Wednesday, May 27, 2009
I'm a little behind on my FPU updates, but let me tell you the Debt Dumping lesson was the BEST one so far. Dave had a big bunch of balloons and popped each one for every myth that we Americans should believe, here are just a few:
1. Car payments are a way of life, and I'll always have one.
TRUTH: Staying away from car payments by driving reliable used cars is what the typical millionaire does. That is HOW they became millionaires (just one of the things).
2. Playing the lottery and other forms of gambling will make me rich.
TRUTH: The lottery is a tax on the poor and on people who can't do math. He had some interesting statistics about people who pay the lottery and lets' just say they aren't good. Poor is a state of mind, broke is a temporary circumstance.
3. I'll take out a 30 year mortgage and pay extra-I promise!
TRUTH:Life happens! Something else will ALWAYS seem more important, so almost no one pays extra every month. Never take more than a 15 year fixed loan and NEVER spend more than a quarter of your income on a mortgage.
HERE'S THE BIG ONE: I NEED A CREDIT CARD TO RENT A CAR OR TO MAKE PURCHASES ONLINE.
TWO WORDS: DEBIT CARD.
There were lots more, but he was just giving all these facts and numbers about the credit cards companies and how differently millionaires and rich people operate. I realized that I really could live the rest of my life without a credit card and for the first time I had peace about that! If I need something I can't pay with my debit card -DON'T BUY IT. Crazy, I know. Walking that out is probably not going to be easy, but I no longer want to be the credit card company's slave.
The rich rules over the poor, and the borrower is servant to the lender. Proverbs 22:7
Then he had this great clip of a gazelle and a cheetah and how we have to BE like the gazelle or the cheetah will get us. It was really great, he is a very engaging speaker and so funny. If you don't want to do financial peace, get his total money makeover book. It will change your life.
So debt dumping is starting with your smallest debt and paying it off, then applying what you were paying on that to the next one-as you lose debt, your payments start getting huge to the others. It also gives you victories and hope that there is an end. He says sell something, get a part time job, do whatever it takes during this short season to pay stuff off!!
I can't wait to be able to call his radio show and scream in his ear: I'M DEBT FREE! But that won't happen for awhile, because Mike and I are like the billion other Americans who have been snared in a trap, but there is a way out!! Yipee!
Oh, he also brought truth to the whole credit score thing. What a relief. When you pay cash for things it doesn't matter what your credit report is-it is just a NUMBER! Him and his wife have been living like that for 20 years and he went to get his FICO score and they sent him a letter that they couldn't find one on him!
OUR PROGRESS SO FAR:
Our emergency fund is almost built back up.
Our first cash system and budget starts June 1.
We have begun the debt snowball.
We are talking about money and goals together with a lot less fighting :-) that should be at the top of the list!