Thursday, June 26, 2008

Living Debt Free--Part 5

Taming the Person in the Mirror
I truly agree with Dave Ramsey on how taking control of your money starts with taming the person in the mirror! So true! Have I mentioned how much I love this guy's books and radio show? *s* Teaching ourselves to grow up, do hard things, and limit our insatiable wants and desires is vital to being financially free.

Sometimes I'm confused by the people around me. I know people who are always complaining about lack of money or who are feeling desperate and panicky because of their current financial situation. Yet, I will often see these same people ordering pizza once a week or more, buying new large toys, and "splurging" in a number of different areas. While I'm not the judge of how they spend their money, it doesn't make sense to me. If your husband is laid off or you are having to live on credit cards just to pay the bills, shouldn't you be eating "rice and beans"? Some people I know would rather work 4 jobs between the 2 spouses (and they have kids) rather than learn to control their spending!

Another friend of mine goes on shopping sprees 3-4 times a year to outfit her kids in the latest clothes. She was extremely bummed when her husband only allowed her $250 for herself to blow and $300 for her kids for new toys and clothes out of the Economic Stimulus Check because he wanted to put half of it down on credit card debt. They make nearly twice what our family makes and yet they are still paying on their honeymoon, their wedding, and the food they ate on credit cards while her husband was going to college for 8 years! These same people have $10,000 worth of DVDs (many of which were gifts, but still....).

I saw this same thing going on in college. Almost every student at my college was taking student loans for school. However, they could somehow afford to go on midnight runs to Perkins several times a week, buy expensive make-up, go shopping at the mall, etc. While I think it's okay to have some fun money in your budget, provided you are working while going to school, I look back and think, "If you can't afford school, and thus need some loans, then how can you afford this or that luxury?" The answer is, you can't! You are spending money you don't have! If you do have the cash in your pocket from your part-time job, shouldn't it be going to pay your outstanding debts, even if they are currently interest-free? Just because your loan is currently interest-free doesn't mean it's not still there! You are still in the negatives! Most college students have no idea how hard it is to pay interest later on greasy restaurant food they ate 10 years ago, but they are about to find out!

I'm not against fun. I love eating out. I look back and realize that even if I was pretty frugal in college I splurged too sometimes and could have lived off of even less. But I didn't because I got caught up in doing what a lot of other people are doing. I am against living a life of luxury and spending on things that you can't afford. If you have consumer debt (credit cards, etc.) you have a negative amount of money. Until you get busy paying them off and being debt free, you don't have any money to spend! You're behind and paying for things in the past so quit buying in the present! It's that simple! Yet, most Americans can't get control of the person in the mirror and they continue spending and continue spending because it's so easy to throw down the plastic and so hard to say no to themselves.

On the contrary, some people get really intense about taking control of their finances and it's admirable. There were a couple of guys at my college who demonstrated this. I'm not sure if they both went to school entirely debt-free but they were sure trying! One guy realized there was no rule in the student handbook saying that you couldn't live in an ice house. So, he camped out in a friend's shed in the fall and then lived in a little ice house on the lake next to the college during the winter. He showered in the guys' dorm and hung out there often with friends, but he "technically" lived in the ice house and saved himself a bundle on dorm fees! In Northern MN temps, this guy was tougher than tough! Needless to say they made a rule the next year about students not being able to live in ice houses! Another guy declined being on the meal plan and cooked all his meals in the dorm lounge. His meals mostly consisted of frozen pizza and Ramen. While I don't endorse that diet (ick!) he did save himself a lot of money! I like that these guys were creative in their approach to get an education without throwing money to the wind. That resourcefulness and ability to sacrifice will come in handy for the guy who ate in the dorm since within 2.5 years of marrying a gal from college they had 4 children!

While I will probably always have friends who won't tame the person in the mirror, I also have some friends who are doing an amazing job at living frugally and shopping deals and bargains. They inspire me to go even lower in my budget and be even more careful in order to save for emergencies and buying a home. Keep up the good work! You are an inspiration to me in living financially free!

*In talking about debt in this post I'm not referring to a loan on an asset, like a home, which appreciates in value, or on loans that come because of unavoidable circumstances, like medical bills or catastrophe. Due to the reality of unexpected expenses, I think it is vital to have some sort of insurance and a large emergency fund, as I've discussed in a previous post. My husband and I have been there, done that when it came to some unexpected hospital bills on Jeremiah's birth. Thankfully we tightened our belts and were able to pay them off by his first birthday, by God's grace! No matter what kind of debt you have, whether it came from foolish purchases or unavoidable circumstances, I think it's important to live frugally and carefully until it's paid off. What I'm mainly harping on in this post is consumer debt or living luxuriously when you absolutely cannot afford to do so!


saraheg16 said...

Hi Lindsey,

I just wanted to say that I agree with you. I think the spending habits of our country has definitely gotten out of hand. I definitely wish that I hadn't taken out loans for school but I wouldn't trade my education there either! :) My hubby and I took the financial peace class by Dave Ramsey and we loved it and have learned lots and are trying to implement them. Thanks for you thoughts.

Sarah P

Suzanne said...

I totally agree with you on this!! Good post.

About the friend with $10,000 of dvds, I have a sister in law like that. Her kids have over 500 dvds. The video store doesn't have that many! If she could afford this, it would be one thing (still a little crazy...) but she can't. She's living the "high life" but asking her parents to pay her credit card bills. When my husband and I were truly in need, they were all "helped out" from her.

Mrs. Taft said...

I agree with you. :)

Becky said...

Mrs. Jo,
I do love reading your frugal posts. I will be completely honest that DH and I still have problems in this area. I am trying to improve. We are moving into our first home next month and I want to start everything on a clean slate. I do wish that we didn't have to take out any school loans when DH was in college but we did since I was the only one working. I have heard a great many things about Dave Ramsey and I will look into finding his book to read and get familiar with. And always keep the frugal posts/ideas coming. You are an inspiration!

The Three 22nds said...

I sometimes resent the fun "toys" my coworkers have. Toys that I don't. Then, sooner or later, the Lord reminds me of some things.

* It is important that we give 10% or more of our income back to His work. Period. Things that impact people's eternal future are important.

God and I have wrestled over this at times, but at the end of the day, but clearly when I set myselfishness aside...

* Guns, new cars, boats, fancy bicycles, big TVs, bigger houses - while fun, all those things are only temporary anyway. And in a great many circumstance, they may be distracting from the other more important things in life.

* There's no point in paying 20% interest on someting you don't need and which will lose value with use.

* An education is worth a loan, but I'll cop to eating too much fast food in college. :) I'm not looking to offend anyone, but what doesn't make sense to me is the people who rack up $50k+ in loans only to be a lowly paid social worker, rural pastor, or whatever. (I'm not saying the world doesn't need those people - I thank God for them - but having a $100k debt doesn't make sense unless you plan to be a doctor.)

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