on your relationship with God and the other five are about your relationship with others.
Getting rid of debt is a guaranteed return. Love it!
I have no debt and I’m still watching this 😂
Me too. I watch Ramsey solutions videos just for the pure entertainment value.
yeah i especially like stories of people up to their eyeballs in payday loans and timeshares
Lol same!
Meanwhile I'm mortgaged to the hilt 🥲
Same
Avoid emotional spending
That's right! Discipline is the key.
THIS!!!!
This is the hardest part right here 😅
This the one!
I did the debt avalanche (highest interest rate first). Totally worked for me. Not everyone is the same. You said debt snowball it is the "most efficeint way" to pay off debt, but even you admitted that isn;t true. It may be the most effective for many people (based on psychology, NOT math), but it is most certainly NOT the most efficient.
Thanks to the baby steps I am out of debt except for the mortgage (and that’s soon to happen)! There’s such wisdom and common sense in the baby steps!
I am asking God if I should continue to give while getting out of debt. I am so glad I bumped into this video and answering my question. I think God used you to answer me. Thank you.
I have been carrying credit card dept for no reason other than I didn't want to use my savings. I never thought about how it affects my thoughts towards my debt. I am paying off everything except my student debt, which will take more time. Thanks!
I used 401k loans at 4% interest, credit card transfers at 0%, and gambling on horse races to eliminate $120k in 2 years. I also kicked both my kids out of the house. They were 22 year old leaches. One got a real job and the other is the army's problem now. Worked great!
I completed BS1 and just paid my first debt. It feels good already
BS1?
I've balance transferred around $20k of consumer debt to 0% interest cards for a set number of months. Assuming you've broken the habit of living off of credit cards and are now much smarter with your money, balance transfers are a great way to save thousands of dollars in interest payments for anyone that finds themselves in my shoes. Thankfully I can now say I'm credit card debt free. One size does not fit all when it comes to personal finance but I still love what you guys do.
Same. I just transferred mine to a 0% interest for 18 months credit card. Saving $200/month in interest is life changing! I was paying off between $350 and $500/month on just one of the cards and still paying the same interest because of rising rates. 🙃 As long as I put the card in a file or cut it up and stay paying off with the same intensity and that’s a $2000 savings (for me).
Yup .. they are a huge help. I did the same and then I wanted to baby step my way out of paying this new 0% interest credit card. I was diligently following my repayment plan but then life struck. Life didn’t just give me the lemon it gave my the sack 😢 Had to stop my payment plan, lost money, and on top of that had to pull out another loan 😭 So now I gotta baby step all of this ..
It is very chancy.
It would be useful to study whether those that consolidate their debt to a lower interest rate actually pay off their debt faster. I don’t think so as I think it might make them feel less pressure to be intentional.
We did the HELOC not once...but twice.. ended up with more debt each time. It really is a behavior problem. I feel like I need to suffer and feel the pain of paying off everything to help this tough lesson sink in.
You can do this!
The pain is real !
Using Heloc with low interest rate to pay credit cards with high interests rates is a smarter way of paying off debts faster and cheaper. I did it and it worked. You just have to be disciplined to make the monthly payments. Goodluck 🙏
I think that what many are missing here regarding the use of a balance transfer to pay off higher interest rate card debt, is that many people who don't have discipline will then keep using the card(s) they just transferred the balance(s) from and end up with more debt. If you immediately close the old accounts or can tell yourself to leave those alone, then sure it can be a useful option.
I didn’t go for Easy I went for Simple I had a 10%apr CC that I got as a teen So I consolidated everything into this one, not to get a lower payment, but to get a consistent payment This allowed me to save a consistent amount to pay it in full in one go
Stop Investing yet Keep Giving. That’s seems counterintuitive. I understand it may be Character issues, but that has nothing to do with debt or building wealth. Plenty of bad people that are wealthy and debt free. I’d rather give once I fixed myself first.
Agree. A lot of this is blanket unthinking "follow my script only" stuff.
thank you so much for addressing these . There have been 3 or 4 that I have actually considered before and I am glad I chose not to after hearing your views. Thanks Rachel!
My dad is recommending Debt settlement, but I have had bad experiences with two different companies - one just took my money and the other one told us that we needed a new bank. I did do two 401K loans and they did help me out and I paid them back before I left the company, but I agree about it being a bad idea. Love your videos :)
This is a great video, but I have to say something about your sponsor Christian Health Ministries. It may be a great plan if you have no previous health conditions but if you have any, this is not the plan for you. This was sold to my parents as if it was health insurance. It is not. It says it right on the card. They aren't obligated to pay and if you have a history of anything it is not covered at all for the first two years of the plan. My dad had a history of "fatty liver" (super common, right?). He found out while he had the insurance that he had decompensated liver cirrhosis and needed a transplant. None of it is covered due to that fatty liver diagnosis. He had NO clue he had liver issues. He knew he was overweight, but he didn't know he was in liver failure. We had to wait for open enrollment to get real insurance while zero of his treatments were covered with this plan. It was the longest year of our lives. He couldn't even get his medicine paid for.
I did a transfer b/c my $13k was costing $350/month in interest. That’s $350 I could put towards debt. So went from 33% to 0% interest
Sorry if this is a dumb question but how did you do a balance transfer?
@@lizrozon6308 Oh, it’s basically applying for a new Credit card. Wells Fargo had a 18-21 months of zero interest introduction rate. When they approved me I called them and asked to do a balance transfer. They charge 3% but it’s worth it since you don’t pay interest for 18-21 months, and can tackle it easier. It’s important that you close your old card once you pay it off. Or else you will want to use it again and go much deeper into debt. B/c now you have an extra card. I also called the company that had me at 33% and told them I was having a hard time financially, and asked if they could decrease my rate for a few months. They got it down to 18% for 6 months, but the card is also locked and not usable. So that helps not to be tempted to use it.
@@chaselesser3191 thanks! I had no idea you could call and transfer like that. I appreciate the response!
@@lizrozon6308 Just make sure you aren’t going from a 18% to a 9% card. If it’s not Zero interest rate card with a long term, it may not be worth it.
I tried for years paying off debt by paying the largest interest rates. Did not work so I reversed it and it worked wonderfully and progress was seen and encouraging.
I'm glad you are teaching giving along the journey
Thank you. God's Love and Blessings.
Give a little until you can give a lot. I love this!
Brilliant advice Rachel!!! Excellent!!!
I have done almost all of these things wrong. I am overwhelmed
Unfortunately, the HELOC was my only way to keep afloat last year. I was reluctant at first but it was either that or move my family into a 5th wheel so we did what we needed to. Now we're actually making some progress with our debt and should be free of everything but the mortgage in 4.5 years or less depending on when I can go back to having full-time work.
Heloc is not for everybody
$8k is what I have. It’s been lingering for 10 years and still causing havoc in my life. I haven’t paid a dime or been in touch and the accounts have been closed/charged off in collections. I don’t know who owns the accounts now but I’m finally in a position to get this debt out of my life. After the $8k is paid I can scream I’m debt free until I purchase a home, then I will have a mortgage and that’s it.
Do a credit report check. They should be listed. You could also contact the original creditor.
I understand the giving idealism behind growing wealth. I have always been blessed to have enough where I'm handling my finances and if ever anyone needed help financially, I was able to bless them with that help. Some how, some way I always get the money back times extra. Sometimes from the person I helped or by other means, but it's always came back to me. It's true. Now, it is important too not to think you can be taken advantage of so my rule of thumb is, I helped you once, you pay me back I can help you again. You don't pay me back, that's all the help you get. I give without expecting it back, but I also am mindful that I'm not being taken advantage of.
I paid off my debt with a personal loan. It worked for me. It was a 5 year loan....paid off in 22 months. Less interest, not revolving credit and the fresh do over start is what I needed. Will it work for everyone...no.
So we are working on the first credit card. Shopping only on one day. Using grocery list. Not going out. Creating dates at home. We are still paying 10% tithes to our church first. Living on a budget. We have made changes in our lives and living frugally. Thanks for your video.
Great video. I made the 401K loan mistake years before taking FPU. Took me 2 years to pay it off and then I was finally able to start looking for a new job. Ugh. Just remembering that makes me ill.
I really appreciated the part about giving. We're still paying off debt and still give 10% to our church, as well as setting aside a little each month for giving in other ways. Sometimes I just think we could get through it a lot sooner if we took that money and put it towards debt every month. But I know giving is the right thing to do and really does shape our character. Thanks for the encouragement and reminder.
Well done! I’m in a similar situation, & titheing to put God first. It’s easy to think that tithe money could pay off debt faster… but God makes a way, & I keep improving my money mindset
I love all the 9 advice except the balance transfers...Two banks gave me 0% interest in 18 months so I split into two my balance from a high interest one and it really really helps! Instead of paying interest we were able to keep an eye on the goal to pay my debt before the 18months end...The first one was closed and we are near in getting debt free... We depleted our emergency funds when I got pregnant and have so many complications which I was deemed high risk and could not work. Thankfully my daughter(oh yeah,two kids and no more) is healthy and we were past that. We live below our means and we are simple family, it was just that whirlwind of chaos that got us with debt. Seeing my kids I know in my heart even though we came to this situation, I would not trade the world...Oh I am excited to shout to the world that we are debt free!
Thank you this is very helpful information. Subscribed ❤
I have used the credit card balance transfer a couple times to lower the interest i was paying. I transferred a 10k CC last year and saved thousands in interest.
I’m having a hard time supporting my family and I on ssdi. $41000 a year. My wife wants to get a job but I have a lot of medical issues, and she takes care of me and takes me to appointments. Our son is a sophomore in high school and is getting a part time job this summer
Working on it.Thanks❤
Great video! God Bless!
I need to quit buying unnecessary things. Handbags are my weakness. I try an justify I need this bag or that wallet bc it’s so pretty or this shade of pink is to die for. NO! I have enough!!! I need to stop. It’s like an addiction. I’m staying strong tho. I’m paying these cards off! I’m dodging these handbags left and right 😂 wish me luck and good luck to y’all!! 🍀
Watch “confessions of a shopaholic”. ! It may help too
best advice everrr! especially HELOC...no bueno!!!
Such great advice!
Giving is a Correct Principle. I testify of that. Being generous has blessed us tremendously. Right now we got a job that we don't have to pay neither rent nor bills in the best neighborhood and also the kids tuition in private schools. You have to live it to believe it.
Walked into every mistake in this list of 10 😅 Thanks so much for the wakeup call!
Good advice - yes, If doing debt settlement do it yourself - I had to as husband got sick - I got 30% on 2 cards so far - larger balances - will be working on one larger and smaller ones within a year based on hardship. The original creditors have been easy to deal with so far.
I love you guys!! I also understand and mindset of giving… but it doesn’t make sense to stop investing but continue to give. To me those are in the same category
Such wise council Thanks from the UK
Love your work!
I'm 41 and I've done it all, now very close to paying it off. 0% is how it started and 6 yrs later I still had tens of thousands in 0%, just have 2 car loans left.
Yes, no debt here for 5 years life is so good, but always give to your church always.
The only thing I don’t agree on is the balance transfer. I did this and had no interest for 24 months which made it a lot quicker and easier to pay our balances down, considering it was our top priority to be debt free and we stuck with the snowball it was a good move.
Debt settlement companies are a rip off. When I was in my early 20s I tried using a company and after 8 months of absolutely no progress, I cancelled the service and just knocked out my credit card debt as she said . . . starting from the least to the greatest.
What if I "give" to my investments or retirement plan?
Great video, thank you
I made 2 of these mistakes...never again. Never again ....
Thanks Rachel, to be honest I never ever had any debt or took out any loans until recently, the main reason I took out the loan was due to the fact that I got scammed on the Internet paying some guy on PayPal. After that I went on a downward spiral of taking out loans, also I have a student loan that I'm currently paying off so I am in the process of watching your videos and trying to get back to where I was before, I mean I used to have money left over and wasn't living paycheck to paycheck. I'm still struggling financially and still want a better life so I can support my whole family.
Thank You.
For me paying off the one with the largest balance is how it’s going to have to be. The interest rate is horrid, and paying hundreds in interest each month is sickening. The lowest balance one is getting the minimum payment and I’m throwing it all at the highest balance one to hopefully get lower interest with a lower balance.
They preach 100% about the debt snowball (understandably), but for people with discipline and a logical mindset, the debt avalanche (highest interest rate first) will save you money and get you out of debt considerably faster.
I did the consolidation about 10 years ago and it actually wasn’t bad. It was about 14k in money owed. When they do this you no longer pay interest on your monthly payments to the company you only a flat rate. Im sure other companies may be different but my payment plan was for 2.5 years
Yes! 😂the way u called me out 🎉 I’m paying off my loans ok!! I heard ya
HELOC is one of the best ways of reducing the debt burden. Think you have not taken a HELOC and continue to pay what you would have paid at the first place. It helps in reducing the EMI while helping in repaying the loan faster. Yes, it means I am risking my house, which actually be used as a source of motivation to get out of debt. Combine all the loans except a home mortgage into a HELOC and then treat as of it never happened. I did take help of a HELOC and was able to get debt free 39 months earlier compared to had I not taken the HELOC.
Thanks 🙏
What about paying the zero interest balance transfer pieces for a certain number of months then the smallest?
velocity banking is better than snowballing
Also don’t put to much onto your credit card at once when making payments when thinking I usually pay say 50 a check then you decide to do 150 to pay off faster then you run out of money down the week and have to use the credit card again .. be realistic with your payments and do 75 or 100 even and be real with yourself so you don’t go backward not forwards .
AKA writing a monthly budget
1000 percent disagree about the credit card transfers, just had one for 20 month with 0 interest
omg!! I didn't even know these things excited! I only have my car loan that I plan to pay off this year woohoo! I am going back to school and I am kind of scared of those payments
I used National Debt Relief back in the day and found it to be a HUGE help.
Did that actually work? I'm doing that right now
@@toxictrexx7716 yup! Got me out of around $6000 debt in less than 2 years. I searched around for companies like that and they had the best reviews. I found them extremely helpful.
@ColoradoKid303 that's good I really hope it works I have a bit more then that
I did a 0% balance transfer and became debt free. I would've paid an additional 5K (approx) worth of interest if I didn't move the funds, and it would've taken longer to pay off due to the interests increasing the balance every month. It doesn't make sense to follow her advice by avoiding the 0% balance transfer, as long as you can pay it off before the promotional period expires.
I have to disagree with you on the snowball versus avalanche method. Yes, the snowball method makes you feel more motivated because you see things getting paid off quicker, but in the long run, you spend more money and interest will use a snowball method versus the avalanche method and you actually pay off your debt faster when you use the avalanche method.
It doesn't matter what you think about it. It's already been proven the snowball method works way better in terms of paying off debt. Moat people just want to get out of debt, they aren't trying to mathematically maximize. The snowball method has been shown to get more ppl out of debt period.
@@Benedict00 I agree with you but when it comes to saving money and stuff paying off high interest first is yes less motivating but in the long run, you save money snowball is more motivational also yes I agree with you on that but if you’re looking at trying to save money in the long run avalanche is better than snowball
@@aviationking9512 Yeah i agree also, but ppl arent looking to save money, people struggling with debt are looking to get out of debt first and foremost. Getting out of debt has been proven to work way better using the snowball method.
I used a balance transfer and paid off all my debt in 9 months!
So good !!
What aboutt saving the money for the student loans before it resumes? So you’re waiting but you are not relying on them
So if you have a higher medical debt at 0% interest, you'd still pay it off before a smaller loan with interest?
All of this makes sense but why not the low intrest credit card for debt transfer? Like if I could I would. It'd cancel the debt on the other cards dropping my utilization, then I can make weekly payments on the 1 card.
What you said is true about owing your 401k if employment stops while having a balance but there’s also no credit pull for borrowing your own money and the interest paid goes back into your portfolio. Fidelity investments charges a poultry $35 processing fee per loan. Why pay a bank interest when you can pay it back to yourself?
Depends on who your giving to
There is some good advices here but, Always pay smallest interest first? Always? High amount $ for 40 years at low interest and a car loan for low amount and high interest you tell me i should pay house first? Getting out of debt is not a priority at all. Debt is awsome and i love it. I invest while in debt, and i'm not alone. You should read some books i sugest Robert Kiosaki is not about paying debt but to control it.
9:43 Yea my employer is actually paying 10k to my student loans this year, 10 next, and whatever is left the year after so I’m paying as little as I can on the student loans myself.
I did mistake number 1, by consolidating my debt I added $6k of new debt with interest on it 🤡 only thing that made sense was a 0% balance transfers. Also so many people say cut up your credit cards or put them away, that didn’t work, I ended ordering a new card eventually and start using it again adding more debt. Only thing that work for me was closing account immediately after paying it off. Can’t use it if it’s closed 😊
These are fabulous ideas. It is a great list if the person/persons are already disciplined. Most folks that have too much debt actually can not live up to these principals you have just espoused. If a person has a 'come to Jesus moment' then they can actually do these.
I have credit card debt that adds another $400 to my debt every month. Now what I owe the least on, is my treadmill and there is zero interest on that! Should I still pay off the treadmill first?
How do I get out of one of those debt settlement
Definitely start by paying off highest interest loan first
I question some of their advice. Balance transfers with no interest fo so many months. Also PSLF worked for me.
Why is she knocking on the Debt Avalanche where you work on the one with the highest interest rate? I’m working on the one with a large balance and high interest rate and the way I have it set up, we will be finished one month earlier than the Debt Snowball method AND saving over $4k in interest!
That may be mathematically, correct if we could do math, we wouldn’t be watching this channel would we small gains build encouragement and change habits
The majority of the “work” of paying off debt/personal finance is behavioral. The snowball is good at keeping you invested in the behavior of paying off your debts because you start small and get small wins that gives you confidence. The avalanche is daunting for most people.
Doesn’t mean it’s not a viable option for other people. The Avalanche motivates me more.
@@nickels.with.nicole, because for the majority of people it doesn’t work. Because they don’t have the steadfast behavior that it takes.
Because it's motivating to have a success. Paying off the highest interest is often the highest balance, so you're plodding along basically forever. In truth, some people have way too many credit cards or loans and the snowball is way more encouraging.
The avalanche method works for me
sorry but balance transfers are a FANTASTIC way to pay off debt faster without accruing ANY interest....she has no idea what shes talking about also debt consolidation loans are PERFECT to stabilize your payments ONLY if the interest rate on the loan is lower than the loans on your other debts...choose a longer term loan for lower monthly payments. that way you can make cash overpayments to the principal to pay off the debt faster.
I was out of debt but then always helping my kids by giving now I'm in debt again
this is my downfall also
I got a better job but I still feel stuck and yes I due take out the dang 401k loans there not helping my current situation. I do know by next April it’ll be paid off which is something I can’t wait for but still have my credit card debt that I have to figure out ASAP
I stopped listening when she invalidated the snow avalanche method of high interest first, which in the long run, actually saves you more money. I've helped a large number of people get out of debt using that method. I'm showing them the comparison to the snowball method and in every case, it's saved thirty to forty percent of interest paid and paid off faster.
I think the difficult part about the avalanche is the mental capacity to be able to tackle the largest debts first. It can be discouraging when you make a solid payment but barely make a dent in the largest one, which can at times be the one with the highest interest rates. For me at least it’s easier to knock out all of the clutter in the smaller loans first. But I also didn’t have much credit card debt with a super high interest rate.
@@99jdogxtreme What I have people track is the actual numbers dropping. Seeing your overall balance drop is every bit as motivational as watching accounts go away. A lot of it is how you package it. I don't disagree that it's a harder sell. But that's why I always show hard data.
It's not about saving money, it's about paying off debt quickly. The snowball will pay it off quicker and getting the wins along the way will help your confidence.
@xmusic2049 you are completely incorrect. In EVERY instance, Avalanche is faster than Snowball. The TLDR is because you shorten the amount of interest you pay, the more goes to principal, i.e. you pay everything off faster.
You should have kept listening - it isn't necessarily what is quicker, but one that is better for your stress level because it provides "wins" which will motivate you to keep going instead of giving up and accumulating more debt. I have also helped a lot of people with debt management in my line of work and that mental aspect is a huge contributor to whether or not the payoff plan is successful.
Debt consolidation is absolutely a fantastic idea for some people, especially if the loan is open.
There are excellent debt settlement companies out there. You can also settle it yourself in collections.. also helocs are the worst. You make interest only payments for years