7.03.2012

No Kool-Aid For Me, Thank You

Last week I wrote a Bottom Line post, sharing that our views on frugality had changed over the years. I received the following comment, which is what triggered the writing of this post:
"It's a hard balance and we are often not sure which is more important. Dave Ramsey would say sacrifice all to pay off your debt, but we think family and a low stress lifestyle (not working 2 jobs) are more important. I'd love to hear what you think about Ramsey's philosophy."
Let me start off by saying that I think Dave Ramsey has a lot of good advice. I love his down-to-earth, no nonsense way of telling-it-like-it-is to folks who need to hear the hard truth. I appreciate the fact that he had it all, lost it, and made it back (and more) in a healthier way. His advice of "doing what it takes" to reach your goals is one of the reasons that Peter started working more overtime, and I got a job as a pharmacy tech. We'd done pretty much all that we could on the outgoing side, so it was time to work on the income if we wanted to reach the goals that we set for ourselves. Dave's book came at a good time, and provided the encouragement and prompting that we needed.

kool-aid-man 

That being said, I haven't drunk the Dave Ramsey Kool-Aid. For example, he's very anti-credit cards...I, am notI hold to the fact that self discipline has a lot to do with successfully managing your finances, and part of building that discipline includes not spending more than you make - whether you put it on a credit card or not. If I want to put a trip to Europe on my credit card, earning me points back or money for future Christmas shopping, as long as I pay it in full (because the money is already in my bank account to pay for the trip), I have no problem with putting it on plastic

Are there exceptions? Of course there are - on both sides! If you've paid off $35,000 worth of credit card debt, it might not be a good idea to open a new account - rather like inviting a recovering alcoholic to a bar. But my point is that it's a personal decision, based on on your track record. Not everyone who enjoys a glass of wine is a wino, and not all who pull out plastic to pay for dinner are in debt up to their eyeballs. 

As I've mentioned before, our goal for 2012 is to pay off the house, and the thought of being out from under our home loan is enough to make us both do the {happy dance}. First of all, we believe that being good stewards is Biblical (see Matt. 25:14-29), and everything we have belongs to the Lord - we're just caretakers and we need to be wise in using those resources. Secondly, we desire to be out from under the thumb of the lender because you never know when those rainy days will come  (Prov. 22:7 & 22:26-27), and if you owe no man anything, you can live on a whole lot less.


Also, by being free from monthly payments, we would able to use those resource for other things that we really want to do, like supporting a project overseas, sponsoring a child, planning a trip to Europe, or attending training for work or personal growth. The bottom line is that we don't like making payments. Our goal is to get to the point where we can have outstanding experiences (day trips, vacations, schooling) that are already paid for, thus making them more enjoyable because we don't have the threat of next months bills hanging over us.

There's one more aspect to this idea of personal responsibility and self discipline that I'd like to address, and it's something that people embrace less and less: delayed gratification. I'm all for buying quality over quantity and having experiences, but not if it means derailing our payoff plan. As long as we're on track to pay off our mortgage, then I have no problem shelling out money for a day trip or buying a high quality knife set. Sometimes, that means saying "No" to yourself, in favor of a larger goal. For example, last month we discussed buying a new chair for our library, but in the end, we stuck to our payoff plan and decided that we would wait a bit longer and make it a "No More Mortgage" gift to ourselves.

Sometimes it's easier to deny yourself something than it is to deny, say, your kids. There are lots of times when I've heard: "I want to give them the memories that I didn't have as a child" or "We were always so poor, I don't want my kids to go without." I believe that those people are doing a disservice to their children. What if, instead, you made memories that didn't involve money? It's possible - my family did. What if kids were taught that denying self isn't a bad thing, but by waiting and saving, they may end up with something better? What if you led by example? Rather than taking two years to pay off your so-so trip to Disney with your 3, 5, & 7 year old, why not work together as a family for those same two years and save cash (what you would have spent + 2 years of interest) for a dream Disney vacation when they are 5, 7, and 9? Kids mimic what they see at home, so teach them wisely - they're never too young to learn.

Bottom Line? I'm not against splurging - if I'm going to Europe, I'm going big - but splurging only works if you have the money in the bank to pay for it.  


Do you have anything you want to add?
What are your thoughts on credit cards vs. cash?

10 comments:

  1. It is always interesting to read about the credit card/cash debate. I often feel like I would be viewed in certain circles as irresponsible (in the least) or evil (at the most) for having and using a credit card. However, my husband and I are committed to not spending more than we earn or charging things that we don't have money already in the bank to pay for. It is nice to see that there are others who are choosing to use credit responsibly. :)

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    1. It is always nice to hear you're not alone and that there are others who can be responsible with plastic!

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  2. I was raised to be responsible with my money (it didn't work very well, but that was because of me. At the same time, I was raised to think life revolved around money; something I really don't think is healthy. I will be doing some things my parents did and some things that they didn't with our children, but regardless of that I will continue to use credit cards responsibly. They get checked regularly, compared to our checking account and we cut back if we have to. We don't have a credit card so we can spend indiscriminately, we have it so we can spend more comfortably and gain some small measure of our money back.
    Truthfully, I owe a lot of our financial stability to Phil's firm hand on the financial reins. I like to spend (I like it a lot!) and he helps pull me back from more foolish choices. Because someone is willing to stand firm and say no to the throw pillow that we don't need or the shoes I already have an exact pair of at home we can happily say that the only debt we have are his student loans. That is a wonderful feeling.

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    1. Angela - I have found that Peter and I are a good check and balance system for each other. He keeps me grounded with clothes or shoes or household stuff, I question why we need one more tool or computer program, or why we need to go out to eat. It's helpful to have a spouse who keeps you accountable! :-) Congrats on only having the student loans!

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  3. I agree 100%. My husband and I were fortunate enough to begin our life together after college with no debt (student loans, car loans, etc...). We only pay 'cash' for vehicles, vacations, fun purchases, etc... Like you, we use our credit to take advantage of the perks and such - but it does take discipline.

    We currently own two properties and rent one out and will rent the other out soon, both for a nice chunk over our mortgage. While we're not close to paying off the properties within the next couple of years, our plan involves having them paid off in 8-10 years. Insert happy dance. :)

    We're big savers for retirement and long-term investments. One girl I know just paid off her house (yay!) but at age 32, she has little savings and absolutely no retirement yet but all of the extra $ went to her mortgage. It is just personal preference, but that is something I am not comfortable with - sacrificing long-term investments for the sake of paying off a house super early. If I can do both - great! But for us, it is a balance between the two that makes the most financial sense for us.

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    1. Well done to you all!! It's absolutely a personal decision, Karen. We've been waffling back and forth (as you know from the blog) about whether we should pay off the house or finish working on the PH and rent it out. In the end, we decided that we were too close to pay off, not to pay it off this year and free up that money.

      However, just when we thought we might not do the PH as a rental, we're waffling again and we'll see what happens next year. Long story. Also, while we're doing what it takes to pay off the house, we also haven't stopped contributing to our retirement account - there's room to do both, but it's a choice. :-)

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  4. Carrie, personally I prefer Suze Orman to Dave Ramsey. Until medical bills ate through my savings I had my 8 month emergency fund which is what saved us financially. I am currently building it back. I prefer not to use credit cards, but unfortunatrly they are a big factor in having a high credit score. Since the high score saves me money I only use the credit cards to pay the monthly bills I have to pay anyhow and then pay the balance in full each month. This way it is a win-win for me and when I need to make a big purchase (car, home, appliances) I know I will get a great rate.

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    1. I've read some articles by Suze, Tamara, and I do like her thoughts and advice. We currently have a 3 month "rainy day fund" built up and tucked away, but I certainly hope we don't have to use it. You are living proof of why those emergency funds are so important, however, so thanks for sharing your story!

      As for the credit card - I do much the same thing (use it to pay the regular monthly bills + what I would be buying anyway - food, gas, etc.).

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  5. I think you might have had a few sips of that koolaid. ;)

    I appreciate your thorough and interesting response.

    If only I was better at discipline. I was denied many things as child in the name of money. We used to eat out all the time since I only at at a restaurant a handful of times while I was growing up. We never had money for vacations (just 2) and I think I blamed money for any unhappiness.

    It takes a lot to break those thought patterns. We are working hard and I'm married to a saver. But, he will not manage the budget so it is still all on my shoulders.

    I'll be reading this blog again to try to solidify its sound truth in my brain!

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    1. Haha! I didn't read Ramsey until I had to for a class we helped teach at our church (three years ago), so most of my financial viewpoints come from my parents and the lessons that they taught and modeled for me throughout my life. They know what it is to be dirt poor (no money for food), they have worked hard, and they are now reaping the benefits of a life of stewardship. They have been excellent examples to me (and my siblings) of the fact that money is just a tool. As my grandfather used to say, "God's just looking for clean pipes to use as channels to help others...any ol' pipe will do."

      Because of their example, I have learned to appreciate money and what it can be used for, but I stop short of believing that it will solve all my problems. Money is just money, but God is sufficient. I've found that people who are always complaining about not having enough money, never stop complaining, even when they get more. It's like that famous quote, "How much money is enough?" and the response, "One more dollar."

      I hope you do come back, and comment again! I love the give and take and different view points!

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