Thank you all so much for the emails and comments you posted in response to my questions about debt. My friend Lindsay sent me an email discussing her thoughts on Dave Ramsey's baby steps, and on debt, and on following promptings of the spirit. Her email was terrific, but I haven't asked her for permission to post it here, so just imagine how good it was:).
Here is my response to her email:
Dear Lindsay,
I loved your email. I needed a little time away from the Dave Ramsey book to regain some perspective:). It's still not all regained. I'm still unsure about whether the purchases I make are wise. I still question my choices:). We're going to discuss Dave Ramsey's book at book club, and I'm tempted to use the wonderful comments I've received in response to my post to spark conversation:).
I want to be debt-free. I absolutely hated that we owed $2,5000 in interest AFTER a year of paying off student loans. That's just gross. After reading Dave Ramsey's book, I'm kind of bugged that he didn't put in many stories about doctors or dentists or lawyers who have a lot of school debt. He mentioned one couple that paid off $60,000 in student loans, but that particular story wasn't very descriptive or helpful. Also, I think it's frustrating that tithing isn't factored into the equation for anyone in the book--until they're out of debt. We've had a budget our whole married lives, and we work really hard to stay within our budget. But I can see how we would make a lot more dramatic headway with our debt if we could contribute the tithing money to debt. But no. We get to act on faith, feel grateful for our jobs that make tithing possible, know that the Lord will help us as we are generous and faithful, etc.
I think the most annoying thing about his book is when he talks about how "the average couple" will get out of debt in 20 months--that won't be us. But we're starting to apply the principles. I took on an extra class during the spring semester. We cut out preschool for Isaac (and I'm still sad about it, and need to find a "joy school" to make me feel better). We have a goal for what we hope to put toward our small student loan this month, and want to put anything remaining at the end of the month toward that as well. We're still deliberating about credit cards (because our card likes to give us lots of points for gas and groceries, with Red Lobster cards and Marriot stays as rewards). I think Doug will be with me on eliminating the credit cards once he actually reads the book. I've asked him to read through Baby Step 2, at least.
So we're working on the baby steps, and I'm very glad I read the book. I just still have a lot to figure out.
Love you,
Tara
5 comments:
The book sounds really interesting and I have several friends that are "obsessed" with its principles. Our reality is: we are, as residents, currently accruing more interest monthly than Ray makes each month. Yes, it makes me positively ill to think about. And discouraged. And sad. BUT, I refuse to let money (or lack thereof) run my life. That said, I still lose sleep over the budget regularly. On paper, it doesn't really work, but somehow (tithing) we squeak by each month.
I am interested to hear your friends email..... maybe she'll give permission?
On the kindergarten thing for the kids: we are not sending them this year because we decided to have them attend a second year of preschool. Their birthday is May 30 so we didn't want them to be among the youngest in their class. Paying their preschool tuition is probably our biggest financial hurdle each month. Sending them to kindergarten would have eliminated that strain, but we wanted to do what was best for them........ tough decision. They have been attending 2 days a week in the afternoons and will do the same next year-- I wish would could do 3, but there is no way.
People out here don't really do the "joy school" thing and I am not comfortable sending them to someone else's home without me that I don't know EXTREMELY well-- I don't care who they are. SO...... an official preschool was our best option.
Your next read should be The Outliers
Hi Tara,
It's interesting to hear your thoughts on getting out of debt. I have paid on my student loan for 8 years and it is nowhere near being paid off. :( However, I am trying to focus on paying off loans with higher interest rates, like our cars. I like the idea of getting one thing paid off, and then using the money that you normally paid towards that bill towards your next loan. We always seem to have something that comes up during the month that sabotages my efforts to get the car loan paid off though. :(
I do have one bit of advice...don't cancel your credit cards. We use our credit card kind of like a debit card. We keep track of our purchases each month and set a limit so that we'll be able to pay it off in full each month. That way, we never pay interest on the card, but we have been paid a LOT of free $$ by the credit company over the years. If you have the self-control (which sounds like you do), a credit card is the way to go because there are so many perks. It is when you fall into the habit of carrying a balance that you should probably cancel them.
Lindsey is awesome, so I am not surprised she had a great perspective, especially since she went to grad school so probably has some great practical advice. I'm interested what your book club will say about it--maybe you could tell us what they say. I think it's an interesting (and of course sensitive) topic, but I always like any tips people give about being super frugal. I just hate the guilt that comes sometimes. Guilt is the worst.
Tara,
I totally agree with Sandy. Keep your credit cards and use them to your advantage. That is all Kye and I use, then we pay them off in full every month. We keep track of what we buy just like a checkbook. We earned over $300 last year from the credit card companies because of this. You get 3-5% on several things during the month. So, we think it's awesome. I am willing to bet that Dave has several credit cards that he uses to his advantage.
Suzy Orman was on Dr. OZ and she was talking about people cutting up their cards because of credit card debt; not other debt like your house, car and school. People that are thousands of dollars in debt are living a financial lie. People who pay off their cards every month are smart. She also said canceling your cards lowers your credit score.
Discipline is key, and you are the queen of self discipline.
Thanks, All!
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