Staying Out of Debt

25 Oct

The other day, my cell phone started having technical problems and I knew it was time for a new one. I have to admit, I was SORELY tempted to buy an iPhone. After all, they’ve dropped in price from $599 to $399. However, when I added in the $70 per month service plan, it would have cost me more than $1,200 over course of the year (including the cost of the phone). Was I really willing to shell out an average of $100 per month for a cool gadget like that? Did I really NEED Internet access while driving in the car? (I already have broadband access at home and at work.)


The answer, sadly, was no. It’s a luxury that I can do without. In fact, I actually went to the other extreme. I cancelled my $60 / month phone service with AT&T and decided to go “pre-paid” with T-Mobile. It’s basically 10 cents per minute for all calls, regardless of when calls are made and who makes them. In order to make it worth it, I have to curb my cell phone usage from about 800 minutes per month to around 200. I’ve been on the plan for a week now and have used 70 minutes. Not too shabby.

Anyway, this brings me to the main point of my post — how to exercise self restraint and stay out of debt.

For the past two years, Robin and I have been essentially free of consumer debt. We paid off both of our cars and all other outstanding debts. Today, we only owe money on our mortgage (oh, and my student loan for my MBA is about to come due, so I’ll have to start paying on that). It feels great not to be under the burden of debt, which we’ve felt before.  Sure, we have a revolving line of credit that we use, but we make sure to pay off our credit card in full each month. We put everything we can on our credit card to earn points, and we get about $600 per year in rewards such as gift cards to Target, Sears, Home Depot, Red Lobster, etc. The credit card company probably hates customers like us since we have never paid any interest on our card, but I love it.

Of course, it’s not always easy to stay debt free. The other day, I saw that someone in our neighborhood was selling a beautiful 2002 Ford Explorer in pristine condition. Its white exterior and leather interior are car qualities my dad always liked, and I’ve followed suit. The seller was asking $11,900, and I started thinking about how I could finance that kind of purchase, especially since I have some AFLAC money coming in and my tax refund is looking pretty good for early next year. Then I came to my senses. I asked myself, “Do I really NEED that new car? Would it be worth the expense?” Sure, my cars aren’t particularly great, but they’re not particularly bad either. And their paid for!!!

Getting out of debt is hard, staying out of debt is equally hard — especially in our society in which we have been trained to want the latest and greatest things, and we have been conditioned to expect instant gratification. That’s where credit cards can be so very dangerous. Here’s a video that really sums up my thoughts on the subject in a humorous way:


Posted by on October 25, 2007 in Uncategorized


5 responses to “Staying Out of Debt

  1. robinbl

    October 25, 2007 at 4:41 pm

    I have to admit, I’m a bit confused why you actually started creating a financing plan for an $11,000 car when my suggestion to buy a $3500 minivan was shot down point blank. I guess it didn’t have the magic combination of white color and leather seats.

  2. robinbl

    October 25, 2007 at 5:32 pm

    FYI–I’m not really ticked off about that. I just think it’s funny how you alternate between extreme frugality (which is a good thing sometimes) and these impulsive big-ticket purchases. It does make me feel a little better, that you do want nice things just like I do, despite your desire to stay out of debt. It’s your financial planning that has kept us doing so well despite our employment setbacks in years past. Good job, honey!

  3. kira

    October 26, 2007 at 3:59 am

    Aaron has those moments too. I think you get it from your Dad. Aaron always says that he used to get in “spending moods”. funny.

  4. Vicki

    October 26, 2007 at 5:10 am

    The video was hilarious! Remember, if you don’t have the money, don’t buy it (easier said than done) ! You are very frugal Andrew–I’m mpressed.

  5. andrewalma

    October 26, 2007 at 2:26 pm

    Yes, my father Kent had kind was kind of bi-polar when it comes to spending. Most of the time he was a penny pincher, but sometimes he just got in these incredibly generous spending moods that resulted in some high quality merchandise…


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