Paying back debt has been a big part of our lives for the last couple years.
We started our debt-free journey about with about $65K of debt. Fast-forward about three years (give or take a month or two) and we’re working away on our last $30K.
It’s fitting that it’s called the debt-free journey because it has certainly been just that.
It has not always been easy or fun, but it would be fair to say we have learned a lot over the course of our debt repayment. This is especially when it comes to our outlook and ideas regarding money.
Alyssa at Mixed Up Money wrote a post talking about finance tips she once loved, but now doesn’t. I found it really interesting. I agreed with a lot of what she had to say and found her “what to do instead” tips useful.
The post made me think about my own beliefs about personal finance and how they have developed and changed over time.
So, loosely inspired by that post, here’s a look at four things I used to believe about paying back debt that I don’t believe anymore.
Things I used to believe about paying back debt that I don’t believe anymore
Reflecting on where I was when we started paying back debt compared to where I am today, there are four things that immediately come to mind when I consider ideas I don’t believe anymore.
A cash-only budget is the best kind of budget
The first book I read when we started getting serious about paying back debt was Financial Peace by Dave Ramsey. This book was recommended to me by a friend; it’s fair to say this book is what really got me fired up to start our debt-free journey.
One thing I really bought into was the whole idea of cash is king. For the first several months of our debt-free journey, apart from auto-paid bills, we were a cash-only house.
I didn’t cut up my credit cards, but the only time they ever came out was for online purchases…and those were few and far between and carefully planned.
But here’s the thing — I hated the cash-only budget.
I hated trying to keep track of it and I hated carrying it on me. And to add insult to injury, I didn’t find that it made me more aware of our spending — it just caused me stress.
What I do instead: I went back to using a credit card based system — and it was the best thing I have ever done for our budget (I wrote about that here, if you’re curious). I treat my credit card like I would treat my debit card — aka, if I don’t have the money available to pay for something, I don’t buy it.
Admitting how much I hated the all-cash budget was difficult — I felt like a failure — but the longer I use credit cards, the more I feel like it was the right choice for me.
(Of course, it likely helps that, the more I learn, the more I pull away from the idea that Dave’s way is the best and only way when it comes to paying back debt. But that’s another post for another time).
Paying back debt should be your only financial priority
I shed this belief pretty quick.
When we first started our debt-free journey, I was still fired up from reading Financial Peace. I loved some of the ideas laid out in the book and I was looking forward to trying them on my own.
But while I’m glad I read it and I think there’s a lot of good stuff there, it didn’t take long for me to decide to make adjustments that better suited our life.
What I do instead: We follow a modified version of the baby steps and it has served us well. Along with making excellent progress on our debt repayment, we have been able to save a more comfortable emergency fund, contribute toward our retirement (at least a little) and…enjoy our lives.
There are some who would disagree with the way we choose to approach our finances but…they’re our finances. Personal finance is, as they say, personal.
The best place to cut is personal spending
When we started paying back debt, I budgeted $20 a pay each for personal spending.
On an average month, this meant we each had about $80 total to spend however we please. Most of the time, I stashed this money away to save for something more long term.
And while I certainly don’t mind doing that — I’m a pretty good saver — it took me longer than I would have liked to admit that maybe $20 was a little on the lean side.
What I do instead: Once we got our smaller debts squared away, leaving only the student loan to focus on, I changed up our budget to allow for more personal spending every month.
Yes, it means it will take longer to pay off our debt, but, as I have often said, there’s no way we were born to just pay bills and die. We work hard for our money — it’s nice to enjoy it from time to time.
I still save the majority of my cash, but it is nice knowing I have the option to spend it, if I so choose.
Tracking your spending isn’t necessary if you have a budget
When we started paying back debt, I read time and time again about the importance of tracking your spending. Still, it’s something I put off doing.
My justification? I have — and stick to — a budget! Isn’t it basically the same thing? Isn’t writing down all the money I spend just pointless duplication?
Then I tried it for a month. And quickly realized it’s not the same thing at all.
Still, tracking my spending is always something I have been resistant about doing despite the obvious benefit.
What I do instead: Panic. Scramble. Basically, not tracking makes keeping my account in order a chaotic experience. That’s why I made tracking my spending part of my 2020 shopping ban. I am hoping this will turn it into a habit, so I can continue doing this in the future.
Final Thoughts
I’m not surprised my beliefs about paying back debt have changed since we started out debt-free journey.
In fact, I think that’s a really natural thing. One goal I have on the debt-free journey is to stay open to new ideas. This includes challenging my own beliefs.
Is there anything you used to believe about paying back debt that you don’t believe anymore?
I have never been able to manage my budget through cash. I understand that people who abuse credit cards shouldn’t use them, but I blow cash and have no idea where it goes. Credit cards help me see what I’m spending and keep my spending on track. I have a self-imposed monthly limit that’s low enough that it doesn’t matter if I exceed it. There are still many months when I don’t even reach my monthly limit, so the extra goes to investments or traveling or whatever.
I’m glad you broke free from the dogma and found what works best for you! You’ll get the debt wiped out soon – I have no doubts because you’re determined and have found a system that works. Well done!
re: vanishing cash — RIGHT?! Like, I think I am a fairly disciplined person generally speaking but when I have cash, it just…disappears into the unknown. The tracking element of credit cards (and, on a lesser level for me, our debit card) gives me that tracking accountability. They’re not for everyone but switching from all cash to basically all credit cards has made a HUGE difference for us. Plus, can’t complain about that sweet cash back (which basically pays for this blog at this point).
The dogma is so real, man. Our debt repayment will be slower than some, but it will definitely be quicker than it would be if we hadn’t found a way to approach it that works for us so I consider that a win 🙂 Appreciate the vote of confidence!
Cash-only budgeting doesn’t work for me, either. I feel like I have no idea where my money is going and suddenly, it’s depleted. Ha. Using my debit card for purchases gives me an online trail and it’s just so much easier for me to manage.
I don’t think I’ve told you this, but I love the refreshing way you talk about debt and paying it back. It makes me feel a lot less alone in my debt repayment journey – it’s not about paying it off as quickly as possible and barely living while doing it. I am working my best to pay my credit card + student loan debts off as quickly as possible while also living a full life and spending money when it feels right.
I went through the exact. same. thing. when we did cash-only budgeting. I know for some people, cash works for them because they can physically see their money but for me, the only time I really noticed it was when I didn’t have any left lol. Using cards comes with its own challenges, sure, but like you said, at least you have an online trail!
And hey, glad reading about my likely-frowned-on-by-the-financial-gurus approach to money is helpful for you! I get why some people opt for the more gazelle-intense style of debt repayment — if that works for them, that’s awesome. But the way I look at it is, in a lot of cases, debt isn’t accumulated quickly so it doesn’t feel unreasonable to me to take time to pay if off, especially if it means getting to…well, enjoy life along the way. Progress is progress, right? As long as you’re moving forward, in my mind, you’re on the right track. 🙂