Debt is dumb, specifically consumer debt. Eliminating consumer debt (i.e., Visa, MasterCard, store cards, gas cards, car loans) is by far the simplest way to start down the road to financial peace. Simple, not easy.

Saying No

Consumer debt instruments ironically should not be used to finance consumerism. It’s just too expensive in the long run.

For me, the hardest part of dumping consumer debt was understanding that I didn’t “deserve” a vacation or dinner out just because I had worked hard. If I couldn’t pay cash for it (or using credit cards like cash), I didn’t deserve it! Saying no to ourselves when we were working hard at eliminating debt was one of the toughest things we had to do on the road to financial peace.

But we stuck to it, and as time went by, saying “no” got easier. And once we were debt-free (except the mortgage), the feeling of peace was indescribable. Coming home from a vacation without a year’s worth of credit card bills is an awesome feeling!

It did mean having a plan. But if we can do it, anyone can. We will never again use a credit card to finance stuff that we should be “paying cash” for… no computers, no vacations, no stereos, etc. We will use credit cards as cash. That is, we never carry a balance, because we do a monthly budget. This makes us “-ish” in Dave Ramsey’s world. Dave employs ecological correlation to convince callers they’re too taken-advantage-of to be able to use cards wisely.

Saying Yes

Eventually, we got to say yes to things. When our income wasn’t going out the door to Visa and MasterCard, we were able to save money to pay cash for things like dinners and vacations.

We still have one leased vehicle — a used “loaner,” so it was 25% off MSRP. Leasing is called “fleecing” by Dave Ramsey. That’s because leasing makes the dealer more money than any other financing option. But the jury is still out. But the payments are lower and that improves monthly cash flow. And your side business can pay it to save a metric crap ton on taxes!

Our Faulty Reasoning

Even though our lease payment with registration, maintenance, insurance, etc. is less than the budget recommendation of no more than 10% of net income (20/4/10 Rule), we may be looking to pay cash for a quality used vehicle some day.

More Excuses…

The value of stuff with engines in your life — cars, motorcycles, boats, snowmobiles, etc. — should probably be less than half a your annual income. So this car, although it’s a luxury car, fit the bill here, too. But…

The car is a final excuse-making area for us. Vehicles are a money dial for us. As I said, Dave Ramsey calls people like us “-ish.” In his book, you have to learn to be “gazelle-intense.” But we are fortunate to have good sources of income.

Update.

We now own two debt-free automobiles that we plan to operated until the wheels fall off. We are debt-free except for our home. And we’re working to pay that off even though our mortgage interest is less than 3%.

So maybe we are less “-ish” than we used to be.

I am retired from teaching. Now I am a professional financial counselor for my credit union. My official title is Financial Wellness Advocate. It’s my first year, but I am enjoying the credit union philosophy of people helping people to move forward together.