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Reflect Upon Where You Started; Acknowledge Where You Are; Move Forward

DH = Dear Husband
DD3 = Dear Third Daughter 
What are the messages about money that you absorbed in your childhood and have carried into your adult life?  T. Harv Eker, in his book Secrets of the Millionaire Mind, says that each one of us has a money blueprint that wields enormous power in determining our financial health, and that most of us are unaware of it.  He encourages his readers to reflect upon the “truths” about money that they came to accept unconsciously while growing up.

Where We Started

              DH, who is reading Eker’s book, sat down with me and told me what he had discovered in his reflection.  As he allowed his mind to go back to his childhood, DH recognized that for his father, money was always a problem – something to worry about; something ominous that needed to be controlled.  DH considered his own financial behaviour in light of this blueprint, and realized that he habitually maintained a financial balance that was tenuous.  When things were good, he made spending decisions that brought us back to anxiety.  So for DH, homeostasis, when it came to money matters, was a state of worry requiring control.  That was familiar.  That’s what he subconsciously gravitated towards.
              He asked me about my money blueprint.  It’s difficult for me to sum it up as neatly as DH did, but here it is:  My parents were excellent managers of money.  They raised five children on one income; bought second-hand cars; stayed clear of the pitfalls of materialism; sent us all to university; and gave generously to their church and other causes. But the topic of money was politely side-stepped in my family.  It was discussed in vague terms if at all.  To me, it was only clear that there was a pot of money somewhere.  I saw that money came from the man.  I knew that there was money when it was needed.  I learned, in my teens and early twenties, that there was money if I made enough of a fuss. 
              As a young woman, I was a disaster financially.  All the good role-modelling of my parents was subverted by that trick I had learned of getting what I wanted by raising a fuss.  In rebellion against what I had considered austerity, I enjoyed material purchases that I couldn’t afford, yet I was repelled by the base details of managing finances or acquiring any pot of money of my own.  That’s what the future man would attend to.  Carelessly in debt, I married a man who was always worried about money and anxiously wanting to control it.  Mind you, he was in debt too.  Eeeek!  We each made good salaries though, so we’d be fine, right?  You can imagine the respective shocks to our systems when DH lost his job. For him, there really was something to worry about, and he had lost control.  For me, there was no pot of money, and I, the woman, became the principal bread winner.
              Ugh!  These are humbling reflections.  We don’t need to wallow in them though; we just need to admit to them so that we know the point from which we’re moving on.  For starters, I have to lose my repulsion from the “base” details of financial management.  I have to work with DH to overcome our debts instead of leaving it all to the man.  He is amazed by my recent engagement in our finances, and he welcomes it.  It allows him to adopt a more positive outlook on what can be, and to cut loose the bonds of worry.

Where We Are

              So what are our base details?  I’ll start with the positive side – with savings.  Ramsey, in his book The Total Money Makeover, advises to devote any savings to debt repayment, as long as there is no penalty to pay.  Fortunately, we do have savings:
a) My retirement savings – I have a pension plan.
b) DH’s retirement savings – For sixteen years, DH contributed to retirement savings, but that stopped with the end of his former career ten years ago.
c) Education Savings – When our children were very young, we began investing monthly in an education savings plan that stops once the child is within a year of graduating from high school.  We’re only paying into it for DD3 now.
d) Tax-free savings account – Just before we listened to Ramsey’s CD, we opened a tax-free savings account.  We’re contributing $100 per month to it, and we’ve only made one contribution so far. 
              Savings a, b, and c cannot be cashed in to pay down our debts without severe penalties, so we won’t touch them.  Savings d can easily be cashed in, but DH wants to keep it because he sees it as an encouraging hint of things to come.  Although it’s only a few weeks old, we can already see a few cents worth of gains in it. 
As for our debts, here is where we’re at:  We have four debts that total over $257,000:
#1 New Car Debt – $8,600
#2 Old Car & Course Debt – $12,800
#3 Business Debt – $80,800
#4 Mortgage – $155,000
Dave Ramsey gives the strategy of paying off the smallest debt first and of “snowballing” towards the largest debt.  So right now, it’s all about focusing on debt #1.  With that in mind, we have our first monthly budget to finalize.  There will be information to gather and decisions to make.  For my part, I will dig into the details along with DH, getting my hands dirty with prices and sales and options.  We’ve reflected upon where we started; we’ve acknowledged where we’re at; now we’re moving forward.

Freedom From Debt: The Vision

I was on my way to work last week, listening to the last segments of Dave Ramsey’s audio book, The Total Money Makeover, and I found myself crying.  He was describing what he calls “the pinnacle point”.  At this point, the tough battle of debt repayment has ended, the practice of diligent saving has reached a place where money saved acquires more wealth than does income earned,  and financial freedom has been realized.  He compared it to a ride he frequently took as a child on his one-speed bicycle up a very steep hill – each push on the pedal a focused effort; the impossibility of the incline requiring him to crisscross the road for a gradual ascent; progress measured by the slow c-l-i-c-k, c-l-i-c-k, c-l-i-c-k of the baseball card stuck into his spokes . . . And then finally, that last push at the summit.  From the pinnacle point, he could see the easier road ahead.  It sloped downwards.  Effort gave way to anticipation, and exhaustion became exhilaration as he took his reward.
               I was surprised by my tears.  Debt repayment, after all, is dull.  It’s all about practicality and numbers and detail and doing without and being sensible.  But here was Ramsey presenting it as something life-giving.  I allowed myself a vision on that car ride to work last week.  In my mind, I fast-forwarded to the day my husband and I would make our last mortgage payment, and we’d be completely debt-free.  It was glorious!  I’ve known for years that our debt load has been a burden, but I didn’t realize how life-sucking that burden was until I envisioned it gone. 
               I want to remain anonymous, so I’ll refer to my husband as DH (dear husband), and I’ll use other codes for other key players in this aspect of my life.  DH is as captivated by Ramsey’s vision of freedom from debt as I am.  It is rare that we are on the same page when it comes to money matters, so we’re taking hold of this inspired unity, and we’re committed to going with it.  We will begin our journey out of debt in June, and we’re preparing for it.  It’s time for details. It’s time for numbers.  I’m psyched!
               Let me begin with some numbers to give context to the starting point of our journey:
49 – That’s how old I’ll be in a little over a month.
53 – That’s how old DH is.
3 – That’s how many daughters we have.  (I will refer to them as DD1, DD2, and DD3.)
10 – That’s about how many years I have to go in my teaching career before I retire.
16 – That’s how many years DH was employed as an engineer in hi-tech.
10 – That’s how many years it’s been since DH became a casualty of the hi-tech bust.
50% – That’s the percentage of our household income that we lost after DH’s hi-tech career ended.
3 – That’s the number of years it’s been since DH bought a franchise. 
               Ramsey advises to expect the unexpected and to prepare for it.  We didn’t.  DH’s career crisis hit us very hard in every way, including, of course, financially.  It’s taken ten years to reach a new normal, and our household income is still significantly lower than it was before the hi-tech bust.  We’re in a position now that’s so different from the one I envisioned as a young woman.  I imagined that we’d coast through our 50s with the ease of prosperity, the satisfaction of well-established careers, and the dignity of being in a position to give back to our church and community.  Instead, we are financially tight, putting a lot of time and effort into making DH’s new career succeed, giving very little in terms of time and money.  And we’re in debt.  Far too much debt for people our age.
               So we’re going to start our journey.  According to my rough calculations, it will take just over five years for us to get there.  But I’m not very good at math, and I know that the unexpected will happen, so I’m not committed to the timing – just the direction of the journey:  out of debt.  I plan to post once per week and to use real numbers to mark our progress.  Jean Nidetch, the founder of Weight Watchers International, discovered that she could more successfully lose weight when she shared the experience with others.  I hope that by sharing our effort to lose debt, I’ll increase our chances of success and offer support to others on the same quest.
               The pinnacle point beckons, and we’re ready to take on the uphill challenge.