How no turned into yes in three days

Today’s Wednesday guest post is written by Liz Neunsinger. Liz and I share a passion for education and getting our financial houses in order. I’m so happy that Liz is sharing her story about how she and her husband both got on the same page when it came to their finances, even if it took him a bit longer to jump on the bandwagon. Her story shows that we can all change our ways. We just need a place to start.

tugging at money

The most important thing I learned about my marriage came when we decided to get out of debt.

My husband and I married in 2010. At first, we didn’t combine our finances. Neither of us had a clue about how much debt the other brought to the marriage or how much the other made. We paid bills willy-nilly and were getting by. Savings or investments? Forget it! We were all over the place with no path and no goals.

About 8 months after the wedding, I had the opportunity to attend Financial Peace University (FPU) through my work. This was the 13 week FPU course offered in 2 days of intense study. My husband couldn’t attend with me. The first day I listened hard. Wide eyes and dreams floating in my head, this was what we were going to do!

I went home that night and spoke at 100 miles a minute for 3 hours about how great this course was and how it was going to change our lives! We needed to combine our debt, combine our finances, and get on a plan. Finally, when I took a breath, I asked what he thought. “No.” he said so matter-of-factly. My heart sank. We were not on the same page. He didn’t want to combine finances because he didn’t want me to pay for his debt. He didn’t like the budget restricting his purchase power. Bottom line, without his willingness, this plan was going to fail.

I went to the next day of FPU with a sad heart. I listened and dreamed, but it wasn’t the same as day 1. The next day went by. On the 3rd day after we talked about a budget, my husband said, “OK, let’s do it.” Immediately, I realized what happened. He needed a few days to think about and research this new plan. He needed time to ponder. I, on the other hand, was impulsive and excitable. I was ready with little thought. This nugget of information has been the pinnacle of communication in our marriage ever since on EVERYTHING! When I want something, I tell him what I want and he researches it for days. When he wants something, by the time he tells me about it he has already researched it and chosen what he wants. I’m very amenable to his request because I know it’s calculated. Then we budget for it and purchase it.

The best thing that could have happened to us is to decide to get out of debt. Not only has the budget been a monthly map to staying debt free, but the lesson I learned about how to communicate with my husband has kept us strong for 4 years. By the time we talk in depth, we’re both in a mindset to have the discussion, which leads to the best outcome.

When you talk to your spouse, how can you use your personality styles to get you both on the same page? How can you help your partner understand your side before passing judgment? What can you share with your spouse about your communication tendencies that will help them talk with you?

To follow Liz and her adventures in education and finances, check out her blog Study Paycheck.

Refinancing your debt doesn’t accomplish much

refinancing doesn't accomplish much

High interest rates suck but lowering your interest rate does not solve your problem.

Your interest rate is not the problem.

Your behavior and your debt is the problem. Lowering your interest rate does not make your problem go away.

Just because you lowered your interest rate does not mean that you have accomplished something amazing.

If you have $30,000 in credit card debt at 15% and you lower your interest rate to 12%, you are saving 3% per year or $900. That assumes that you don’t pay down the balance over that period of time. If you are transferring the balance to another credit card, you will typically pay a balance transfer fee of 3%, which means your savings just evaporated.

Don’t get comfortable. GET ANGRY!

The only way to get out of debt is to get so pissed off that you are motivated to act. You get so motivated you stop going on vacation. You get so motivated that you stop eating out. That is the way to get out of debt.

Let’s say you are currently paying $500 per month on your $30,000 in debt. It will take you 9 years to pay off the balance and you will pay $25,798 in interest!

What if you put $1,500 per month on the debt? You could pay off the debt in 2 years and save over $20,000 in interest charges.

Here is where things get interesting: Let’s take $500 per month and put it into an investment for 7 years after you pay off the credit card. So instead of making payments on your debt, we are now investing the money. Remember, this is just the original $500 per month you were paying on the credit card before you kicked things into high gear. This is only for the seven years that you would have made the credit card payments. In 20 years you would have $295,800.

In 30 years, you would have over $900,000! All we did was invest the $500 per month you would have been paying to the credit card company. Working hard for two years to pay off your debt results in you almost being a millionaire.

People, this is why we need to get out of debt!

Get mad. Get motivated. Get moving.

P.S. If you kept making the $500 payments for the entire 30 years, you would have $1.6 million. There is no reason to retire broke. Want to run your own calculations? You can use this calculator at DaveRamsey.com.