My Financial Goal for 2009: 100% Debt Free (forever)
Tonight while reconciling bank statements and pulling together the documents necessary to file my taxes, I decided to cut up my credit cards and work towards the weighty goal of being debt free, forever.
I often listen to Dave Ramsey's podcast via iTunes.
On the podcast (which is a syndication of his on-air radio show), Dave Ramsey espouses dead simple advice and counsels live callers who range for jubilant (newly debt free) to destitute and fearful. His roadmap to financial prosperity is shockingly simple: cut up your credit cards, budget, live within your means, ignore your FICO score, pay off your mortgage and save like Scrooge McDuck.
At first, I found his plain talking advice to be fanatical, but it was the callers who were facing horrible financial woes that kept me listening -- the human financial train wrecks. And they piled up every day, asking for advice on how to sort out their lives.
I listened to stunned and grieving widows ask for basic financial advice and children swindled out of their inheritance by step parents who left multigenerational family businesses to their children (cutting out the rightful and intended heirs). I paid attention to the poor trusting souls who cosigned loans for their irresponsible children or friends, only to find themselves harassed by bill collectors. I also snorted at the callers who bought houses and cars they could never afford, ran up massive credit card debt, and they asked if they should file bankruptcy. It was always there: job losses, death, unforeseen medical crises, divorce, greed, financial gluttony, avarice, family infighting, and the ultimate reckoning.
And as I continued to listen, he started to make more sense.
Pay off your mortgage? Bah, what about the tax deduction? Oh... the calculator agrees with Ramsey. You will save more money by paying off your mortgage in interest than you will by deducting the interest on your tax return. Why are all the other financial "gurus" lying?
But what about my FICO score? Since I'm a small business owner and derive all of my income from my Sub-S Corp, I will have to go through manual underwriting for a mortgage or major purchase anyway.
But what about the credit card rewards? I've already been burned by Capital One who modified their "no hassle" rewards program after I accrued the points, making the reward program nearly worthless. American Express dutifully deposited my 1% cash rebate into my savings account, but then cut the savings interest rate, lowered my limit, and jacked up my interest rate. CitiBank notified me this week that they are decreasing the mileage earned per dollar spent on my card, at the same time the airline is making it more difficult to redeem free tickets.
And so on... until each of my objections and rationalizations were killed by rational thought over time. Slowly, I came to realize that cash was the way to go, especially in these turbulent times.
So, my financial goal for this year is simple -- through financial self depravation, pay off all of our debt and forever leave credit cards behind in my personal and business life.
Labels: Business, Personal Finance
