The Oregonian article has opened up some new discussion with our friends and family who are thinking again about their own relationship to debt. I have enjoyed clarifying some of the more confusing points of our project, and debating some of the more controversial aspects of the feature with people. What it boils down to for me is that even though we were able to pay down an unusually large amount of debt in a relatively short amount of time, the principals we applied can make a difference in any person’s life, scaled to the right amount for each situation.
Using cash and getting rid of credit cards is a big part of the Financial Peace formula, and although I don’t want to get preachy about it, I agree with Dave Ramsey’s take on why cash-based transactions are an incredibly important part of the equation.
“Here’s the problem: when you don’t pay cash for things, you do not feel money. You do not emotionally, spiritually, relationally register the transaction. You’ve got to learn to feel money again, because when you do not feel money, you do stupid things with money. When it doesn’t register in your spirit that the money is leaving you… ” -03/15/2012 podcast at 12:12
“Personal finance is about 80% behavior. It’s only about 20% head knowledge. Until you learn to do things that modify your behaviors and cause you to control your behaviors… until you learn to do that, you WILL struggle with money. Lots of studies have been done that show that when you pay with cash, you will spend considerably less than when you pay with plastic of any kind.” -03/15/2012 podcast at 13:48
March 15, 2012 Podcast of the Dave Ramsey Show
skip to 11:04-19:55 for a listener question abut using a debit card versus cash for purchases such as gas
We have friends who want to use credit cards to keep their credit score up, to gain points and perks, and to feel safe in the case of emergency. Every situation is different. Using cash is a lot more difficult (consider buying a house, for example) and seemingly brings more risk, but with a reasonable emergency fund in place and delayed gratification on some larger purchases until you have the cash to pay for them, it has a big payoff value. Without plastic, you can’t spend money you don’t have. OUCH!
If you’re interested in hearing more everyday advice about finances, I recommend* the Dave Ramsey Show podcast. On Fridays they take calls from real life families who have paid off their debt – and discuss specifics on salary, lifestyle choices, and advice to others who want to become debt free.
*Dave Ramsey’s on-air communication style (and politics) are not for everyone, but in the end he delivers a much needed direct challenge to the excuses many of us use to justify a lifestyle of convenience over freedom. Sometimes he comes off as a real jerk!