Money troubles

[Chris]

Folks, do any of you have any experiences with or knowledge of the the consumer debt consolidation services?  My brother has gotten himself in over his head and, unfortunately, I'm just a criminal lawyer who knows very little of the debtor/credtor laws.  he has high credit card balances, a house payment, child care costs, and the normal bills from life.  he's getting to the point where it's getting hard to pay the bills, and he's borrowing money from family.  I've done what I can, but I have my own budget to live within, as hard as that can be sometimes.

He's in a situation where he needs to use credit cards to put food on teh table, but then has to turn around and pay a higher bill to the credit company next month, which makes him more dependent on the cards to live on.  I've seen adds for the comsumer credit services and such, but don't know enough to warn him about the negative aspects.  He looks to me as the big brother for help, and I don't know what to tell him.  he mentioned bankruptcy, but that has so many pitfalls involved that I don't want to see him go down that road if at all possible.  On their faces, some of the debt conslidation/consumer credit counseling services seem like a good option, but I don't want to sell him down that road if there some pitfall I don't know of.  It's getting pretty bad.  He sold off all but his Taurus .357, and we're considering selling off Ping golf clubs ( a gift from out granfather), and some family heirloom guns, including a 4 digit serial number Marlin Model 39, to try and make some money.

All advice appreciated, whether on these options, or any financial advice.

[richyoung]

I have had good experiences with them - specifically Consumer Credit Counseling Service.  Bear in mind that most, if not all, of these services are in fact funded by a consrtium of credit providing companies, so there is an inherent conflict of interest.  That being said, they saved my butt.  Also bear in mind it WILL NOT WORK unless your brother understands that he HAS TO STOP BORROWING - even from freinds, pawn shops, signature loans, etc.  Furhter, the credit cards are cut up and the accounts put in a "no adds" status, so he better have some plan for feeding himself and family.  Why is he in such desperate straights?  Does he have too much car? Too much house?  More details would be helpful, as there are some debts, (taxes, student loans, etc) that even the services can do nothing about.

[Chris]

It's a combination of problems, in my opinion.  To start with, he bought too much car, but that's now paid off, but he has the repair bills of a ten year old car.  He bought too much house.  At the time, he was able to keep up with the payments.  but he furnished it on the card.  He and his then live-in significant other, now wife, decided to have a child.  Out of wedlock birth not covered 100% by his insurance.  Much of the costs for that child being born wenton the credit card.  Oops!  Here comes an unplanned second child, also out of wedlock.  More expense on the card for the birth of this child.  So, he's got about $50,000 in debt on various cards and a house payment that he's struggling to get by on.  Add to that a wife that isn't working a full time job...

Hey, I know he has his faults, he's made mistakes, but he's my brother, and I'm trying to help him out of a jam.

richyoung, they took the cards from you when you went with the services.  Did that impact your credit long term?  Did they work with you on a payment, or did you still have to pay the monthly payment amount as required by the credit card company?  (Thanks for teh help, by the way.  It is truly appreciated.)

[HankB]

He bought too much house.

It may STILL be too much house, and he should consider selling it and downsizing.

Alternatively, if your brother has been in the house for 10 years, he should have some equity in it - as much as I detest them on principle, in this case a home equity loan can probably be had at a rate for MUCH less than credit card interest, (he may even be able to deduct the interest on his 1040) so he can pay off the cards and substantially cut his costs that way, but THIS WILL ONLY WORK IF HE STOPS BUYING THINGS ON CREDIT!!!!

And I don't mean reduces his credit card purchases - he has to stop or he'll never get his head above water.

I suggest you sit down with him and go over his budget, item by item, and figure out exactly where each dollar goes. Have him set up a budget - and check every week to be sure he sticks to it.

(BTW, no more "unplanned" kids - tell him to take cold showers instead.)

[AJ Dual]

With a little information, he can do "credit counseling" himself. All they do is set up the agreements with the various cards themselves with a streamlined back-door process. There is nothing that prevents you from contacting all your creditors yourself, and that extra $50 a month fee can just go to the balances instead.

Perhaps he should look up David Ramsey. There's other good "debt systems" out there as well, as long as they have a basis in common sense, they'll all work if you follow them.

The one "controversial" aspect of Dave Ramsey is that he advocates knocking out some smaller balances first for the psycological boost having things cleared up, and having fewer bills and paperwork coming into the mailbox, gives the debtor. This goes against the pure mathamatics of the situation, as based on rate and balance. This method can cost more, and leave you in debt longer. However, Dave Ramsey figures (correctly, IMO) that the kind of people able to take a purely mathematical "hard nosed" approach to beating down debt aren't in debt in the first place.

The other thing is he needs to cut all unnecsesary spending now. No cable, no broadband, no eating out, no going out for lunch at work, etc. and that money needs to go. A second job with all income applied to debt might be a good idea. Also, the busier you are, the less you spend.

Also, "medical debt" is the lowest on the debt totem-pole, as far as paying it goes. It dosen't have interest, and in the "real world" when a human being is making credit decisions on your fate, medical debt counts against you the least. There's an unspoken assumption about medical debt in "the industry" of "What were they going to do, die?" so the priority should be: Mortgage, Car, unsecured interest-bearing debts ranked by rate and balance, and then medical. It won't help him now, but he should stop paying medica expenses on credit NOW, if it comes up.

And, he should resist the temptation to refinance or consolidate debt on his house, unless as Hank B. says, he get's some discipline. No matter how bad his credit is, with the proper legal manuvers, he'll at least have a roof over his head. Not so if that debt gets refinanced into a mortgage.

[The Rabbi]

First thing he needs to do is set up a budget.  He needs to determine exactly how much money he brings home every month.  He needs to include any bonuses or whatever he gets regularly on a yearly basis, but spread that out over 12 months.
Then he needs to get a handle on where he is spending money.  Most people have no idea what they spend on lunch every month.  They'd be amazed.
Then he needs to see how much he can cut back.  Turn off the cable TV, dont eat out, etc etc.  
Then balance the remaining outgo and income.  If he still cannot make ends meet then he needs to look at bankruptcy options, either Ch.7 or Ch.13.

[Brad Johnson]

Ditto what Rabbi said. Can't do anything until you know where you stand.

List all liabilities, balances and minimum payments.

List all equity, estimated market value (real, not imagined)

Sit down and make a list of what you need vs what you want. If you don't need it, sell it, rent it out, or throw it away (if it's costing you something to keep it).

Now set him straight on problem vs inconvenience. Not being able to buy that double latte at Starbucks is an inconvenience. Not being able to put food on the table is a problem.

Oh, and remind him that "food" does not include eating out. Rice and beans may be boring as hell, but they are cheap, easy, and nutritional. He should prep the family for a little change in dietary habits.

Look at everything on a net basis. Example - ten year old "expensive car". Can he sell the older car for X, buy a lesser vehicle for Y, and net out a positive balance (even if only a couple hundred dollars)? Same goes for the house.

If possible, do some balance shuffling on the credit cards to take advantage of their 6-12 month no/low interest balance transfer offers. At least it will help slow the hemorrage a bit.

And most important, when you find yourself in a hole, STOP DIGGING! Every time he says "We can't do that" in response to a suggestion about a downsize/reduction, reach across the table and smack him. You can do anything, it's a matter of wanting to bad enough. Heck, I spent a couple of years on a $30-a-month food budget just to make ends meet after my ex split. I have no sympathy for anyone who claims they "can't" live with something.

Brad

[Iain]

Nearly got a job doing this earlier this year. Job was with the Citizens Advice Bureau, essentially a grant funded organisation that provides free (at the point of use) help to people with all kinds of issues, legal and suchlike. Their debt advice service is pretty highly regarded, no costs and they liase with creditors and the like as long as you stick to their pre-agreed budget. Is there an equivalent organisation?

[auschip]

Also note, that many people consider CCC the same as a bankruptcy and it stays on your credit rating the same.

[garrettwc]

It's a combination of problems, in my opinion.  To start with, he bought too much car, but that's now paid off, but he has the repair bills of a ten year old car.  He bought too much house.  At the time, he was able to keep up with the payments.  but he furnished it on the card.  He and his then live-in significant other, now wife, decided to have a child.  Out of wedlock birth not covered 100% by his insurance.  Much of the costs for that child being born wenton the credit card.  Oops!  Here comes an unplanned second child, also out of wedlock.  More expense on the card for the birth of this child.  So, he's got about $50,000 in debt on various cards and a house payment that he's struggling to get by on.  Add to that a wife that isn't working a full time job...

Hey, I know he has his faults, he's made mistakes, but he's my brother, and I'm trying to help him out of a jam.

It's not a combination of problems, it's one problem. Maturity, or the lack thereof. Sorry, I know that's harsh, but it needed to be said.

richyoung, they took the cards from you when you went with the services.  Did that impact your credit long term?  Did they work with you on a payment, or did you still have to pay the monthly payment amount as required by the credit card company?

That will only prevent in store purchases. If he knows the security code on the back of the card, the expiration date, and his account number, he can still buy all kinds of stuff online.

This has to be about changing the way he and his wife think. And I did say him and his wife. They are in this together, he can't do it alone.

I'm going to recommend two books to you. Pick up copies for him and maybe for yourself too. "Financial Peace" and "Total Money Makeover" by Dave Ramsey. Mr. Ramsey has a syndicated radio talk show about personal finance. I checked both books out from the local library because I didn't want to be out any cash if the books weren't worthwhile.


This guys knows his stuff. He knows from experience. He was a hot shot real estate type with a multi-million dollar fortune. But it was all on paper and mortgaged to the hilt. He lost everything after the bank called the notes. He probably broadcasts on a station near you, or you can listen via the internet at www.daveramsey.com.

He offers a lot of helpful advice and can explain things in a way that the average person clearly understands. There are sections in the book written by his wife describing the emotional side of the situation, the fears, everything that goes along with it. He's about more than just the money side, he helps you understand your own heart and mind, and how it caused you to get where you are in the first place.

I'm working the program now just from the books I read, and I can already see light at the end of the tunnel. And I'm pretty sure it isn't a train

[richyoung]

richyoung, they took the cards from you when you went with the services.  Did that impact your credit long term?

Yes, somewhat - but not NEAR what a bankruptcy or default would have.  Plus you have to look at it somewhat ruithlessly - buying on "credit" is what got you there in the first place, so who cares if you can't buy on credit?  Especially if you have a house already mortgaged.  If you can't pay cash, you can't afford it.

Did they work with you on a payment, or did you still have to pay the monthly payment amount as required by the credit card company?

They worked with me on a paymenti - there was some back-&-forth when it forst started.  Big thing is you send ONE money order (no checks!) - out of which 5 or 10 dollars a mounth is charged to run the program.  Took me about 33 months to get out of seven grand or so of debt, including medical bills.  Was able to get a mortgage for a house 3 years later.

(Thanks for teh help, by the way.  It is truly appreciated.)

De nada.

[grislyatoms]

Good advice here, as always.

Regarding living within a budget, it worked much better for me to gradually cut down on luxuries.

It took me about 5 years to get used to doing without, but I have cut cable tv, (I buy/rent movies now) internet service, home telephone (I have a cell with unlimited calling and long distance), magazine subscriptions, affiliations with various organizations, keep the thermostat at moderate temps, etc. Eating out frequently is like throwing money in a garbage can. I avoid processed / pre-packaged food also, too much money for what you get and cooking from scratch is healthier anyway.

Anyway, if I had to give all that up at once it wouldn't have worked. I know me, I would have felt "deprived" and would have just blown the money elsewhere.

[Chris]

I'd like to thank you all for the advice you're offering here.  I guess I've been lucky in that I haven't really lived beyond my means, and I have a wife that lives the same way.  yes, i can fault my brother, yell at him until I'm blue in the face, and chastise he and his wife from now until 2007.  But none of that will help with his problem.  And, I don't want to see my brother, his wife, or my niece/nephew on the street.  that's why im trying to learn about these things, so i can offer help.  

That said, I hope I can impose on you all for more information.  I tried calling a local Comsumer Credit service, and all they did was first deny that I was really asking about my brother, then hang up when it was obvious I wasn't signing up for the services.

1.  Those of you who have been through this, or done without credit cards...what do you do whan the unexpected expense hits, like an unexpected car repair?

2.  Those who reccomend swapping from card to card to take advantage of low apr, is it worth splitting the balances if necessary to cover the whole amount?  In other words, dividing the $30,000 between two or three cards/companies to take advantage of the rates, or is it better to stick it out wit the one you already owe, and try to negotiate a lower rate?

3.  For those who advise doing without/living minimally until the bills are paid off, did this include selling off firearms and limiting range trips?

[The Rabbi]

3.  For those who advise doing without/living minimally until the bills are paid off, did this include selling off firearms and limiting range trips?

It would depend on the firearm.  If it were my 12 ga pump that was my home protection gun then no.  If it were my $900 Kimber safe queen then yes.  It gets back to "what do I actually need vs what do I want."  Limiting range trips?  Yes.  Limiting anything that would be classed as "leisure."

I'll mention the Nashville library has a good movie selection.  I imagine other public libraries do too.  I cant calculate how much money I have saved on movies by getting them through the library.

[Brad Johnson]

1.  Those of you who have been through this, or done without credit cards...what do you do whan the unexpected expense hits, like an unexpected car repair?

2.  Those who reccomend swapping from card to card to take advantage of low apr, is it worth splitting the balances if necessary to cover the whole amount?  In other words, dividing the $30,000 between two or three cards/companies to take advantage of the rates, or is it better to stick it out wit the one you already owe, and try to negotiate a lower rate?

3.  For those who advise doing without/living minimally until the bills are paid off, did this include selling off firearms and limiting range trips?

1. You deal with it on as as-needed basis. As part of the strategy keep a few hundred dollars in cash readily available for unexpected expenses. If cash is too much of a temptation, have him give the money to someone who will keep it for him and not release it unless there really is an expense needing funding (a trip to Chuck E. Cheese's is not a necessary expense).

2. If you have to spread the balance, so be it. The first goal is to minimize monthly obligations so you can use current income more effectively.

3. Yes.


The basic methodology is dirt simple - if it doesn't involve the three basic necessities of food, clothing, and shelter, it is automatically a "want" and not a "need". And the three necessities don't mean Applebee's, The Gap, and a home on the 8th tee. It means "the minimum amount to meet the immediate demand".

One of a family's largest expenses is food. For what the average family of four spends eating out once they could budget home-cooked meals for a week. Does your brother or wife cook? If they don't they need to learn the basics. Get them a Betty Crocker cookbook and a subscription to Southern Living or Better Homes and Gardens for Christmas.  Also, Campbell's soup has a recipe book that's dynamite. Easy stuff that can be prepared in no time with on-hand items, and it tastes great.

In their position grocery lists are not an option, they are mandatory. They are going to have to plan meals and stick to it. They may have to spend a little more at the grocery store and buy in bulk, then plan their meals around what they have until it's used up (I'm single, but I still buy in bulk and freeze/store so I have it on hand).  This is a toughy for many folks, especially in this day and age where loading up the fam and heading to Chile's three or four times a week has become a way of life.

As for entertainment, that's a toughy, especially when you have children in the mix. Parks, fun local (free) events, etc. will be your best bet for out-of-the-home events. Have them get a library card. Most libraries have a stock of videos and games that are available for check out. A lot of people (myself included) will counsel you to ditch the cable and rent movies on demand. For a big family I think I'd keep basic cable. For the $35 a month you spend on basic you have all the history, science, cooking, entertainment, news, etc. It salves the desire to go and rent a bunch of stuff at $1-3 a pop. It also gives you something to do as a family (these days there are some pretty entertaining things on cable weeknights). Sure, you're staring at the TV, but at least you are together and you're not spending money on something else.

The big question at this point is how much equity do they have in their house?

Brad

[HankB]

Assuming my helpful brother put me on a budget that left me $200 a month to spare, I'd put half of that towards paying down my debt, and half in an "emergency only" account for things like unexpected car repairs.

3.  For those who advise doing without/living minimally until the bills are paid off, did this include selling off firearms and limiting range trips?

Unless I had enough value tied up in my gun collection to put a sizable dent in my debt, actually selling off firearms (or any other compact, portable assets) would be very low on my "to do" list if I were flirting with bankruptcy. I'm not familiar with bankruptcy proceedings, but I've heard that they can take almost everything you have - that they can find! - to settle debts. It would be nice to have something left when starting over . . .

Range trips, restaurant outings, trips to amusment parks & the movies, country club & golf memberships, cable TV, premium phone services, magazine subscriptions, XM or Sirius radio service, Itunes downloads, etc., would be halted until I got my head above water. Maybe I'd "reward" myself with a range trip for every $5000 I successfully took off my debt load . . .

I don't have most of these (memberships & such) now, but a person who's a) in deep financial trouble; and b) unwilling to do what it takes to dig himself out, is headed for disaster.

(BTW, I know you mentioned he's your brother, but I strongly suggest you do NOT co-sign any loans with him. )

[mfree]

Also note, that many people consider CCC the same as a bankruptcy and it stays on your credit rating the same.

That's only partially true. I voluntarily entered CCC a few years ago because I saw the writing on the wall before I pulled even a single late payment. My rating dropped to the high 500's, merging into the 600's as my ratio improved.

A couple months ago, I got an unsecured loan with my credit union (I have my mortgage through them, which likely helped the chances) and paid off all my credit accounts except one (which i'm doing myself). Now, in theory, that loan is treated as a revolving account by the credit agencies so my score shouldn't have improved; however once it hit the agencies my score leapt well above 700, exact number I can't recall.

I'm left to assume that the moment I left CCC it ceased being a detriment. That beats the heck out of the 5 year stain.

[Chris]

Again, thanks to all for the continued advice.  he's got about two or three years of equity, if you call it that, in his home.  I'm afraid he got suckered into one of those deals by the pretty lady at the builder's demo home, who convinced him he could afford the extras like fancy cabinets and whatnot.  About a quarter of a million dollar home.  But, needing three or four bedrooms, he's not going to be in much of a position to buy down.

As for co-signing for loans...no thanks.  I'll help feed his children (and step children), but I cannot afford that.  I'm struggling to make my own ends meet, thank you.  Believe it or not, not all lawyers are getting rich quick, especially those who actually choose public service careers.  try paying off almost $70,000 in student loans, the wife's$45,000 in student loans, a mortgage, child care, and put food on teh table and gas in the tank every day.  Add two children that grow like fertilized weeds, and you'll see why I haven't bought a gun in several years...

(Sorry for the porr typing...I have a secretary that fixes the official documents.  )

[garrettwc]

1.  Those of you who have been through this, or done without credit cards...what do you do whan the unexpected expense hits, like an unexpected car repair?

That is the first step in the program I was referring to. You build a $1000 emergency fund to in cash to cover things like this so they don't bust your budget.

This assumes of course that all debts are current and you are not being slammed with late fees. You have to do that first. Then you make the make the minimum payment until you have the emergency fund. After you have the emergency fund, then you start tackling the debt, smallest balance first. After that one is paid off, you take what you were paying on it and add to the minimum payment on the next smallest, etc until you are all paid off.

2.  Those who reccomend swapping from card to card to take advantage of low apr, is it worth splitting the balances if necessary to cover the whole amount?  In other words, dividing the $30,000 between two or three cards/companies to take advantage of the rates, or is it better to stick it out wit the one you already owe, and try to negotiate a lower rate?

Tread carefully, and double check your math. The low rates are only introductory usually, so if it won't pay it off before the introductory period is over, he may be worse off payment wise in the end.

3.  For those who advise doing without/living minimally until the bills are paid off, did this include selling off firearms and limiting range trips?

As someone said, you should keep your self defense weapon, but the safe queens need to go. Range trips? Dry practice is free, and makes you a better shooter.

[richyoung]

Again, thanks to all for the continued advice.  he's got about two or three years of equity, if you call it that, in his home.  I'm afraid he got suckered into one of those deals by the pretty lady at the builder's demo home, who convinced him he could afford the extras like fancy cabinets and whatnot.  About a quarter of a million dollar home.  But, needing three or four bedrooms, he's not going to be in much of a position to buy down.

What's his mortgage payment?  What does a 3 bedroom tract house rent for in your neck of the woods?  FWIW, a new, doublewide thrre or four bedroom prefab should be around 65K - if he can find land to put it on cheap.  If inflations and equity combined can let him pay cash for that if he sells out, he can eliminate his mtg completely, might have to commute further tho.

[Brad Johnson]

he's got about two or three years of equity, if you call it that, in his home.  I'm afraid he got suckered into one of those deals by the pretty lady at the builder's demo home, who convinced him he could afford the extras like fancy cabinets and whatnot.  About a quarter of a million dollar home.  But, needing three or four bedrooms, he's not going to be in much of a position to buy down.

If the market in his area has appreciated 3-4% per year he should break even on the sale.  Sell that sucker!  Get out from under the $2500/month payment. Get a $1200 per month rent house for a couple of years. Take the $15K/yr savings and start knocking the snot out of the debt. On $50K in debt that's a 3.3 yr payoff. Plus, he's gotten out from under the liability of ownership if the AC system decides to have itself for breakfast one morning. Once he's done paying off the debt he can take that $15k yr and save it against buying a more modest home in 4-5 yrs.

needing three or four bedrooms

Need? My grandfather was one of NINE kids that grew up in a two bedroom farmhouse about the size of my garage. So shove in two kids per room. Mom and Dad get to share a room. The kids can, too. It won't kill them. I promise. They might actuall benefit from being forced to share space with another human being on a very personal level. I had a few roomates in college that sure could have used the experience.


Your brother's American Dream has turned into the American Nightmare. If he wants to get out he can be completely done in under 4 years, but it's going to take some sacrifices, diligence, and guts. It won't be easy and definitely won't be all fun and games, but it IS do-able. And in a shorter time than he thinks.

Brad

[TMM]

Unfortunately, i can't really help you, but one thing i have to say, do NOT sell off ANY guns that have ANY sentimental value to you. you will always regret it.

~tmm

[caseydog]

Here is a paste of a post I made about a year ago on this subject...


One of the easier ways to deal with credit card debt and still be able to look in the mirror and smile before you're completely buried : Take your CC bills to a small office lawyer , ask him to write requests for payoff to each company/bank. Typically when a lawyer requests these for you the payoffs will be between 1/2 and 2/3 of your full balance stated on your bill (more or less depending on the age of the debt and accrued interest).
Write the payoff amount on each bill and take the bills and the letters returned to the lawyer to your local bank , tell them you need a debt consolidation loan , show them the bills and tell them they can pay them directly. Of course the state of your credit history will determine how much you can get unsecured at the bank.

Typically if you have been paying the CC bills on time so your credit is intact you'll get a loan at about half the interest rate or less compared to the cards, your payment will be half or less than you were paying the CC companies , and your term will be fixed so in 3 , 4 or 5 years you are free and clear and you didn't welch out , you negotiated your way out. Everyone is happy , the CC company , the bank and most of all you. You don't take a hit on your credit report. A lawyer friend told me about doing this for a few folks , and I recently recommended a good friend to him , he wanted to get in a position to buy a house in a few years but he couldn't get rid of the CC debt fast enough even though he was paying 50% over the minimum , the interest had him backpedaling. Now in less than 3 years he'll be free and clear plus he's using the extra money he has now to save for a downpayment.

CC companies fight giving up principal , but they are pretty flexible when your debt is aged and you paid in most of the original principal (even though your balance looks otherwise). So if your debt is young , don't expect this to work as well.

Ray

[Northwoods]

My wife and I are going through Dave Ramsey's Financial Peace University class right now.  Only reason we're not totally out of non-mortgage debt yet is to do so I'd have to sell a bunch of mutual funds.  I already have sold a bunch, and if I sell any more I'll push myself into the 25% tax bracket which will trigger a tax rate on the cap-gains of those mutual funds of 15% instead of 5%.  So, in January I'll be selling enough mutual funds to pay off everything left besides the 0% credit cards that we're on track to pay off before the interest rate jumps to 9%. 

In total we'll have paid off something like $48000 in non-mortgage debt (combo of student loans, home equity loan used to pay for a lot of improvements, car loan, and credit cards) by this time next year.  We started about a month ago.

Here are the "Baby Steps" to financial peace that Dave recommends (preamble to all this is to make sure you're current on all debts before doing anything else):

1: $1000 emergency fund - This is Murphy Repellent.  It must only be used for true emergencies and is intended to keep those emergencies from going on a credit card and compounding the debt problems.

2.  Debt Snowball - Pay off all debts starting with the smallest balance.  Make the minimum payment on everything else and get "Gazelle Intense" about finding the money to attack that smallest loan.  Sell stuff, get a second (or third) job, use your budget to find waste and cut it out of your spending.  Every time a debt is paid in full add what you were paying to the next one in line.  As you go the total being paid will gather size like a snowball rolling downhill.

3.  Save 3-6 months in living expenses - Additional Murphy Repellent.  This is what will you keep going when you get laid off, or have a major uninsured medical expense, etc.

4.  Invest 15% of gross income in Roth IRA's and 401k/403b type plans. 

5.  College funds for the kids/grandkids

6.  Pay off the house early.

7.  Build wealth and GIVE.

Part of being able to accomplish this is getting onto and staying on a budget.  What Dave recommends is to do what he calls a "Zero-based" budget.  With this you spend/allocate every single penny of your income before it arrives.  The whole idea is to tell your money where to go rather than wondering where it went.  Once you do this, and stick to it for at least 3 months (about the minimum amount of time most people need to shake it out and get something that really works) you'll find that it's really a good way of budgeting.  One important thing to make sure you get into this budget is "Blow Money" or "Mad Money" or "Discretionary Money" or whatever you want to call it.  You WILL blow some money each month so you might as well plan on it.  Again this is part of telling your money where to go, rather than wondering where it went.

While some people will argue that the "Debt Snowball" is more expensive than paying the highest interest rate debt first, yes that probably is true.  But financial peace is only 20% knowledge and is 80% behavior.  He recommends the snowball method since getting those little victories will motivate people to keep going.  Plus, for those that are struggling to even make minimum payments, being able to knock out a few small debts can give them that edge in payments to make noticable progress when they get to the bigger ones.  And, I think it probably does speed up the time needed to get most people out of debt and therefore, in the long run probably puts them ahead.

[Ezekiel]

Sounds like some excellent advice.

Single, perhaps esoteric, caveat: the Mental Aspect.

Having, earning or spending lots of money doesn't make you special or important.

I am not applying it in this case, nor am I aware of anyone else doing so, but such -- often -- needs to be taken into account when looking at the totality of the situation.

(I know.)