Christmas and Debt
While it’s not uncommon to stand at the checkout line and watch person after person pull out their credit cards and rack up the debt, this is not our choice this Christmas. I know it means that we will be buying fewer gifts for people. I know it means that we probably will just stick to our budget and buy a select few gifts for each other this year. For my wife and I, it’s okay.
Next year will be better. The year after that? Much better.
Let me tell you why.
This year we have paid off over $8,000 worth of debt. Next year, we will pay off around $11,000 barring any possible increases/decreases in our income. It’s not because we are extremely frugal, but because we have a plan for our money. This last year has been hard. We both had went through a period of massive increases in our pay, then massive decreases. We probably make less than the average childless couple in the US, but because of some education and deliberate choices, we are doing better than many.
Awhile back some friends of ours gave us a gift of education through Dave Ramsey’s Financial Peace University Course. It opened our eyes to how we could handle our finances better. We began listening to the podcast over on the Dave Ramsey website and started planning ahead our finances. We are not perfect, we aren’t even close, but we are getting better.
Some changes we’ve made in our lives to make this work.
Budget.
I used to hate budgeting money and thought it was a waste of time. Now, I enjoy the process and like to know where the money is going before it comes. It’s nice to have that security. We use envelopes to put our cash in throughout the month to prepare for upcoming bills. It’s nice to be able to pay rent and bills when they are due.
Future.
We’ve put off some significant life decisions till we are ready. We actually know when we’d be ready for things like buying a home, having children now. And when we do decide to buy/build a house, it will either be completely debt free or a 15 yr fixed rate mortgage. Why? Because the borrower is slave to the lender.
So why do I share? I think going through the classes of Financial Peace is a great way to get a handle on your own finances. No, this isn’t Dave Ramsey worship, it’s the simple truth about money. How do I know? Because we don’t have a lot of money, but it’s still working for us. We are still getting somewhere with our finances. We are still moving forward. And soon, hopefully in the next year or so, we’ll be debt free.
I look forward to sharing that with you when that happens too. That will be a great Christmas!
Dec 3rd, 2007 at 4:31 pm
Debt is the most misunderstood and abused financial product. Most people at least flirt with the notion of using it to buy a lifestyle they can’t afford. Far too many act on that and eventually come face to face with the reality that they now have to own their actions.
My Wife and I learned some painful lessons about debt a long time ago. For over a decade now, apart from a small amount owing on the mortgage (acceptable debt), we have no debt. We use credit cards (One each), but we pay them off totally each month. We use them in a positive way; to manage cash flow over the month.
At Christmas we begin shopping early so the expense is spread out, and also so there is no sense of rush. We are totally done our gift shopping as of today. We take our time with it and enjoy it.
A nice touch at Christmas is to hand make a gift or two for someone special. This creates more of a sense of giving, and giving is what Christmas is about, to me at least. It’s pretty tough to feel good about giving when it is coupled with a sense of guilt over debt, or a lack of ownership for irresponsible behavior. it’s better to do the right thing and feel good about life
By the way William, you might want to look at historical mortgage rate stats regarding your idea of going with a 15 year fixed rate. I have found that a one year term is best over the long haul, but there are times when locking in for 5 years is smart. The biggest thing you can do to reach your goal is to purchase at a price that allows you to use future income increases to pay the mortgage down quicker, instead of just keeping up with inflation if you mortgaged to the max. With that buffer zone of earnings you can easily pay a 20 year mortgage off in under 10, using regular prepayments, or increasing the monthly payments at each renewal period, which if you go with a one year term, is every year. If you have good discipline, the prepayment options (not sure if that’s what it’s called in USA) allow you to be more flexible in emergencies. Prepayments come directly off the principal with no interest. You can make them regularly at any time you want, up to a certain percentage of your total balance.
Just some thoughts,
John
Dec 4th, 2007 at 8:44 am
Ultimately, I’d love to pay cash for a house.
I am still in the learning stages about mortgages, but from what I see around here, the variable interest rates are pretty bad on people. The financial market in my area is pretty bad. There are mortgage companies that have a planned ballooning period each year. A lady in our church got stuck on one of those plans and ended up having her house foreclosed on.
On a completely other note, I am starting to experiment with oils again. I have been getting frustrated over the quick drying time of Acrylics.
By the way, I really like your “Happiness is.” painting. It really stands out from the others as being more symbolic in nature. It looks like “Kelowna Colors” “Spring on Knox Mountain”, “High Point”, “Grassy Outlook” and “Happiness is” were all painted in the same location? It’s interesting to see the same location portrayed at different times and in different ways.
Painting is like a drug and I need some people to support my habit.
Dec 4th, 2007 at 2:30 pm
Hey William,
Remember that the lenders know interest rates better than we do, so on a 15 year fixed rate, you can bet they’ll cover their tail to ensure they earn a descent profit on the loan. The longer the term, the more padding they will build into the rate to make sure that happens. A one year term is always the lowest interest rate at the time, but you are then more at the mercy of fluctuations. It’s always a tough call to make, but just keep a good eye on things from a broad perspective between now and when you’re ready to buy. That way you’ll be “in the picture.”
And speaking about pictures
I am also thinking about switching back to oils. Like you, the fast dry of acrylics is bothering me. I love them in many ways, but I think they were causing me to be more tight in my painting. with oils I seem to be more spontaneous.
Thanks for your thoughts on those pieces. I like Happiness is as well. “Balsam Beauty” is in a similar vein, but more simplistically stylized. The photo of that one is not good though. I should re-shoot it. You’re right, all those are from the same location, which is typical of our area. The last one I did is “Typically Okanagan,” and is also from the same area.
Good luck with the oils. It looks like it’s back to the traditional studio smell and paint on the hands eh?
John
Dec 4th, 2007 at 3:03 pm
Here’s a debate question, may have to make a new post on this one. Do you think that there is an inherent value that people inadvertently associate with Oils as opposed to Acrylics? Or is that stereotype of painting completely vanquished yet?
I think for artists, it comes down to style and working time and spontaneity but many I think would place a higher value on oils despite preference of the artist regardless of the quality of work.
Dec 4th, 2007 at 5:45 pm
It probably would make a good article to discuss the factual difference between the quality of acrylic paint VS traditional oil paints, and compare that to the perceived difference in the art consumer’s mind.
I have two thoughts on that. My first comment is that acrylics are superior to oils in longevity. They are more fade resistant, the colors hold true and fresh longer, and they retain more flexibility over time. This is from a technical perspective. Also the problem of lean over fat, and oil absorption of top layers by oil hungry pigments like raw umber is eliminated. The artist has to have more technical knowledge when using oils than acrylics. My background in the technical end of the paint field, so it’s easy for me to see the difference.
It’s not so easy however for the art consumer to understand this. The masters primarily used oils because it was the best available at the time, and I have seen hundreds of old masters paintings in the flesh, including Rembrandt, and Titian. Most have held up remarkably well. So the common thinking is that oil must be the best binder for artist pigment.
As good as it is though, we have found better binders. That is why you don’t find linseed oil anymore in architectural oil paint; Alkyd resin is used because it is more flexible and resists yellowing more. Acrylics take this improvement even further. That said, oils now are even better than in the old days. With the power mills we are using in the manufacturing, it is possible to “wet” the pigment with far less oil than they had to use back then. Less oil in the paint means less yellowing, etc.
So the second point is that I think the consumer is learning to let go of old thinking. I personally haven’t noticed any difference in sales from oils to acrylics, and thousands of successful internationally known artists use acrylics exclusively.
The bottom line is: use what you like. The public is pretty smart on the whole. They are catching up with all this at a fast pace.
John