Something I learned when going through Financial Peace is that we typically look at finances the wrong way. The way our grandparents handled their money (only paid cash, lived on less than you make) is long gone. The average American today, before they make a large purchase, will ask themselves if they can afford the monthly payment. For example: New car costs $25K but spread over 4-5 years might cost $350 per month. They pay no attention to the fact that they are about to go $25K in debt and will actually end up paying more than that amount because of interest. This kind of thinking typically leads to people getting trapped in the "rat race" and with debt up to their eyeballs.
I know the concept of debt has always been around (Proverbs 22:7 The borrower is SLAVE to the lender), but it seems to have gotten out of hand in the last 50 years. I am pretty sure too that Master Card, VISA, American Excess, etc. have had something to do with it. I think eventually all this debt is going to catch up with us. In fact, it probably already is. Bankruptcy is at the highest level it ever has been and I doubt it will be getting better anytime soon. The national debt is at a whopping 5 trillion dollars. Obviously people don't mind being in debt or it just doesn't bother them enough to do anything about it.
As I type this I am reminded of our mortgage and how I can't wait for the day that it is paid off. Does it drive anyone else crazy to know that you owe such a large amount of money? It does me. If Proverbs is true, then why would any of us want to be a slave to money any longer than we have to be? Maybe it's time we started taking our grandparents advice again and change the way we look at money. Let me know if I am preaching to the choir or if you have a different view on debt. I am interested to know if debt drives you crazy as much as it does me.
7 comments:
Glad to see that you'll be blogging and that you'll be covering this kind of material. God bless, man.
Debt drives me crazy as well. I hate having debt. Very good post by the way. I am with you 100%.
P.S. I told you Jud was going to love you blog. LOL!
ben...i totally agree...as i sit here contemplating taking on a mortgage...and adding debt. yikes!
proverbs is totally valid too (that's a duh statement)...b/c the stress of owing money enslaves the borrower so much!
so i may be naive...but there are very few folks i know (our age at least) that have no debt and own a house, car, etc. and i don't know if it's just been engrained (sp?) in our heads that we have to have all these things NOW...but how are we supposed to save thousands of dollars to buy a house w/o taking on debt? i guess that's the lesson i really would love to learn. hmmm...
thanks for blogging about this...i look forward to reading/learning more from you!
Great point Lori. I wish I had the answer for you. Our culture today makes it very hard for anyone to go through at least some part of life without debt. That still sounds like an excuse but the only alternative would be to drive clunkers and rent an apartment/house until you had enough money to pay cash. That might take a while. It's obviously longer than anyone including myself would want to wait.
That being said, Dave makes an exception for going into debt to buy a house. He justifies it because it is a good investment. He says you should only buy a house after you have saved up enough money to put 20% down and then you should get a 15 year mortgage with a fixed rate. Your mortgage payment should not exceed more than 25% of your take home pay. Buy doing this you will be about to pay off your home quicker and not be "as much" of a slave to debt (or your home) as you normally are. There is probably no such thing as "as much of a slave to debt" but I couldn't think of anything better to say.
Stay warm in Knoxville!
Sometimes I wonder about what our economy (the big national and worldwide picture)would be like if everyone, or at least a majority of people, lived like you are talking about. There would definitely be less spending going on. But it some ways, it seems like spending helps drive the economy. For example, if everyone followed Dave's advice, there would far fewer new, fancy homes being purchased because people could not (rightly) afford them. However, there would be fewer new, fancy houses being built because of the lack of demand for them. And it seems like a large part of our economy balances on the housing industry. It seems like the slightest downfall in consumer spending sends our economy into a tailspin...
BTW, I totally agree with what you are saying and definitely try to keep my personal finaces in this manner, this was just the first thought that came to mind when I read your post. Maybe you could give us Dave's economics lesson in your next post!
-MILK JUD
Jud-
If everyone would live debt free I think it would actually help the economy. If people were debt free they would actually have more money to buy stuff, not less. You always hear the news talking about how people spending money helps the economy and it does, but imagine what the economy would be like if those same people had more money to spend. I think for a period of time up front there might be less spending b/c people were trying to get out of debt, but after that I think you would see spending going up. Just my 2 cents (and Dave's).
Good points...
-Milk
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