Habit: Debt is not an option
I opened my first credit card when I was 18 years old. I was told I needed it to “build my credit.” I went to Best Buy and financed the purchase of a digital camera with all the accessories. I was so proud of myself and felt so adult for making such a wise move. And the habit was created.
Have more month left at the end of the money? Put some stuff on a credit card.
Can’t pay $21,000 cash for the brand new car you want? Take out a 5 year loan.
Don’t have the money for private school college tuition for your husband? Sign here for a student loan.
Want to start a business and can’t afford all the equipment? Borrow some money to get off the ground quicker.
What makes me feel the most stupid about all of it is that when we went totally broke in 2013 due to some bad timing on some business decisions, we moved in with my parents 7 months pregnant because we couldn’t afford rent. When I look back, we COULD have afforded to support ourselves but we had $1,300 per month in minimum payments on debts. I was so afraid of “destroying my credit” that I never once missed a credit card minimum payment, but we couldn’t support our family.
Unfortunately, we didn’t learn the lesson for three more years. We would make progress, pay a bunch of debt down, have an expected expense pop up and throw it on a card. We were using our business credit card for every business transaction so we could “get the points.”
Studies have shown that when you’re putting it on a credit card and not using cash or debit, you spend 12% more money. Emotionally, it doesn’t hurt as badly to let go of the money.
In September 2016 I started listening to the Dave Ramsey podcast. That fall we started using the app and setting a monthly budget together, but I was still so afraid to part with that business credit card. By January, I knew we needed to go “all in” on Dave’s plan. We didn’t have the guts to cut the cards up, but we did take them out of our wallets and hide them in the house. That was January 2017 and we haven’t swiped a credit card since.
We saved up our starter emergency fund and have been cash flowing every unexpected expense since then. We’ve paid cash for two vehicles. Thanks to the monthly budgeting, we’ve have money sitting in the checking account ready to go for most of the home, auto, medical and life expenses that have come up. We just plan better.
Twice in the last year the temptation was there to finance something.
The first was on an airplane. They have a direct flight from where we live to where my in-laws live and I SO DESPERATELY wanted to sign up for the airline credit card and use it for our purchases so I could earn a free flight, but my hubby talked me out of it. The risk was not worth the reward.
And then the second time was when I was researching coaching schools. The two I liked the most were both $18,000, which we didn’t have in savings. I wanted to justify financing them like people do secondary education, but I just heard Dave’s voice. “If you feel stuck with a situation that debt is your only choice then that just means you haven’t researched enough options. There’s always a solution that avoids debt.” I patiently waited and kept researching more schools. Like magic (but I just credit God) the Choose to Win coaching program crossed my path a couple months later and was a MUCH BETTER fit for the type of coaching I wanted to do AND was a price point I could cash flow.
My husband and I have just made the decision as a couple that debt isn’t an option for us.
If you still believe in debt as a way to build wealth, I HIGHLY RECOMMEND the book Everyday Millionaires. You’ll find that being debt free is one of the most common lifestyle choices people have in common that retire with at least a $1 million net worth or greater.
If you’re currently in debt and looking for a way out, I cannot recommend Dave Ramsey highly enough. A few good places to start are his book The Total Money Makeover, his podcast, or his course Financial Peace University.
Wanna hear something funny….everything he teaches goes right back to developing the right habits. Maybe there’s something to this habit thing, huh?