Chapter Two
Get Out of Debt
For most people, being free involves being out of debt. I have realized that it is pretty hard to be free when you have to work every day just to make enough money to pay your bills.
I am a huge fan of Dave Ramsey. I have to say that I do not agree with everything Dave says, but I do agree with most of it.
If you owe money to someone else, you work for them. You go to work to make money just so you can make your payments. Then, you get a raise. You start making more money, so now you can pay a little extra money towards those loans.
Unfortunately, most people do not do this. They get a raise, so they buy a bigger house, a nicer car, or a boat. It’s a vicious cycle that puts people in more and more debt. Then they lose their job or have unexpected bills, and they cannot make their payments.
I cannot count the number of people I have seen in this situation. As long as their income continues, they will seem ok. However, if it even drops a little, they will lose their house. I have seen it at all income levels too.
I do not want to put myself in this situation. Sometimes I take a lot of crap for it, but I drive a 2000 Saturn (in 2014) with over 200,000 miles on it. I have been tempted at times to buy a nicer car, but I have decided to keep my old car. When we moved to our farm house, we decided that we will need a truck. Instead of rushing out to buy something right away, we waited to find a good deal. My dad’s neighbor told him that he was moving out of the county in a couple months and needed to sell his old truck within about a week of moving.
He had a 1994 Chevy with about 175,000 miles on it. He was asking only $800, and I agreed to purchase it at that price. I take care of my vehicles. They both run well, and I do not have to put much money into repairs. So I now have two “beater” vehicles that I paid for with cash. I love it. We did, however, buy a little nicer for my wife, but we still paid cash for it.
My dad has told me a story a few times now about a guy that he thought was pretty wealthy. As I mentioned before, my dad owns his own painting business, and this guy hired my dad to paint his brand new house. This is a house that was worth a few hundred thousand dollars back in the 80’s. The job went smoothly, and my dad got paid. The guy called my dad back a few months later to repaint a room because he wanted the color changed. My dad walked into his living room, and he only had a couple lawn chairs sitting there. My dad asked him if he was going to be moving in soon, and the guy told him that he was living there already. He had just spent all of his money on his house, so he didn’t have money for furniture.
I think about that story all the time and how I do not want to be that guy. I guess that’s why I live in a small two bedroom house with my wife and three kids. I have to admit that we used to have a little bigger house…not much bigger though. We purchased this house because it has a lot of land with it. But, instead of building a bigger house on the property right away, we decided to live in our “tiny house” and save money.
I cannot say that I am perfect. I spend money all the time that I regret later. I make mistakes just like most people. I am working on it though.
Below are the baby steps created by Dave Ramsey. Follow these as closely as you can, and you will be on your way to being out of debt.
1. Save $1,000 to start an emergency fund.
Before you pay any debt down, save $1,000 for emergencies. This can be from selling things you do not need or just not spending that money when you receive it.
2. Pay off debt using the debt snowball
This is my favorite step. Basically, it is saying that you should pay off your smallest debt first. Once you pay that one off, you take the money you would be paying on that payment and pay it on the next smallest debt. So now you are making the normal payment plus the extra payment that you would be making on the debt you just paid off. Continue to do this until everything is paid off but your house.
3. Save 3-6 months of expenses
This step goes along with step 1 (saving $1,000) but it provides a little more buffer. Once you have this step completed, you are able to withstand any short-term drops in your income.
4. Invest 15% of household income into Roth IRAs and pre-tax retirement
Investing 15% of your household income should be fairly easy at this point given that you shouldn’t have any debt other than your house. This is actually one area where I do not agree with Dave 100%. I do believe in investing, and I do believe in investing at least 15%. However, I believe that there are other ways to invest that 15%. For example, I like real estate and precious metals as investments. I think that you should invest in Roth IRAs and pre-tax accounts too. I would rather be more diversified into other things than just the stock market.
5. College funding for children
One thing to think about here is how much your child (or children) will need to go to school. It may be overwhelming trying to save 100% of the money all of your children will need for college. So, focus on saving what you can afford.
6. Pay off home early
The hard part here is to figure out how much money you are putting towards step 5 and how much you are putting towards your home. There isn’t really a definitive answer. I think it all depends on the age of your children, how much money you think they will need for college and how much you have left on your mortgage. This answer is going to be different for everybody; therefore, your percentages will different.
7. Build wealth and give
I am a huge proponent of giving – whether its money or time. Giving money to someone or an organization feels good but not nearly as good as volunteering your time for a good cause. There have been times that I haven’t donated much. I never seemed to have enough money to donate. My wife and I finally decided that we were going to give no matter what. Things have just seemed easier since then. There are still times when things get tight, but we always have enough now.
If you want to read more about Dave’s “baby steps”, check out his book The Total Money Makeover.
I came across these quotes online. There are a lot of quotes on debt, but I think that going through every one of them may help get the point across.
While going through the list, pick out a couple quotes that help keep you stay motivated to get out of debt. Write them down, and put them somewhere you will see them every day.
“Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.”
-Ogden Nash
“Good times are when people make debts to pay in bad times.”
-Robert Quinlin
“What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience?”
-Adam Smith
“It is the debtor that is ruined by hard times.”
-Rutherford B. Hayes
“We all think we’re going to get out of debt.”
-Louie Anderson
“The man who never has money enough to pay his debts has too much of something else.”
-James Lendall Basford
“I’m in debt. I am a true American.”
-Balki Bartokomous
Proverbs, Sayings, and Unknown
“He who promises runs in debt.”
-The Talmud
“It is poor judgment to countersign another’s note, to become responsible for his debts.”
-Bible
“Debts are like children: the smaller they are the more noise they make.”
-Spanish Proverb
“Interest on debts grow without rain.”
-Yiddish Proverb
“There are four things every person has more of than they know; sins, debt, years, and foes.”
-Persian Proverb
“The only man who sticks closer to you in adversity than a friend is a creditor.”
-Unknown
“Before borrowing money from a friend, decide which you need most.”
-American Proverb
“In God we trust; all others must pay cash.”
-American Proverb
“Promises make debt, and debt makes promises.”
-Dutch Proverb
“Christmas is the season when you buy this year’s gifts with next year’s money.”
-Unknown
“A hundred wagon loads of thoughts will not pay a single ounce of debt.”
-Italian Proverb
“Running into debt isn’t so bad. It’s running into creditors that hurts.”
-Unknown
“A church debt is the devil’s salary.”
-Henry Ward Beecher
“The borrower is servant to the lender.”
-The Bible
Benjamin Franklin (and other dudes like him)
“Rather go to bed supperless, than rise in debt.”
-Benjamin Franklin
“When you get in debt you become a slave.”
-Andrew Jackson
“Tis against some mens principle to pay interest, and seems against others interest to pay the principle.”
-Benjamin Franklin
“The second vice is lying, the first is running in debt.”
-Benjamin Franklin
“Never spend your money before you have it.”
-Thomas Jefferson
“Lying rides upon debt’s back.”
-Benjamin Franklin
“I say to you never involve yourself in debt, and become no man’s surety.”
-Andrew Jackson
“Creditors have better memories than debtors.”
-Benjamin Franklin
“Buy what thou hast no Need of and ere long thou shalt sell thy Necessaries.”
-Benjamin Franklin
“Live within your means, never be in debt, and by husbanding your money you can always lay it out well.”
-Andrew Jackson
“Those have a short Lent, who owe money to be paid at Easter.”
-Benjamin Franklin
Funny… well, some of them at least…
“If I owe you a pound, I have a problem; but if I owe you a million, the problem is yours.”
-John Maynard Keynes
“If you think nobody cares if you’re alive, try missing a couple of car payments.”
-Earl Wilson
“This would be a much better world if more married couples were as deeply in love as they are in debt.”
-Earl Wilson
“When a man is in love or in debt, someone else has the advantage.”
-Bill Balance
“Debt, n. An ingenious substitute for the chain and whip of the slavedriver.”
-Ambrose Bierce
“No man’s credit is as good as his money.”
-E.W. Howe
“Today, there are three kinds of people: the have’s, the have-not’s, and the have-not-paid-for-what-they– have’s.”
-Earl Wilson
“Forgetfulness. A gift of God bestowed upon debtors in compensation for their destitution of conscience.”
-Ambrose Bierce
“Some people use one half their ingenuity to get into debt, and the other half to avoid paying it.”
-George Prentice
“A man who pays his bills on time is soon forgotten.”
-Oscar Wilde
“I like my players to be married and in debt. That’s the way you motivate them.”
-Ernie Banks
“Ten million dollars after I’d become a star I was deeply in debt.”
-Sammy Davis, Jr.
Writer’s writers
“A man in debt is so far a slave.”
-Ralph Waldo Emerson
“He that dies pays all debts.”
-William Shakespeare
“Debts are nowadays like children begot with pleasure, but brought forth in pain.”
-Moliere
“Wouldst thou shut up the avenues of ill, Pay every debt as if God wrote the bill.”
-Ralph Waldo Emerson
“Neither a borrower nor a lender be; for loan doth oft lose both itself and friend.”
-William Shakespeare
“Debts and lies are generally mixed together.”
-Francois Rabelais
“There are but two ways of paying debt: Increase of industry in raising income, increase of thrift in laying out.”
-Thomas Carlyle
“Poets, like friends to whom you are in debt, you hate.”
-William Wycherley
“He looks the whole world in the face for he owes not any man.”
-Henry Wadsworth Longfellow
“Who goeth a borrowing. Goeth a sorrowing.”
-Thomas Tusser
“Debt is the worst poverty.”
-Thomas Fuller
“Speak not of my debts unless you mean to pay them.”
-George Herbert
“Youth is in danger until it learns to look upon debts as furies.”
-Edward G. Bulwer-Lytton
“Small debts are like small shot; they are rattling on every side, and can scarcely be escaped without a wound.”
-Samuel Johnson
“Do not accustom yourself to consider debt only as an inconvenience; you will find it a calamity.”
-Samuel Johnson
Government, Politics, and other boring topics
“Blessed are the young, for they shall inherit the national debt.”
-Herbert Hoover
“I found this national debt, doubled, wrapped in a big bow waiting for me as I stepped into the Oval Office.”
-Barack Obama
“A liberal is someone who feels a great debt to his fellow man; a debt he prop oses to pay off with your money.”
-Gordon Liddy
“I go on the principle that a public debt is a public curse.”
-James Madison
“A billion here, a billion there, sooner or later it adds up to real money.”
-Everett Dirksen
“You cannot spend your way out of recession or borrow your way out of debt.”
-Daniel Hannan
“Debt is a prolific mother of folly and of crime.”
-Benjamin Disraeli
“Simply put, unsustainable debt is helping to keep too many poor countries and poor people in poverty.”
-Bill Clinton
Modern ‘Gurus’
“Debt is dumb. Cash is king.”
-Dave Ramsey
“Debt can turn a free, happy person into a bitter human being.”
-Michael Mihalik
“Chains of habit are too light to be felt until they are too heavy to be broken.”
-Warren Buffett
“If you’re thinking of debt, that’s what you’re going to attract.”
-Bob Proctor
“Debt is normal. Be weird.”
-Dave Ramsey
“If you have debt I’m willing to bet that general clutter is a problem for you too.”
-Suze Orman
Kickin’ it Old School
“Debt is the slavery of the free.”
-Publilius Syrus
“A small debt produces a debtor; a large one, an enemy.”
-Publilius Syrus
“Crito, I owe a cock to Asclepius; will you remember to pay the debt?”
-Socrates
“It shows nobility to be willing to increase your debt to a man to whom you already owe much.”
-Cicero
“It is thrifty to prepare today for the wants of tomorrow.”
-Aesop
Hard to categorize quotes…
“It takes as much imagination to create debt as to create income.”
-Leonard Orr
“A habit of debt is very injurious to the memory.”
-Austin O’Malley
“In the long run we shall have to pay our debts at a time that may be very inconvenient for our survival.”
-Norbert Wiener
“The impulse dances inside the debt.”
-Jareb Teague
“A mortgage casts a shadow on the sunniest field.”
-Robert Green Ingersoll
“One of the greatest disservices you can do a man is to lend him money that he can’t pay back.”
-Jesse Jones
“Debt is like any other trap, easy enough to get into, but hard enough to get out of.”
-Henry Wheeler Shaw
“Many delight more in giving of presents than in paying their debts.”
-Sir Philip Sidney
“Wars in old times were made to get slaves. The modern implement of imposing slavery is debt.”
-Ezra Pound
“Home life ceases to be free and beautiful as soon as it is founded on borrowing and debt.”
-Henrik Ibsen
“Debt is the secret foe of thrift, as vice and idleness are its open enemies.”
-James H. Aughey
“Worrying is like paying on a debt that may never come due.”
-Will Rogers
“One can pay back the loan of gold, but one lies forever in debt to those who are kind.”
-Malcolm Forbes
Grand Finale!
“Don’t let your mouth write no check that your tail can’t cash.”
-Bo Diddley
- http://manvsdebt.com/debt-quotes/ Resources: