Gather Little by Little

Photo by: Drown

The following is a guest post by my friend Ana of DebtFREE-Revolution, a blog about being debt free and getting out of debt. If you like this post, consider subscribing to her feed via RSS.

I became debt free but the mortgage earlier this week, and Gibble asked if I would like to do a retrospective guest post for this blog.He suggested a “How I got here” type piece, and that got me thinking about more than just the nuts-n-bolts of how I did it. It’s more about a major attitude shift than the mechanics.

Everyone has heard the various personal finance advice: Live on less than you make. Save up a portion of your income. Don’t get embroiled in high interest consumer debt. Yet statistics say Americans are doing the exact opposite of all that good advice. Now that I’ve slipped the shackles of my debt, I look back and ask WHY??? Then I looked in the mirror and asked MYSELF “WHY? Why did I go into debt I knew was stupid?”

See, I had been burned by debt before.I got into credit card hell back in the early 90s when I was young and naive. It took me until 2001 to finally clean up my credit report enough to buy my house. Then less than a year later I went out and financed a car. Then in 2006 I urged hubby to get a couple of credit cards to go with our TWO vehicle notes (car and truck).

WHY?? I knew better … didn’t I? I knew all the mean tricks credit card companies and collection agencies play. I knew I hated paying a car note every month. I knew I definitely hated the whoppin big truck note on hubby’s bought-brand-new-off-the-car-lot truck. If I knew all these things, why would I put my leg back into the steel trap?

I think this goes back to the “money myths” Dave Ramsey addresses in his Financial Peace University and on the radio. The two most pervasive and persuasive seem to be “You need to build your credit” and “Debt is a tool.” I know I fell for the first one hook, line, and sinker up until I listened to Dave Ramsey. In fact, “building my credit” is why I took out the car note in 02. “Building your credit” is why I urged hubby to get credit cards in 06, since his dad co-signed for his truck note and that rubbed me the wrong way. “Building my credit” was why I got that Citibank card as a college freshman back in the fall of 1991. “Building your credit” is why young adults get a high interest credit card when they start out. It’s also a very slippery slope for most. After the first credit card, there’s the second … then a car note … then another credit card or two … then the mortgage (which is okay as far as debt goes I guess) … then the HELoC … ad infinitum.

The “Debt is a tool” myth is even worse: this one is pushed by highly educated folks, high-powered business people, and many personal finance bloggers. The ones who want to dress it up fancy call it “leverage” and liken debt to a crowbar that can get you into nice things that you couldn’t do on your own. Where I come from, crowbars also have more sinister uses: breaking windows or as a weapon. Hmm, an appropriate analogy! (Also says a few things about the neighborhood I grew up in…)

So those two ubiquitous debt myths are out there … and I followed them for too long. Those two myths helped me justify some anti-smart debt, and to be completely honest I really didn’t see other ways to do things. It just wasn’t part of my family dynamic growing up. I remember how proud my mom was when she finally got a credit card after my parents’ bankruptcy. I remember how happy she was to be one of the first people to get the Discover card when it came out. I remember how happy both parents were when we finally financed a newer vehicle from the credit union’s fleet vehicle and repo sale, as opposed to the beat up used junkers my parents had driven for years that were paid for.

So even though I knew better, I had dug myself back into debt, like so many people around me. Now I have dug myself back out of debt again. This time I intend to keep my debt free status! I like the “old-fashioned” notion of saving up for most major purchases, and am currently very enamored with the ideas of having a big cash emergency fund and eventually paying off my mortgage. I like my greatly reduced expense budget, now that we only owe on the house (plus utilities and food and normal living expenses). I really, REALLY like the idea that I will soon be able to contribute at least 15% of our income towards retirement. It’s the way my grandparents did things, yet today that is considered “weird” and possibly even “counter-culture.” I guess this makes me a financial rebel WITH a cause!