Generosity While Paying Off Debt: My Dilemma

DH = Dear Husband
               My sister-in-law, the wife of DH’s brother, sent me an e-mail last month saying that her son and his wife would be going to a developing African nation to help build a school this summer, and that they needed to raise many thousands of dollars.  Would we be able to help out?  Such a good cause.  Such a great family.  Such a sweet couple.  Such a predicament!  I didn’t answer the e-mail for weeks.
               Ramsey says that getting out of debt requires a change of heart and that you will find out what your obstacles are as you pursue the goal.  For Ramsey, as for many men, it was the desire for shiny, spiffy new cars.  For me, it’s the desire for people’s approval.  Years ago, when Oprah talked about “the disease to please” and the need to “exercise your ‘no’ muscle”, I knew she was talking to me.  And I’ve come a long, long way.  But it’s still an obstacle.

Digging deep: examining my moral paradigm

               Each one of us operates according to a moral paradigm, whether or not we’re aware of it.  An atheist has a set of moral values, as does an agnostic, a Pagan, a Christian, a Jew, a Muslim, or a Hindu.  My journey out of debt requires me to examine, define, and refine my own Christian values, and my sister-in-law’s e-mail really put me to the test.
               I remember a sermon I heard in the year following my recommitment to Christianity (after a serious lapse) eighteen years ago.  It had been filmed at a huge pastors’ convention, and our own pastor showed it for Sunday service Father’s Day of 1995.  He explained that the man speaking had had brain cancer and that he had died three days after the filming.  I recall these details because that sermon proved to be so pivotal for me.  It was based on Proverbs 29:25.  “Fear of man will prove to be a snare, but whoever trusts in the Lord is kept safe.”  In what would be his last public address, this man established the fact that we are indeed all born with a legitimate need to be approved of.  The point was to fulfill this need through God’s approval and to avoid the trap of seeking people’s approval, as per the proverb.  Just as certain products that we purchase are stamped “Approved” by various regulatory organizations, he advocated for the wisdom in our own seeking to be stamped “Approved Of God”.   This dying man challenged the pastors in his audience to consider their good works, particularly in attracting large attendance at their churches and speaking engagements, and to be honest about whose approval they were really seeking.  Even though I was watching the filmed version of this sermon, and even though there was no panning of the original audience, I was struck by the palpability of the shame those pastors experienced as they recognized and were confronted by their own desire to seek the approval of people through their works – good as those works were.  And I had a “eureka moment”.  My own need to be approved fundamentally transferred from people to God.  It was very liberating.
               I do not subscribe to a legalistic approach to Christianity.  Christ is all about grace – not law. Still, there are undeniably rules.  The Ten Commandments stipulate, among other things, that we are not to commit murder, theft, or adultery.  Jesus taught that we are to be humble, to repent, and to forgive.  There are also clear messages about the importance of giving:
·        “So when you give to the needy, do not announce it . . . to be honoured by men . . . do not let your left hand know what your right hand is doing, so that your giving may be in secret.” (Mathew 6:2-4) 
·        Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver.” (2 Corinthians 9:7)
So we are to give to the needy; we are to give in secret; we are not to give reluctantly or as a duty; we are to give cheerfully. 
Then there is the whole matter of tithing. To tithe is to give ten percent of all you have, and it is a matter of great debate among Christians.  Furthermore, it stirs up feelings of guilt in me.  I am trying to get out of debt, and I’ll be straight:  I am not tithing.  Not even close.  If I tithed, I would not be doing so cheerfully, but in resentment of an imposed duty.  When I see the woman at church who counts the offering, I just want to say, “Sorry!”  I find myself wondering if all she sees is a stingy double-income couple with a big house.  I find myself hoping that she knows DH went through a long period of unemployment; that our van is really old; that I haven’t bought any new clothes in months.  “Fear of man brings a snare . . .”   I can’t let myself go down that road.  I do not need the approval of the people at my church.  (And of course it’s my own guilt that makes me uncomfortable, not the offering counter herself.)  In the end, I believe that God does approve of our efforts to get out of debt, and I believe that the grace of God is big enough to absorb that fact that our giving is going to be limited as a result.
I finally answered my sister-in-law’s e-mail.  I told her how much I admired her son and his wife for the wonderful work they had taken on, but that unfortunately we would not be supporting them financially because of our commitment to get out of debt.  I said that I truly wished it could be otherwise.  There was no response for quite some time.  “She’s angry,” I worried.  “She thinks we’re selfish and indifferent.” But I didn’t waver.  “Fear of man brings a snare . . .”  When I did receive a response – after she and her family had returned from vacation – it was full of acceptance and understanding, as well as a wish for all the best in our efforts to kill off debt.  Phew!  The people-pleaser in me was relieved.  I just can’t be motivated by that side of me. 
Ramsey advises still to give as we’re getting out of debt – just as he advises us still to invest in fun – and to recognize that generosity can mean time and work as well as money.  I am exercising my “no” muscle, and it’s hard.  But I’m also finding out that generosity is possible, and I’m discovering what it will look like for me while I’m on this journey out of debt. 

Fun Getting Out Of Debt?

DH = Dear Husband                                        CF1 = Church Friend 1
DD3 = Dear third daughter                           CF2 = Church Friend 2
DD2 = Dear second daughter
               I introduced myself to a new neighbour recently.  We had a brief, polite conversation which included her informing me that she played golf.  When I told her that I never golfed, she asked me what I did for fun.  “Not enough,” I replied.
Ramsey says that there are three purposes for money:  to have fun; to invest; and to give away.  Starting with purpose number one, he says that once you’re out of debt and your money is working for you, the doors open to new levels of fun.  My dream is to take my family hiking in the south of England before going on a Jane Austen tour.  That would be a new level of fun.  But in the meantime, says Ramsey, as you’re getting out of debt, don’t neglect to make small investments in fun.

All Work And No Play

“All work and no play makes Jack a dull boy,” goes the saying.  I’ve been feeling dull lately.  May and June are the craziest months of the year for anyone who works in a school.  The teachers’ pressure to get through the curriculum and mark, mark, mark; the students’ stress to complete assignments and study for exams; the whole staff’s efforts to make graduation ceremonies happen; the weird, summer-hungry energy that develops among students, requiring extra vigilance from equally summer-hungry staff . . .  It’s all relieved by the sudden crash of July.  Unless you teach summer school. 
Couple this with the fact that DH’s craziest months of the year are June and July.  He has a regular client who annually gives DH a very intensive bit of business that spreads out over these two months.  Although DH works at home, he is essentially not present these days.  Morning, noon, and night, he is working to get this job done and to manage other business that still comes his way.  As a result, I’m doing almost everything involved in running the household.  It is, of course, thrilling that DH’s business is succeeding.  It’s just that I’m tired.  Especially over the first couple of weeks of July, still recovering from June, after a morning of prep work and marking; an afternoon of teaching; an evening of making supper, doing the dishes, taking DD3 to her soccer, walking the dog . . . I didn’t so much fall asleep at night as I did slip into a coma.  Are we having fun yet?

Fun With DD3

Last week, I did some radical things.  First, I bought myself a book – Margaret Atwood’s Payback in which she studies the history of debt.  I considered being sensible and borrowing it from the library, but I gave in to my reckless desires and made the purchase.  That was just the beginning.  I subsequently took DD3 out for dinner.  DD2 was busy with her sport; DH was working; and I had a profound need to be served, as well as a slight guilt – about working in the summer when my youngest is still young – to be assuaged.  Following our pleasant and delicious meal, I told her I’d buy her a book.  She chose Nicholas Sparks’ The Last Dance.  And I chose Adele’s 21 CD.  We stopped at the coffee shop where her youth pastor works, and he treated her to a caramel latte.  Mother and daughter came home full, happy, and eager to enjoy our purchases.

Fun With CF1 & CF2

This wild behaviour continued last Friday after work when I got together with my two friends from church.  I’ll call them Church Friend 1 (CF1) and Church Friend 2 (CF2).  About ten months ago, the three of us chatted after service one Sunday and found that we couldn’t stop.  “We’ll have to get together,” said CF1.  And we have.  Almost every Friday evening since that Sunday, the three of us have met in one house or another, and it has been a remarkable blessing for each one of us.  We always talk.  We often pray for each other.  We sometimes eat and watch a movie.  On occasion, we have a drink. 
Last Friday was very hot and humid, and as I drove to CF2’s house from work (she offered to host us for bar-b-q hamburgers), I decided I wanted to have a beer.  I don’t drink often though, and I didn’t know where the beer store was.  When I arrived at CF2’s house, I shared my dilemma with her, but she wasn’t much help because she didn’t know where the beer store was either.  CF1 soon arrived, and we looked to her for answers, but to no avail.  Finally, the young woman who boards at CF2’s house advised us to go to the liquor store where foreign beer is sold.  She told us where it was.
We decided that we’d all go together, and each of us ended up with a six-pack or a four-pack of something or other in hand.  As we made our way to the cash register, CF2 bumped into her next-door neighbour.  “Are you all friends from work?” she asked.  CF2 said no, and then there was an awkward silence.  I decided to break it.  “We’re friends from church,” I said.  “We’re the church ladies.”  This neighbour got a kick out of “the church ladies” at the liquor store, and CF1 in particular broke into a giggle fit.  We went back to CF2’s place where I had my beer and our host put on the bar-b-q.  Only she burned her first three burgers because we were talking so much and she didn’t want to miss anything.  Take two on the burgers, but this time she brought us out to her back yard so that she could keep an eye on our meal and talk at the same time.  Her next door neighbour, happily home from the liquor store and playing cards in her back yard, threatened to call the cops with all the smoke and laughter going on over the fence.  It was fun!  And it cost me about $10.  As we were getting ready to leave later on, CF1 wrote “love” in the dust covering CF2’s furniture.  That’s the kind of friendship we have.
So fun can happen, even when you’re getting out of debt.  It often does take a bit of money, but I sometimes wonder if more money really would allow for more fun.  Would I have had more fun with DD3 if we’d eaten at a fancier restaurant or bought more expensive items than books and a CD?  I don’t think so.  Would I have had more fun with my friends if we’d met at a country club?  You can’t burn hamburgers and write in the dust at a country club.  I definitely look forward to the day when I can take that dream vacation in England.  But I know that while fun can be set up, it can’t be bought.  And it’s best when it catches me by surprise in unlikely situations – like the liquor store with my church ladies – or cruising in my car, Adele tunes blaring, on the road to summer school.  

A Temptation Back Into Debt

               DD1 = Dear First Daughter
               DH = Dear Husband
“Sweetheart, I want you to quit your job and apply for a student loan.”  It’s hard to believe that Prudence Debtfree would utter such words, but I did – in speaking with DD1 on the phone this week.  Ramsey warns that as soon as you swear off debt, something will happen to tempt you right back into it.  For some, it takes a major car repair; for others, a child who needs braces.  I know what it has taken for me.

DDI’s Story

               DD1 is getting her master’s degree at a university on the west coast.  I have many reasons to be proud of her – academic and athletic achievement among them – but I would have to say that recently, given my newly acquired obsession with debt, I’m most proud of her money management.  DD1 was about ten years old when our financial ship started sinking.  The background to her teen years was her parents’ financial drowning.  Our anxiety filled the air, and she absorbed it.
               She excelled in athletics in her early teens, first as a competitive swimmer, and then in a sport that involved swimming.  As an older teen, she started to compete nationally and even internationally.  Throughout these years, DH’s career suffered its multiple wounds from the hi-tech bust, stalled, and then came to a dead stop before DH slowly found his way to his current business.  We didn’t have the funds to send our daughter around the world for competitions.  Nevertheless, she did compete in fifteen different countries on three different continents.  DD1 had a coach who believed in her and allowed her to train younger athletes instead of pay fees; she had a mother who found sponsors to provide her with air mile points and cash; and she had an incredibly positive disposition that made her believe anything was possible.  And it seemed everything was.
               In grade twelve she worked hard for scholarship grades, and she got them.  Through her undergraduate years at a university in our city, she worked hard for more scholarship grades while participating in two varsity teams as well as her main sport outside of university, and she got them.  She’s about to enter her second year of a master’s degree, and she doesn’t have a cent of student debt.  Our education savings plan paid for roughly half of her undergrad education, but none of her graduate studies.  She’s managed the balance on her own.  DD1 is passionate about a new sport now, but she continues to coach swimming as a means of income. 
               At the beginning of this summer, she was surprised by a tuition bill.  She thought that she had the choice either to continue studies through the summer or to wait until the fall to resume them.  Due to the conditions of her main scholarship though, she actually didn’t have that choice, and she was faced with an unexpected bill for $1,600.  She was able to pay it!  My cup runneth over.  How did I – steeped in a quarter of a million dollars’ worth of debt – produce such a child?

DD1’s respiratory problem

               But enough of this brag-fest.  Here is the point:  DD1 started to notice a shortness of breath two years ago during her first summer with a full-time job coaching swimming.  It seemed to come and go, so she didn’t pay much attention to it at first.  After several months, it was still in evidence – though not always dramatically so – and she decided to seek medical attention.  Just before she flew out west to study, she saw a specialist in our city.  She had already left by the time the results came in.  Her lung capacity was limited.       I was dumbfounded and aching with worry.  This young, athletic, non-smoker had a respiratory problem?  DD1 was not to be derailed by such news.  She was confident that a diagnosis would be found and a treatment provided.  Visits with specialists came at an agonizingly slow pace.  The respiratory specialist.  The vocal cord specialist.  The throat specialist.  There was scarring on the lung tissue.  There was constriction in the throat.  More appointments.  More specialists.  A year later and there is still no definitive diagnosis and no certain treatment. 
A week ago, DD1 had to stop mid-way through a practice because her breathing was out of control.  She’s had to eliminate a certain aspect of her training due to breathing stress.  It’s getting worse and it’s impacting her more directly.  Even her own golden optimism has been rattled.
               As for my anxiety, it skyrocketed. I talked about the issue more often and with more people.  I prayed about it.  DH has always been adamant that the cause of her troubles has been her exposure to chlorine.  No doctor has acknowledged it as a possible root problem though, so DD1 has been convinced that it’s not.  I, on the other hand, have learned over the years that DH’s convictions are worth listening to – doctor or no doctor.  DH isn’t always pleasant in being right; it’s just that he so often is right.  Two people phoned me last week-end to tell me that they’d researched or had heard of or had witnessed evidence of chlorine’s detrimental impact on the respiratory system.  Furthermore, one of them told me that the pool in which DD1 first trained was notoriously bad for high levels of chlorine and poor air circulation.  So I made my call to DD1 and urged my unlikely advice.  Quit your coaching job!  Get away from chlorine!

DD1’s level-headed wisdom

She said, as I knew she would, that she couldn’t abandon her swim team in the middle of the summer season.  But she did agree not to coach through the fall and winter.  It’s no small deal for her.  She’s gone through hoops to get qualified; the pay is extremely good; and she enjoys her coaching job.  “But,” I said, “we’re talking about your health, and nothing is more important.  Just get a lower-paying job and work as much as you can.  It’s great the way you’ve managed to avoid student loans so far, but it won’t be the end of the world if you end up needing one.”  No, said DD1, she wouldn’t need to take out a loan.  She would put her name out there as a tutor and get paid at about the same rate.
               Why didn’t I think of that?  Tutoring is a pretty obvious option for a graduate student.  I think it’s because I have the mind of the debt-ridden.  The automatic answer to any problem is a loan.   The synapses of my brain have created a well-worn path to debt as a solution.  DD1, on the other hand, long ago resolved never to sink into the debt-hole of her parents, and the geography of her brain is marked by different pathways. Her solution is better. 
               I feel very good about this proactive step on her part.  The diagnosis is not yet defined and the solution is still uncertain, but I feel hopeful that this action plan will prove DH’s conviction right yet again.  In the meantime, I will strive to make DD1’s standard my own.  Full of hopeful possibility, and out of debt.

A Report Card for June and a Goal for July

            
DH = Dear Husband                                                                                                                                                  
DD3 = Dear Third Daughter
             DH and I assign different marks to our June debt reduction.  I give it a C- because we missed our goal by $1,500, but he gives it an A+.  Go figure.  Relative to my husband, I’m the positive one.  DH, the worrier, generally has a mission to dampen my enthusiasm if it passes a certain point.  So I was surprised by the elation he demonstrated at the end of June.  “It’s so great to be up-to-date with our money!  To know exactly how much we have and to know exactly where and when it’s all going.” 
Ramsey calls it “getting current”, and it’s something I didn’t really understand and didn’t at all appreciate when I first heard of it.  DH is the one who has been balancing the accounts and tracking our finances through the years, and it was always a burden for him to have to deal with things like unexpected VISA bills, lost receipts, and other slip ups that kept things chronically out of balance and one step out of time.  That burden completely lifted with our June budget and our vigilant timeliness in keeping track.  It didn’t matter to DH that we had less to put against our debt than hoped for; the relief of becoming current more than made up for it. 

“Gazelle Intensity”

And so, fuelled by DH’s pumped attitude, on we go with July.  Ramsey uses the expression “gazelle intensity” to refer to the focus that is necessary to get out of debt.  He gets the term from the Bible, Proverbs 6, which says, “Free yourself, like a gazelle from the hunter . . .” in reference to debt.  The gazelle is slower and weaker than its hunter the cheetah, just as each one of us is less powerful than the agents of debt that permeate our society.  But nineteen times out of twenty, says Ramsey, the gazelle can outmanoeuver the cheetah and stay clear of it.  Similarly, those of us trying to get out of debt must strategize our way out and away from it. 
In response to Ramsey’s call to be intentional, I applied to teach summer school this July.  Summer school is most often the domain of new teachers who want to work their way into the system, and of thirty-something teachers who have bought homes and started families and need the extra money.  The last time I taught summer school was fourteen years ago – the summer we moved into our current house.  Priority is given to the regular teachers of summer school, which I am not, but I did get a position.  It’s a half-time, afternoon assignment teaching students who need to make up their credit.
The response I got from my colleagues when I told them I had applied to teach summer school was one I have given to others over the years.  Why are you doing that?”  “Are you crazy?”  No!  Enjoy your summer!  We only have so much time on this planet, you know.”  Others just stared wide-eyed and jaw-dropped.  To each, I gave the same response:  “My husband and I are trying to get out of debt.”  That worked.  I don’t know if they felt compassion or respect, or if they were reflecting upon their own debts, but they graciously accepted my straightforward explanation.
My biggest concern about teaching summer school is DD3.  Her older sisters are busy with jobs, their sports, and their friends, but she is still too young to get a summer job or to go places on her own.  I prayed about teaching summer school with this concern in mind, and I feel blessed in that the position I was offered is half-time.  I started this week, and so far, DD3 is doing just fine.  Yesterday, she spent the afternoon at the home of a friend who has a swimming pool.   The day before was a quieter day at home, but since DH works at home, she wasn’t alone.  So without compromising too much, I’m helping to set up for a significant debt reduction in July. 
If all goes well (if our ‘99 van holds up) we will be putting $3,700 against Debt #1 at the end of the month.  In June, Debt #1 went from $8,600 to $6,100.  By the end of July, there’s a good chance it will sit at $2,400.  I’m so grateful that DH and I are on the same page, the same paragraph, the same word.  We’re in this thing together – I would have to say more so than for any other venture we’ve taken on as a team – and I believe we will free ourselves from “the hunter”.

A Mess And An Emergency

               Whenever we used to have cleaners come to the house, DH and I would first rally the troops.  “You’ve got to clean your rooms.  The cleaners are coming.”  This command would be met with complaints of, “I hate it when the cleaners come!” and “Why do we have to clean for the cleaners?”  Picking up mess to make way for scrubbing, vacuuming, mopping, and dusting is relatively easy, of course, compared with the hard work that follows it.  But it’s annoying.

Annoying Financial Messes

               I found that our efforts to navigate the budget for June, with the goal of paying $4,000 off Debt #1, were frustrated by annoying messes.  Our first mess had to do with credit cards.  There are certain expenses that we are set up to pay with our VISA, and while we have decided (under the influence of Ramsey) not to use credit cards for impulse shopping or for anything remotely discretionary, we do use them for gas, phone, internet, and any medical or dental bills that will be reimbursed through my work’s insurance plan. 
We have always been very good about paying off our VISA when it comes due, with only the odd slip up.  But now, we’re committed to doing even better.  Now we transfer money to our VISA account the same day we use the card.   So if we buy $48.17 worth of gas for the car in the morning, we transfer $48.17 to our VISA account that evening.  When our next credit card bill comes in, it will be at zero.  A noble plan, I think. 
We knew that our VISA bill would come in at the end of June, and that it would cover purchases made from the middle of May until the middle of June.  So we budgeted $500 to cover any messy credit card debt from the previous month.  Smart thinking!  Only it didn’t cover it.  Our May VISA debt amounted to $700.  Our debt repayment had to be lowered by $200.  Not too big a deal, but a bit deflating.
A second annoyance involved our bank account.  Our bank account is one in which we have opted to maintain a balance of $1,500 to avoid paying banking fees.  On the rare occasion when we’ve dipped below $1,500 – even once during a given month –  the fees have kicked in for the whole month with a vengeance. 
It’s a system that worked in the past, but it doesn’t work now.  Ramsey’s first baby step out of debt is to save $1,000 for emergencies.  I was considering our untouchable $1,500 minimum balance as our emergency fund – but such a fund cannot be untouchable.  So when DH found an account without banking fees, I thought that it was to make the $1,500 available for such cases.  It was no small deal switching accounts.  It required us to track down everyone who does automatic deposits and withdrawals to and from our old account – insurance, employers, utilities – and to send the paper work, faxes, and e-mails necessary to get them working with our new account.  It was like tidying up a mess to make way for the cleaning.  It was annoying.                                                                                                                                                           

Starting Off With An Emergency (and bad communication)

Now to develop that house-cleaning analogy, suppose that you have diligently done away with the mess, and an emergency happens.  You’re emptying the dishwasher and two plates slip out of your hands to smash on the kitchen floor.  All activity must be suspended until the shattered glass is dealt with.  Children and pets are at a safe distance; bare feet are shod; Spouse #1 gingerly sweeps up the shards while Spouse #2 gets the heavy duty paper bag to put them in so that they don’t pierce the garbage bag.  But where are the paper bags?  It turns out Spouse #1 used them for something else and thought that Spouse #2 knew about it.  Oh, oh.  Communication lapse.
We had an emergency in June.  Our first month on a budget and we had an emergency!  Our van, a 1999 Dodge Caravan with over 200,000 kilometers, which has been paid off for years, and for which we have enormous respect, needed suspension work.  Shocks and struts (don’t ask me what those are) and wheel alignment came to over $1,300.  No problem, right?  We had that $1,500 all ready to go.  But DH had used it to pay a tax bill.  I didn’t know that.  So again, our debt repayment was hacked.  Ugh.
For the month of June, we had hoped to pay a whopping $4,000 off of Debt #1.  But in dealing with financial mess, an emergency, and a lapse in communication, we could only manage $2,500.  I’m surprised at how disappointed I am.  But I really do think that our efforts in June will set us up for a better July.  So on to next month’s budget.

Behind Every Debt There’s a Story . . . And An Alternative

 DH = Dear Husband     
              DH and I have four debts, each incurred through different circumstances.  Ramsey’s advice never to borrow isn’t contingent upon circumstances though.  So I sometimes wonder how we could have navigated each scenario differently to avoid debt.  How would things have played out in the short term?  What would have been the long term impact?
               Wallowing in regret is a dangerous pastime, but it’s a good idea to acknowledge mistakes and recognize their ripple effects.  It’s a practice that might help us to make better decisions the next time “circumstances” present themselves.   As Oprah says, “When you know better . . . You do better.” 
               In a way, Debt #1 is my favourite debt.  It’s the smallest of the four debts, and it looks like it will be killed off quickly.  It also gave us a car we really like – a 2011 Ford Focus.  And we’ll be paying it off faster than we’ve ever paid off a car.  But it’s also a really stupid debt.  We didn’t need to buy that car, and we shouldn’t have.

The Story Behind Debt #1

               In May of 2011, the lease on our 2007 Ford Focus came due.  Ramsey speaks out strongly against leasing cars – but that’s part of debt #2, and so I’ll deal with it when the time comes.  For now, I’ll only say that I’d chosen the 2007 car rashly, and I didn’t like it.  It too was a Ford Focus, but it was the young male version – black and sporty with a moon roof and a big fat spoiler at the back.  The boys at my school liked it, but I, a middle-aged female school teacher, always felt an embarrassment driving it.  Furthermore, it was a standard – annoying for the stop-and-go traffic I had to deal with driving to and from work every day.  When the four-year lease was up, it was time to go into the dealership and decide what to do.
               DH and I went in intending to buy the 2007 Focus.  There was $8000 remaining to be paid.  But our salesman, a former student of mine, was very good.  DH, who has to do sales and marketing in his business, thinks our car salesman is brilliant.  “He’s got us figured out,” he said.  The 2011 Focus was soon going to be replaced on the lot by the 2012 Focus, and so the price was right.  For $20,000, we could choose it.   Would we like a test drive?  Red, automatic, no moon roof, no spoiler . . .  It was irresistible.  And it smelled so new.  And it drove so well.  And it was such a good deal after all.  Of course, my former student added, the 2007 Focus would be a perfectly good choice too.  In our minds, by this point, it was chopped liver.
               We went with the new car and felt very happy about it.  It is a great vehicle, but when I consider the alternative, the purchase was so obviously a mistake.  We committed to paying off our 2011 Focus at a rate of $1000 per month.  If we had decided upon the 2007 Focus, we would have paid it off at that rate by January 2012, and we would have been in a position to pay off the remainder of debt #2 (incurred by a course DH took) by June.   We could have started off our Ramsey debt tackle this month by taking on what is for us, debt #3.  Ugh!  I didn’t know the numbers until just now.   What a mistake!  If we had bought the 2007 Focus, I would have continued to feel that embarrassment and inconvenience, but we could have been free of $21,000 worth of debt.  Though as DH says, there’s no telling if we would have paid off the older car so quickly,  or if we would have continued to pay down debt at the same rate after we had.                So no wallowing.  Lesson learned.  We will humbly chop away at debts #1 and #2 with the full knowledge that they were completely unnecessary.  And the next time “circumstances” arise, we’ll do better.  

Money Sense: My New Awareness

 

ap·o·plec·tic  / [ap-uhplek-tik]   adjective

(dictionary.com)


DH = Dear Husband
USC = Urban Schools Consultant

I run a “Word of the Day Challenge” at my school.  I love it when a student says to me after taking the challenge, “Miss, I heard ‘curmudgeon’ on the radio this morning!” or “Mr. Plummer used ‘apoplectic’ in English class today, and I knew what he meant!”  So often, the same phenomenon has occurred with me.  I learn a word, and then there it is in the newspaper or in a conversation.  I witness the illness of a loved one and then find out that half of the people I know are connected to someone who has suffered it.  I examine our society’s bad habit of debt and . . .
Recently, I’ve been surprised by my newly developed consciousness of money matters.  I have listened to Dave Ramsey’s Total Money Makeover CD; I’ve read parts of two money books; and I’ve worked on a one-month budget.  This small amount of study hardly makes me an expert, but it has resulted in the birth of a new sense in me:  money sense.  I usually listen to the radio on my drives to and from work, and it used to be that my brain would blank out when the news turned to the economy.  I was vaguely aware that interest rates were low and that several European countries were having a really hard time with their debt loads, but I was eager for the topic to change to something more interesting.  Now I find I’m riveted by much of the financial news. 
I’ve also become attuned to other people’s fiscal philosophies – picking up on cues relating to their money sense.  A colleague of mine recently talked of his plans to pay off his current car debt so that he could borrow money for his next car.  Another colleague told me that if she had my low mortgage rate (we lucked in at 2.99% for the next four years), she would take out a second mortgage and invest in a condo.  There is such widespread acceptance of debt as a tool in building up equity that we don’t even see it.  A real paradigm shift has taken place in me though, and as a result I’m actually noticing this acceptance for the first time.

USC, generosity & cash

I facilitate our school’s Christian group, and this year I was very happy to have the support of a visiting urban schools consultant (USC) who worked with our graduating students one day each week.  At Christmas time, our group was planning a fundraiser.  We had chosen to support Ratanak, an organization that frees girls from the sex trade in Cambodia, and as we were brainstorming on ways to raise money, USC suggested raffles for students and staff.  “Get a spa gift certificate worth $100 for the staff and gift certificates to a store worth $150 for the students.”  He then backed up his suggestion by taking $250 out of his wallet and handing it to me.  The students and I were stunned, but we went with it – and ended up raising over $600 for Ratanak.  USC also offered to treat our group to a feast just before he left for the Christmas break, and we ordered from a wonderfully delicious Chinese restaurant.  It was the best attended meeting our Christian group ever had.  Again, USC pulled out cash to take care of the bill. 
I talked to DH about USC’s generosity, and we were both rather perplexed by his welcome but decidedly odd behaviour.  After I listened to Ramsey’s CD, I put two and two together and asked USC, “You don’t have any debt, do you?”  He confirmed my suspicion.  I told DH about it, and later, as DH was voicing his vision of life after debt, he included this comment:  “And I’ll support organizations that want to raise money for charity by pulling out $250 and saying, ‘Here, buy some door prizes.’”  DH has never met USC, but he is inspired by him.  USC, by the way, is in his late twenties.

Debt-free colleague

Emboldened by my accurate assessment of USC’s money smarts, I asked a colleague the same question:  “You don’t have any debt, do you?”  He told me he hadn’t had any debt for the last fifteen years.  This fellow teacher is about my age.  He doesn’t dress in a flashy way; he rides his bicycle to get to school; and he packs a lunch for work.  Ramsey says that the rich so often live simply.  That is certainly the case with my money smart colleague.

Another debtor following Ramsey

Last week-end, I was away at a Christian women’s retreat.  My roommate was a woman whom I had never met before, but we very quickly fell into conversation.  Within minutes, we were talking about debt.  She and her husband are debt-ridden just as we are.  And she’s using the advice of Dave Ramsey to help her through.  She said she goes to her car at lunch hour, turns on the radio, and listens to his show.  Ramsey is not as well known in Canada as he seems to be in parts of the U.S., so it was amazing to each of us that we had the same mentor.  The song we sang many times over, as a kind of theme song during the retreat, was Mercy Me’s God With Us.  One line of the chorus is:  “The debt is paid.  These chains are gone.”  I have a new appreciation for that metaphor.   
If my students keep using new words, their vocabulary will develop at an exponential rate.  If DH and I keep fine-tuning our money sense, the debt will be paid, and these chains will be gone.

Here We Go!

DH = (Dear Husband)

The High of Starting

                If you’ve ever taken part in a road race, you know how effortless it feels at the beginning.  Surrounded by fellow runners, cheered on by well-wishers, adrenaline pumping, barely conscious of the legs beneath you . . .  It’s as if you are carried by the crowds through that first kilometer or so.  I have participated in a few 10 km runas, and I love that invincible high at the start.  Three quarters of the way through, I’m resenting the fact I ever signed up.  But that first bit is sweet.

              The most extreme “invicible” high I’ve ever experienced happened right after my first daughter was born.  I had delivered by C-section, and I remember lying in my hospital bed in the wee hours of the morning shortly after her birth, the effect of the epidural drugs just starting to wane, completely taken over by the first post-birth happy hormones ever to course through my veins.  A nurse came by with a shot of pain killer, and I told her it wouldn’t be necessary.  She assured me it would and gave me the shot.  I didn’t protest, but I was truly convinced that pain was not possible at that time – even though I’d just undergone major surgery.  An hour later, I was asking for the next shot.
              Now it’s June, and DH and I are taking the proverbial first step on our journey out of debt.   Psyched by a vision of debt freedom, we feel a happy adrenaline – a hope-filled, united, optimistic energy.  At this point, I can`t even conceive of a time when we`ll hit a wall.  Dave Ramsey, towards the end of his Total Money Makeover CD, says that many people want to quit when it`s time to face the mortgage debt.  As I listened to him, I thought, “That won’t happen to us!”

Our First Monthly Budget

              And we don’t need to think of that wall right now.  At this point, we can allow ourselves to give in to the high of starting and to get as much mileage out of it as possible.  DH and I have prepared our first monthly budget.  It was more complicated than I would have guessed.  How do you know how much a month will cost until you live it?  What’s the best way to account for big expenses that aren’t due this particular month?  I’m sure we’ll get more accurate in our budgeting with practice.  For June 2012, we’ve done our best.
              As a very first step, Ramsey advises not to put money towards paying off debts until you’ve put aside a very liquid $1,000 as a small emergency fund (the big emergency fund comes later).  As it turns out, we have the mini-emergency fund already built in.  DH has been maintaining a “reserve” in our bank balance for things like unexpected car repairs.  So baby step one gets a quick check mark.              In preparing our June budget, DH and I found that we didn’t have a lot of fat to trim.  That makes sense as we had to take many cuts off our living expenses when DH lost his first career a decade ago.  The most significant change we’ve brought about with our budget is to follow Ramsey’s advice about paying off the smallest debt first – with intensity.  Debt #1, incurred by our purchase of a new car last year, sits at $8,600, and  we’ve been paying it off pretty aggressively at the rate of $1,000 per month.  We have also been putting significant amounts of money against DH’s business debt and the mortgage (Debts #3 and #4).   With the aim of intensifying our repayment of Debt #1, we’re going to stop paying off the business debt and we’re going to stop topping up our mortgage payments.  These two changes mean that we will pay $2,300 off of Debt #1 in a regular month. 

              The thing is, this isn’t a regular month.  I get paid every two weeks, and as a result, there are two months each year when I’m paid three times.  It just so happens that June is one of those months this year.  Ramsey refers to the good financial luck that seems to happen to people once they start getting their act together.  This is one such piece of luck:  a bonus to start us off.  Thanks to it, we’ll be paying $4,000 off of Debt #1 this month.  Ramsey’s “smallest debt first” strategy is based on the fact that it’s encouraging to see results.  While $4,000 would barely make a dent in our $155,000 mortgage, it’s slicing Debt #1 right down the middle and gives us that “We can do it!” mentality.
              One fat-trimming change did offer itself to us just before we listened to Ramsey’s CD.  We were paying for a house cleaning service once every two weeks, and our cleaners quit.  Some people think it’s decadent to hire cleaners, but I don’t.  With two full-time careers and children to raise, I don’t think it’s a lavish expense.  I’d rather take the rare bits of down time that I have to be with my family or friends, to work out at the gym . . . or to write.  Furthermore, I hate cleaning.  Big time.  We haven’t hired anyone else though.  The $200 per month that we’re not spending on cleaners is going against debt.  It’s a lot of work for us (mainly me) to clean this house.  It takes a full day every second week-end to get it done, and I dread it.  But because I’ve got that starter’s energy and because I’m confident that the money will go to a worthy place and won’t just evaporate, I’m able to suck it up and scrub.
              The starter’s gun has gone off, and we’ve taken our first step.  We’ve got focused energy on our side, as well as the good luck that apparently blesses the wise.  If our budgeting skill is at all accurate, Debt #1 will be down from $8,600 to $4,600 by the end of June.  Onward!

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.