Let's talk about Americans' Debt Problem

A friend of mine posted on facebook recently an article written by author Neal Gabler. He brings up a lot of reasons why American's are so in debt. Starting with how with a statistic that "nearly half of Americans would not be able to get together $400 to pay for an emergency." I got the impression that would include even having $400 available in lines of credit to pay for the emergency. It goes on to say that even a small percentages of American's could go on to get $2000 together to pay for an emergency. 

Now we have always had enough lines of credit to pay for a $400 emergency and a $2000 emergency. But regardless if we could get the funds together, if it was possible to pay for it with the credit card- we did. It was easier not to think about it.  That is part of the reason we are in the situation we are in. In addition, if those funds were required in cash, it would just mean that something else would be put on a card.

Before starting on this path of debt reduction, I would have sympathized more with his life story. I would have related more to his plight. But now I look at it and notice that there is a tone of "yes it is my own fault" that they are weighed down by this debt, and he sees himself as breaking a taboo just talking about it. I get the impression that he is also saying "BUT I would make the same choices again and still be in the same situation". He is not saying that debt is a bad choice all the time. I distinctly feel that he is saying that debt is necessary but shackling us as Americans away from our dreams. 

I see the attitude that needs to happen in America as a state of repentance.Repentance is more than just saying you are sorry, but we have to change, to truly repent we must make permanent changes to our lives.

We need to recognize that we have a problem with debt. Each of us individually needs to recognize, then we need to repent of our addiction, by feeling sorrowful for our choice, and then resolving to never use it again. Mr. Gabler did not seem repentant. He recognized that there was a problem, he even seemed remorseful that he made those choices, but it felt that he was still trying to justify his choices. In the end, although he talks about how their past choices are determining their choices today, I would not be surprised to learn that he and his wife are still using credit cards as a way of life. One thing I have realized is that as long as you are a consumer of debt products, eventually you will accumulate debt and become "in-debt". You will never get out of the cycle unless you forsake the products of debt. Yes some people, like my dad, can have a card and pay it all every month. He only uses it for those things were he needs to (internet, hotel bookings, car reservations). For everyday purchases he uses is debit card. I have learned that I am not my dad and neither are most Americans. Especially American's who have been told that they will have to go into debt to enjoy a basic standard of living, that is how it is done, how everyone does it. Especially Americans who have been told that their buying power will never be that of their parents because their income isn't going to increase. It is stagnate. Lastly it is never going to work for Americans who have bought into the mentality that buying stuff is good, and if you can't afford it put it on the card, the card benefits are great. All things that most Americans find normal and how things are done. I so wish I could ask Mr. Gabler some questions. See if he sees this bigger picture. It is never too late to change. Change our lives and repent, and change our spending habits and get out of debt.

Life will *always* be CRAZY

When Life happened before we started our financial revolution I saw it was life happens and I don't want to think about it. I would then hand whatever it is my credit card and not think about it.

So EVERY month there has been something or multiple somethings. Each time one of these things come up it has created two responses. First, getting upset at how this is delaying our ability to pay off the debt. Then second, as we change our budget around it shows us that we can take care of this, stay on track, and have managed to still pay off some debt.

Examples:

• Between August and October our family over $600 in dental work.
• End of September I chopped off the tip of my finger and we found ourselves at the ER. Between all the bills it cost us over the next couple months over $300
• In August and September everyone got sick at least once (some twice) and we had about $200 in medical bills (doctors and prescription).
• November brought us two blown tires. That was another almost $400 to fix everything connected with it.
• My doctors have been urging me for a year now to get my tonsils out. Since we've had sooo many medical expenses this year we decided that financial we'd get the best price for having them removed if we did it before the end of the year. We now added all the surgery expenses to all our crazy medical bills this year. 

But we have to remind ourselves that we are still staying afloat.

We are making progress. Since starting in June. We have paid off almost $8000 in debt. There is a small part of me that looks at all of our "life happens" expenses and think about how that is another $1500 we could have paid off. But I need to remind myself that no matter what "life happens" and will continue to happen, but as long was we are trying to do it right we'll survive. 

Avoid our Pitfalls of Credit Cards

Credit Cards are the worst type of debt. I fooled myself for years into thinking having "revolving debt" was the way to go. I got into the habit of convince back in college and have continued those bad habits.
I realized in college that if I used my card for my every purchases instead of my debit card. I didn't have to pay attention to what was in the account at that moment. I didn't have to worry if my paycheck was deposited today (and was available) or if it will show up tomorrow. So I used my card to make the everyday purchases and then told myself I would pay it all each month.  Sometimes it worked out just like that. But then there were the months I was unemployed or didn't have as much income as I normally did for my spending. Or I straight up over spent. As life got even crazier and I paid even less attention those numbers added up even more. There are a lot of people who get into lots of debt because they impulsed bought, often big ticket items. We aren't bad at that. We have had our moments, but that is not the bulk of our debt. And to compound it all is the compounding interest. Once you have that carry over balance getting rid of that balance again is almost impossible only making payments.

So here is a warning to you.

All debt is bad debt. Revolving debt is still debt and the easiest pitfall get trapped into. Sure I thought it was making my life convenient (and it was convenient) but I was also ignoring the responsibilities to my finances. I was addicted to my credit cards. Not exactly to the overspending but to the easy non-accountable way I didn't have to worry about every penny. But that isn't good for our pocketbook nor is it good for the soul. God's plan is for us to be accountable.

Now we are paying the price of our non-accountable actions. We are now being held responsible for all the actions we have taken.

Learn before. Don't use credit cards. If you're in the same boat as I am. Cut up those cards, go cash, and force yourself to learn to be accountable. It is possible. We can do it.

No debt is good debt.

Making Sacrifices: Giving up Netflix

We have decided that we need to make sacrifices in order to full commit to where we want to be.

One of the things we have decided to sacrifice is our Netflix account.

This was hard for us. We have loved Netflix. A few years ago we were unemployed for about 6 months and we cancelled our Netflix then and it was so sad. We missed it so much and it was the first thing to come back when we were employed again. It will be probably be one of the first things we put back into our budget when we are fully out of debt. It was also a hard choice for us to sacrifice because it is such a small amount out of our budget- Less than $10 a month for unlimited entertainment for our whole family. If we had only $10 for entertainment in our budget each month- it is the best value for that money.
We have been without cable for 6 years now- which was not an easy choice because we live in a rural community and there are no "local" tv channels with out cable. We watch everything online and don't feel like we're missing out on anything. Chromcast and Netflix have been wonderful to us. But we are cutting out anything that isn't necessary.
We own lots of DVDs. There are lots sites that we use to watch for free. We can do this.
Some of the online watching resources we use:
http://video.pbs.org/
http://pbskids.org/video/
http://www.hulu.com/
http://www.mylifetime.com/shows/
http://disneyjunior.com/
https://www.youtube.com/

pbskids is probably our favorite site to watch online

What are your favorite online places to view content?

If you in the cut the cord from cable boat to make sacrifices. If you don't already do Netflix consider it. Their selections of kids shows is awesome. They have a lot of shows of my husband and I want to watch, and their movie selection isn't bad and is constantly changing. The value of how many options you have is very reasonable. I look forward to the day we can put it back in our life.

Side Note- What I miss most about cable is the sporting events. I am a huge football fan and I miss my college football. Additionally I like turning on baseball games to occasionally watch. How do you give up cable when you want to watch sports?
Suggestions- Go to friend or family to watch the game. Sport events should be social anyway so make it social by watching it over there. Another suggestion is make it your date night (if your significant other likes sports too). ESPN online use to allow you to watch online if your internet was a participating company, but now it is only if you put in your cable information. Boo ESPN. Which leads me to the last method I use to watch sporting events. Bootleg TV. There are sites out there (very shady sites) that re-stream live TV. Due to their shadiness and ever changing locations I will not be sponsoring any of those sites on my blog. Needless to say, they exist and you can find them. Word of warning be careful where you click, don't let the moving or fake box closing x's to trick you. If you click wrong it will take you to sites you never wanted to see and can't un-see. I do not set up the sporting events in view of my children for this reason.

Good luck in all your efforts to live more thrifty lives. What sacrifices have ya'll made in getting out of debt or to live within your means?

Why I'm here

First off I'm not starting this blog as a way to become one of those guru bloggers. Or even make a little cash from the traffic or advertising. I'm here to make myself and my family accountable.

My family of 6

My husband and I recently came to a realization. Yes we live well. We paid all our bills, we had money for things that we wanted- or at least that is what we thought. Whenever we looked at our finances, there was always this pile of debt that tried as we may to throw money at it wouldn't go away. We would buckle down and make meaningless goals and continue to throw money at the pile of debt, but the interest kept eating all that money. We would then give up, keep throwing money at it and pretend it wasn't there, and not talk about it. Just wishing and hoping and dreaming that throwing money would one day work and about all those things we wanted to do in the future "when we had money".
I had heard many of my friends and blogs talk about the book "The Total Money Makeover" by Dave Ramsey. And more specifically the "cash and carry" method he talks about and the "snow-ball" method of eliminating your debt and what Dave Ramsey is all about. But, there seemed to be something totally off to buy a book about saving money, in order to save money. My husband and I were having a finance conversation about money and our goals. I suggested that I had recently seen a friend post about how this book had changed her family's outlook on money. It had been a required reading for her accounting class. I mentioned my issues with buying the book to "save money" but my husband was actually more on board then I thought. That evening he got on his Kindle and purchased an e-copy. He spend all weekend reading it whenever he got a chance. He was all fired up and ready to get started- after I read it. I use to love to read. But as a mom I have the hardest time reading anything that takes me more than a minute to skim. Not to mention I read supeeeerrrr slow. But I knew our goals and dreams were going to stay out of reach unless we made some deliberate choices to change them. So I read it. Took me a whole week of trying to read every moment I could pull away from my children to read.

So here we are. Almost done with the first month of our total money makeover and it has not been easy. We have decided we are going to make sacrifices to reach our goals. Some of those include: canceling our Netflix account, canceling our summer vacation, making more things from scratch, no fast food or eating out for probably the next year... Just with anything when we want to show the LORD we are serious about a goal we show Him by making sacrifices. We've set up our budget and have our emergency fund, and even paid off my student load that was barely hanging in there. There are times I have wanted to cry, but it is my heart changing.
On a spiritual note, we are members of the Church of Jesus Christ of Latter-Day Saints, aka the Mormons.  We have been commanded to not go into debt, and if you are in debt- to get out of debt. For the past few years I have been telling myself lies- and didn't even realize it. Any time we were counseled to get out of debt I would tell myself "we're working on it" and convince myself it would happen. People it won't ever happen unless you are actively trying to do something about it with specific goals. Set the goals work to the goal, do it with purpose. I know my family isn't alone, just saying you are trying to pay off that debt isn't doing it.
On another note- I feel guilty that I help perpetuate lies, I am never going to find the people who I lied to and ask their forgiveness. I don't even remember most of them, and the sad part is I wholly believed the lies I was telling. Let me explain. I supported myself through college by working as a teller (and other positions) at some credit unions. Now I was born to goodly parents who lived debt free and taught me the evils of debt. They taught me how to make a budget and how to live within my means, and for the most part I did. But when I entered the world of finance- I met lots of people who told me differently. Lots of people who told me that debt can be good. Debt is needed, debt is the only way you are going to be successful. I bought into it hook line and sinker. I told myself that I could have a little debt. I would still be living within my means, I could make the payments. I can have a credit card -even my parents had a credit card- but my dad is one of the few people in the world who actually pay off every single penny with each purchase they make when they make that purchase. I thought I could be that disciplined. But it was all lies to myself. Lies I had become so numb to that I didn't even realize that they were lies until I was reading Dave Ramsey's book. In addition, I had given up on cash. When I was a teller, cash was something I "counted" out to other people. It was paper to me. I could touch up to $200,000 a day and it meant nothing. When I had my own cash I spend it like you should drink water and couldn't understand where it ever went. I decided me and cash didn't get along. I divorced cash for the sleek world of cards, that way I could keep tract and see every single little penny I spent. And at that time that actually worked for me. As a bank employee I could see and check my account 100 times a day. I watched every penny leave my account and be accounted for. Fast forward 9 years and I haven't worked in the finance work that whole time and I check my bank account online maybe once a week. Plus now their are two of us with drawling from that account, and we aren't always communicating on what and when we are spending money. So we've made some bad choices to avoid making other mistakes. Now I can't go back to my days as a teller and tell every person that I spoke to suggesting debt was the way to go and tell them how stupid I was. But I can now, right here say stop using credit cards, don't be afraid of cash, stop saying we can having it now and instead say we can save for it now and buy it when we have the money.  For everyone I knew as a teller I say, I am so sorry I tried to lead you down the unwise path. Please forgive me. And for everyone who is in debt just like we are. We can do it! We can get out of debt with sacrifice and with deliberate choices to pay off our debt.