How We Messed Up With Money

I'm reading two books about getting out of debt: Live Well On Less Than You Think by Fred Brock and The Total Money Makeover by Dave Ramsey. I wish we'd had these books before we got into this mess. I don't know if we'll be able to dig ourselves out of such a deep hole but we're going to try.

I started Live Well first and here's what I learned about it so far: I am a member of the spoiled brat baby boomer generation that finds it so hard to save and so easy to spend. The author breaks people into several generations. Those who came before the boomers are the cash and carry folk; they don't trust credit cards and always pay with cash. The generation after us, the Gen-Xs, apparently do use credit cards but wisely. They're the ones who don't anticipate anyone taking care of them (like social security) and so they are a lot more careful with their money. Ours apparently is the generation that can't say no to ourselves; when we want something we want it NOW and that's why we've gone overboard with credit cards.

Not that this was any surprise to me, but credit card debt is "bad" because most of the time we use it for stuff that is eaten or used up in a short period of time and we can't remember where the money went. "Bad" debt is also new cars because they start depreciating right away. A lot of people who go bankrupt say it's because they accummulated too much credit card debt, a disaster occurred and then they were unable to pay it. Some people take out a new mortgage or get a line of credit to pay off their debt. It's a bad idea--and I can tell you this is true--because usually within two years the credit cards are maxed out again. There is good debt and one example of that would be a mortgage.

From there, the book then talks about places to live that are less expensive than others. TB and I were encouraged to see that Delaware is one of the least expensive places to live. Expenses were broken down by cost-of-living, property tax, childcare expenses, and prescription costs to name a few.

Then there are the little things we can do to save money. The areas where it's easiest to cut back include food, clothing, home decorating and furnishings, family activities and holiday spending. I think we're at the point where we really need to stop spending a lot on food and start visiting food banks. Otherwise, the suggestions are pretty common sense: pack a lunch instead of buying out, clip coupons, buy on sale, buy name brand and so on. We haven't bought any clothes for ourselves in months. Home decorating and furnishings? NOpe, putting that off too. Our family activities are eating dinner together--no movies, no parks, no nothing that cost money. Holiday spending? This year, everyone might just get a card.

I slowed down with this book when it started talking about which kind of insurance policies we should have. I may skip over it because at this point in our lives, it may no longer be relevant. I have term life policies, which was recommended, and we know TB wouldn't be able to get a policy because of his diabetes. Of course, New Jersey is one of those states that don't allow exclusion of pre-existing conditions but it would be ever so much nicer if we could get disability policies--which we've had no luck with so far. And we now don't have the money for any of this anyway.

So that's what I've learned so far from the first book.