Back in the far distant times, we had debt. We've had credit card debt, car loans, a mortgage, etc. Years ago we decided that debt was dangerous, put us at the mercy of others in a way that we didn't like, and prevented us from saving. And the interest! It's hard to buy things and then pay more in interest than the item originally cost.
I discovered Dave Ramsey on the radio back in the early 1990s and found it supportive and helpful. He had an organized plan, and I bought a book and adapted his suggestions for our situation. At his website, he has instructions on getting out of debt using the "debt snowball" where you take the smallest debt and devote available resources to it until it's paid off. Then you devote those resources to paying off the next debt.
There are other Get-Out-Of-Debt programs, but sometimes it feels like those programs are actually selling something rather than providing help. Resources that give specific instructions without hyping low-interest credit cards are better. ListenMoneyMatters.com has articles on How to Destroy Your Debt. Time.com has it boiled down to 3 simple steps and offers reviews of the best books on the subject. The Art of Simple website connects living debt-free with living simply. The first two steps at The Balance are reflecting on how you got into debt and changing your spending habits.
It seems to me it doesn't much matter which system you use as long as you devote attention to it and commit to not borrowing more. I will say I'm talking reasonable levels of debt here. I can't imagine what it must be like to have the kind of medical debt some people have, for example.
Once out of debt, we were able to save up to replace our current cars. That's a glorious feeling, I'm telling you, to be able to write a check for a car. Not having those big monthly payments for cars and mortgage makes it so we can live more easily on less income. During this period of reduced income with no certainty it'll ever increase, it's such a comfort to not be burdened with debt.
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Saturday mornings there is a radio show called Get Rich Slow with Jim Macaleese, one of the bits of advice I've heard more than once is that spending is good for the economy but not for the individual. Individually spending leads to debt and lack of savings but if everyone refrains from spending the economy would go into recession.
ReplyDeleteYes, that's why policies that benefit the finances of the lower and middle classes benefit the economy -they spend theirs often out of need, while policies that benefit the richest folks don't benefit the economy -because they hoard -oh, I mean save- it. Don't get me started on the recent tax bill ;)
DeleteI owe no one anything. Like you, I learned to live debt free, at least until some medical dilemma throws me for a loop in the future. I remember the day I tried to refinance my home (I say tried because I was at the bank on 9/11 and in the middle of the refinance, all banking was suspended). The first thing the loan officer asked me was what my monthly debt was. I started with gas, electricity, and he stopped me, saying those were utilities, NOT DEBT. They feel like debt to me (grin).
ReplyDeleteI think you have given people a few options for getting out of debt. I just wish my foodie and shopaholic friend Sally would take heed. She's even further in debt than she was in the past.
I've known older people who kept gradually increasing their debt saying they'd never get out of debt anyway. It's a sad position to be in, but you can't make someone see the value of being debt-free. Even getting rid of that smallest debt is so freeing!
DeleteKudos to you guys!!! That's really smart and just plain awesome. :)
ReplyDeleteThx! We're glad we came to that realization as early as we did and were able to act on it.
DeleteIt's a good outlook to have and very comforting when you don't have debt 😁. We have always saved up then bought things too. Wishing you a happy new week! J 😊 x
ReplyDeleteSaving up for things is the only way that makes sense, isn't it. Sometimes we change our minds before we've saved the money lol
DeleteThanks for the resources link ins. In today's culture I think debt is hard to refuse, it's made to sound so easy & not a big deal. Students are lured in & that can cripple them right from the start. We are taught so early that it is our right to have the things we want - now! Thankfully Mr Man & I tend to be more of a saver nature than a spender nature. Again thanks for talking about this subject & being so honest.
ReplyDeleteStudent debt should be bankruptable, imo. I think that'd make lending institutions more cautious and steer students towards more affordable options. Affordable housing is an issue, too. It'd be good if housing expenses didn't take up so much of people's incomes. It can be all but impossible for some households to avoid debt.
DeleteHello. Ironically I had just read last week about the Snowball debt solution. I read about Dave Ramsey 10 years ago and tried the envelope system. I like the snowball solution and am working on that right now. Thanks for posting this positive insight.
ReplyDeleteEnvelopes don't work for us. We use a credit card and pay it off at the end of the month. I'm glad the debt snowball is working for you :) It was slow, but we made it :)
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