How long have professionals encouraged us to STAY OUT OF DEBT? Do we listen? Probably not all of us! Why? Why is it that we struggle with this so much. Not only our prophets, but finance professional encourage human beings to stay out of debt. Like for instance Dave Ramsey! I know, I talk about him all the time, I love the guy. He’s great and helps a lot of people out!
Now I am not standing on a soap box saying that I {my husband and I} are perfect at this. We have had our fair share of debt. I am just here to share some great info that I have found in the last few months!
We haven’t been big on credit cards since we got married, but we had one and we used it. No we didn’t buy big stuff on it, but you know, you’ve done it, when you didn’t have the money in checking you whip out the credit card and said to yourself that you would pay it back. Do you? Hopefully, but I know we haven’t in the past.
So Why? Why should we stay out of debt?
I found a great list of 6 reasons why on this awesome site called Sensible Steward.
- Debt can limit our options, forcing us to work in jobs that we hate or work long hours that keep us from spending precious time with our families – “I owe, I owe, so off to work I go”.
- Strain of debt often leads to breakup of marriages – money is often cited as the #1 cause of divorce
- Because of interest compounding at high rates, we can get stuck in a spiraling debt cycle that is difficult to escape
- Debt assumes that we know what will happen tomorrow; Because there are no guarantees in life, this is a dangerous assumption.
- Debt increases our stress level, which can lead to a variety of health issues – depression, heart attacks, etc. Furthermore, the additional time spent at work can cause people to neglect their health by eating unhealthy foods and spending less time exercising
- Practices of collection agencies is borderline criminal and can lead some people to suicide (see the movie “Maxed Out”)
Wow what a list. Why do we want to get ourselves into this. I think a lot of us including myself sometimes feel like we deserve things. Like we need it now, and we deserve it now , and so why not get it now and pay for it later. A lot of us feel like the “Buy now Pay later” philosophy can work for us. That we will pay it off fast after we get it. What is the major problem with this? I have found that whenever I went to look at my credit card bill after I bought something I “needed” I was overwhelmed and wondered how in the world we got SO much on there.
On LDS.org under debt is says “Spending less money than you make is essential to your financial security. Avoid debt, with the exception of buying a modest home or paying for education or other vital needs. If you are in debt, pay it off as quickly as possible. Some useful tools in becoming debt free are a debt-elimination calendar and a family budget worksheet. “
Elder Joseph B. Wirthlin taught: “All too often a family’s spending is governed more by their yearning than by their earning. They somehow believe that their life will be better if they surround themselves with an abundance of things. All too often all they are left with is avoidable anxiety and distress”
So here are 4 things I came up with to help our family…
1- Be grateful for what you have, and save for what you don’t have.
This can be really hard. Do you know how long I have wanted a new kitchen table? A long time, but I am still saving for it! We have been doing the Dave Ramsey Envelope system for over a year now and love it. I have had people laugh at us when I am saving for something telling me, why not just go get it, you will have the rest of the $40 next week. But to me, I have felt so much more financially secure saving for things we need, and not dipping in or borrowing from other “envelopes”. I also feel way more excited about buying with the cash that I have saved for that exact item.
2- Have a budget and stick with it!
No matter how you budget, stick with it and don’t let your “wants” get in the way! Share the budget with your kids and help them learn and understand it. And encourage them to set up a small budget of their own!
3- Avoid Debt
We have been working for the past 2 1/2 years to get out of debt, and we have one small loan to pay off and we are done! Obviously we have our house debt, but that’s it, and I am so excited! We even paid off our car. For some people they include car in OK debt. My husband and I have decided not to. We want to buy our next car with cash.
Also if you use a credit card, only use it if you have the money that day in checking to pay it off!
4- Save, Save, Save
My husband and I have had our fair shares of rainy days! And I can tell you from experience that when we had money in savings things turned out. When we didn’t we had to rely on others, which is not fun. I have been thinking a lot about tax returns this year. I really wanted to take my kids to Disneyland or buy a new trampoline, but for us this year and last we decided to save our tax return. That has been really hard. Sometimes when we get that “extra” money we want to go on a vacation with it, or buy something big and fun! But really it isn’t extra money. It is income and we should use it as such. We have had way to many experiences happen when we got to the end of the year and felt stressed about Christmas or finances and wished we wouldn’t have bought that big fun item with our tax return and saved it for our “rainy day” of stresses and struggles.
Dave Ramsey encourages people to save $1000 dollars emergency fund, and then 3-6 months expenses. When you have that and you are out of debt and are saving and have a retirement fund, then you can spend your extra money a little more frivolously per say!! 🙂
I love this quote by President Hickley…
“Brethren, I wish to urge again the importance of self-reliance on the part of every individual Church member and family. None of us knows when a catastrophe might strike. Sickness, injury, unemployment… I do not predict any impending disaster … yet prudence should govern our lives … Begin in a small way… gradually build toward a reasonable objective.” Gorden B. Hinkley, Priesthood Session, October 2002
Debt is a trap and can stress us out and make us frustrated, and angry. It has for our family and we are going to avoid it like the plague from now on! But also if we are in debt, don’t give up, just do one things to change today! I like that he says to “begin in a small way” baby steps are the best way to get things accomplished and not be overwhelmed!!
This is such great advice and so true! When my husband got his first job, we decided that we had been living on my income for the last 4 years and we would try to continue to live on that amount for the next year and just save the extra. We were able to save a considerable amount of money and as the years have passed we increase our budget to accommodate increased living expenses. We have built up a large retirement fund and are still able to save more than half our income. I feel like I have everything I could ever want and more. Of course most of that comes from paying tithing first and a generous offerings to fast offerings and other church programs, but also it is so freeing not to have debt hanging over us and to know that if we got in a bind we have savings prepared.
Amen to all of this wonderful post. You have given wise counsel and I know we have tried to follow the get out and stay out of debt advice from our Prophet and Apostles. We have had our own share of debt through the years and it was hard to buckle down and get out of debt. We feel so much more secure in our financial circumstances now.
Blessing for a very well written post on this subject.