All Debt is Bad Debt

As of June we are officially DEBT FREE. It feels good.

You know, I really, really hate debt. It is so evil! Why you ask? Because not only does debt make people LOOK like they have more money than they do, but it also makes them FEEL like they have more money than they do… until it limits their opportunities.

Do you remember that commercial where the guy is riding on a lawnmower talking about his expensive house and car, at the end he says, “And how do we do it? We’re in debt up to our eyeballs!” That is how many Americans are living today. In fact, as of 2018 the average household credit debt (revolving) was nearly $7,000, the average household auto loan debt was just above $28,000 and the average household student loan debt… a staggering $47,671. WHAT?

Think about it, when you have debt, you don’t truly have an income. You’re not “making” money because that money has already been spent and is owed to someone else.

ALL DEBT IS BAD DEBT

Today we are tricked by the credit companies, friends, and family members to think there is “good” and “bad” debt/credit. Let me be very clear… there is no good debt. Do you know what a credit score really is?

Let’s start with how it’s calculated…

35% payment history

30% amount owed

15% length of history (how long you’ve been in debt)

10% NEW types of debts you’ve accumulated

10% types of debts you’ve accumulated

Your credit score is all about how you manage, or don’t manage, debt. Your credit score is not something to brag about folks. It’s shows no indication of what you have in savings or in retirement. Your credit score means you’ve gone into debt… congratulations?

People are OBSESSED with their credit score. Umm… why would you be obsessed with your debt? Unless that means you’re obsessed with paying it off.

When I talk about this people act like I’m stupid, “You can’t buy a car if you don’t have a credit score.” Hmm… pretty sure they’ll accept cash. Paying cash now days sounds absurd to people, but imagine if you took what you were paying in student loan debts, credit cards, and car loans and saved it every month. In 2018 the average new car payment was $515 per month. The average monthly credit card payment was $189. And the average student loan payment is approximately $280 per month. Add that all up… $984. If you save $984 a month it shouldn’t take you long to be able to afford that new car, now will it?

“Okay Laura, what about buying a house, surely you need a credit score for that.” Nope. You’ll just have to do a manual underwriting. It is more difficult, but it’s not impossible.

BECOMING DEBT FREE

So disclaimer, when Jacob and I married I had credit card debt and a truck payment. At first, I was NOT onboard with Jacob’s debt-free mindset and it took me awhile to buy into and get onboard with it. However, as we became closer and closer to debt free the more I could see the freedom it was bringing us and the more eager I became to live debt free.

We followed Dave Ramsey’s snowball method . All extra money that came in each month went to paying off debt… tax returns, bonuses, etcetera. And ohhhh boy did it feel good when we made that final truck payment. So good that we took a trip, and guess what, the absence of the truck payment made that trip possible!

LIVING DEBT FREE

Living debt free is an amazing feeling (how many more times can I say “amazing” before it becomes annoying?).

With no more truck payments and no more credit card payments we have been able to set aside an emergency fund and are now saving to buy me a new vehicle. Do you know how good it will feel when we buy a vehicle and walk away owing NOTHING? No car payments? You guessed it… AMAZING.

Living debt free means having a say in where your money goes. It means financial freedom.

If you’re interested in learning more about becoming debt free and financial freedom, I recommend Dave Ramsey’s website and a book by his daughter, Rachel Cruze, Love Your Life Not Theirs.

#debt #debtfree #free #daveramsey #rachelcruze