A long, dry but pertinent post we hope will help others
Wouldn’t it be smart if the “American Dream” were more about financial freedom and becoming debt-free, than acquiring a lot of possessions we don’t need for an amount of money most of us don’t have? Instead of being the ‘land of the free’, most of us are enslaved to banks. We weren’t always this way as a country. My maternal grandfather owned everything he had, and didn’t carry debt on anything. He was proud of it, and never understood why anyone would want to be beholden to a financial institution. He lived simply, had everything he needed, and was always a good provider for his family. He wasn’t a carpenter, but built an entire addition onto his house with his own hands that included a bedroom, bathroom and enlarged kitchen. He had no help, except for the electrician. When the addition was completed, he had no debts to pay off… how many people can say that today? I think of his independent spirit a lot, especially when it comes to finances.
The world we live in today doesn’t support how my grandfather chose to live. If you live within city limits, we probably have so many zoning requirements, permit fees, time limits, and very specific codes about how things have to be built. It’s intimidating, so one might easily decide against building anything themselves and leave it up to an expensive remodeling company. It’s daunting, but at the very least I’d look into doing part of the work myself. Today’s world teaches people that if they can pay someone to do something, even if you could manage it yourself, pay them because it will save time and trouble. What they don’t say is that the time you take would be well spent because you’d have more pride in your independence & self-reliance, and far more money in your pocket. That last one is big, and should be a huge consideration in our Drowning in Debt society. I’m not saying everyone should take on monumental home improvements, but there are so many things we don’t know how to do any more, resulting in a very dependent population.
Comparatively speaking, we’ve never considered ourselves to be drowning in debts as a family. But we don’t like comparing ourselves to the general population. If we did that, we’d probably say were were doing fine and just stay in debt. We used credit cards for big things, like adoption travel expenses and unexpected repairs. We even had a 2nd mortgage on our last home due to our finished basement project. Due to our move, that debt is gone, and we had a major reduction in the mortgage payment (shaved off by 2/3). As a result, this last year we paid all our credit cards off. We cancelled them all, except one that Daniel keeps for business/court purposes. That one is paid off monthly, and never carries a balance. If we want something, but can’t afford it at the time, we wait and save for it. That’s the old-fashioned way, and the smartest most common sense way. Strangely, it’s been an adjustment to our “want it now, therefore should have it now” mentality– that thinking is ingrained in every American’s mind since birth; instant gratification. Even the less materially minded of us have that type of mindset. It’s important to become aware of it, and keep it in check.
What’s next? Credit cards weren’t the only ball & chain. We still have a mortgage and two car debts. Fortunately, one auto loan (Daniel’s commuter car) was financed at 0% interest, and we’ll have it paid off in a couple of years. After that, we plan to pay cash for our cars. With far fewer expenses, we’re setting money aside now in order to be able to buy a car later, and when the time comes we’ll buy only what we can afford. Sounds logical, doesn’t it? Our second car (the mini-van) is used around town only, so has very low mileage. The loan payment is high, so we’re considering our options at this time- selling and using the cash to buy a less expensive car that we actually own, trading down, etc. The thought of zero car debt is tantalizing and liberating. With each debt we cut out of our lives, we don’t only free up our finances for savings and other endeavors, we liberate our psyche from the imprisonment we’ve created for ourselves. We truly are enslaved when we have debts of any kind. What’s worth more, that inner sense of peace and freedom, or stuff?
As for the mortgage, our largest debt, we moved into a much less expensive house last year, so we’re dealing with a more surmountable mountain now. By moving, we owe less than half of what we did last year.. imagine cutting your present mortgage by almost 60%! We’re shaving off the debt fast by paying hundreds more on the mortgage every month, and should have it paid off well before the term ends. There is a bright light at the end of the mortgage tunnel when you make even small principal-only payments, but people are rarely told about what a difference it makes (it shaves off years, even decades). My mother owns her own home, free and clear. She always tells me home ownership is the greatest gift I can give myself, especially when I’m older. We don’t want to be in our sixties making mortgage payments, but ours should be paid off well before then.
So, for those considering shaving off debt, expenses, simplifying financially, or getting out of the debt cycle completely, here’s our Annual breakdown of the Peebles 2010-2011 journey:
- Moved and lowered mortgage by 66%
- Reduced utility bills (and our footprint) by 35%-40% because of much smaller house. Living happily without a dishwasher, microwave or blow dryer, reducing showers, hanging laundry outdoors, and being more responsible with electrical usage
- Maintained same income first six months and used that to pay off debts in that time frame
- Food savings: Making lists, menus, and better planning saves a lot of money for a big family. Having chicken eggs from home, plus we’re on our way to having a lot of our own food from the garden. It’s a huge help (both financially and ecologically) being vegetarian, too.
- Fuel savings: Communing less to work by staying home 2-3 days/week. We have this option now that we have fewer financial obligations. We also drive less as a family, use our bikes, and make fewer trips to the store
- We stopped what we call hobby shopping- wandering through stores just to buy something, even when we don’t need anything. Impulse buys have come to a halt. Hobby Shopping should be classified as an official disease in our country!
- Cash only: It wasn’t intentional, but somehow we both ended up carrying cash around this year instead of using debit cards. We highly recommend doing this if you want to curb spending. Seeing bills in your wallet keeps you from spending them as frivolously, and gives you a more tangible sense of what you have to spend
- DIY savings: Saved money by repairing lawnmower and toilet ourselves, building three fences, landscaping, creating a new gravel driveway, planting our own trees, interior painting, and old kitchen floor removal.
- Sold a lot of unwanted items on Craigslist
- Paid for our bathroom renovation and new kitchen floor with cash we saved, not with credit.
- Purchased new, gently used/recycled items often. Shopped antique, consignment and second-hand stores a lot for kids clothing and discovered how many chain stores donate and sell brand new goods to those shops. We saved at least 50% this year on extraneous expenses all because of recycled goods.
- Hardly working: With far less to worry about, and significantly fewer work hours (Daniel is down to working about 20-25 hours/week as a self-employed attorney). He still makes more money than we need, and live a very comfortable lifestyle. We both have more time together, and are in better mental and physical health
There is probably far more to add to our list, but this sums it up well. Most people believe that getting out of debt and having more financial freedom means they need more income. It can feel like an impossible pipe dream. We used to wrack our brains for years thinking up solutions. Of course each household varies, depending upon individual circumstances, the level of debt, etc. It usually doesn’t occur to people that it would help considerably if we just changed our lifestyle, habits, thoughts and beliefs about what our needs are and what we can do for ourselves. Or maybe people just don’t want to change anything, and avoid this very liberating philosophy: We do not need more debts, more stuff, more jobs or income to solve the problem. This type of thinking feels almost upside down at first, but we’ve discovered first-hand how true it is. Being in debt isn’t really about money at all, it’s about the attachment our psyche has to the material world, and the importance we place upon it. When we can start asking ourselves what we need, and what truly makes us happy, all the extraneous things we don’t need (that enslave and tie us down) can fall away and we become free.
On a final note, after reflecting upon our last year, we realized if we wish to be free inwardly, our outer reality must reflect that. We can’t expect spiritual upliftment when things in this world weigh upon us and tie us down. We also noticed how getting out of debt and simplifying our lifestyle automatically goes hand-in-hand with becoming more ecologically responsible. Both goals complement and supports one other. I find that intriguing and beautiful! I’m guessing my grandfather is smiling upon us, helping us every step of the way. For all he did, he’s always been such an inspiration to me.
Posted by: Jill