Hello again! I apologize in advance for the length of this post. There is so much to say about this topic, and so much more that I could have said, so consider yourself lucky with this "brief" version! So far, we've covered Steps 1 and 2 (setting a deadline, and differentiating between need and want), which means it's time to move on to one of the hardest (and least fun) steps in our payoff process, Step #3...
We had to practice self-discipline. There was a period of time in our early married life when we could have been the poster-children for lack of self-discipline when it came to finances. It's only by the grace of God, a few perfectly timed financial gifts, and a tiny pricking in our sub-conscious that we could do better, that we didn't end up deeply in debt.
I Can't vs. I Choose Not To: While sharing some of these steps with my unknown insurance friend, I mentioned that it really came down to developing and practicing self-discipline. "Oh yes," she gushed, "but so many people just can't do that, you know?" Knowing that this would probably the the only time that I ever spoke to her, I seized the moment and said, "I disagree. It's not that they can't do it...it's that they choose not to. Anyone can develop discipline - it just takes practice."
Over the last four years, self-discipline has become a passion for us. Oh sure, we still struggle with it (especially in the areas of eating, exercise, and weight-loss), but overall, it's probably the number one reason why we sat in the bank last November, making the final payment on our mortgage.
While shopping, we developed the habit of asking ourselves, "Would I rather have this [random item] now (instant gratification), or would I rather pay off the house a little bit sooner (long-term satisfaction)?" Long-term began winning out more and more - which provided the added bonus of keeping unnecessary junk out of our house! While saying "no" to unnecessary spending is a discipline that has turned into a habit, in the beginning, I really struggled.
I was the "Target Queen", drawn like a moth to a flame by those red clearance stickers! In order to develop discipline, I physically had to stay away from my favorite store for a period of time. Once I jumped the mental hurdle that "I was missing deals", I went back to Target, not to buy, but to look. I would see something I liked, even put it in the cart, but quickly realize that I didn't like X as much as I would like having a paid off house - and X would go back on the shelf. Eventually, Target changed from being my "happiest place on earth", to what it always should have been: a store to buy toilet paper, toothpaste, and the occasional string of replacement Christmas lights.
In the Beginning: Peter would go to Target with me and do a funny mental exercise. As we walked around the store, he would tell me, "Remember, you can afford anything you see, but you're making the CHOICE not to buy it. It's not that you can't have it, it's that you want something better." It worked for me.
Brick and mortar stores aren't the only danger spot. The online world makes it easy to fill your home and empty your bank account with a click of a few buttons. However, Amazon makes it easy to shop without buying. How? We would load up the online shopping cart with stuff we thought we wanted - books, DVDs, techie gadgets - and then we would close the browser. I'd say a good 95% of the time, we never came back the next day (or even the next week) to go through the check out process. You should see our "Saved for Later" cart - I think there are over 90 items in there as I write this (it's a nice online reminder list).
One of the big changes for us was eating at home 6-7 nights a week. It was not unusual to see 6 o'clock roll around with nothing planned for dinner. This was especially true when I was working at the pharmacy. After counting pills and dealing with grumpy customers all day, the last thing I wanted to do was cook. While we didn't go cold turkey on eating out, we practiced the discipline of saying "no" to ourselves far more often, and made the choice to use the groceries we already had, to prepare a meal. One unexpected bonus of cooking more: we discovered that we actually enjoy it, and with practice, we can now both whip up a tasty dinner on the fly.
Self-Discipline - The Reason We Part Company With Dear Old Dave: Dave Ramsey is a smart guy. He offers a lot of good advice for people who have struggled with managing money. He's enthusiastic about people getting out of debt - all really great things! However, we part company when it comes to mortgages. Dave says if you must get one, get a 15-year one. I could not disagree more, and here's why: First, having a bank do the work to make you pay them back in 15 years is not the same thing as developing the self-discipline to do it. By developing and practicing self-discipline, we paid our 30-year mortgage off in 11 years and 9 months. And self-discipline is something that will benefit you in many other areas of your life, long after the mortgage is gone. That takes me to the second reason we disagree with Dave: With a 30-year loan, your monthly payments are smaller. Remember what I said about rainy days happening to everyone? If your rainy day should hit, it's a lot easier to continue making a $500-a-month house payment than a $1200-a-month payment. And if you should decide that you want to pay off your 15-year mortgage early, you have to come up with $1200, just for the base payment, before you get to a principle-only payment. If you have a $500 payment and you find you can pay $1200, you've just made your regular payment, plus one and a half principle payments! My advice: save up and pay cash for the whole thing, or go with a 30-year loan and tell yourself you only have 15 years to do it.
Next Week: Going Frugal