Have
you been tracking your expenses as requested in last weeks post? Any
thoughts to share so far? I
wasn't restricting my spending and we were purchasing more than usual
because we are doing things at the farmstead. Spent
a little over $400. Paint & painting supplies, food, gas &
N100 masks with filters. No credit used.
Nancy
Thormann's got me thinking about how much you are able to save if you
get yourself out from the credit game.
While I have technically
known that you really pay a lot to borrow to purchase a house,
I went to a mortgage calculator and discovered:
How
much you pay $300,970.80 (total amount you pay) – $165,000 (loan
amount)
= $135,970.80 (your cost to borrow that money).
Every time you are using accumulated credit debt, you are paying back much larger amounts of money.
And this my friends, is the envelope that arrived with the Deed to our property, instead of a coupon payment book.
Not
so smart way to pay off your credit cards...
I
do not recommend this
next step. At this point we refinanced the house to pay off our
credit card debt. We were still on the brink of financial toxicity in
our thought process. But, we wisely started using cash only
from that point.
We
focused on three points
1)
Not using our credit cards. Basically we got rid of them, with the
only exception for one card for online purchases. With
this card, I immediately go to my bank account and pay the amount to
the credit company. You
should actually think
about that too. Decide if having your information out there is worth
the risk.
2)
Using cash only. If we didn't have the money, we just don't buy it.
Once you get the credit cars
payment eliminated, you might be surprised how much more money you
have to spend. Suggestion: Why not add up how much you are paying in
credit card debit each month? Are you only paying minimum payments?
3)
Building up an emergency cash reserve to pay for those things that
you need. We
are dedicated to this principle.
Honestly,
I haven't read or taken the Dave Ramsey financial courses, but I know
somethings we do fit into that system and it is one I would recommend
highly, particularly how to pay off credit cards, budgeting with
envelopes and prioritizing the establishment an emergency cash
reserve.
Lastly,
Peter
Bendal Kear
had some excellent suggestions I wanted to make sure everyone got a
chance to read his thoughts.
"A
couple things I would like to add. A
bank is not a good place to store all of it keep an emergency fund on
hand. Along these lines realize that paper and even hard currency
will lose it's monetary value when the system crashes (Perky's
emphasis added).
One words about debt and bills which comes in 2 types IMO. Things
like electricity, phone, food, etc. which are either the same or
variable monthly charges can be budgeted for but hey if you don't pay
and something is shut off be able to do without are not something to
worry much about. Budget for them and well if you can't afford them
or the system goes down be ready to do without. Other things like
mortgages, car loans, credit cards, etc have a set monthly payment on
a debt you owe. All of these things can be paid with 10% added to the
payment (less or more is okay I make 20% on our vehicle) in order to
pay them off and get out of debt quicker. This also has the advantage
in some cases depending on your financial institution of being ahead
in payments so that if you say had to stop paying for a time you
would be covered. Now keep in mind secured loans are ones that they
will take the collateral (home, vehicle) so in my mind part of
prepping is making sure that does not happen thus the extra payments.
Thing is if the system crashes who is to say I owe this and force
payment as well so I guess I could put that same 10% into a savings
but then what do I know my house is paid for and I am about a year
ahead on my only vehicle loan."
Next
Friday, The Big Hairy, Scary Step...
For
more information...
10/10/14
I am currently adding more blogs posts to explain a little more in
detail about how we got to this point in our journey. These posts are
listed here under"Financial".
Romans
13: 8 Let no debt remain
outstanding, except the continuing debt to love one another, for
whoever loves others has fulfilled the law. (NIV) Note that the
previous chapter is talking about actually paying what our owe.