My Plastic Surgery
There’s a few facts in our society about money. The government is in debt, and will likely always be in debt. Likewise, following the model that “debt is a tool,” Americans have high average household debt. Few Americans buy homes with the “traditional” 20% down-payment anymore. There’s all kinds of “flexible” financing available. Why save? Who needs equity? We Americans almost always finance our cars, student loans are expected and the average household consumer credit-card debt is $9,000 per household.
So why work so hard to get out of debt? Presuming I’m average, I should be carrying about $25,000 of “operating debt” in the forms of “educational investment,” “transportation expense” and the costs of building up a good FICO score.
So, why would I bring this suburban bliss to a screeching halt and start tallying receipts, slashing expenses and even making my own laundry detergent.
I got laid off, and decided to start acting my wage
It all started with my layoff in December ‘08, I had a sudden realization that I didn’t want to have an employer again—I wanted “employment freedom” and I started my own business. As I tallied up those bills (trying to figure how to pay them that first month post-layoff) I realized also that I wanted to be free from creditors too. I was working more for them than for my children. I found it hard to get excited about my work—when I knew I was just going to pay back old debts—a car repair, that class from college that I didn’t enjoy. All these bills, and empty college savings accounts for my kids.
When I was in Ethiopia last fall, my Ethiopian friends were watching a MTV show about young Americans who get themselves in financially over their heads. They couldn’t believe that Americans would spend on credit cards—with money they don’t have yet. And they spent on silly things. Tattoos, cosmetic changes to their cars, trendy shoes.
This group of upper-middle-class, college-educated Ethiopians asked me if it was ethical if we (Americans) live a life we haven’t earned. Good question. Not me. No more, and never again. It isn’t ethical. Like Dave Ramsey says, we need to “act our wage.”
Jump on board and join us in the adventure to become debt free. I’m halfway there and I’ve never felt more empowered in my life. What’s your story? Is getting out of debt worth the effort?
Next post: How we created a budget–and how it wasn’t as hard as we expected.
{ 2 comments… read them below or add one }
All the reasons you listed are right on target. Here is another one: Opportunity Cost. Carrying that debt creates an opportunity cost, meaning that in order to pay your interest owed you need to forgo a different opportunity. By not carrying the debt you will be able to actually do and spend more in the long run because you will not be bleeding out money every month to the black hole that is interest.
Good point RD! I can’t even tell you how many opportunities we’ve passed up because we were extended too far. One still breaks my heart–a little boy I had the chance to adopt. Six years now, he’s still waiting for a family and I keep a picture of him on my refrigerator to remind me to pull it together and be ready next time–or maybe, maybe even be ready soon enough to help him find a family.