Saturday, January 28, 2012

No Debt

I wish... 

The only debt I have is my house and oldest daughter's house.  Even though they claim it as "their" house that they own, they don't.  I put the down payment on and also put on a new roof.  After that they are on their own.  My plan on that house is when I retire they will buy the house off me or I will put it on the market and let someone else buy it.  If I rented it to someone right now (oldest daughter pays all expenses now: the mortgage payment, taxes, and insurance) I'd come out a couple hundred dollars ahead each month after paying the expenses.  But I don't want the rental.  The couple hundred dollars isn't that important.

My house has a huge loan on it.  I pay a little extra each month but not enough extra to make a difference.  There's a possibility of me changing jobs next year.  The pay increase would be so great that I'd be able to pay off the mortgage five years after I take that job, if I put every bit that's more than I make right now into the house payment.  Not one to count my chickens before they hatch, I won't plan on that job and I expect to be paying on the house for a long time.  The loan still has 24 years left on it.  My plan, without getting that new great paying job, is to pay the house off in 10 years or as close to that as possible. 

I know that people say either own it outright or don't pay much on it.  I don't like the don't pay much idea.  When I'm in my 70s I don't want a house payment.  I want to be completely debt free.  That brings us to today.  On our way to our party this afternoon we were listening to the Dave Ramsey show.  The kids were asking questions about being debt free.  What does that me?  Do I have debt?  Why don't I go on the show and yell I'm debt free?

I told them I used to have debt.  I borrowed money to go to college but I paid it back really quickly.  I used to owe money for my truck.  Not any more.  It was a six year loan that was paid off in four.  The truck is 11 years old.  For the last couple of years I've been putting away a small amount of money each month into the "car payment" account.  When I'm ready for something else or in addition to the truck I will have the money put aside.  I don't want to ask the bank for money. 

I explained that I use credit cards but when the bill comes in I pay it all.  They didn't quite understand that the bill could come in but you didn't have to pay it.  I tried to provide analogies using doing chores and having to do extra chores that don't really count as the number you have to do but it just wasn't coming out right. 

If they can get the concept that you don't spend money you don't have and that you figure out what are wants compared to needs, then they will do alright in life.  By my living a pretty frugal lifestyle they are learning as they go along that we have to think logically about spending money.  A TV show was discussing consumables.  That is something that is bought and used up or not any good any more after six months.  I try to go as cheap as possible when it comes to consumables.  Obviously we spend money for food, gas, etc.  But clothing is purchased with the intent of passing it down or wearing it out.  Not getting rid of it because it's no longer in style. 

While they see that I don't spend, they see their aunts and uncles spending continuously.  It's hard to explain why it's not a good idea that son just bought another TV.  This time it's a 40".  Never mind that a few months ago they bought a 36".  They live in a two bedroom apartment, on either welfare or unemployment, and go out to eat all the time.  They just got their tax return.  $8,000 returned to them.  Not bad considering they made $20,000 last year (plus welfare, plus food stamps, plus free medical) and didn't pay a penny into the income tax system.  Girl sees her cousin getting her hair done and her nails done.  The cousin is 9!  Sorry girl.  Just because you are a year older doesn't mean I am EVER going to spend money on your hair or nails.

Kids will often listen to others rather than parents.  I'll keep listening to Dave Ramsey when the grand kids are riding with me.  With all the people calling in telling there stories perhaps it will rub off after all.


  1. I went all cash after I got sick. I suck at credit cards so I cut them all up and haven't had one for over 4 years. I can say I don't really need one any more. I know I sure don't miss credit card bills!

  2. Great lessons, but hard ones for young people. If they do learn them, their lives will be much blessed.

  3. Hair, nails, and a big screen TV, all on my dime--makes me angry.

  4. One of the best results of my becoming debt free was the lesson my son learned in the process. He is determined to never have a credit card.

    Have you looked into refinancing your mortgage recently? My boss did his and went from a 30 to 15 year at 3.something. I know it's crazy low interest now.

  5. Before I retired I was living on about $12,000 a year for everything including the mortgage. I made a lot more and banked it. But my taxes were $18,000 a year. The single biggest expense (and arguably debt) all working people have is taxes. So I retired at 56 took a huge cut in my vested retirement and now I live on about $12,000 a year and pay no taxes. I now collect SS too and make more then $12,000 a year but since I don't have "earned" income my taxes are zip. Now someone else gets to pay for those on welfare.

  6. We are trying to get the mortgage refinanced. It's a slow process because it's California and on acreage. Even though the payment will be several hundred less than what I pay now I'll still pay the same and it will really cut down on the length of the mortgage.

    Makes me angry that luxories are bought with welfare too. It should be for basic necessities. I get so mad when I hear people say they "deserve" something special every now and again. No, we earn them, we don't deserve anything.