I remember the day that I walked in to the bank to take out my first loan. I was still in high school and I wanted a new Ampeg bass amp more than anything. I was playing in a band and had worked all summer long to earn enough money to buy my own bass guitar. But what good is a guitar without a sweet amp to go with it? And I sure wasn't going to wait to earn enough cash to buy it. Plus, if I took out a loan to buy it, I'd start building credit! Woohoo! So I took out a $2000 loan. I financed a guitar amp.
Saying those words ten years later sounds insane. Little did I know that the $2000 loan for a guitar amp would be the very beginning of my personal debt journey. Ten years and around $70,000 later, here we are coming to the end of the debt journey. Over the past three years, my attitude has changed about debt and I've felt as if my debt has imprisoned me.
You'll typically hear me say "my debt" as much of the debt we're paying off I brought in to our marriage. But make no mistake, it's ours now and we're paying it off together.
When we started paying off debt, we had to make decisions that some people just didn't understand or agree with. We've said no to things. We've reduced our retirement savings. We live a frugal life. There's been a lot of why's? Why do it? Why focus on paying off debt? You could be saving for retirement! You could be taking trips! You could be doing all these other things!
The borrower is slave to the lender
There is a plethora of verses in the Bible that tell us how to handle our money. Tithing, debt, contentment, greed, planning ahead. It's very clear how God wants us to handle our money and our relationship with money. It definitely doesn't say that we should carry debt all our lives.
Bible Money Matters has a huge list of verses that are about how we should handle our money.
Money is one of the leading causes of stress and divorce in America
The data doesn't lie folks. You can read more here or here about how money stresses us out. There are way too many other things to stress us out and cause strain on a marriage. For Mrs. PF Guy and I, it was important for us to eliminate unnecessary things that may cause stress on our marriage. We simply weren't going to let money be one of the stresses in our marriage. Being on a plan and sticking to it has really minimized any strain on our marriage with regards to money. Our typical argument is about how much we should spend on groceries in a month. For those that couldn't guess, I'd be perfectly fine living on ramen and rice and chicken, but Mrs. PF Guy wins and makes sure we eat nice and healthy but still on a reasonable grocery budget.
As Americans, we sort of suck at money. Want some more statistics to back that up?
- 28% of Americans have no savings at all
- 63% of us don't have enough to cover a $500 emergency
- The average U.S. household debt is 136% of their annual income
All things that lead to stress and strain on a marriage. It's just not worth it.
Being debt free will give us freedom
What an obvious statement. But it needs to be said. And let me explain a little bit.
Our minimum monthly payments that were being made towards all our debt totaled over $1200. This didn't include our mortgage. This was two car payments, four student loan payments, and a credit card. Every single month we look at how much we put towards this debt and dream of what we could be doing with that money instead. Think of what you could do with $1200 extra a month. Think of how much less you'd have to work. Think of how much you could save. Think of how much you could give.
Those who have been reading my articles know I love my compound interest calculator. If we invested that $1200 every month for the next 20 years (with no initial investment) making 6%, we'd have $530,000. YAHTZEE!
This also goes to show that putting a slight hold on retirement investing while we focus on paying down debt is OKAY. A couple of years while we're still young isn't going to harm us too much. I think we'll be alright when we're ready to retire.
It's a personal preference
The truth is this. What each of us do with our personal finances is our own preference. And each families circumstances are there own and require a slightly modified plan. But it's a personal preference. If you want to stay in debt for the next 20 years, that's your choice. If you want to carry car loans on brand new cars, that's your choice. When we decide to buy a new (to us) car, we'll choose to save up and pay cash. Because we don't want to have to have a car payment every month. We don't want to ever have to worry about making that car payment. Life is full of surprises. Just because you can afford $250/month today, doesn't mean you can a year from now. But again, that's your choice. Yours is yours and ours is ours.
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Cover photo by John Towner via Unsplash