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Debt is holding you (and me) back

24 Jun

Seth Godin is a favorite blogger, author and entrepreneur of mine. And he’s the biggest no-b.s. marketing guy on the planet. Now he’s sharing some personal finance advice too, and it’s music to my ears. Seth says Only borrow money to pay for things that increase in value.”

His short list includes your house, your education and your business. That’s it. Dave Ramsey would disagree, putting only the house (maybe) on that list–bootstrapping your business and kicking old Sallie Mae to the curb. The point is pretty clear though–get rid of those car loans, credit cards and whatever other stupid debt is drowning you. If it’s not drowning you today, it will. And it is most certainly keeping you from doing things you would and could do if you had no payments. Think about that…NO PAYMENTS! What would be on your list if you had cash every month instead of all those payments?

I know Jaim and I would be doing some different things. And we will once we can scream “We’re debt free!!!!” in a few more months. We’ve been skipping all the extras and holding rummage sales (and shopping at them) since September 2005 to dump our stupid hefty debt. We’re almost there. Hope you’ll join us.

P.S.- I don’t mean for you to think we’re doing this to get more stuff. ‘Stuff’ is for sure not what we’re after. Getting debt free, for us, is about freedom of choice. Being able to make choices instead of them being made for us–to open doors that are thrown our way in life.  Like Jaimie becoming a full-time mom, or me leaving my job to start a business, or taking a month or two off for a learning journey, or maybe deciding we want to live somewhere else for a while. With those stinky debt payments hanging over us, we can’t make those choices without putting our kids at risk of losing the roof they sleep under or the van they ride in. It’s about life, not stuff.

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11 Comments

Posted by on June 24, 2008 in money

 

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11 responses to “Debt is holding you (and me) back

  1. BDO

    June 24, 2008 at 2:03 pm

    It is awesome to hear that you are getting closer to earning your freedom! We are rooting for you!

    God Bless!

    http://www.beatingdebt.wordpress.com

     
  2. Francine S

    June 24, 2008 at 10:37 pm

    Hi, I just found your blog. Congrats on being almost debt free. We are not even close to tasting it and have been for the last 6 months living frugally and buying very little that is not needed. We have learned so much through this process about what life is actually about and how to live without posessions. It has been a blessing to go through this struggle and we feel makes us stronger.

     
  3. joebart

    June 24, 2008 at 11:14 pm

    Thanks for the kind words and encouragement. Many blessings on your journey Francine!

     
  4. totaltransformation

    June 25, 2008 at 6:58 am

    “get rid of those car loans, credit cards and whatever other stupid debt is drowning you.”

    I am trying to get free of debt too. Thus far we’ve been able to cut our debt by 40% (excluding student loans and mortgage). However, since it isn’t always possible to put down cash on a car, perhaps it might be worthwhile to suggest a reasonable time limit for car financing. For example, if you can’t pay it off in less than 6-12 months, don’t buy it.

     
  5. joebart

    June 25, 2008 at 12:48 pm

    How about this? If you can’t pay cash, don’t buy it.

     
  6. totaltransformation

    June 25, 2008 at 1:28 pm

    “How about this? If you can’t pay cash, don’t buy it.”

    While in general this is a good idea, what do you do when your only mode of transportation breaks down and you lack sufficient funds to pay in cash? Well certainly you wouldn’t cling to the “if you can’t pay in cash don’t buy it” rule so firm as to lose your job for lack of transportation? It seems that in an effort to cut debt you’ve embraced an extreme rule that by its very nature is often untenable to follow. Yes one can say that it is better to pay in cash. But it isn’t always possible, so there should be further guidance for the difficult decisions that all too often can’t be solved by an absolute rule like no cash = no purchase. Especially when it applies to essentials like a car to get to work.

     
  7. Brett

    June 25, 2008 at 1:49 pm

    “While in general this is a good idea, what do you do when your only mode of transportation breaks down and you lack sufficient funds to pay in cash? Well certainly you wouldn’t cling to the “if you can’t pay in cash don’t buy it” rule so firm as to lose your job for lack of transportation? It seems that in an effort to cut debt you’ve embraced an extreme rule that by its very nature is often untenable to follow. Yes one can say that it is better to pay in cash. But it isn’t always possible, so there should be further guidance for the difficult decisions that all too often can’t be solved by an absolute rule like no cash = no purchase. Especially when it applies to essentials like a car to get to work.”

    That’s the reason you need to build up your emergency fund before you make big purchases. If anything find an older reliable car for a low price until you have conquered the debt. If you don’t have cash for it…start sellin stuff (Garage sale, ebay, etc.)

     
  8. Brett

    June 25, 2008 at 1:51 pm

    p.s. Thanks for getting us started Joe. Can’t wait to get to the point you guys are at!

     
  9. joebart

    June 26, 2008 at 5:11 pm

    Brett’s right on. We started out by making minimum payments on everything, and saving up $1000 cash as an emergency fund. You can buy a car that runs great for that (it won’t be pretty, but it gets you to work just fine).

    Once you have that emergency fund, list all your debts–including everything but your house–from smallest to largest. Even if you owe your brother 50 bucks, that’s where you start.

    Then, we’ve just attacked that smallest debt with a vengeance, making the minimum payments on everything else. When you knock one off the list, it’s high fives all around, and right back at the next debt. Just keep kicking butt until you get all the way through the list.

    Focussed intensity is where it’s at. You can’t do this if you are not willing to change your behavior. We had to change drastically. We promised each other we’ll never borrow money again for stupid things. That means the only thing on our possibility list is a house. We make a new budget every month, and follow it hard core. It’s cash or debit card only for us.

    This is hard, uncomfortable, and really weird. And it’s working.

    Btw-the model we follow is called the “Debt Snowball.” It’s part of Dave Ramsey’s ‘Baby Steps’ to a ‘Total Money Makeover.’ We listen to Dave’s radio program and read his book (which we’ve already given to my cousins or I’d offer to lend it to you).We’re big Dave fans–he’s helped us to be much less stupid! http://daveramsey.com.

     
  10. nomadneedles

    September 15, 2008 at 9:39 am

    I love this post – it is very empowering when we realize that we have control over spending and saving. It’ also empowering to know we can change our habits. I’ve pursued a pretty simple life for a long time, but made the big move to get rid of my car in May of 2007. That made it doable for me to quit by FT job (and its 2 hr round trip bus commute) and start my own business and have the option to work PT closer to home.
    Those are my choices but the bigger point is we have choices and power to change our situation.

    Your post is a great reminder of what is possible. It’s important to see models for this.
    Robyn

     

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