Escaping the cycle of debt.

That's pretty much how we do it, except we do use Netflix (also a pretty decent value if you use it a lot) and I have a data plan on my iphone. My 1998 Corolla just had a $500 repair, so I'm starting to think the repair death spiral is imminent. Our 1994 Camry is still going strong-ish.

I got carried away with credit cards in and after college, and learned my lesson.

I'm similar, except I'm not a miser. I just don't spend money on things I don't care about. So, for example, I have a fast internet connection and a smartphone with a dataplan, and I pay a cleaner to clean my house every two weeks, but pretty much my entire wardrobe was bought 50% off or more. In addition, I don't have any "if I get a loan..." caveat in my car-buying plan. I buy the best car I can afford with the money I have in the bank, period. My first car cost $3100, second was $6600, and it was only a few years ago that buying new would've been an option (I chose to get a two-year-old Yaris instead). The best way to stay out of debt is to not get into debt. Would I have saved money in the long run getting a loan instead of buying a car that was 16 years old and only lasted three years? Maybe. But then I would've had loan payments to worry about when I got laid off.

However, that's all just me being me. Left to my own devices I will save about $3000 a year, regardless of how much I earn. The reason I'm in a way better financial position now than in my 20s is automatic savings, thanks to the Wealthy Barber. I put 10% of each paycheck into my RRSP and 10% into non-retirement savings before I ever see the money. My spending has adjusted accordingly, but instead of only saving $3000 a year I'm putting away over $20,000. And really, that's the only change I've made. I've read a lot and learned a lot about finance since I started taking an interest, but the single thing that made the biggest difference was setting up an automatic savings plan. What you do with the money after you save it is a secondary concern, the main thing is spending less than you earn. The easiest way to do that is to put the money in savings before you ever see it, so it doesn't even feel like you ever had it to spend.

Making a salary of around $100K a year helps too.

Not really. Percentages apply to all numbers equally well. When I was earning half what I do now, I was obviously saving less and spending less, but the mechanics are exactly the same. If you believe that you can't afford to save 20% of $30,000 then you will still be spending every penny (or more) when you're earning $40,000, 50,000 or 60,000.

If your question is "how can I become a millionaire by 50" then obviously increasing your income is a big part of it. If your question is "How can I pay off my debt and build up a nest egg to smooth out financial shocks" it's kind of immaterial. Doing it by percentages means it accounts for income and ignores lifestyle inflation. When I get a raise I'm still getting a raise, I have more money to spend, I'm just always living 20% below my means. Making it automatic means I never really feel like I'm making a sacrifice.

It's not linear; there's a floor on how cheap essentials like respectable clothes, food, power, and minimal entertainment can get. The farther you get away from the break-even point the spare cash compounds on itself.

On $30,000 you have to watch your money; on $100,000 you can spend like a drunken sailor and still come out fine. If you start buying second hours and boats you can blow it all, but it's a categorically different kind of spending.

I will say, to anyone looking into paying off debt, putting that stuff in a spreadsheet (Google Docs has a bunch of templates you can use), and seeing the effect that just tossing an extra $50 or $100 a month at your credit cards will do it inspiring. Seeing the payoff dates drop by a year or more just for eating out a bit less and throwing that money at debt instead... it feels good.

Everyone has been very helpful in giving tips for going through this, but in all honesty, it's up to you to admit it's going to be a long and painful slog to pay this off and get debt free. You are in your forties, so you don't have a lot of time to save if you want to retire - so getting this debt burden off your back has to be a huge priority.

I would recommend laying it out & putting together a 1-2 year plan so you can see the light at the end of the tunnel. Then go up to the mirror in your house, look yourself in the eyes and tell yourself you are going to change how you live, and how you spend - and execute to this plan.

Absolutely true, it'll come down to me and my willingness to change (within the context of the home situation with my girlfriend and her son, of course). I've gone through the initial set up on mint.com, at least. It's deeply depressing to see the details of my debt laid out clearly. It's one thing to do the mental calculations but when the numbers are there...ugh, I screwed up so badly over the years. Now I have to try and make the necessary changes to at least level things out, and go forward from there.

The floor would be the point where being poor is actually more expensive, like driving a car that continually breaks down and costs more in repairs than a better car would cost to buy. I'm making the assumption we're talking about the middle class, because we're on a website based around talking about leisure activities. If you're talking about true poverty, that's what the social safety net is for. Beyond that, it's about what you're willing to do without now to improve your life later. However much you earn, there is somebody getting by on less. You just have to be willing to live like that.

Debt compounds this, because the lifestyle you're accustomed to is actually beyond what you can afford. To go from accumulating debt to paying it down requires stepping back your lifestyle twice as much. But the reality is, however bad that seems the alternative is worse. On the show Til Debt Do Us Part, the host always extrapolates out what their debt will be five years down the road, to shock them into making the necessary changes now. Because then, not only is the raw number astronomical, you're talking about losing your house, having to sell your car, and making really serious sacrifices.

But the reason I advocate the automatic approach is pretty simple: it works for me. Doesn't mean it'll work for everyone, but it worked for me. When I was in debt, I went for a long time intending to pay it off but never actually having the money left over to do it. When I started putting $100 a month toward it, it got paid off in way less time than I had put off paying it down.

So, slight tangent here: anyone used services like mint.com? We got our spending under control a coupe of years ago by doing a zero balance budget that I created as a Google spreadsheet doc. But it's kind of a hassle to create the budget templates and input everything and we eventually slacked off. I'd love to have a smartphone app and webpage where I could enter expenses into categories and have them tracked against a budget (ideally a zero balance one). I looked a bit at mint.com but it seems to do a lot of stuff that I'm not interested in, and I don't like the idea of linking my online accounts with it.

Also, we did the Dave Ramsey Financial Peace University workshops a while back and got an awful lot out of them. You can get the same info from other sources like the ones mentioned upthread, but actually going to a class once a week adds a motivational and support element that you don't get form reading a book or website. I'd recommend it, though you should know that it does contain Bible quotes and I think the meetings are done at churches where they lead things with a prayer.

I've been using Mint for years. They claim that linking your bank accounts is totally secure, and they're owned by Intuit now so at least there's a real reputation on the line if things go awry. Only problem I have is that their systems occasionally had difficulty logging in to one of my student loan providers, resulting in me getting locked out of the account until I called the provider to sort it out. Seems to have been an isolated issue, though.

Anyway, Mint is terrific for tracking spending across categories. While I use Excel for actual budgeting and forecasting, I come up with the budget amounts by looking at my spending in Mint to figure out what I'm actually spending, rather than what I aspire to spend. Also great for checking account balances and such on the fly.

I wouldn't trust Intuit. Sure, they probably won't steal money out of your account but I bet they'll use the data they collect about you or sell it to others.

I'm largely just bitter about Quicktax though.

Who doesn't? I mean FFS even my alma mater has sold my information to marketers.

Well, yeah, that's why I track my spending by hand in Excel. Who can I trust with my information? Me.

Mint does advertise various financial services (credit cards, savings accounts, etc.) that I assume are based on your info, but it's pretty unobtrusive. For instance, it shows you "Ways to Save" based on how much of a balance is on various accounts, some of which are cards or accounts from well-labeled "Featured Partners."

As a budget-tracking software, I use Moneywell (www.nothirst.com). It's for Mac and iOS, it syncs everything using Dropbox, and noone gets that data anywhere but me. I *really* like it. I don't have any credit card debt, but for those who do they also have software to help with that, called DebtQuencher.

The best move I ever made was to get a bill-consolidation loan to pay off my consumer debt. I closed almost all my cards, keeping only one Visa, one gas card and one card for Firestone for car-repair emergencies. I should have done the loan thing a lot earlier but for some reason thought my credit wasn't good enough.

And this morning I got a new card that's 0 percent interest for 13 months, with zero fees for balance transfers. I will use it to replace the one Visa card I have with a balance on it. This probably wouldn't have been possible even two years ago, but getting rid of all those CCs made my credit rating shoot way the hell up.

Don't most banks offer seamless budget tracking/planning software as part of their online banking? I know that mine does, and I believe the previous couple of move-related (as in, where we moved to) banks we've had offered it as well. I believe we even offered it at WaMu - yes, I worked for the devil. I would think it'd be pretty stupid of the larger banks not to offer this as a free value add when many smaller banks/credit unions do. Then again, the larger institutions are petty fucking stupid.

That's all true, but the fact remains that it is much, much easier to be good when you make a ton of money. If nothing else, shocks are less shocking. Let's say your water hater breaks. If you make $50K and you suddenly face a $1,000 unexpected expense, odds are that you're going to have to put it on credit, and skimp over the next 3-4 months to pay it down, even if you are a responsible debt-free well-budgeted person. If you make $100K and the same thing happens and you are just as responsible, you just pay for the replacement and have a tight month, going back to normal next month.

It's a qualitatively different experience. If you make a ton of money, you have to really fuck up to end up in a bad place; if you make a more moderate amount, you have to work hard and diligently to stay in a good one.

Bitch set me up.

This time of year is brutal for saving money. I've only just started my Christmas shopping and it's already eaten into what I wanted to save for the month. The little guy wants the new Skylander Giants game on the Xbox, which is $75. That along with a couple of smaller items will take me to over $100 for him alone. I've bought used stuff before for Christmas gifts but my girlfriend looked at me in horror - apparently that makes me cheap. I'll try to find some savings elsewhere to cover it, and gently remind my step-mother that I actually do prefer cheques to gifts. Gift certificates too, anything that can be converted for future use.

Hold on and correct me if I'm wrong, the girlfriend that you support along with her son, thinks you're cheap for trying to save some money when you're sinking in debt? Fuck that shit, get her lump of coal and be done with it! As for the kid just because he wants something doesn't mean he should get it. Get the game if you think it's worth it and nothing else. Christmas costs: $75, done.

Do you have someone you trust (family, friend) whom you can ask to sit down with you and map out a plan, and know that they won't be judgmental? When I'm faced with a challenge that looks enormous, having a plan mapped out makes me feel a lot better about it, and I've found getting someone to help me with it makes it easier to develop one, even if they're just going to tell me what I already know. If I don't enlist help I'm more likely to just ignore it because oh god the task is huge and scary.

Having a plan makes me feel like I'm in control of the situation and that's enormously helpful.

Good luck.

You're missing the point. Having money in the bank makes shocks less shocking. Even if you're only earning $30,000 a year, as long as you've been saving 10% for six months when the water heater breaks you just pay for it out of savings and don't adjust your lifestyle at all. Obviously life is easier when you earn more, that's why the destruction of the middle class is a bad thing. Doesn't change the fact that no matter how much you earn, putting some of it in the bank every month will make your life better.

I wasn't earning very much when I wrecked my first car. In fact, I think I was working on contract after being laid off for four months. If I'd had nothing in the bank, I would've been screwed. Probably would've needed a loan and I wouldn't've gotten a very good rate, and who knows how long it would've taken to pay off. Instead, I just bought the best car I could afford and continued on with my life.

You're right, if you have no savings then a higher income will cushion the blow of any unexpected expenses. But all that means is that saving is more important when you earn less. What's the alternative? Saying "I will save when I earn more"? That day never comes.

I help, but she has her own sources of money. I think it's more a family thing - Christmas is a big deal for them and the money flows freely. It's been an adjustment, since my own family was never big on spending a lot of money over the holidays. I don't really mind spending on them, it's just bad for savings. I'm going to try to take advantage of some black Friday sales to pick up gifts for others (love how that tradition has made its way north).

That's an interesting idea. My girlfriend and I have been merging some monthly expenses this year, so it only makes sense.