Is now the time to become debt free?
Saturday, February 21st, 2009
Time to change the game. I’ve had verbal confirmation from the debt free guru himself (Dave Ramsey). Now is the time to either save all your money or invest some of it INSTEAD of paying extra towwards bills.
It’s getting ugly out here folks. We ALL know more than one person that’s been laid off or have lost their job within the last 6-12 months. To put it into perspective, my wife and I have been laid off from our positions within the same year (’08). I was able to find employment while taking a $20K pay cut. She’s pregnant with our fifth child and after 4 months isn’t as fortunate (which is expected). She’s had her resume all over the place and has had only ONE legit callback. We halfway expected this. I told her not to worry about finding another position too much considering the circumstances.
Thanks, to my budgeting program, we’re forecasted to not have to touch savings until August of this year (Unless things change).
Enough of me and my situation…
Getting ready for work the other day they had Dave Ramsey on the news grilling him for financial advice. I couldn’t believe what I was hearing. He adamantly stated that now is the time to SAVE your money and don’t pay down anything right now. Of couse, make your minimal payments. But don’t apply anything extra towards bills.
If you know you’re getting laid off and will get a severance, DO NOT pay down or off bills. Build your cash stash immediately and as fast as you can in order to be able to ride out any long term unemployment. Also, build your emergency cash fund to beyond the 3-6 months window he previously suggested. He recognizes the sincere crisis we’re facing and is willing to put his debt free intentions for America on hold.
On another note, I was listening to his radio station today and was re-inspired by one of his callers. His caller and her husband has paid off their $120,000 home mortgage while having a combined income of less than $80,000 in three years.
They didn’t have kids so I can’t entirely put myself in their shoes but I’d like to think it’s doable. Having said that, I think I’m switching the direction of this site from general debt reduction to a more centralized goal of paying off our mortgage.
Right now, I’ll need to get a grip on what our finances will be like so I can’t really take the site there until our situation is more stable and understood. Once I get a grip on that, I’ll throw all the numbers out there and we’ll track the progress.
If someone could answer me a question, I’d really appreciate it. Is it better to put lump sum amounts of cash on the principal when paying off a home or is it better to Pay it all off at once? I’d probably go with the last option because that keeps the cash in my hands the entire time in case of emergency but I’m anxious to hear your pros or cons of both.
But for now, we’re just like you… Just trying to keep our head above water.
We’re still determined that ‘09 is our year!
It never fails. A relative of mine called me about refinancing their car and then the conversation switched to the home. After discussing the options available it occured to me that I was once there thinking of playing the refi game also.