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Below are some frequently asked questions from people just like you. If you have a question that is not answered below, please contact our Customer Care Center at 888.22.PEACE.
Also try using Dave’s envelope system to help you spend cash where you’ve budgeted it to be spent. Take some envelopes, write the budget categories on the envelopes, and use only the allotted money to purchase specific things. When an envelope is empty, don’t buy anything else in that budget category.
Do it on paper, on purpose, before the month begins—and include your spouse! Then you’ll have a game plan, and you’ll start to understand what Dave means when he talks about having Financial Peace.
Pay the minimum payments on all of your debts except the smallest. Put any and all money left over—after you’ve covered necessities—onto the smallest debt. Attack the smallest debt, and pay it off as quickly as possible. Once the smallest debt is clear, start making extra payments on the next smallest debt. You now have more dispensable income because you have one less debt. Just like a snowball gains momentum as it rolls downhill, you’re going to gain tons of momentum and motivation as you move further along in your debt snowball. Learn more.
For instance, if you are saving for a car, use a money market account with a mutual fund company. Don't put money into a mutual fund unless you're going to leave it alone for at least five years. Your savings is not an investment.
Dave’s first investing principle is not to mess with investing until you’ve completed your first three Baby Steps. Then you are ready to invest 15% of your income. The second major principle is to never invest in anything you don’t understand. Don’t invest in something because your brother-in-law says, “You gotta do this!” Talk to your advisor, do your research and know the facts.
We are emotional beings. If we don’t see quick results, we feel like quitting and decide to move on to something else. The Baby Steps and the debt snowball help build momentum and maintain focus. By taking small steps, you will see quicker results. This helps you stay focused and motivated to stay on track. By paying off the smaller debts first, you will see quick results and have more income available to fight debt.
Investing is further down the Baby Steps. That’s because until you free your income from being spent on payments, you cannot fully use the power of investing. Your income is the most powerful wealth-building tool you will ever have.
It’s still important to start investing as soon as possible. The average time it takes people to get through Baby Step 2 is 18 months to two years. But you’ve got to get “gazelle intense” first and truly focus your efforts on becoming debt-free. Use your desire to start investing for your future as motivation to get debt-free!
Remember, don't get caught up in the numbers games. Focus on one task at a time. This process yields the quickest and best results, and Dave has used these principles for over 15 years.
You don't need or deserve it unless you have saved cash to pay for it. Remember, you can also negotiate with cash and get a far better deal. When this happens, 90 days is not the same as cash, now is it?
The way to get out of debt is to change your habits. You need to commit to get on a written game plan—a budget—and stick to it. Get an extra job and start paying off the debt. Live on less than you make. Becoming debt-free is not rocket science; it’s common sense and self-discipline.
You may be tempted by the companies that claim to be able to clean up your credit. Don’t go there. There are two basic problems with these companies. First, for purposes of getting a mortgage, going through companies that take your money and pay your bills will reflect on your credit as if you filed a Chapter 13 Bankruptcy. Secondly, only transactions older than seven years, or a mistake, may be taken off your credit report. A company that says otherwise is either lying or operating illegally.
Here are two suggestions. First, sit down with a counselor and work out a plan to get out of debt. Find counselors in your area who have been trained by Dave. Second, attend Financial Peace University—Dave’s 13-week program that will teach you how to make the right money decisions to achieve your financial goals. Find a class in your area.
Collectors will bluff you and try to play on your ignorance—if you aren’t aware of the laws. You have to remain logical and make sure you leave your emotions out of these conversations. If you start to feel emotional, politely end the discussion and ask them to call you back later when they can speak to you like a normal human being. Speak with them once every two weeks. Inform the creditors of this rule and tell them not to call too often inside the two-week window. If they do, then simply thank them for their call, hang up, and await their next call in the next two-week window.
The Federal Fair Debt Collection Practices Act is a federal act that outlines consumer rights, as well as the restrictions of creditor calls. Here are a few regulations addressed in that particular act:
You do have to make some kind of monthly payment to them. To find out how to get on a budget and eventually get these creditors off your back, get Financial Peace Revisited or The Total Money Makeover.
After counseling thousands of families, Dave and his team assure you that more marriages are saved over this one issue than any other. Agree on how you spend your money, and you will begin to feel a powerful sense of unity in your marriage.
Work part-time if you need the money. You could also try attending an affordable local college to complete your first few years of required classes. Then, if you can pay cash, transfer to the school of your dreams.
You cannot borrow your way out of debt! You get out of debt by changing your habits. Commit to a written game plan and stick to it. Maybe you need to get an extra job to start paying off your debt. Live on less than you make. It’s not rocket science; it’s just basic common sense mixed with disciplined behavior. Get started now!
In order to turn over the title, you will have to get intense and pay out of pocket for the difference. Or, you will need to get a small loan to make up the difference between the loan amount and the blue book value. In this case, you should try to borrow enough from your credit union to pay your vehicle off and get an extra one or two thousand dollars. That extra money goes toward the purchase of a used, yet reliable, vehicle until you clean up some of your debt. Because you are reducing the amount of debt by a drastic amount in just a short period of time, this is one of the only times Dave would recommend borrowing money to get out of debt.
If you just have a quick question, check out the Ask Dave section of our website for Dave's answers to common questions about life and money.