reading

Author: Dan Williams

Edited by: A. Fry

Artwork by: T. Pabon

Photographs by: C. Parks

Sense and Money

www.senseandmoney.com

ISBN 978-0-9854255-0-0

The steps and methods described in this publication are those used by the author.

Disclaimer: All statements in this publication represent the opinion of the author. Please consult a licensed or certified tax and financial professional regarding your particular situation.

Forward

A United States president once said that America is addicted to oil. I believe that Americans are addicted to debt, and that addiction is destroying them, one payment at a time.

If you are tired of living paycheck to paycheck and the cost of living has you digging deeper than your pockets go, then now is the time to change your financial direction. If you wait another day, you will only be farther down the same path you are on now. A question you can ask yourself often while reading the plan outlined in this writing is “How has that been working for me so far?”

My wife, Marlis and I learned the hard way that your good credit could quickly become a pile of bad debt. Our American dream of home ownership turned into an American nightmare of run-away property taxes, maintenance, and skyrocketing home improvement costs.

Here is a no nonsense approach we used to eliminate our debt and if followed, can help you eliminate your debt and increase your savings and net worth. We used this very same systematic plan to eliminate debt, put money in the bank, and double our giving to charity. This is a must-read for every individual, parent, family, or business owner, who wants to break the bondage of debt permanently.

Society will sell you anything your mind can imagine and all at a price they will tell you that you can afford. While we were drowning in a sea of debt, the financial institutions just kept lending us more, and like many people from the mid 1990’s until 2006, we just continued to believe that we could afford it. After we had paid off all our debt, had very ample funds in the bank and a credit score approaching 800 we were turned-down for a very small loan. It was then that we realized the typical way of handling money just did not make sense. That is the very essence of why we wrote this “Common Sense” seven-step plan to turn it all around.

Chapter 1

Been There, Done That

In the fall of 1999, we bought a house with six acres and spent nearly seven years of bliss making it bigger, better, and nicer than anything we could have ever hoped to have. No, it was not a mansion with granite countertops, stainless steel appliances, and a built in swimming pool. It was just (in our humble opinion) a very modest three-bedroom ranch style home with gray vinyl siding. The living area was roughly twelve hundred and fifty square feet setting atop a poured concrete basement. We certainly did not buy into the whole idea of trying to ‘keep up with the neighbors’, but we did not want them to get too far ahead of us either! I was sure that money would not buy happiness, but I wanted to see how close to it we could come.

When we first moved into our humble abode, our mortgage payment was a mere $650 each month and the property taxes were about $1,300 a year (a number I remember quite well as it would play a very important role in our future lesson on finances and housing.) The property tax assessment meant we would only have to save a little more than $25 each week to pay the taxes and less than $150 each week to cover the mortgage. Well, that seemed easy enough. We had nearly arrived at the “Promised Land” of home ownership! The American Dream was in sight. That was easy! I was sure that with just a little more effort we could have it all, although I never really grasped what “all” meant.

With both of us working, we had become the “typical” American family with two kids, two jobs, two cars, two credit cards, and two bank accounts. One account was for saving and one for spending, though there was seldom any money in the savings account and the spending account only had money in it when we were paid! Even then, it evaporated rather quickly. By the end of the month, both the savings and the checking account had but a few dollars for a balance. We just could not seem to save and there was always an emergency of one kind or another that needed attention. The only place we could pay for an emergency was from the savings account or the credit card. The spending account received plenty of attention as well as there always seemed to be something that we wanted, or felt we “needed to have”.

It was easy for us to justify purchases for “stuff.” After all, a man’s castle has to have “stuff”, right? There is no sense in having a basement that is unfinished, right? That would be a waste of space. We thought that surely the basement would be more practical if we added a bathroom. The basement would be used a lot more if there was a bathroom and you did not have to run up the stairs every time you needed to use it. Seriously, what is the sense of having a basement with just a bathroom? Nobody is going to go all the way down to the basement just to use the bathroom. After all, we had two of them upstairs, but they must have been nearly fifty steps away from the far end of the basement. There was no sense in walking that far!

A few items such as a pool table, ping-pong table, and a foosball table would keep the kids and all their friends well occupied. Oh, and while we were at it, we did not want to forget about a nice hot tub outside on the patio. You absolutely must have a patio with a walk out basement, right? I mean, why would you want to walk out on the grass or just some stepping-stones? A full size concrete patio, underneath a treated hardwood deck, which runs the length of the house is much better, and will add tremendous value to the house. After all, the property taxes cannot possibly go up that much if we add a few little items here and there. Besides, the local building supply store was offering a crazy good deal of twelve full months with no payments and no interest. Seems like I have heard that somewhere before and would hear it a lot more as time went along. The Entertainment Palace said practically the same thing, only they said I could get a slate pool table with no payments and no interest for an entire eighteen months. Wow! What a deal. Fill it up with stuff, and fill it we did! This was easier than pumping gas into your tank. After all, you deserve it, or so we thought. You work hard for your money. Besides, we would save a fortune if we could stay at home and use all our stuff instead of going out all the time. No need for expensive vacations, we could practically go on vacation by just staying home and using the stuff that we had not even made a payment on yet. Justifying it was easy. Paying for it and maintaining it was a whole other matter. Our American dream was about to become an American Nightmare.

In 2006, we had no idea that we, like millions of other American families, were going down a very slippery slope of increasing home values along with unsustainable debt. With both of us working, we had two cars and yes, both of them had payments. Why would you not have a car payment? It was such a low interest rate that you would be crazy not to have payments. Everyone says, “You will always have a car payment.” Just ask the salesperson who is selling cars at any dealer and he will tell you the same thing. Do you realize that you can get a new vehicle with zero percent interest? Who can pass up a deal like that? I can justify a new vehicle because I need reliable transportation to get to work so I can make all these no interest payments on all my stuff. Besides, you cannot go to church every Sunday in an old rust bucket. What would God think? Surely, the pastor knows where I work and the rest of the congregation might not show me the respect I know we deserve if I am not driving a vehicle that is at least as nice as any church board member’s car.

Now that I have that nice new car, truck, van, SUV, or motorcycle, I just cannot leave it outside in the bad weather. Heaven’s no! Now that we had those nice automobiles to get back and forth to work, where would we park them, outside? Now that is just silly. I am a very handy person, so why not just add an oversized two-car garage to the old homestead instead of leaving that nice vehicle parked in the driveway. The right thing to do is to take care of it and keep it in a garage. Who knows, if I take care of it properly maybe it will last longer than the payments. Besides, the new garage is a place where I can save money by working on my own car and changing my own oil. I mean, a garage cannot possibly cost more than a few thousand to build if I do everything myself, right?

One thing I discovered with do-it-yourself projects is that you can come really close to estimating the total cost if you do just one thing. Write it all down and figure it out to the exact penny, and when you get to the bottom line, add a little and then double it, and you will probably be closer than your original estimate! We had an estimate of four-thousand dollars to build the garage I mentioned, but by the time we added a few “perks”, the final cost was just over six-thousand dollars. A little here and a little there, and before you know it, you are in pretty deep. The illusion is that you have obtained the so-called “American Dream”.

We thought we “had it all.” With two great kids, two good jobs, we had stuff coming out of our ears. There seemed to be no end to that dream of get all you can, can all you get, and sit on the lid when you have finished getting it all. At one point, when our kids were old enough to drive, we had four cars and three of them had payments. With cars and drivers of course comes insurance, and when you have as many cars as drivers, the insurance rates took off faster than the space shuttle and in the same general direction… way up! We were approaching $400 a month just for auto insurance! Remember the $150 a week we had to save for our mortgage payment? Well now, we had to take on another hefty sum of nearly $100 every week just for the auto insurance. Of course there were always auto repairs to be concerned with on top of the insurance and plenty of other so-called “easy, no interest” payments! On top of all of this we had department store credit, furniture store credit, and my personal favorite, home fix-it place credit, and just about anything and everything we wanted or needed.

In my opinion, we were not rich or even upper class by any stretch of the imagination, but we were living as if we were. After all, it was just what the advertisements had said, there was no interest and that with “easy payments” it would, all be ours. I do not know about you, but I think the term “easy payments” is just plain misleading! I do not think you should be able to put those two words together in the same sentence, easy and payments