We had a shift in our thinking 10 years ago when we followed Dave Ramsey’s debt snowball to kick $89,000 in debt to the curb in 3 months. We purposed then to never borrow again (except on a home.)
When we think that way and model that for our kids our thinking shifts from how can I borrow the money to how can I EARN the money. We find ourselves planning ahead for things like car purchases, college, and appliances.
There isn’t enough money right now to fund every category we’d like to plan ahead for. If an emergency comes up in one of those unfunded categories, we have our emergency fund. Since those extra categories are written into our budget with a temporary $0, we know how much income we need for the ideal monthly budget. It gives us something to shoot for as I build my side hustle business to make up the shortfall.
I’m talking to my kids now about what they might being saving for. A car, college….definitely. What about a house? If they can work and live at home for a few years as they sock money away, they might be able to purchase their first home with CASH.
Imagine never having a house payment…ever. That’s the stuff I dream about for my kids.
Debt is slavery, because you’ve already spent money you haven’t earned yet. Your future self ends up working for no pay. Choose your hard: I choose to wait until I earn it and hope my kids will too.
This is day 9 of our series 31 days of Kids and Money.
This is SO, SO good! We read a book by Steve Maxwell about how to teach your sons to buy a home debt free while they are teens so that they can provide for a family immediately after getting married. Such a fantastic concept!!
Love it! If I had thought something like that was possible when I was a teen and as a first and second year teacher, I would have made a lot of different choices…and likely had $50,000 in savings instead of $5,000 when I got married :(.
89,000 in 3months? Is that right, or do you mean 3years. The Ramsey debt snowball system is good, but paying off 30k a month is not a relatable thing in my universe.
Amanda, It was 3 months. Our income was $35,000 a year. We sold a house that we had hoped would be investment property for us and that helped swing the pendulum for us.
P.S. Because we were totally committed to the process, we did some crazy stuff that helped us not spend most of our income. When we were done, we figured up that we only lived on 20% of our income that year. After 6 months we had saved $40,000 for a down payment on a house to live in. I know it sounds crazy, but we sold everything we could, even a couple of cows that were our last piece of Darren’s childhood farm. We had our cars for sale too, but were able to keep them in the end.
I really needed to read this today. Friends of ours invited us on a once in a lifetime trip. We still have debt, beyond our mortgage, and COULD manage to save enough cash to go on the trip. This would, however, require us to quit paying extra on our debt. The debt can be gone if we stay on track until 3 months after the trip. So…after reading this, I am going to stay on track. Smash this debt and THEN say yes to a different trip in a little while. THANK YOU!!
Yay, Rebecca! I know that was a hard decision. Bravo!