Wednesday, February 5, 2014

Why I am Leaving the Debt Cycle

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I have a personal mission right now to get out of debt.  Most people who have any kind of debt realize how much of a burden it is.  Carrying payments to have stuff is a huge burden to bear.   In modern society, the problem is the "get it now, instant gratification" mindset.  No one asks how much it costs, but they ask what the monthly payment will be.  When you want it now, why not use credit cards or loans?  As long as you have a stable income, you can always make the payment right?

When you have debt you always have to have a stable source of income to make those payments or the things you have will be taken away.  In today's job market, it is not smart to assume your job will always be there.  Being in debt makes you feel trapped - trapped in a job you hate, trapped in a cycle of always having debt because you can't get ahead of the interest, and trapped with stuff that you may not even want or need.

The good news is that you can get out of the cycle of debt.  


That is my goal right now.  I was raised with the knowledge that saving money was necessary.  I always saved money up until the time I became a home owner, but after adding a house payment and homeowner's insurance, I didn't have any extra funds to save.  I fell for the lie that to own a house I had to have a 30 year mortgage.

Unfortunately I was also conned into getting a loan without a down payment.  It seemed logical at the time so I could keep an emergency savings, but now I realize that the extra fees added to the loan are costing me thousands of dollars extra.  If I had waited to purchase a house until after I had a down payment saved up, I would actually have equity in my home and could pay it off faster.  Since I didn't, I will now have to pay an additional $15,000 in interest alone, plus $7,000 for the closing costs and USDA fees.

Before I married I had no debt other than the house payment.  My husband brought a car payment into our marriage and we settled into the payment lifestyle, using our credit cards instead of paying cash and overspending because we didn't stick to a budget.  Now a budget gets a bad rap.  People think that a budget restricts them, but really a budget just helps you to see where your money is going.  It is a plan to use money in the best way possible and not to live above your means.

I believe that everything we have comes from God.  All the wealth is His, we are just managers of it.  I want to be a good manager of what God has given me.  In His word He says it is best to owe no man anything.  (Romans 13:8)  The borrower is slave to the lender.  (Proverbs 22:7)  I truly believe that.  When you have to make debt payments, you have to sacrifice having a job you love to work for a job that pays enough for you to make the payments on your lifestyle.  If you don't make your payments, the lender can take away what you have.  You are their slave. 


Now if you manage your money in such a way that you are able to save, it makes a big difference.  
  • You can pay cash for things and actually own them, not the bank.  
  • You can get better deals a lot of the time when paying with cash.  
  • You save money on interest.  
  • You don't have the worry that you will lose your property if you can't make the payment.  
  • If a major crisis happens in your life like if you lost your job, you can be at peace knowing that the main things you need to live are taken care of.  You would still have a roof over your head if you paid cash for your home.

A thing we need to learn from our ancestors is how to prepare for tomorrow.  They saved to buy things they needed or wanted.  They preserved foods for times like winter when food was scarcer.  They spent more time with their children instead of trying to buy their love.  They looked to the future, not just at the here and now.  We have lost sight of the future in today's world.  We want what we want when we want it and we don't think about how many years we will have to pay for it and how much interest will be due over that course of time.

I am happy to say that I finally got it.  We started sticking to a workable budget that isn't as restricting, but where we could still save and pay down debt.  As of the end of this month we will be debt free except for the house!  I am hoping that we can save up for emergencies then sell our house for profit so we can buy land free and clear.  By that point hopefully the market will be better so we can make enough profit off the house to add to the cash we save so we can buy land to homestead on.


We can live in a trailer or tiny house until we can pay cash to build.  It's not impossible but most people do not want to make the sacrifices.  I would much rather live in a tiny home somewhere I love and not have a mortgage payment than live in a larger house somewhere I don't love and pay on it for 30 years.  It may take 5-10 years to save enough to build free and clear but compare that to 30!  That's 20 more years to enjoy life debt free, and think of the interest saved!

Being debt free means you are free. Free from worry, free from keeping up with the Jones, free from the fear of losing everything.  Bad things still happen to those who pay with cash but they seem to bounce back a lot quicker from financial crises than those with debt payments.

How about you?  Are you working on becoming debt free?  Are you already living the payment free life?  I'd love to hear your story!  Use the comment section below to share your story!

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