Monday, January 5, 2015

Step 1: Debt is not okay. It just isn't.

I mentioned in the first post of this journal that when my husband's business went under, we were deeply in debt. Now, most of that was business debt of one kind or another, but the fact is, we had let ourselves get buried in personal debt anyway: in addition to the mortgage, we had student loans, two car loans, a second mortgage for the pool (what planet were we on to think that was normal?), and that doesn't even include the credit cards, of which we had...let me think...four.

We are not debt free at the moment. One of the student loans hasn't been paid off yet, and we now have a car loan. After all, we're nothing but a couple of dummies trying to make our way in the world. But let me tell you what we learned. It's really simple.

Debt is not okay. It's just not. Everyone who wants to sell you something will tell you that it's perfectly okay, after all, everyone does it. And that financing is so easy to get, we can handle it for you. And you really want that thing, you want it NOW, and here it is...all you have to do is sign. I've done it a hundred times, and you probably have too.

But it's not okay. It's just not.

I learned this from a guy that I mentioned a couple of days ago named Dave Ramsey. Now, if you haven't heard of this guy, he's a long-time money management guru out of Texas who has a radio call-in show, a couple of books and a series of seminars called the Total Money Makeover. His thing is helping people get out of debt. I used to listen to his call-in show when I was driving home from work, and I'd listen to people call in and ask what to do in this or that situation, like the guy whose wife told him he had to take a job that paid below poverty level. Over time, I started to get what he was trying to say: that buying things you can't afford doesn't make you happy, it traps you, it makes you miserable, and it keeps you from reaching your long term goals.

But, you say, and so do I...I have to have a car, and cars are expensive! I don't have time to save up 25 grand, I need a car now! How can I do that without borrowing the money? I'm not rich!

Okay, let me give you an alternative. Go ahead and buy the car. Finance it. But don't just make the minimum payments. The second you get that car home, commit to yourself that this car is going to be paid off as soon as you can do it. And do the same thing with everything you owe money on.

Now, I know what you're going to say: "Yeah, it's easy to say you're going to pay off a car, or save money, but it never seems to happen. Every time  I try, the money is always gone."

So that's what I'll talk about next: paying yourself first.

Oh, I almost forgot...I was going to tell you why we have a car loan. We had to buy a new car six months ago after our trusty Jetta was totaled by another driver. We used our insurance money and took out a loan of $18,000. We've been paying it off to the tune of $1100 a month, plus we dropped a couple of bonus checks on it, and as of today, the balance on the loan is a bit under $8000. We expect to have it paid off in February.

I'm off now to hang with the fam. This dummy is out!

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