I have recently started attending the Dave Ramsey Financial Peace University in order to get our financial affairs in order and I must say its been an awesome experience thus far. It has opened my eyes and I finally
see our current situation.
Over the last couple of months I have actually bringing in more money than I have ever in my life, but because the way we have been handling our money, which is a direct result of our view of money, we are still living paycheck to paycheck, and only slightly paying off our debts. For the most part, this has just been the way we live and have generally accepted it. Sure, we fight about money and what we spend it on but we don't really fight about the fact we have debt we have generally thought that the debt we acquired was good because we got something good from it. We do of course have debt we don't think is so good and realize that we made bad decisions in taking in that debt. The only difference between what we classify as good debt versus bad debt is the value of the actual thing we got from it.
But like I said, I've had an awaking...When I started thinking about cutting up all my credit cards, and I don't have any balances on any them, at the present time, I got scared. Before you think I'm must be doing something right not have any credit card balances the truth is we transferred most of those balances to our home equity loan a long time ago, and thats just one of reasons those loans are so huge now. And to tell you the truth, I don't even know how much or when that happened, its all got lost in the noise.
Anyhow, as I was saying when I started to just consider canceling those cards, and cutting off our access to the home equity loans, essentially saying to myself "I will no longer borrow any money for nothing"...and then quickly made a single exception for a house loan :) But I've decided that I will only do that if I can finance it with a 15 year loan" I got even more scared. I knew if I did that then I would have to rely on myself to take care of myself and my family. Which of course means I not been doing that up until now and have in fact relied on the "protection" and "support" of the banks and credit card companies to support my family. Doesn't this sound just like the same thing you see in the Mob movies where the poor working stiff has to pay for protection because he's feels he needs the Mob to protect him and then only later does he realize and finally see that its the Mob that is his greatest enemy.
Of course, at the time I bought their protection, I thought I was really just agreeing to get something now and pay later. That made sense, seemed like a good deal in fact. I even computed the difference in price it seemed like such a small price to pay to have it now and pay later. But I know see I got more than I bargained for, and the cost was more than computed on paper.
Once I accepted their protection, I needed them in order to get all things I wanted in life, like an education, a car, a house, and my own survival instincts were lulled to sleep. I felt comfortable and provided for because I thought I had achieved the security my family needed. But in fact, I actually hadn't achieve financial security only the illusion of it, I had not dug deep enough and I had elected to build my house on the sand.
During the first class we attended we saw a preview of the things to come and one of them was savings for the future. My wife gets really excited when she thinks of doing that. She sees how important that is and once to start doing it right away. Its easy to lulled into that way of thinking because we all know we should in fact be saving for retirement, for our kids education, etc... but won't don't realize is that we can not effectively save for anything until we get out of debt.
Unless we are making more on our savings than we our loans we are not actually saving anything, we're still losing money. Even if we do happen to make more money our savings than our debt, which is not the normal, then you still have to subtract what you pay in interest from what you make in interest, and account for inflation, and I bet you end up with a negative balance after that. It might seem tempting to start saving for the kids college but when we have ourselves still have our own student loans its best to first off those loans. And when I say best here I am talking in terms of money. Again, unless you making more on the savings than on your current loans you might as well just take out a loan for your kids college because that is exactly what you are doing. And the difference between what you are making on your savings and paying in the your current debt is the interest you are actually paying for that saving account.
All right I think I've ranted enough on my first post, so I'll just conclude that I believe that Free Enterprise, Free Agency, and the Survival of the Fittest, are all different words for the same idea. When man is forced to provide for himself his fight or flight instincts kick in, and that which does not produce results will be eliminated through natural selection. The truth of the matter is that when we are forced to provide for ourselves we end up stronger because we are forced to overcome the obstacles that stand in our way, and ultimately we are strengthened by the process and end up with more talents to show for it.
