Being debt free...

I am a recovering debt-aholic myself. We should strive to not be in debt; I still have a ways to go, but I've got a plan to get there.

It's just so easy to whip out those cards, though, especially when you forgot to stop at an ATM....

I look at what I could be giving, as opposed to what I have to pay out because of debt, and it never ceases to bring me down.

 

When I used to live in Tennessee, there was a talk radio host by the name of Dave Ramsey. His talk show was how to get out of debt and stay debt free. The following is his website and his mission statement. Hope this helps!

The Dave Ramsey Show

Mission Statement
The Lampo Group is providing Biblically based, common sense education and empowerment, which gives HOPE to everyone from the financially secure to the financially distressed.

 

We cut up all of our credit cards several years ago and refuse to have another.

If we can't pay cash...we don't buy.

Like most people, we do have a mortgage, but it is for 30 years at a very low rate of interest through a private party.

 

My husband and I have recently gotten out of debt except for our mortgage and car. We could have paid off the car, but chose not to as it is a 0% interest loan. We also have kept 2 CC's for emergencies.

This might be interesting for ya
http://clarkhoward.com/

 

It could still be a good idea to have one credit card for emergency travel. It is my understanding that you pretty much have to have a credit card (or a debit card might work) to make airplane, hotel, and rental car reservations.

Karen

 

Ah, yes, Dave Ramsey: the annuity hater.
The man who says to never buy individual stocks.

He has some excellent ideas, and yet some horrible ones as well. But as far as debt is concerned, he is a good counselor.

 

Credit cards and debt is a matter of the will. I have 5 or 6 credit cards. I regularly use three of them. I have never had a debt on them. In 15 years of having a credit card, I have failed to pay the full amount less than 10 times with the exception of when I bought my laptop computer on 0% card that I paid off before the interest kicked in. I had a three year car loan one time that I paid off in 18 months. I don't like debt.

However, I probably have a little different view on debt than most. I would say that debt is not always wrong. Several principles come into play.

1. Debt on appreciating items is "safe debt." For instance, a mortgage on a house is generally an appreciating debt. To buy a house with a 100,000 mortgage, knowing that by selling time in 10-15 years, that house will be worth more than 100,000 is a good deal.

All business run on investment capital (i.e., debt). At one point, my brother and I entered a little business venture together. I put all the cash up for it (i.e., went into "debt" even though I had the cash at hand; I put money at risk). That little cash venture more than quadrupled my money. Even if I had had to borrow that money from the bank or a credit card, I would have been wise to do so because in the long run, it was safe debt.

2. Debt on depreciating items should be incurred only when absolutely necessary. Sometimes, you have to have a car. (You don't necessarily have to have two.) To borrow money for something you have no choice about, such as medical bills, a car, a refrigerator, etc. is considerably different than debt for a vacation, a second car, a big-screen TV, etc.

In some cases, debt can be beneficial. Remember debt is all about money at work. You can be both a creditor and a borrower. If I have 100,000 in a mutual fund or stock account averaging 10% a year return, in most cases I would be crazy to use that to pay off a 100,000 mortgage at 6%. To pay 6% (along with tax advantages that takes that down a couple of points) while I make 10% is a good deal in most cases. By the same token, to make 10% on money while paying 21% on a credit card is not a good deal. I would be better off, in most cases, selling the investments making 10% to pay off a debt that I am paying 21% for.

IN the first scenario, someone is paying 10% to use my money, while I am paying 6% to use someone else's. I have a net 4% gain (before any tax considerations). In the second scenario, someone is paying me 10% to use my money, while I am paying someone 21% to use their money. That is a net 11% loss for me.

While this is oversimplified and the long term investment strength of a security must be considered, these general rules help to focus perspective.

Above all, a believer must meet his obligations. In most cases, the answer is found by putting the wallet in your pocket and leaving it there. In my high school years with my first job, I spent money like a mad man. My parents made me give 10% to the church and put 35% in a savings account. The rest was mine and it burned a hole in my pocket. I went out to buy clothes and whatever else with it. Then one day I looked in my closet and realized I had a bunch of clothes I had only worn one time that I had spent money on. I realized I could only spend it once so I better spend it well. That changed my habits drastically. Now, I tend to spend only when absolutely necessary. It gaught me the value of money.

Debt can be managed and can be avoided. It takes tough decisions and a willingness to live without. In most cases, debt is the result of greed or covetousness which is idolatry. (There are exceptions where debt is a necessity.) To confess the sin of covetousness and take steps to get out of debt is the solution. Live within your means, whatever those means are. If you make 200,000, live like it. If you make 20,000, live like it. Don't live like you make 200,000 if you only make 20,000.

 

My husband and I always lived with as little debt as possible. We had a mortgage on the house that we paid off in 4 years. Any additions, remodelling, etc on the house were on a pay as you go basis.

We always paid off our credit cards completely as the bill came in. I don't think we ever left a balance, but I could be wrong. Sometimes we took out notes for vehicles, but we usually bought used, so the debt was minimized, and we paid those off as quickly as possible. We never were into having a lot of "stuff", but we never went without anything we really wanted, either.

We did always have a regular income, something I know some people don't have, but it wasn't a large income--a teachers salary--and we were raising 4 kids, as well.

We did endure some jokes about our frugalness on occasion, but those same people just can't believe it when I tell them that I don't need to work now that I am widowed--that I can concentrate on continuing to raise my children even though my income is slashed in half. This is possible only because there is no mortgage to be paid and a decent car owned free and clear.

So there, as I see it, is the big advantage to debt free living--even when the unexpected happens--a death, an illness, a job loss--you are not a prisoner to your finances. You still have worry free options.

 

Yup being in debt is HORRIBLE! Especially when God's Word says to pay up! I often just feel terrible when a bill is late or has to remain unpaid until we get the money.
We too JOYFULLY cut up all 12 of our Credit Cards and put the pieces in a jar that sits where we can see it everyday. No emergency card either, at least not until we feel we are mature enough to know what a real emergency is!!! LOL But we have paid them ALL off now, but sad to say that we can't even buy a $47,000 house because of all the red marks from late payments and a revolving loan we have yet to pay off and STAY AWAY FROM!!! It is something that brings us down on a daily basis. I am 34 and my Husband is 45 and we are scared to death about this situation.
A warning to anybody who has not done this to themselves: DON'T!!! And truthfully what is it that we really NEED that God does not provide. And often He gives us much more, ahhh like an ISP?
God Bless

 

I like to have a credit card for traveling, emergencies, ordering online, ordering by phone, but we always pay the balance due. I don't like to pay that interest.

I had rather write one check than several. Further we don't have to carry very much cash with us when we travel. Credit cards have to be used wisely. It is very easy to spend too much.

My husband had rather use his check card, but he doesn't balance the bank account.

 

For those interested, a debit card works just like a credit card for travel, reservations, etc. Debt is slavery. I'm a huge Dave Ramsey fan. My wife and I have a ways to go before we are out of debt, but that is one of our top priorities.

Jason

 

Interesting that many on this thread who were vehemently against debt were in debt and working to get out of it.

I got out of debt in 1979 and have stayed that way for almost 25 years. I use credit cards (6)and have several lines of credit but I never pay interest except on house or car loan.

Credit can be our servant as one writer pointed out. Get out of debt and stay out. If you can't handle credit then you are doomed to a life of cash only.

 

Which is not always a bad thing!
And true the Debits work like credit, to a point, but they can get you in a mess too if you are not careful.